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Open Lending Reports Second Quarter 2022 Financial Results

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Open Lending Corporation
Open Lending Corporation

AUSTIN, Texas, Aug. 04, 2022 (GLOBE NEWSWIRE) -- Open Lending Corporation (Nasdaq: LPRO) (the “Company” or “Open Lending”), a leading provider of lending enablement and risk analytics solutions to financial institutions, today reported financial results for its second quarter of 2022.

“Our business has performed well during the quarter, despite industry headwinds,” said John Flynn, Chairman and CEO of Open Lending. “We remain focused on what we can control, including investing in our go-to-market sales strategy to capture more of our significant and growing TAM and maintaining financial flexibility with a strong balance sheet and cash position. In Q2 we added 18 new customers, including 10 lenders that began certifying their first loans in the quarter. We also further penetrated our existing customer base, with our top 10 non-OEM customers increasing their certification volume by 33% compared to Q221.”

“While we continue to be confident in the resiliency of our business and remain excited about our long-term opportunity, we are updating our guidance for the year to take into account the short-term headwinds surrounding the auto lending industry. Despite this, our current expectations for 2022 auto loan originations at Open Lending are projected to be in line with 2021, while the current run-rates at many of the universal banks imply that their auto loan originations will be down over 20% year over year,” concluded Flynn.

Three Months Ended June 30, 2022 Highlights

  • The Company facilitated 44,531 certified loans during the second quarter of 2022, compared to 46,408 certified loans in the second quarter of 2021

  • Total revenue was $52.0 million during the second quarter of 2022, compared to $61.1 million in the second quarter of 2021

  • Gross profit was $47.0 million during the second quarter of 2022, compared to $57.0 million in the second quarter of 2021

  • Net income was $23.1 million during the second quarter of 2022, compared to $76.0 million in the second quarter of 2021

  • Adjusted EBITDA was $34.0 million during the second quarter of 2022, compared to $46.1 million in the second quarter of 2021

Adjusted EBITDA is a non-GAAP financial measure. Reconciliations of this non-GAAP financial measure to its most directly comparable GAAP financial measure are provided in the financial tables 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.”

2022 Outlook
Based on the first half of 2022 results and trends into third quarter 2022, the Company is revising its guidance ranges as follows:

 

Full Year 2022 Outlook

Total Certified Loans

155,000 - 185,000

Total Revenue

$175 - 205 million

Adjusted EBITDA

$110 - 135 million

Adjusted Operating Cash Flow(a)

$115 - 145 million

  1. Adjusted Operating Cash Flow is defined as Adjusted EBITDA, minus CAPEX, +/- change in contract assets.

The guidance provided above includes forward-looking statements within the meaning of U.S. securities laws. While the financial guidance takes into account the continuing impact of the global COVID-19 pandemic, the impact of the pandemic has been unprecedented and the future effect of the pandemic on the global economy and our financial results remains uncertain, and our actual results may differ materially. See “Forward-Looking Statements” below.

Conference Call
Open Lending will host a conference call to discuss the second quarter 2022 financial results today at 5:00 pm ET. Hosting the call will be John Flynn, Chairman and CEO, Ross Jessup, President and COO, and Chuck Jehl, CFO. 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 (800) 582-4096, or for international callers (212) 231-2935; the conference ID is 22019615. 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 by saying “yes” to more automotive loans. 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, the impact of the global COVID-19 pandemic on factors impacting the Company’s business, the Company’s new lender pipeline, consumer behavior and demand for automotive loans, as well as future financial performance under the heading “2022 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; the continuing effects of the COVID-19 pandemic on consumer behavior; 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 is, or may become a party; failure to realize the anticipated benefits of the business combination with Nebula Acquisition Corporation (“Business Combination”); 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, 2021 and our subsequently filed Quarterly Reports on Form 10-Q. 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 they currently believe 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 their 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 tax expense, depreciation and amortization expense, share-based compensation expense, gain on extinguishment of tax receivable agreement and loss on extinguishment of debt. 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, 2022

 

December 31, 2021

Assets

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

167,695

 

 

$

116,454

 

Restricted cash

 

 

3,412

 

 

 

3,055

 

Accounts receivable, net

 

 

6,960

 

 

 

6,525

 

Current contract assets, net

 

 

73,338

 

 

 

70,542

 

Income tax receivable

 

 

4,309

 

 

 

1,345

 

Other current assets

 

 

3,341

 

 

 

4,873

 

Total current assets

 

 

259,055

 

 

 

202,794

 

Property and equipment, net

 

 

2,791

 

 

 

2,663

 

Operating lease right-of-use assets, net

 

 

4,904

 

 

 

5,189

 

Non-current contract assets, net

 

 

33,410

 

 

 

42,414

 

Deferred tax asset, net

 

 

66,501

 

 

 

65,503

 

Other non-current assets

 

 

152

 

 

 

262

 

Total assets

 

$

366,813

 

 

$

318,825

 

