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 2023.
“We are pleased to have reported results ahead
of our expectations again in the second quarter, including the
certification of 34,354 loans,” said Keith Jezek, CEO of Open
Lending. “Our intense focus on optimizing sales channels, enhancing
our technology offering and attracting and retaining top talent
drove positive results for the quarter and puts us in a position to
capture pent-up demand when the industry inevitably recovers.”
Three Months Ended
June 30, 2023 Highlights
- The Company
facilitated 34,354 certified loans during the second quarter of
2023, compared to 44,531 certified loans in the second quarter of
2022
- Total revenue was $38.2 million
during the second quarter of 2023, compared to $52.0 million in the
second quarter of 2022
- Gross profit was $32.0 million
during the second quarter of 2023, compared to $47.0 million in the
second quarter of 2022
- Net income was $11.4 million during
the second quarter of 2023, compared to $23.1 million in the second
quarter of 2022
- Adjusted EBITDA was $20.7 million
during the second quarter of 2023, compared to $34.0 million in the
second quarter of 2022
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
2023 Outlook Based on trends into
third quarter 2023, the Company is issuing guidance ranges as
follows:
Total Certified Loans |
26,000 - 30,000 |
Total Revenue |
$29 - $34 million |
Adjusted EBITDA |
$13 - $17 million |
|
|
The guidance provided above includes
forward-looking statements within the meaning of U.S. securities
laws. See “Forward-Looking Statements” below.
Conference CallOpen Lending
will host a conference call to discuss the second quarter 2023
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
(844) 512-2921, or for international callers (412) 317-6671; the
conference ID is 10180171. 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 StatementsThis
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 2023 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;
failure to realize the anticipated benefits of the business
combination with Nebula Acquisition Corporation; 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, 2022. 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 MeasuresThe
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
LendingInvestorsopenlending@icrinc.com
OPEN LENDING
CORPORATIONCondensed Consolidated Balance
Sheets(Unaudited, in thousands, except share
data)
|
|
June 30, 2023 |
|
December 31, 2022 |
Assets |
|
|
|
|
Current
assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
224,445 |
|
|
$ |
204,450 |
|
Restricted cash |
|
|
5,337 |
|
|
|
4,069 |
|
Accounts receivable, net |
|
|
6,329 |
|
|
|
5,721 |
|
Current contract assets, net |
|
|
33,651 |
|
|
|
54,429 |
|
Income tax receivable |
|
|
11,764 |
|
|
|
9,714 |
|
Other current assets |
|
|
2,980 |
|
|
|
2,361 |
|
Total current assets |
|
|
284,506 |
|
|
|
280,744 |
|
Property and equipment, net |
|
|
3,013 |
|
|
|
2,573 |
|
Operating lease right-of-use asset, net |
|
|
4,305 |
|
|
|
4,610 |
|
Contract assets |
|
|
26,004 |
|
|
|
21,001 |
|
Deferred tax asset, net |
|
|
63,346 |
|
|
|
65,128 |
|
Other assets |
|
|
5,626 |
|
|
|
5,575 |
|
Total
assets |
|
$ |
386,800 |
|
|
$ |
379,631 |
|
Liabilities and
stockholders’ equity |
|
|
|
|
Current
liabilities |
|
|
|
|
Accounts payable |
|
$ |
30 |
|
|
$ |
288 |
|
Accrued expenses |
|
|
7,491 |
|
|
|
6,388 |
|
Current portion of debt |
|
|
3,750 |
|
|
|
3,750 |
|
Third-party claims administration liability |
|
|
5,318 |
|
|
|
4,055 |
|
Other current liabilities |
|
