Open Lending Reports Second Quarter 2021 Financial Results
“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
Three Months Ended
- 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 | ||
| Adjusted EBITDA | ||
| Adjusted Operating Cash Flow (a) |
- 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
Conference Call
About
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
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
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
Investors
openlending@icrinc.com
Condensed Consolidated Balance Sheets (Unaudited, in thousands, except share data) |
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2021 |
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, |
— | — | ||||||
| Common stock, and 126,190,351 shares outstanding as of 126,803,096 shares outstanding as of |
1,282 | 1,282 | ||||||
| Additional paid-in capital | 492,874 | 491,246 | ||||||
| Accumulated deficit | (339,578 | ) | (428,406 | ) | ||||
| (57,500 | ) | (37,500 | ) | |||||
| Total stockholders’ equity | 97,078 | 26,622 | ||||||
| Total liabilities and stockholders’ equity | $ | 261,136 | $ | 294,009 | ||||
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited, in thousands, except share data) |
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| Three Months Ended |
Six Months Ended |
||||||||||||||
| 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 | |||||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited, in thousands) |
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| Six Months Ended |
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| 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 |
— | (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 | ||||||
Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited, in thousands) |
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| Three Months Ended |
Six Months Ended |
||||||||||||||||||
| 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) | 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 |
| (4) | Reflects non-cash charges for the change in the estimated fair value of contingent consideration from |
| (5) | Reflects transaction bonuses awarded to key employees and directors in connection with the Business Combination in the three and six months ended |
| (6) | Adjusted operating cash flow is defined as adjusted EBITDA, minus capex, plus or minus change in contract assets. |
Source: Open Lending Corporation