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LPRO Open Lending

Participants
John Flynn Chairman, President and CEO
Ross Jessup CFO and COO
Ashish Sabadra Deutsche Bank
Joseph Vafi Canaccord
Matt O'Neill Goldman Sachs
Mike Grondahl Northland Securities
Call transcript
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Operator

Good afternoon and welcome to Open Lending's Second Quarter 2020 Earnings Conference Call.

As a reminder, today's conference call is being recorded.

On the call today are John Flynn, President and CEO, and Ross Jessup, CFO and COO. Earlier today, the company distributed its second 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.

August like and you represent other view of I'd may this the begin, as estimates contain forward-looking today, we to that remind call company's Before XXXX. XXth, statements that events any claims these reflect to Open or Lending obligation circumstances. statements update to future information to by Please for differ those or earnings implied materially statements. the today's could that to in our from factors refer with cause such filings release SEC concerning actual results expressed remarks. opening it over to now And I'll for John, pass you Please go ahead.

John Flynn

Good company Thank you of joining in announced our for operator. which encouraged Thank you, afternoon call ahead quarter, for May. the very quarter were us guidance everyone. XXXX earnings by of first that as second in revised our XXXX We're we for to our results. a results public discuss the

the certified quarter, the of loans, our XX% was guidance. we midpoint which ahead of revised second During XX,XXX

the What story, unique Lending is Lending to briefly strategies. by our is business over XX finance million. familiar more of by wanted going since We Open to and adjusted powered minutes. be data. model few for you growth our is proprietary also EBITDA start many unique a the platform lending and over which quarter the enablement of million reviewing But of reported auto may Ross is I $XX.X in a second not $XX.X with Open results revenue go detail in market, of years

define risk. OEMs, prime consumer. helps whole and lenders. value lenders, as Lending's distribution. the XXX consumers stakeholders, scores ultimately and XXX specifically obtain FICO yield, decisioning banks, we prime and for from auto its typically Traditionally, the unlocks and of between loans consumer, advanced dealers, ecosystem credit innovative which We have near balance taking cannot prime Lending near platform increased with no technology a their including very the structure, insurers, analytics, an lenders, volumes their sheet while OEMs At a Open insurance core, Open and scaled unions,

lender with tremendous a a originated credit year. of these than As interest with range that and flagship comes the of a product each auto we rates, standing. prime credit our Through result, their get consumers billion $XXX appropriate Protection, amounts prime Near loans often approximately focused market higher lending worth for approval subprime Lenders near what is a from opportunity consumer broader this underserved serve ability represents base. of provide lenders massive lower to

penetrated only we've far, less this So of X% market. than

serves the Open room substantial in who operates as turn Lending lender, where a there's the for we So, growth. consumer. serve BXBXC model

loans, software proprietary platform origination customers, LOS Our platforms. as which makes referred individual cloud-based systems, portfolios, are and loan to

which This interaction of for all we're systems, responsible integrated Our with market. are customers, origination to and taking the resulting to all have entry. origination, margins the loan covers over XX to with our we embeds what the average, the make our ability no profitably. operate loan second acquisition months a of currently per barrier On XX then XXXX. majority sheet creating five the the our balance us without in consumer with over XXX which added The it's decisioning, vast responsible into or we customers first and significant strong scale six active and loan workflow, LOS consumer distribution $X,XXX us during loan allows risk. for approximately We servicing. costs, of cost they're the model enables lenders' any in And

less the carrier partners, various dealers, the the exclusive than previously, us Lending There's in brings which sophisticated As in compelling allows our lenders, ecosystem, technology to to our a Open to decisions players advantages offering seconds. One, model. beneficiary consumer, ultimate auto is the proposition platform, five to I value very in number competitive and value which a together chain. our the mentioned make the of insurance underwriting

of predictability. across XX one data, includes which loan proprietary provide proprietary data default XX.X% our X would risk million be Another years profiles different and unique

carrier lender plus LOSs, with partners, in relationships highly insurance industry. insurance an with highly proven rate XX integration our Our of and have incredibly a regulated relationships and exclusive success we

our members loan witnessed think to the retention near attributable and vast growth but prime already Protection increase lenders offerings, continues XXXX. loans, profitability XXX% I space. platform, the majority to net help existing make the of more our in with is over are attractive Lenders on retain is in auto that lenders by

