Open Lending Reports Second Quarter 2023 Financial Results
“We are pleased to have reported results ahead of our expectations again in the second quarter, including the certification of 34,354 loans,” said
Three Months Ended
- 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 | |
| Adjusted EBITDA | |
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, 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
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
Investors
openlending@icrinc.com
Condensed Consolidated Balance Sheets
(Unaudited, in thousands, except share data)
| 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, |
— | — | ||||||
| Common stock, |
1,282 | 1,282 | ||||||
| Additional paid-in capital | 501,374 | 499,625 | ||||||
| Accumulated deficit | (191,910 | ) | (215,819 | ) | ||||
| (91,596 | ) | (72,264 | ) | |||||
| Total stockholders’ equity | 219,150 | 212,824 | ||||||
| Total liabilities and stockholders’ equity | $ | 386,800 | $ | 379,631 | ||||
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except share data)
| Three Months Ended |
Six Months Ended |
||||||||||||||
| 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 | |||||||||||
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
| Six Months Ended |
||||||||
| 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 | $ | — | ||||
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited, in thousands)
| Three Months Ended |
Six Months Ended |
||||||||||||||
| 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.
Source: Open Lending Corporation