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Date
Wednesday, October 29, 2025 at 9 a.m. ET
Call participants
Chief Executive Officer — Todd Schwartz
Chief Financial Officer — Pamela Johnson
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Takeaways
Total revenue -- $155 million in revenue for Q3 2025, up 14% year over year, marking a quarterly high for the company.
Net originations -- 12.5% growth in net originations compared to Q3 2024, almost 50% of originations coming from new customers.
Adjusted net income -- $41 million of adjusted net income for Q3 2025, an increase of 41% from $29 million in Q3 2024 (adjusted), representing a new quarterly record.
GAAP net income -- $76 million net income for Q3 2025, a 137% increase in net income, boosted by a $32 million non-cash gain from reduced warrant liability due to the drop in share price.
Net revenue -- $105 million net revenue for Q3 2025, up 15% compared to Q3 2024, setting a company record for the quarter.
Yield -- Slightly reduced to 133% from 134% in Q3 2024, attributed to seasonal and mix factors, but remains elevated.
Net charge-offs as percentage of revenue -- 35% in 2025, a modest increase from 34% in the third quarter of 2024; management asserts risk is properly priced into new originations.
Total expenses (excluding interest) -- Declined to 30% of revenue in the third quarter, compared to 33% in the same quarter last year, reflecting improved operational efficiency.
Interest expense -- Due to refinancing and debt paydown initiatives.
Credit facility capacity -- $600 million in total funding, including $204 million in unused debt capacity at quarter-end.
Adjusted EPS -- Adjusted EPS grew to $0.46 from $0.33, based on 89 million diluted shares outstanding.
Share repurchases -- plus 317,000 more shares repurchased post-quarter for $3.2 million.
Raised full-year guidance -- Revenue guidance increased to $590 million–$605 million for full year 2025; adjusted net income is expected to be $137 million–$142 million, and adjusted EPS to $1.54–$1.60 for the full year.
Model 6.1 rollout -- Enhanced credit risk segmentation and pricing, launching with partners in Q4 and entering full implementation in Q1 2026.
LOLA migration -- Testing phase underway for the new origination system, with full migration targeted for Q1 2026, expected to improve automation and operational throughput.
Biddy equity income -- $1.4 million equity income contribution from SMB partner Biddy, with ongoing growth opportunities identified in the revenue-based finance segment.
Direct mail originations -- Accounted for 4.2% of total originations, noted as an early-stage initiative with potential for expansion.
Auto-approval rates -- Supporting improved origination efficiency.
Customer acquisition costs -- Increased by $20–$30 per account in the second half as growth efforts intensified, but management remains confident in the unit economics.
Summary
OppFi (OPFI +4.10%) reported record-setting growth across revenue, net income, and originations, underpinned by both higher auto-approval rates (79%) and nearly half of new loan volumes driven by new customers (almost 50% of originations). The company enhanced its financial flexibility by expanding and renewing credit facilities, securing lower-cost funding, and lowering interest expense as a percentage of revenue. Management implemented technology-driven upgrades, with Model 6.1 poised to refine risk assessment and LOLA advancing automation across origination and servicing operations. Shareholder returns were prioritized through ongoing share repurchases, while guidance for revenue and earnings was raised for the third time this year.
Pamela Johnson stated, "the estimated value of the warrants issued when we went public decreased, driving this non-cash income," clarifying the GAAP net income swing was tied to market-based warrant revaluations.
Todd Schwartz expects double-digit adjusted net income and revenue growth "throughout the remainder of 2025 and into 2026," but added that future expansion remains credit quality dependent.
Biddy's partnership contributed equity income and is positioned to benefit further from ongoing small business lending demand.
Early Connected TV marketing trials offer a potential new growth lever for customer acquisition in 2026.
The latest credit models use AI and real-time customer data integrations, with Model 6.1 designed for dynamic risk-based pricing across borrower segments.
Industry glossary
Model 6/6.1: Proprietary OppFi credit risk assessment systems that segment borrowers and support automated, risk-based pricing and approvals.
LOLA: OppFi’s loan origination lending application system aimed at automating originations and integrating advanced AI capabilities.