Liabilities and stockholders’ equity

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable

 

 

421

 

 

 

1,285

 

Accrued expenses

 

 

6,105

 

 

 

3,984

 

Current portion of debt

 

 

3,906

 

 

 

3,125

 

Third-party claims administration liability

 

 

3,037

 

 

 

3,050

 

Other current liabilities

 

 

546

 

 

 

621

 

Total current liabilities

 

 

14,015

 

 

 

12,065

 

Long-term debt, net of deferred financing costs

 

 

140,959

 

 

 

143,135

 

Non-current operating lease liabilities

 

 

4,371

 

 

 

4,643

 

Total liabilities

 

$

159,345

 

 

$

159,843

 

Commitments and contingencies

 

 

 

 

Stockholders’ equity

 

 

 

 

Preferred stock, $0.01 par value; 10,000,000 shares authorized, none issued and outstanding

 

 

 

 

 

 

Common stock, $0.01 par value; 550,000,000 shares authorized, 128,198,185 shares issued and 126,225,550 shares outstanding as of June 30, 2022 and 128,198,185 shares issued and 126,212,876 shares outstanding as of December 31, 2021

 

 

1,282

 

 

 

1,282

 

Additional paid-in capital

 

 

498,745

 

 

 

496,983

 

Accumulated deficit

 

 

(236,159

)

 

 

(282,439

)

Treasury stock at cost, 1,972,635 shares at June 30, 2022 and 1,985,309 at December 31, 2021, respectively

 

 

(56,400

)

 

 

(56,844

)

Total stockholders’ equity

 

 

207,468

 

 

 

158,982

 

Total liabilities and stockholders’ equity

 

$

366,813

 

 

$

318,825

 

 

 

 

 

 

 

 

 

 


 

OPEN LENDING CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except share data)

 

 

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2022

 

2021

 

2022

 

2021

Revenue

 

 

 

 

 

 

 

Profit share

$

29,157

 

 

$

38,842

 

 

$

57,467

 

 

$

66,572

 

Program fees

 

20,731

 

 

 

20,597

 

 

 

40,457

 

 

 

35,508

 

Claims administration and other service fees

 

2,156

 

 

 

1,686

 

 

 

4,188

 

 

 

3,053

 

Total revenue

 

52,044

 

 

 

61,125

 

 

 

102,112

 

 

 

105,133

 

Cost of services

 

5,085

 

 

 

4,140

 

 

 

9,873

 

 

 

7,502

 

Gross profit

 

46,959

 

 

 

56,985

 

 

 

92,239

 

 

 

97,631

 

Operating expenses

 

 

 

 

 

 

 

General and administrative

 

7,968

 

 

 

8,381

 

 

 

15,450

 

 

 

16,593

 

Selling and marketing

 

3,994

 

 

 

2,954

 

 

 

7,727

 

 

 

5,351

 

Research and development

 

2,188

 

 

 

773

 

 

 

4,011

 

 

 

1,364

 

Total operating expenses

 

14,150

 

 

 

12,108

 

 

 

27,188

 

 

 

23,308

 

Operating income

 

32,809

 

 

 

44,877

 

 

 

65,051

 

 

 

74,323

 

Interest expense

 

(1,124

)

 

 

(1,122

)

 

 

(1,927

)

 

 

(4,411

)

Interest income

 

22

 

 

 

58

 

 

 

47

 

 

 

142

 

Gain on extinguishment of tax receivable agreement

 

 

 

 

55,422

 

 

 

 

 

 

55,422

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

 

 

(8,778

)

Other expense

 

 

 

 

(2

)

 

 

 

 

 

(133

)

Income before income taxes

 

31,707

 

 

 

99,233

 

 

 

63,171

 

 

 

116,565

 

Income tax expense

 

8,581

 

 

 

23,267

 

 

 

16,891

 

 

 

27,737

 

Net income

$

23,126

 

 

$

75,966

 

 

$

46,280

 

 

$

88,828

 

Net income per common share

 

 

 

 

 

 

 

Basic

$

0.18

 

 

$

0.60

 

 

 

0.37

 

 

 

0.70

 

Diluted

$

0.18

 

 

$

0.60

 

 

 

0.37

 

 

 

0.70

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

Basic

 

126,221,689

 

 

 

126,230,752

 

 

 

126,218,710

 

 

 

126,515,343

 

Diluted

 

126,222,366

 

 

 

126,274,197

 

 

 

126,219,115

 

 

 

126,554,082

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

OPEN LENDING CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)

 

 

 

 

 

Six Months Ended June 30,

 

 

2022

 

2021

Cash flows from operating activities

 

 

 

 

Net income

 

$

46,280

 

 

$

88,828

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Share-based compensation

 

 

2,269

 

 

 

1,628

 

Depreciation and amortization

 

 

614

 

 

 

537

 

Non-cash operating lease cost

 

 

285

 

 

 

268

 

Gain on extinguishment of tax receivable agreement

 

 

 

 

 

