OppFi Inc. (OPFI): Driving Financial Inclusion Through Innovative Tech-Enabled Solutions

Published on March 17, 2025 | Ticker: OPFI

OppFi Inc. (OPFI) is a tech-enabled, mission-driven specialty finance platform that is broadening the reach of community banks to extend credit access to everyday Americans. The company's primary objective is to facilitate financial inclusion and provide accessible lending products to the 60 million Americans facing credit insecurity.

Business Overview and History

OppFi was founded in 2012 with the goal of leveraging technology and data-driven insights to responsibly serve the underbanked population. The company has evolved significantly over the past decade, transitioning from a direct lender to a platform that powers banks to offer specialized finance products.

OppFi is organized in an Up-C structure, where the company owns an equity interest in Opportunity Financial, LLC (OppFi-LLC), a Delaware limited liability company. As of December 31, 2024, OppFi owned approximately 25.6% of the OppFi Units, with the remaining equity held by the members of OppFi-LLC.

To facilitate relationships with its bank partners, OppFi-LLC formed wholly owned subsidiaries to acquire participation rights in finance receivables originated by the banks. OppFi-LLC entered into credit agreements with unrelated third parties, where the subsidiaries use the proceeds to acquire the receivables, which are then pledged to the lenders.

Over the years, OppFi has faced several challenges and milestones. In 2022, the company experienced elevated charge-offs due to macroeconomic conditions, which led to the development of its Model 6 underwriting system to better identify risks of long-term charge-offs. This model has helped improve the credit quality of originations and weather periods of economic volatility. Additionally, OppFi has navigated regulatory inquiries regarding its lending practices and bank partnership model, successfully defending its compliance with state and federal laws.

Despite these challenges, OppFi has achieved significant growth and scale. As of December 31, 2024, the company had served more than 1.4 million unique customers since its inception, with a net promoter score of 78. OppFi has also expanded its product offerings, including its investment in Bitty Holdings, LLC, a small business credit access company, in 2024.

In 2018, OppFi began partnering with FDIC-insured banks to originate loans, leveraging the company's proprietary technology, data analytics, and customer acquisition capabilities. This bank partnership model has been a key driver of OppFi's growth, enabling the company to scale its reach while adhering to regulatory requirements. As of the end of 2024, approximately 100% of OppFi's net originations were facilitated through this partnership approach.

OppFi's flagship product, OppLoans, provides short-term installment loans to consumers who may not qualify for mainstream credit options. The average OppLoans installment is around $1,750, with a contractual term of 11 months on average. These loans are structured to help borrowers rebuild their financial health, with features such as no fees, flexible repayment options, and reporting to the three major credit bureaus.

In addition to OppLoans, OppFi has explored other avenues for growth, including the launch of the SalaryTap secured installment loan product and the OppFi Card credit card offering. While these initiatives did not gain significant traction, they demonstrate the company's willingness to innovate and diversify its product suite.

Financials and Performance

OppFi has delivered impressive financial results in recent years, showcasing its ability to navigate various economic environments. For the full year 2024, the company reported total revenue of $526 million, a 3.3% increase from the prior year. Net income for the year reached $83.8 million, more than double the $39.5 million reported in 2023.

The company's strong performance was driven by several key factors, including:

1. Improved credit quality: OppFi's enhanced machine learning models and underwriting capabilities have led to a decrease in net charge-offs as a percentage of total revenue, from 43.5% in 2023 to 39.1% in 2024.

2. Operational efficiency: The company's focus on automation and cost control measures have resulted in a decrease in total expenses as a percentage of total revenue, from 44.6% in 2023 to 43.1% in 2024.

3. Consistent demand: Despite macroeconomic headwinds, OppFi has maintained strong demand for its loan products, with total net originations increasing by 7.2% to $801.5 million in 2024.

In terms of financial metrics for the full year 2024:

Operating Cash Flow: $323.8 million
Free Cash Flow: $310.8 million

For the fourth quarter of 2024, OppFi reported:

Revenue: $135.7 million, up 2.1% year-over-year
Net Income: $14.0 million, up 619.7% year-over-year

The strong Q4 performance was driven by record total revenue, improved credit quality leading to higher yields and lower charge-offs, and disciplined cost management.

Looking ahead, OppFi has provided guidance for the full year 2025, projecting total revenue in the range of $563 million to $594 million, representing a 7% to 13% increase from 2024. The company expects adjusted net income to grow between 15% and 17% year-over-year, reaching $95 million to $97 million. Adjusted earnings per share (EPS) are expected to be in the range of $1.06 to $1.07, based on an anticipated diluted weighted average share count of 90 million.

For the first quarter of 2025, OppFi has increased its expectations for adjusted net income by more than two times compared to its previous guidance. The new Q1 2025 adjusted net income guidance is $22 million to $24 million, reflecting a strong start to the year.

It's worth noting that OppFi exceeded its 2024 guidance on key metrics. The company had initially provided guidance for total revenue between $510 million and $530 million, adjusted net income of $74 million to $76 million, and adjusted EPS of $0.85 to $0.87 for the full year 2024. OppFi surpassed these targets, reporting total revenue of $526 million, adjusted net income of $82.7 million, and adjusted EPS of $0.95.

