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Open Lending Corp (LPRO)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue of $25.3M and diluted EPS of $0.01; revenue modestly beat S&P Global consensus while EPS slightly beat; GAAP EBITDA materially missed given higher OpEx and tighter profit-share unit economics; management emphasized a 2025 “transition year” focused on profitability and mix . Revenue/EPS estimates from S&P Global: $23.63M and $0.0086; EBITDA estimate $5.91M vs ~$1.77M actual (derived) — a significant miss; estimates marked with asterisks below (S&P Global) *.
  • Strategic catalysts: early extension with AmTrust (largest carrier) from 2028 to 2033, strengthening insurance capacity and partner confidence; extension announced two days prior to earnings and reiterated on the call .
  • Mix shift continues: OEM exposure reduced to 11.1% of certs as company leans into CU/Bank channel for better unit economics; average program fee per cert held >$500; average loan size increased to $29,535 .
  • Guidance: Q3 2025 total certified loans guided to 22,500–24,500; OpEx elevated this quarter by severance as right-sizing continues; $21M remains on buyback after repurchasing ~$4M in Q2 .

What Went Well and What Went Wrong

  • What Went Well

    • Early extension of AmTrust producer agreement to 2033, reinforcing carrier capacity and confidence in Lenders Protection Program: “This early extension not only secures our credit capacity…but demonstrates their faith in our product, team, and ability to generate profitable business” .
    • Positive back-book dynamics: first positive change-in-estimate (CIE) since 2023, aided by lower-than-expected claim frequency and Manheim Used Vehicle Value Index rising to 206.9 in mid-July, reducing severity assumptions .
    • Improved portfolio quality and economics mix: OEM share fell to 11.1%, super-thin files reduced to 0.3% of loans; average program fee per cert remained strong ($563), supporting less volatile and more profitable unit economics over time .

  • What Went Wrong

    • EBITDA shortfall vs consensus due to tighter profit share unit economics (initial booking at 72.5% loss ratio) and higher OpEx (severance); EBITDA ~$1.77M (derived) vs $5.91M consensus* *.
    • Volume headwinds persist: total certs 26,522, down vs 28,963 YoY and 27,638 QoQ, reflecting seasonality and deliberately tightened underwriting/rate increases; management continues to prioritize quality over quantity in 2025 .
    • Profit share per cert lower ($289 vs $552 YoY) as unit economics are constrained at origination to reduce future volatility; management expects better performance on 2025 vintages as pricing/mix changes take hold .

Financial Results

  • Core financials
MetricQ4 2024Q1 2025Q2 2025
Revenue ($M)$(56.9) $24.4 $25.3
Gross Profit ($M)$(63.2) $18.3 $19.8
Operating Income ($M)$(78.6) $0.8 $1.2
Net Income ($M)$(144.4) $0.6 $1.0
Diluted EPS ($)$(1.21) $0.01 $0.01
Adjusted EBITDA ($M)$(73.1) $5.7 $4.1
Adjusted EBITDA Margin (%)128% 23% 16.2%
  • Segment revenue breakdown
Metric ($M)Q2 2024Q1 2025Q2 2025
Program Fees$14.84 $15.21 $14.93
Profit Share$9.33 $6.73 $7.97
Claims Admin & Other$2.56 $2.45 $2.41
Total Revenue$26.73 $24.39 $25.31
  • KPIs and unit economics
KPIQ2 2024Q1 2025Q2 2025
Total Certified Loans (certs)28,963 27,638 26,522
CU/Bank Certs22,038 24,215 23,591
OEM Certs6,925 3,423 2,931
Avg Program Fee per Cert ($)512 550 563
Avg Profit Share per Cert ($)552 278 289
Facilitated Loan Origination Volume ($000)819,253 782,901 783,327
Average Loan Size ($)28,286 28,327 29,535
  • Q2 2025 actuals vs S&P Global consensus
MetricActualConsensus*Surprise
Revenue ($M)$25.31 $23.63*+$1.68M (Beat)
Diluted EPS ($)$0.01 $0.0086*+$0.0014 (Beat)
EBITDA (GAAP, $M)~$1.77 (Op Inc $1.176 + D&A $0.590) $5.91*−$4.14M (Miss)

Values marked with * are retrieved from S&P Global.

Notes: EBITDA (GAAP) derived from Operating income plus Depreciation & Amortization; D&A and Operating income cited above .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Certified Loans (certs)Q3 2025N/A22,500–24,500 New
Total Certified Loans (certs)Q2 202525,500–27,500 N/APreviously issued; met with 26,522 actual
Revenue, Margins, OpEx, OI&E, Tax Rate, Dividends2025None providedNone providedN/A

