10q10k10q10k.net
Open Lending Corp

Open Lending CorpLPROEarnings & Financial Report

Nasdaq · Financials · Personal Credit Institutions

Open Library is an online project intended to create "one web page for every book ever published". Created by Aaron Swartz, Brewster Kahle, Alexis Rossi, Anand Chitipothu, and Rebecca Hargrave Malamud, Open Library is a project of the Internet Archive, a nonprofit organization. It has been funded in part by grants from the California State Library and the Kahle/Austin Foundation. Open Library provides online digital copies in multiple formats, created from images of many public domain, out-of...

What changed in Open Lending Corp's 10-K — 2022 vs 2023

Top changes in Open Lending Corp's 2023 10-K

146 paragraphs added · 172 removed · 127 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

34 edited+5 added−5 removed40 unchanged
We believe LPP enables automotive lenders to generate higher returns on assets and equity than traditional prime and super prime 6 portfolios with a risk profile supported by credit default protection from highly rated insurers. Additionally, many of the loans generated using LPP have already been processed and denied through the automotive lender’s loan origination system.
We believe LPP enables automotive lenders to generate higher returns on assets and equity than traditional prime and super prime portfolios with a risk profile supported by credit 6 default protection from highly rated insurers. Additionally, many of the loans generated using LPP have already been processed and denied through the automotive lender’s loan origination system.
In particular, the laws which we may be subject to directly or indirectly include, but are not limited to, the following: • state laws and regulations that impose requirements related to loan disclosures and terms, credit discrimination, and unfair or deceptive business practices; • the Truth-in-Lending Act, and its implementing Regulation Z, and similar state laws, which require certain disclosures to borrowers regarding the terms and conditions of their loans and credit transactions; • Section 5 of the Federal Trade Commission Act, which prohibits unfair and deceptive acts or practices in or affecting commerce; • Section 1031 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank” or the “Dodd-Frank Act”), which prohibits unfair, deceptive, or abusive acts or practices (“UDAAP”), in connection with any consumer financial product or service; • the Equal Credit Opportunity Act, and its implementing Regulation B, which prohibit creditors from discriminating against credit applicants regarding any aspect of a credit transaction on the basis of race, color, sex, age, religion, national origin, marital status, the fact that all or part of the applicant’s income derives from any public assistance program or the fact that the applicant has in good faith exercised any right under the Federal Consumer Credit Protection Act or any applicable state law; • the FCRA, and its implementing Regulation V, as amended by the Fair and Accurate Credit Transactions Act, which promotes the accuracy, fairness and privacy of information in the files of consumer reporting agencies and imposes certain notice and disclosure obligations on the users of consumer reports and credit scores; • the Gramm-Leach-Bliley Act (“GLBA”), and the California Consumer Protection Act, which includes limitations on the disclosure of consumer information (e.g., nonpublic personal information) by financial institutions and their service providers about a consumer to non-affiliated third-parties, in certain circumstances requires financial institutions to limit the use and further disclosure of consumer information by non-affiliated third-parties to whom they disclose such information and requires financial institutions to disclose certain privacy policies and practices with respect to information sharing with affiliated and non-affiliated entities as well as to safeguard personal customer information, and other privacy laws and regulations; • the California Consumer Privacy Act, the Colorado Privacy Act, Virginia’s Consumer Data Protection Act, and other state and local data privacy and security laws that may be enacted from time to time; • the Electronic Fund Transfer Act, and Regulation E promulgated thereunder, which provide disclosure requirements, guidelines and restrictions on the electronic transfer of funds from consumers’ bank accounts; and • the Bank Secrecy Act, which relates to compliance with anti-money laundering, customer due diligence and record-keeping policies and procedures.
