Oportun Financial Corporation (OPRT) Earnings Call Transcript & Summary

All right. Good afternoon. Thank you for joining us for this fireside chat [indiscernible] [Operator Instructions] We've also prepared a number of audience polling questions that we would encourage you to answer during the presentation, and we'll be publishing the results in our report summarizing the takeaways from the conference.

With that out of the way, let's get to the discussions. Raul, thank you for joining us. We wanted to start with some high-level color on how Oportun approached the pandemic initially, what the results were and how you're pivoting back to growth right now?

Well, thanks for the opportunity, Mark, to talk to you about our business. So when the pandemic started, there were really 5 things that we focused on. Number one, certainly, with that kind of an economic shock and with the public health crisis that the company was facing, one of the first things we wanted to do was just to quickly tighten credit. And we have a very sophisticated AI-driven risk engine that allowed us to make very granular adjustments and allowed us to make those adjustments very quickly. So really, within 24 to 48 hours, we've made a series of adjustments that allowed us to be much more prudent in terms of the credit we were giving and even to make some very granular adjustments like treating an applicant who worked in the tourism industry in Florida different from someone that worked for a grocery store in Arizona because we knew that the pandemic was having different impacts on different types of applicants in their employment. So that was one of the first things we did, which is to absolutely tighten credit. The second was obviously heightened safety measures for our employees. And that was both our employees and our contact centers and our employees in our stores. And we thought that was really important because what we've seen in the past, any time there's some sort of a natural disaster or certainly a recession, is a lot of customers turn to us for help. And we wanted to make sure that our employees felt safe so that they could be there to pick up the phone or they could be there to take a payment or take an application in our retail locations. So that was the second thing we did. We wanted to make sure that both our employees and our customers would be safe in these physical environments. The third thing is we implemented what we believe was really one of the most customer-centric hardship programs. Our customers were among the first to be impacted by some of the layoffs or by reductions in hours. So at the peak of our hardship deferral program, we had enrolled about 120,000 customers and we have 14% of our portfolio or so in emergency hardship deferral. As a mission-driven company, we were very comfortable doing that because we know that if we give our customers, who are responsible, hard-working people, some time to get back on their feet, they'll absolutely do it and they'll resume payments. We've seen that time and again. And that confidence in our customers was proven correct once again during this recession because the overwhelming majority did end up coming back and making their payments. Fourth thing, we strengthened our balance sheet. We had no idea how long the recession would be or the depth of the impact. So that was something that our team is very, very focused on. And then the last thing I would point out is we really leaned into our digital channel. Digital was an investment that we started 5 or 6 years ago. Before I came to Oportun, I spent 9 years at Walmart, including 7 at walmart.com. And as a leadership team, we certainly had a view that customers were going to continue to want to focus on digital means of dealing with us and every other company. And that proved to be correct because the adoption of digital really accelerated in the last year. We've recently disclosed about 80% of our new applications are originated online. That was 59% a year ago. So those were the 5 things we really tried to do, Mark, to deal with the pandemic. In terms of our pivot back to growth, emerging from the crisis, we have seen our net charge-off rates return to pre-pandemic levels and frankly, even lower than what we were seeing before the pandemic. Our credit metrics right now are arguably the best that we've ever had in the 15 years that we've been lending. Number two, combined with the strong credit performance, we're seeing a return to just demand for our loans and our products that are very similar to the pre-pandemic levels. In particular, we're seeing a lot of growth now as we expand into new geographies and offer new products. And the net result is one of the metrics we disclosed today that we shared intra-quarter was that quarter-to-date through September 12, originations were $500 million, which is up 122% year-over-year. So we really feel like we navigated the pandemic well and put ourselves in a position to really lean back into this growth.

Great. I think you may have at least indirectly answered this with some of your comments around credit quality and demand. But can you just talk a little bit more about what gives you confidence that now is the time to really lean into growth again? .

