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LPRO Open Lending

Participants
John Flynn Chairman and Chief Executive Officer
Ross Jessup President and Chief Operating Officer
Chuck Jehl Executive Vice President, Chief Financial Officer and Treasurer
David Scharf JMP Securities
Ashish Sabadra Deutsche Bank
Mike Grondahl Northland Securities
Joseph Vafi Canaccord
Vincent Caintic Stephens
Matthew O'Neill Goldman Sachs
Lance Jessurun Jefferies
Peter Heckmann Davidson
Call transcript
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Operator

Good afternoon and welcome to Open Lending's Third 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; Ross Jessup, President and COO; and Chuck Jehl, CFO. Earlier today, the company posted its third 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.

November like and you represent other views of I'd may this the begin, as estimates contain forward-looking today, we to that remind call company's Before XXXX. XX, statements that events any disclaims 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 your for remarks. the call over now And I'll you John, pass to opening

John Flynn

you, third conference Thanks for Thank good for again everyone. operator, afternoon quarter and joining us call. our earnings XXXX

Before business. reviewing we of Ross appointments, will do I'd and Today, them our financials continuing update our to an respect on and looking third much congratulate with our will forward to Then like Chuck to dive by both on in in, objectives. detail. I our very highlights finally, to progress review Ross their And our Chuck growing quarter growth our provide greater on QX OEM work want on opportunity. start

loans, the X% was we quarter, certified which third XX,XXX an quarter-over-quarter. increase During of

we're We $XX.X encouraged of reported third which EBITDA of adjusted XX% an revenue very results. of in more go results an quarter few million, is of but and by was a also which increase going Chuck minutes, XX% increase our quarter-over-quarter. was to million, $XX.X over in detail these

attributable our on is of As the majority to existing we lenders previously the discussed, are platform. growth our that already vast

which We cities increased moving cars value the interest reluctant consumers also typically duration have money to public two out used resilient of COVID-XX our an been throughout and like need creating to influx into are that very three-year continue of and to of unions are lending low We've trends. pandemic. shorter seen utilize Our platform the auto loans, of especially transportation and the to demand credit to the that them rate lend driving environment, cash modes and more these and is loan. positive credit unions, partners, believe the banks, these use for a

new also add value We to driven proposition. and by strong partnerships customers our continue sign

During added search customers XXX and year. on our approximately are customers active currently we that we have the platform XX this new quarter, generating

including to continue as We FIS is well. recently based which which we Services, FIS additional institution believe platform. and Credit platform, bank bring A+ in $X.X Tacoma, Federal Union, in is institution our Credit partnerships of billion in on Austin, billion $X to some $X.X which We Houston, in in quarter larger the Texas. use going for first as well, doors resellers to other based the billion First Investors new Washington, Sound originate launched is third based institution here We that to banks open market Union also us the announced Texas, Financial

key our relationships. of exclusive competitive advantages insurance One is carriers' our

have with of that our to As working we the carriers. know, you also third third which similar partners our we've we we're carrier a currently adding existing terms carrier impact that will and negatively to the want be on, two insurance a to will note existing have identified not volume finalize already carriers. terms I

other and our progress making banks to auto some are objectives. core of credit with helping business unions growth grow continues we While our strongly, make loans more of

working initiatives an to OEM right first that few on I'm $X a to Our over on. is market, now a I of wanted update it touch billion to minutes captive going provide the Ross few us to but here, front largest based opportunity in in which other we're turn

rate just them additional to family, a to refinance out with very saving a of but prime working well. much This consumers them savings uncertainty. program the certified allows lower as focus $XXX is enhanced a near This time to loan $XXX month. trying opportunity per lock this is ends Our to huge in make on economic drive volume as in to meet

we a and and quarter, banks parties with signed working We're business our credit sources broaden grew program. looking with I'm we such Ross, that, ahead unions our our other partner decisioning the that also and the OEM channel new offering lending partners existing also OEMs have turn auto we classes and that establish credit outside of space. can go banks, four refi he asset leases with. us. opportunity We've in and so And near funding our into available on it prime funding the to platform risk front to During adjacent expand to beyond going our currently the broader been to third the make unions to sources jump as to with to and clients the over into