Biddy: OppFi’s small- and medium-sized business (SMB) investment partner focusing on revenue-based financing.
Connected TV: Digital marketing channel delivering targeted advertisements via internet-enabled televisions.
Full Conference Call Transcript
Todd Schwartz: Thanks, Mike, and good morning, everyone. Thank you for joining us today. OppFi achieved another record quarter of revenue, profitability, originations, and ending receivables. In addition, we are happy to report that we have renewed our credit agreement with Castlelake, improving operating leverage, pricing, and capacity. Given our continued outperformance in Q3, we are raising earnings guidance for the third time this year. I will discuss growth credit, our loan origination lending application, LOLA, migration, and Biddy, our SMB investment, on the call. In the quarter, we achieved 12.5% growth in net originations and a 13.5% increase in revenue year over year, with almost 50% of originations coming from new customers.
Auto approval rates increased to 79% year over year, and customers continue to be approved at a higher rate than in prior quarters with no human interaction. We continue to see increased scale in our partnerships and direct response programs. We started testing Connected TV in Q4 and believe that this could contribute to growth in 2026 and beyond. This strong top-line growth combined with prudent expense management led OppFi to generate a record $41 million of adjusted net income for the quarter, representing 41% year-over-year growth. Regarding credit, Model 6 continues to perform well and better segment customers across risk segments. Throughout the quarter, we saw higher charge-offs in new loan vintages.
However, by tightening higher risk segments and applying a risk-based pricing approach, we maintain strong unit economics while sustaining growth. The team leveraged AI tools, customer attributes, and repayment data to refit Model 6 into what we believe is the most reliable model to date, Model 6.1. This Model 6.1 refit is designed to identify riskier borrower populations better, incrementally improving volume. The model is also designed to enhance risk pricing across segments, accounting for behavioral and seasonal volatility. In conjunction with our lending partners, we plan to roll out Model 6.1 refit in Q4 and fully implement it in Q1 2026.
With Lola, OppFi is building the origination system of the future. This will give us a clean architecture that is designed to take advantage of rapidly developing AI tools in originations, servicing, and corporate operations. The product and tech teams have been working hard and have officially begun the test phase of our migration. We plan to continue testing LOLA throughout the fourth quarter and migrate in Q1 2026. Early indicators give us confidence that LOLA will help continue to improve funnel metrics, increase automated approvals, enhance efficiency in servicing and recoveries, better integrate major systems, deliver reduced cycle times, and greater throughput for our product, tech, and risk teams. Our investment in Biddy continues to perform well.
In 2025, Biddy generated $1.4 million in equity income for OppFi. Biddy is a great partner that we have enjoyed working with and learning from in the SMB space. The company shares OppFi's business principles and corporate values and consistently uses technology to enhance operations and the customer experience. Biddy has identified significant additional growth opportunities and continues to capitalize on the ongoing supply-demand imbalance in the small business revenue-based finance space. Overall, OppFi delivered another strong quarter, both financially and operationally, outperforming expectations and allowing us to raise guidance for the third time this year. Looking ahead, we anticipate continued double-digit revenue and adjusted net income growth throughout the remainder of 2025 and into 2026.
We believe OppFi is well on its way to executing its vision of becoming the leading tech-enabled digital finance platform that partners with banks to offer essential financial products and services to everyday Americans. With that, I'll turn the call over to Pam.
Pamela Johnson: Thanks, Todd, and good morning, everyone. As Todd noted, we achieved another record quarter, generating revenues of $155 million, an impressive 14% increase over the third quarter of 2024. Model 6 has been a significant contributor to this growth, empowering OppFi to expand its reach and grow its business effectively. Its enhanced predictive power has enabled us to better manage our loan economics through risk-based pricing and allow our bank partners to underwrite larger loan amounts for creditworthy individuals, helping fuel robust growth in originations and receivables balance. As Todd noted, in 2025, we observed an increase in net charge-offs as a percentage of revenue at 35%, up from 34% in the third quarter of 2024.