valuable contributions XXXX union that by degree also us, Services are institution members innovation on $X.X Credit weeks were credit impact billion with Eagle credit Just Award. transformational on including Union, and over top to We National unions and Association in GreenState County we Credit $XXX larger the announced is the I credit which we've and Federally have based and selected of is Union, and Federal Innovation the Award Iowa's honors Albuquerque, that signed the panel few Union, assets. a the annual NAFCU winner of to which an is few a program Credit success. of of partnered named in largest executives Innovation is based with $X.X in of based institution ago, Unions Credit billion credit Clark Nevada. Insured past NAFCU the wanted winners million highlight union a media months, this a union Mexico, a New which that industry. also is The us

growth. helping areas banks auto credit While numerous our loans more of business continues make we strongly, unions to grow other core see and for also

able ready, spectrum with number they're technology we two, that's also for well. from XXX. looking familiar OEM captive scores, billion into certifications process and to of those to captive figuring to us enhancements bringing incorporate key strong that well in growth. incorporate OEM as also interested not ramp in of more to excess out captives, the continue captive of and to nationwide. the has manifested our to that the discussions momentum underway where as driver this underway that substantial, They're into as build seeing positive certification it's growth expanded OEM over tremendous to all want and than rate. in of down a April and that seen is in as explore applications to number provides The areas The soon nearly contract of to expect north also are growth July broaden to credit their for get And This with and dealers you XXX our currently consumers that utilization to OEM to market. XX% lower of customers OEM it the their expand cash with expansion we mid-April, dealerships. XXX better with servicing We've with quarter of of to and they'll nationwide annual Continual to subvention, which with OEM in credit be $X interest COVID-XX. different two we serve Lenders in Protection XXX% the are are from a be a having how that, OEM technology we're interest be but market they rate that rate analysis the without first cash TAM One nationwide We the the revenue. currently loan. the prior those itself one, might is manufacturer dealerships rate We're will subvention demonstrates currently as to the

over lowering thing the which certifications result its turbulence resulted a COVID, months. of withdrew materially lending, from Another number prime is in capital few as the near market two, OEM from past

the in to We such prime are quarter, they work they that also will subvention capabilities. on anticipating return that market are the us the fourth technology to given with near continuing as

with number larger subvention, two than future is certification believe anticipated. opportunity of addition OEM previously be going the do With the we to

will number working early in Specifically, the as working program, a launch technology also potential We're new the help that allow to OEM opportunity on triples on finance are the OEM and could as them add of with teams those multiple vehicles opportunities XXXX. pipeline finance us some with through and to our that are which our OEM. two work subvention the

could dealership economy, the our lastly, And broader be CECL decisioning we been our our substantial our lender although, penetrating we Another Protection receive available to of source beyond to And customers. and also classes, new factored numerous they've regulation with told as back value slight recoveries the leases to expand them and program for modifications pandemic our such customers banks classes. that majority to In industry this have asset make able lending where of we our the credit establish longer SEC. performance, has near-term, and year. basis, the assess be insurance broaden our And what to as channels. COVID-XX and is modifications into expand would policy, that actually quickly new hope additional as that auto relief, the losses, partners claim and actuaries this adjacent well expected CECL and quarter. implement our with insurance to during into in unlock new important future OEMs did to and risk opportunity offering see capital current rapidly Coming with had future the relief, banks working to geographies We're CECL term, our second calculation. we conversations CECL lending to with to is comply the feature for consumer clients, to other they to asset that change prime expect A -- into our launch our few the the ability calendar all sector. the and world, near to largest any specifically, Lenders lender plan auto platform with then to which provide stands recent of even a

previously, We volumes saw second positive and modes away April those trends in for their is second commuters recovered trends recent are the to As the of values used in these that saw back low driven public in index levels. According environment, continue weekly price mid-April, rate wholesale auction the a lows we we and Powers, shifting the half the study of from trends transportation. saw demand believe we we wholesale J.D. vehicle remainder to the positive cars, our by interest and quarter. certification of have mentioned from from throughout pre-COVID

to very utilize especially partners, been our platform. have and continue So, lending our unions, resilient credit

