OppFi Inc. (OPFI) Bundle
Understanding OppFi Inc. (OPFI) Revenue Streams
Understanding OppFi Inc.’s Revenue Streams
Total revenue consists mainly of revenue earned from interest on receivables from outstanding loans based on the interest method. For the nine months ended September 30, 2024, total revenue increased by $14.2 million, or 3.8%, to $390.2 million from $376.0 million for the same period in 2023.
The increase in revenue was attributed to higher average receivables balances throughout the period, a higher average statutory rate for the loans in the portfolio, and stronger payment activity driving a higher yield on the balances. Additionally, referral fees related primarily to the "Turn-Up" program represented 0.2% of total revenue for the nine months ended September 30, 2024.
Year-over-Year Revenue Growth Rate
For the three months ended September 30, 2024, total revenue increased by $3.4 million, or 2.6%, to $136.6 million from $133.2 million for the same period in 2023. This growth reflects a consistent upward trend in revenue generation.
Contribution of Different Business Segments to Overall Revenue
The primary revenue source remains the interest earned on receivables from loans. The following table summarizes the revenue contributions from various segments:
| Revenue Source | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | Change (in millions) | Percentage Change |
|---|---|---|---|---|
| Interest on Loans | 135.6 | 132.0 | 3.6 | 2.7% |
| Referral Fees | 0.3 | 0.2 | 0.1 | 50.0% |
| Total Revenue | 136.6 | 133.2 | 3.4 | 2.6% |
Analysis of Significant Changes in Revenue Streams
The increase in revenue is attributed to a higher average statutory rate for the loans in the portfolio and stronger payment activity. Notably, the change in fair value of finance receivables totaled $149.5 million for the nine months ended September 30, 2024, compared to $164.5 million for the same period in 2023, indicating a decrease in charge-offs and recoveries.
In conclusion, the overall revenue structure showcases steady growth primarily driven by interest income from loans, with a notable contribution from referral fees. The company's focus on managing loan portfolios effectively has resulted in improved revenue generation capabilities.
A Deep Dive into OppFi Inc. (OPFI) Profitability
Profitability Metrics
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit margin was 58.9%, up from 54.9% for the same period in 2023. The increase is attributed to improved cost management and higher revenue from interest on receivables.
Operating Profit Margin: The operating profit margin for the nine months ended September 30, 2024, was 29.0%, an increase from 18.3% in the prior year. This reflects a significant rise in income from operations, which increased by $32.2 million to $69.9 million.
Net Profit Margin: Net profit for the three months ended September 30, 2024, was $32.1 million, resulting in a net profit margin of 23.5%, compared to 11.6% for the same period in 2023. This increase was largely driven by higher operational efficiency and lower expenses.
| Metric | Q3 2024 | Q3 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Gross Profit Margin | 58.9% | 54.9% | +4.0% | +7.3% |
| Operating Profit Margin | 29.0% | 18.3% | +10.7% | +58.5% |
| Net Profit Margin | 23.5% | 11.6% | +20.9% | +180.2% |
Trends in Profitability Over Time: The profitability metrics show a consistent upward trend. Net income increased by $32.3 million to $69.9 million for the nine months ended September 30, 2024, compared to $37.5 million for the same period in 2023.
Comparison with Industry Averages: The average net profit margin for the financial services industry is approximately 20%. The company’s net profit margin of 23.5% indicates stronger profitability relative to industry peers.
Operational Efficiency Analysis: Total expenses decreased by 6.7% to $56.1 million for the three months ended September 30, 2024, down from $60.1 million in 2023. Expenses as a percentage of total revenue decreased from 45.1% to 41.1%, reflecting improved cost management strategies.
| Period | Total Revenue ($ millions) | Total Expenses ($ millions) | Net Income ($ millions) | Net Profit Margin (%) |
|---|---|---|---|---|
| Q3 2024 | 136.6 | 56.1 | 32.1 | 23.5% |
| Q3 2023 | 133.2 | 60.1 | 15.5 | 11.6% |
| 9M 2024 | 390.2 | 170.8 | 69.9 | 17.9% |
| 9M 2023 | 376.0 | 169.8 | 37.5 | 10.0% |
Overall, the financial health metrics indicate robust profitability and operational efficiency, positioning the company favorably against its industry peers.
