OppFi's Q1 2025: Unpacking Contradictions in Yield Strategy, Dividends, and Market Dynamics

Yield improvement and pricing strategy, dividend and share repurchase strategy, macro uncertainty and consumer behavior, inorganic growth opportunities, yield trends and credit box are the key contradictions discussed in OppFi's latest 2025Q1 earnings call.



Record Financial Performance:
- OppFi reported record revenue of $140 million and adjusted net income of $34 million for Q1 2025, representing a 10% and 285% increase year-over-year, respectively.
- The record performance was driven by a 16% increase in originations, improved credit quality, and operational efficiencies.

Operational Efficiency and Cost Control:
- OppFi achieved an auto approval rate of 79% in Q1 2025, up from 73% in Q1 2024, contributing to a 18% decrease in total expenses.
- This improvement was the result of continuous enhancements to the automated loan approval process and a focus on cost discipline.

Model 6 and Credit Quality Improvement:
- The adoption of Model 6 resulted in a significant decrease in net charge-off rate to 35%, down from 48% in the prior year.
- The model's ability to identify long-term risk and facilitate risk separation led to improved credit quality and risk management.

Bitty's Contribution to Profitability:
- Bitty's performance continued to drive accretive profitability and cash flow for OppFi in Q1 2025.
- The imbalance between supply and demand for working capital among small businesses provided opportunities for Bitty's growth and profitability.

Capital Deployment and Shareholder Reward:
- OppFi paid off its corporate debt in Q1 and issued a special dividend of $21.7 million in Q2.
- The capital management strategy reflects strong cash flow generated by the business, allowing for shareholder reward and potential future investments in high ROI initiatives.