Open Lending Reports First Quarter 2021 Financial Results

Open Lending Reports First Quarter 2021 Financial Results

News Highlights

AUSTIN, Texas, May 11, 2021 (News) — 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 first quarter of 2021.

“We are pleased with our strong first quarter results, which included a 19% increase in certified loans, a 152% increase in revenue and a 217% increase in Adjusted EBITDA compared to the first quarter of 2020. March 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 Open Lending. “We’ve continued to make a lot of progress on our growth objectives, including the addition of many new credit union customers during the quarter, making traction in our efforts to expand into regional banks and online lending channels, OEM growth, as well as continuing to make progress adding additional insurance carrier partners to the platform.”

Three Months Ended March 31, 2021 Highlights

  • The Company facilitated 33,318 certified loans during the first quarter of 2021, compared to 28,024 certified loans in the first quarter of 2020
  • Total revenue was $44.0 million during the first quarter of 2021, compared to $17.4 million in the first quarter of 2020
  • Gross profit was $40.6 million during the first quarter of 2021, compared to $14.9 million in the first quarter of 2020
  • Net income was $12.9 million during the first quarter of 2021, compared to $8.2 million in the first quarter of 2020
  • Adjusted EBITDA was $30.3 million during the first quarter of 2021, compared to $9.6 million in the first 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 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.”

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

 Full Year 2021 Outlook 
Total Certified Loans161,000 – 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 CallOpen Lending will host a conference call to discuss the first 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 13719185. The replay will be available until Tuesday, May 25, 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 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, 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 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 MeasuresIncluded in this press release is financial information that has not been prepared in accordance with GAAP. The Company uses Adjusted EBITDA, a non-GAAP financial measure, 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.

Adjusted EBITDA is a non-GAAP financial measure used by management to evaluate its operating performance, generate future operating plans, and make strategic decisions, including those relating to operating expenses and the allocation of internal resources. Accordingly, 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 excluding interest expense, income taxes, depreciation and amortization expense, share-based compensation expense, and loss on extinguishment of debt. Adjusted EBITDA margin is defined as Adjusted EBITDA expressed as a percentage of total revenue.

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 Adjusted EBITDA to its 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)

  March 31,2021 December 31,2020
Assets    
Current assets    
Cash and cash equivalents $127,011  $101,513 
Restricted cash 2,631  2,635 
Accounts receivable 6,803  4,352 
Current contract assets 52,736  50,386 
Prepaid expenses 932  1,873 
Other current assets 980  2,018 
Total current assets 191,093  162,777 
Property and equipment, net 1,608  1,201 
Operating lease right-of-use assets, net 5,600  5,733 
Non-current contract assets 44,482  38,956 
Deferred tax asset, net 83,888  85,218 
Other non-current assets 124  124 
Total assets $326,795  $294,009 
Liabilities and stockholders’ equity    
Current liabilities    
Accounts payable 2,991  3,442 
Accrued expenses 3,994  3,033 
Income tax payable 4,791  1,640 
Current portion of debt 3,125  4,888 
Other current liabilities 4,109  4,005 
Total current liabilities 19,010  17,008 
Long-term debt, net of deferred financing costs 170,212  152,859 
Non-current operating lease liabilities 5,019  5,138 
Other non-current liabilities 92,369  92,382 
Total liabilities $286,610  $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 126,803,096 shares outstanding as of March 31, 2021 and December 31, 2020, respectively 1,282  1,282 
Additional paid-in capital 491,947  491,246 
Accumulated deficit (415,544) (428,406)
Treasury stock at cost, 1,395,089 shares at March 31, 2021 and December 31, 2020, respectively (37,500) (37,500)
Total stockholders’ equity 40,185  26,622 
Total liabilities and stockholders’ equity $326,795  $294,009 

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

 Three Months Ended March 31,
 2021 2020
Revenue   
Program fees$14,911  $12,712 
Profit share27,730  3,774 
Claims administration service fees1,367  944 
Total revenue44,008  17,430 
Cost of services3,362  2,495 
Gross profit40,646  14,935 
Operating expenses   
General and administrative8,212  3,569 
Selling and marketing2,397  2,078 
Research and development591  359 
Operating income29,446  8,929 
Interest expense(3,289) (764)
Interest income84  17 
Loss on extinguishment of debt(8,778)  
Other (expense) income(131) 1 
Income before income taxes17,332  8,183 
Provision for income taxes4,470  11 
Net income and comprehensive income$12,862  $8,172 
Preferred distribution to redeemable convertible Series C preferred units  (40,475)
Accretion to redemption value of redeemable convertible Series C preferred units  47,537 
Net income attributable to common stockholders$12,862  $15,234 
Net income and comprehensive income per common share    
Basic$0.10  $0.40 
Diluted$0.10  $0.16 
Weighted average common shares outstanding   
Basic126,803,096  37,631,052 
Diluted126,837,832  51,909,655 

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

  Three Months Ended March 31,
  2021 2020
Cash flows from operating activities    
Net income $12,862  $8,172 
Adjustments to reconcile net income to net cash provided by operating activities:    
Share-based compensation 701  487 
Depreciation and amortization 522  122 
Loss on extinguishment of debt 8,778   
Deferred income taxes 1,330   
Changes in assets & liabilities:    
Accounts receivable (2,451) (1,092)
Contract assets (7,876) 4,202 
Prepaid expenses 941  (178)
Deferred transaction costs   (4,599)
Other current and non-current assets 1,038  346 
Accounts payable (611) 539 
Accrued expenses 478  (974)
Income tax payable 3,151   
Operating lease liabilities (140) (66)
Other current and non-current liabilities 112  116 
Net cash provided by operating activities 18,835  7,075 
Cash flows from investing activities    
Purchase of property and equipment (3) (83)
Net cash used in investing activities (3) (83)
Cash flows from financing activities    
Proceeds from term loans 125,000  170,000 
Proceeds from revolving facility 50,000   
Payments on term loans (166,847) (3,313)
Payment of deferred financing costs (1,491) (9,112)
Distributions to Open Lending, LLC unitholders   (134,153)
Net cash provided by financing activities 6,662  23,422 
Net change in cash and cash equivalents and restricted cash 25,494  30,414 
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 $129,642  $40,312 
Supplemental disclosure of cash flow information:    
Interest paid $2,722  $89 
Income tax (refunded) paid, net (16) 11 
Non-cash investing and financing:    
Internally developed software accrued but not paid $463  $ 
Deferred financing costs accrued but not paid 178   
Change in fair value of redeemable convertible series C preferred units   (47,537)
Distributions accrued but not paid   1,228 

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

 Three Months Ended March 31,
 2021 2020
Net income$12,862   $8,172  
Non-GAAP adjustments:   
Interest expense3,289   764  
Provision for income taxes4,470   11  
Depreciation and amortization expense193   122  
Share-based compensation701   487  
Loss on extinguishment of debt (1)8,778   —  
Total adjustments17,431   1,384  
Adjusted EBITDA30,293   9,556  
Total revenue$44,008   $17,430  
Adjusted EBITDA margin68.8 % 54.8 %

Notes:

(1) Reflects unamortized deferred financing costs which were written off in connection with the refinancing of our Term Loan due 2027 on March 19, 2021.

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