Open Lending(US:LPRO)2022-05-07 12:31Financial Data and Key Metrics Changes - Certified loans increased by 32% year-over-year to 43,944 in Q1 2022 compared to Q1 2021 [6] - Revenue for Q1 2022 was $50.1 million, a 14% increase from $44 million in Q1 2021 [30] - Adjusted EBITDA rose by 11% to $33.8 million in Q1 2022 compared to $30.3 million in Q1 2021 [36] - Net income for Q1 2022 was $23.2 million, up from $12.9 million in Q1 2021 [35] - Gross profit increased by 11% to $45.3 million, with a gross margin of 90% in Q1 2022 [32] Business Line Data and Key Metrics Changes - Profit share revenue was $28.3 million in Q1 2022, with $25.7 million from new originations [30][31] - The refinance program accounted for nearly 40% of total searches, with significant growth in certified loans from existing customers [9][11] - The top 10 customers, excluding OEMs, increased their certification volume by 166% year-over-year [11][62] Market Data and Key Metrics Changes - North American vehicle production is expected to be around 15 million units in 2022, in line with 2021 levels [19] - Average used vehicle pricing increased by 18% year-over-year, with average monthly payments for used cars at approximately $488 [20] - The company anticipates a gradual return to affordability for near-prime and non-prime consumers over the next 18 months [21] Company Strategy and Development Direction - The company plans to invest in its go-to-market sales strategy and expand account management staff to capture a significant $250 billion total addressable market (TAM) [13] - Key hires are being made to support growth in OEM captive and large institution opportunities [14] - Investments in technology are aimed at enhancing the Lenders Protection Platform and improving lender reporting and claims capabilities [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the automotive market, noting improvements in inventory and demand conditions [18] - The company reaffirmed its guidance for 2022, expecting total revenue between $210 million and $240 million [37] - Management highlighted the resilience of the business despite macroeconomic headwinds, including inflation and supply chain issues [38] Other Important Information - The company signed 18 new accounts in Q1 2022, including five Tier 1 accounts with over $1 billion in assets [7] - A new agreement with Arch Specialty Insurance Company was announced, expanding the company's insurance partner relationships [27] Q&A Session Summary Question: Sustainability of Refinance Growth - Management confirmed that the refinance channel's growth is sustainable and will help bridge the gap until new car inventories recover [41] Question: CECL Compliance and Credit Unions - Management noted that larger credit unions are positioning for CECL relief, which will benefit their volume despite rising rates [48] Question: Advantages of New Insurance Carrier - The addition of new insurance carriers provides more capacity and credibility, enhancing the company's market position [59][60] Question: Growth from Top Customers - Growth from the top 10 customers is attributed to underwriting rule changes and expansion of refinance channel partners [62] Question: Capital Priorities - The company is focused on investing in business growth and technology enhancements, with share buybacks being evaluated at the board level [86]