Open Lending Corporation Q3 FY2025 earnings call

• Introduced ApexOne Auto, a prime credit automated decisioning platform for lender customers, which is subscription-based with minimum application volumes.
• Delivered 3 consecutive quarters of positive adjusted EBITDA and reduced volatility in back book performance, including a positive CIE adjustment of $1.1 million.
• Tightened underwriting standards, reducing credit builder exposure and having SuperThin files comprise a negligible amount of new originations.
• Rolled out the first phase of lender profitability dashboards, added 10 new logos with no customer cancellations, and hosted the 12th Annual Executive Lending Roundtable.
• Amended the reseller agreement with Allied Solutions, expected to generate over $2.5 million in annual cost savings by 2027.
• Made progress on cost reduction, focusing on retaining and attracting top talent, and named Ben Massey as General Counsel and Corporate Secretary.

In the third quarter of 2025, the Lenders Protection platform facilitated 23,880 certified loans, down from 27,435 in the same quarter of 2024. Total revenue was $24.2 million, with program fee revenues at $13.3 million, profit share revenues at $8.5 million, and claims administration fees and other revenues at $2.4 million. The certain mix by channel was 89.8% through credit unions and banks, and 10.2% from OEMs. The new ApexOne Auto platform is a subscription-based product with monthly minimums and overage per loan charges, diversifying Open Lending's revenue and adding a recurring stream.

• For the fourth quarter, total certified loans are expected to be between 21,500 and 23,500.
• The amendment to the Allied Solutions agreement is projected to yield ~$2.5 million in annual cost savings, with a portion phasing in in 2026 and the majority in 2027.

• Macroeconomic challenges such as rising delinquencies, affordability pressures, and moderating wage growth.
• Uncertainty regarding the full impact of OEM volume ramping and the pace of refi recovery contributing to certified loan volumes.

Q: Can you talk a little bit more about how ApexOne Auto might work, regarding fixed vs volume-based payment?

A: ApexOne Auto will be a completely subscription-based product with 3-year contracts, having monthly minimums and overage per loan charged based on the amount over the minimum. None is variable except for overage.

Q: On the Allied change in terms, when will the $2.5 million annual savings start phasing in?

A: A small amount is expected to phase in in the second half of 2026, but the lion's share will be realized in 2027.

Q: Any thoughts on the macro environment and 2026 outlook?

A: 2025 was a transition year with pricing model changes. We see refi flow, OEM momentum, a new CRO, and improved credit union retention, with cert volume excluding credit builders and SuperThin's up 7% year-over-year.

Q: Thoughts on 4Q certified loan assumptions, refi vs purchase and FI contribution?

A: Fourth quarter is a low volume quarter due to seasonality. There could be refi uplift, with ~90% of business from CU and bank, and OEM volume expected to remain below 10% of overall volume.