I'd say 3 things are really giving us that confidence. Number one, like you said, the very low credit metrics that we're seeing. That makes us feel like we can lean into growth. And as a mission-driven lender, we want to be there. We want to be able to give our customers an opportunity to get the capital that they need. Number two, it's a very, very strong employment environment for our customers. I can't recall a time when someone that was going to work at a McDonald's or a Costco or another job like that was not only seeing wages move up, but was getting a hiring bonus for showing up at work, right, and taking that job. So that very predictable, very strong environment of employment for our customers is one of the key things that we look for when we are underwriting, and that's giving us confidence. And then number three, just seeing demand come back. Demand has been really, really strong. And all of those things are the things that have got us right now very excited about leaning into this opportunity and really taking share from competitors as we serve our customers.

Okay. Great. Could you talk about what behaviors you've seen from your customers of late? And is there -- the emergence of the delta variant impacted them in any way?

We're not seeing an impact on demand, Mark. We certainly saw an impact last year because again, we believe that our customers are very responsible. So when the pandemic started and there was the uncertainty about the future employment picture and whether a customer would have the income to make their payments, we did see demand go down, right, last year. . But right now, I think we're seeing the opposite. We're seeing such a strong opportunity for a customer to either get higher wages in their current job or to shift jobs and get paid more that we're not seeing any impact in terms of demand based on the delta variant.

Okay. As you've already alluded to, credit has been extremely strong here. Can you just talk about what you believe have been the primary drivers of that?

One of the biggest drivers, we think, is just all the investments that we've made over the years in this AI-driven, very technologically sophisticated underwriting engine. We build models using machine learning. We've processed over 8 billion data points in building these models. And the models are trustworthy, both when we go into a situation like the recession. Our Chief Credit Officer has been here 13 years. So he's actually navigated 2 recessions for us. And one of the things that he talks a lot about is you have to trust your models. And that was one of the things that we really did was we trusted our models, we trusted our team because the model really is a tool for our team and we were able to run the same playbook that we ran a few years ago. And we think that, that's one of the things that really put us into a position to lever these strong credit results and to feel like we can continue to deliver that kind of performance for the rest of the year.

Okay. Looking forward on credit, as stimulus begins to burn off, what do you think trends will look like later this year and into 2022?

We're really bullish in terms of the rest of the year. As you know, we gave guidance that we expected to originate $2.1 billion this year. As we talk to investors, I think they really appreciated such a strong signal of confidence in our business and in our consumer. In terms of stimulus, we know stimulus has been helpful, to some extent, in credit. I think everyone has said that. But we've started to see stimulus really burn off, as you put it. And our credit metrics still look great. So we're not concerned at all about credit for the rest of the year. If anything, we think our credit metrics are a little too low. From a static pool basis, we like to be at about 7.5% to 9%. And right now, we're tracking kind of at the bottom end of that range. So we would like to see a bit more of a balance between originations and credit metrics as we go into 2022.

Okay. Great. I wanted to talk about underwriting for a minute. Core to your underwriting is AI and machine learning. Can you talk about that and the type of refinements that you've made since the start of the pandemic?

One of the things that I'm really grateful for is just the amount of hard work and the amount of dedication and innovation that the team demonstrated last year in this area of underwriting, and the real focus on AI is a great example. So during the pandemic, we built 6 different models or updated them, right? So our data science team is really, really busy. We built a new collections risk model during the pandemic, several new response models because AI, we don't just use for underwriting and fraud management. On the marketing side, a lot of our response models and the models we use to underwrite based on marketing channel were also really driven by machine learning. So we were able to create a lot of new response models. We built a new profit model for direct mail, which continues to be an important channel for us in terms of driving demand. Mark, as you know, one of the things that we have is what we call an ADS score. It's an alternative data score. We -- when we do underwriting, you can think of it as triangulating between 3 different scores, and the ADS score is made up of data that is all outside of the bureaus. So we built a new ADS score for DM. We built a new ADS score that we could use for our new customers, because we even underwrite differently for a new customer and a repeat customer. And one of the other things that we're really excited about right now are our new products. We've reported triple digit and quadruple digit growth rates for those products. And one of the other models that we built last year was a new proprietary model for our credit card underwriting. So that's an example of all of the work that took place last year, again, all driven by data because we think of data as the lifeblood, and then the data scientists take all of that data and they keep upgrading our models or building new ones.

