Open Lending Reports Second Quarter 2024 Financial Results


AUSTIN, Texas, Aug. 08, 2024 (GLOBE NEWSWIRE) -- Open Lending Corporation (Nasdaq: LPRO) (the “Company” or “Open Lending”), an industry trailblazer in lending enablement and risk analytics solutions for financial institutions, today reported financial results for its second quarter of 2024.

“For the second quarter of 2024 we were near or above the high end of our guidance range across certified loans, revenue, and Adjusted EBITDA, excluding a negative change in estimate associated with our profit share,” said Chuck Jehl, Chief Financial Officer and Interim Chief Executive Officer of Open Lending. "While the automotive lending environment continues to face challenges, I am encouraged by the early signs of improvement in market conditions and remain confident in the long-term opportunities ahead of us. ”

Three Months Ended June 30, 2024 Highlights

  • The Company facilitated 28,963 certified loans during the second quarter of 2024, compared to 34,354 certified loans in the second quarter of 2023.
  • Total revenue was $26.7 million during the second quarter of 2024, compared to $38.2 million in the second quarter of 2023. The second quarter of 2024 was negatively impacted by a $6.7 million reduction in estimated future profit share revenues related to business in historic vintages as compared to a $1.2 million reduction in the second quarter of 2023.
  • Gross profit was $21.0 million during the second quarter of 2024, compared to $32.0 million in the second quarter of 2023.
  • Net income was $2.9 million during the second quarter of 2024, compared to $11.4 million in the second quarter of 2023.
  • Adjusted EBITDA was $9.9 million during the second quarter of 2024, compared to $20.7 million in the second quarter of 2023.

Adjusted EBITDA is a non-GAAP financial measure. A reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure is provided in the financial table included at the end of this press release. An explanation of this measure and how it is calculated is also included under the heading “Non-GAAP Financial Measures.”

Third Quarter 2024 Outlook

Based on trends into the third quarter of 2024, the Company is issuing its third quarter 2024 guidance ranges as follows:

Total Certified Loans25,000 - 28,000
Total Revenue$28 - $31 million
Adjusted EBITDA$11 - $14 million

The guidance provided above includes forward-looking statements within the meaning of U.S. securities laws. See “Forward-Looking Statements” below.

Conference Call
Open Lending will host a conference call to discuss the second quarter 2024 financial results today at 5:00 pm ET. The conference call will be webcast live from the Company's investor relations website at https://investors.openlending.com/ under the “Events” section. The conference call can also be accessed live over the phone by dialing (877) 407-4018, or for international callers (201) 689-8471; the conference ID is 13747056. An archive of the webcast will be available at the same location on the website shortly after the call has concluded.

About Open Lending
Open Lending (Nasdaq: LPRO) provides loan analytics, risk-based pricing, risk modeling and default insurance to auto lenders throughout the United States. For over 20 years, we have been empowering financial institutions to create profitable auto loan portfolios with less risk and more reward. For more information, please visit www.openlending.com.

Forward-Looking Statements
This press release includes certain statements that are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995, including statements related to market trends, consumer behavior and demand for automotive loans, as well as future financial performance under the heading “Third Quarter 2024 Outlook” above. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These statements are based on various assumptions and on the current expectations of the Company’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the Company’s control. These forward-looking statements are subject to a number of risks and uncertainties, including general economic, market, political and business conditions; applicable taxes, inflation, supply chain disruptions including global hostilities and responses thereto, interest rates and the regulatory environment; the outcome of judicial proceedings to which Open Lending may become a party; and other risks discussed in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2023. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that the Company presently does not know or that it currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect the Company’s expectations, plans or forecasts of future events and views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its assessments to change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company’s assessments as of any date subsequent to the date of this press release. Accordingly, undue reliance should not be placed upon the forward-looking statements.

