Open Lending(US:LPRO)2025-08-07 20:16Financial Performance - Total revenue for Q2 2025 was $25.3 million, a decrease of 5.3% from $26.7 million in Q2 2024[91] - Net income for Q2 2025 was $1.0 million, a decline of 65.5% compared to $2.9 million in Q2 2024[92] - Operating income for Q2 2025 was $1.2 million, significantly lower than $4.0 million in Q2 2024[91] - Total revenue for the three months ended June 30, 2025, decreased by $1.4 million, or 5%, primarily driven by a $1.4 million decrease in profit share revenue compared to the same period in 2024[116] - Total revenue for the six months ended June 30, 2025, decreased by $7.8 million, or 14%, primarily driven by an $8.5 million decrease in profit share revenue[131] - For the six months ended June 30, 2025, total revenue decreased by $7.8 million, or 14%, to $49.7 million compared to $57.5 million in the same period of 2024[137] - Gross profit for the same period decreased by $7.9 million, or 17%, primarily due to a decrease in profit share revenue and an increase in cost of services[138] - Operating income decreased by $9.4 million, or 83%, to $1.9 million for the six months ended June 30, 2025, compared to $11.3 million in 2024[142] Profit Share Revenue - Profit share revenue decreased by $1.4 million, or 15%, due to an $8.3 million, or 52%, decrease in anticipated profit share revenue associated with new certified loan originations[117] - During the three months ended June 30, 2025, the company recorded $7.7 million in anticipated profit share associated with 26,522 new certified loans, averaging $289 per loan, compared to $16.0 million associated with 28,963 loans averaging $552 per loan in the prior year[118] - Profit share revenue for the six months ended June 30, 2025, decreased by $8.5 million, or 37%, due to a $15.7 million, or 51%, decrease in anticipated profit share revenue associated with new certified loan originations[133] Expenses and Costs - Total operating expenses for the three months ended June 30, 2025, increased by $1.6 million, or 9%, primarily due to a 123% increase in research and development expenses[124] - Research and development expenses increased by $2.2 million, or 83%, primarily due to increased employee compensation and benefits costs[141] - Interest expense decreased by $0.3 million, or 12%, due to lower borrowing costs from decreased interest rates[128] - Income tax expense decreased by $1.4 million, primarily due to changes in the valuation allowance and a decrease in income before income taxes[130] - Income tax expense decreased by $3.7 million, or 96%, primarily due to changes in valuation allowance and a decrease in income before income taxes[145] Share Repurchase and Capital Management - The company repurchased 1,971,369 shares at an average price of $2.00 per share for a total of $4.0 million during Q2 2025[94] - The company repurchased 1,971,369 shares at an average price of $2.00 per share for a total of $4.0 million during the three months ended June 30, 2025[156] Loan and Insurance Operations - Certified loans facilitated in Q2 2025 totaled 26,522, down 8% from 28,963 in Q2 2024[90][97] - The value of insured loans facilitated in Q2 2025 was $783.3 million, down from $819.3 million in Q2 2024[96] - The average program fee increased by 10% to $563 in Q2 2025 from $512 in Q2 2024[97] - The number of active lenders at the end of Q2 2025 was 449, an increase from 446 at the end of Q2 2024[96] - Earned premiums for Q2 2025 were $80.8 million, a decrease from $84.6 million in Q2 2024[101] - A five-year extension of the producer agreement with AmTrust North America, Inc. was signed, now valid through December 31, 2033[102] Cash Flow and Financial Position - Net cash provided by operating activities was $(2.99) million for the six months ended June 30, 2025, a decrease of $12.6 million compared to $9.6 million in 2024[148] - Adjusted EBITDA for the six months ended June 30, 2025, was $7.3 million, reflecting a decrease due to reduced revenue and increased operating expenses[160] - As of June 30, 2025, the company had $136.1 million outstanding under its Term Loan due 2027[155] - As of June 30, 2025, the company had outstanding amounts of $136.9 million under the Term Loan due 2027, maturing on September 9, 2027[169] - The company has no outstanding amounts under the Revolving Credit Facility as of June 30, 2025[169] Market and Risk Factors - The company is exposed to market risks influenced by economic conditions, including unemployment rates and consumer confidence, which affect consumer spending and borrowing patterns[166] - The company relies on three active insurance partners for a significant portion of profit share and claims administration service fee revenue, indicating concentration risk[167] - The company faces interest rate risk due to fluctuations in interest rates on investments in money market funds and U.S. Treasury securities[168] - The company is subject to competition from various automotive lenders, impacting its ability to acquire and maintain relationships[166] - Termination of relationships with insurance carriers could materially affect the company's revenue[167] Credit Agreement and Fees - The interest rates on borrowings under the Credit Agreement range from 1.625% to 2.375% per annum for Adjusted SOFR loans, based on the total net leverage ratio[169] - The company is charged an unused commitment fee ranging from 0.15% to 0.225% per annum on the average daily unused portion of the Revolving Credit Facility[169] - The spread on borrowings under the Credit Agreement is contingent upon the company's total net leverage ratio[169]