Excellent. That's very helpful. As you pivoted back to growth and we look forward, what does the credit box or addressable market for you look like? And how does it compare to pre-pandemic?

So I'll start with the addressable market. I think one of the really exciting things for us here at Oportun right now is we are in the midst right now of transforming our business from a strong regional player to really being a nationwide provider of credit solutions. We've historically been a state license lender. Our core product, our unsecured personal loan was available in 12 states in which we have state licenses. And one of the things that we've been working on and had announced was a relationship with MetaBank so that, that way, we could work with them and we could go ahead and expand our footprint to truly being a coast-to-coast footprint. And on August 23, we launched the first phase of that work. And we went from 12 states to 24 states. We're going to add another 17 or 18 states by the end of the year. And in doing so, we're basically going to double the addressable market for our core product. At the same time, we're also expanding the addressable market with the new products that we've been working on. So in December of 2019, we launched a credit card. And we're happy to announce today that, that portfolio is in excess of $30 million, and we have 75,000 active customers already working with us in terms of a credit card and having that daily product or that product that can be used on a daily basis in their wallets. We also have a secured personal loan product that we launched in the pandemic. That's another example of the innovation. So that product has been around a little over a year now. That receivable base now is $23 million, and it's about -- it's up significantly relative to last year because it was a small base last year. So it's up about 11,000% on a year-over-year basis. So when we think about addressable market, we think about it both in terms of expanding our geographies and in terms of expanding our product set. And even as we think about becoming a bank in the future, there's a lot more work that we think we can do, adding additional products and further expanding that lifetime relationship with our customers. So that's how we think about addressable market. From a credit box perspective, what is also exciting for us is we can drive additional growth in that bigger addressable market without expanding the credit box. We can simply take what we've already done and proven in our core states and apply that to the new states. So our credit box today, we would say, is largely the same as the 2019 credit box mark. There were a couple of areas where just given, again, the strength of the current economic environment, we've opened up a little bit more because we know we can make profitable loans in this environment. But it's largely the same as 2019. And I think that same credit box is going to help us continue to drive a lot of growth.

Okay. Historically, part of your niche has been to lend to customers who have more limited credit files, right, and using data in a way that others or maybe nontraditional sources of data to identify good credits where others might not have seen them. Have you learned anything over the last couple of years to enable you to expand the credit box a little bit just based on kind of again a deeper understanding of some of these other alternative forms of data that give you greater comfort with a slightly wider credit box?

Absolutely. If we had, had this conversation a few years ago, we probably would have said we're looking at 7 or 8 alternative data sources. Today, that number is over 20. As part of our application flow, we also connect to a customer's bank account so that we can get a sense of what that cash flow-based view of their financial picture looks like. And what that's allowed us to do, Mark, is at the kind of the margins continue to expand the customer that we serve. The marginal cost is very, very low because those customers are coming to look for us. And as we added more and more data, we were able to develop a more complete picture of them and get comfortable with underwriting. So we have expanded. We were initially focused on credit invisibles. Then we started to expand the people that had thin files. And now we're getting a chance to expand more to that near prime segment of the market that also is looking for a responsible product at low rates because all of our rates are at 36% and below. So we do believe that there is a segment expansion opportunity that is developing for us as well.

Okay. Great. How, if at all, has the expanded child care tax credit impacted your borrowers?

