Open Lending Q1 Earnings Call Highlights

Key Points

• Quality over quantity: Open Lending pulled back from higher‑risk borrowers, which lowered approval rates but still facilitated 21,064 certified loans—above the high end of quarterly guidance—and reiterated full‑year certified loan guidance of 100,000–110,000 as OEM‑3 and core credit‑union volumes ramp.
• Unit economics improving: Management lowered the 2026 vintage implied loss ratio to about 70% (anticipating eventual performance in the mid‑60s), with profit‑share per certified loan rising to $363, though the quarter included a $0.7M negative change in estimate tied to pre‑2023 vintages.
• Financial picture mixed but capitalized: Q1 revenue fell to $20.5M and adjusted EBITDA declined to $2M with a $0.5M net loss, while the balance sheet remains strong with $173.3M in unrestricted cash and a boosted $50M share‑repurchase authorization (≈$45.1M remaining).

Open Lending NASDAQ: LPRO reported first-quarter 2026 results that management said reflected continued operational discipline amid a challenging auto lending environment, with a deliberate shift away from higher-risk borrowers weighing on approval rates but improving per-loan economics and portfolio quality.

On the company’s earnings call, leadership emphasized “quality continues to take precedence over quantity,” pointing to tighter underwriting and pricing actions taken in 2025 that are now fully flowing through to 2026 results. The company also reiterated its full-year certified loan and adjusted EBITDA guidance.

Certified loans top guidance as company tightens credit

Management said applications grew 18% year-over-year, driven by stronger go-to-market performance. However, approval rates declined “as a direct result of our deliberate decision to pull back from higher-risk credit segments and borrowers in favor of higher quality certified loan volume,” according to Jessica Buss, who led prepared remarks alongside CFO Mas Monaco and Chief Underwriting Officer Matt Sather.

Open Lending facilitated 21,064 certified loans in the quarter, which Monaco said came in “above the high end of our quarterly guidance.” The total was down from 27,638 in the first quarter of 2025, but executives repeatedly highlighted that last year’s first quarter benefited from “super thin” borrowers that no longer contribute meaningfully to volume.

Buss said the first two weeks of January still reflected “some residual impact” from a fourth-quarter pricing conversion factor that rolled off on Jan. 15. Even with that headwind, she said the outcome was “higher quality certified loans and volume that exceeded the top end of our guidance.”

Looking ahead, management reiterated expectations for 100,000 to 110,000 certified loans for the full year, and Monaco guided to 22,000 to 25,000 certified loans in the second quarter.

OEM and credit union channel mix shifts; OEM 3 ramp highlighted

Executives attributed first-quarter performance to “slightly stronger than expected volume in our core credit union channel and the continued ramp of OEM 3,” Buss said. She added that the company expects OEM 3’s ramp to accelerate as it rolls out in additional high-volume states, with “the most meaningful cert contribution expected to come in the third and fourth quarters.”

At the same time, Buss said “legacy OEM certs continue their intentional decline,” which she described as a direct result of 2025 actions designed to improve the quality of the company’s book.

Monaco echoed the expectation for volume acceleration through 2026, citing both the OEM 3 expansion and what he described as a healthy core credit union channel, with lenders showing “capacity and appetite to grow as our pipeline reflects.”

Unit economics improve; loss ratio assumptions lowered for 2026 vintage

Management pointed to underwriting and pricing actions taken in 2025 as drivers of improved unit economics in the first quarter of 2026. Buss said the company booked its first-quarter 2026 vintage at a 70% loss ratio, compared with 72.5% used for full-year 2025, attributing the change to “the realities of our improved underwriting and the higher quality books that we have built.” She stressed it was not a shift to a less conservative stance.

Buss outlined several factors behind the improvement, including:

• A favorable mix shift toward core credit union customers and OEM 3, which she said have “consistently delivered better performance”
• Full-year impact in 2026 from rate increases deployed on OEM 1 and OEM 2 in May 2025
• More refined pricing and targeting for loans with credit builder trade lines
• The removal of “super thin” borrowers, which she said historically carried loss ratios “in the 90s”
• Better-than-expected performance in the 2025 vintage core credit union business

Buss also said the company’s 2025 vintage has been outperforming 2023 and 2024 vintages, with 60-day-plus delinquency rates holding an “approximate 200 basis point advantage” at the 14-month on-book mark.