Ross Jessup

tremendous Thank OEM COVID-XX growth despite you, the quarters, demonstrates certification in pandemic. were John. third captive which the originations strong

in let's is both news number This I'm begun to have up they good sure news and We very throughout our very saw two number business have OEMs, back for with for a being back start good online October. you OEM OEM exciting the two, October. ramp about production sign

the and back on ahead will two, OEM like We number the trends encouraged levels on number based get very seems applications are pre-COVID with the opportunity its of October it soon. two submitted to number being OEM

on in of currently we seeing April and Moving their one. over OEM to from September from one of the The applications XXX% OEM dealerships. certification has of over growth are to itself number manifested expansion XX% number nationwide nationwide

expansion adding launched to to expand from as nationwide XXX. one geographic by Initially, to soon. cap January in their denied previous goal of a number OEM one their XXX being and This they their as we'll the XXXX. credit customers sitting applications are countered with As for up months scores with be stated areas to spectrum credit previously, pilot three applications four of expanded decided

utilizing This now they platform for our scores. credit XXX example. late are a in So great XXX, September, starting is

us with to usage their excited from we're other our expanded saw benefit OEMs that We're tremendous this banks product. has and and targeting. use talking to when customer Our

work help efforts teams are our us the subvention the our them ramping the next OEM continue OEMs. two the throughout finance The make progress number potential opportunity vehicles finance on to for Protection is allow which will over be and on Lenders Program, We weeks. This with schedule enhancement new should increases rollout OEM. doing with technology subvention our the to on and few

number soon is explore OEM one, as this well. rolled as As wants this out,

sec, insight In quarter. on terms We auditors. next very number providing OEM as well CECIL excited from forward are to this we more independent two of relief CECIL that the as their relief, received look

that completing working that possibly addition and third in I show no also proving prospective One launch opportunities OEM These add point are not through our to OEMs is platform. opportunity multiple by to XXXX. the is We our OEM pipeline yes in a out, say to our many financial they however, data studies studies. in can are today how value to are want of projections lift are our XXXX. captives at they that saying some the to do for looking way of loans could

OEM with closely captives study, These and very data OEM number one are beneficial We other well a the completed numerous studies stage. as as up working two. evaluation discussion cap of in were and signing that that are in OEM third

other to turn over be So will hopeful Chuck? the OEMs Chuck for detail. to we greater financials our and banks. I'll it case are discuss this in

Chuck Jehl

Now our ended, moving executed months and loans quarter results, facilitated three were we've to the new certified XX. September with third during contracts XX,XXX XX lenders

was million result of recognition the the a as million as fees short in quarter a Program third the third loan with in compared previous $X.X XXX due share of compliance the $XX.X and of of $X.X $X.X implementations year previously. implementing an is term, to fees share is live” portfolio. second XXXX, Total active third continue six in “go million, control quarter in in in million we a next million and becoming SG&A income of Operating claims cost obligations the companies. public related as to $X.X XXXX, have macroeconomic expenses was we the certified required up XX% in discussed million a Gross XXXX, expenses, general overall previous the with primarily addition, in XXXX million, from performance million year $XX.X our of result public administrative quarter to quarter. cost In as to result $X.X profit of than improved and days. historical XX and related administration in by expect the was we to in previous experience were incremental the the satisfied change increase in the periods in higher expected we advantages compared SG&A procedures increase increase for an In million. were an and increase quarter internal third better making were certified million in million do company. X% ASC portfolio performance estimate in than expected quarter-over-quarter, better to quarter. quarter $XX.X performing loans conditions to The our and increase the were quarter dates $XX.X that levels driven including revenue of Selling, profit compared $XX.X $XX.X of profit third The XXXX.

of the of was which quarter XXXX. in loss from the XX% result, as liability for third for quarter a milestones quarter quarter of fair contingent increased Net in with in that were operating margin met of as of We million result XXXX, the quarter charge XXXX the $XX.X to third to awards. earn-out the non-cash business in change net $XX.X in million contingent had the earn-out million, compared third $XX.X income slightly were As share XX% specifically quarter a value the third were associated accounted third consideration combination, All a in XXXX. in XXXX. shares, expenses

these XXXX, will the of by So beginning earn-out consideration shares any changes third quarter burdened net XXXX. quarter fourth the value as not issued in in of contingent awards in be were income

XXXX, XXXX to excludes We GAAP adjusted of be the XX, back for with So found combination. our $XXX.X quarter period charges our of as EBITDA, release. million quarter On the can to XXXX. with the exited to at quarter financial October was the unrestricted non-GAAP in Adjusted warrant press significant third which was expired. compared total associated let of me $XX.X the $XX.X cash. measures redemption now million of third EBITDA million which business $XXX.X Reconciliation from in million, assets turn

$XXX.X warrant-related approximately of approximately As a million shares. company transactions, and issued result in cash received million the all X.X

are Board of update an you best proceeds. on evaluating more know an proceeds, use and Also use we working briefly share the very our about the we'll give when with of provide We update to close our wanted count.