Well, we think that program is a wonderful program, right? Really, the goal of that is to help pull kids and pull families out of poverty and out of very difficult situations. So we were certainly supportive of that kind of stimulus regardless of what it might do to the business. The truth of the matter, and it's a bit heartbreaking at the same time, is so many of our customers and so many Americans live paycheck to paycheck, that funds like that create a bit more breathing room. They reduce stress in the household, but they don't necessarily help if the car doesn't start in the morning or if there's a loved one that needs medical attention. So we didn't see any impact, really, to the demand in our business. So as a consequence, it was both fantastic to see those programs roll out and to know that they also weren't putting any sort of a dent in our originations growth.

Okay. That's helpful context. Now turning to your strategic objectives, starting with kind of digital first. You set out earlier this year to lean more into digital and optimize your retail brand strategy. Can you talk about how that's going?

We're thrilled with the way the customer is adopting our digital offerings, and I'm really proud of the way that the group both executed the retail optimization strategy and the way that we're also redeploying those funds. So to just be able to provide a bit more detail on that, as I mentioned earlier, about a year ago, the use of our mobile channels was about 59%, and that's now gone up to 80%. So mobile is the fastest-growing channel. We think of it as the top channel, which is why, as you were just describing, when we articulate our vision, it's really to build an AI-driven digital-first business, and we are seeing that already in our business today. The other data point that we use to illustrate the use of these alternative channels, these non-retail-based channels is a year ago, about 68% of our payments were happening outside of a retail location. And today, they're about 80%. So again, the customer keeps looking for the convenience of being able to pay us or apply without coming to a location. Excuse me. Sorry about that. So that's on the mobile and digital first side. In terms of the retail optimization, as the customer was continuing to adopt mobile, what we were seeing was in some of our very dense markets like L.A., where we had a lot of locations, we were finding that the utilization of those locations was dropping. And that's not even a great job to be able to give one of our employees if they're not busy throughout the day. So the analytics team did this wonderful analysis really from a customer-based view bottoms up. And in a market like L.A., they looked at what were the utilization in those stores, who were the customers that use those stores, did they use other stores or did they show a propensity to use digital. And based on that, we came up with an outreach strategy, once we identified the stores we were going to close, what store were we going to try to direct someone to if they look like they were some in the preferred going to a retail location, or how could we help them understand all of the convenient ways that existed via mobile or third parties to be able to make a payment or apply. So looking back now, we executed that in Q1. There's been no negative impact on our business and we freed up about $19 million to be able to invest in AI and to be able to invest in digital. So I feel really good about all the elements of that strategy, how it was planned, the data behind it, the way it was executed and the overall impact on our business.

Okay. That's helpful. Just curious whether you've observed any kind of recovery in foot traffic in some of these places as people have gotten a little bit more comfortable being out and about following the earlier lockdowns. Or are you seeing more like permanent behavioral changes, where people who might not have engaged digitally or kind of forced to, but now they realize, wow, this is a level of convenience that I'm going to continue to leverage going forward.

We're seeing both. So we absolutely believe that having a retail option is a good thing for our customer and makes our business stronger. That retail option can either be one of our physical locations or it can be one of our partners, because one of the other elements of innovation during the pandemic was we started a lending-as-a-service channel, where we basically provide our underwriting engine and our application flow, and we make it available through a partner. And those partners today are people with physical locations. So we are seeing, Mark, that there is growth again in those channels. We're seeing customers come back, but it's not to the same level to which they're adopting mobile. So we're going to continue to be thoughtful about our retail network, what does it look like in combination with these partner networks, because one of the other updates we gave today is we've exceeded the goal that we had for our footprint with our partner, DolEx, yet again, and we raised our target yet again. So physical locations are really important, and we'll keep looking at how do we optimize our network to best serve the customer, and at times, to free up capital that we can invest in the channels that the customer really is telling us they want to use.

