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Open Lending Corporation (LPRO)
NASDAQ:LPRO
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Open Lending
(NASDAQ:LPRO)
38Underperform
Positive Factors
Leadership and Experience
Investors will be encouraged that Ms. Jessica Buss has significant P&C insurance experience as CEO of Argo Group and that she brings valuable insurance and actuarial experience to Open Lending's operations.
Market Opportunities
The third OEM partnership is seen as a vindication against investor concerns about Open Lending's business model and the attractiveness of the Lenders Protection product.
Negative Factors
Delayed Reporting
LPRO has delayed its 10-K filing and earnings to finalize its accounting for profit-sharing revenue and contract assets.
Profit Sharing Issues
The most important to digest is the significant negative Profit Share reported this quarter, about 40% of it due to negative future expectations for Profit Share due to make-whole agreements.
Revenue and Earnings Challenges
Shares of Open Lending declined by 12.6% following 3Q results that saw better certification volume than expected, yet an additional write-down to its profit-sharing on the 'back book' of underperforming 2021 and 2022 loans, which drove a revenue and earnings miss.
Open Lending (LPRO) vs. S&P 500 (SPY)
Market Cap
$140.15M
Dividend YieldN/A
Average Volume (3M)1.66M
Price to Earnings (P/E)72.9
Beta (1Y)1.18
Revenue Growth-79.55%
EPS Growth-726.70%
CountryUS
Employees205
SectorFinancial
Sector Strength82
IndustryFinancial - Credit Services
Share Statistics
EPS (TTM)-1.13
Shares Outstanding119,782,900
10 Day Avg. Volume3,614,614
30 Day Avg. Volume1,660,641
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)4.05
Price to Cash Flow (P/CF)8.50
P/FCF Ratio8.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$5.00Price Target Upside290.62% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
Open Lending Business Overview & Revenue Model
Company DescriptionOpen Lending Corporation provides lending enablement and risk analytics solutions to credit unions, regional banks, and non-bank auto finance companies and captive finance companies of original equipment manufacturers in the United States. It offers Lenders Protection Program (LPP), which is a Software as a Service platform that facilitates loan decision making and automated underwriting by third-party lenders and the issuance of credit default insurance through third-party insurance providers. The company's LPP products include loan analytics, risk-based loan pricing, risk modeling, and automated decision technology for automotive lenders. Open Lending Corporation was founded in 2000 and is based in Austin, Texas.
How the Company Makes MoneyOpen Lending makes money through its proprietary LendProtect platform by partnering with financial institutions such as credit unions, banks, and automotive lenders. The company earns revenue by charging fees for the use of its platform, which helps lenders assess the risk of potential borrowers using sophisticated algorithms and data analytics. Additionally, Open Lending may earn revenue from performance-based fees, which are tied to the success and profitability of the loans facilitated through its platform. Partnerships with insurers and other financial service providers also contribute to its revenue model, as these collaborations help enhance the overall value proposition of its lending solutions.