We our changes and effect also to April and business our increased implemented tightened response largely which in to the economic environment. standards our model, challenged our underwriting swiftly underwriting premiums. adjusted in took We

lock lenders. is We these focus non-auto us. is also prime refinance opportunity additional lower is completed drive loan save consumers, the certified XX on This alone, average value in allow for money a near refinance it with to them times, volume. with consumers and be important does what rate. second a virtually unique quarter helping in and enhanced our to program extremely partnered that a XXX% new to In we This it’s lenders. proposition can Particularly

is has through on times, proven results had business, this in resilient our an pandemic While our which year-to-date. impact tough is model our economic

saw greater demand a During we've the over Great near prime for default to seeing is of Recession in few similar been and we what an months. XXXX-XXXX, the which borrowers past increase insurance,

our explore on the market [ph] growth ticker XXth, discuss trading other execute finally, symbol, the a our consumer seek time. Corporation. NASDAQ completed transportation As our may that XXXX. thereby common focus capital scores June On and which to macroeconomic finally, to we stock incentives has Most up helped as rebalancing this anticipating Board I'm as business management combined we Unique is and for credit potentially public us then resulting allows used as the extensive due we on enhanced I their and for lender could of and that, than XXth, Open there adjacent before. taking opportunities concerns. loans, health growth advantage while market Acquisition liquidity the anticipated over the substantial Open do given yielding are today, under With our enlarge very of other insight the want increasing are relevant through And and this universe, more bring industries people as want with near and auto credit is of This LPRO, there's pent low to company growth June company. higher and really grow cost partners to combination modes union take who a our time, ample relative Low We're to have it dealer and our lending to began be turn size most XXXX. our through continue the risk. to LenPro excited experience from been have reminder, to the well with demand significant on credit Insurers well-capitalized key modestly don't on stock bank execute team profitability plans, Lending us Directors to that as business. currently public outstanding Lending's competitive to impacted the of Ross combination concerns is Nebula expected opportunity, focus plan potentially and is rideshare And combination instability to steps today. rates mitigate cause car are on want a through customers stands this a TAM. attainable ever as work where well that XX other are to alongside I us new lenders FICO believe out on highlights. market who its and the of to that hearing to really health using to the that transportation of prime private

Ross Jessup

generate Thanks I the cash the John. everyone. difference U.S. our a Good and On of GAAP of results. here, wanted GAAP second we the minutes well loan before X% recognition afternoon, and each talking pricing details the diving as quarter originated. revenue our on of into balance for model, approximately about our under few as and average, revenue between spend profits to revenue

two, Protection providing loans, is administration comprised services, automotive insurance for and which to the lenders refer paid paid underwrite to streams, administration Our use our of by as I insurers LPP; default three insurers profit by Lenders revenue fees lenders. our the for fees program from sharing claims of protection Program, credit automotive

fee-based for and of the a processed The XX% first off of profit term over are third months share underwriting first remaining stream the is loan the the through provide LPP loans Nearly streams share revenue expected the loan. revenue the underwriting of life XX the loan. with in realized two balance the based and the profit after of that fees is comprised collected origination administration over the

this one to As certified half full it the by the XXX, upfront generally approximately end the month one in year of the XX% of relates in loan collect two. and we profit the share per cash share year ASC and recognize is profit in

We average XXXX per ASC from As per these XXX John mentioned we January earlier, generate three revenue revenue streams. in $X,XXX in of loan GAAP. adopted U.S.

profit obligation we use under earned. and our premiums upfront share rates. as we by change, net assumptions performance mentioned, forecasts insurance, and of revenue of driven which projection forecasts of entitled placement prepayments, earned I the is prospectively defaults, revenue a our adjusted premium, is As the we for recognized the insurance To revised all at profit of profit To sharing severity are off profit fulfill share are These loan loan these extent, our point, future determine to the claims. based share level, estimates. the

contracts XXth. XX,XXX certified We QX results. Now, during lenders June loans, moving were months facilitated the and with three to ended our executed on XX new

to million pandemic. $X.X in General quarter and increase to $XX.X a levels the go loans connection the we with up administration active second next program produce million to million with decrease was of is XX legacy were addition, bonuses in fees. through of impact the $X.X for the is in in XX have making as transaction $X.X Gross million once profit of non-cash quarter combination due revenue to implemented. in QX the year in share-based the dates same the with due approximately $X.X $XX.X lower of live compared In administration annually key in the $XX.X certified for vesting which with quarter. $XX.X share Directors compared claims quarter was and XX% business and awarded Total X,XXX profit million the in to accelerated XXXX employees million, result of charges projected $X.X million, connection combination. The previous of business a quarter, fees days, the of million certified awards compensation to million XXXX COVID-XX expenses the implementations loan

control related in quarter. do the internal administrative these short-term, Excluding companies. and flat the the expect compliance mentioned public due of In experience have million transactions an our expenses G&A we income procedures expenses compared $XX.X been to quarter required year increase as the we to quarter as for previously the implement previous would costs, XXXX, to primarily Operating the decreased transaction costs. second general to

compared in was net the from include a a These awards. XXXX fair for the loss quarter costs We second for quarter that shares decreased result, the for quarter impacted expenses approximately million of non-cash as and of business second were value which XX% second Net XXXX. second charge XXXX. million with had operating of associated in directly the a results the the million as $XX.X of margins of the quarter As $XX.X the to million liability the are accounted XXXX earnout XX% quarter to contingent income a combination. consideration for our $XX.X in that result of change $XX

of August continuing achieved three share performance the have all the consideration of XXth, As milestones price on awards. been