It's important to note that we believe this risk is appropriately priced into these loans. This strategy also contributed to our net revenue growth, reaching a quarterly record of $105 million, a 15% increase over the third quarter of 2024. Though the yield decreased slightly to 133% from 134% in the third quarter of 2024, our scale and focus on cost discipline also played a pivotal role in our strong performance. Continued operational improvements contributed to notably lower total expenses before interest expense, which declined significantly to 30% of revenue in the third quarter, a substantial improvement compared to 33% in the same quarter last year.
We noted previously, earlier this year, we proactively paid down our corporate debt and successfully upsized one of our main credit facilities at more attractive interest rates. These strategic moves helped reduce interest expense to 6% of total revenue, down from 8% in the prior year. Additionally, in early October, we announced the signing of another $150 million credit facility with lower interest rates than the previous one, positioning us to realize even lower interest expenses as a percentage of revenue in the future. As a direct result of increased revenue and strategic reductions in expenses, adjusted net income surged 41% to a quarterly record of $41 million, marking a significant increase from $29 million last year.
Concurrently, adjusted earnings per share grew to $0.46 from $0.33 last year. On a GAAP basis, net income increased by 137% to $76 million, reflecting our higher revenues, lower expenses, and a $32 million non-cash gain related to the change in the fair value of our outstanding warrant. Because our Class A common stock price decreased during the quarter, the estimated value of the warrants issued when we went public decreased, driving this non-cash income. However, as we have stated, this is a non-cash item and does not impact the underlying profitability of the company.
Looking at the balance sheet, we continue to maintain a robust financial position, ending the quarter with $75 million in cash, cash equivalents, and restricted cash, alongside $321 million in total debt and $277 million in total stockholders' equity. Our total funding capacity stood at a strong $600 million at the quarter's end, including $204 million in unused debt capacity. During the third quarter, OppFi strategically repurchased 710 shares of Class A common stock for $7.4 million. Additionally, since the third quarter, OppFi has repurchased 317,000 shares of Class A common stock for $3.2 million as management continues to believe the share price does not reflect our underlying cash generation or our return on capital opportunity.
Given our strong operating performance, driven by growth in net originations, revenues, and adjusted net income, we are pleased to provide the following updated full-year guidance. We are once again increasing our guidance. For total revenues, we are raising the bottom of the range to $590 million while leaving the top of the range at $605 million, up from the prior guidance of $578 million to $605 million. Adjusted net income is expected to be $137 million to $142 million, up from our prior guidance of $125 million to $130 million.
Based on an anticipated diluted weighted average share count of 89 million shares, adjusted earnings per share are expected to be $1.54 to $1.60, up from our prior guidance of $1.39 to $1.44 per share. With that, I would now like to turn the call over to the operator for Q&A. Operator?
Operator: Please press the star and one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two. Once again, to ask a question, that is star one. We'll take our first question from David Scharf with Citizens Capital Markets. Your line is open.
David Scharf: Maybe I'll start off with credit since it's been so topical this reporting season. Just curious. Obviously, you spoke to strong performance. Just curious, are there any early indicators or metrics such as first payment defaults or the like? I mean, anything that gives you a sense that households that you're catering to are becoming a little more stressed than three months ago? Or pretty much the loss ratio reported speaks for itself?
Todd Schwartz: Yeah. Hi, David. Good question. Thank you. You know, we constantly are surveying and looking at different data points, not only from the data that we receive from bank accounts and the macroeconomic data. I mean, the backdrop from a macroeconomic standpoint still remains largely unchanged. We are hearing about different products like auto loan delinquencies and all this, but we really focus on how it affects our customers. In our bank data, we're not seeing anything that would cause alarm. However, we did see some higher early payment stats in the quarter that caused us to tighten slightly.
I will remind you, though, that since back in '22, without risk-based pricing, not being able to price risk properly in these environments is something that we were not able to do. Also, our recovery lines, we feel really good about keeping unit economics strong with pricing and strong recoveries in this environment and feel like we can operate in any environment with Model 6. You know? And it's kind of a dynamic modeling environment. It's not set it and forget it anymore. We're really of the mindset that we're going to meet the customer where they are. And we're going to price it properly and have a product for them.
