Oportun Financial Corp Q4 FY2025 Earnings Call

Greetings, and welcome to the Oportun Financial Fourth Quarter 2025 Earnings Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce Dorian Hare of Investor Relations. Please go ahead.

Thanks, and hello, everyone. With me to discuss Oportun's fourth quarter 2025 results are Raul Vazquez, Chief Executive Officer; and Paul Appleton, our Interim Chief Financial Officer, Treasurer and Head of Capital Markets. I'll remind everyone on this call or webcast that some of the remarks made today will include forward-looking statements related to our business, future results of operations and financial position, including projected adjusted ROE attainment and expected originations growth, planned products and services, business strategy, expense savings measures and plans and objectives of management for future operations. Actual results may differ materially from those contemplated or implied by these forward-looking statements, and we caution you not to place undue reliance on these forward-looking statements. A more detailed discussion of the risk factors that could cause these results to differ materially are set forth in our earnings press release and in our filings with the Securities and Exchange Commission under the caption Risk Factors, including our upcoming Form 10-K filing for the year ended December 31, 2025. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events other than as required by law. Also on today's call, we will present both GAAP and non-GAAP financial measures, which we believe can be useful measures for period-to-period comparisons of our core business and which will provide useful information to investors regarding our financial condition and results of operations. A full list of definitions can be found in our earnings materials available in the Investor Relations section of our website. Non-GAAP financial measures are presented in addition to and not as a substitute for financial measures calculated in accordance with GAAP. A reconciliation of non-GAAP to GAAP financial measures is included in our earnings press release, our fourth quarter 2025 financial supplement and the appendix section of the fourth quarter 2025 earnings presentation, all of which are available at the Investor Relations section of our website at investor.oportun.com. In addition, this call is being webcast, and an archived version will be available after the call, along with a copy of our prepared remarks. With that, I will now turn the call over to Raul.

