Open Lending Reports Fourth Quarter and Full Year 2023 Financial Results
- Exceeded high-end guidance for certified loans and revenues in Q4 2023.
- Improved product and technology in 2023 to position for growth.
- Prioritizing core business optimization and bank segment expansion in 2024.
- Reported 26,263 certified loans in Q4 2023, with total revenue of $14.9 million.
- Net loss of $4.8 million and adjusted EBITDA of $(2.1) million in Q4 2023.
- Facilitated 122,984 certified loans in 2023, with total revenue of $117.5 million.
- Net income of $22.1 million and adjusted EBITDA of $50.2 million in 2023.
- First quarter 2024 guidance ranges: Total Certified Loans 24,000 - 28,000, Total Revenue $26 - $30 million, Adjusted EBITDA $10 - $14 million.
- Negative impact on revenue in Q4 2023 due to reduction in estimated profit share revenues.
- Decrease in certified loans and total revenue in 2023 compared to the prior year.
- Net loss and lower adjusted EBITDA in Q4 2023 compared to Q4 2022.
- Reduction in net income and adjusted EBITDA in 2023 compared to the prior year.
Insights
Open Lending Corporation's reported financial results reveal a significant year-over-year decline in both quarterly and annual revenues, as well as in the number of certified loans facilitated. The reduction in estimated future profit share revenues is a critical factor here, indicating adjustments in expected earnings from previously agreed upon profit-sharing arrangements. This adjustment suggests that the company's performance and the quality of its loan portfolio may not be aligning with initial projections.
From a financial perspective, the decline in Adjusted EBITDA from $105.7 million to $50.2 million year-over-year is concerning as it reflects a decrease in the company's operational profitability. This could potentially affect investor sentiment and stock valuation. The net income figure, while still positive, has decreased substantially, which could impact the company's ability to reinvest in its business or return value to shareholders.
Looking ahead, the first quarter 2024 guidance indicates an expected increase in total revenue and Adjusted EBITDA compared to the fourth quarter of 2023, suggesting a degree of optimism about near-term performance. However, stakeholders should consider whether this optimism is based on concrete market recovery signals or if it's a more speculative outlook.
The reported decline in certified loans facilitated by Open Lending Corporation may reflect broader trends in the auto lending industry, such as a potential decrease in consumer demand for auto loans or increased competition from other lenders. Additionally, the company's focus on expanding into the bank segment could be an attempt to diversify its revenue streams and mitigate the impact of such industry trends.
Open Lending's emphasis on refining its go-to-market strategy and product technology suggests that it is seeking to enhance its competitive edge. However, the effectiveness of these strategies will be critical in capturing the 'pent-up demand' mentioned by the CEO. It is important to analyze the company's strategic moves within the context of the evolving fintech landscape and the auto retail ecosystem.
Stakeholders should also be aware of the company's reliance on profit-sharing arrangements, which can be volatile and impact financial stability. The significant negative adjustments reported could raise questions about the sustainability of Open Lending's business model in a fluctuating market.
The financial performance of Open Lending Corporation can be influenced by macroeconomic factors such as interest rates, consumer credit health and overall economic conditions. The decrease in certified loans and revenue might be symptomatic of a broader economic slowdown or tightening of credit markets.
Furthermore, the company's strategic pivot towards optimizing its core business and expanding into the bank segment should be viewed in light of the current economic climate. As the auto industry faces potential recovery, the company's ability to adapt and capture emerging opportunities will be key to its growth prospects.
The forward guidance provided by Open Lending for the first quarter of 2024 could be a reflection of management's confidence in the resilience of the auto lending market. However, stakeholders should closely monitor economic indicators that could affect the industry's recovery trajectory and Open Lending's performance.
AUSTIN, Texas, Feb. 27, 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 fourth quarter and full year ended December 31, 2023.
“We exceeded the high-end of our guidance range for certified loans and revenues in the fourth quarter, excluding a negative change in estimate associated with our profit share. In 2023, we continued to improve our product and technology and further refined our go-to-market strategy to position us well for growth,” said Keith Jezek, CEO of Open Lending. “In 2024, our priorities will be to optimize the core business as well as further expand into the bank segment. I believe our value proposition to the various players in the auto retail ecosystem is as strong as ever, and by executing on our priorities, we will be well-positioned to capture the pent-up demand as the industry inevitably recovers. I am proud of the continued execution by our team as we remain focused on our mission to change lives by making transportation affordable.”