Open Lending Financial Statement Overview
Summary
Open Lending shows a strong gross profit margin and solid cash flow management, but faces challenges with declining revenues and profitability margins. The balance sheet is stable, though leverage needs monitoring.Income Statement
Open Lending has shown a decline in revenue over the TTM with a decrease to $95.89M from $117.46M in the previous year, indicating negative revenue growth. The gross profit margin is strong at 76.0% for TTM, but net profit margin has significantly reduced to 4.78%, compared to higher values in previous years. EBIT and EBITDA margins have also dropped, reflecting reduced profitability. The company's income statement highlights challenges in maintaining revenue and profitability levels.65
Positive
Balance Sheet
The balance sheet of Open Lending shows a stable financial position with a solid equity base of $220.46M. The debt-to-equity ratio is moderately high at 0.66, indicating manageable leverage. The equity ratio is satisfactory at 55.7%, suggesting a good proportion of equity financing. Return on equity has decreased, reflecting reduced profitability. Overall, the balance sheet reflects stability with some leverage risks.72
Positive
Cash Flow
Open Lending's cash flow management is strong with a positive operating cash flow of $37.73M and free cash flow of $36.98M in TTM. The free cash flow to net income ratio is favorable, indicating efficient cash generation relative to net income. However, the free cash flow growth rate is negative due to a decline from the previous period. The operating cash flow to net income ratio is robust, showing strong cash conversion capabilities.75
Positive
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 95.89M | 117.46M | 179.59M | 215.66M | 108.89M | 92.85M | Gross Profit |
| 72.93M | 95.18M | 159.63M | 197.03M | 99.11M | 85.04M | EBIT |
| 4.90M | 29.07M | 97.61M | 205.81M | 56.72M | 62.62M | EBITDA |
| 15.85M | 41.30M | 100.87M | 198.69M | -77.62M | 62.94M | Net Income Common Stockholders |
| 4.58M | 22.07M | 66.62M | 146.08M | -97.56M | 62.54M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 11.07M | 240.21M | 204.45M | 116.45M | 101.51M | 7.68M | Total Assets |
| 0.00 | 374.04M | 379.63M | 318.82M | 294.01M | 79.19M | Total Debt |
| 0.00 | 148.13M | 151.51M | 150.90M | 163.25M | 3.31M | Net Debt |
| 11.07M | -92.08M | -52.94M | 34.45M | 61.74M | -4.36M | Total Liabilities |
| 0.00 | 168.46M | 166.81M | 159.84M | 267.39M | 313.96M | Stockholders Equity |
| 7.73M | 205.58M | 212.82M | 158.98M | 26.62M | -234.78M |
| Cash Flow | Free Cash Flow | ||||
| 34.40M | 80.48M | 106.81M | 93.17M | 23.44M | 41.66M | Operating Cash Flow |
| 37.73M | 82.66M | 107.43M | 95.16M | 24.64M | 41.76M | Investing Cash Flow |
| -3.33M | -2.18M | -624.00K | -1.99M | -1.20M | -99.00K | Financing Cash Flow |
| -11.87M | -42.33M | -17.80M | -77.81M | 70.81M | -44.90M |
Open Lending Technical Analysis
Negative
1.28
Price Trends
4.73
Negative
5.35
Negative
5.55
Negative
Market Momentum
-0.74
Positive
11.53
Positive
4.64
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LPRO, the sentiment is Negative. The current price of 1.28 is below the 20-day moving average (MA) of 3.47, below the 50-day MA of 4.73, and below the 200-day MA of 5.55, indicating a bearish trend. The MACD of -0.74 indicates Positive momentum. The RSI at 11.53 is Positive, neither overbought nor oversold. The STOCH value of 4.64 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LPRO.
Open Lending Risk Analysis
Open Lending disclosed 48 risk factors in its most recent earnings report. Open Lending reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Open Lending Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $2.49B | 13.43 | 17.19% | ― | 25.51% | 36.96% | |
72 Outperform | $296.03M | 7.27 | 12.14% | 3.93% | 6.73% | 151.08% | |
72 Outperform | $7.61B | 12.28 | 14.71% | ― | 22.89% | 39.00% | |
69 Neutral | $11.20B | 20.27 | 6.63% | 3.29% | 3.41% | -12.41% | |
63 Neutral | $14.35B | 9.94 | 8.94% | 4.37% | 16.34% | -11.76% | |
53 Neutral | $1.17B | 23.11 | 3.96% | ― | 3.63% | 27.77% | |
38 Underperform | $140.15M | 72.92 | -95.19% | ― | -79.55% | -726.70% |
* Financial Sector Average
Performance Comparison
LPRO
Open Lending
1.28
-4.40
-77.46%
RM
Regional Management
31.37
8.35
36.27%
ALLY
Ally Financial
37.02
-0.85
-2.24%
COOP
Mr Cooper Group
133.56
57.82
76.34%
LC
LendingClub
10.73
1.99
22.77%
ENVA
Enova International
103.67
40.84
65.00%
Open Lending Earnings Call Summary
Earnings Call Date: Mar 31, 2025 | % Change Since: -53.62% | Next Earnings Date: May 13, 2025
Earnings Call Sentiment Negative
The earnings call highlighted strong customer growth and proactive measures to address underperformance. However, significant negative changes in estimates and financial losses overshadowed these positives, indicating challenges in managing loan vintages and borrower profiles.Highlights
Strong Customer Growth
The Lenders Protection program signed 58 new customers in 2024, including 13 in the fourth quarter, indicating strong market interest and the value proposition of the platform.