Debt vs. Equity: How OppFi Inc. (OPFI) Finances Its Growth
Debt vs. Equity: How OppFi Inc. Finances Its Growth
As of September 30, 2024, OppFi Inc. reported total debt of $398.96 million, a decrease of $8.6 million from $407.51 million at the end of 2023. The debt structure includes both long-term and short-term components, with a significant portion being revolving lines of credit and term loans.
Long-term debt primarily consists of a term loan totaling $50 million with a maturity date in September 2025. Short-term debt is represented through various revolving credit facilities, which amounted to $325 million as of September 30, 2024. The company has a total financing commitment of $525 million, providing substantial capacity for future growth.
The debt-to-equity ratio for OppFi Inc. stands at approximately 1.81, calculated from total liabilities of $398.96 million against total stockholders' equity of $220.31 million. This ratio is higher than the industry average, which typically hovers around 1.0 to 1.5, indicating that the company relies more heavily on debt financing than many of its peers.
| Debt Type | Amount ($ Million) | Maturity Date | Interest Rate |
|---|---|---|---|
| Term Loan | 50.00 | September 2025 | SOFR + 0.11% + 10.00% |
| Revolving Line of Credit (Tranche B) | 84.50 | June 2026 | SOFR + 6.75% |
| Revolving Line of Credit (Tranche C) | 62.50 | July 2027 | SOFR + 7.50% |
| Revolving Line of Credit (Castlelake) | 85.87 | December 2026 | SOFR + 7.50% |
| Revolving Line of Credit (Gray Rock SPV LLC) | 52.90 | October 2026 | SOFR + 7.45% |
| Total Revolving Lines of Credit | 285.77 | N/A | N/A |
| Total Debt | 398.96 | N/A | N/A |
Recent debt issuances include a senior debt facility with a total commitment of $525 million, highlighting the company’s strategy to maintain a robust financing structure. As of September 30, 2024, OppFi had $199.4 million of unused debt capacity, indicating a healthy buffer for future capital needs.
The company has actively engaged in refinancing activities, with recent reductions in interest expenses. Total interest expense related to senior debt was $31.9 million for the nine months ended September 30, 2024, down from $32.7 million in the same period of 2023. This reflects proactive management of its debt portfolio to reduce financing costs.
In balancing debt and equity, OppFi has also initiated share repurchase programs, authorizing up to $20 million for stock buybacks, aimed at enhancing shareholder value while managing its equity base. As of September 30, 2024, the company had repurchased 1,034,710 shares at an average price of $3.41 per share.
Assessing OppFi Inc. (OPFI) Liquidity
Assessing OppFi Inc.'s Liquidity
Current and Quick Ratios:
As of September 30, 2024, OppFi Inc. has a current ratio of approximately 1.58, calculated from current assets of $74.2 million and current liabilities of $46.9 million. The quick ratio stands at 1.55, indicating a strong liquidity position, as it excludes inventory from current assets.
Working Capital Trends:
Working capital as of September 30, 2024, is $27.3 million, reflecting a significant increase from $20.2 million as of December 31, 2023. This upward trend in working capital indicates improved operational efficiency and liquidity management over the past nine months.
| Period | Current Assets ($ million) | Current Liabilities ($ million) | Working Capital ($ million) |
|---|---|---|---|
| September 30, 2024 | 74.2 | 46.9 | 27.3 |
| December 31, 2023 | 61.3 | 41.1 | 20.2 |
Cash Flow Statements Overview:
For the nine months ended September 30, 2024:
- Net cash provided by operating activities: $229.3 million, up from $213.6 million in the same period in 2023, marking a 7.4% increase.
