Jonathan Coblentz: Right. Because if you think about it, we were flat, right, second half of last year. And we only grew by 1% in the fourth quarter. And in February, we took a significant expense reduction actions. So €“ and we’re continuing to stay tight on our sales and marketing budget. Given that, we’re focused on a tight credit posture. So when you combine the operational improvements though we don’t guide to it, we would expect to see lower OpEx and further improvement in our efficiency ratio.
Raul Vazquez: Hal. This is Raul. Just to build on that a little bit. I’m really proud of the team and just the discipline that’s been demonstrated. Sales and marketing was down 43% year-over-year in Q4. CAC for the year was down 7%. So we were able to deliver that kind of flat operating expense that we had committed to earlier in the year, and we’re taking that discipline into this year. So we’ve already said that, the unfortunate reduction in force that was the right thing to do for our business is going to result in $48 million to $53 million in annualized savings. And if you really look at the way that we’ve guided for adjusted EBITDA, certainly, we guided for negative adjusted EBITDA in Q1. But what that means is between or for Q2 through Q4, so the remainder of the year after the first quarter.
We’re going to generate $96 million to $109 million in positive adjusted EBITDA if you look at that guidance. That’s a combination of the operating discipline that you just asked about and that Jonathan said, right, we expect it to go down. It also is our expectation that losses are going to go down in the back half of the year. So even with the modest revenue growth that we have, you have lower losses, you’ve got lower OpEx, and that generates that profit that we’re looking forward to for the rest of 2023. And it’s €“ what gets us excited about 2024, because when we think about 2024 and 2025, we’re getting down to our target range and losses, right? We continue to have this expense discipline because it’s not just going to be for 2023. We’re just going to take this as part of how we manage the business in future years.
And as the economy stabilizes, at some point we start to have originations growth again, and that generates higher levels of profitability. So we really think that this quarter is an inflection point in the business in having that expense discipline, the lower losses that will come and then at some point being able to start to grow the book again.
Hal Goetsch: Okay. And if I could ask one follow-up. Tell us about the new app and what are some of the key performance indicators that you could share with us you’re hoping to achieve with that? And will you disclose some of those to us in future periods?
Raul Vazquez: So that the app is something we’re really excited about. One of the reasons that we went ahead with the acquisition was this vision that we had of creating a one-stop shop, but being able to offer all of these products to our members in a very convenient manner. And today, obviously for all of us, that’s the phones in our pockets, it’s the apps that are on our phones. So the Oportun app, we think is the first step in creating this one stop shop in a very engaging platform for our members to come in through any product, whether they come in through savings and then need a credit €“ come in through any product, whether they come in through savings and then need a credit product or they come in with credit and then have an opportunity to build savings in an effortless way.
So that’s what we’re so excited about. The metrics that we’re tracking right now since we just launched it first is just usage. So having already over 275,000 people using our app and making payments in the app, we think indicates a really strong start. And yes, we do look forward to showing some metrics in the future, how we want to give some thought to what those metrics will be, but we do expect to start to share more of those success metrics in the future.
Hal Goetsch: All right. Terrific. Thank you.
Raul Vazquez: Thank you.
Operator: Thank you. Next question is coming from David Scharf from JMP Securities. Your line is now live.
David Scharf: Hi. Good afternoon. Thanks for taking mine as well. Maybe I’ll just kind of piggyback off of couple of the prior questions. First, just to get clarification, I know Rick asked about the warrants in terms of understanding the full extent of the dilution. In your comments of the timeline, based on the future draws, should we assume effectively 10% of what the year-end diluted outstanding count should be added to the count going forward?
Raul Vazquez: David, this is Raul. We certainly intend to draw on that capital, but what I would say is right now it’s the 5% that were in Jonathan’s comments. And certainly if we continue to draw on that capital, then we trigger the additional warrants and we’ll make sure that we message that appropriately, that we disclose that in the appropriate fashion. So for now, we would model the 5%.
David Scharf: But was there a comment about successive 2.5% tranches at certain dates? I guess that’s why I was confused, like why €“ I’m trying to reconcile the intent to fully draw and how that dovetails with your single-digit AR growth expectation versus the 10%, like €“ is it one or the other?