In particular, the laws which we may be subject to directly or indirectly include, but are not limited to, the following: • state laws and regulations that impose requirements related to loan disclosures and terms, credit discrimination, and unfair or deceptive business practices; • the Truth-in-Lending Act, and its implementing Regulation Z, and similar state laws, which require certain disclosures to borrowers regarding the terms and conditions of their loans and credit transactions; • Section 5 of the Federal Trade Commission Act, which prohibits unfair and deceptive acts or practices in or affecting commerce; • Section 1031 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank” or the “Dodd-Frank Act”), which prohibits unfair, deceptive, or abusive acts or practices (“UDAAP”), in connection with any consumer financial product or service; • the Equal Credit Opportunity Act, and its implementing Regulation B, which prohibit creditors from discriminating against credit applicants regarding any aspect of a credit transaction on the basis of race, color, sex, age, religion, national origin, marital status, the fact that all or part of the applicant’s income derives from any public assistance program or the fact that the applicant has in good faith exercised any right under the Federal Consumer Credit Protection Act or any applicable state law; • the FCRA, and its implementing Regulation V, as amended by the Fair and Accurate Credit Transactions Act, which promotes the accuracy, fairness and privacy of information in the files of consumer reporting agencies and imposes certain notice and disclosure obligations on the users of consumer reports and credit scores; • the Gramm-Leach-Bliley Act (“GLBA”), and the California Consumer Protection Act, which includes limitations on the disclosure of consumer information (e.g., nonpublic personal information) by financial institutions and their service providers about a consumer to non-affiliated third-parties, in certain circumstances requires financial institutions to limit the use and further disclosure of consumer information by non-affiliated third-parties to whom they disclose such information and requires financial institutions to disclose certain privacy policies and practices with respect to information sharing with affiliated and non-affiliated entities as well as to safeguard personal customer information, and other privacy laws and regulations; • the California Consumer Privacy Act, the Colorado Privacy Act, Virginia’s Consumer Data Protection Act, and other state and local data privacy and security laws that may be enacted from time to time; • the Electronic Fund Transfer Act, and Regulation E promulgated thereunder, which provide disclosure requirements, guidelines and restrictions on the electronic transfer of funds from consumers’ bank accounts; and 8 • the Bank Secrecy Act, which relates to compliance with anti-money laundering, customer due diligence and record-keeping policies and procedures.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available through the investor relations page of our website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (“SEC”).
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available through the investor relations website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (“SEC”).
Claims management administration fees are calculated as 3% of monthly insurance earned premium for as long as a loan remains outstanding. The administration fee is recognized monthly as earned and decreases over time as the loan amortizes. Profit share represents our participation in the underwriting profit generated through the use of LPP.
Claims management administration fees are typically calculated as 3% of monthly insurance earned premium for as long as a loan remains outstanding. The administration fee is recognized monthly as earned and decreases over time as the loan amortizes. Profit share represents our participation in the underwriting profit generated through the use of LPP.
LPP is designed to provide a real-time experience for automotive lenders that is intuitive and easy to use. We have exclusivity agreements with insurance carriers who provide default insurance to automotive lenders on individual automotive loans processed through LPP, which underwrites the risk on each loan application.
LPP is designed to provide a real-time experience for automotive lenders that is intuitive and easy to use. 4 We have exclusivity agreements with insurance carriers who provide default insurance to automotive lenders on individual automotive loans processed through LPP, which underwrites the risk on each loan application.
The laws, regulations and rules described above are subject to legislative, administrative and judicial interpretation, and some of these laws and regulations have been 8 infrequently interpreted or only recently enacted.
The laws, regulations and rules described above are subject to legislative, administrative and judicial interpretation, and some of these laws and regulations have been infrequently interpreted or only recently enacted.
Our proprietary risk models project loan performance including expected losses and prepayments in arriving at the optimal rate. With five second decisioning, LPP generates a risk-based, all-inclusive interest rate for a loan that is customized to each automotive lender, reflecting cost of capital, loan servicing and acquisition costs, expected recovery rates and target return on assets.
Our proprietary risk models project loan performance, including expected losses and prepayments, in arriving at the optimal rate. With five-second decisioning, LPP recommends a risk-based, all-inclusive interest rate for a loan that is customized to each automotive lender, reflecting cost of capital, loan servicing and acquisition costs, expected recovery rates and target return on assets.
See “Item 1A— Risk Factors—Risks Related to Our Business — If we lose one of more of our insurance carriers and are unable to replace their commitments, it could have a material adverse effect on our business .” Borrowers We address the financing needs of borrowers with a credit score generally between 560 and 699, also referred to as consumers.
See “ Item 1A—Risk Factors—Risks Related to Our Business—If we lose one of more of our insurance carriers and are unable to replace their commitments, it could have a material adverse effect on our business .” Borrowers We address the financing needs of borrowers with a credit score generally between 560 and 699, also referred to as consumers.