presentation, investor to third outstanding XXX which XXXX shares have Relations We X. earnings slide diluted share Investor We out as posted supplemental, quarter updated a site, count. fully million has that approximately November diluted lays of our an our

quarter million be based million; Now, moving to on ranges to revenue third the adjusted $XX guidance we October, cash million to million our XXX,XXX; be previously total to be XXXX, into on total our between guidance and issued XX,XXX operating and EBITDA following: and performance XXXX between $XX XXXX $XX results and an between flow are and $XX fiscal the to for search reaffirming of $XX and million. $XXX million; adjusted between be our

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

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

Operator

you. Thank

a will proceed first with your line with Our be now session. Scharf question-and-answer [Operator question. the Securities. JMP comes question conducting David from Please Instructions] We of

David Scharf

Hi, good And taking my questions. afternoon. thanks for

John Flynn

David. hi Yes,

David Scharf

about just so lenders be other lines what figure. Who wanted should tremendous to thought on during reporting I about cautious we we related little thinking kind of days of overly cert underwriting was per those early allowance kind forward? COVID, about along that some a profit we should one-time as as the to share season? over level this a Hi. event their reset early going largely of of of effectively, vintages view of this of levels, probably this we follow-up in the think of potentially kind share a And as reserved same many sort

Chuck Jehl

You Good Chuck. talk bet. you. David, to to Hey it's

we think a the follow our Risk QX, really talked that Ross, we Officer, disciplined we in process the team, As COVID you did Nobody recorded it time. and circumstances really we $X.X be. facts on various in is Chief the made about the risk estimate process, we've myself, at of bad $XX When and quarter, the people. very knew and a million it quarter. the have about adjustment, John, we was previously, and just a to first change includes was better and our third the million this what book And if performance estimate second back and how had and based going in a in that really quarterly was about in

just at really in period third this and realized we looked X/XX. through the favorability the quarter through the of So quarter the third

levels none there’s us have going next of have into another we or the of corona know quarter year, So will to into if because stress to continue you. really be wave what fourth

continue process. a follow quarterly our that’s disciplined on So It’s basis. to it and we very

David Scharf

active figure. the the your side in mean, the the Got percentage follow-up, it, equivalent unions one got helpful. front, same-store the and… of like kind almost, And a growth it. for credit union on of well, credit of it quarter, That’s maybe there is contracts increase during their is I on demand kind

John Flynn

like what credit their you’re find of with we is of you’ll where continue will is find they whether the avenues unions portfolio indirect about churn every they going has percentage They’ll versus credit from auto keep to to doing lot think us, opening their business have in just I than other What see or loans with their get average try auto go term feet continue yield refinance think line see to a with their LENPRO their in they and direct. that to lot their I unions. the might that a portfolio But Well, a what grow Once is union it’s of of volume in typically our a our program credit loan. fixed is with filling increase as to three-year life. that we total prime. prime higher channel,

class. for So asset asset that’s classes that a the versus other matter scores of within certain appetite

same-store like So yes, it we of grow. get lot sales, to a continues

Chuck Jehl

of we’re add last if net not to thing just too one quarter customers is look incremental signed is customers our customers think reporting, were to David amount at that I up. you active new all compared

that customers affected and We were back COVID some again. have by now they’re

it’s product the back. think are and of uncertainty coming and And the so has up a prop yes, our I folks lot value the – seeing withstand stepped really and

John Flynn

And Austin I and shop, probably in lunch a one thing $XXX ended locally last up David that but the I have attracting or that $XXX a to other worth just three had union guess add million is, million their comment here so with to last a in credit EVP they $XX week I’d we million two right months. cash only of

of because Just were are markets safe they bringing money into scared the places.

So we’re money back what for we’re hot could looking to a are calling put us, be assets your why these getting guys in. then out is

a cash with a of drives seen do getting where lot you’ve to was What auto if lot more is, it earlier. growth. our think guess going bunch I they’re a of I program. that’s with they’re I loans going in,

consider a safe to unions little the credit time get to every scared, their money. place put people a think I markets be

David Scharf

even of that them down leading Got deposits to actually you look spectrum? is FICO the further it. finding Are influx

John Flynn

Yes, we Exactly. these incremental and is stuff prime just applications. denying auto so loans all many the looking do what them. there’s at its beauty flow. They’re only of They’re

our clients our are So processes they’ve the buying already set utilizing those of lower now tiers, into down got up. because capable program

David Scharf

you. Thank Perfect.

Operator

Thank you.