(55,422

)

Loss on extinguishment of debt

 

 

 

 

 

8,778

 

Deferred income taxes

 

 

(998

)

 

 

16,903

 

Changes in assets & liabilities:

 

 

 

 

Accounts receivable, net

 

 

(435

)

 

 

(3,217

)

Contract assets, net

 

 

6,208

 

 

 

(22,591

)

Other current and non-current assets

 

 

1,477

 

 

 

(1,133

)

Accounts payable

 

 

(885

)

 

 

(1,455

)

Accrued expenses

 

 

2,094

 

 

 

1,377

 

Income tax payable/receivable

 

 

(2,964

)

 

 

(1,720

)

Operating lease liabilities

 

 

(240

)

 

 

(349

)

Third-party claims administration liability

 

 

(13

)

 

 

299

 

Other current and non-current liabilities

 

 

(105

)

 

 

252

 

Net cash provided by operating activities

 

 

53,587

 

 

 

32,983

 

Cash flows from investing activities

 

 

 

 

Purchase of property and equipment

 

 

(364

)

 

 

(841

)

Net cash used in investing activities

 

 

(364

)

 

 

(841

)

Cash flows from financing activities

 

 

 

 

Proceeds from term loans

 

 

 

 

 

125,000

 

Proceeds from revolving facility

 

 

 

 

 

50,000

 

Payments on term loans

 

 

(1,562

)

 

 

(167,628

)

Payments on revolving loan

 

 

 

 

 

(25,000

)

Payment of deferred financing costs

 

 

 

 

 

(1,669

)

Shares withheld for taxes for restricted stock units

 

 

(63

)

 

 

 

Settlement of tax receivable agreement

 

 

 

 

 

(36,948

)

Share repurchase

 

 

 

 

 

(20,000

)

Net cash used in financing activities

 

 

(1,625

)

 

 

(76,245

)

Net change in cash and cash equivalents and restricted cash

 

 

51,598

 

 

 

(44,103

)

Cash and cash equivalents and restricted cash at the beginning of the period

 

 

119,509

 

 

 

104,148

 

Cash and cash equivalents and restricted cash at the end of the period

 

$

171,107

 

 

$

60,045

 

Supplemental disclosure of cash flow information:

 

 

 

 

Interest paid

 

$

1,756

 

 

$

3,776

 

Income tax paid, net

 

 

20,853

 

 

 

12,452

 

Non-cash investing and financing:

 

 

 

 

Internally developed software accrued but not paid

 

$

27

 

 

$

660

 

Property and equipment accrued but not paid

 

 

21

 

 

 

 

 

 

 

 

 

 

 

 

 


 

OPEN LENDING CORPORATION
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited, in thousands)

 

 

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2022

 

2021

 

2022

 

2021

Net income

$

23,126

 

 

$

75,966

 

 

$

46,280

 

 

$

88,828

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

Interest expense

 

1,124

 

 

 

1,122

 

 

 

1,927

 

 

 

4,411

 

Income tax expense

 

8,581

 

 

 

23,267

 

 

 

16,891

 

 

 

27,737

 

Depreciation and amortization expense

 

226

 

 

 

196

 

 

 

447

 

 

 

389

 

Share-based compensation expense

 

988

 

 

 

927

 

 

 

2,269

 

 

 

1,628

 

Gain on extinguishment of tax receivable agreement (1)

 

 

 

 

(55,422

)

 

 

 

 

 

(55,422

)

Loss on extinguishment of debt (2)

 

 

 

 

 

 

 

 

 

 

8,778

 

Total adjustments

 

10,919

 

 

 

(29,910

)

 

 

21,534

 

 

 

(12,479

)

Adjusted EBITDA

 

34,045

 

 

 

46,056

 

 

 

67,814

 

 

 

76,349

 

Total revenue

$

52,044

 

 

$

61,125

 

 

$

102,112

 

 

$

105,133

 

Adjusted EBITDA margin

 

65

%

 

 

75

%

 

 

66

%

 

 

73

%

 

 

 

 

 

 

 

 

Adjusted operating cash flows (3)

 

 

 

 

 

 

 

Adjusted EBITDA

$

34,045

 

 

$

46,056

 

 

$

67,814

 

 

$

76,349

 

CAPEX

 

(178

)

 

 

(838

)

 

 

(364

)

 

 

(841

)

Decrease (increase) in contract assets, net

 

704

 

 

 

(14,715

)

 

 

6,208

 

 

 

(22,591

)

Adjusted operating cash flows

$

34,571

 

 

$

30,503

 

 

$

73,658

 

 

$

52,917

 

Notes:

(1)   Reflects the gain recognized as a result of the early termination and settlement of the tax receivable agreement.
(2)   Reflects unamortized deferred financing costs that were written off in connection with the refinancing of our Term Loan due 2027 on March 19, 2021.
(3)   Adjusted operating cash flow is defined as Adjusted EBITDA, minus CAPEX, +/- change in contract assets.