LPP supports loans made to near-prime and non-prime borrowers and is designed to underwrite default insurance by linking automotive lenders to insurance companies. The platform uses risk-based pricing models that enable automotive lenders to assess the credit risk of a potential borrower using data driven analysis.
LPP supports loans made to near-prime and non-prime borrowers and is designed to underwrite default insurance by linking automotive lenders to insurance companies. The platform uses risk-based pricing models which enable automotive lenders to assess the credit risk of a potential borrower using data driven analysis.
Approximately 73% of the expected revenue is collected in the first 12 months after loan origination, with the balance comprised of administration fees and underwriting profit share that are realized over the remaining life of the loan.
Approximately 80% of the expected revenue is collected in the first 12 months after loan origination, with the balance comprised of administration fees and underwriting profit share that are realized over the remaining life of the loan.
LPP is powered by technology that delivers speed and scalability in providing interest rate decisioning to automotive lenders through electronic system integration. It supports the full transaction lifecycle, including credit application, underwriting, real-time insurance approval, settlement, servicing, invoicing of insurance premiums and fees and advanced data analytics of automotive lender’s portfolio under the program.
LPP is powered by technology that delivers speed and scalability in providing interest rate decisioning to automotive lenders. It supports the full transaction lifecycle, including credit application, underwriting, real-time insurance approval, settlement, servicing, invoicing of insurance premiums and fees and advanced data analytics of the automotive lender’s portfolio under the program.
Business Overview We are a leading provider of lending enablement and risk analytics to credit unions, regional banks, finance companies and the captive finance companies of automakers.
Company Overview We are a leading provider of lending enablement and risk analytics to credit unions, regional banks, finance companies and the captive finance companies of automakers.
In 2022, LPP generated, on average, $579 in profit share revenue per loan, which excludes the change in estimate associated with profit share reported on loans certified in prior periods. We refer to the prior periods as historic vintages. We believe the automotive industry is still seeking solutions to address the near-prime and non-prime borrower market.
In 2023, LPP generated, on average, $538 in profit share revenue per loan, which excludes the change in estimate associated with profit share reported on certified loans. We refer to the prior periods as historic vintages. We believe the automotive industry is still seeking solutions to address the near-prime and non-prime borrower market.
LPP program fees vary as a percentage of the loan amount, averaging $488 per loan in 2022, and are recognized upon receipt of the loan by the consumer. The program fee is paid either in one single payment in the month following loan certification or in equal monthly payments over the 12 months following loan certification.
LPP program fees vary as a percentage of the loan amount, averaging $527 per loan in 2023, and are recognized upon receipt of the loan by the consumer. The program fee is paid either in one single payment in the month following loan certification or in equal monthly payments over the 12 months following loan certification.
Our website and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report.
Our websites and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report.
The regulatory framework to which we are subject includes U.S. federal, state and local laws, regulations and rules. U.S. federal, state and local governmental authorities, including state financial services and insurance regulatory agencies, have broad oversight and supervisory authority over our business.
The regulatory framework to which we are subject includes United States (“U.S.”) federal, state and local laws, regulations and rules. U.S. federal, state and local governmental authorities, including state financial services and insurance regulatory agencies, have broad oversight and supervisory authority over our business.
Insurance Carriers As of December 31, 2022, we partnered with four insurance carriers to provide auto loan default insurance policies for LPP certified loans. Our carrier partners are required to maintain not less than “A-” Financial Strength Rating by A.M. Best insurance rating company.
Insurance Carriers As of December 31, 2023, we partnered with three insurance carriers to provide auto loan default insurance policies for LPP certified loans. Our carrier partners are required to maintain not less than “A-” Financial Strength Rating by A.M.
Since our inception in 2000, we have facilitated over $18.3 billion in automotive loans, accumulated more than 20 years of proprietary data and developed over two million unique risk profiles. We currently serve 438 active lenders. Lenders Protection Platform Our flagship product, Lenders Protection Platform (“LPP”), is a cloud-based automotive lending platform.