So, yeah, we may incur some higher charge-offs coming through in the fourth, but let's not lose sight of, as a percentage of revenue, year over year, we expect our charge-offs as a percentage of revenue to go down year over year. So, that's just kind of how the environment is now. You can't set it and forget it. You have to be watching it and constantly updating your pricing per segments and your pricing per risk.
David Scharf: Got it. No, that's helpful. You kind of delved into maybe my follow-up, which was maybe to get a little better context for risk-based pricing. Is the Model 6 going to enable more of it? You know, I guess at a high level, should we think about more risk-based pricing as you're currently leaving yield on the table? Or is it you're leaving volume on the table that there may be consumers that are applying, not accepting the loan? You know, maybe give us both contexts.
Todd Schwartz: It's both. I think in times of volatility and economic environments, it allows us to properly price risk. So that gives us that lever. But it also allows us to target with potentially lower prices for our lowest risk customers. It allows us to better target them. And so we use it for both. We use it for credit and losses. We also are using it for targeting and growth. And it's a switch that you can toggle depending on the environment. And that's kind of why I spoke a little bit before about the dynamic nature of it.
It's something that we're reading in real-time on a weekly basis and kind of assessing, especially in an environment like this where there's a lot of news and a lot going on. You know, we do we're, you know, the Fed's meeting soon. You know, we're waiting and seeing on that. You know, from a unit economic standpoint, if we do get some relief on interest rates. But, you know, right now, we're just in an environment like that where we're just going to continue to watch credit. But we still think we can grow in this environment with strong unit economics.
David Scharf: Got it. Got it. Great. Hey. I apologize. Maybe just one quick follow-up on credit because, you know, obviously, you mentioned auto. It's been sort of dominating the headlines. A lot of company-specific events out there. But auto, sometimes delinquencies have gone up. I'm curious. Since you're capturing bank data, do you monitor what percentage of household budgets are being attributed to auto payments since affordability is still sort of plaguing the auto sector for both new and used?
Todd Schwartz: Yeah. I mean, something, you know, we're very ability to repay is very prevalent in our modeling. Not specifically necessarily auto, but it is factored into the equation of ability to repay. You know, the customers have to have the discretionary income to make the monthly payments. And so it's something that is top of mind in our model. We have not seen in our bank data, you know, significant reductions in income or balances or anything that would cause alarm here. And so that's why we can, you know, we tightened where it made a lot of sense. And then also, you know, use the model to better target lower risk customers in this environment.
But, you know, we're watching it just like everybody else right now. I'm not going to not say that, you know, credit isn't worse. It is worse than it was last year in the new segments. Especially the new. But, you know, something that we can operate in now with our current pricing structure and how we operate.
David Scharf: Great. Thank you very much, Dan.
Operator: Our next question comes from Mike Grondahl with Northland Securities. Your line is open.
Mike Grondahl: Hey. Thanks, guys, and congratulations. On the origination side, could you talk a little bit about direct mail and then some of your thoughts on connected TV that you mentioned?
Todd Schwartz: Yeah. Thanks, Mike. How are you doing? You know, listen. I think direct mail is a highly scalable lever for us that we're just starting. You know, we're just in the early innings of it. You know, it was 4.2% of our originations. That can easily be in the double digits if we wanted. We're going slow and being pretty methodical and strategic. We're making sure we have the creative right, excuse me, and making sure that the modeling is right. It's something that, you know, it's a powerful funnel, top of funnel, you know, if you can get a lot of apps that's consistent, it's something that, you know, we're prioritizing and focusing on.
Connected TV. Yeah. So we're in the early, really early innings of that. But, you know, it's something that we think it's controllable, scalable. And it's also reaching a lot of our customers in a targeted fashion. So we're excited about it. It also allows us to get our brand out there and our creative. So, you know, our marketing team has been working hard on that, and, you know, we're going to be testing that throughout the quarter. But, you know, we'll want more to report on that in our Q4 earnings. But, we think it's promising, and it's something that can help us scale and continue to grow next year.
