Good day, everyone, and welcome to the Open Lending Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this call is being recorded and I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Ryan Gardella, Investor Relations. Please go ahead.

Thank you. I appreciate you joining us. Prior to the start of this call, the company posted their third 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 or other forward-looking statements that represent the company's view as of today, November 6, 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 the business and financial results for the third quarter of 2025.

Thank you. Good afternoon, everyone, and thank you for joining us today. We are pleased to announce our results for the third quarter of 2025, which we believe reflects the transition we are making from a company stabilizing their business to what I would consider the new norm of running and operating Open Lending. When I assumed the role of CEO, 2 of my key objectives were to promote earnings stability and to guide the company towards predictable results for our shareholders. We have sought to achieve these objectives by fostering less volatile profit share unit economics and more segmented and sophisticated pricing changes. We have executed on both of these objectives with positive outcomes, as I will discuss today. In addition to the work we have done on our core Lenders Protection platform, we have recognized the need to diversify Open Lending's current offering to meet the evolving needs of our lender customers. Based on customer feedback, our first new product initiative was to deliver a pricing, underwriting and decisioning tool for our lender customers to use for their prime auto borrowers. Therefore, we are excited to announce the introduction of ApexOne Auto, our new prime credit automated decisioning platform. ApexOne Auto not only diversifies Open Lending's revenue by product, but also adds a reoccurring revenue stream driven by subscription-based minimum application volumes. ApexOne Auto will address the approximately $500 million per year opportunity to serve segments of the automotive credit market that our current decisioning engine does not. Built on our core LPP offering, ApexOne Auto extends our analytics into the prime auto lending segment, a strategic expansion that addresses the industry's shift towards higher-rated credit, where our customers and their borrowers demand faster, more efficient and more accurate loan decisioning and pricing. Over the years, we have…

Thanks, Jessica. I'm pleased to join you all on my first earnings call as Open Lending's CFO. As Jessica mentioned, I joined in August after more than 2 decades in financial leadership roles across the residential mortgage and financial services industry. I'm excited to bring that experience to Open Lending as we continue to strengthen our financial discipline and pursuing our growth strategy. It's a privilege to be part of such a talented team, and I look forward to connecting more with our investors and analysts soon. After spending a few months in the seat, I firmly believe that Open Lending has a bright future with significant potential and growth opportunities ahead. I look forward to building on the strong foundation already in place, driving renewed growth and value creation to our stakeholders, while advancing the company's mission to serve the underserved. Now let me walk through the numbers for the quarter and guidance before Jessica and I open up the line for Q&A. During the third quarter of 2025, we facilitated 23,880 certified loans compared to 27,435 certified loans in the third quarter of '24. Total certified loan volumes reflect typical seasonal patterns, and our strategic tightening of underwriting standards aimed at building a higher quality loan portfolio. To add on what Jessica mentioned earlier, when we exclude SuperThin and credit builder certs, our cert volume for the quarter were up approximately 7% year-over-year, highlighting continued momentum in our core higher-quality segment. While we anticipate volumes to remain relatively stable through the remainder of ' 25 on a seasonally adjusted basis, we believe we are well positioned for renewed growth in 2026 with improved underwriting and pricing actions. Our credit union and bank channel loans typically have higher program fees compared to our OEM loans, which leads to more…

[Operator Instructions] I will take our first question from Peter Heckmann with D.A. Davidson.

It's good to hear about ApexOne Auto, the new credit decisioning tool. Jessica, I think you mentioned it was going to be on a subscription basis. But I think you said something about some -- like a volume component. Can you talk a little bit more about how that might work? How much of the payment might be fixed versus volume-based?

Yes. Nice to hear from you, Peter. Thank you for the question today. Yes, ApexOne Auto will be a completely subscription-based product with -- we're looking to do 3-year contracts, which will have monthly minimums and then any overage per loan will be charged based -- that is over the minimum amount. So it will equate to like a per loan fee. None of it will be variable, meaning that we will have a minimum. So the only variable amount would be if there was an overage. And then anything that is -- and I think I mentioned this during the script, anything that is not then decisioned in ApexOne would be eligible to go into the LP (sic) [ LPP ] product, so they would be complementary to each other. But anything related strictly to ApexOne would be with a noninsurance wrapper and would not be subject to any change in the revenue once booked, it would be on the subscription basis.

Okay. That makes sense. That makes sense. And then Mass, just a follow-up on the Allied change in terms. I think you said you would approximate about a $2.5 million annual savings. Did you say that, that was going to start phasing in next year? Or it was just going to be for the full year 2027?