Thanks, Dorian, and good afternoon, everyone. Thank you for joining us. Our fourth quarter results were strong. We met or exceeded all of our guidance metrics, reflecting continued operational discipline and strong execution across the business. The four key headlines from the quarter are sustained GAAP profitability, solid credit performance, ongoing expense discipline and a reduced cost of capital. Let's start with profitability. We generated $25 million of GAAP net income in 2025, including $3.4 million in the fourth quarter. This capped a year of significantly enhanced profitability for Oportun with full year GAAP net income improving by $104 million and adjusted EPS growing 89%. These results were driven by growth in originations, improved credit performance, balance sheet optimization and disciplined expense management. Turning to credit performance. Our annualized net charge-off rate was 12.3% in Q4 at the better end of the guidance range we provided. On the expense side, Q4 operating expenses of $84 million came in below the $92 million expectation set last quarter and marked our lowest quarterly spend as a public company. Driven by disciplined expense management, full year 2025 GAAP operating expenses totaled $362 million, a $49 million or 12% reduction from 2024. Finally, our balance sheet optimization initiatives are lowering our cost of capital and positioning us for stronger long-term returns. Driven by corporate debt repayments as well as actions related to our ABS notes and warehouse facilities, Q4 interest expense, excluding $5.5 million of debt extinguishment costs was $52 million. That was $4.1 million lower than Q3. We also completed a $485 million ABS transaction earlier this month, marking our fourth consecutive issuance with a sub-6% funding cost and a AAA rating on the senior notes. Paul will further detail our balance sheet optimization initiatives and how they factor into our 2026 expectations. With our Q4 and full year 2025 highlights covered, I'll now review how we're executing against our three strategic priorities: improving credit outcomes, strengthening business economics and identifying high-quality originations. Starting with credit outcomes. As we discussed in our second quarter call, the first half of the year included a higher mix of new members than expected, so we shifted originations towards returning members. That adjustment was effective. Seventy-four percent of second half originations came from returning members, up from 64% in the first half. To further strengthen our risk management approach, we also introduced new early default models focused on new and returning members and added five new data sources into our underwriting process. In 2026, a key focus will be upgrading our decisioning infrastructure capabilities to accelerate model training and deployment, thereby enabling us to respond even faster to evolving credit conditions. Turning to business economics. We continue to make strong progress on efficiency and operating leverage. During full year 2025, our risk-adjusted net interest margin ratio improved 55 basis points year-over-year to 15.8%. As a reminder, that metric includes portfolio yield, net charge-offs, cost of capital and loan-related fair value impacts. Our full year 2025 adjusted OpEx ratio improved 109 basis points year-over-year to 12.7% of our owned portfolio. Together, these improvements drove strong operating leverage, lifting adjusted ROE by almost 1,000 basis points to 17.5%. I'm also pleased to share that we are advancing a new initiative designed to enhance our unit economics and progress towards 20% to 28% annual GAAP ROEs while expanding access to responsible credit. In partnership with potential new bank sponsors and warehouse providers, we are exploring the reintroduction of risk-based pricing above 36% APRs for select higher-risk segments on shorter-term loans. This creates a meaningful opportunity to extend our mission of financial inclusion by responsibly serving customers that we would otherwise not serve while better aligning pricing and term length with risk in order to improve portfolio returns. At the same time, we are selectively testing modestly lower APRs for certain higher-quality returning members to maximize lifetime value where competitive dynamics warrant. We are assuming only modest incremental profitability in the second half of 2026 as we roll this initiative out in a disciplined and measured manner. However, if executed successfully, we believe this initiative can drive higher earnings power in 2027 and beyond. Finally, on identifying high-quality originations, we grew originations by 10% during full year 2025 while maintaining a conservative credit posture. We exceeded our prior expectation for high single-digit percent growth by focusing on members with higher free cash flow and on channels that deliver the strongest results. In full year 2025, loan application growth more than doubled the rate of originations growth, while customer acquisition costs declined 6% to an average of $117, a testament to our strong loan demand, disciplined underwriting and improved cost efficiency. Expanding our secured personal loans portfolio secured by members' autos remains a key pillar of our responsible growth strategy. SPL originations increased 51% in full year 2025. As a result, our secured portfolio grew 39% year-over-year to $226 million and secured loans now represent 8% of our owned portfolio, up from 6% at year-end 2024. Importantly, secured personal loan losses were more than 600 basis points lower than unsecured personal loans during the year. To continue our strong SPL growth momentum into 2026, we've recently initiated new direct mail campaigns targeted specifically at potential SPL customers who own their vehicles. By executing against our three strategic imperatives: improving credit outcomes, strengthening business economics and identifying high-quality originations, we've driven meaningful operational and profit improvement in 2024 and 2025. We're confident this disciplined framework will continue to support our momentum in 2026. With that, I'd like to now preview our initial 2026 outlook. While our member base remains resilient, inflation above Federal Reserve targets, declining wage growth, uneven job creation and policy uncertainty continue to create a cautious environment for low to moderate income consumers. Our outlook prudently assumes these conditions persist throughout 2026 alongside our currently tight credit posture. We remain well positioned to adjust quickly as conditions evolve. The guidance for full year 2026 that Paul will soon detail for you is underpinned by mid-single digits originations growth, a 1% to 2% decline in average daily principal balance, revenue growth ranging from flat to a 2% decline, a net charge-off rate range with a midpoint reflecting slight year-over-year improvement, a reduction in interest expense of at least 10% and substantially flat operating expenses. We expect these drivers to result in full year 2026 adjusted EPS growth of 16% at the midpoint of our full year guidance. We also expect higher profitability in the second half than the first as originations ramp under our normal seasonal pattern and loss rates improve. Now I will turn it over to Paul for additional details on our financial and credit performance as well as our guidance.