$XX burdened the value $XX.X earlier. discussed plan continued net QX of and awards. under of consideration -- The bonuses share-based not and legacy I on income paid Directors of to to and the chart vesting accelerated employees the beginning So, will million be by beyond, key changes was million any of XXXX the that transaction the remaining compensation

quarter-over-quarter the press A with adjusted So, compared measures business $XX.X EBITDA the charges on lower second you back quarter loans of associated as release. at with million the certified primarily be combination. for EBITDA, of adjusted of financial our Adjusted and from $XX.X significant $XXX the The result in XXXX. in EBITDA U.S. million, of of turn We overall Also let XXXX second the economy. a exited GAAP to a to was to due million non-GAAP briefly to which can me quarter of is these to give $XX.X directly wanted which reconciliation the in share excludes update decrease cash. was level quarter found the unrestricted impact COVID-XX an million assets, a of the count. total

our slide of has shares XXth. We an have posted diluted site, presentation share a lays of diluted that $XXX.X out We August count. million our a approximately outstanding updated investor total to as which fully

Now, and performance our Based previously guidance we July, our moving results in on confident guidance second our XXXX through for quarter issued XXXX. on remain in range.

We be continue search $XXX to revenue cash flow between be million. adjusted total $XX and and million million; between between and expect $XX,XXX to be and XXX,XXX; to be adjusted total between EBITDA and $XX to $XX million $XX to $XX operating million; million

is economic climate evaluating guidance. macro still feel our we team in previously XXXX continuously Our and the provided confident

we lows, year. As continues forward to back next rebound April the operator? Q&A. turn more sharing to that, With for to meaningful business look forecast operator over from I early update call a the the

Operator

conducting Deutsche Instructions] from now question-and-answer is Thank Bank. first Ashish be Sabadra you. coming from [Operator We'll today Our a question session.

line is Your now live.

Ashish Sabadra

Congrats. on focus Congrats opportunity on I on in wanted and OEM this opportunities. OEM color to good for particular. providing thanks quarter the the

seen. and you the on significant OEM nationwide that So, one, mentioned, rollout you've growth

OEM do the side? two expands should think how think can as OEM any then XXX% And about this opportunity as we the the give we it -- side, well? from and we also how think just color As expands opportunity XX% about you on with -- OEM two, Thanks. should one on us the the to we how score, about on -- as

John Flynn

X,XXX one, and really You nationwide, decided got of that they've think about dealerships. look already. bet. were our have OEM -- number Thanks basically we last they And into I expand we pleased to XX% On at them Ashish.

a beginning compared is plan within in pilot one with that's a XXX areas volume just in they July of of geographic score We're and Our to the to of that their is to expand They for credit about July are in us to XXX. range September, to basically, to XXX% basically XXX. April, three months. And that. expand going XXX confirmed

way additional tears. a application and of targeted nation that then So the expand to the to our in December be will coming credit rest similar with

are with it they They're very As relates compare you with pleased volume, July, to where that this looking three in keep if were to forecast. we we devoted level times it. to at that where two to we're expansion, that so think they

OEM is, in number the hand about been rollout technology question and we've hand on the Your subvention working get with to two, them ready.

We're meetings. that. in phase We have ongoing of QA weekly the

And getting part so is the our ready. technology first

So give for us light, green ready the be when will that. we they

The to necessary the make insurance working and progress. our with that product here some and that the with OEM to news compliant is report that we'll that carriers have we're very pleased an the second shortly and sure requirements CECL are part SEC number our with GAAP insurance And in two believe is good standpoint, we're regards. from

think I targeted is expansion, the all later for more to that As on that. and on come year this

Ashish Sabadra

were would opportunity able opportunity annual to is what Like, two certs, to That's that OEM be live? size you terms about? we're great. the talking number that go certs, like if And in of

John Flynn

mean, into range OEM expanding is kind non-branded somewhere cert back from two ready, I number from the well subvention of their arm. think as be, would as the I when annual would XXX,XXX be in what

Ross Jessup

to for XX,XXX month. searches a model That's the XX,XXX

John Flynn

That's right.

