Todd Schwartz: Yeah. I mean, currently, the yield — no, we forecast the yield to stay strong where — at its current levels. It really, really has to do with us not seeing the credit there. We’re also not going to chase growth by paying more necessarily. We have a benefit quite some time and seen that when you do that, you end up just getting a lot more high-risk customers into the funnel and end up paying more for less. So, I think it really has to do with the — what we’re seeing on the macroeconomic outlook. Now things can change, and we’re prepared, right? And we also have — we mentioned our most powerful model yet is launching in the second quarter, where we really, really think that on the swap in, swap outs and on some of the other attributes of the model are going to be very powerful that we put it all together.
All the testing we’ve been doing over the last year, year-and-a-half is going to allow for more growth. But right now, what we’re seeing is largely similar to last year, albeit we still have some levers that we’re working on. And like I said, some funnel efficiencies to propel growth and some geography expansion as well from the bank partners that we can service in more states. But yes, that’s kind of how we’re looking at it.
Zachary Oster: Got it. That makes sense. And then just one more follow-up question. Just on the charge-off rate specifically, we were kind of wondering if you can give more color on the dynamic of it for the year and the kind of — the way that plays out throughout the year.
Todd Schwartz: The charge-off rate as a percentage of revenue?
Zachary Oster: Yes.
Todd Schwartz: Yeah. I mean I think we’ve made a lot of gains. One thing that we mentioned on the call is year-over-year significant improvement. We expect that to stay significantly the same, if not, incremental improvement there. We’re going to always be looking for ways to improve that. But yes, as your revenue growth slows, obviously impacts some of those numbers and as a percentage of receivables as well. But we think it’s going to be largely similar for — on that aspect.
Zachary Oster: Got it. Thank you very much.
Operator: The next question we have is from Dave Storms of Stonegate. Please go ahead.
Dave Storms: Good evening. Just wanted to start, you mentioned updated acquisition criteria. I was hoping you could dive into that a little bit more and just a general sense of what you’re seeing in the M&A market.
Todd Schwartz: Yeah. On the acquisition criteria, are you referring to like top-of-funnel, like the criteria? I just want to get more specific on the question to make sure I answer it correctly.
Dave Storms: My understanding was that when you were talking about uses of cash as you look for — towards external growth, you were updating your criteria there. Did I misinterpret that?
Todd Schwartz: Sorry, you’re talking about on M&A. I’m sorry, I was focused on originations on the loan side. Well, I think, yeah, I mean, I think we’re learning a ton on the M&A side. We’ve really, really started to hone in on two or three verticals that we think are really interesting and very complementary to the OppFi brand. Our vision around being a tech-enabled platform that provides best-in-class alternative — digital alternative financial service products, where we receive supply-demand imbalance where the banks are not and the large financial institutions are not fit that bill. It’s really us just finding a situation that works for us that’s highly accretive for our shareholders and for the business and for our brand, right?
It all has to align. So, we’re being patient. This is not something that we are just going to do haphazardly. We’re going to be very thoughtful about it. We’re pulling on a lot of my — in my second life before I came back as CEO was in private equity, doing a lot of transactional stuff. So, pulling on a lot of that experience and a lot of our team’s experience to make sure that we’re going to get it right. So yeah, we’re starting to get more confidence. The market is starting to get more rational. We’re starting to see more opportunities that potentially can make sense. But nothing to report now, but we’re hard at work, and we’re starting to — we’re looking around.
Dave Storms: Understood. That’s very helpful. Thank you. And then just one more. On the auto approval rate, it took a nice step-up year-over-year, continues to grow. How do you think about the ceiling on this rate? And kind of what are the hurdles that you see over the next 12 months to continue growing that rate?
Todd Schwartz: Yeah. I mean I think we’ve made the large-scale improvement. I think it’s sitting somewhere in the neighborhood of — I think we’re at 72%. So really, really happy with tech and product and the ability to increase that year-over-year. Incrementally, every year, that’s a goal, right, is to continue to increase that. I think one of the things still talked about is on the artificial intelligence front on the servicing side. There’s great opportunity, right, during the — in the funnel to be using some of these AI tools to better really help people through the process and get them auto approved. So that we have all the documentation and making sure that the customer — we have all the information to be able to process in an automated fashion and prevent having to go to more manual style underwriting.
So, we’re looking at all options there and pulling on our tech and product teams to continue to incrementally build on that. But obviously, it’s something that we watch and track very closely.
Dave Storms: Understood. Thanks for taking my questions, and congrats on the year.
Todd Schwartz: Thank you.
Operator: [Operator Instructions] The next question we have is from [Ross Davidson of Bennington Capital] (ph). Please go ahead.
Unidentified Analyst: Hi. Thanks for taking the question, guys. Just circling back on guidance, just further question I had was you’ve launched in some more states, it sounds like. Given that, and I understand the outlook in 2024 is still cloudy and sounds like, I think, you said even similar to 2023, wouldn’t the states — or why wouldn’t the states that you’re — you’ve entered provide some uplift more than sort of what’s implied by the revenue? Am I missing something there?
