Happen (HAPN) Q1 2025 earnings summary

Executive summary

• Loan originations grew 21% year-over-year to $2.0 billion, driven by strong borrower and investor demand, with HFI originations rising to 34% of total originations.

• Total net revenue increased 20% year-over-year to $217.7 million, with net interest income up 22% and marketplace revenue up 17%.

• Net income was $11.7 million, down 5% year-over-year, with diluted EPS of $0.10, impacted by $8.1 million in allowance and fair value adjustments due to macroeconomic uncertainty.

• Surpassed $100 billion in lifetime originations and maintained strong member engagement, with over 5 million members and a Net Promoter Score of 81.

• Enhanced product features, completed a $100 million structured certificates transaction, and acquired Cushion's AI-powered spending intelligence IP and talent.

Financial highlights

• Net interest income reached $150 million, up 22% year-over-year, with net interest margin improving to 5.97%.

• Pre-provision net revenue (PPNR) rose 52% year-over-year to $73.8 million.

• Provision for credit losses increased to $58 million, reflecting higher retention and macroeconomic allowance.

• Net charge-off ratio improved to 4.8% from 6.9% year-over-year; net charge-offs were $48.9 million.

• Deposits grew 18% year-over-year to $8.9 billion, with 87% FDIC-insured.

Outlook and guidance

• Q2 2025 loan originations expected between $2.1 billion and $2.3 billion, up 16%–27% year-over-year.

• Q2 2025 pre-provision net revenue guidance is $70–$80 million, up 27%–46% year-over-year.

• Management expects capital expenditures of approximately $155 million in 2025, including a new headquarters property.

• Liquidity is considered sufficient for the next twelve months and beyond, supported by cash, liquid securities, deposits, and borrowing capacity.

• On track to achieve Q4 originations and ROTCE targets, barring macro deterioration.