Management reiterated right-sizing efforts with one-time severance elevating Q2 OpEx, and a target to reach a run-rate cost structure supported by program and TPA fees by 2026 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
Underwriting/pricing & unit economicsQ4’24: Large negative CIE driven by 2021–22 vintages, macro delinquencies, and credit-builder cohorts underperforming . Q1’25: New loan measures; refined pricing to reduce volatility; quality over quantity .Tightened standards; initial booking at 72.5% loss ratio to dampen CIE volatility; expect 2025 vintages closer to 65% with pricing/mix; positive $0.3M back-book CIE .Improving quality and predictability; CIE stabilizing.
Carrier capacity/partnershipNo prior extension noted.AmTrust producer agreement extended early to 2033; same overall terms; key signal of confidence .Strengthened capacity/visibility.
Channel mix (OEM vs CU/Bank)CU/Bank focus emerging in Q1’25 KPIs .OEM down to 11.1%; CU/Bank 88.9% mix; OEM pilot (“OEM 3”) progressing, with broader rollout targeted by 2025 and larger impact in 2026 .Shift toward CU/Bank; measured OEM pilot.
Macro/used vehicle valuesQ4’24: Used car values decline drove severity; major negative CIE .Manheim index 206.9 mid-July aiding severity; improving consumer sentiment and wholesale supply trends .Severity tailwind vs 2024 headwinds.
Costs/streamliningFocus on cost efficiencies noted in Q4’24/Q1’25 .Q2 OpEx up due to severance; second RIF completed July 15; substantial 2026 run-rate savings identified .Cost base reduction underway.
Technology/data initiativesTools and scorecards emphasis in Q4’24 .Real-time TransUnion data integration for pricing; using automation/ML in claims to boost productivity/accuracy .Increased real-time decisioning/automation.
Tariffs/mix—Tariffs could shift new/used mix; anticipate more used certs and higher vehicle prices if new inventory is impacted .Monitoring; likely mix implications.
Capital return—Repurchased ~1.97M shares for ~$4.0M; $21M buyback capacity remains .Ongoing buybacks.

Management Commentary

  • “We just signed an early extension of our producer agreement with AmTrust…extended through 02/19/33…This extension…demonstrates our faith in our product, team, and ability to generate profitable business” .
  • “We facilitated 26,522 certified loans…This decrease is largely due to typical seasonality combined with our intentionally tightened lending standards and targeted rate increases in less profitable segments” .
  • “Profit share revenue…associated with new originations was $7.7 million or $289 per certified loan…we would expect current vintage to ultimately perform closer to a 65% loss ratio” .
  • “Operating expenses were…up…partially due to one-time severance…We have completed the work to identify substantial run rate savings for 2026 and plan to have implemented all planned actions by year end” .
  • “For the third quarter, we are expecting total certified loans to be between 22,500 and 24,500” .

Q&A Highlights

  • AmTrust extension: AmTrust approached Open Lending to extend, signaling confidence; terms unchanged across OEMs, banks, and CUs .
  • Back-book CIE: First positive CIE since 2023 seen as a constructive sign; supported by lower claim frequency and MUVI at 206.9; management still expects normal quarter-to-quarter variability .
  • Q3 certs guidance vs demand: Deceleration driven largely by reduced OEM exposure, tighter underwriting, and rate increases; CU demand solid; refi channel showing early growth with rate backdrop .

Estimates Context

  • Q2 2025 results vs S&P Global consensus: Revenue beat ($25.31M vs $23.63M*), EPS beat ($0.01 vs $0.0086*), but EBITDA (GAAP) missed materially (~$1.77M derived vs $5.91M*). Miss reflects tighter profit-share unit economics at origination and elevated OpEx from severance; management is prioritizing quality/mix and reducing volatility in 2025 .
  • Forward estimates context: Management guided Q3 certs to 22.5–24.5K; continued focus on pricing, mix, and cost base suggests potential estimate dispersion near-term as the transition plays out and OEM pilot timing firms up .

Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue/EPS beat but EBITDA miss: expect models to shift from EBITDA toward quality of revenue and future loss-ratio normalization; key to the story is unit economics predictability over absolute volume *.
  • Carrier confidence is a differentiator: the AmTrust extension through 2033 de-risks insurance capacity and supports underwriting continuity; constructive for multiple expansion if back-book stability persists .
  • Mix and pricing upgrades progressing: OEM downsizing and CU/Bank focus should lift average fees and improve loss performance; watch OEM3 pilot ramp into 2026 .
  • Back-book stabilization signs: positive CIE and improving used car indices lower severity risk; still expect normal variability; monitor Manheim trajectory and delinquency trends .
  • Cost actions underway: Q2 OpEx temporarily elevated by severance; secondary RIF completed; company targets 2026 run-rate supported by program/TPA fees — potential operating leverage ahead .
  • Capital allocation: ~$21M buyback capacity remains; Q2 repurchases suggest willingness to support shares during transition .
  • 2025 is a transition year; 2026 is the inflection: expect limited volume growth near-term, with quality over quantity; upside hinges on loss ratio normalization, OEM3 rollout, and execution on data/ML initiatives .

Appendix: Additional Data

  • Balance sheet snapshots (selected)
    • Cash and cash equivalents: $230.7M (Q2 2025) vs $236.2M (Q1 2025) vs $243.2M (FY 2024) .
    • Total debt (incl. current): ~$136.1M (Q2 2025) vs ~$137.9M (Q1 2025) vs ~$139.7M (FY 2024) .
    • Total assets: $296.7M (Q2 2025) vs $304.2M (Q1 2025) vs $296.4M (FY 2024) .

S&P Global values disclaimer: All values marked with an asterisk (*) are retrieved from S&P Global.