OPPFI 3Q26 EARNINGS CONFERENCE CALL - OPPFI INC

Explicit Guidance:

• FY2026 Revenue: Revised upward to $600 million – $610 million.
• FY2026 Adjusted Net Income: Revised upward to $115 million – $120 million.
• FY2026 Adjusted EPS: Revised upward to $1.34 – $1.40.
• Long-Term EPS Target: Expectation remains to achieve approximately $3.00 EPS by end of 2028.
• 2027-2028 Outlook: Confirmed expectations for 2027 and 2028 remain intact; no specific numerical guidance provided for these years.
• Strategic Investment Plan: Committed to investing >$150 million in 2026 to support growth and transformation.
• Capital Allocation: Continuation of the $40 million board-authorized share repurchase program; $18 million utilized in H1 2026, with intent to remain active when shares are undervalued.

Business-Segment Outlook:

• Line of Credit (LOC): Expecting "considerable growth potential" in 2027; currently scaling in new geographies and testing in existing markets; Q4 testing expected to generate data for 2027 forecasting.
• Earned Wage Access (EWA): Planned launch expected in 2027 to complement LOC product and access new marketing capabilities.
• Installment Business: "Pricing Test 5" (rate/payment reduction) expected to support origination growth in Q4 and into 2027; migration to "Lola" platform expected to be substantially complete for existing customers heading into 2027.
• BIDI (Small Business): Targeting 2027+ acceleration in growth via new "premier funding" product targeting the near-prime segment; goal to become a "full-spectrum small business funder."
• Technology (Lola Platform): Enables AI agent embedding across originations/servicing with development starting in 2027; currently originating 100% of new volume.
• BNC Transaction: Pending regulatory approval; merger expected to benefit customers via broader product sets and lower costs.

Market and Competitive Outlook:

• Origination Volume: Anticipated recovery and growth in 2027 driven by Model 7 launch (expected Q4 2026), which improves marketing pre-screening alignment by ~20% and increases application-to-funded conversion.
• Competitive Positioning: Differentiation via high recovery rates (distinct competitive advantage) and disciplined acquisition costs compared to peers paying higher percentages of principal.
• Product Mix Shift: Anticipated shift toward more flexible products (LOC) to capture customer preference for flexibility over stringent installment products.
• Pricing Strategy: Willing to reduce yields for higher-quality customers to drive acquisition; Q4 yields expected to be flat year-over-year.
• Unit Economics: Focus on maintaining strong profit margins and unit economics over short-term volume growth in a "higher for longer" inflation environment.

Macro / Industry Outlook:

• Consumer Sentiment: Acknowledges "higher for longer" inflation and subdued consumer sentiment disproportionately impacting the company's customer base.
• Credit Environment: Expectations of a "reversion to the mean" in credit metrics, though current elevated charge-offs (40% of revenue) are viewed as a denominator effect from slower growth; recoveries expected to remain a stable, growing stream.
• Regulatory Timeline: Confident in resolving the BNC bank merger application; hopeful for closing by Q4 2026, with potential bleed into Q1 2027 if delays occur.

Strategic Initiatives:

• M&A (BNC Corp): Pending final regulatory approval; deal structure is 50% stock/50% cash; ample cash available to fund the cash portion.
• Technology Migration: Full migration to Lola platform expected by 2027; $35 million investment allocated to rebuild operating and servicing systems.
• AI Integration: Development of AI agents for originations and servicing workflows scheduled to begin in 2027.
• Capital Structure: Secured a $75 million draw from a Citi facility (approx. 12% interest) to provide balance sheet flexibility for 2027; viewed as replenishment rather than deleveraging trend reversal.
• Product Roadmap: Q4 2026 launch of Model 7 underwriting model; 2027 launch of Earned Wage Access (EWA).

Risks and Headwinds to Outlook:

• Execution Risk: Potential delay in BNC merger closing could impact 2026 timing and financial consolidation.
• Macro Sensitivity: Continued "higher for longer" inflation and consumer sentiment pressure may delay the recovery in consumer payment behavior and origination volumes.
• Credit Quality: Elevated charge-offs relative to revenue in the near term due to slower growth denominators; reliance on continued recovery performance to offset losses.
• Product Rollout: LOC and EWA success depends on effective scaling and marketing funnel testing; any failure to gain traction could impact 2027 growth forecasts.

Management Tone on the Future:

• Confidence Level: High confidence in long-term earnings potential and the path to $3 EPS by 2028; describes current share price as "unfair" and trading below intrinsic value.
• Strategic Posture: Cautious but optimistic; shifting from pure volume growth to a balanced approach of profitability and strategic investment.
• Guidance Revision: Explicitly raised the top end of FY2026 guidance, signaling confidence in the revised outlook despite near-term headwinds.
• Capital Discipline: Reiteration of commitment to disciplined underwriting and expense management while actively repurchasing shares when undervalued.

Miscellaneous:

• Share Count Impact: Note that a $42 million Total Return Agreement (TRA) previously collapsed the EPS structure; current buybacks aim to capitalize on undervaluation.
• Investor Relations: Earnings presentation and forward-looking statement disclaimers available at investors.opfi.com.