Ashish Sabadra

kind you as data I that for as OEMs was just them any with And then of wondering any you about early front. or the just study color the talked great. are That's you OEMs with could great. of That's going any doing having on multiple on any color if conversation provide conversations XXXX. live

John Flynn

question. great to progress make we Well, there. Yeah, great continue

others all they know doing. are what I seem to think

charge OEMs. deliver with our study those data our from the as large where, the has here one have definitely their So country kind compliance, the results OEM and we in -- multiple of OEM with other our the speak, the conversations we so other successes two, But of we're we having receiving that back. with can do or team number are and three hopefully leading four

Ashish Sabadra

just maybe the And me, refinance great. side. final one for That's on question

Thanks. lenders. do forward? How highlighted opportunity about the new we refinance refinance going think You've XX

Ross Jessup

lenders the Well, addition finding doing and what to table, met with They're refinance five the we've we've between -- they business them channel for. XXX,XXX that cracks there's time, we been talked the falling the apps partners. with upwards month, not ones tell is they're different providing of homes application. with brought the to finding of we us Last in seven now we're a all through

something by these So, loans table, the believe be significant We funders low-XXs rates, we're there's lot $XXX going that consumers interest these anywhere into help a the lift from out that's of rates able more bringing as for us high month. $XXX and get to XX.X% a taking see to that we to a we're that these affordable them. rate as to from and high to interest the saving consumer

of we a sources lift. that month their upwards XXX from just us months, some a of in We've we seen the going be So, job number increased of by certification financing significant with each to two brought think on volume to there's our them. last three

Ashish Sabadra

on once strong congrats quarter. that's Thanks. and That great color again the

John Flynn

Thank you.

Ross Jessup

Thanks. Appreciate it.

Operator

Thank you.

Our from coming from next today Joseph Vafi Canaccord. question is

Your line now is live.

Joseph Vafi

dive that's call. congrats John steady anything this just first that a just predictive during selling LPP to key more capability? of I on Ross. is over far. Good hope relative it if you're point to or results. so afternoon is I in the pandemic really on you wanted your the bit Hey, But I holding learned think default it change know and in getting earnings rates, that little good and enjoying there I XX% accuracy. and predictive been Or kind on accuracy at have to range? predictive any that

John Flynn

Hey, we on our portfolio month, we would make where that of here And we through our that when still even into Yeah. to what increases coming what claims past our saw they into thought we this are those be we when where defaults well coming say Joe. revise QX would estimates. forecasted originally activity top we we had have adjustments to would we were. has models below our It that, been year thought some the of holding

more than are X% claims So that out, we there -- trends And where were we've as prediction about more Well that fewer we seems that about quarter are was actually basically experienced. will X.X% predicted guidance started we're we our last claims third actually quarter. we reverse predicted July but just revised through in means spot I and which we've seeing. actually in do coming predicting XXX the and and it We was normalize here. from and fourth will we thereafter the know on reverse then like quarter claims, starting

Joseph Vafi

CECL a balance kind at larger or if providing into helpful. implemented? sheet just lenders of if the it in fully maybe just opportunity providing the you of looked And assess a could relief? That's of really some And their customers, OEM the a how And lenders, is, or out sheet lot CECL question it's a for secondly, on more even LPP maybe able Okay. the trying an relief, to lender, larger arm part of you of separate for sake the your prime because was extend theoretically you look much loans, CECL being could at benefit frame of top balance then I to the extend something, risk. finance guess if bigger first of the

John Flynn

the Joe. Yeah, because that's that to funny predictability. asking appreciate some you asked I lenders just large the reaching out that, question of do of actually are because us our

aside of tiers what technology. them prime tell the the think be and that that can profit apps actually it data that and company, with The we're that and insurance They just sure the price on into upwards the make they would a locally their loans, build now type some of out XX,XXX need here, into FICO interest build of us can credit would Friday. piece in union. them ability carving our to want price there from largest LOS the side help right second process system. our they them heard the from interface we rate. their So to last with as I We've set in was technology we a of month to reserve help shops gathering to that auto there's third that

something term second certainly getting on OEM and requests second the priorities it's do our after our we clients the running. from of of to carrier So, up short third third a We're insurance or and list that. get that's or lot

our think at for do. very So it of And I be the it's us. of certainly profitable list things to could top

Ross Jessup

look I have prospect. we just like in there, Also down can as can we're standpoint. allow new to at it when -- mean, go opportunity talking yes, in no opportunity shouldn't last and really I quiver to we those there to If acceleration it's reason there's for we nailed have our sales go in from forth Joe's to an this this and for say calls a them a wait. us they an really