Bank. Deutsche your Please from comes Sabadra question. the proceed question line Ashish with next of Our with

Ashish Sabadra

business. wanted OEM. taking for momentum my Thanks the down on Good I question. in the drill to

about the run So I that it’s ramping talk the number up wondering are you the XX,XXX get to rate and forward? rate was Thanks. how month? two, about to functionality run we good do is on OEM XX,XXX see they per turn get thirds the should And once subvention of – when we rate normalized if to can monthly back How think back. a going implemented.

Chuck Jehl

going dealerships, they one month. you. of You except even in. all bet. re-launched in business back, number are we’re first a their for coming Yes, Good in excited of month to previous is our talk October. division so was The And – with great we outside very yes, months early us that to applications doing exceeded

trending right definitely the it’s in area. So

we and the back hit that that they think next of levels that in does months. And Then also the business over to moving inside. were see I of should division their – kind in QX. couple

you of in As side. XX U know, the in one been their we’ve markets

be in launching month are the that, There’ll help of the be this the months. should side. I the this launching will to that, which other a one I which ramp side. be We new XXXX, month, throughout Later It will areas. side, would into ramp markets us U we think assume we’ll the ramped side fully the be a but a from in be going to on few [indiscernible] will U

think third hitting dealerships, should the as be start at I nationwide their So quarter, quarter division inside XXXX of looking and in well we’re all when cylinders on we sometime used second as outside. new

well them in is So was and it up very everybody’s underway. the training plan implementation going lined with

Ashish Sabadra

great. great. the three, just you That’s for data the steps OEM I just on Have if next update number study. maybe already number study provide wondering the data was you And OEM could That’s on what and three? completed an are

Chuck Jehl

Yes.

now. We well doing individual They have as We’ve form. actually detail in They it application have reform as it the we So taken in. actually delivered. some their delivered own completed. analysis are

had Looking CEO three at in utilized be we should results, a a very call they of couple the conference at them and we the really back well. from pockets, I hearing looking think that went and with ago, the be that can soon. weeks

there, from a back that interest opportunity very, them the hearing that so you. provide the going of then are lift to be areas we’d steps great and discussing Next most from very,

Ashish Sabadra

understand receive. quarter. next information on in one, then if more planning banks to maybe provide or yet sneak just be fair quickly I CECL relief, can any just But Thanks. be That we that this a third that understand call. on color would the a great. would statement. to for wondering OEMs just That’s relief give I And better the you I wanted any to you’re That’s CECL pretty could I brief – if applicable any a

Chuck Jehl

You bet.

them basically the – with And And right that we’ll And certainty to CECL and is claims mirrors making. policy can is agreed our cover. get will percentage a at styled basically they’ll policy item what of we the way of that, provide level the SECs as what be the offset deficiency payment from balance the to does so relief you allowance actually takes auditors, their The financials. future that. that is line that that there it account on insurance

number opposed the So you net to as as show payment future other claims income. a recognizing

that this we’re just lenders. CECL. to definitely and but replicate other so us is to right that are going OEMs, And to the have behind to to credit going here to pleased unions is is – to look that be Not something have now, we around corner

will think we’re I to the things on adhere – or having benefit so three that. we’ll some new And of of all to years that are have lenders doing two the be today

John Flynn

you’ve got today larger of the then XXXX. mean banks beginning in I Yes, credit need the unions to comply and

up selling make gearing point. to big we’re So a that

Ashish Sabadra

a again Thank great. That’s quarter. once on Congrats you. solid such

Chuck Jehl

you. Thank

John Flynn

for your you Thank time.

Operator

Thank you.

your Grondahl proceed Mike question Our Northland with from question. Securities. next comes Please with

Mike Grondahl

the unions you for you Hey, OEM implementing That’s and to out average them Or And credit quarter. anything number six would size stick the number or all out? wise The congrats as XX to in on anything the it call new guys that you’re XXX ones OEM great describe Does like three. the of progress have? sounds the compared two. business. on

John Flynn

a from lot and we think to I the the about And a that that’s think talk they’re A now. all heard signing getting up No, plus billion in up shops we trying interest we’re highlight larger of us that you we’re that size. the question. for in And the sound great fact plus

numbers can the produce shops our some starting think to some we’re program significantly I in higher attract of today. that larger

that So we’re hearing are the shops the size about really excited of about us.

