Executive Summary / Key Takeaways

• OppFi has successfully transformed into a highly profitable digital finance platform, achieving record revenues, adjusted net income, and operational efficiency, driven by a strategic reorientation under CEO Todd Schwartz.
• The company's proprietary Model 6 credit underwriting system, evolving to Model 6.1, and the upcoming LOLA origination platform are critical technological differentiators, enabling enhanced risk-based pricing, higher auto-approval rates, and seamless integration of AI tools for future scalability.
• Strong financial performance in Q3 2025 saw total revenue grow 13.5% year-over-year to $155.1 million and adjusted net income surge 41% to $40.7 million, leading to a third upward revision of full-year 2025 guidance, projecting revenues between $590 million and $605 million.
• Strategic diversification through an equity investment in Bitty, a small business financing platform, and a flexible capital allocation strategy including share repurchases and special dividends, positions OppFi for multi-product growth and shareholder value creation.
• While macroeconomic uncertainties and regulatory scrutiny remain pertinent risks, OppFi's disciplined credit management, operational leverage, and robust funding capacity underpin its confidence in sustained double-digit revenue and adjusted net income growth into 2026.

OppFi's Mission and Market Position: A Foundation of Financial Inclusion

OppFi Inc., founded in 2012 in Chicago, Illinois, has established itself as a tech-enabled digital finance platform dedicated to serving the everyday Americans often overlooked by traditional financial institutions. Through its primary OppLoans platform, the company partners with banks to offer essential financial products, predominantly installment loans averaging $1,950 with an 11-month term for new borrowers. This model addresses a significant supply-demand imbalance in the alternative credit market, providing transparent and responsible access to credit for approximately 48 million credit-insecure individuals.

The company's strategic trajectory was significantly reshaped following Todd Schwartz's return as CEO in 2022, initiating a three-year plan focused on operational and financial enhancements. This period has seen OppFi prioritize disciplined growth, cost efficiency, and technological innovation, laying the groundwork for its current strong performance. OppFi operates under an Up-C structure, controlling Opportunity Financial, LLC (OppFi-LLC) as its sole manager, which aligns economic interests and provides a clear operational framework.

Technological Edge: The Power of Proprietary Models and LOLA

OppFi's core competitive advantage is deeply rooted in its proprietary technology, particularly its advanced credit underwriting models and its commitment to integrating cutting-edge AI. This technological differentiation is not merely about efficiency; it's about precision in risk assessment and superior customer experience.

The company's Model 6 credit underwriting system, launched in 2024, represents a significant leap forward. It is designed to more effectively identify the risks of long-term charge-offs, a crucial improvement over earlier versions that focused on shorter-term repayment status. This model facilitates enhanced risk separation, enables seasonal segmentation, and optimizes targeting for new loan approvals. The tangible benefits are evident in operational metrics: the auto-approval rate, a key indicator of efficiency and customer experience, increased to 79.1% for the three months ended September 30, 2025, up from 76.8% in the prior year period. This algorithmic automation streamlines the origination process, allowing customers to be approved at higher rates without human interaction.

Further enhancing its technological moat, OppFi is developing its new Loan Origination Lending Application (LOLA), which management describes as the "origination system of the future." LOLA is designed to significantly reduce loan application processing times and boost operational efficiencies across originations, servicing, and corporate operations. Its modern architecture is built for seamless integration with rapidly developing AI tools, creating a cleaner data layer and providing deeper insights. Testing of LOLA commenced in Q3 2025, with full migration planned for Q1 2026. The stated goals include improved funnel metrics, increased automated approvals, enhanced efficiency in servicing and recoveries, and reduced cycle times.

For investors, these technological advancements translate directly into a stronger competitive moat and improved financial performance. Model 6's ability to better price risk across segments contributes to stable to incrementally increasing yields, while higher auto-approval rates drive operational leverage by reducing manual processing costs. The strategic investment in LOLA ensures OppFi's long-term adaptability and efficiency in a rapidly evolving fintech landscape, positioning it to capitalize on future AI innovations and maintain its leadership in tech-enabled financial services.

Competitive Landscape and Strategic Positioning

OppFi operates in a dynamic fintech lending sector alongside both direct and indirect competitors. Direct competitors include companies like Upstart Holdings (UPST), LendingClub (LC), SoFi Technologies (SOFI), and Affirm Holdings (AFRM), all vying for market share in online lending and credit products.