Proactive Corrective Measures
Implemented corrective actions designed to improve the performance of new originations, including adjustments to underwriting rules and pricing for borrowers with credit builder tradelines.
Positive Relations with Insurance Carriers
No restrictive caps on capacity with insurance carriers, who are pleased with the overall long-term performance of the portfolio and are willing to do more business with Open Lending.
Lowlights
Significant Negative Change in Estimate
An $81 million negative Change In Estimate (CIE) was identified due to further deterioration of 2021 and 2022 loan vintages and additional factors impacting 2023 and 2024 vintages.
Decline in Revenue and Profitability
For fiscal year 2024, generated $24 million in revenue and an adjusted EBITDA of negative $42.9 million, largely due to the impact of the negative CIE.
Challenges with Credit Builder Tradelines
Borrowers with credit builder tradelines performed twice as poorly as others, and this group constituted a significant portion of negative performance in 2024.
Increased Delinquencies
There was an increase in 60-plus day delinquencies in the fourth quarter of 2024 from the 2021 and 2022 loan vintages.
Operating and Net Losses
Operating loss was $78.6 million in the fourth quarter of 2024, and net loss was $144.4 million, compared to a net loss of $4.8 million in the fourth quarter of 2023.
Company Guidance
In the recent Open Lending earnings call for the fourth quarter and full year 2024, several key metrics and guidance were discussed. The company reported a total of 110,652 certified loans for the fiscal year 2024, generating $24 million in revenue and an adjusted EBITDA of negative $42.9 million. For the fourth quarter alone, they facilitated 26,065 certified loans, resulting in a total revenue of negative $56.9 million, which included an $81.3 million negative change in estimate (CIE) related to profit share. The company attributed this negative CIE to further deterioration in the performance of their 2021 and 2022 loan vintages, as well as factors affecting their 2023 and 2024 cohorts. Specifically, borrowers with credit builder tradelines and those with fewer positive tradelines underperformed, contributing significantly to the negative CIE. The call also addressed corrective actions, including credit tightening and pricing adjustments, aiming to improve future loan performance. Looking ahead to the first quarter of 2025, Open Lending expects to certify between 27,000 and 28,000 loans.Open Lending Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Open Lending Announces New CEO and COO Appointments
Positive
Mar 31, 2025
On March 31, 2025, Open Lending Corporation announced significant leadership changes with the appointment of Jessica Buss as Chief Executive Officer and Michelle Glasl as Chief Operating Officer. Jessica Buss brings extensive experience from the insurance industry, previously serving as CEO of Argo Group International Holdings. Her leadership is expected to enhance collaboration with insurance carrier partners and automotive lending partners, focusing on improving loan performance and underwriting processes. Chuck Jehl will continue as interim Chief Financial Officer and a Board member during the transition period, while a search for a permanent CFO is underway. These changes aim to drive the company’s strategic growth and strengthen its position in the industry.
Executive/Board ChangesBusiness Operations and Strategy
Open Lending Co-Founder Retires from Board, Stays as Consultant
Neutral
Jan 21, 2025
On January 21, 2025, Open Lending Corporation announced the retirement of its co-founder, John J. Flynn, from the Board of Directors, effective January 16, 2025. Although Mr. Flynn is stepping down, he will continue to contribute to the company as a consultant through the end of 2025. This transition is not due to any disagreements but marks a planned succession, with the company under the leadership of CEO Chuck Jehl. Flynn’s retirement reflects a strategic continuity for Open Lending, aiming to maintain its growth and innovation in the automotive lending industry.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.