Mike Grondahl

was think Great, four of in about percent partners the that then third going that How the new quarter? refi, refinance should your forward? we great. business And roughly, what

John Flynn

about up third That volume to it’s the continuing grow. in of third X% our XX% the in quarter, goes – quarter from second and

Mike Grondahl

guess, OEM I time hearing forward Great. and two to report Well, about there. you more guys, care. congrats look Take next

John Flynn

you. Thank

Chuck Jehl

Mike. Thanks,

Operator

you. Thank

question. Our the comes with Please next question Vafi with of Joseph from line Canaccord. proceed your

Joseph Vafi

and Board, great guys, Hey welcome on Chuck. progress,

Chuck Jehl

Thank you.

Joseph Vafi

team good the expanding. to see It’s

or few So funding in here. expansion interested to John – comments provide on moving one, business your more other a of happen. just any you you beyond if or adjacent about have And near Number classes expanding we asset that questions into was some maybe on then those any what on a earlier some all might when comments I moving model kind of including little wanted might see color and of prime of that? here, sources,

John Flynn

Yes.

the study. As far that space, already expanding beyond prime as started actually we’ve data near

they started of of Our from data to as in Chief some of portfolios. We've it performance has their and ton Officer, lot Risk been Ken the data gone from together prime out up three a our given larger bureaus. all have relates shops

willing all performance to are to long pay would history these data us give performing have super as of prime get, a data. prime how relates they're you with out So and loans it that go typically to and to

that, to can't be done, IT foremost be date we're forward because has right I to as but when just the team definitive we're that's moving working on actively model to OEMs. a that going our I for now obviously first you subvention a big give study starting and bang behind, will with know So that been

Chuck Jehl

going think thoroughly south. credit north And I the the on expansion side, not is

John Flynn

some back going knowing just building June. were on currently source I to backed this process us we June, of lenders in Yes. put of have something like public working customer. But as at pools funding the through prime as already that through model burner SPAC pipeline we've that applications with sit put even union some We've of sources, from And we bank. until on behind, a now looking we it. built. interest a a find significant homes some yield. to data more loans volume a generate all by aimed to money public lot that funding be funding we’re are to can firms different the a together be prior that insurance number flowing It's into can funding the and that far we of the – of was or This get this credit new that with is looking then SaaS we for just got more more that's decent a back another back the of we That's get a as some just loans, size capital in put significant people to got the was or equity for our And could source, on. they think what to can't source that fill really just creating really working segment just together a of taking

Joseph Vafi

the you continues on for one, are that. is OEM just OEM other expand And score How expanding the relationship I one then do range like where in penetrated might you get? it number number think Thanks you versus to Great. mean, sounds things. FICO

Chuck Jehl

by I inside noticed being of levels. the now sea think just them we're

north Our decided side. grow. we why is to exactly And hear the well, move portfolio to performing continues which credit everything they is from on very

to automated the range of and to, us keep overall that in telling decisioning providing But definitely, saving think our the cost a and to what is what to in – me a them it's refer have that they're was the on of underwriting the really find to estimate, is ability but not kind for person from loans in these opportunity it's X% the ecosystem. to we them I the lot non-prime. partner hard still X%

during it what promised So we're we're exactly excited. it's up process and we and to our sales living

in received I and hasn't started hit month. their notice now, tiers of the the late four markets we from additional the just one it think been expansion really in you credit

shown QX year continue certainly I our and will we be here really, the QX so really next in progress of think to And when expand.

Joseph Vafi

in what then that maybe, maybe one cert given And guidance range more I Ross that wide, still we're you is Okay. to said, follow-up just have the is, just the on pretty related that may and QX. QX. here ramps I'm guessing correct directionally or not And least? that may happen to in with at what do that from Is kind perhaps of OEM has

Ross Jessup

Yes.

the the we is what focused did it first feel lot through reassessed what were our were and those ranges and and was through And reaffirmed about that like the think performance, economic running We we hit will very work today in really performed is, the is we of when QX, company. reaffirm analysis, to low went in that what came into country went but results continue QX, plan and guidance I guidance – through high, we even COVID we the take and and public it of and there into all the executing view excited business we're execution. we're and a a through on QX. sensitivity prepare well, on backdrop trends we out focused that's we a before prudent out. that and

Chuck Jehl

at we're looking to going and to gone through. through where coming year the XX,XXX up what out end Joe, XXXX we've of certs think I going

I think are growth that pleased be we're now. we position in certainly, are very to that. well December we're months going as the right from November And and

with we well excited going So about on. everything XXXX have we're as

Joseph Vafi

Great. Congrats guys. much. Thanks very

John Flynn

you. Thank

Operator

Thank you.

of next line comes from question. Stephens. your with the Please Our Vincent Caintic question proceed with