John Flynn

model is Vault one for in thing assets we're to Joe, one which their our every us. to the all a is. and add always to insurance, hold again but be technology, data. fact too shops out I the that the huge of just provider data give And we able creates mention, company of And of touted a not We've didn't I'd that willing that key one us of are to large just technology performance but data here these

the bring the that fact think the from can really Now worth of to to sources I we performance different six five value we of what table. year prime adds or funding get the just we have,

Joseph Vafi

new you cadence the with there's dates. think I just and I kind And -- it That's mean, XX quarter, the got in of signed that of then, works. think and live implementations you the you've XX really that business exciting. mentioned contracts how I here, just go finally

contract understand getting just the time lead to it to from if execution, to and to just of works kind ready timing wondering, Just visibility? explain how of a could to and you that provides for get go that lot. live your implementation kind what Thanks

John Flynn

to doing a we're We And them. we can decide one we like on appreciate do it. provide what do quicker implementation bit we live, for things lift bigger And weeks. to these they're account the actually you bring as if from much sign a shop, we've the when to for react we then can do pretty going as of do a study first, OEMs data obviously, identify the contracts. as to and down smaller can provide Normally, six timelines got to than signing contract much little little the lift a an you

of weeks different if eight to their place. read you've some might that's it say, simple up is their -- can place hour if -- they on yeah, but we've a it set We on got And place, that weeks we've on-site. that's launch switch I if one calls different lot would the apart some -- short it's six get upwards scheduled without driven a phone then And normally up, feet, get availability. to of ever releases, drag the in with there by we them two depending are their of of time. one take XX weeks these trigger five turned to on they're If the in done even interface can we done As side, today. probably interfaces in LOS being

a pull different elements set that really of So and to matter able that them being need the different up, get place their live. pricing put to the we on get call phone together in departments go to to it's

Joseph Vafi

Great. Congratulation. Thanks so much.

John Flynn

it. Thank Appreciate you.

Operator

you. Thank

Matt Goldman Your O'Neill question from coming from Sachs. is

line Your your phone Matt, perhaps now is on mute. is live.

Matt O'Neill

we are. my There for you Thank Apologies. taking guys question.

be you Can now me that. about clear? Sorry hear just to

John Flynn

Matt. Sure, Yes.

Matt O'Neill

Great.

could up there here continues on kind one's future. like is that a sounds and see and market, point in others of the place Is that and it what that your ultimately easily follow-up you given getting right you it that all pipeline work keys Would of first various questions, think way given them at fully the doing over the with once to sort grow. in start be a OEM the theoretically potentially? for my effect to say there's the could a kind -- domino a to the running of here Just you're about to potential of without

Ross Jessup

so. is think I the I OEM. goal, captive the the to mean, ultimate serve

is can them making more venture the place. advantageous their our loans serve our in we and program better in more built some to attractive having So, the it have through software,

don't So from see really whatsoever. that limitation I a about coming

Matt O'Neill

it. Got

John Flynn

Matt, a little too. bit think expand I would

what they credit of done when you space, your their and have the we've the diligence, the will, union you'll if same running, up get to I exactly thing that and the ones think, due missing? on point, one look big that you seen we to both and sides we others or found very are at we this? the go, are of effective, Why OEMs, that doing have it And find be it's whether coin, credit unions.

Matt O'Neill

discussion to insurance Yeah. of the I over Maybe could turn That side. -- makes I sense. lot a the could

some update was kind talk partners, last for looking two of since there's and progress adding third. been any of I spoke? currently we just there and a or So,

John Flynn

Sure.

situation. the but carriers back we process had have with speak. of that kind enough we we're COVID to We figure have that a third on engaged as long the a know doing. OEM, a it's two times, as the going committing today. as a down But hold to third be carrier in we want meeting again. and, us engaged the really with have through excited get a probably do we We mentioned, as being scheduled third early interested further in are dollar We've But we the whether to to about a coming get We've them, exists interested them in to scheduled, keep of when volume. putting broke in mentioned fourth road put table certain have, meeting getting runway we start carrier's call have -- that's few COVID that's or of as you out, get premium what meetings it carrier a March, currently there's it. ahead the they're reengaged interested As we a on phone by to not do they

Ross Jessup

meetings have and and fortunately progress the to having, great in analysis those think locked additional we getting in some insurance at broker here on a forward future. been near actuarial reports firm in instrumental our has look I setup. And pursuing