OppFi's competitive positioning is primarily defined by its strong bank partnerships and a specialized focus on underserved borrowers. While Upstart leverages AI for broader credit assessment, OppFi's platform emphasizes collaboration with established financial institutions, potentially offering greater regulatory alignment and borrower trust through institutional backing. This partnership model provides unique distribution channels and regulatory advantages, fostering growth by ensuring access to established networks. In contrast to LendingClub's peer-to-peer model, OppFi's bank-facilitated loans may offer greater stability.

However, OppFi faces competitive pressures in technological agility and market reach. Upstart, with its strong AI emphasis, appears to lead in the speed of adopting advanced technologies for credit assessment. Similarly, SoFi, with its comprehensive financial ecosystem and strong brand recognition among younger demographics, offers a broader range of integrated services that could appeal to a wider audience than OppFi's niche focus. Affirm, with its point-of-sale financing model, excels in immediacy for consumer purchases, an area where OppFi's traditional installment loans may lag in digital commerce integration.

Despite these challenges, OppFi's unique value proposition lies in its specialized products, such as payroll-secured loans (SalaryTap, though not explicitly detailed in recent performance, is part of its broader offering), which can offer differentiated risk management. The company's focus on inclusive lending through OppLoans also makes it accessible for credit-challenged borrowers. While precise, directly comparable market share figures for all niche competitors are not publicly detailed, OppFi's strong performance in its core segments suggests effective competition. The company strategically positions itself by continuously refining its credit models and investing in platforms like LOLA to enhance operational execution and customer experience, thereby strengthening its competitive edge against rivals.

Financial Performance: A Story of Profitable Growth

OppFi's financial results for the three and nine months ended September 30, 2025, underscore a compelling narrative of profitable growth and operational excellence. The company achieved record quarterly revenue, adjusted net income, and operating margin in Q3 2025, demonstrating the effectiveness of its strategic initiatives.

Total revenue for the three months ended September 30, 2025, increased by 13.5% year-over-year to $155.1 million, primarily driven by higher average receivables balances. For the nine months ended September 30, 2025, total revenue grew 12.2% to $437.8 million, also benefiting from a higher average statutory rate for loans in the portfolio. This top-line expansion was supported by robust origination growth, with net originations increasing 12.5% to $246.1 million in Q3 2025 and 13.8% to $669.2 million for the nine-month period. Ending receivables also saw a significant increase of 16.3% to $481 million as of September 30, 2025.

Profitability metrics highlight OppFi's operational discipline. Net revenue, which accounts for the change in fair value of finance receivables and provision for credit losses, increased by 14.7% to $104.6 million in Q3 2025 and 22.8% to $295.6 million for the nine months. Crucially, expenses for Q3 2025 remained nearly flat, increasing by a mere $39 thousand (0.1%) to $56.1 million, despite growth in direct marketing and employee benefits. This was largely offset by lower interest expense due to debt paydowns and rate decreases, as well as reduced capitalized technology amortization. As a result, expenses as a percentage of total revenue decreased significantly from 41.1% in Q3 2024 to 36.2% in Q3 2025. Income from operations surged by $13.4 million to $48.4 million in Q3 2025.

Adjusted net income, a key non-GAAP measure, increased an impressive 41% year-over-year to a record $40.7 million in Q3 2025. On a GAAP basis, net income attributable to OppFi Inc. reached $41.6 million in Q3 2025, a substantial increase from $4.3 million in the prior year, though the nine-month figure of $9.5 million was impacted by a $23.2 million loss from the change in fair value of warrant liabilities.

Credit quality, a critical factor in lending, shows a nuanced picture. Net charge-offs as a percentage of total revenue increased slightly to 35.1% in Q3 2025 from 34.3% in Q3 2024, primarily due to elevated charge-offs from early summer vintages, partially offset by higher recoveries. However, for the nine-month period, this metric improved, decreasing to 33.9% from 38.2%. Management emphasizes that Model 6 allows for appropriate risk-based pricing, ensuring strong unit economics even with some elevated charge-offs in newer loan vintages. The average yield remained robust at 133.2% in Q3 2025 and 134.3% for the nine months.

OppFi maintains a strong liquidity position. As of September 30, 2025, the company held $45.4 million in unrestricted cash and had $204.2 million in unused debt capacity, contributing to a total funding capacity of approximately $600.2 million.

Net cash provided by operating activities for the nine months ended September 30, 2025, increased by $55.2 million to $284.5 million, primarily due to higher net income. The company has also proactively managed its debt, extinguishing its corporate debt in Q1 2025 and expanding its Blue Owl (OWL) facility.