Thanks, Raul, and good afternoon, everyone. Turning to Slide 5. We delivered a strong fourth quarter relative to guidance. Identifying high-quality originations enabled us to exceed the top end of our quarterly total revenue guidance by $1.7 million or 1%. Combined with disciplined expense management, this drove strong adjusted EBITDA of $42 million, exceeding the top of our guidance range by $5.5 million or 15%. For full year 2025, we delivered adjusted EPS of $1.36 towards the high end of the $1.30 to $1.40 expectation and achieved GAAP profitability of $25 million, consistent with our full year GAAP profitability commitment. Turning now to Slide 6. We recorded our fifth consecutive quarter of GAAP profitability with net income of $3.4 million and diluted EPS of $0.07. We also generated adjusted net income of $13 million and adjusted EPS of $0.27. While maintaining credit discipline, fourth quarter originations of $495 million were down 5% year-over-year, primarily due to credit tightening actions. This was modestly better than our prior expectation for a high single-digit decline. Total revenue of $248 million declined by $3.2 million or 1% year-over-year. This decline was attributable to the absence of $3.8 million of credit card revenue in the prior year quarter. As a reminder, we completed the sale of our credit card portfolio in November of last year, a transaction that has been accretive on a cash basis. Net decrease in fair value was $99 million this quarter due primarily to $86 million in net charge-offs. Also included in the decrease in Q4 fair value was $17 million of derivative-related impacts in line with our expectations associated with the acquisition of an Oportun service loan portfolio and the wind-down of a related risk-sharing agreement. The majority, $13 million was noncash. As we discussed on our prior earnings call, these loans were previously held by our bank sponsor, Pathward. We continue to expect a profitability benefit from the acquisition, driven by lower funding costs associated with owning the portfolio versus the prior arrangement with Pathward. We also expect derivative-related fair value impacts to be muted in the first quarter and following the wind down to no longer affect fair value in future quarters. Partially offsetting the impact of the wind down, sustained lower ABS funding costs drove a favorable $4.9 million mark-to-market adjustment on our loan portfolio. Reported fourth quarter interest expense was $58 million, down $16 million year-over-year. After adjusting for debt repayment-related charges of $17 million in the prior year quarter and $5.5 million in Q4 '25, interest expense declined $4.6 million or 8% year-over-year. This improvement reflects the balance sheet optimization initiatives Raul referenced earlier, which I'll detail momentarily. Net revenue was $90 million, down 3% year-over-year as the impact of lower total revenue and a higher net decrease in fair value offset lower interest expense. Operating expenses were $84 million, down $5.6 million or 6% year-over-year, better than our $92 million expectation and reflecting continued cost discipline. Our adjusted OpEx ratio reached a record low of 11.6%, marking the first time we've outperformed our 12.5% unit economics target. Importantly, as we work toward meeting our unit economics targets on a GAAP basis, our GAAP OpEx ratio improved to 12%, down from 13.1% in the prior year quarter and also outperformed our target. Adjusted EBITDA, which excludes the impact of fair value mark-to-market adjustments on our loan portfolio and notes was $42 million in the fourth quarter. This reflected a year-over-year increase of $1.5 million as lower operating expenses and interest expense more than offset higher net charge-offs and lower total revenue. Adjusted net income, which excludes the debt repayment-related charges discussed earlier, was $13 million, down $8.6 million year-over-year, primarily due to the wind down of the Pathward risk-sharing agreement I discussed earlier. Adjusted EPS similarly declined year-over-year from $0.49 to $0.27. Importantly, GAAP net income before taxes was $6.6 million, up $2.7 million or 68% year-over-year as lower operating expenses more than offset lower net revenue. GAAP net income was $3.4 million and would have been higher absent repayment-related charges and the tax headwinds this quarter. The $5.3 million year-over-year decline in GAAP net income was largely attributable to the tax comparison as this quarter reflected $3.2 million of tax expense versus a $4.8 million benefit in Q4 '24 due to discrete items and R&D credit timing. Diluted EPS of $0.07 declined by $0.13 year-over-year. Next, I'd like to provide some additional color on our credit performance in Q4. As shown on Slide 7, our Q4 net charge-off rate increased as anticipated, coming in at 12.3% and at the low end of the annualized guidance we provided. As expected, the higher loss pre-July 2022 back book continued to roll off, shrinking to less than 1% of our owned portfolio at year-end. Our 30-plus delinquency rate was 4.9%, up a modest 13 basis points year-over-year. As a forward-looking indicator, this supports our expectation that 1Q '26 will represent the peak quarterly net charge-off rate for the year with moderation beginning in the second quarter. Turning now to capital and liquidity. As shown on Slide 9, we continue to strengthen our debt capital structure by reducing higher cost corporate debt, lowering our overall cost of capital and enhancing liquidity. First, I'm pleased with the progress we made with deleveraging, ending Q4 '25 at 7.2x debt to equity. That's down from 7.9x a year ago and from the 3Q '24 peak of 8.7x. During 2025, shareholders' equity increased by $36 million or 10% with consistent GAAP profitability supporting continued deleveraging. Reducing our high-cost corporate debt, which carries a 15% interest rate remains our second highest capital priority after originating high-quality loans and reinvesting in the business. Since the $235 million corporate debt facility was put in place in November 2024, we've reduced the outstanding balance by $70 million or 30%, including $37.5 million or 16% in Q4. These repayments lowered our annualized run rate expense by $10.5 million, generating meaningful and sustainable savings. During Q4, we increased total committed warehouse capacity from $954 million to $1.14 billion. We also extended the weighted average remaining term of our combined warehouse facilities from 17 months to 25 months and reduced the aggregate weighted average margin by 43 basis points. We achieved this by closing a new $247 million 3-year revolving term committed warehouse facility and improving the terms of our existing facilities. Following the fourth quarter and earlier this month, as Raul mentioned, we completed a $485 million ABS transaction at a 5.32% weighted average yield. In the last 9 months, we have now raised $1.9 billion in the ABS market at sub-6% yields, demonstrating sustained access to capital on favorable terms. In addition to reducing high-cost corporate debt by $70 million during 2025, we increased our unrestricted cash balance by $46 million or 76%. As of December 31, total cash was $199 million, of which $106 million was unrestricted and $93 million was restricted. Turning now to our guidance. As shown on Slide 12, our outlook for the first quarter is total revenue of $225 million to $230 million, annualized net charge-off rate of 12.65%, plus or minus 15 basis points and adjusted EBITDA of $25 million to $30 million. At the midpoint, our Q1 revenue guidance implies an $8 million year-over-year decline, reflecting seasonally lower demand during tax season and our continued tight credit posture. Our Q1 annualized net charge-off rate midpoint guidance of 12.65% reflects the impact of first half 2025 originations, which included a higher percentage of new members prior to the tightening actions we implemented in the second half. We expect first quarter '26 delinquencies to decrease to 4.4% to 4.5%, which would be 20 to 30 basis points lower than 1Q '25 and 40 to 50 basis points lower sequentially than 4Q '25. That anticipated improvement in delinquencies gives us confidence that charge-offs will decrease beginning in the second quarter. Importantly, our implied net charge-off guidance for the remaining 3 quarters of 2026 is approximately 11.65%, which is 100 basis points lower than the first quarter guidance midpoint, reflecting the impact of our tightened underwriting and improved mix. At the midpoint, our Q1 adjusted EBITDA guidance implies a year-over-year decline of approximately $6 million, less than the expected revenue decline of $8 million, driven by lower operating and interest expense. Our initial full year 2026 guidance includes total revenue of $935 million to $955 million, annualized net charge-off rate of 11.9%, plus or minus 50 basis points, adjusted EBITDA of $150 million to $165 million and adjusted EPS of $1.50 to $1.65. We expect to lower interest expense by more than 10% in 2026, which supports our adjusted EPS guidance. We are confident in this expectation because the benefits of the balance sheet optimization initiatives completed in 2025 will flow through to our 2026 financials. Midpoint growth of 16% in adjusted EPS and 6% in adjusted EBITDA, even amid macro uncertainty for low to moderate income consumers reflects the resilience of both our members and our business model. Before I turn it back to Raul, let me briefly review our unit economics progress for full year 2025. Although our long-term targets are GAAP targets, I'll reference adjusted metrics because they remove nonrecurring items and better reflect our future run rate. As shown on Slide 11, we made meaningful progress during the year. Full year 2025 adjusted ROE was 17.5%, nearly a 10% point increase year-over-year, driven primarily by cost reductions and improved credit performance. We expect to build on this progress in 2026. Our North Star remains delivering GAAP ROE of 20% to 28% annually. We plan to achieve this by reducing annualized net charge-offs to 9% to 11%, lowering operating expenses to 12.5% of our owned portfolio and attaining 10% to 15% annual growth in our owned loan portfolio. We also intend to make substantial progress towards returning to our target 6:1 debt-to-equity leverage ratio this year by reducing our debt outstanding and continuing to grow profitability. With that, Raul, back over to you.