Okay. Am I right that the statistic you cited going from 59% to 80%, that was around the percentage of loans that are initiated over digital versus in-person. Is that -- so it's capturing the first stage of the process?

The application stage. .

The application, yes. So do you have a sense for how much like the broader like end-to-end from application all the way to fulfillment, how much of that has kind of moved to digital channels?

We do. We do. And we're really pleased with that as well. We don't disclose that number because right now, we think it's most helpful, both within our company and externally, to focus on the demand picture, what is it the customers are indicating they want from the very start of the process. But because of what we're seeing, Mark, one of the things that our teams are really focused on is how do they continue to streamline that process in mobile so that, that way, the conversion there in an unassisted channel, right, we can be as happy with as we are with the conversion that we've historically seen in a retail channel where there's someone that's answering questions and assisting you to get from an application all the way to a loan. So there's really some fantastic work that's happening there. And in fact, I've got a meeting in 2 days, where someone is presenting their road map for the next 6 months and how they want to continue to streamline that experience.

Okay. Excellent. And then moving to your strategic partnerships. You announced DolEx earlier, now a partnership with MetaBank. Can you remind investors what the DolEx partnership is, what it's expected to bring to the table and how it's progressing?

Absolutely. Maybe to provide a bit of context first, we're very focused on building an ecosystem of products. So we started with an unsecured personal loan. As I mentioned, we added a credit card, and now we've added a secured personal loan. And as we move forward to become a bank, we know we're going to keep adding products. We're going to help people save. We're going to help them spend. We're going to help them budget. We seek to help them invest. Our Net Promoter Scores, as you know, because you've known us now for years, is in the 79 to 80 range, which is much, much higher than even companies like the Ritz, the credit card average or the banking average. So we're going to develop this rich ecosystem of products so we can extend the lifetime with our customers and have an even more meaningful relationship. And then we're very focused on distribution, what's this ecosystem then of channels that we can use to leverage this IP, to leverage all these new products. And going back to your question, right, with that context, MetaBank and DolEx are both ways to extend distribution of that ecosystem of products and to figure out how can we continue to drive growth because these are ultimately scaled businesses. So the -- I'll start with the DolEx relationship. The DolEx relationship was meant to be a way for another company, in this case, DolEx, that has a loyal customer base and that has a need for more products than what DolEx provides by themselves, our partnership with DolEx allows them to provide that customer alone, and to do it without having to develop their own expertise. They can rely on the expertise that we've developed. They can rely on all that artificial intelligence that we were talking about earlier and the investments we've made for 15 years. So if someone goes into a DolEx location, say, to do some sort of a remittance sort of cash or check, there will be signs there that let them know that they can also get a loan through a partnership with Oportun. And they'll go ahead and they'll initiate the application on an iPad that looks exactly like our experience, our application experience. And through APIs, it leverages all of the code and all the capabilities that we've developed. So what DolEx loves about it deepens the relationship they have with their customers, right? It's incremental revenue and margin for them. And then the loan ends up on our books. So we really like it because it's not our real estate. We're not paying for the labor, right? It's purely variable, and the contribution margin is very attractive. And over time, we imagine ourselves having many of these types of relationships, not just in the money service business, but across a wide range of industries. And not just physical, but also digital, given the digital capabilities that we have. So we think of these partner programs as really being additional challenge -- channels that we'll use to distribute our products. MetaBank then is a different type of partnership, where MetaBank is the originator of loans. And what we do is we market the product and we underwrite the products. So again, we're leveraging all of the capabilities that we've built, not just the underwriting and fraud management, but in this case, all of the sophisticated marketing models that we've also created. And MetaBank allows us to expand our geographic footprint so that as we expand that geographic footprint, over time, we can also figure out how do we provide multiple products and potentially also have partnerships in that nationwide footprint. But it all comes back to increasing distribution, right, giving us multiple channels to be able to serve the customer, and allowing us to drive faster growth.

