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Open Lending Reports Second Quarter 2021 Financial Results

AUSTIN, Texas, Aug. 10, 2021 (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 2021.

“We are pleased to report another record quarter, which included a 148% increase in certified loans, a 177% increase in revenue and a 199% increase in Adjusted EBITDA compared to the second quarter of 2020. June was especially notable, a record month in our Company’s history from a certified loan perspective, and the momentum has continued,” said John Flynn, Chairman and CEO of Open Lending. “We continue to make progress on our growth strategies to capture more of the $250 billion addressable market and help underserved consumers get auto loans. During the quarter, we signed an agreement with a third insurance partner, American National, and they have already begun to write policies for us. Looking ahead, our pipeline of new credit union and regional bank customers is strong and there remains a large opportunity in front of us to grow our OEM captive business.”

Three Months Ended June 30, 2021 Highlights

  • The Company facilitated 46,408 certified loans during the second quarter of 2021, compared to 18,684 certified loans in the second quarter of 2020

  • Total revenue was $61.1 million during the second quarter of 2021, compared to $22.1 million in the second quarter of 2020

  • Gross profit was $57.0 million during the second quarter of 2021, compared to $20.2 million in the second quarter of 2020

  • Net income was $76.0 million during the second quarter of 2021, compared to net loss of $(49.8) million in the second quarter of 2020

  • Adjusted EBITDA was $46.1 million during the second quarter of 2021, compared to $15.4 million in the second quarter of 2020

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 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.”

2021 Outlook
Based on the second quarter results and trends into the third quarter of 2021, the Company is reaffirming its previously issued guidance of the following:

Full Year 2021 Outlook

Total Certified Loans

161,000 - 206,000

Total Revenue

$184 - $234 million

Adjusted EBITDA

$125 - $168 million

Adjusted Operating Cash Flow (a)

$81 - $111 million

  1. Adjusted Operating Cash Flow is defined as Adjusted EBITDA, minus CAPEX, plus or minus 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 2021 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 (877) 407-4018, or for international callers (201) 689-8471. A replay will be available two hours after the call and can be accessed by dialing (844) 512-2921 or (412) 317-6671 for international callers; the conference ID is 13721622. The replay will be available until Tuesday, August 24, 2021. 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 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 anticipated 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 “2021 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, political and business conditions; the continuing effects of the COVID-19 pandemic on consumer behavior; applicable taxes, inflation, 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; the amount of redemption requests made by the Company’s stockholders; those factors discussed in other documents of the Company filed, or to be filed, with the SEC. 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 is 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 believe it is useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance. The Company believes that the use of this non-GAAP financial measure 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, they 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 (loss) excluding interest expense, provision for income taxes, depreciation and amortization expense (including amortization of right-of-use assets), share-based compensation expense, gain on extinguishment of the Company's tax receivable agreement, loss on extinguishment of debt, change in fair value of contingent consideration and transaction bonuses as a result of the business combination with Nebula Acquisition Corporation (“Business Combination”). 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, plus or minus 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,
2021

December 31,
2020

Assets

Current assets

Cash and cash equivalents

$

57,154

$

101,513

Restricted cash

2,891

2,635

Accounts receivable

7,569

4,352

Current contract assets

61,032

50,386

Income tax receivable

80

Prepaid expenses

4,390

1,873

Other current assets

634

2,018

Total current assets

133,750

162,777

Property and equipment, net

2,581

1,201

Operating lease right-of-use assets, net

5,465

5,733

Non-current contract assets

50,901

38,956

Deferred tax asset, net

68,315

85,218

Other non-current assets

124

124

Total assets

$

261,136

$

294,009

Liabilities and stockholders’ equity

Current liabilities

Accounts payable

1,987

3,442

Accrued expenses

5,070

3,033

Income tax payable

1,640

Current portion of debt

3,125

4,888

Other current liabilities

4,460

4,005

Total current liabilities

14,642

17,008

Long-term debt, net of deferred financing costs

144,518

152,859

Non-current operating lease liabilities

4,898

5,138

Tax receivable agreement liability

92,369

Other non-current liabilities

13

Total liabilities

$

164,058

$

267,387

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 126,190,351 shares outstanding as of June 30, 2021 and 128,198,185 shares issued and
126,803,096 shares outstanding as of December 31, 2020

1,282

1,282

Additional paid-in capital

492,874

491,246

Accumulated deficit

(339,578

)

(428,406

)

Treasury stock at cost, 2,007,834 shares at June 30, 2021 and 1,395,089 at December 31, 2020, respectively

(57,500

)

(37,500

)

Total stockholders’ equity

97,078

26,622

Total liabilities and stockholders’ equity

$

261,136

$

294,009


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

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Revenue

Program fees

$

20,597

$

8,793

$

35,508

$

21,505

Profit share

38,842

12,163

66,572

15,938

Claims administration service fees

1,686

1,111

3,053

2,054

Total revenue

61,125

22,067

105,133

39,497

Cost of services

4,140

1,827

7,502

4,322

Gross profit

56,985

20,240

97,631

35,175

Operating expenses

General and administrative

8,381

14,650

16,593

18,218

Selling and marketing

2,954

1,295

5,351

3,373

Research and development

773

349

1,364

707

Operating income

44,877

3,946

74,323

12,877

Interest expense

(1,122

)

(3,644

)

(4,411

)

(4,408

)

Interest income

58

44

142

61

Gain on extinguishment of tax receivable agreement

55,422

55,422

Loss on extinguishment of debt

(8,778

)