Non-GAAP Financial Measures
The non-GAAP financial measures included in this press release are financial information that has not been prepared in accordance with GAAP. The Company uses Adjusted EBITDA, Adjusted EBITDA margin and Adjusted operating cash flows internally in analyzing our financial results and believes these measures are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance. The Company believes that the use of non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial results with other companies in our industry, many of which present similar non-GAAP financial measures to investors.

The Company believes these measures provide useful information to investors and others in understanding and evaluating its operating results in the same manner as its management and board of directors. In addition, these measures provide useful measures for period-to-period comparisons of our business, as they remove the effect of certain non-cash items and certain non-recurring variable charges. Adjusted EBITDA is defined as GAAP net income excluding interest expense, income taxes, depreciation and amortization expense of property and equipment, and share-based compensation expense. Adjusted EBITDA margin is defined as Adjusted EBITDA expressed as a percentage of total revenue. Adjusted operating cash flows is defined as Adjusted EBITDA, minus CAPEX, +/- change in contract assets.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measure provided in the financial statement tables included below in this press release.

Contact:
ICR for Open Lending
Investors
openlending@icrinc.com

 
OPEN LENDING CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited, in thousands, except share data)
     
  June 30, 2024 December 31, 2023
Assets    
Current assets    
Cash and cash equivalents $248,007  $240,206 
Restricted cash  4,458   6,463 
Accounts receivable, net  4,439   4,616 
Current contract assets, net  22,601   28,704 
Income tax receivable  8,060   7,035 
Other current assets  5,650   2,852 
Total current assets  293,215   289,876 
Fixed assets, net  4,835   3,913 
Operating lease right-of-use asset, net  3,663   3,990 
Contract assets  11,130   610 
Deferred tax asset, net  66,256   70,113 
Other assets  3,703   5,535 
Total assets $382,802  $374,037 
Liabilities and stockholders’ equity    
Current liabilities    
Accounts payable $899  $375 
Accrued expenses  8,214   8,131 
Current portion of debt  7,500   4,688 
Third-party claims administration liability  4,482   6,464 
Other current liabilities  915   932 
Total current liabilities  22,010   20,590 
Long-term debt, net of deferred financing costs  135,787   139,357 
Operating lease liabilities  3,105   3,450 
Other liabilities  5,117   5,060 
Total liabilities $166,019  $168,457 
Commitments and contingencies    
Stockholders’ equity    
Preferred stock, $0.01 par value; 10,000,000 shares authorized and none issued and outstanding $  $ 
Common stock, $0.01 par value; 550,000,000 shares authorized, 128,198,185 shares issued and 119,251,295 shares outstanding as of June 30, 2024 and 128,198,185 shares issued and 118,819,795 shares outstanding as of December 31, 2023  1,282   1,282 
Additional paid-in capital  499,732   502,032 
Accumulated deficit  (185,760)  (193,749)
Treasury stock at cost, 8,946,890 shares at June 30, 2024 and 9,378,390 at December 31, 2023  (98,471)  (103,985)
Total stockholders’ equity $216,783  $205,580 
Total liabilities and stockholders’ equity $382,802  $374,037 
         


 
OPEN LENDING CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except share data)
    
 Three Months Ended June 30, Six Months Ended June 30,
 2024 2023 2024 2023
Revenue       
Program fees$14,836  $17,893  $29,145  $35,194 
Profit share 9,333   17,809   23,215   36,411 
Claims administration and other service fees 2,558   2,452   5,112   4,910 
Total revenue 26,727   38,154   57,472   76,515 
Cost of services 5,713   6,117   11,463   11,548 
Gross profit 21,014   32,037   46,009   64,967 
Operating expenses       
General and administrative 11,745   10,971   23,724   21,166 
Selling and marketing 4,149   4,218   8,363   8,627 
Research and development 1,130   1,128   2,609   2,358 
Total operating expenses 17,024   16,317   34,696   32,151 
Operating income 3,990   15,720   11,313   32,816 
Interest expense (2,736)  (2,655)  (5,506)  (5,042)
Interest income 3,086   2,452   6,057   4,516 
Other expense, net    (6)     (6)
Income before income taxes 4,340   15,511   11,864   32,284 
Income tax expense 1,438   4,140   3,875   8,375 
Net income$2,902  $11,371  $7,989  $23,909 
Net income per common share       
Basic$0.02  $0.09  $0.07  $0.20 
Diluted$0.02  $0.09  $0.07  $0.20 
Weighted average common shares outstanding       
Basic 119,206,370   120,648,658   119,066,270   121,878,503 
Diluted 119,331,472   121,540,094   119,387,598   122,456,565 
                


