lpro-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission File Number: 001-39326

OPEN LENDING CORPORATION

(Exact Name of Registrant as Specified in its Charter)


Delaware			84-5031428
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

1501 S. MoPac Expressway Suite 450 Austin, Texas			78746
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (512) 892-0400

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange
on which registered

Common stock, par value $0.01 per share

LPRO

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 2, 2022, the registrant had 126,300,303 shares of common stock, $0.01 par value per share, outstanding.

OPEN LENDING CORPORATION

FORM 10-Q

TABLE OF CONTENTS


		Page
PART I.	Financial Information	3

Item 1.	Condensed Consolidated Financial Statements (Unaudited):	3

	Condensed Consolidated Balance Sheets	3

	Condensed Consolidated Statements of Operations	4

	Condensed Consolidated Statements of Changes in Stockholders’ Equity	5

	Condensed Consolidated Statements of Cash Flows	6

	Notes to Condensed Consolidated Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	27

Item 4.	Controls and Procedures	28

PART II.	Other Information	29

Item 1.	Legal Proceedings	29

Item 1A.	Risk Factors	29

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29

Item 3.	Default Upon Senior Securities	29

Item 4.	Mine Safety Disclosures	29

Item 5.	Other Information	30

Item 6.	Exhibits	31

SIGNATURES		32

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

OPEN LENDING CORPORATION

Condensed Consolidated Balance Sheets

(Unaudited, in thousands, except share data)


	September 30, 2022		December 31, 2021

Assets
Current assets
Cash and cash equivalents	$	201,807	$	116,454
Restricted cash	3,349		3,055
Accounts receivable, net	6,654		6,525
Current contract assets, net	65,555		70,542
Income tax receivable	2,329		1,345

Other current assets	3,515		4,873

Total current assets	283,209		202,794
Property and equipment, net	2,789		2,663
Operating lease right-of-use assets, net	4,758		5,189
Non-current contract assets, net	34,385		42,414
Deferred tax asset, net	73,363		65,503
Other non-current assets	459		262
Total assets	$	398,963	$	318,825
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	183	$	1,285
Accrued expenses	8,838		3,984


Current portion of debt	3,750		3,125
Third-party claims administration liability	3,358		3,050
Other current liabilities	851		621
Total current liabilities	16,980		12,065

Long-term debt, net of deferred financing costs	144,478		143,135
Non-current operating lease liabilities	4,231		4,643

Total liabilities	$	165,689	$	159,843
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 126,230,762 shares outstanding as of September 30, 2022 and 128,198,185 shares issued and 126,212,876 shares outstanding as of December 31, 2021	1,282		1,282
Additional paid-in capital	499,843		496,983
Accumulated deficit	(211,630)		(282,439)
Treasury stock at cost, 1,967,423 shares as of September 30, 2022 and 1,985,309 shares as of December 31, 2021	(56,221)		(56,844)
Total stockholders’ equity	$	233,274	$	158,982
Total liabilities and stockholders’ equity	$	398,963	$	318,825

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

OPEN LENDING CORPORATION

Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenue
Profit share	$	26,523	$	35,447	$	83,990	$	102,019
Program fees	21,845		21,638		62,302		57,146
Claims administration and other service fees	2,293		1,807		6,481		4,860
Total revenue	50,661		58,892		152,773		164,025
Cost of services	5,199		6,380		15,072		13,882
Gross profit	45,462		52,512		137,701		150,143
Operating expenses
General and administrative	9,335		7,197		24,785		23,790
Selling and marketing	5,981		3,308		13,708		8,659
Research and development	2,355		1,268		6,366		2,632
Total operating expenses	17,671		11,773		44,859		35,081
Operating income	27,791		40,739		92,842		115,062

Interest expense	(1,608)		(959)		(3,535)		(5,370)
Interest income	321		35		368		177
Gain on extinguishment of tax receivable agreement	—		—		—		55,422
Loss on extinguishment of debt	—		—		—		(8,778)
Other income (expense)	(239)		3		(239)		(130)
Income before income taxes	26,265		39,818		89,436		156,383
Income tax expense	1,736		10,404		18,627		38,141
Net income	$	24,529	$	29,414	$	70,809	$	118,242



Net income per common share
Basic	$	0.19	$	0.23	$	0.56	$	0.94
Diluted	$	0.19	$	0.23	$	0.56	$	0.94
Weighted average common shares outstanding
Basic	126,228,723		126,190,351		126,222,084		126,405,822
Diluted	126,228,723		126,247,499		126,222,415		126,451,119

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

OPEN LENDING CORPORATION

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited, in thousands, except share and unit data)


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Treasury Stock			Total Stockholders’ Equity
	Shares	Amount		Amount		Amount		Shares	Amount		Amount
Balance as of December 31, 2021	128,198,185	$	1,282	$	496,983	$	(282,439)	(1,985,309)	$	(56,844)	$	158,982

Share-based compensation	—	—		1,281		—		—	—		1,281
Restricted stock units issued, net of shares withheld for taxes	—

SEC Form 10-Q filed by Open Lending Corporation