Mike Grondahl: Got it. And then you've been really disciplined on OpEx. You know, I would call OpEx sort of, you know, basically flattish to up a tad. How much can you grow originations in the book without having a step function list in OpEx? Like, you know, you've kind of done this now for two plus years. If not longer. You know, bolted on more revenue and more loans on your existing platform and been really efficient. The throughput's been great. But how long can you continue to do that?
Todd Schwartz: Yeah. Good question. You know, we feel really confident in our ability to scale. I mean, this is where things get highly incremental at this scale. As far as, you know, originations and growth go. We don't anticipate, I mean, LOLA is that. That's why I keep talking kind of about LOLA on these calls and introduced it last quarter.
You know, we've made significant R&D and software development initiatives in the company over the last year to allow us to continue to scale and then also allow us to, you know, essentially, as I said, building lending origination system of the future, but it really allows us to install and integrate some of these new age AI tools that are coming. You know, some of them are more developed than others, and some of them are more ready to use today versus, you know, in a year from now.
But it was all about having a clean architecture on your tech stack and not have a lot of technical debt built up so that we can take advantage of some of these tools. It also better integrates our corporate systems. So we really don't anticipate having to add much fixed overhead. You know, it's more going to just be variable cost of the growth. And, you know, think that, you know, this can continue. And definitely into next year.
Mike Grondahl: Got it. And then one last question. I think in your prepared remarks, you said double-digit revenue and adjusted net income growth for the rest of 2025, you know, obviously implied by your guidance. But I think you also said and into 2026. Is there anything you want to say about 2026? Are you sort of, you know, striving for double-digit top line? Anything there would be helpful.
Todd Schwartz: Yeah. I mean, listen. It's something that, you know, it is credit dependent. I'll caveat that, Mike. But, you know, I will say that we have the levers, and I'm pretty confident, you know, within our walls. We have the levers to grow at double digits. And feel confident we can do that. The only thing, you know, that would prevent us from doing that is we're not going to chase growth if credit is not there. It's just not something we're going to do. You know us now. We're very disciplined. So we won't chase growth to take on higher losses, but we do have the levers if that's what you're for next year for double-digit growth. Absolutely.
Mike Grondahl: Got it. Hey. Thanks a lot. Thank you.
Operator: As a reminder, if you would like to ask a question, that is star one to join the queue. You may remove yourself by pressing star two. Take our next question from Kyle Joseph with Stephens. Your line is open.
Kyle Joseph: Hey, good morning. Thanks so much for taking my questions. Just given everything going on with the portfolio in terms of new customer mix, the risk-based pricing, just wanted to get your kind of your thoughts in terms of yield trends we should expect going forward.
Todd Schwartz: Yeah. You know, we feel good that our yield is stable. It came down a little bit in Q3. That's due to, you know, that is typical this time of year. Q3, you're going to see some of your lower yields as you start to see some losses kind of come into the past dues, the drop out of accrual. We do hope that we'll see a nice rebound in Q4 and it's also been stable throughout the year. But we anticipate stability and an elevated yield coming through the book. And that is part of the risk-based pricing. Right? We're better pricing risk across the segments. So we feel good about where we are with that.
Kyle Joseph: Got it. Helpful. And then, moving to the balance sheet capital. Obviously, you guys have done a lot of work on the balance sheet year to date. And it's in a really good place. And then you guys are still generating strong cash flows despite portfolio growth. But just, you know, give us a sense for kind of your capital allocate priorities. Now that you have the balance sheet in a really good position?
Todd Schwartz: Yeah. Well, Pam, I think Pam, you know, talked about it. We've been buying back stock in open windows and with, you know, predetermined programs. We'll continue to, you know, defend our share price when we think it's, you know, undervalued. It's something that, you know, we feel like we're not trading. Third time is the charm here, Kyle, you know, with us. You know, raising guidance again. But, you know, listen. That's top of mind right now is obviously share price and making sure that we're properly valued in the marketplace. We're continually actively looking at M&A opportunities, looking at using, you know, it for growth. You know, the menu of options is open.
So we are, you know, we're actively looking at those different scenarios and best and highest use of our cash.