Three Months Ended December 31, 2023 Highlights
- The Company facilitated 26,263 certified loans during the fourth quarter of 2023, compared to 34,550 certified loans in the fourth quarter of 2022.
- Total revenue was
$14.9 million during the fourth quarter of 2023, compared to$26.8 million in the quarter of 2022. The fourth quarter of 2023 was negatively impacted by a$14.3 million reduction in estimated future profit share revenues related to business in historic vintages as compared to a$12.8 million reduction in the fourth quarter of 2022. - Gross profit was
$9.6 million during the fourth quarter of 2023, compared to$21.9 million in the fourth quarter of 2022. - Net loss was
$4.8 million during the fourth quarter of 2023, compared to a$4.2 million net loss in the fourth quarter of 2022. - Adjusted EBITDA was
$(2.1) million during the fourth quarter of 2023, compared to$8.5 million in the fourth quarter of 2022.
Twelve Months Ended December 31, 2023 Highlights
- The Company facilitated 122,984 certified loans during the year ended December 31, 2023, compared to 165,211 certified loans in the prior year.
- Total revenue was
$117.5 million during the year ended December 31, 2023, compared to$179.6 million in the prior year. The year ended 2023 was negatively impacted by a$22.8 million reduction in estimated future profit share revenues related to business in historic vintages as compared to a$5.7 million reduction in the prior year. - Gross profit was
$95.2 million during the year ended December 31, 2023, compared to$159.6 million in the prior year. - Net income was
$22.1 million during the year ended December 31, 2023, compared to$66.6 million in the prior year. - Adjusted EBITDA was
$50.2 million during the year ended December 31, 2023, compared to$105.7 million in the prior year.
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.”
First Quarter 2024 Outlook
Based on trends into 2024, the Company is issuing its first quarter 2024 guidance ranges as follows:
| Total Certified Loans | 24,000 - 28,000 | |
| Total Revenue | ||
| Adjusted EBITDA |
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 fourth quarter and full year 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 (877) 407-4018, or for international callers (201) 689-8471; the conference ID is 13743278. 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 “First 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 Consolidated Balance Sheets (Unaudited, in thousands, except share data) | ||||||||
| December 31, 2023 | December 31, 2022 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 240,206 | $ | 204,450 | ||||
| Restricted cash | 6,463 | 4,069 | ||||||
| Accounts receivable, net | 4,616 | 5,721 | ||||||
| Current contract assets, net | 28,704 | 54,429 | ||||||
| Income tax receivable | 7,035 | 9,714 | ||||||
| Other current assets | 2,852 | 2,361 | ||||||
| Total current assets | 289,876 | 280,744 | ||||||
| Fixed assets, net | 3,913 | 2,573 | ||||||
| Operating lease right-of-use asset, net | 3,990 | 4,610 | ||||||
| Contract assets | 610 | 21,001 | ||||||
| Deferred tax asset, net | 70,113 | 65,128 | ||||||
| Other assets | 5,535 | 5,575 | ||||||
| Total assets | $ | 374,037 | $ | 379,631 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 375 | $ | 288 | ||||
| Accrued expenses | 8,131 | 6,388 | ||||||
| Current portion of debt | 4,688 | 3,750 | ||||||
| Third-party claims administration liability | 6,464 | 4,055 | ||||||
| Other current liabilities | 932 | 626 | ||||||
| Total current liabilities | 20,590 | 15,107 | ||||||
| Long-term debt, net of deferred financing costs | 139,357 | 143,683 | ||||||