Change in fair value of contingent consideration

(48,802

)

(48,802

)

Other (expense) income

(2

)

3

(133

)

3

Income (loss) before income taxes

99,233

(48,453

)

116,565

(40,269

)

Provision for income taxes

23,267

1,352

27,737

1,364

Net income (loss) and comprehensive income (loss)

$

75,966

$

(49,805

)

$

88,828

$

(41,633

)

Preferred distribution to redeemable convertible
Series C preferred units

(214

)

(40,689

)

Accretion to redemption value of redeemable
convertible Series C preferred units

47,537

Net income (loss) attributable to common stockholders

$

75,966

$

(50,019

)

$

88,828

$

(34,785

)

Net income (loss) and comprehensive income (loss)
per common share

Basic

$

0.60

$

(1.01

)

$

0.70

$

(0.80

)

Diluted

$

0.60

$

(1.01

)

$

0.70

$

(0.80

)

Weighted average common shares outstanding

Basic

126,230,752

49,547,284

126,515,343

43,589,168

Diluted

126,274,197

49,547,284

126,554,082

43,589,168


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

Six Months Ended June 30,

2021

2020

Cash flows from operating activities

Net income (loss)

$

88,828

$

(41,633

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Share-based compensation

1,628

2,676

Depreciation and amortization

537

483

Amortization of right-of-use assets

268

188

Gain on extinguishment of tax receivable agreement

(55,422

)

Loss on extinguishment of debt

8,778

Change in fair value of contingent consideration

48,802

Deferred income taxes

16,903

775

Changes in assets & liabilities:

Accounts receivable

(3,217

)

574

Contract assets

(22,591

)

225

Prepaid expenses

(2,517

)

(1,150

)

Deferred transaction costs

1,081

Other current and non-current assets

1,384

322

Accounts payable

(1,455

)

176

Accrued expenses

1,377

(1,184

)

Income tax payable/receivable

(1,720

)

569

Operating lease liabilities

(349

)

(178

)

Other current and non-current liabilities

551

280

Net cash provided by operating activities

32,983

12,006

Cash flows from investing activities

Purchase of property and equipment

(841

)

(424

)

Net cash used in investing activities

(841

)

(424

)

Cash flows from financing activities

Proceeds from term loans

125,000

170,000

Proceeds from revolving facility

50,000

Payments on term loans

(167,628

)

(4,380

)

Payments on revolving facility

(25,000

)

Payment of deferred financing costs

(1,669

)

(9,767

)

Distributions to Open Lending, LLC unitholders

(135,380

)

Share repurchase

(20,000

)

Settlement of tax receivable agreement

(36,948

)

Recapitalization transaction, net of transaction costs

(13,289

)

Net cash (used in) provided by financing activities

(76,245

)

7,184

Net change in cash and cash equivalents and restricted cash

(44,103

)

18,766

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

104,148

9,898

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

$

60,045

$

28,664

Supplemental disclosure of cash flow information:

Interest paid

$

3,776

$

3,958

Income tax paid, net

12,452

20

Non-cash investing and financing:

Internally developed software accrued but not paid

$

660

$

Change in fair value of redeemable convertible series C preferred units

(47,537

)

Conversion of preferred stock to common stock

257,406


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

Three Months Ended
June 30,

Six Months Ended
June 30,

2021

2020

2021

2020

Adjusted EBITDA reconciliation to net income (loss)

Net income (loss)

$

75,966

$

(49,805

)

$

88,828

$

(41,633

)

Non-GAAP adjustments:

Interest expense

1,122

3,644

4,411

4,408

Provision for income taxes

23,267

1,352

27,737

1,364

Depreciation and amortization expense

196

120

389

242

Share-based compensation (1)

927

2,189

1,628

2,676

Gain on extinguishment of tax receivable agreement (2)

(55,422

)

(55,422

)

Loss on extinguishment of debt (3)

8,778

Change in fair value of contingent consideration (4)

48,802

48,802

Transaction bonuses (5)

9,112

9,112

Total adjustments

(29,910

)

65,219

(12,479

)

66,604

Adjusted EBITDA

46,056

15,414

76,349

24,971

Total revenue

$

61,125

$

22,067

$

105,133

$

39,497

Adjusted EBITDA margin

75

%

70

%

73

%

63

%

Adjusted operating cash flows (6)

Adjusted EBITDA

$

46,056

$

15,414

$

76,349

$

24,971

Capex

(838

)

(341

)

(841

)

(424

)

(Increase) decrease in contract assets

(14,715

)

(3,977

)

(22,591

)

225

Adjusted operating cash flows

$

30,503

$

11,096

$

52,917

$

24,772

Notes:

(1)

Includes $2.2 million of non-cash charges incurred in connection with the accelerated vesting of the legacy share-based awards, as a result of the Business Combination for the three and six months ended June 30, 2020.

(2)

Reflects the gain recognized as a result of the early termination and settlement of the tax receivable agreement.

(3)

Reflects the loss recognized in connection with the refinancing of our Term Loan due 2027 on March 19, 2021, which primarily consists of the write-off of unamortized deferred financing costs.

(4)

Reflects non-cash charges for the change in the estimated fair value of contingent consideration from June 10, 2020 through June 30, 2020.

(5)

Reflects transaction bonuses awarded to key employees and directors in connection with the Business Combination in the three and six months ended June 30, 2020.

(6)

Adjusted operating cash flow is defined as adjusted EBITDA, minus capex, plus or minus change in contract assets.