Open Lending Corporation

Good afternoon and welcome to Open Lending's fourth quarter 2020 earnings conference call. As a reminder, today's conference call is being recorded. On the call today are John Flynn, Chairman and CEO, and Ross Jessup, President and COO, and Chuck Yale, CFO. Earlier today, the company posted its fourth quarter 2020 earnings release to its investor relations website. In the release, you will find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed on this call. Before we begin, I'd like to remind you that this call may contain estimates and other forward-looking statements that represent the company's view as of today, March 9th, 2021. Open lending declaims any obligation to update these statements to reflect future events or circumstances. Please refer to today's earnings release and our filings with the SEC for information concerning factors that could cause actual results to differ materially from those expressed or implied by such statements. And now, I'll pass the call over to you. John, for your opening remarks.

Thank you, operator. Good afternoon, everyone. Thanks again for joining us for the fourth quarter 2020 earnings conference call. I'd like to start today by reviewing our fourth quarter and our full year 2020 highlights, as well as the progress we've made on our growth objectives. Then Ross is going to provide an update on our OEM opportunity. And finally, Chuck is going to review our Q4 financials in greater detail. and discuss our outlook for 2021. During the fourth quarter, we certified 26,822 loans, which was an increase of 19% as compared to the fourth quarter of 2019. We reported revenue of $39.6 million, which was an increase of 52%, and adjusted EBITDA of $24.8 million, which was an increase of 37% as compared to the fourth quarter of 2019. The fourth quarter was a great end to a very productive year for open lending. For the full year, we reported a 20% increase in certified loan growth, a 17% increase in revenue, and a 7% increase in adjusted EBITDA. We also added 55 new customers in 2020, including large partnerships with several billion-dollar institutions. We experienced strong OEM captive cert growth, despite COVID-19, which Ross is going to discuss shortly. We also enhanced our focus on direct lending and refinance channels, and also made progress on our initiative to provide CECL relief to our OEM, bank, and credit union customers. And of course, in 2020, we went public, which was an incredible milestone for us after building the business for the past 20 years. And with that came a strong board as well, and an expanded management team, which has positioned us well for many years to come. Now I'm going to spend a few minutes on our fourth quarter 2020. Our lending partners continue to be very resilient during this time. A combination of a recent influx of deposits as a result of COVID, in addition to a low interest rate environment, has led lenders to search for higher risk adjusted yields. This has led to growth in auto loan originations further down the credit spectrum. During the quarter, we added 16 new customers, and we currently have approximately 355 active customers on our platform that are generating certified loans this year. We continue to bring in additional resellers as well. We announced some new large partnerships in the fourth quarter as well, including OE Federal Credit Union, a $1.2 billion institution based in Livermore, California, Members First Federal Credit Union, a $5.3 billion institution based in Mechanicsburg, Pennsylvania, and Interra Credit Union, a $1.3 billion institution based in Goshen, Indiana. Our integration into the FIS Originate platform is going well as well. We're currently live with one bank partner on the platform, and we continue to believe that this partnership is going to open up doors for us to market this to other banks that use that platform. Our enhanced focus on the refinance program to drive additional certified loan volume continues to be a great additional growth channel. During the quarter, we grew our business with existing channel partners, and we signed eight new credit unions and banks to the refinance program. We've also been working on other funding sources with third parties to expand our funding sources outside the banks, credit unions, and the OEMs that we currently partner with. And then lastly, on the insurance partner side, our current insurance partners include CNA and AmTrust. We are in active discussions with various top insurance carriers to potentially partner with as a third insurance relationship, as we now feel there's enough volume to support three insurance carriers without jeopardizing our relationship with our two existing partners. And we'll provide an update on that when we have more details. So with that, I'm going to go ahead and turn it over to Ross so he can jump into the OEM opportunity that we currently have in front of us.

Thank you, John. OEM captive certification originations were strong in the fourth quarter, which demonstrates tremendous growth despite the COVID-19 pandemic. As we laid out before, the OEM captive market is substantial, with each captive opportunity representing a $30 to $100 million annual revenue opportunity and collectively more than a billion annual revenue opportunity. As of today, we currently serve two OEM captives, which we expect to continue to ramp and will be key drivers of growth in 2021. Starting first with OEM number two, which came back online in October, they have begun to ramp production back up, and we are encouraged at the number of applications being submitted, loans booked and certified, and the opportunity ahead with this OEM. Moving on to OEM number one. We experienced certification growth of over 200% from April to December, and are currently seeing applications from over 100% of their nationwide dealerships. We also officially launched our expanded credit score offering for them. In addition to the 560 to 619 credit scores in all regions, they are now utilizing our platform for 560 to 679 credit scores in one of their four regions they service and look to expand to the other three over the next few months. This is a great example of how our customer has expanded their usage and saw tremendous benefit from our product. Subvention will also increase the opportunities at both current OEMs. We launched a submission at OEM number two in January and are very encouraged by the opportunity ahead. In addition, we took our findings from the seasonal relief that the OEM number two received from the SEC as well as their independent auditors and created a white paper on the topic. We only recently published the paper and have gotten many inquiries on how we can help others. Lastly, on OEMs, we have been very active in discussions with others and continue to build our pipeline and work together on data studies and the value proposition we offer our platform. Again, we do not have any additional OEMs in our 2021 guidance. We continue to focus on this significant opportunity. With that, I would like to turn it over to Chuck to discuss the financials in greater detail.