Hi, everyone. My name is Manny Chagas. I'm the Chief Operating Officer of OppFi. This is Pamela Johnson, our CFO, and Mike Gallentine, our Head of Investor Relations. Thank you for the opportunity to come talk to answer questions you have and do a little bit of introduction on OppFi. We're not going to read the disclaimer. All right. So just as an introduction, OppFi, what are we? So we are a mission-driven specialty finance platform that enables community banks to access, provide credit to customers who are otherwise in distress. So it's a lot to unpack here. Mission-driven, what is the mission? There are 60 million Americans who do not have the credit score they would like to have. They have the same needs as everybody else, but most of them don't have a rich uncle.
And so what we do is we partner with community banks to be able to provide them credit. We do it with great technology that allows us to provide outstanding customer service. Our average NPS is 78. In our industry, that's very high, especially with a segment. We do it at scale. We facilitated almost $7 billion worth of issuance, covering almost $4 million in loans. We're profitable. That's something that's very important to us, is growing profitably. We've been profitable over the last nine cycles. We have, as I mentioned, a large addressable market, a problem that we're trying to solve. And ultimately, we do it with very strong fundamentals and a strong balance sheet. Our highlights: why us, why invest in us, what makes us unique. Start at the bottom left. First and foremost, founder-led, majority owned by the family.
I started my career as a consultant for 10 years. I started serving CEOs when I was 25. For any of you who have not worked for a visionary founder, I can tell you it's different. It's not easy. We didn't sign up for easy, but it is special, and I will tell you that the focus on the customer and the business and growing something to last is first and foremost in a way that I've never seen before. We also have a very strong management team, 80+ years of lending experience, so we're surrounded by people who've done this before. We have a very solid balance sheet, strong unit economics, and operating efficiency. That's been a big focus for us over the past two years, is making sure the unit economics make sense. We have phenomenal technology.
I talked to you about what it does for the customer service we provide. It's a huge part of our underwriting as well. We can use 15 billion data points assembled over the past 13 years when we make underwriting decisions, and also the technology that allows us to build new products, expand through partnerships, and strategic acquisitions. Our mission: 60 million folks. I described them briefly before. I think to paint the picture, 47% of the average American is living paycheck to paycheck these days. That is the heart of the issue. 51% of them have a credit score below 650 or no credit score at all, and a little over a third struggle when it's time to obtain a line of credit. And like all of us, emergencies come up, whether it's everyday expenses with your family, housing, et cetera, emergencies, travel, auto, medical.
Unfortunately, many Americans are not in a position to be able to absorb those. And if you don't have a rich uncle and you don't have credit access, that can be incredibly stressful. That's where we come in. We have a simple, transparent product that is easy to use. We are no fees. We are easy to understand. It is a term loan. You know when you sign up for it how much you're going to pay. There is no prepayment penalty. So if you pay early, you're done. So it's very consumer-friendly. And it's a much better option than many of the alternatives that these customers have to turn to in these times of need. Whether it's tribal lenders or payday lenders, the reality is these exist because the need exists, and we're providing a much better product. How we capture demand.
I mentioned briefly, we partner with three community banks. They originate the loans. We buy some of the equity back, in most cases, 90+% of the equity back. And we acquire customers through a broad set of marketing channels. Marketing partners like Credit Karma, Experian, and LendingTree are our main driver. But we also use direct mail. In fact, we've redesigned our direct mail to improve the results: email, search engine optimization, and refer friends. It's also a very important part of our business. Ultimately, what you get is really, really strong customer satisfaction. I mentioned our NPS before. We have great ratings across the net. We're also an A+ Better Business Bureau accredited business and lots of wonderful customer testimonials that I'm very proud of. And they will highlight themes like the transparency of the product.
People understand this is an expensive option, but a better alternative than what else is out there and lots of highlights of very important times and struggles that people need help with that we've been able to help them through. With that, I will turn it over to Pam for some of the financials.
Sure. Thank you, Manny. As Manny mentioned, we have strong unit economics. It's something we've really focused on over the last couple of years. If you take a look at the average customer over their lifetime, we have revenue of $2,325. Our average loan size is about $1,500. It's a term of about 11 months, and it stays on the book for something less than that. A lot of people pay off early. A few people charge off early, right? But overall revenue in a customer lifetime is $2,325. Our net write-offs related to that average out to $967. We have acquisition costs around $225. Now, that has varied. We have been as high as $270, and we've been as low as about $200 per customer.
That $225 is probably a good range to be in to really kind of be that sweet spot of gaining your customer at a good cost. We have a servicing cost because we service all the loans: $98 and interest expense of $183. Now, that's at some higher interest rates than what we're seeing now. If you note, if you've seen any of our filings, all of our borrowings are on a SOFR plus, so their variable rate. So as the interest rates go down, our interest expense will go down as well. So that's a nice tailwind for us as we go into 2025. So that gives us a 37% margin before you hit our corporate overhead types of expenses of $425. So earnings before tax, 18% margin per customer over their life, or $427 out of that $2,325.
