Open Lending(LPRO)2025-04-01 12:00Financial Data and Key Metrics Changes - For fiscal year 2024, the company generated 110,652 certified loans, 42.9 million, largely due to fourth quarter results and the impact of a negative change in estimate [10][41] - Total revenue for Q4 2024 was negative 81.3 million associated with profit share revenue [36][39] - Net loss for Q4 2024 was 4.8 million in Q4 2023, with net loss per share at 0.04 per share in the prior year [39][40] Business Line Data and Key Metrics Changes - The company facilitated 26,065 certified loans in Q4 2024, a slight decrease from 26,263 certified loans in Q4 2023 [35] - Profit share revenue in Q4 2024 associated with new originations was 314 per certified loan, compared to 501 per certified loan in Q4 2023 [38] Market Data and Key Metrics Changes - The Mannheim Used Vehicle Value Index (MOVIE) declined from 257.7% in late 2021 to 204.1% as of February 2025, representing a more than 20% decline in used vehicle values over the past three to four years [12][13] - The company observed an increase in 60-plus day delinquencies in Q4 2024, particularly from the 2021 and 2022 vintages [14] Company Strategy and Development Direction - The company is focused on strategic efforts to drive new customer acquisitions and certified loan growth while optimizing profitability for lenders and insurance partners [6][25] - Management plans to implement a sophisticated, segmented, and real-time data-driven pricing model to enhance predictability of profit share revenue [33][34] - The company aims to reduce the mix of borrowers with credit builder trade lines from approximately 15% in fiscal 2024 to under 5% in fiscal 2025 [23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macroeconomic environment and the need for credit tightening and pricing adjustments to drive revenue [42] - The outlook for Q1 2025 expects total certified loans to be between 27,000 and 28,000, indicating a sequential increase from Q4 2024 [26] Other Important Information - The company announced a leadership change, with Jessica Buss becoming the new CEO, focusing on profitable unit economics and growth [27][30] - The company has signed 58 new customers in 2024 for its Lenders Protection Program, indicating strong market interest [25] Q&A Session Summary Question: Overview of Open Lending's situation from an insurance perspective - Management emphasized the need for a more insurance-like approach to pricing and operations to enhance profitability and reduce volatility [52][53] Question: Infrastructure and investment needed for changes - Management indicated that existing infrastructure is adequate, but improvements in data collection and predictive modeling are necessary [60][63] Question: Impact of credit builder trade lines on addressable market - Management noted that credit builder trade lines represented a small portion of the business and corrective actions have been taken to minimize their impact [78] Question: Insurance carriers' capacity and profitability - Management confirmed that insurance carriers have ample capacity to support future growth and that their long-term profitability remains strong [90][102] Question: Profit share per certified loan and future expectations - Management indicated that the current profit share per certified loan is constrained at around $300, with expectations to return to historical levels as performance improves [104][106] Question: Effects of tariffs on used car prices and affordability - Management noted that tariffs could positively impact the back book by increasing collateral prices but acknowledged the need for careful pricing adjustments to avoid future volatility [109]