Since our inception in 2000, we have facilitated over $21.9 billion in automotive loans, accumulated more than 20 years of proprietary data and developed over two million unique risk profiles. We currently serve 454 active lenders. Lenders Protection Platform Our flagship product, the Lenders Protection TM platform (“LPP”), is a cloud-based automotive lending platform.
Lenders Protection, LLC, our wholly owned subsidiary (“Lenders Protection”), is licensed as a property and casualty insurance agency and regulated by the insurance regulator in each state in which we operate. All sales personnel are individually licensed as property and casualty insurance agents in each state in which they operate.
Lenders Protection, LLC is licensed as a property and casualty insurance agency and regulated by the insurance regulator in each state in which we operate. All sales personnel are individually licensed as property and casualty insurance agents in each state in which they operate.
On an ongoing basis, we promote the health and wellness of our employees by strongly encouraging work-life balance, offering flexible work schedules, parental leave, on-site gym, keeping the employee portion of health care premiums to a minimum and sponsoring various wellness programs. Available Information Our website address is www.openlending.com.
On an ongoing basis, we promote the health and wellness of our employees by strongly encouraging work-life balance, offering flexible work schedules, parental leave, on-site gym, keeping the employee portion of health care premiums to a minimum and sponsoring various wellness programs.
As of December 31, 2022, we had 180 employees, primarily located in the greater Austin, Texas area. We consider our relationship with our employees to be good and strive to maintain a mission-driven culture with a focus on employee input and well-being. Our core values are integrity, accountability, quality, commitment, perseverance, respect and teamwork.
As of December 31, 2023, we had 210 employees, primarily located in the greater Austin, Texas area. We consider our relationship with our employees to be good and strive to maintain a mission-driven culture with a focus on employee input and well-being. Our core values are trustworthiness, commitment, respect, humility, teamwork, innovation, and quality.
These would include money center banks, super-banks, banks, captive finance companies of automakers and sub-prime lenders. 7 Some of these competitors offer a broader suite of products and services than we do, including retail banking solutions, credit and debit cards and loyalty programs. Government Regulation We operate in a heavily regulated industry that is highly focused on consumer protection.
Some of these competitors offer a broader suite of products and services than we do, including retail banking solutions, credit and debit cards and loyalty programs. Government Regulation We operate in a heavily regulated industry that is highly focused on consumer protection.
In addition, CNA will continue to service and provide claim funding for any of its existing default insurance policies for the remaining life of the loans associated with such policies. During the period until the expiration of these agreements, we expect to transition our customers who use CNA to our other insurance carriers.
However, CNA will continue to service and provide claim funding for any of its existing default insurance policies for the remaining life of the loans associated with such policies. In 2023, we transitioned our customers who previously used CNA to our other insurance carriers.
We compete with loan origination system providers that perform custom underwriting rules and loan underwriting, as well as third-party lending-as-a-service companies that provide turn-key loan origination systems. The near-prime and non-prime lending market is highly fragmented and competitive. We face competition from a diverse landscape of consumer lenders, including traditional banks and credit unions, as well as alternative technology-enabled lenders.
We compete with loan origination system providers that perform custom underwriting rules and loan underwriting, as well as third-party lending-as-a-service companies that provide turn-key loan origination systems. 7 The near-prime and non-prime lending market is highly fragmented and competitive.
A key element of LPP is the unique database that drives risk decisioning using data accumulated for more than 20 years. When a loan is insured at origination, certain attributes of the transaction are stored in our database. Through the claims management process, we ultimately obtain loan life performance data on each insured loan.
Through electronic system integration, our software technology connects us to parties in our ecosystem. A key element of LPP is the unique database that drives risk decisioning using data accumulated for more than 20 years. When a loan is insured at origination, all attributes of the transaction are stored in our database.
On June 10, 2020 (the “Closing Date”), Nebula entered into a business combination pursuant to that certain Business Combination Agreement by and among Nebula, Open Lending, LLC (“Predecessor”), BRP Hold 11, Inc.
On June 10, 2020 (the “Closing Date”), Nebula completed a business combination with Open Lending, LLC (the “Business Combination”) pursuant to that certain Business Combination Agreement by and among Nebula, Open Lending, LLC and the other parties named therein (the “Business Combination Agreement”).
