lpro-20230331

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 March 31, 2023


☐			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 May 9, 2023, the registrant had 120,653,954 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 Statement s (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	29

Item 6.	Exhibits	30

SIGNATURES		31


	March 31, 2023		December 31, 2022

Assets
Current assets
Cash and cash equivalents	$	210,589	$	204,450
Restricted cash	4,713		4,069
Accounts receivable, net	6,620		5,721
Current contract assets, net	41,711		54,429
Income tax receivable	6,530		9,714
Other current assets	1,832		2,361
Total current assets	271,995		280,744
Property and equipment, net	2,664		2,573
Operating lease right-of-use asset, net	4,459		4,610
Contract assets, net	24,231		21,001
Deferred tax asset, net	63,907		65,128
Other assets	5,642		5,575
Total assets	$	372,898	$	379,631
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	741	$	288
Accrued expenses	6,369		6,388

Current portion of debt	3,750		3,750
Third-party claims administration liability	4,713		4,055
Other current liabilities	1,173		626
Total current liabilities	16,746		15,107
Long-term debt, net of deferred financing costs	142,829		143,683
Operating lease liabilities	3,930		4,082
Other liabilities	3,844		3,935
Total liabilities	167,349		166,807
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 120,591,873 shares outstanding as of March 31, 2023 and 128,198,185 shares issued and 123,646,059 shares outstanding as of December 31, 2022	1,282		1,282
Additional paid-in capital	500,530		499,625
Accumulated deficit	(203,281)		(215,819)
Treasury stock at cost, 7,606,312 shares at March 31, 2023 and 4,552,126 at December 31, 2022	(92,982)		(72,264)
Total stockholders’ equity	205,549		212,824
Total liabilities and stockholders’ equity	$	372,898	$	379,631


	Three Months Ended March 31,
	2023		2022
Revenue
Profit share	$	18,602	$	28,310
Program fees	17,301		19,726
Claims administration and other service fees	2,458		2,032
Total revenue	38,361		50,068
Cost of services	5,431		4,788
Gross profit	32,930		45,280
Operating expenses
General and administrative	10,195		7,482
Selling and marketing	4,409		3,733
Research and development	1,230		1,823
Total operating expenses	15,834		13,038
Operating income	17,096		32,242
Interest expense	(2,387)		(803)
Interest income	2,064		25

Income before income taxes	16,773		31,464
Income tax expense	4,235		8,310
Net income	$	12,538	$	23,154
Net income per common share
Basic	$	0.10	$	0.18
Diluted	$	0.10	$	0.18
Weighted average common shares outstanding
Basic	123,122,014		126,215,698
Diluted	123,424,322		126,216,197


	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, 2022	128,198,185	$	1,282	$	499,625	$	(215,819)	(4,552,126)	$	(72,264)	$	212,824
Share-based compensation	—	—		1,844		—		—	—		1,844
Restricted stock units issued, net of shares withheld for taxes	—	—		(939)		—		41,148	810		(129)
Shares repurchased, including excise tax	—	—		—		—		(3,095,334)	(21,528)		(21,528)
Net income	—	—		—		12,538		—	—		12,538
Balance as of March 31, 2023	128,198,185	$	1,282	$	500,530	$	(203,281)	(7,606,312)	$	(92,982)	$	205,549












	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	—	—		(207)		—		5,079	168		(39)
Net income	—	—		—		23,154		—	—		23,154
Balance as of March 31, 2022	128,198,185	$	1,282	$	498,057	$	(259,285)	(1,980,230)	$	(56,676)	$	183,378


	Contract Assets
	Profit Share		Program Fees		Claims Administration and Other Service Fees		Total
	(in thousands)
Ending balance as of December 31, 2022	$	65,889	$	7,932	$	1,609	$	75,430
Increase of contract assets due to new business generation	17,888		17,301		2,458		37,647
Adjustment of contract assets due to estimation of revenue from performance obligations satisfied in previous periods	714		—		—		714
Receivables transferred from contract assets upon billing the lending institutions	—		(17,577)		—		(17,577)
Payments received from insurance carriers	(27,882)		—		(2,428)		(30,310)
Provision for expected credit losses	32		5		1		38
Ending balance as of March 31, 2023	$	56,641	$	7,661	$	1,640	$	65,942


	Total		Fair value measurement as of March 31, 2023
			Level 1		Level 2		Level 3
	(in thousands)
Cash equivalents:
Money market funds	$	4,955	$	4,955	$	—	$	—
U.S. Treasury securities	169,305		169,305		—		—
Total	$	174,260	$	174,260	$	—	$	—


	Total		Fair value measurement as of December 31, 2022
			Level 1		Level 2		Level 3
	(in thousands)
Cash equivalents:
Money market funds	$	35,915	$	35,915	$	—	$	—
U.S. Treasury securities	151,511		151,511		—		—
Total	$	187,426	$	187,426	$	—	$	—


	Three Months Ended March 31,
	2023	2022
Unvested and unexercised stock options	155,897	188,540
Unvested time-based restricted stock units	362,751	459,431
Unvested performance-based restricted stock units	159,965	94,415
Total	678,613	742,386


	Three Months Ended March 31,
	2023		2022
Certified loans	32,408		43,944
Value of insured loans facilitated (in thousands)	$	951,893	$	1,182,567
Average loan size per certified loan	$	29,372	$	26,911
Number of contracts signed with automotive lenders

SEC Form 10-Q filed by Open Lending Corporation