|
1,379 |
|
|
|
626 |
|
Total current liabilities |
|
|
17,968 |
|
|
|
15,107 |
|
Long-term debt, net of deferred financing costs |
|
|
141,984 |
|
|
|
143,683 |
|
Operating lease liabilities |
|
|
3,775 |
|
|
|
4,082 |
|
Other liabilities |
|
|
3,923 |
|
|
|
3,935 |
|
Total
liabilities |
|
|
167,650 |
|
|
|
166,807 |
|
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
120,696,156 shares outstanding as of June 30, 2023 and
128,198,185 shares issued and 123,646,059 shares outstanding as of
December 31, 2022 |
|
|
1,282 |
|
|
|
1,282 |
|
Additional paid-in
capital |
|
|
501,374 |
|
|
|
499,625 |
|
Accumulated deficit |
|
|
(191,910 |
) |
|
|
(215,819 |
) |
Treasury stock at cost,
7,502,029 shares at June 30, 2023 and 4,552,126 at
December 31, 2022 |
|
|
(91,596 |
) |
|
|
(72,264 |
) |
Total stockholders’
equity |
|
|
219,150 |
|
|
|
212,824 |
|
Total liabilities and
stockholders’ equity |
|
$ |
386,800 |
|
|
$ |
379,631 |
|
OPEN LENDING
CORPORATIONCondensed Consolidated Statements of
Operations(Unaudited, in thousands, except share
data)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenue |
|
|
|
|
|
|
|
Profit share |
$ |
17,809 |
|
|
$ |
29,157 |
|
|
$ |
36,411 |
|
|
$ |
57,467 |
|
Program fees |
|
17,893 |
|
|
|
20,731 |
|
|
|
35,194 |
|
|
|
40,457 |
|
Claims administration and other service fees |
|
2,452 |
|
|
|
2,156 |
|
|
|
4,910 |
|
|
|
4,188 |
|
Total
revenue |
|
38,154 |
|
|
|
52,044 |
|
|
|
76,515 |
|
|
|
102,112 |
|
Cost of
services |
|
6,117 |
|
|
|
5,085 |
|
|
|
11,548 |
|
|
|
9,873 |
|
Gross
profit |
|
32,037 |
|
|
|
46,959 |
|
|
|
64,967 |
|
|
|
92,239 |
|
Operating
expenses |
|
|
|
|
|
|
|
General and administrative |
|
10,971 |
|
|
|
7,968 |
|
|
|
21,166 |
|
|
|
15,450 |
|
Selling and marketing |
|
4,218 |
|
|
|
3,994 |
|
|
|
8,627 |
|
|
|
7,727 |
|
Research and development |
|
1,128 |
|
|
|
2,188 |
|
|
|
2,358 |
|
|
|
4,011 |
|
Total operating expenses |
|
16,317 |
|
|
|
14,150 |
|
|
|
32,151 |
|
|
|
27,188 |
|
Operating
income |
|
15,720 |
|
|
|
32,809 |
|
|
|
32,816 |
|
|
|
65,051 |
|
Interest expense |
|
(2,655 |
) |
|
|
(1,124 |
) |
|
|
(5,042 |
) |
|
|
(1,927 |
) |
Interest income |
|
2,452 |
|
|
|
22 |
|
|
|
4,516 |
|
|
|
47 |
|
Other expense, net |
|
(6 |
) |
|
|
— |
|
|
|
(6 |
) |
|
|
— |
|
Income before income
taxes |
|
15,511 |
|
|
|
31,707 |
|
|
|
32,284 |
|
|
|
63,171 |
|
Income tax
expense |
|
4,140 |
|
|
|
8,581 |
|
|
|
8,375 |
|
|
|
16,891 |
|
Net
income |
$ |
11,371 |
|
|
$ |
23,126 |
|
|
$ |
23,909 |
|
|
$ |
46,280 |
|
Net income per common
share |
|
|
|
|
|
|
|
Basic |
$ |
0.09 |
|
|
$ |
0.18 |
|
|
$ |
0.20 |
|
|
$ |
0.37 |
|
Diluted |
$ |
0.09 |
|
|
$ |
0.18 |
|
|
$ |
0.20 |
|
|
$ |
0.37 |
|
Weighted average
common shares outstanding |
|
|
|
|
|
|
|
Basic |
|
120,648,658 |
|
|
|
126,221,689 |
|
|
|
121,878,503 |
|
|
|
126,218,710 |
|
Diluted |
|
121,540,094 |
|
|
|
126,222,366 |
|
|
|
122,456,565 |
|
|
|
126,219,115 |
|
OPEN LENDING
CORPORATIONCondensed Consolidated Statements of
Cash Flows(Unaudited, in thousands)
|
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
|
2022 |
|
Cash flows from
operating activities |
|
|
|
|
Net income |
|
$ |
23,909 |
|
|
$ |
46,280 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
Share-based compensation |
|
|
4,163 |
|
|
|
2,269 |
|
Depreciation and amortization of property and equipment |
|
|
496 |
|
|
|
447 |
|
Amortization of debt issuance costs |
|
|
210 |
|
|
|
167 |
|
Non-cash operating lease cost |
|
|
305 |
|
|
|
285 |
|
Deferred income taxes |
|
|
1,782 |
|
|
|
(998 |
) |
Other |
|
|
6 |
|
|
|
— |
|
Changes in assets &
liabilities: |