As a result, many near-prime and non-prime borrowers turn to sub-prime lenders, resulting in higher interest rate loan offerings than such borrower’s credit profile often merits or warrants. We seek to make the near-prime and non-prime market more competitive, resulting in more attractive loan terms. We operate a business-to-business model. Our customers are automotive lenders.
Borrowers who must utilize the near-prime and non-prime automotive lending market have fewer lenders focused on loans with longer terms or higher interest rates. As a result, many near-prime and non-prime borrowers turn to sub-prime lenders, resulting in higher interest rate loan offerings than such borrower’s credit profile often merits or warrants.
Our customers rely on us to assist in insuring against loan defaults by pairing them with highly rated insurance companies that mitigate the added risk associated with lending to near-prime and non-prime borrowers. 5 We support new and used automotive loans originated through a number of channels, including direct loans where the customer interfaces directly with the lender, indirect loans through networks of auto dealers who work with our lenders, and in targeted refinance programs implemented by our lenders.
We support new and used automotive loans originated through a number of channels, including direct loans where the customer interfaces directly with the lender, indirect loans through networks of auto dealers who work with our lenders, and in targeted refinance programs implemented by our lenders.
LPP enables automotive lenders to expand their lending guidelines to offer loans to borrowers with lower credit scores, potentially leading to increased loan originations and higher loan advance rates. LPP integrates directly with automotive lenders’ existing loan origination systems, facilitating electronic delivery of all-inclusive loan rates in real-time to automotive lenders.
LPP integrates directly with automotive lenders’ existing loan origination systems, facilitating electronic delivery of all-inclusive loan rates in real-time to automotive lenders.
Having granular origination and performance data allows our data scientists and actuaries to evolve and refine risk models. 4 Our Business Model We target the financing needs of near-prime and non-prime borrowers, or borrowers with a credit bureau score generally between 560 and 699, who are underserved in the automotive finance industry.
Our Business Model We target the financing needs of near-prime and non-prime borrowers, or borrowers with a credit bureau score generally between 560 and 699, who are underserved in the automotive finance industry. Traditional lenders focus on prime borrowers, where an efficient market has developed with interest rate competition that benefits borrowers. Independent finance companies focus on sub-prime borrowers.
(the “Blocker”), the Blocker’s sole stockholder, Nebula Parent Corp., NBLA Merger Sub LLC, NBLA Merger Sub Corp., and Shareholder Representative Services LLC, as the security holder representative (the “Business Combination”). Unless the context otherwise requires, “we,” “us,” “our,” “Open Lending,” and the “Company” refers to Open Lending Corporation, the combined company and its subsidiaries following the Business Combination.
Item 1. Business. Unless the context otherwise requires, “we,” “us,” “our,” “Open Lending,” and the “Company” refers to Open Lending Corporation, the combined company and its subsidiaries. Open Lending, LLC and Lenders Protection, LLC are wholly owned subsidiaries of Open Lending Corporation.
CNA will continue to provide auto loan default insurance policies for LPP certified loans until the terms of its producer and claims service agreements expire on December 31, 2023, unless mutual agreements with CNA are reached to transition new originations to our other insurance carriers prior to December 31, 2023.
Best insurance rating company. 5 On December 31, 2023, our producer and claims service agreement with Continental Casualty Company (“CNA”) expired. CNA will no longer provide auto loan default insurance policies for LPP certified loans.
Automotive Lenders Our customers are credit unions, regional banks, finance companies and the captive finance companies of automakers that use LPP.
Automotive Lenders Our customers are credit unions, regional banks, finance companies and the captive finance companies of automakers that use LPP. Our customers rely on us to assist in insuring against loan defaults by pairing them with highly rated insurance companies that mitigate the added risk associated with lending to near-prime and non-prime borrowers.
Many of our competitors are (or are affiliated with) financial institutions with the capacity to hold loans on their balance sheets.
We face competition from a diverse landscape of consumer lenders, including traditional banks and credit unions, as well as alternative technology-enabled lenders. Many of our competitors are (or are affiliated with) financial institutions with the capacity to hold loans on their balance sheets. These would include money center banks, super-banks, banks, captive finance companies of automakers and sub-prime lenders.
Removed
Item 1. Business Company Open Lending Corporation, headquartered in Austin, Texas, provides loan analytics, risk-based loan pricing, risk modeling and automated decision technology for automotive lenders throughout the United States (“U.S.”), which enables each lending institution to book near-prime and non-prime automotive loans, coupled with real-time underwriting of loan default insurance, out of their existing business flow.