If you look at overall our performance over the last, well, including a projection for 2024, the last four years, you notice revenue is up and to the right, which is something you like to see, right? It hasn't been what I'd call through-the-roof type of growth, like you see maybe in some of our peer groups, because we have focused, again, on profitable growth. We're not going to go after growth for growth's sake. But we have managed to grow through what I would call some difficult cycles for our industry. But it has resulted in Adjusted EPS that we maintained profitability through those four years, even with 2022. Let's talk about 2022. What we saw in 2022 was a huge spike in inflation. Inflation impacts our customers so strongly that it made it so they were unable to service their debt.
So we had a very high charge-off rate in 2022. But we responded quickly. We adjusted our underwriting. We narrowed our credit box to only higher-performing customers, and we're still able to eke out a $0.04 earnings per share. But as you see, we've recovered well in 2023 with $0.49 earnings per share adjusted. And our guidance for 2024 is $0.86 a share. So definitely, we feel like we've got everything firing on all cylinders right now. We've got inflation is relatively under control. We've got good unemployment numbers yet. It's important that our customers maintain their employment. And we've got really good opex really well under control. We really feel like we've got our arms around that as well. So again, I think an $0.86 a share is really quite doable with our guidance. We are a cash flow generator.
We have a very strong balance sheet, as Manny mentioned. We had generated free cash flow by this time last year through third quarter of $33.6 million. This year, we've generated $74.6 million. So again, very strong. And if you look at our funding capacity, we have a total of $599.2 million of funding capacity. We have drawn debt of $325.6 million. So that gives us $199 million of undrawn debt and $74.2 million of our cash and restricted cash. So still a lot of room to grow without having to really go back into the markets and restructure our facilities. We have used some cash in 2024, though, in that we did a special dividend. It was $12.7 million at $0.12 a share. And we did that in Q2. We have repurchased $3.6 million in shares through third quarter. Our average price was $3.41.
We made some good buys back with that repurchase. We did a $10 million repayment of our corporate term debt. That happened in Q2 as well. Then in Q3, on July 31st, we purchased 35% of a merchant cash advance company called Bitty Advance. It's a small business advance company. It's a line of business that we feel is very compatible with our current line of business. We felt like we could add a lot of value. We are in the market for other M&A. That's a growth opportunity for us, we feel. This has been our first kind of little toe in the water, and it's going really well. I can tell you that right now. This is our guidance for 2024. We affirmed our $5.10-$5.30 at our Q3.
We think our adjusted net income will be somewhere in the $74 million-$76 million dollar range. That was a raise from $63 million-$65 million. And our adjusted EPS at $0.85-$0.87 a share, which was a raise from $0.73-$0.75 a share. We did have some additional slides in an appendix here. I'm not going to go through those, but I'm sure they will be available to you. But now we'd be happy to take some Q&A.
I was curious about the footprint of those community banks. Are they located in a central geographic area? Sorry, just revisiting a question of business.
They're in Utah. So our business, we lend in most of the states in the U.S. It's a digital experience, either partially or most of this is completely a digital experience. But they happen to be headquartered in Utah.
They're Industrial Loan Banks.
Yeah.
Chartered in Utah.
I remember when you guys went public, your Net Promoter Score was really high. It was 85, and that was as high as I've seen anybody else out there. Even much bigger established names in the USA and so on. I was looking at the last couple of years there. Consumers were having a tough time. Were you guys able to maintain that brand strength?
Yes. We're at 78. We review this weekly. So we get Todd, I'll tell you, the founder is an important leader. Todd obsesses about that number, I think rightfully so. And so every week, we ask why and why are we not at 85? I think the reality is, as the financial needs so here's what happened. As we tighten credit a little bit, underwriting becomes a little bit trickier. A subset of your customers require more of a review. They have to send it more documents. So the portion of customers that instead of just sending it a driver's license now has to send a pay stub and a driver's license increases, that delays the process sometimes by a day or two. And so you're not going to get that 100 from that customer that you used to get so regularly.
That said, we feel great about 78, and we're on the upswing.
That's still up there with the best.
It is. We are outperforming.
Wait.
I forgot the exact number, but I think you said it was like 60 million marginalized people who don't have access to credit, so I was going to ask, what is it that you're doing that makes your loans more accessible to those people compared to competitors?
Yeah, I think it's a couple of things that I'm really proud of. Number one, very transparent products, right? Easy to understand. It's not a complicated construct. It is not a, this is what it looks like for the first 100 days. And if everything goes fine, then it's okay. On day one, you know exactly what you're going to pay, and it's easy to understand. The fact that so much of our decision, I think it's 74% right now, is fully automated, makes the process very, very fast and customer-friendly. We get every month almost 5,000 customers who previously paid off a loan with us to come back and ask us to help them again, right? So that's a huge vote of confidence. Depending on the competitor, right, and the nature of the loans, ours are more affordable. They're not cheap, and we don't pretend like they're cheap.