Monaco said profit share revenue associated with new originations totaled $7.7 million, or $363 per certified loan, up from $278 per certified loan in the first quarter of 2025 and $322 in the fourth quarter of 2025. Buss characterized the $363 figure as a 30% year-over-year improvement.

However, the quarter included a negative change in estimate tied to older vintages. Buss said the company recorded a negative change in estimate of $700,000 “driven entirely by our pre-2023 back book more seasoned vintages,” which she said reflected reserve estimate additions amid deteriorating macroeconomic trends, “not currently a reflection of additional paid losses.” Monaco noted the comparable item in the prior-year quarter was a $0.9 million reduction.

For the 2026 vintage, Monaco said the company applied an implied loss ratio of about 70%, adding that based on current pricing and expected credit performance, management anticipates those vintages will “ultimately perform closer to a mid-60s% loss ratio.”

Revenue declines year over year; expenses reduced and adjusted EBITDA dips

Open Lending reported total revenue of $20.5 million for the first quarter, down from $24.4 million in the prior-year period. Monaco broke down revenue as:

• Program fee revenue: $11.4 million
• Profit share revenue: $7.0 million (inclusive of the $0.7 million negative change in estimate)
• Claims administration fees and other revenue: $2.2 million

Operating expenses were $16.3 million, down 7% from $17.5 million a year earlier. Monaco said first-quarter operating expense included $0.8 million in non-recurring items excluded from adjusted EBITDA, and approximately $1 million related to the company’s Project Red Rocks initiative and other initiatives.

Net loss was $0.5 million, compared with net income of $0.6 million in the first quarter of 2025. Diluted net loss per share was $0, compared with diluted net income of $0.01 per share in the prior-year quarter. Adjusted EBITDA was $2 million, down from $3.2 million a year earlier.

Monaco also noted that the company updated its presentation of adjusted EBITDA beginning in mid-2025 to exclude interest income, and later to exclude certain non-recurring expenses, with prior periods conformed to the current presentation.

Balance sheet, capital allocation, and initiatives: Red Rocks and ApexOne Auto

On cash flow and the balance sheet, Monaco said operating cash flow was negative $0.8 million, primarily due to the timing of payments under the company’s 2025 annual short-term incentive program, which amounted to approximately $4.5 million and shifted into the first quarter.

The company ended the quarter with $231.1 million in total assets, including $173.3 million in unrestricted cash. Total liabilities were $155.8 million, including $82.9 million in outstanding debt, and Monaco said the company continued scheduled principal payments on its senior secured term loan.

In capital allocation, Monaco said Open Lending did not repurchase shares in the first quarter, citing a brief open trading window. He added that the board extended the share repurchase program’s expiration from May 2026 to May 2027 and increased the program size to $50 million, leaving approximately $45.1 million remaining.

Strategically, Buss discussed work on customer retention and product initiatives, including a “voice of the customer” exercise launched in December 2025 to better align investments with customer needs. She also highlighted efforts to extend the company’s decisioning capabilities and data assets, including AI-enabled tools intended to help develop and deploy new decisioning models faster.

Buss said ApexOne Auto, delivered in late 2025, is not yet a significant contributor to results, but the company is encouraged by its pipeline and expects it could drive incremental subscription recurring revenue and additional certified loan volume over time.

She also provided an update on Project Red Rocks, describing it as building a core competency in simulation and “decision intelligence” that helps model the impacts of pricing and underwriting changes on volume, losses, and profitability. As an example, Buss said Red Rocks is improving the company’s ability to differentiate and price credit builder applicants—about 30% of application flow—and management expects related changes to be executed in the middle of the second quarter.

Finally, Buss said the company’s insurance partners expressed positive feedback at its annual carrier meeting and showed alignment with the company’s disciplined growth strategy.

The company did not take analyst questions on the call.

About Open Lending NASDAQ: LPRO

Open Lending Corporation is a financial technology company specializing in risk analytics and automated loan decisioning for the automotive finance industry. Through its proprietary platform, Open Lending enables banks, credit unions and finance companies to enhance underwriting accuracy, manage risk more effectively and streamline the loan origination process. The company's solutions leverage machine learning and big-data analytics to deliver credit-based pricing models that help lenders optimize portfolio performance and reduce losses.

The core offerings of Open Lending include an automated underwriting engine, risk-based pricing tools and performance analytics dashboards.

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