To close, I'd like to emphasize three key points. First, we're pleased with our 2025 results. On a full year basis, we improved GAAP net income by $104 million and grew adjusted EPS by 89%. Second, we expect full year profitability to improve across all metrics in 2026. Although the additional credit tightening implemented in the second half of last year is expected to temper revenue growth in 2026, we still project 10% to 21% adjusted EPS growth per our guidance, improved ROE and higher GAAP profitability year-over-year. And third, we see a compelling long-term opportunity ahead for Oportun. The progress we've made over the past year in reducing leverage, lowering our cost of capital and strengthening our liquidity enables us to focus squarely on operational execution and profitable, sustainable growth. For 2026, we are assuming only modest incremental profit from the risk-based pricing initiatives discussed earlier as we roll them out prudently. However, if executed successfully, a return to risk-based pricing could enhance earnings growth beginning in 2027 and drive additional progress towards our 20% to 28% GAAP ROE objective over time. This will be my final earnings call as CEO of Oportun. I will step down as Chief Executive Officer and from the Board by April 3 or earlier if the Board appoints a successor. Following that, I will serve as an advisor through July 3 to support a smooth transition. I will continue meeting with investors this quarter and I'm working closely with the Board and management team to ensure an orderly and seamless leadership transition. It has been a privilege to lead Oportun for nearly 14 years and to work alongside such a talented, committed and mission-driven team. I am deeply grateful to our employees, members, partners and shareholders for the trust and support they have shown me throughout this journey. I am confident that Oportun is well positioned for its next chapter with a strong foundation, a clear strategy and a team fully capable of continuing to deliver for our members and shareholders. With that, operator, let's open up the line for questions.