Added
Through the claims management process, we ultimately obtain loan life performance data on each insured loan. Having granular origination and performance data allows our data scientists and actuaries to evolve and refine risk models, based on actual experience and third-party information sources.
Removed
We also operate as a third-party administrator that adjudicates insurance claims and premium adjustments on automotive loans. Nebula Acquisition Corporation (“Nebula”) was originally incorporated in Delaware on October 2, 2017 as a special purpose acquisition company for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.
Added
We seek to make this market more competitive, resulting in more attractive loan terms. We operate a business-to-business model. Our customers are automotive lenders. LPP enables automotive lenders to expand their lending guidelines to offer loans to borrowers with lower credit scores, potentially leading to increased loan originations and higher loan advance rates.
Removed
Refer to Note 3—Business Combination for further discussion on the Business Combination. We have evaluated how the Company is organized and managed and have identified only one operating segment. All of our operations and assets are in the U.S., and all of our revenues are attributable to U.S. customers.
Added
On February 15, 2024, we entered into a program management agreement with Starstone Specialty Insurance Company, an affiliate of Core Specialty Insurance Holdings, Inc. (“Core Specialty”), to provide auto loan default insurance policies for LPP certified loans, from which we expect to earn profit share revenue and claims administration fees.
Removed
Traditional automotive lenders focus on prime borrowers, where an efficient market has developed with interest rate competition that benefits borrowers. Borrowers who must utilize the near-prime and non-prime automotive lending market have fewer lenders focused on loans with longer terms or higher interest rates.
Added
Corporate History Nebula Acquisition Corporation (“Nebula”) was originally incorporated in Delaware on October 2, 2017 as a special purpose acquisition company.
Removed
In addition, on January 24, 2023, Continental Casualty Company (“CNA”), one of our insurance carriers, informed us of their intent not to renew their producer and claims service agreements with us when they expire on December 31, 2023.
Added
Following the Business Combination, Nebula Parent Corp., the parent company of Nebula, changed its name to Open Lending Corporation. Our principal executive office is located at 1501 S. Mopac Expressway, Suite 450, Austin, Texas 78746, and our telephone number is (512) 892-0400. 9 Available Information Our website address is www.openlending.com and our investor relations website is investors.openlending.com.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
In the future, we may become party to legal matters and claims arising in the ordinary course of business, the resolution of which we do not anticipate would have a material adverse impact on our financial position, results of operations or cash flows. Item 4. Mine Safety Disclosures None. 29 PART II
In the future, we may become party to legal matters and claims arising in the ordinary course of business, the resolution of which we do not anticipate would have a material adverse impact on our financial position, results of operations or cash flows. Item 4. Mine Safety Disclosures. None. 31 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+0 added−1 removed7 unchanged
The current Peer Group tracks the weighted average stock price performance of equity securities of nine companies in our industry, including Green Dot Corporation, Jack Henry & Associates, Inc., LendingClub Corporation, Pagaya Technologies Ltd., Paymentus Holdings, Inc., Q2 Holdings, Inc., Repay Holdings Corporation, SoFi Technologies, Inc. and Upstart Holdings, Inc.
The Peer Group tracks the weighted average stock price performance of equity securities of nine companies in our industry, including Green Dot Corporation, Jack Henry & Associates, Inc., LendingClub Corporation, Pagaya Technologies Ltd., Paymentus Holdings, Inc., Q2 Holdings, Inc., Repay Holdings Corporation, SoFi Technologies, Inc. and Upstart Holdings, Inc.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table sets forth information with respect to our repurchases of shares of common stock during the three months ended December 31, 2022.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table sets forth information with respect to our repurchases of shares of common stock during the three months ended December 31, 2023.
Equity Compensation Plan Information The information concerning our equity compensation plans is incorporated by reference herein to the section in our definitive Proxy Statement for the 2023 Annual Meeting of Stockholders (“2023 Proxy Statement”) entitled “ Equity Compensation Plan Information. ” 30 Performance Graph The graph below shows the cumulative total stockholder return of an investment of $100.00 at market close on the Closing Date of the Business Combination, in (i) our common stock, (ii) the S&P 500 Index, and (iii) common stock of a selected group of peer issuers (the “Peer Group”).