Great. That was very helpful. Moving on, you're also pursuing a bank charter here. Can you give us an update there and how that's going and what the timing looks like.

So we continue to be optimistic because the conversations that we're still having with the OCC are positive conversations. It is our sense that as acting controllers who -- he's provided this testimony, that as he moved into the role, he was going to instruct staff to take a very close look at everything that was in the pipeline, to coordinate with other agencies. And it is our sense that, that's exactly what is happening right now. So we continue to have good conversations. We think that the process is going to take longer. I think, as you know, others that have historically gone through this process, it's been a 2- to 3-year journey. The good news for us is we had a plan B in case this did take 2 to 3 years. And that plan B was the relationship with MetaBank, which is a multiyear relationship, that would allow us to expand, it would allow us to drive awareness and growth while we receive the bank charter. So still optimistic, but I think we're learning that we may need to be quite patient.

Okay. Great. So if we put all these partnerships in the bank charter together, can you give us an idea of what Oportun's distribution or coverage model looks like over the next few years?

I've been with this company, it will be 10 years early next year. And I am more excited about the next 10 years than the first 10 years. And we've done a lot of wonderful things. I'm here and our leadership team is here because of the mission. In many ways, we're focused on customers, and we're focused on communities that much as there are food deserts, their credit deserts. So we're really proud of the fact that we've put $10.5 billion into those low- and moderate-income communities. . We served almost 2 million customers. We've also saved them $2 billion in interest and fees. And we've helped 925,000 people have a credit score for the first time. So a lot for us to be proud of. But yes, like I said, I'm actually even more excited about the next 10 years because when I think about what that distribution and coverage model is going to be, Mark, in the next few years, it's really being a nationwide provider of credit. It's really entering that top tier of fintechs. I think right now because we have been focused on a part of the market that doesn't get a lot of attention, and because our footprint was primarily in 12 states, we are arguably among the best kept secrets in fintech. And as we now expand to all 50 states with all of these products and all of these channel opportunities, we think that there is an exciting opportunity to expand the impact of our mission even more and to drive more revenue and more profit for our investors.

Okay. Great. Over the last several years, you've kind of simultaneously both expanded your digital capabilities while also expanding kind of your physical geographic footprint through all these different partnerships. As you look out 5 to 10 years, do you see yourself more of the growth coming from more digital engagement or being driven more through physical locations, whether it's an Oportun or one of your different partners.

We -- as I mentioned earlier, we believe in retail. So for example, as we add these approximately 30 new states, there's going to be an opportunity for retail locations. And I really look forward to being able to hire a team, say, in Philadelphia, hire a team in Cleveland, hire a team in a lot of the metros where we're not today, and we know there are a lot of customers that could use our help. And then to your point, Mark, be able to also complement our own network with the partner networks, right, and being able to serve customers that way. Because while we're all having this conversation, there are a lot of customers right now that are walking into a location or looking at a website where credit is more expensive than it needs to be. So we want to expand both physically and digitally. So we think it's going to be both. We don't think it's an either/or. And we'll use a lot of data and a lot of analytics to figure out is our next dollar best spent investing in mobile? Or is it opening up a physical location?

Okay. Great. Switching gears and talking about new products. You're also expanding into some ancillary products like secured loans and credit cards that you already talked about. Can you give us an update on the credit card rollout and how that's progressing?