| Operating lease liabilities | 3,450 | 4,082 | ||||||
| Other liabilities | 5,060 | 3,935 | ||||||
| Total liabilities | 168,457 | 166,807 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity | ||||||||
| Preferred stock, | — | — | ||||||
| Common stock, | 1,282 | 1,282 | ||||||
| Additional paid-in capital | 502,032 | 499,625 | ||||||
| Accumulated deficit | (193,749 | ) | (215,819 | ) | ||||
| Treasury stock at cost, 9,378,390 shares at December 31, 2023 and 4,552,126 at December 31, 2022 | (103,985 | ) | (72,264 | ) | ||||
| Total stockholders’ equity | 205,580 | 212,824 | ||||||
| Total liabilities and stockholders’ equity | $ | 374,037 | $ | 379,631 | ||||
| OPEN LENDING CORPORATION Consolidated Statements of Operations (Unaudited, in thousands, except share data) | |||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Revenue | |||||||||||||||
| Program fees | $ | 13,482 | $ | 18,309 | $ | 64,092 | $ | 80,611 | |||||||
| Profit share | (1,132 | ) | 6,066 | 43,301 | 90,056 | ||||||||||
| Claims administration and other service fees | 2,589 | 2,446 | 10,067 | 8,927 | |||||||||||
| Total revenue | 14,939 | 26,821 | 117,460 | 179,594 | |||||||||||
| Cost of services | 5,365 | 4,896 | 22,282 | 19,968 | |||||||||||
| Gross profit | 9,574 | 21,925 | 95,178 | 159,626 | |||||||||||
| Operating expenses | |||||||||||||||
| General and administrative | 12,002 | 11,165 | 43,043 | 35,950 | |||||||||||
| Selling and marketing | 4,349 | 4,148 | 17,485 | 17,856 | |||||||||||
| Research and development | 1,500 | 1,839 | 5,575 | 8,205 | |||||||||||
| Total operating expenses | 17,851 | 17,152 | 66,103 | 62,011 | |||||||||||
| Operating income (loss) | (8,277 | ) | 4,773 | 29,075 | 97,615 | ||||||||||
| Interest expense | (2,820 | ) | (2,297 | ) | (10,661 | ) | (5,832 | ) | |||||||
| Interest income | 3,018 | 1,627 | 10,335 | 1,995 | |||||||||||
| Other expense, net | 118 | 1 | 109 | (238 | ) | ||||||||||
| Income (loss) before income taxes | (7,961 | ) | 4,104 | 28,858 | 93,540 | ||||||||||
| Income tax expense (benefit) | (3,119 | ) | 8,293 | 6,788 | 26,920 | ||||||||||
| Net income (loss) | $ | (4,842 | ) | $ | (4,189 | ) | $ | 22,070 | $ | 66,620 | |||||
| Net income (loss) per common share | |||||||||||||||
| Basic | $ | (0.04 | ) | $ | (0.03 | ) | $ | 0.18 | $ | 0.53 | |||||
| Diluted | $ | (0.04 | ) | $ | (0.03 | ) | $ | 0.18 | $ | 0.53 | |||||
| Weighted average common shares outstanding | |||||||||||||||
| Basic | 119,366,013 | 125,763,245 | 120,826,644 | 126,108,329 | |||||||||||
| Diluted | 119,680,269 | 125,794,209 | 121,474,880 | 126,261,614 | |||||||||||
| OPEN LENDING CORPORATION Consolidated Statements of Cash Flows (Unaudited, in thousands) | ||||||||
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities | ||||||||
| Net income (loss) | $ | 22,070 | $ | 66,620 | ||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
| Share-based compensation | 9,492 | 5,449 | ||||||
| Depreciation and amortization of fixed assets | 1,159 | 915 | ||||||
| Amortization of debt issuance costs | 428 | 424 | ||||||
| Non-cash operating lease cost | 620 | 579 | ||||||
| Deferred income taxes | (4,985 | ) | 375 | |||||
| Other | 15 | — | ||||||
| Changes in assets & liabilities: | ||||||||
| Accounts receivable, net | 1,105 | 804 | ||||||
| Contract assets, net | 46,116 | 37,527 | ||||||
| Other current and non-current assets | (507 | ) | (2,685 | ) | ||||
| Accounts payable | 86 | (996 | ) | |||||
| Accrued expenses | 1,183 | 2,405 | ||||||
| Income tax receivable, net | 2,699 | (8,369 | ) | |||||
| Operating lease liabilities | (561 | ) | (495 | ) | ||||
| Third-party claims administration liability | 2,409 | 1,005 | ||||||
