Good afternoon and welcome to the Open Lending First Quarter 2025 Earnings Conference Call. As a reminder, today’s conference is being recorded. On the call today are Jessica Buss, Chairman of the Board of Directors and Chief Executive Officer as well as Chuck Jehl, Interim Chief Financial Officer and a Member of the Board of Directors and Matthew Sather, Chief Underwriting Officer, who will both be available for the Q&A section of the call. I would now like to pass the call over to Ryan Gardella, Investor Relations, to read the Safe Harbor statement. Please go ahead.

Thank you. Appreciate you joining us. Prior to the start of this call, the company posted their first quarter 2025 earnings release and supplemental slides to its Investor Relations website. In the release, you will find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed on this call. Before we begin, I would like to remind you that this call may contain estimates and other forward-looking statements that represent the company’s view as of today, May 7, 2025. Open Lending disclaims any obligation to update these statements to reflect future events or circumstances. Please refer to today’s earnings release and our filings with the SEC for more information concerning factors that could cause actual results to differ from those expressed or implied in such statements. And now I will pass the call over to Jessica to give an update on our business and financial results for the first quarter of 2025.

Thank you. Good afternoon, everyone, and thank you for joining us today. After a disappointing fourth quarter, I am pleased and eager to walk through our results for the current quarter, which we believe reflect the progress we’ve already made on our concise, actionable plan for the business going forward. Our early initiatives are already working and demonstrating tangible progress, and we’re focused on our goal of continued profitable growth for our shareholders. Before we move on to the financial details, I first want to say a few words about myself, where Open Lending stands today, and the future of our organization. First and foremost, I am firmly committed to Open Lending and the incredible team we have built here. I have decades of experience leading insurance companies. And at the end of the day, what we are selling at Open Lending is an automotive loan underwriting solution with credit default insurance protection while delivering on our mission to serve the underserved. Our value proposition is derived from our Lenders Protection program, our customers, and our insurance carrier capacity, which I believe are as strong as ever. That being said, I want to assure everyone that I’m focused not just on the bigger picture of where we can be in the medium and long term, but also on optimizing the day-to-day blocking and tackling that moves the needle in the short term. I have nothing but confidence in this team and our business model, or quite frankly, I would not be in the seat talking to you all here today. We intend to come through this difficult time as a stronger, leaner, more agile organization. I’ve also heard from many of you in the financial community, including our investors. The management team and the Board take all of your feedback…

Thank you. [Operator Instructions] Our first question will come from John Hecht with Jefferies. Your line is open.

Yes, afternoon and thanks for all that context. Very, very helpful. First question is just, call it, for lack of a better term, the overall environment. I mean, we saw the Manheim edged up this morning. There could be some more pressure, I guess, if tariffs get enacted as potentially expected. And how do those elements affect your ability to structure deals, just given the likelihood that the costs of used cars go up to your consumers?

Yes. Thank you, John. This is Jessica. Yes, as you mentioned, we are closely monitoring the overall macro environment. The increase to the MUVVI index for our back book is actually something that we view as positive that will increase collateral values and could potentially – again, one quarter does not make a trend, could potentially have a positive impact on our CIE. We are also taking active steps on monitoring tariffs. Matt Sather can talk a little bit more about what we’re doing in terms of rate increases that we’re implementing in anticipation of, again, the increase of both new and used cars. And I believe we’re taking about a 10% rate increase that will go into effect in the next couple of months. The overall credit union environment is actually improving with loan to share actually coming down at 81.8% and actually share growth has actually increased 40% quarter over quarter to 6.4%. So we believe that the environment is actually getting better on the credit union side. And that, again, because of our enhanced pricing and our better feedback loops and our, I think, more awareness to the environment and what we’re taking in terms of rate with the tariffs that we’re better positioned than we’ve ever been to be able to react to the changes in the environment. Certainly, it’s an insurance product, and we can’t predict 100% the cost of goods sold, but we’re in a much better position with the data that we have and the actions that we’ve already taken. And I don’t know, Matt, if you’d like to add anything on the tariffs?

Yes. I think on the tariffs, the issue isn’t just the prices going up. It’s the volatility, which is something that we’re gauging for the future. The prices go up and stay up. It wouldn’t have a major impact on our book. What we’re concerned about is the uncertainty around the tariffs as there were 2 tariffs put in place already for the auto industry, one on April 3, and the one this past weekend on auto parts. And the deal structure changes and has been changing week by week. And so we’re continuing to monitor that. We’re working with our insurance carrier partners. So we have complete alignment on our action steps, and we’ll continue to monitor that.