Vincent Caintic

profit should just good thanks clarifying I for And my questions. share. the Hey, first taking afternoon.

on quarter, strong want really but follow-up question. a was to that So this David's

the that $XX quarter, million back that you profit right. reversed in in the you put third in So it's share the like first not quarter,

that something third So is the saw of of share. terms it's in sort quarter what in we going sustainable forward profit

Chuck Jehl

before the prior in Vincent, How profit vintages. about a change Chuck. the $XXX is it I estimate had share about this on per we That's this cert doing? based way, you think right. average

March. the that a net on million had of of million really under So the that million we the was was of $XX.X $X.X was then the reversed in $XX $XX that And part little back million that's P&L.

better the in realized the second quarter. expected than third and just that's performance So portfolio on the

take per for the share we divide search of vintages. cert, number. revenue into just So number quarter roughly prior $XXX the the $X.X if you inflated that recognized by and is million, profit That straight the on

Vincent Caintic

Got Okay. you.

So a so bit $X.X million. – that little

Okay. Makes Perfect. sense.

Chuck Jehl

another of XX-Q not we'll $XX but later got follow the week, million It's reversed. been way, we've that that's and got million, this $X.X

have we're a still, obviously, don't our run process. we and looking ball So forward and crystal

Ross Jessup

a as million XXXX, Because had during that, $X.X we more QX well. that of kind – also even of a It’s than by I about that about right. we think

yes. So,

Vincent Caintic

very makes sense. Thank you. Okay. That's helpful. That

a you items Secondly, so take guidance you've is of and very all areas. of prior about, the end of nine different would it's the guess the strong. and think wide to been since on I the question kind range each seems when different of mean, know – like great you so it the the far, is the guidance, I there those, low to been in four what performance about has months

Chuck Jehl

I when reaffirmed said, guidance, think question, we Vincent. about I I feel the we good Joe's it answer

good even October, going trends into feel we the now. into November about really So

hitting So really our guidance and and we about, reaffirmed obviously, feel there. good meeting expectations

had were the October we but we're further was November. XXX. really than And feel to certs XX good into good to – into any trends want we really heading and year-to-date and don't So go continue the And that. about and is where it September range XX,XXX

we'll middle that. feel of math and projected if what goalpost just or in you a like. the look think would QX than maybe So be about the better And we

Vincent Caintic

sense. Makes Right.

you one you. me, provided Okay, on then and and all great number details for it's last potentially perfect. just one two, the OEM And Thank three. the

opportunity the what set size to wanting So is.

that prior. probably you score for what can upside of kind guess, XXX I'm broadly up to how say much more, that. and is guess, down you applications that, say number when up OEM when previously, than double say different I sets. versus you sign turned you. when could even for the And assuming of maybe then data example, X% because the that the you Thank that X% you're XXX looking sizing OEM generate? one set separately, at is application speaking, to an going OEM now were OEM, than yes number three, maybe capturing the more Is to, so So, about incremental FICO I say when more you that's that like how

Ross Jessup

this Ross. Yes, is

to can XXX they to And then something And of credit goal it seeing look much all, all one, we add applications, where is down running denied get they of XXX, countered number are that. to they're okay. when now. to sending us floor like full The move XXX, That's only probably that first for asking the phase next payment to of apps to that to make below convincing customer when a their program, our that's them XXX apps, with coming through them XXX and how is then I third So is the pretty credit. that. that they're relates upsize at piece for try the that you the actually are that OEM add the up extension off. then XXX, everything believe And to and going

So we see we basically everything score that the from increased for them. credit

application about where they our much were today right so of they're in I they're probably could XX% lift probably be now. pilot a from that And especially that that increase And much, just because overall, known higher, in that we'll getting past. the get additional is standpoint, think

their it. it three get It'd should what was three We're So double today to months just add be once markets, those ago. already they we take volume. seeing

so we to there's subvention. of That's them even the through And before how car new opportunity lots get to on there. help discuss side

Vincent Caintic

much. so Thanks Great.

John Flynn

you. Thank

Ross Jessup

bet. You

Chuck Jehl

Thanks.

Operator

Thank you.