I'm really pleased with the work that the team has done there. What we did years ago was we looked at what was our customers' desire for additional products. And what we found was that even among customers who first came to us without a credit score, about half of them eventually ended up getting a credit card and about 30% of them would end up getting an auto loan. And we seek to start with a customer problem or a customer opportunity. So that data gave us a lot of confidence, combined with our high NPS scores, that customers would like to get those products from us, but they were having to turn to someone else because we didn't offer them. So we hired a group of people that was focused on just the credit card launch. They don't touch the rest of our core business. And in December of 2019, we launched that. So you fast forward to today, and as I mentioned earlier, we have 75,000 active credit card accounts. That's up almost 40% quarter-over-quarter. So we're really leaning into the growth because we now have had an opportunity for almost 2 years to look at credit metrics, to really feel like we had product market fit, and now to focus on scaling. From a receivables perspective, that receivables now is about $32 million. We set a goal of getting to $50 million by the end of the year. So we've got a lot of confidence that we're going to be able to meet or exceed that goal. And then that's going to position us really well for additional growth next year with credit card. And then secured personal loan, if you will, is about 6 months behind that because we launched it in the summer of 2020. So it's only at $23 million. But last year, I think the number was about $200,000 in receivables. So we -- again, we feel great about product market fit. We feel great about credit, and that has us leaning into scaling the program now.

Okay. Could you talk a little bit more about what the makeup of the customers for these products looks like and how it compares to your existing customer base?

It is basically our exact same customer. So one of the reasons why we're so excited about this idea of an ecosystem of products that then is permitted through the same channel is we spend a lot on marketing. We have a lot of people that come to our website and then go through the funnel. So with secured personal loans, for example, one of the things that we've been able to do is to integrate that into the same funnel so that an applicant doesn't necessarily come in and pick a door right at the beginning, right? They basically express the need for credit, we take some information, and then we either make both products available to them or the one that they do qualify for. So in essence, we continue to optimize our funnel by putting more products in it and trying to figure out how do we start a relationship with someone. We're now trying to figure out how might we be able to add credit card to that same funnel. They're already added to much of our marketing so that our marketing can present multiple products. And going back to our conversation about being a bank, that's the vision that we have, is ultimately someone who will come to our website, we'll give them a sense of all the products that we can offer, we'll figure out the right entry point based on their needs and based on the data they provide, and then we'll start a journey with them that will last for many years and seek to solve their challenges, right, their financial needs through a combination of technology and AI.

Okay. Could you talk about how the loss and return expectations for these new products compare to your existing kind of personal loan product?

Yes. So it's still early, right? But as I mentioned earlier, the initial results and with credit card now that it's been a little over 1.5 years, give us reason to be optimistic. So we're pleased right now with the credit results for credit card. They're better than what we had projected. Secured personal loan, what we've disclosed historically is that loan is about twice the size, and historically, delinquencies have been about half the rate. Frankly, we don't need them to be that low. That's also better than our initial projections. We manage our business, as you know, as a portfolio. So when we look right now with the overall credit metrics across the whole portfolio and by segment, we're really pleased, and we think it gives us an opportunity to drive more growth. That growth then will help us from a return perspective because we're focused on delivering ROEs that are in the high teens to our investors, but that's how we're thinking about it today. As we achieve more scale in those products, we know our investors are going to want to get a better sense of what the individual return characteristics look like. And as we get a bigger book of business, we'll start sharing some of those details, Mark.

Okay. Great. And just one last question for me. There's obviously a lot going on in Washington these days, a couple of big pieces of legislation and an administration that's still making key appointments across the government. Anything that you're monitoring that you think could be particularly impactful on your business?

We monitor what's happening both in Washington and at the state level very closely to understand what legislation might be taking shape. As some of the people on this call will know, we lowered all of our rates below 36% last year. We thought we'd achieve a scale where we could do that. We felt that it would create bigger differentiation relative to the alternatives that are out there and that it would help us grow faster and take share. And all those things have been true. It also reduces the risk from the kind of legislation both at a federal and a state level that we're talking about. So there's nothing we see right now, Mark, that is concerning to us, but we continue to watch it closely, especially because it's a very dynamic environment. So it feels that there's a lot of dealmaking taking place, and we want to understand what's in and what's out.

Okay. Great. Well, we're about out of time. So we'll conclude on that note. Raul, I would just like to thank you for your time and insights today. We really appreciate it.

I really appreciate the opportunity. Thank you so much, Mark.

Thanks.