A small amount we expect to phase in, in 2026, the second half of 2026, but the lion's share of it will be realized in 2027.

And Peter, it will have applicability then sort of going forward in perpetuity, right? It will have a benefit.

Right. It's an ongoing benefit.

Yes, correct.

Our next question comes from Joseph Vafi with Canaccord.

This is Will Johnson on for Joe. Maybe just one kind of high level on the macro environment. Just curious kind of any more color you can share on when you think things could kind of stabilize and trends, you're seeing in the Manheim Index? And just any thoughts on conversations with customers?

Yes. As we've sort of weave through our script, we feel like 2025 was a transition year. There was lots of tightening and changes we needed to make to our pricing models that we felt, and we do feel have proven to put us in a much better and less volatile financial position. We feel like we're very well positioned for sort of growth in 2026. There's a few things we can point to. We obviously aren't giving guidance into '26. We're seeing a lot more flow coming in from the refi channel. We believe OEM is starting to build some very positive momentum now live in 32 states with a few of the larger states coming live towards the end of the year. We are bringing in a new CRO, which we believe will also bring more of a strategic lens to how we approach our credit union. And of course, we are seeing an improvement in retention of our credit unions. If you were to actually look at year-over-year, our cert growth our cert volume, excluding credit builders and SuperThin's, which is where we took most of our underwriting action, our cert growth is actually up 7% year-over-year. So I think that gives us a good starting pad as we move into 2026.

We will move next with John Davis with Raymond James.

This is Taylor on for JD. Maybe just to start on the 4Q certified loan assumptions. It looks like certs are supposed to be down about 14% year-over-year at the midpoint. So just curious what you're expecting from a refi versus purchase volume perspective, and then just also the contribution expected from your FIs, credit unions and OEMs.

Yes. So seasonality, fourth quarter is one of our lowest volume quarters. So we did take that into consideration. And then again, we will still have some of the impact of the OEM strengthening that we put into place as that works through sort of its full year effect. There could be some uplift from refi. We are doing 3 different things right now to become more refi ready at working with active refi partners and our current credit union base, whether we see that uplift in the fourth quarter or we see that more going into 2026. And then, of course, again, there's still some uncertainty as to when we'll get some of the full benefits from OEM 3. I don't know -- and about 90% of our business is coming from the CU and the bank. So we would expect that to sort of stabilize as we move into the fourth quarter and into 2026. I think kind of our goal with, I'll say, OEM 1 and 2 is to -- that, that volume will remain below 10% of our overall sort of volume. I don't know, Mass, if you have anything else to add to that?

No, I agree. And we're comfortable with that OEM 3 or OEMs 1 and 2 at less than 10% of our volume or around 10%, but they could still grow as we grow the overall portfolio, the OEMs 1 and 2 could grow along with it. But the mix has been our focus.

Got it. Makes sense. And then maybe just one more on ApexOne. It's obviously very early days with 2 customers launched, but just curious longer term, what you're expecting from an uptake perspective and then a growth contribution perspective as well? And then does this make sense for all of your lenders to use or just a certain subset, just love to hear some detail on that.

Sure. We would love to share. We're very excited about its launch and a product that we've been working on for the last couple of years as we've gotten feedback from our credit unions. And again, really wanted to diversify into the full credit spectrum. If we sort of look at the credit unions, we do business with today, we estimate that about 25% of the apps that we see are the subprime apps. And if we were able to capture what we -- and which is what is required, ApexOne, sort of look at all the applications, and we were to get about a 50% adoption rate, we're looking at revenues somewhere between $30 million and $40 million, which we consider to be significant. But again, early days, and that will take time as we start to sign credit unions up. We have seen a lot of interest from our credit union clients. Again, there's been sort of the flight to quality on paper as the macroeconomic environment is what it is. And so this also, I think, protects us from sort of being more resilient to different market cycles. So again, we're excited about this product for many different reasons. And we also think it has applicability outside of our credit union customers, right? So there's other institutions, financial institutions that are interested in getting into and learning about and participating in auto decisioning that don't have those tools that we may be able to partner with.

[Operator Instructions] And we show no further questions at this time. I will now turn the call over to Chief Executive Officer, Jessica Buss, for closing remarks.

Thanks, everyone, for your participation and support today. The third quarter represented tangible progress against the initiatives I laid out in my first quarter as CEO and believe that Open Lending is now in a stronger position today than it was just 6 months ago. We believe we are well positioned for growth in 2026, and I look forward to updating to you on our next call. Thank you.

Thank you. And this does conclude today's program. Thank you for your participation. You may disconnect at any time.