Sachs. O'Neill from Goldman question. comes proceed your with question next Please Our Matthew with

Matthew O'Neill

of Yes. potential of with know That Hi, answered said, gentlemen. Thanks on update cadence third, discussions exciting the ensure I for thus the questions. evening, lot that sort curious of about any we've far. and was asked my is chatting I stuff's a there been A good taking prior? been

John Flynn

Yes.

to consider they a that, February are their on off had to complete a verbal early by We believe where the they'd their be week they stamp management’s event on and those said XX that meeting on then first we the to as we've senior final sign help cert – as stages terminology Board meeting with rubber get be phone guys their of at it And last in after that like April. November writing it. to then

Matthew O'Neill

I that great appreciate that's detail. to Yes, hear.

loans like you've adding other of pools certs one to unions insurance is are other of the the participants the new or or side, you follow-up like good the talking some limiting to sounds side? essentially the originate. credit and Is moment a As the guys the just incremental capital/lender with at I investors factor of comments able six made it about sort were that rate success earlier, to curious, you more mix XXX take to to was up and a on capital it looking had trials.

John Flynn

the you When rate… say

Ross Jessup

its think side don't I insurance whatsoever.

of comes at some where might have not the from capacity coverage that standpoint there might other much some as geographic we a a think I as areas. certain be area applications

trying just we're and lenders gaps side that so do have to liquidity fill issues shore flow. in and standpoint. the steady go also to just you throughout so that to of then, And loan can we and have have trying come possible from kind now every of And we're that keep that up

Matthew O'Neill

it. Got

John Flynn

you on other the auto then it, if with you thing of up of to or always different into that names like And bring but without reaching we're sources us places likes Costco end the buying to you we here, you working if or for now have that are members enough do services cater lot a that, for, into will bringing Walmart it. have out funding members,

will. to to be trying sides to able both if company the position of we're coin the is what you do So handle

run capital large our funding to got the coming with. But sources can We others just loan out same if of You've can have game we pool that reached be bring if available. balances, liquidity. of the existing these share in Ross' to stay to able cash can in. want the mix they We apps to time, or a inundate their to at point

Ross Jessup

thing We insure Matt, mentioned don't think something it. actually about originate, on right? you the us originate. We I risk one

a So, lender. not we're definitely

John Flynn

And a using pulling through loans just of. folks together we piece This is would this could the platform show cash. and make to they white returns of kinds auto sources funding own paper our that through any any funding is that not business plan a and

Matthew O'Neill

on the understood three. last guess – would industry absolutely. I guess, kind just Yes, ask, follow on think OEM that I OEM wind of up, at on the Absolutely I starts successes I of catch call the to of I front. the last two, Right. once asked around, OEMs yes, one, OEM

think or take domino maybe I something referred it like think to to effect. Is it discussion, premature for I place OEM to an yet is? a about starting of

Ross Jessup

lots on. got discussions going all at We've Not Matt. of

captive, we their now, we're one study have have active we the of well. as having Just lots it. OEM only are on only that detailed numerous They with just but with but not we that discussion,

So the we prop that sales, all the help, more each you all, sell after about backend see value to can to making OEMs actually moving – sales. way products

a now. are underway lot great so of discussions And

John Flynn

if one leader And the Matt, I domino what the what's you I missing? we one them everybody union think you that industry, with? to, first then hit the was, questions the and of credit they prevent one up first the do what due to OEMs real they effect. your jumping in got other from two get are a OEMs happened business or Once views figure a And you comment on on What bandwagon. that think we the about talked and many two we big head, running. diligence the the in And the on you nail That's as exactly with space. did bring

a of it's it's great go sudden, people for work working and to show and the well that others. account does it out a flagship All

Ross Jessup

Thanks question. for the

Matthew O'Neill

Yes. appreciate for jump That makes in the much of the back so I sense. queue. Thanks I'll questions. it. a lot taking

John Flynn

Good, thanks, Matt.

Ross Jessup

Thanks comment. for your

Operator

you. Thank

with of proceed Our your with next question comes Jefferies. from the Please line Jessurun Lance question.

Lance Jessurun

Hey guys. Thanks for taking my question.

dead you many the beat in in definitively in thing, OEMs to sorry guys. FY time, you of a but interest upsell for look OEM the at How horse a XXXX? launching good could in realistically Just

John Flynn

Tentatively?

Ross Jessup

kind to them, at relief and three If the stars a and eight know answer all all We've are. that. I – five were next over process more regarding the we than value they – through There's who great mean, the which going just or candidates, as we of handful. definitely had looking process prop, such aligned? discussions CECL questions probably with years, there's of potential the tried we're seven

John Flynn

with point Ross's Chief he selling platform we're attacking the the loan angles, relationships of we've all majors these To Lending talks that that at too, about the the versus got on an is what how ready not show And IT to we And not is is only easier time to come to I do that, to made stuff three to. this that on talking from made? that, the but think So them are approach the origination for last I phone the the when now of just IT multiple that built? people. like guy, OEMs does go? the the land. do Ross the the and captive, And how spent you with OEMs it we're week spend and gentleman more with; these wants that for How side hour responsible exactly Sagent is LOS is he watch up the them