Liquidity

OppFi maintains a strong liquidity position, which is crucial for its operations in the specialty finance industry. As of December 31, 2024, the company reported:

Cash and Restricted Cash: $88.3 million

Available Credit Lines: $206.2 million in unused debt capacity
Debt/Equity Ratio: 1.36x
Current Ratio: 9.43x
Quick Ratio: 9.43x

These liquidity metrics demonstrate OppFi's ability to meet its short-term obligations and fund its operations. The company's strong cash position and available credit lines provide flexibility to pursue growth opportunities and navigate potential economic uncertainties.

Product Segment and Market Position

OppFi's primary product is its OppLoans installment loan platform, which provides short-term credit options for everyday Americans who lack access to mainstream financial products. The platform offers transparent, digital specialty finance products with the goal of facilitating financial inclusion and rebuilding credit for the approximately 60 million U.S. consumers facing credit insecurity.

Key features of the OppLoans product include:

Average loan size of around $1,750
Typical contractual term of 11 months
No origination, late, or insufficient funds fees
Payments reported to the three major credit bureaus

The OppLoans platform utilizes machine learning and proprietary algorithms to make credit decisions, with approximately 92.5% of underwriting decisions automated during 2024. This high level of automation contributes to the platform's efficiency and scalability.

In addition to OppLoans, OppFi holds a 35% equity interest in Bitty Holdings, LLC, a company that offers revenue-based financing and other working capital solutions to small businesses. However, this investment did not contribute meaningfully to OppFi's results during the year ended December 31, 2024.

OppFi's focus on financial inclusion, transparent lending practices, and leveraging technology to streamline the lending process has allowed it to achieve strong customer satisfaction. The company maintains an A rating from the Better Business Bureau and a 4.5 out of 5 star rating on Trustpilot, further underscoring its commitment to providing a high-quality customer experience.

Geographic Markets and Industry Trends

OppFi operates primarily in the United States. As a small-cap company, it does not have significant operations in other geographic markets. The company's growth is closely tied to the broader trends in the online lending industry, which has seen a compound annual growth rate (CAGR) of approximately 15-20% over the past 5 years. This growth has been driven by the shift towards digital financial services and increased demand for alternative credit options.

Risks and Challenges

While OppFi has demonstrated impressive financial and operational performance, the company faces several risks and challenges that investors should be aware of:

1. Regulatory environment: As a financial services provider, OppFi is subject to a complex and evolving regulatory landscape. Changes in laws and regulations, or increased scrutiny from authorities, could impact the company's business model and operations. Currently, OppFi is involved in an ongoing legal dispute with the California Department of Financial Protection and Innovation (DFPI) regarding the applicability of interest rate caps in California. OppFi has filed a lawsuit seeking declaratory relief that the interest rate caps do not apply to loans originated by its bank partners.

2. Competition: The specialty finance industry is highly competitive, with both traditional financial institutions and fintech platforms vying for a share of the underbanked consumer market. OppFi's ability to maintain its competitive edge and attract new customers is crucial.

3. Reliance on bank partners: OppFi's business model is heavily dependent on its partnerships with FDIC-insured banks. The loss of a key partner or changes in the terms of these partnerships could have a significant impact on the company's operations.

4. Macroeconomic conditions: As a provider of consumer credit, OppFi's performance is linked to the broader economic environment. Factors such as inflation, interest rate changes, and employment levels can affect the company's loan portfolio and customer demand.

5. Legal issues: In July 2023, a stockholder filed a putative class action lawsuit against certain of FGNA's former directors and officers, as well as its controlling stockholder, alleging breaches of fiduciary duties stemming from FGNA's merger with OppFi-LLC. While OppFi is not a party to this lawsuit, it is obligated to indemnify certain defendants, which could result in financial and reputational consequences.

Despite these challenges, OppFi's strong track record, innovative technology, and mission-driven approach have positioned the company as a leader in the specialty finance industry. As the company continues to adapt and expand its offerings, investors will closely monitor its ability to maintain its growth trajectory and navigate the evolving market landscape.

Conclusion

OppFi's success in driving financial inclusion through its tech-enabled solutions has positioned the company as a key player in the specialty finance industry. With a strong financial performance, a focus on operational efficiency, and a commitment to serving the underbanked population, OppFi is well-poised to continue its growth trajectory. The company's impressive 2024 results, which exceeded previous guidance, and its optimistic outlook for 2025 demonstrate its ability to execute on its strategic initiatives and capitalize on market opportunities.

While OppFi faces certain risks and challenges, including regulatory scrutiny and ongoing legal disputes, its innovative approach, strong liquidity position, and adaptability suggest that it is well-equipped to navigate the evolving market landscape and deliver value to its shareholders. As the company continues to refine its underwriting models, expand its product offerings, and leverage its bank partnerships, it remains at the forefront of the digital lending revolution, poised to address the needs of millions of credit-insecure Americans.

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