And this customer base, with loss rates being what they are, the model does not work, unfortunately, for it to be cheaper. But they are cheaper than many of the alternatives. And without a prepayment penalty, it gives you the flexibility to take a 10-month loan. And if you are able to pay the loan after three months, that's it. The interest is only, it's daily interest collected over those three months. So it can become, it gives you the flexibility to make it more affordable if you're in a position to pay faster.
I really think our no-fee structure is just pretty amazing. There are no origination fees. There are no late fees. There are no NSF fees. So our customers really know what they're getting into. It is a simple interest loan with a daily interest check, so.
It's no surprise.
Yeah.
I have a couple of questions. I might have missed some of your presentations, so I'm wondering what we're going to address there. How do you price your loans?
So up until very recently, we had a single price for all of our loans. We are rolling out risk-based pricing. So without getting too long-winded, we used to lend pre-pandemic to what we called five risk segments. And as the checks went away and people's ability to repay changed, we learned quickly that segments four and five, we could not loan to it at this price range. We pulled back. We did a lot of, I think, great things. What we're now exploring is a slightly higher price for those segment four, those higher risk customers. And it will be underwriting-based, right? Correlated with the likelihood of repayment based on the factors that we reviewed.
Okay. But do you use some type of gauge in the marketplace to price? You just said it's automated. Because Utah usually has a very high, I think your price is probably based off the state you chartered it. Is that correct or no?
Well, we do. Yes, exactly. We can export their rates, basically, right?
Yeah. Second thing is during 2022, when you had that, when the markets were very stressed, can you explain a little bit more how you worked through that? Did you just write it off? Did you kind of work with the customers to kind of push any revenue forward next year in 2023?
We have really stringent write-off criteria. And it is part really of the credit policy that we administer on behalf of the banks. And so we have to follow that. Now, we have been very successful in increasing our recoveries. And we did, and Manny's team worked really hard on a lot of initiatives there. And you might want to explain some of those because that's really a very bright spot on our P&L, in the fact that we have collected a lot of those write-offs. Well, I say a lot compared to what you would normally collect because of some of the initiatives we've taken. And we do it very compassionately too.
Yeah. And we have arrangement programs, right? I mean, when someone, I think what the fine line with an arrangement program is you do not want to kick the inevitable down the road. What you want to be able to do is provide help for those who have a temporary issue. And so we have those in place. If it's not the right fit or it looks like the person's situation is not going to solve for us anytime soon, then we'll write off the loan. In order for someone to be able to refinance their loan, they have to meet minimum requirements. They have to make, I forget the exact numbers, but a minimum of $400 in payments or these are $1,000, $1,500 loans, right? These are not very large loans. So the short answer is very important for us not to kick the problem down the road.
When you compare us to some of the other loans and certainly classic loans, the benefit of a short term is that if you do have a problem in your books, it will work itself out much faster than a home loan or a student loan or something like that.
Did you say your average loan is $1,500?
Right.
There's no collateral.
No, they're unsecured.
They're unsecured.
Yeah. One of the things I said when all this hit in 2022, I said, "This is a three-to-five-month problem, not a three-to-five-year problem in this model." And we did. We worked through it quickly.
On a previous slide, I think you touched on briefly about how you are finding new customers. I think one of the ways was partnering with lending platforms. Could you just go deeper on all the different ways that you can find more customers?
Yeah. So our biggest channel right now are the marketing partners. The customer Googles loans for bad credit, whatever it might be. The partners promote a lot. And we send them some pre-screen criteria so that we have a good fit between the customers coming our way. We pay for a funded loan. So we're not paying for clicks or something like that. We historically had done a fair amount of direct mail. I think we got to the point we realized we needed a refresh. So we refreshed our direct mail and we're relaunching. Everything we do is a test and learn, right? So we don't pull levers. We don't, right? And so we have new creative. We have new cadence. We have new segmentation models. And we're rolling those out to make sure they're working well. We do retargeting through email for prospects.
Our search engine optimization has gotten a really good boost in the last eight to 12 months. That's great because it's essentially free marketing, right, if you get the right articles that draw in the eyeballs, and refer a friend has always been and continues to be an important channel for us, but in terms of volume, the marketing partner is definitely the biggest.
Can you guys kind of add a little more color to the equity interest in Bitty Advance? And is there really a possibility to be as fully funded?
Yes.
Yes. Yes. We have some options out there. So we acquired 35%. And in three years, we can acquire another 30%, which would give us majority control. And then three years after that, the last 35%. Right now, there is a governing board that we have one member sitting on, Todd. Todd and one of our board members meet weekly with Bitty to really kind of oversee what's happening there and provide tons of really, really good counsel to them. We've already started having some of our marketing team, some of our tech team interacting with them. So there's a lot of synergies here that's coming out of this, and we're very excited about it.
All right. I think we're running out of time anyway. Thank you all very much.