Open Lending Corporation Q4 FY2025 earnings call

CEO focused on stabilizing business and driving durable growth, improved underwriting standards, launched Apex One Auto platform. Strengthened leadership team. 2025 vintage performance improved, 60-day delinquency lower than prior vintages. Implemented rate changes in Q4, rolled back subset to improve momentum. Project Red Rocks developing sophisticated real-time simulation engine. New CGO Anthony Cabezano joined, focusing on increasing wallet share, penetrating larger institutions, building go-to-market strategy for Apex One Auto. Apex One Auto increases application flow and subscription revenue. OEM 3 ramp up, credit union health improving, customer retention strong with zero Q4 customer losses.

Full year: facilitated 97,348 certified loans, total revenue $93.2 million, adjusted EBITDA $15.6 million. Fourth quarter: facilitated 19,308 loans, revenue $19.3 million, adjusted EBITDA $2.8 million. Apex One Auto platform launched in Q4, in prime credit auto segment, subscription-based minimum volume model. Profit share unit economics for 2025 vintage booked at 72.5% loss ratio, targeting mid-60% loss ratio.

2026 full-year certified loan guidance $100,000 to $110,000, Q1 expected 21,000 to 22,000. Full-year adjusted EBITDA guidance $25 million to $29 million. Conversion rate headwind solved, growth expected to compound quarterly.

Risks include macroeconomic environment impact on credit performance, temporary headwinds from pricing adjustments in Q4, uncertainty in model predictions.

Q: High-level thoughts on AI and potential threats?

A: Use AI in tools and models, proprietary data and machine learning superior.

Q: Cert outlook from mid-20s down to high single digits growth?

A: Application volume up 20%, credit builders priced profitably, OEM 3 ramp up, refinance opportunity.

Q: Management team build-out and credit quality?

A: Management team filled, 2025 vintage delinquencies 200 basis points lower.

Q: Free cash flow outlook?

A: Difficult to predict losses, free cash flows in line with EBITDA guidance.