| Other current and non-current liabilities | 1,329 | 3,873 | ||||||
| Net cash provided by operating activities | 82,658 | 107,431 | ||||||
| Cash flows from investing activities | ||||||||
| Purchase of property and equipment | (123 | ) | (238 | ) | ||||
| Capitalized software development costs | (2,055 | ) | (386 | ) | ||||
| Net cash used in investing activities | (2,178 | ) | (624 | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from term loans | — | 150,000 | ||||||
| Payments on term loans | (3,750 | ) | (123,594 | ) | ||||
| Payments on revolving facility | — | (25,000 | ) | |||||
| Payment of deferred financing cost | — | (976 | ) | |||||
| Shares repurchased | (37,322 | ) | (18,018 | ) | ||||
| Shares withheld for taxes related to restricted stock units | (1,258 | ) | (209 | ) | ||||
| Net cash (used in) provided by financing activities | (42,330 | ) | (17,797 | ) | ||||
| Net change in cash and cash equivalents and restricted cash | 38,150 | 89,010 | ||||||
| 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 | $ | 246,669 | $ | 208,519 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Interest paid | $ | 10,313 | $ | 3,520 | ||||
| Income tax paid, net | $ | 9,075 | $ | 36,112 | ||||
| Non-cash investing and financing: | ||||||||
| Share-based compensation for capitalized software development | $ | 88 | $ | — | ||||
| Capitalized software development costs accrued but not paid | $ | 248 | $ | — | ||||
| Accrued excise tax associated with share repurchases | $ | 314 | $ | — | ||||
| OPEN LENDING CORPORATION Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited, in thousands) | |||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Net income (loss) | $ | (4,842 | ) | $ | (4,189 | ) | $ | 22,070 | $ | 66,620 | |||||
| Non-GAAP adjustments: | |||||||||||||||
| Interest expense | 2,820 | 2,297 | 10,661 | 5,832 | |||||||||||
| Income tax expense (benefit) | (3,119 | ) | 8,293 | 6,788 | 26,920 | ||||||||||
| Depreciation and amortization of fixed assets | 335 | 235 | 1,159 | 915 | |||||||||||
| Share-based compensation expense | 2,666 | 1,885 | 9,492 | 5,449 | |||||||||||
| Total adjustments | 2,702 | 12,710 | 28,100 | 39,116 | |||||||||||
| Adjusted EBITDA | $ | (2,140 | ) | $ | 8,521 | $ | 50,170 | $ | 105,736 | ||||||
| Total revenue | $ | 14,939 | $ | 26,821 | $ | 117,460 | $ | 179,594 | |||||||
| Adjusted EBITDA margin | (14)% | 32 | % | 43 | % | 59 | % | ||||||||
| Adjusted operating cash flows(1) | |||||||||||||||
| Adjusted EBITDA | $ | (2,140 | ) | $ | 8,521 | $ | 50,170 | $ | 105,736 | ||||||
| CAPEX | (590 | ) | 13 | (2,178 | ) | (624 | ) | ||||||||
| Decrease (increase) in contract assets, net | 19,917 | 24,511 | 46,116 | 37,527 | |||||||||||
| Adjusted operating cash flows | $ | 17,187 | $ | 33,045 | $ | 94,108 | $ | 142,639 | |||||||
(1) Adjusted operating cash flows is defined as Adjusted EBITDA, minus CAPEX, +/- change in contract assets.
FAQ
How many certified loans did Open Lending Corporation facilitate in Q4 2023?
What was the total revenue for Open Lending Corporation in Q4 2023?
What was the net loss for Open Lending Corporation in Q4 2023?
What were the adjusted EBITDA figures for Open Lending Corporation in Q4 2023?
How many certified loans did Open Lending Corporation facilitate in the year ended December 31, 2023?
What was the total revenue for Open Lending Corporation in the year ended December 31, 2023?
What was the net income for Open Lending Corporation in the year ended December 31, 2023?
What were the adjusted EBITDA figures for Open Lending Corporation in the year ended December 31, 2023?
What are the first quarter 2024 guidance ranges provided by Open Lending Corporation?