|
|
|
|
Accounts receivable, net |
|
|
(608 |
) |
|
|
(435 |
) |
Contract assets, net |
|
|
15,775 |
|
|
|
6,208 |
|
Other current and non-current assets |
|
|
(633 |
) |
|
|
1,477 |
|
Accounts payable |
|
|
(259 |
) |
|
|
(885 |
) |
Accrued expenses |
|
|
857 |
|
|
|
2,094 |
|
Income tax receivable, net |
|
|
(2,133 |
) |
|
|
(2,964 |
) |
Operating lease liabilities |
|
|
(272 |
) |
|
|
(240 |
) |
Third-party claims administration liability |
|
|
1,263 |
|
|
|
(13 |
) |
Other current and non-current liabilities |
|
|
718 |
|
|
|
(105 |
) |
Net cash provided by
operating activities |
|
|
45,579 |
|
|
|
53,587 |
|
Cash flows from
investing activities |
|
|
|
|
Purchase of property and
equipment |
|
|
(77 |
) |
|
|
(70 |
) |
Capitalized software
development costs |
|
|
(766 |
) |
|
|
(294 |
) |
Net cash used in
investing activities |
|
|
(843 |
) |
|
|
(364 |
) |
Cash flows from
financing activities |
|
|
|
|
Payments on term loans |
|
|
(1,875 |
) |
|
|
(1,562 |
) |
Shares repurchased |
|
|
(21,323 |
) |
|
|
— |
|
Shares withheld for taxes
related to restricted stock units |
|
|
(275 |
) |
|
|
(63 |
) |
Net cash (used in)
provided by financing activities |
|
|
(23,473 |
) |
|
|
(1,625 |
) |
Net change in cash and cash
equivalents and restricted cash |
|
|
21,263 |
|
|
|
51,598 |
|
Cash and cash equivalents and
restricted cash at the beginning of the period |
|
|
208,519 |
|
|
|
119,509 |
|
Cash and cash
equivalents and restricted cash at the end of the
period |
|
$ |
229,782 |
|
|
$ |
171,107 |
|
Supplemental
disclosure of cash flow information: |
|
|
|
|
Interest paid |
|
$ |
4,974 |
|
|
$ |
1,756 |
|
Income tax paid (refunded),
net |
|
$ |
8,726 |
|
|
$ |
20,853 |
|
Non-cash investing and
financing: |
|
|
|
|
Property and equipment accrued
but not paid |
|
$ |
— |
|
|
$ |
21 |
|
Share-based compensation for
capitalized software development |
|
$ |
42 |
|
|
$ |
— |
|
Capitalized software
development costs accrued but not paid |
|
$ |
59 |
|
|
$ |
27 |
|
Accrued excise tax associated
with share repurchases |
|
$ |
190 |
|
|
$ |
— |
|
OPEN LENDING
CORPORATIONReconciliation of GAAP to Non-GAAP
Financial Measures(Unaudited, in
thousands)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net
income |
$ |
11,371 |
|
|
$ |
23,126 |
|
|
$ |
23,909 |
|
|
$ |
46,280 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
Interest expense |
|
2,655 |
|
|
|
1,124 |
|
|
|
5,042 |
|
|
|
1,927 |
|
Income tax expense |
|
4,140 |
|
|
|
8,581 |
|
|
|
8,375 |
|
|
|
16,891 |
|
Depreciation and amortization of property and equipment |
|
252 |
|
|
|
226 |
|
|
|
496 |
|
|
|
447 |
|
Share-based compensation |
|
2,319 |
|
|
|
988 |
|
|
|
4,163 |
|
|
|
2,269 |
|
Total
adjustments |
|
9,366 |
|
|
|
10,919 |
|
|
|
18,076 |
|
|
|
21,534 |
|
Adjusted
EBITDA |
$ |
20,737 |
|
|
$ |
34,045 |
|
|
$ |
41,985 |
|
|
$ |
67,814 |
|
Total
revenue |
$ |
38,154 |
|
|
$ |
52,044 |
|
|
$ |
76,515 |
|
|
$ |
102,112 |
|
Adjusted EBITDA
margin |
|
54 |
% |
|
|
65 |
% |
|
|
55 |
% |
|
|
66 |
% |
|
|
|
|
|
|
|
|
Adjusted operating
cash flows(1) |
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
20,737 |
|
|
$ |
34,045 |
|
|
$ |
41,985 |
|
|
$ |
67,814 |
|
CAPEX |
|
(508 |
) |
|
|
(178 |
) |
|
|
(843 |
) |
|
|
(364 |
) |
Decrease (increase) in
contract assets, net |
|
6,287 |
|
|
|
704 |
|
|
|
15,775 |
|
|
|
6,208 |
|
Adjusted operating
cash flows |
$ |
26,516 |
|
|
$ |
34,571 |
|
|
$ |
56,917 |
|
|
$ |
73,658 |
|
(1) Adjusted operating cash flows is defined as Adjusted EBITDA,
minus CAPEX, +/- change in contract assets.
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