Oportun Financial rolled out an auto refinance product this week after applying lessons learned from a retail loan offering that launched in the second quarter, said Chief Executive Raul Vazquez during an earnings call.
“We are excited about the introduction of auto refi loans, because we believe they will be a larger contributor to growth than purchase loans,” Vazquez said on the call, Oportun’s first as a publicly traded company. “We think the largest volume driver in auto, however, will be personal loans secured by a vehicle, and we anticipate testing for that product will begin in 2020.”
In the second quarter, Oportun piloted a direct-to-consumer auto loan. “Purchase loans are not expected to be big volume drivers, but we introduced them first because it was the fastest product we could get to market to begin our learning agenda,” Vazquez said. “We are currently testing at low volumes in order to validate our controls framework and to dial-in our product market fit.”
So far, Oportun has met all its milestones, Vazquez noted. “We are learning a lot and using those learnings to inform our product roadmaps for auto,” he added.
The auto offerings are part of Oportun’s five-prong growth strategy. “We plan to increase our addressable market by providing a broader suite of products and services to address our customer’s financial needs specifically with auto loans and credit cards,” Vazquez said. The four other elements of the plan hinge on customer growth, data and technology, geographic expansion and an omnichannel network.
Jeffries equity analysts reiterated their “buy” rating on Oportun’s stock after the earnings release. “As the first quarter out the gate, Oportun produced solid results, and the fundamentals of the business look promising,” according to a research report. “The quarter was generally in line with our forecast, with some slight puts and takes, while loan growth and originations continue to be strong while credit performance has been consistent.”
Oportun earnings dropped last quarter — to $10 million of net income from $20.8 million in the prior-year period — primarily due to the company’s transition to fair-value accounting.
Oportun’s stock [ticker: OPRT] was trading at $19.60 per share, down 1.21%, as of 10:12 a.m. ET.