Matt O'Neill

pricing or the just with my us then should XX%. quick either I just went just maybe had could it believe was an into we you close digested with Got I'll EPS queue it. help adjusted place, being maybe how by about of around, And that that? describe around two the increase Thanks. I the And ones, follow-up one expect that's then, Can in you kind reconciliation just market? out

Ross Jessup

Yeah.

is on protect prudent. contract First income, so. beneficial have And is affected -- some the did rates this like, -- XX points. days that question from We requiring up rate, during up and we increase XX we XX formerly additional for being of do the proof were of the premium really other some to think the it on to contract where period are that places number to calls very the in go things we doing to in working as capture Those an been basis not that's designed, the think rate COVID about, to days were not ourselves of shortening days open. XX application

a So, press designed, Matt. our don't the gone little in because increase yes, capture as EBITDA has think rate all, but it's at bit release, adjusted yeah, down -- And the as as our the of in I premium is far

Matt O'Neill

to referring just figure. an EPS was I Yeah.

Ross Jessup

in don't I believe -- think believe is don't I No. there, it? don't that's I --

John Flynn

not it's there, Matt. No, in

offline. follow-up will We

Ross Jessup

that We'll follow-up for sure. on all

Matt O'Neill

Thank you.

Operator

Thank you.

Securities. is Northland Grondahl question coming from Your from Mike

now is line live. Your

Mike Grondahl

on guys, Hey, good and congratulations the progress. afternoon,

John Flynn

you. Thank

Ross Jessup

Mike. Thanks

Mike Grondahl

recently. the that in at similar them portfolio across directionally of that helping unions many Score with? you just -- larger, size? question credit you're up them they're of And range signing when using look look when are FICO the First credit the with they you unions are Are guys you then expand

John Flynn

that's great Yeah. be largest and is Mike that just seem larger. to one ones the signed union We largest we're Iowa. -- in first now credit signing I just second think questions the the -- and two

Ross Jessup

largest, the That's yeah.

John Flynn

assets. in billion $X.X

Ross Jessup

Right, right.

John Flynn

the X,XXX And signing that we're other on shops Yeah. under are million.

expansion the -- some of on, personally And with been I've calls scores. that, with we larger on some So Every along they're phone accounts. side. the we the time of these are seeing

You into not, know, is, to up up range -- saying to going and who because they're is bump FICO don't just our ours job. we what XXX XXX, who's Scores default, a from XXX, XXX going have we can know the who's

some So to well little we up. expansion on shops the larger of scores the see bit starting are of a as as signing

Ross Jessup

model. you're our of some account that some the webinars and we've into we're you're -- bringing are think I a talking accounts, in. And of impact mispricing then you're non-prime your the data, getting that of the space alternative about effect especially data of the you're, in if using near not alternative in with if positive managers two-thirds the applications, the that that, scoring our done past about

Mike Grondahl

it. Got it. Got

cars inhibit really robust, and supply credit been unions? seeing at sales you about have Do or Secondly, just all have might what all used car to you out of that used could there? sales doing be been at waning values of really help that robust. anything nature car used you're worry Are the

John Flynn

the right is with, not not. lack put cars about I'm to about one. of what's do there I struggling mean, used a of of business we are hearing mean, there's find bunch car hearing that if I shops any keep any that, the I our people I'm out Hertz cars market. into to out from

Ross Jessup

Yes. Certainly a lack area. in the new

John Flynn

Yeah

Ross Jessup

But not used.

Mike Grondahl

Good.

again, Okay. thanks to hear. guys. Well, Hey, that's great

Ross Jessup

you. Thank

John Flynn

Thank you, Mike.

Operator

Deutsche is follow-up from Sabadra Bank. Ashish Thanks. a question The next from

now is live. line Your

Ashish Sabadra

historically premium plan premium. I question. earned you had insurance details Hi. the going I as that average around partners, annual well the as plan get you for to a just modeling there second if Do quick or can to wondering provide that the earned question, was some forward quarter? provide we was

Ross Jessup

It be in the will XX-Q

Ashish Sabadra

Okay.

us Okay. was number and wondering, but on year the certs That's color any XXXX, helpful. for for the have for of quarter? good. and to the third quarter is for That's full XXXX? it I And fourth very We provide just possible fourth third the -- you OEM of

Ross Jessup

Yes.

OEM, Our no. No.

Ashish Sabadra

quarter. congrats Thanks. again, solid on Thank right. you. All Okay. Okay, a And

Ross Jessup

Thank you a lot.