 
OPEN LENDING CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
  
 Six Months Ended June 30,
 2024 2023
Cash flows from operating activities   
Net income$7,989  $23,909 
Adjustments to reconcile net income to net cash provided by operating activities:   
Share-based compensation 4,222   4,163 
Depreciation and amortization of fixed assets 787   496 
Amortization of debt issuance costs 214   210 
Non-cash operating lease cost 327   305 
Deferred income taxes 3,857   1,782 
Other 37   6 
Changes in assets & liabilities:   
Accounts receivable, net 177   (608)
Contract assets, net (4,417)  15,775 
Other current and non-current assets (2,885)  (633)
Accounts payable 524   (259)
Accrued expenses 191   857 
Income tax receivable, net 843   (2,133)
Operating lease liabilities (307)  (272)
Third-party claims administration liability (1,982)  1,263 
Other current and non-current liabilities 22   718 
Net cash provided by operating activities 9,599   45,579 
Cash flows from investing activities   
Purchase of property and equipment (51)  (77)
Capitalized software development costs (1,677)  (766)
Net cash used in investing activities (1,728)  (843)
Cash flows from financing activities   
        
Payments on term loans (938)  (1,875)
        
        
Shares repurchased    (21,323)
Shares withheld for taxes related to restricted stock units (1,137)  (275)
Net cash used in financing activities (2,075)  (23,473)
Net change in cash and cash equivalents and restricted cash 5,796   21,263 
Cash and cash equivalents and restricted cash at the beginning of the period 246,669   208,519 
Cash and cash equivalents and restricted cash at the end of the period$252,465  $229,782 
Supplemental disclosure of cash flow information:   
Interest paid$6,260  $4,974 
Income tax paid (refunded), net$(825) $8,726 
Non-cash investing and financing:   
Share-based compensation for capitalized software development$129  $42 
Capitalized software development costs accrued but not paid$127  $59 
Accrued excise tax associated with share repurchase$  $190 
        


 
OPEN LENDING CORPORATION
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited, in thousands)
    
 Three Months Ended June 30, Six Months Ended June 30,
 2024 2023 2024 2023
Net income$2,902  $11,371  $7,989  $23,909 
Non-GAAP adjustments:       
Interest expense 2,736   2,655   5,506   5,042 
Income tax expense 1,438   4,140   3,875   8,375 
Depreciation and amortization of fixed assets 415   252   787   496 
Share-based compensation 2,368   2,319   4,222   4,163 
Total adjustments 6,957   9,366   14,390   18,076 
Adjusted EBITDA$9,859  $20,737  $22,379  $41,985 
Total revenue$26,727  $38,154  $57,472  $76,515 
Adjusted EBITDA margin 37%  54%  39%  55%
        
Adjusted operating cash flows(1)       
Adjusted EBITDA$9,859  $20,737  $22,379  $41,985 
CAPEX (1,086)  (508)  (1,728)  (843)
Decrease (increase) in contract assets, net (1,803)  6,287   (4,417)  15,775 
Adjusted operating cash flows$6,970  $26,516  $16,234  $56,917 
                

(1) Adjusted operating cash flows is defined as Adjusted EBITDA, minus CAPEX, +/- change in contract assets.