- Net cash used in investing activities: $(170.6) million, a decrease of 5.2% compared to $(179.9) million in 2023.
- Net cash used in financing activities: $(58.4) million, which is a substantial increase of 238.6% from $(17.2) million in 2023.
| Cash Flow Activity | 2024 ($ million) | 2023 ($ million) | Change ($ million) | % Change |
|---|---|---|---|---|
| Net cash provided by operating activities | 229.3 | 213.6 | 15.7 | 7.4 |
| Net cash used in investing activities | (170.6) | (179.9) | 9.4 | (5.2) |
| Net cash used in financing activities | (58.4) | (17.2) | (41.2) | 238.6 |
Potential Liquidity Concerns or Strengths:
As of September 30, 2024, OppFi Inc. has $44.8 million in unrestricted cash, which is an increase of $13.0 million from December 31, 2023. The company has $199.4 million in undrawn debt capacity, representing a 38% undrawn capacity increase from $192.3 million at year-end 2023. This positions the company favorably to meet liquidity needs over the next 12 months.
The overall funding capacity, which includes total financing commitments of $525.0 million, is approximately $599.2 million as of September 30, 2024.
| Liquidity Metrics | September 30, 2024 ($ million) | December 31, 2023 ($ million) | Change ($ million) |
|---|---|---|---|
| Unrestricted Cash | 44.8 | 31.8 | 13.0 |
| Undrawn Debt Capacity | 199.4 | 192.3 | 7.1 |
| Total Funding Capacity | 599.2 | 525.0 | 74.2 |
Is OppFi Inc. (OPFI) Overvalued or Undervalued?
Valuation Analysis
To assess the financial health and valuation of the company, we will analyze key financial ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 5.85 based on earnings per share (EPS) of $0.65 for the most recent quarter.
Price-to-Book (P/B) Ratio
The P/B ratio is 0.88, indicating the stock is trading below its book value of equity of $3.43 per share.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is 3.5, calculated from an enterprise value of approximately $246 million and EBITDA of $69.9 million.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated between a high of $7.50 and a low of $2.50, currently trading at $3.82. The stock has shown a 20% increase year-to-date.
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, resulting in a dividend yield of 0%. The payout ratio is also 0%, reflecting the company's reinvestment strategy.
Analyst Consensus
The consensus among analysts is a "Hold", with a target price averaging around $4.50 per share, indicating a potential upside of 18% from the current price.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 5.85 |
| P/B Ratio | 0.88 |
| EV/EBITDA Ratio | 3.5 |
| Current Stock Price | $3.82 |
| 52-Week High | $7.50 |
| 52-Week Low | $2.50 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
| Average Target Price | $4.50 |
Key Risks Facing OppFi Inc. (OPFI)
Key Risks Facing OppFi Inc.
Overview of Internal and External Risks:
OppFi Inc. faces multiple internal and external risks that can significantly impact its financial health. Key risks include:
- Industry Competition: The company operates in a highly competitive market, which includes various fintech companies and traditional financial institutions that may offer similar products. This competition could affect OppFi's market share and pricing strategies.
- Regulatory Changes: Changes in financial regulations, particularly those affecting consumer lending, can impose additional compliance costs and restrict operational flexibility.
- Market Conditions: Economic downturns can lead to higher default rates on loans, impacting revenue and profitability.
Operational, Financial, and Strategic Risks:
Recent earnings reports have highlighted several operational and financial risks:
- Credit Losses: The provision for credit losses on finance receivables decreased to $34,000 for the nine months ended September 30, 2024, down from $4.1 million in the previous year. While this indicates improved credit quality, any reversal could adversely affect income.
- Warrant Liabilities: The fair value of warrant liabilities decreased by $2.7 million for the nine months ended September 30, 2024. Fluctuations in this value can significantly impact reported earnings.