Lance Jessurun

one think a volume with a should the ease new them. OEMs? big of know, ramped of hamper OEM origination to How we the then could how the kind a fast of it. landing Got to ramp on the OEM partners we OEM faster much follow-up has how with on about COVID your And up? one, expect future ask rate I put but up,

Ross Jessup

to call platform. back of that provider in or loan we targets John think, key kind of gentleman, with have is eight the an the are that having integration I their three actually of started of we're discussion that we what the had seven one into with. LOS with; And our they origination

it's type just is their with – platforms our it we So system integration easy, very integration talk us an once to driven have have to actually each API that other. technology

time. standpoint; getting technology are project proving period integrate learn They're here, or prop, And of seven for value of on good we to this this unit thing so OEMs so hurdle our month our is And all the into the for subvention getting of I the process. with that's kind first from time-based, utilize roadmap been and a same they discussions but has having is all this the of a think instead other IT marketing us is on, prepared the far the dollars. just

with what And already so it we developed. well really fits have

but, OEM the could So exactly OEM, them the launched six we I day think first the be ever to get get timeline an once the months And nod we from I we presented. them first to implemented. believe – one-year four from

– if loans at at look two-year have a you that tiers, And the there. or look capability out has next X,XXX we first if various get OEM launched I month. that could five is doing So to that, – X,XXX four you years there's for the to of

one that well. equal number to ones are is the And two. sweet are OEM some other targeted is then OEM that, X,XXX, one same then sizes XX,XXX of number second we're spot, and The range, as

big, So big it's a tam.

Lance Jessurun

Awesome. Thanks for so much questions taking my guys.

Ross Jessup

thank you. Well,

John Flynn

Thank you.

Operator

you. Thank

Peter with Please Our Davidson. comes your Heckmann question proceed from with next question.

Peter Heckmann

estimates car those about car in your trending And estimates play for of data that and answered. some XXXX? most how see macro talk maybe Thanks values, new/used though. or my you been used on think of questions total some stimulus you some into that sales? maybe unemployment, stimulus of Can how variables of play and about staying of Hey, major just have terms direct the of long additional into some unemployment you how

John Flynn

Yes.

whether this supply you point cars, I when that trends at legally of XXX the what's cars, demand and the considered. we used things calculation, of the we factored out these default unemployment, which the new can vehicle the The in think things time. look fact at down repossess values, go are course, all vehicle impacts

started So cars. business I we that OEMs, XX% before our think with of the is working used

what from benefiting to lot of and lenders our it's market we're are so a And now seeing fantastic it. a

to pent the for there forcing new Now that which cars values cars, used increase. is up still OEMs are demand manufacturing, are a the cars out of

the have was also And fortunately of cars supply a that the the risk. coming used lot we with knowing what pretty not off-lease. not and We conservative new low, I were Hertz the situation their – production so the bankruptcy offset car of of think it impact

don't know... I So

Chuck Jehl

I the point... index, up up XX%, Manheim year-over-years think value car XXX In used it's

John Flynn

April fast amazing It's it's in the how recovered... happened and

Chuck Jehl

Covered very quickly.

Peter Heckmann

Got it. it. Got

Ross Jessup

than better just think everything thought. originally had gotten has we I

to extensions granted, So thing reached we were that even we're too where car the consumers for all they looking these weren't hearing during excited kept of even they about loans the extensions, there future, telling was were payments. that their most us to being and we your car shops our other the continuing and out had make times

John Flynn

still would at Yes. actually just our we even, something be. what's it, come our to all below I received thought Chief claims as five received last Risk in. over we the where XX%, looking are expected And from Officer compared We of or they today. months last XX% four month

there's, So how delinquencies we would have are And going hand. probably out one on definitely, with pleased there. real expected you it's now. are are things combination have a But that of our still satisfiers check, so some we in and we're

Peter Heckmann

there the assume would or the increase be consideration guess That's you'll earlier to the year? two, of pricing from data continue another a potentially probably I but review great. quarter in reversing for I And

John Flynn

And same come that through is a process we we that same and the quarter take do and and went the to Chuck we as the we explained. we a is look meet through as what conclusion. at how go management We'll inputs we team

have also that service upon EY our KPMG well. like We and providers as

Peter Heckmann

appreciate I it. Thanks much.

John Flynn

questions Thanks Thank Peter. It time. for no we your appears at questions, this you. additional have

this gentlemen does today's and teleconference. ladies conclude So