And John, maybe one other data point I would add to that is that the originations in the first quarter, we actually saw a 15% increase in originations from our credit unions, which we see as a good sign. We’ve also seen a decrease, obviously, with no super thins decrease in our open secured card approval rates. So overall, we believe that our mix shift in our book and our risk profile has decreased, while we’ve actually achieved rate increases on our current vintages.

Okay. And then maybe talk about other like aspects of the business that may present some opportunities over time and what might catalyze those and that would be the refi portion of the business as well as the OEM portion of the business?

Yes, happy to. So as we announced a few quarters ago, we have implemented in the current phases of a pilot with OEM 3. That could be a very sizable opportunity for us. We’re still in the initial phases of that. It has not gone active live as again we’re still in the pilot. That pilot is rolling out. We’ve had great conversations with them, and I think they’re very happy with the product. The refi market, we’re ready when that market comes back. We’re also talking to a few larger credit unions that have big refi books and looking at a way to potentially help fund those loans. Again, we’re in initial conversations. But certainly, our product is adapted and well suited for the refi market. At the height of a high cert volume, we were doing like 40,000 refi certs. So again, that’s an area that we love and that book has performed very well for us.

Okay, wonderful. Thanks very much for the color.

Thank you. [Operator Instructions] Our next question comes from John Davis with Raymond James. Your line is open.

Yes, good afternoon. Jessica, I just wanted to start on the CIE this quarter. I realize it was relatively small at $900,000, but I guess a little bit surprising to see another negative revision after the big 4Q one, especially given the MUVVI has moved in the right direction. So just curious kind of what drove that $900,000 revision? And also, was that specific to the 2021-2022 vintages or any other color you could give would be helpful?

Sure. So let me just start by saying that, again, we have multiple vintages that are measured each quarter through a process and a model by where we update inputs on frequency, severity, and many other factors that go into our scorecard. And so every quarter, we would expect there to be some form of movement in the 606 or the CIE looking backwards. If you look at the prior vintages, you would see sort of ups and downs across all the vintages, meaning that some were positive, some were negative. None of them extremely large either way and netting to the $900,000 negative adjustment. It is true and I did make the remark in my script that the most negative did come from the ‘21 and ‘22, mostly driven by claims and frequency, offset by a positive, as you mentioned, with the increase in MUVVI and severity. But none of the individual vintages were very large. And then again, the MUVVI did go up again in April, and I think recently today came out at 209.

289.

209, which was not built into our estimate at the time, of course, that was new information that came out today, but we would expect if it continues to stay there and/or is a new jumping off point for the future months, that would also be a positive impact to CIE. But again, we would expect quarter to quarter there to be variances.

Okay, that’s helpful. And then if I look at the profit share kind of ex the CIE, I think it was 276 this quarter. Last quarter, you said somewhere around 300, what’s kind of the right way to think about it. And again, I am not going to split hairs there. But actually, I wanted to focus on your comments that I think you were kind of underwriting that 276 at like almost a 73% loss, but you expect a 65% loss. So I guess what I’m just trying to like do the math. And like does that mean that, that 276 is like 12% conservative, meaning that like in theory, if you are booking to exactly what you expected, you would book something like 310. Just trying to translate that kind of the loss ratios that you are talking about into what you’re booking upfront to try and gauge the conservatism that’s in that 276?

Sure. I think it’s exactly what I said in my prepared remarks. So, under 606 guidance, even for the current profit share we want to book a loss ratio or per unit economic that is more likely than not to be reversed. So we have further constrained our profit share for the current quarter based upon the recent volatility of the past historical results. So that is booked at a 72.5% loss ratio, as you mentioned, and I made it in my remarks. That being said, the pricing actions that we’ve taken to-date, including underwriting and pricing, both, we believe if those all have the impact as projected, would perform closer to a 65%, including also the book mix shift. We will not write those up, and we will not know that until sometime in the future. And again, under 606, we have that more built-in conservatism. So you’re thinking about it the right way. The timing of when that would occur and the certainty, again, we’re booking it with a more constrained view to be more conservative and to reduce the volatility moving forward so that it’s more likely than not that we have positive CIE adjustments than negative CIE adjustments in the future.

Okay, very clear. Thanks, Jessica.

Thank you, ladies and gentlemen. As there are no further questions, I’ll now turn the call back over to Jessica for her closing remarks.

We appreciate your interest and support. And I’d like to again thank all the team members at Open Lending for your hard work and dedication to our company. I would also like to thank Chuck Jehl, who is our current Interim CFO, but has been with the company for 5 years as both our CFO and our CEO, has done great work with the company. This will be his last official earnings call as Interim CFO, but will continue on our Board. Thank you, Chuck, for all that you’ve done. Really appreciate it. He has done great work here. We wouldn’t be where we were today without him. And thank you all. Have a great day.

Thank you, ladies and gentlemen. This concludes today’s event. You may now disconnect.