Happen, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported record pre-tax income of $76.8 million, up 34% year-over-year from $57.2 million.
• Diluted EPS increased 35% year-over-year to $0.50, compared to $0.37 in the prior year.
• Total net revenue was $263.2 million, a 1% decrease year-over-year from $266.2 million, driven by the adoption of Fair Value Option (FVO) accounting for new originations.
• Risk-adjusted revenue reached $279.1 million, up 27% year-over-year.
• Recorded a provision benefit of $15.9 million, compared to a provision expense of $46.3 million in the prior year, attributed to strong credit performance and FVO accounting.
• Profit margin (pre-tax) improved to 29.2% from 21.5% year-over-year.
• Return on Equity (ROE) was 15.0% and Return on Tangible Common Equity (ROTCE) was 15.8%.
• Net charge-off ratio on total loans and leases held for investment improved to 3.1% from 3.4% year-over-year.
• Non-interest expense increased 24% year-over-year to $202.3 million, driven by a 79% increase in marketing expenses to $72.8 million.

Guidance and Future Outlook:

• Raised full-year 2026 diluted EPS guidance to $1.87–$1.92, up from the previous range of $1.80–$1.90, reflecting 61%–66% annual growth.
• Narrowed full-year 2026 loan originations guidance to $12.3 billion–$12.4 billion, prioritizing unit margins while targeting 26%–27% annual growth.
• Provided Q4 2026 guidance for loan originations of $3.1 billion–$3.2 billion and diluted EPS of $0.43–$0.48.
• Guidance assumes a stable consumer and interest rate environment, including a projected 25 basis point increase in the Fed funds rate in December.

Business Segments and Product Lines:

• Loan originations grew 26% year-over-year to $3.3 billion.
• Entered the home improvement financing market, now underwriting and originating loans in the $500 billion market with a significant pipeline of new partners.
• Crossed $10 billion in loans sold through proprietary structured certificates programs.
• AI-powered agent support tools achieved an originations automation rate of over 90%, contributing to record originations efficiency.
• Added distribution partners in the home improvement business.
• Total servicing portfolio grew 19% year-over-year to $15.5 billion.

Market and Competitive Landscape:

• Continued multi-year credit outperformance versus the competitor set, with approximately 40% lower delinquencies.
• Won multiple industry awards, including Money.com's Best Bank, Finovate's Best Customer Experience Award, and Business Insider's America's Most Innovative Businesses.
• Successfully executed a corporate rebrand to Happen, Inc. and Happen Bank, transitioning from an online lender to a diversified digital-first bank.
• Increased investments in new acquisition channels, including paid social and display, to build attribution models and data capabilities.

Risks and Challenges:

• Forward-looking statements note potential risks including loan performance, ability to attract and retain borrowers and marketplace investors, competition, overall economic conditions, integration of acquired technology, and interest rate or regulatory environments.
• Net interest margin decreased slightly to 6.05% from 6.18% year-over-year.
• Non-interest income decreased 26% year-over-year to $80.1 million, largely due to the impact of FVO accounting on net fair value adjustments.

Management Commentary and Tone:

• CEO Scott Sanborn described the quarter as "great," highlighting effective navigation of the dynamic rate environment and strong core business performance.
• Management expressed confidence in the new brand taking root, strong marketplace demand, and the ability to scale into the home improvement market.
• Tone was positive regarding the transition to FVO accounting, which management expects will result in higher return on invested capital over time.

Other Key Points:

• Total assets increased 20% year-over-year to $13.3 billion.
• Deposits grew 22% year-over-year to $11.5 billion, with 89% FDIC-insured.
• Available liquidity remained robust at $4.2 billion.
• Hedging program notional balances increased to $2.5 billion from $1.5 billion in the prior year.
• Capital position remains strong with a consolidated Tier 1 leverage ratio of 12.0% and a CET1 capital ratio of 15.7%.
• Book value per common share rose to $13.81 from $12.68 year-over-year; tangible book value per common share rose to $13.11 from $11.95.
• Ongoing execution of the Stock Repurchase and Acquisition Program with cumulative utilization of $59 million through September.
• Adopted FVO accounting for all new loan originations starting January 1, 2026, aligning accounting treatment for loans held for investment and held for sale.