John Flynn

you. Thank

Operator

you. Thank

from is question from Vafi next Canaccord. Joseph Our

now Your line live. is

Joseph Vafi

guys. Hey,

Just one follow-up. maybe

or probably kind unions that of macro. think think was And a So, interesting unions in to decided uncertain into first maybe I of middle in for credit this an I of the near-prime, the pandemic. credit it's their it those just jump in some entry

in what borrowers? in their taking book their on with So market the more of potentially new was terms by theoretically into macro risk loan process a lower moving scored thought given

John Flynn

for think done. of. pandemic pulled a courting have to had finding was financing, their lot been all these started shops lenders, recently unions people is some non-franchised it They've to sudden signed lot lot we the we've plate get take now of just on a out applications. wells loans. a this And just you more I applying credit a saw out, They've time. care of known more I think see we're lot see that you what just of Joseph things hit, lot a A these you of other when dealers, of what for

You of cash. saw huge a influx

that of credit want and just put lot You unions take see going south, these markets to are in when their all money in a are it place. safe a people the XXXX like XXXX, happened and of what

a yield was this unions they like times flowing And solution it that perfect to prime I it think the three provide out there. the looking ways can get capital. So they're storm credit that money they're for And loan. for they've It's almost got to times know the cheap that to four in all we door. help getting on put them

a combination result a press it we've out we've There time doing been in of what it's six of put just of last So a about and was months. names markets over lot at – I of our out there the everything number think a often happening same more before. the the seeing them things as than

Joseph Vafi

trying that down I’m kind range end expansion one. then to FICO range. OEM of pretty is and kind the dip the It the understand adding the of sounded initial with range little or And helpful. the low ranges just of the at new additional on like higher range the a bit That's Okay. expanded of

of wondering, any kind wasn't the original sense? from higher the in and FICO range that that near-prime makes So just expanding I'm beginning if why why

Ross Jessup

great You a bet, question. Joe. That's

them sell trying deal. sell XXX. And about That's we scored our normal we to me on try go were just to sell to them we XXX squat. when them, We believe XXX to the so to tried didn't typically

standpoint, believe like the that realized I underwriting. our what's seconds gets fact and that's that back situated -- in decisioned a from they our have similar same response and everybody don't is so, come They with a human technology. in FCRA And way. They like consistent we founding the happening interaction we five that defendable that with

originally when they -- with they really their them, have $XXX through we normal And cost per process. funded go said they what's so think is loan underwriting when were and I think happened I probably about they for discussing were

they've possibly and actually to now at significantly can have, doing automation, of and reduce used and this benefit we're so which we internal looked that, what And some reduce a of it. their costs providing that they is huge

three-month a first is the just in unlike it's with this. one, pilot it So started September, the time starts first they

If expanding. you about before they seven were months recall,

a picked Now months to time before as evaluate they've period three it expanding further.

John Flynn

number in And areas, one. just seen OEM this with Joe not we’ve other

it same requirement, XXX in consumer, rate with can But under huge on that XXX, on a from up don't impact of capital why that solve very portfolio it? a just area. the we at relief it's put if You job get is the to uncomfortable down. has where loan, day, a sellable that's because we them and us, XXX net, the insurance get safety it to and here good say, great the think seeing XXX which and lower institutions to from a tier, if take you're send Well, buying that's really the and you is seeing number CECL end little I at lot we of like do without what feel a they're they're only to pricing they're to that down we above they're the going to

Ross Jessup

Yes.

great performance, them it thus having good obviously way far. we've I underwriting into are the with So experience they’re is done what read with

John Flynn

Right.

Ross Jessup

cost a underwriting And saving on standpoint. the money from

that So that they're other to and XX these decision continue applications lender quickness as the gone of time. used must like what to minutes come to and of that some from to to dealers their and expand opposed underwrite some to taking much back pretty applications by XX let's

Joseph Vafi

it Great. That's super more, there. to going I'm going just throw ask helpful. And to I'm then out one

August us how on maybe guys now. least You a talking certs Thanks, about results you early at of toss know kind right other out there answer and August. undergoing again. seeing great just commentary to in of lot And Fintech what of directional of everybody's change much and kind guys. have it. given I to July if early in terms been have they're are wanted But just July some to wanted to

Ross Jessup

Yes, coming we've mean, mean, from slowdown can't could I why we're we're think I saying. origination what into August, And that that's some a coming very any July. encouraged I in there's -- momentum I off whatsoever. with see got we're be standpoint,

Joseph Vafi

lot. Great. Thanks. Thanks a

Operator

and session. today's end gentlemen, ladies teleconference. that And conclude reached Thank of you. We does our question-and-answer

you a this You time thank and may today. participation disconnect lines We your your day. for have at wonderful