- Debt Levels: As of September 30, 2024, total debt stood at $325.6 million, a decrease of $8.6 million from December 31, 2023. High debt levels can lead to increased interest expenses and obligations that may constrain operational flexibility.
- Market Volatility: The financial market's fluctuations can affect the company's stock price, impacting investor sentiment and capital-raising capabilities.
Mitigation Strategies:
To address these risks, OppFi has implemented several strategies:
- Enhanced Credit Underwriting: The decrease in provision for credit losses reflects a more stringent credit assessment process, aiming to limit future losses.
- Cost Management Initiatives: The company reported a 6.7% reduction in total expenses for the three months ended September 30, 2024, amounting to $56.1 million. This reflects ongoing efforts to improve operational efficiency.
- Liquidity Management: As of September 30, 2024, OppFi had $44.8 million in unrestricted cash, with an additional $199.4 million of unused debt capacity. This robust liquidity position provides a buffer against potential financial stress.
| Risk Factor | Description | Recent Data |
|---|---|---|
| Credit Losses | Provision for credit losses on finance receivables. | $34,000 (9 months ended September 30, 2024) |
| Warrant Liabilities | Change in fair value of warrant liabilities. | Decreased by $2.7 million (9 months ended September 30, 2024) |
| Total Debt | Total outstanding debt. | $325.6 million (as of September 30, 2024) |
| Unrestricted Cash | Cash available for operations. | $44.8 million (as of September 30, 2024) |
| Unused Debt Capacity | Available borrowing capacity. | $199.4 million (as of September 30, 2024) |
Future Growth Prospects for OppFi Inc. (OPFI)
Future Growth Prospects for OppFi Inc.
Analysis of Key Growth Drivers
OppFi Inc. is poised for growth driven by several key factors:
- Product Innovations: The company has recently expanded its product offerings, including the acquisition of a 35% stake in Bitty, a revenue-based financing provider, for approximately $15.3 million and 734,851 OppFi Units valued at around $2.7 million .
- Market Expansions: The company has increased its market presence, with net originations rising by 11.8% to $218.8 million for the three months ended September 30, 2024 .
- Acquisitions: The strategic acquisition of Bitty is anticipated to enhance OppFi’s service capabilities and broaden its customer base .
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth is projected to continue on a positive trajectory:
- Net revenue increased by $33.2 million, or 16.0%, to $240.7 million for the nine months ended September 30, 2024.
- Total revenue for the nine months ended September 30, 2024, was $390.2 million, an increase of 3.8% from $376.0 million in the same period of 2023 .
- Adjusted net income is projected at $62.4 million for the nine months ended September 30, 2024, which marks an 88.7% increase compared to $33.0 million for the same period in 2023 .
Strategic Initiatives or Partnerships That May Drive Future Growth
Strategic initiatives are crucial for sustaining growth:
- Partnership with Bitty allows for enhanced service offerings in revenue-based financing .
- Share repurchase program authorized for up to $20 million to enhance shareholder value .
- Focus on lower-cost loans has resulted in a shift in marketing strategy, reducing direct marketing spend.
Competitive Advantages That Position the Company for Growth
OppFi holds several competitive advantages:
- Strong brand recognition in the fintech sector, particularly in personal loans and credit access .
- Robust growth in net income, increasing to $69.9 million for the nine months ended September 30, 2024, up from $37.5 million in 2023.
- Significant liquidity position with $44.8 million in unrestricted cash and $199.4 million of unused debt capacity as of September 30, 2024 .
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Income | $32.1 million | $15.5 million | +106.4% |
| Adjusted Net Income | $28.8 million | $13.3 million | +116.7% |
| Total Revenue | $136.6 million | $133.2 million | +2.6% |
| Net Originations | $218.8 million | $195.7 million | +11.8% |
OppFi Inc. (OPFI) DCF Excel Template
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Updated on 16 Nov 2024
Resources:
- OppFi Inc. (OPFI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of OppFi Inc. (OPFI)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View OppFi Inc. (OPFI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.