Strategic Initiatives and Diversification

OppFi's strategic roadmap extends beyond its core OppLoans product, focusing on diversification and efficient capital deployment. The company is actively expanding its marketing channels, identifying direct mail as a highly scalable lever that currently accounts for 4.2% of originations but has the potential to reach double digits. Additionally, OppFi is testing Connected TV in Q4 2025, anticipating its contribution to growth in 2026 and beyond by reaching targeted customers and building brand awareness.

A key element of OppFi's diversification strategy is its 35% equity interest in Bitty Holdings, LLC, a credit access company providing revenue-based financing to small businesses. This investment, made on July 31, 2024, generated $1.4 million in equity income for OppFi in Q3 2025. Bitty is capitalizing on a significant supply-demand imbalance in the small business revenue-based finance space, aligning with OppFi's vision to be a multi-product platform leader in the alternative credit sector.

The company's capital allocation strategy is flexible and shareholder-focused. In Q2 2025, OppFi paid a special dividend of $21.7 million. Furthermore, in August 2025, the Board authorized an increase to its share repurchase program, bringing the total authorization to $40 million. Management views share repurchases as a tool to address perceived undervaluation of its stock. OppFi is also actively exploring inorganic growth opportunities in adjacent spaces such as consumer point-of-sale and earned wage access, prioritizing high-ROI initiatives that align with its mission.

Outlook and Guidance: Sustained Momentum

OppFi's management has consistently demonstrated confidence in its strategic direction and operational capabilities, evidenced by multiple upward revisions to its 2025 guidance. For the full year 2025, the company now projects total revenues between $590 million and $605 million, an increase from previous guidance. Adjusted net income is expected to be between $137 million and $142 million, and adjusted EPS is guided to be between $1.54 and $1.60, based on an anticipated diluted weighted average share count of 89 million shares.

This optimistic outlook is underpinned by several key assumptions. Management anticipates continued double-digit revenue and adjusted net income growth throughout the remainder of 2025 and into 2026, contingent on maintaining acceptable credit quality. The full implementation of Model 6.1 in Q1 2026 and the migration to the LOLA platform are expected to further enhance risk management, operational efficiency, and growth potential. OppFi also expects less seasonality in its 2025 results compared to prior years, driven by the stabilization and growth of yield, predictable credit trends, and the full-year impact of operating efficiencies, with a more stable interest rate environment contributing to consistent performance.

Risks and Challenges

Despite a strong performance trajectory, OppFi faces several pertinent risks and challenges that warrant investor attention. Macroeconomic conditions, including potential economic slowdowns, inflation, interest rate changes, and recessions, could impact consumer repayment abilities and credit quality. Management acknowledges that credit quality in new loan vintages is "worse than it was last year", necessitating continuous vigilance and dynamic adjustments to its risk-based pricing. The company also monitors broader economic indicators, such as auto loan delinquencies, and potential impacts from tariffs, although direct effects on its consumer base have been de minimis to date.

Regulatory scrutiny remains a significant factor. OppFi is involved in ongoing legal proceedings and regulatory matters, including inquiries from various agencies and states concerning its lending compliance and the validity of its bank partnership model. A notable case involves a complaint filed in March 2022 against the California Department of Financial Protection and Innovation regarding the applicability of interest rate caps to its bank-originated loans. While management is vigorously defending its position, the outcome of such legal and regulatory challenges could materially affect the company's financial condition and operations. Additionally, a stockholder class action lawsuit related to the merger with OppFi-LLC, for which OppFi is obligated to indemnify certain defendants, presents a contingent liability.

Conclusion

OppFi Inc. has demonstrated a remarkable turnaround and established a robust foundation for future growth, transforming into a highly efficient and profitable digital finance platform. The core investment thesis hinges on its ability to leverage proprietary technology, particularly the advanced Model 6 credit system and the forthcoming LOLA origination platform, to serve the underserved credit market with discipline and scale. These technological differentiators, coupled with strategic bank partnerships, enable superior risk management, operational efficiency, and a compelling customer experience.

The company's consistent outperformance, reflected in record revenues and adjusted net income, and repeated upward revisions to its 2025 guidance, underscores management's effective execution. Strategic diversification through its Bitty investment and a flexible capital allocation approach further enhance its long-term potential. While macroeconomic headwinds and regulatory uncertainties persist, OppFi's disciplined approach to credit, strong liquidity, and commitment to technological leadership position it to sustain double-digit growth and continue creating significant shareholder value in the evolving landscape of alternative credit.