And the first question comes from Kyle Joseph with Stephens.

Kyle, you may have us on mute. We can't hear you.

The next question will come from the line of David Scharf with Citizens.

This is Zach on for David. Congrats on the strong fourth quarter performance. I wanted to dig in a little bit on the macro side and see if we can get any more color. And also just kind of if you can talk about any of the signs that we might see that might lead to some loosening.

Sure, Zach. When we consider the macro environment, we see that the consumer is showing a great deal of resilience, which makes us optimistic as we move forward in the year. We are aware that tax refunds are projected to be larger this year. Our delinquency performance at the beginning of the year gives us confidence about the future path of losses. However, it’s worth noting that Q4 GDP growth was slightly below expectations and wage growth for the lowest income quartile is currently at its lowest level. Additionally, fuel prices, which our customers are quite sensitive to, while lower compared to last year, rose by $0.40 a gallon in California just last month. This is something we will monitor closely. Overall, there are both positive and negative factors in the macro landscape. Consequently, we will maintain a conservative credit approach until we see improvements. Specifically, we hope to see stronger job growth, sustained GDP growth, a robust conclusion to the tax season, and the expected trajectory for losses. These are the indicators we need to see in order to consider making adjustments.

The next question comes from the line of Brendan McCarthy with Sidoti.

Just wanted to start off on the net charge-off rate. Obviously, it looks like a temporary step-up in the first quarter, and then you mentioned it will step down in the second quarter and thereafter. Just curious as to what data points you're seeing regarding first payment defaults or the new origination vintages that really give you that confidence that it will step down like that.

Yes. The biggest signal in terms of the losses going down is really what we're seeing in delinquencies. So right now, based on what we're seeing in delinquencies and 30-plus delinquencies specifically, but early delinquencies also look good, Brendan. But on the 30-plus side, we think we're going to end up at 4.4% to 4.5% for Q1. That would be 20 to 30 basis points lower than last year and 40 to 50 basis points lower quarter-over-quarter. So we think that this elevated loss rate for Q1 is really just a product of the higher mix of new customers that we had at the beginning of the year, right? We've been signaling this bubble. We talked about it in our last two earnings calls. So the trajectory of losses is what we expect. If anything, Q4 was on the low end of the guidance that we provided. So we got a lot of confidence when we look at delinquencies going back to your question, looking at the path for delinquencies for Q1 that we will see losses start to come down in Q2 and then certainly in Q3 and Q4. You did see that the implied loss rate for Q2 to Q4 is 11.65%. Again, the confidence really comes from what we're seeing in delinquencies so far this year.

Great. I appreciate the detail there, Raul. And another question here on operating expenses. I think you guided to flat OpEx for 2026 relative to 2025. I'm curious if you can differentiate the Q4 run rate, which would be a little bit lower if you took that and annualized it for 2026. Just wondering what increases are kind of baked into that from the Q4 run rate?

From an operating expenses perspective, looking ahead to 2026, there are two main points to consider. First, I'm really proud of the discipline the team demonstrated throughout 2025 and particularly in the fourth quarter, and that discipline will carry on into this year. We will continue to seek opportunities to reduce operating expenses and maintain a lean headcount. This will be a key aspect of our operating expenses story. The flat nature of operating expenses this year is influenced by a second factor: we will make some incremental investments compared to 2025, which we believe will excite our investors. One significant investment will be returning to risk-based pricing, especially for pricing over 36%. For those who may be newer to Oportun, our history has involved pricing over 36%, and during my tenure as CEO, we consistently priced a portion of our portfolio above that threshold. This return to previous pricing practices will necessitate partnering with a new bank and some new development and investment, but we are optimistic about the positive effects this will have, even if they are modest initially, we anticipate a greater impact in 2027 and beyond. The second area of focus is secured personal lending, which continues to drive our growth. We reported a 51% year-over-year increase in originations for secured personal lending last year, and this year we project mid-single-digit growth for the business, with a particular emphasis on secured personal lending achieving disproportionate growth rates. Lastly, as I explained in response to Zach's question, we will see growth in originations from Q2 to Q4 this year that won't stem from loosening credit standards, but rather from increased investment in marketing. The combination of the savings we expect to identify plus these three investments will result in relatively flat operating expenses for the year.