Kyle Joseph: Got it. And just one last one for me. Apologies if I missed it, but just in terms of the marketing spend, we saw it return to growth this year. I think you mentioned that was, you know, maybe TV and direct mail. But, yeah, if you could walk us through, you know, what you're seeing in terms of customer acquisition costs and how you expect marketing expenses to go going forward and how that versus portfolio growth. Obviously, they go hand in hand.
Todd Schwartz: You know, I think I stated back in Q2, you know, you should expect the acquisition cost to kind of creep up here as we go into growth mode here in the second half. And that's, you know, it's consistent with, you know, what's happened. You know, we're probably up $20 to $30 per. We feel very comfortable there. And think there's even probably some more room, especially for lower risk segment customers, to be able to pay those CPFs and feel really strong about the unit economics and the incremental growth it provides.
Kyle Joseph: Great. Thanks so much for taking all my questions.
Operator: Our last question comes from Robert Lynch with Stonegate Capital Partners. Your line is open.
Robert Lynch: Hey, good morning, Pam and Todd. Really appreciate you taking the questions today. Just have a few here. With net charge-offs as a percentage of revenue, saw a slight increase in Q3. You know, is this typical seasonality or mix? And, you know, could you get this back up to the 45% in Q4 that we saw last year? Seasonality and early indications for the holiday season coming up.
Todd Schwartz: Yeah. I mean, there is seasonality to the business. And you're going to see your lowest charge-offs as a percentage of revenue kind of in Q2 and Q3, and then it elevates. Year over year, it is slightly elevated. I know, we do anticipate, though, for, you know, annualized a reduction in percent as a percentage of revenue overall. You know, we didn't tighten, you know, we were very in '24 even, you know, tightening probably a little too conservative maybe in Q2, which caused, you know, really strong revenue as a percentage of charge-off numbers. I mean, we don't need to be, we're at a level now where we feel really comfortable that the unit economics are strong.
So it's, you know, it's going to flatten out here and, you know, incrementally every quarter could be a little bit less, could be a little bit more, but we feel really good at these numbers where we're at. Think that, you know, we can generate really strong returns within this band.
Robert Lynch: Okay. Great. Really appreciate the color there. I got maybe two more here, but you know, you highlighted stronger recoveries from operational changes. Is the second half recovery run rate now above plan and, you know, how confident are you that this level is sustainable into 2026?
Todd Schwartz: Yeah. I mean, we've now, you know, achieved, you know, a strong as a percentage of gross charge-offs, a really strong recovery right now for two years. We think it's very sustainable. It's performing at or above plan every quarter. We have a great process team and strategy behind it. So we feel it's sustainable. And, you know, at first, you know, in the first year when we were achieving those results, it was something that was hard to bake into the unit economics. Because, you know, we weren't sure if the stability of it was going to last, but it has.
And we feel really good that, you know, we're going to continue to achieve that percentage of recovery on charge-off. And it obviously helps our unit economic model, you know, and how we price and how we target on the front end. And so, it's been a great story for us.
Robert Lynch: Awesome. Thank you for the color there. And, you know, I've got just one more unique question here. But on the recent shutdown, you know, what impact did it have on, you know, any of the data you see coming in as well as your models? You know, with customer behavior. More for them and yourself as well and how are you monitoring the situation and mitigating any of the effects, you know, going forward in real-time.
Todd Schwartz: Yeah. You know, I thought we were prepared for this question because I thought I was going to get it sooner. But, no, it's something that, you know, we're actually better. We have a very, very fair hardship program for customers that have been impacted by the federal government shutdown. We do have some exposure. It's something we're currently watching. It's pretty de minimis at this point on the number of hardships. This time of year because of weather events, it is our largest hardship program offering for this quarter because of the three and the weather events that happen usually typically in this time of year.
But, you know, incrementally there are some more coming from the federal government shutdown. Nothing that we've caused alarm or caused us to, you know, really change, you know, how we operate at this point or credit from a credit perspective. But, definitely, we're watching very closely as it unfolds and will continue to.
Robert Lynch: Great. Really appreciate it, Todd, Pam, Mike. Congratulations on the quarter, and I'll get back in the queue.
Operator: It appears we have no further questions at this time. This does conclude today's program. Thank you for your participation. And you may disconnect at any time.