Installment lender Oportun is cutting 185 jobs, or 18% of its corporate staff, amid a slump in the company’s earnings.
The fintech is also discontinuing its investment and retirement products, ending its embedded finance partnership with buy now, pay later player Sezzle and “exploring strategic options” related to its credit-card portfolio, CEO Raul Vazquez said in a statement Monday.
“This is not how we anticipated or wanted to close 2023," Oportun CFO Jonathan Coblentz told American Banker. "Nevertheless, my conviction remains fortified by the decisive actions we announced today."
Vazquez highlighted that the company saw “record revenue” of $268 million — a 7% increase year over year — as it “prioritized quality over quantity of loans.”
The revenue jump came despite a 24% decrease in loan originations — $483 million, compared with $634 million a year earlier.
Oportun has stiffened its underwriting criteria over the past year and reported an uptick in loan write-offs over the third quarter. The company’s annualized charge-off rate jumped to 11.8%, compared with 9.8% during the same span in 2022.
Oportun’s earnings report Monday wasn’t without bright spots. The company’s total operating expenses dropped to their lowest level in two years — $123 million during the third quarter, down 53% from the same period a year earlier.
Vazquez emphasized, though, that he was “disappointed” that the company fell far short of expectations for adjusted earnings before interest, taxes, depreciation and amortization — $16 million during the quarter, compared with prior guidance of more than $35 million. He credited fair value adjustments and the effect of higher interest rates on customers’ ability to repay.
“We are taking additional decisive actions to substantially enhance shareholder returns, including further cost reductions intended to achieve $105 million in quarterly run rate expenses by the end of 2024,” he said in a statement accompanying Monday’s earnings report.
The staff cuts amount to 7% of Oportun’s total workforce, a spokesperson told American Banker, though reductions will be concentrated among corporate staff. The company’s corporate division saw a separate round of layoffs earlier this year.
In the short term, Vazquez said Oportun would focus on growth related to its cornerstone unsecured personal loans and its automated savings app, which the CEO termed the "most proven and profitable parts of the business.”
“Backed by two new personal loan financing agreements with primary funding partners totaling up to $267 million, we're well positioned for profitable, sustainable growth in service of our members,” Vazquez said Monday.
Monday’s earnings report spurred a 49% slump in Oportun’s stock price, American Banker reported.