Understood. I appreciate the color there. And I think that's a key takeaway, your plan to go above that 36% cap. Can you give us a sense of how this might increase your addressable market? And is that plan included in your expectation for mid-single-digit growth in originations for the year?

It is not included in our view for this year. For this year, we're going to take a very methodical, very prudent approach to rolling this out. Again, we know how to do this. This is not new to us. But certainly, right, this is a different environment than a few years ago when we stopped doing this. So we think it is prudent to roll this out in a thoughtful way. Certainly, as we get into '27 and future years, we think there's two big benefits here, Brendan. One is certainly over time, to your point, it should open up some additional market for us. And our ability to price appropriately for that slightly higher risk, right, is going to improve our unit economics and is going to improve the overall profitability of the business. So we're excited about that. What we also used to do, and this is contemplated in our plans, is we would price the best part of our portfolio slightly below 36%. And if someone came back as a returning borrower, they would get the benefit of good performance by having lower pricing. We think not only does that maximize lifetime value because it allows us to go ahead and retain those individuals, but by marketing price points below 36%, it also changes the through-the-door population and the applicant quality that we see so that, that way you see an overall benefit from a credit quality perspective. So we think that part of the business, the pricing below the 36% is also accretive to the business. And that's why we're so excited; although the benefits would be muted this year, we're very excited about this initiative, and I've got a ton of confidence in this leadership team's ability to execute the plan well both this year and in future years.

The next question comes from the line of Hal Goetsch with B. Riley Securities.

Raul, I want to express my gratitude for your contributions to the company and its investors. You've had an impressive journey from start-up to becoming a public company. Congratulations. You will be missed. My question is, could you provide more details on the expense reduction? It seems to have been particularly effective. What factors contributed to that this quarter? Additionally, what are the targets for corporate debt reduction in 2026?

Thank you very much for your kind words. Shareholders are well served by this leadership team, and I have a lot of confidence in them. Looking at the full year, our operating expenses decreased by $49 million, or 12% year-over-year, with contributions from nearly all areas. Specifically, in tech and facilities, which make up the largest part of our operating expenses, we saw a reduction of $24 million, or 14%. This was primarily due to increased efficiencies in our technology spending and streamlining our team, which also led to lower associated charges. The tech team will keep searching for ways to become leaner moving forward, especially by utilizing AI, which includes leaner operations through attrition and potential savings in contracts as several multiyear agreements come up next year. On the personnel front, we've notably reduced our headcount over the years, resulting in personnel costs decreasing by about $7 million, or 8%. General and administrative expenses fell by $19 million, or 36%, and outservicing expenses were down by around $2 million. There is a strong culture of discipline and focus throughout the business. Despite these reductions, we were still able to self-fund a $4 million, or 5%, increase in sales and marketing. This investment targeted areas we've discussed throughout the year, including direct mail and a very successful customer referral program. Looking ahead to 2026, while it may be challenging to sustain reductions at the same level, we plan to keep pursuing cost-cutting opportunities and make modest investments in marketing. Please remind me of the second part of your question. Yes. So on the debt reduction side, from a capital allocation strategy perspective, our priorities are still, number one, fund profitable growth; number two, pay down the debt, in particular, the 15% interest rate corporate facility. We made a lot of progress last year. We did $70 million in payments last year, including $37.5 million. That does impact GAAP profitability because there are some repayment charges. So our GAAP net income would have been even higher if not for the $5.5 million or so of debt repayment charges in the quarter. We do have additional payments contemplated in the plan by quarter. We'll certainly talk more about those every time that we have an earnings call, Hal, give you an update on how much did we pay down. But the plan does include that. And in fact, GAAP net income would be even higher this year if not for some of those debt repayment charges that we have to recognize. So yes, you'll continue to see us pay down that debt as aggressively as possible.

Okay. There appear to be no further questions. We want to thank you once again for joining today's call. We appreciate your continued interest in Oportun, and the team looks forward to speaking with you again soon. Thank you, everyone. This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.