Equity Compensation Plan Information The information concerning our equity compensation plans is incorporated by reference herein to the section in our definitive Proxy Statement for the 2024 Annual Meeting of Stockholders (“2024 Proxy Statement”) entitled “ Equity Compensation Plan Information. ” 32 Performance Graph The graph below shows the cumulative total stockholder return of an investment of $100.00 at market close on the Closing Date of the Business Combination, in (i) our common stock, (ii) the S&P 500 Index, and (iii) common stock of a selected group of peer issuers (the “Peer Group”).
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the Nasdaq under the symbol “LPRO.” As of February 27, 2023, there were 24 registered stockholders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is traded on the Nasdaq under the symbol “LPRO.” As of February 27, 2024, there were 23 registered stockholders of record.
Our common stock had a closing stock price of $13.75 on the Closing Date, and the stock price performance shown in the graph below is based on historical data and is not indicative of, nor intended to forecast, future stock price performance of our stock. 31 Item 6. [Reserved] 32 Item 7.
Our common stock had a closing stock price of $13.75 on the Closing Date, and the stock price performance shown in the graph below is based on historical data and is not indicative of, nor intended to forecast, future stock price performance of our stock. 33 Item 6. [Reserved] 34 Item 7.
Future share repurchases are subject to the business judgment of our Board of Directors, taking into consideration our historical and projected results of operations, financial condition, cash flows, capital requirements, covenant compliance, current economic environment and other factors considered relevant. As of December 31, 2022, we had $57.0 million available under the Share Repurchase Program.
Future share repurchases are subject to the business judgment of our Board of Directors, taking into consideration our historical and projected results of operations, financial condition, cash flows, capital requirements, covenant compliance, current economic environment and other factors considered relevant. As of December 31, 2023, we had $19.6 million available under the Share Repurchase Program.
(2) On November 17, 2022, our Board of Directors authorized share repurchases under a share repurchase program (the “Share Repurchase Program”) for up to $75.0 million, effective through November 17, 2023.
(2) Our Board of Directors authorized share repurchases under the Share Repurchase Program for up to $75.0 million effective through March 31, 2024.
Period Total number of shares purchased (1) Average price paid per share Total number of shares purchased as part of publicly announced plans or programs (2) Approximate dollar value of shares that may yet be purchased under the plans or programs (in millions) (2) 10/1/2022-10/31/2022 17,327 $ 7.18 — $ — 11/1/2022-11/30/2022 357,101 $ 6.95 356,525 $ 72.5 12/1/2022-12/31/2022 2,286,781 $ 6.80 2,286,781 $ 57.0 Total 2,661,209 2,643,306 (1) Includes 17,327, 576 and no shares purchased from employees to satisfy their tax withholding obligations related to share-based awards that vested during the months of October, November and December 2022, respectively.
Period Total number of shares purchased (1) Average price paid per share Total number of shares purchased as part of publicly announced plans or programs (2) Approximate dollar value of shares that may yet be purchased under the plans or programs (in millions) (2) 10/1/2023-10/31/2023 127,347 $ 6.84 — $ 25.6 11/1/2023-11/30/2023 527,787 $ 6.08 519,663 $ 22.5 12/1/2023-12/31/2023 423,238 $ 6.83 416,475 $ 19.6 Total 1,078,372 936,138 (1) Includes 127,347 shares in October 2023, 8,124 shares in November 2023 and 6,763 shares in December 2023 purchased from employees to satisfy their tax withholding obligations related to share-based awards that vested during those months.
Removed
The Peer Group has changed from the prior year to replace Equifax Inc., FleetCor Technologies, Inc., TransUnion, Verisk Analytics, Inc. and WEX Inc. with other more comparable peer companies in the same industry.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

76 edited+13 added−39 removed199 unchanged
In addition, our results of operations could be below the expectations of public market analysts and investors due to a number of potential factors, including the following: • variations in our quarterly or annual results of operations; • additions or departures of key management personnel; • the loss of key automotive lenders or a reduction in the amount of certified loans generated by such lenders; • changes in our earnings estimates (if provided) or failure to meet analysts’ earnings estimates; • publication of research reports about our industry, litigation and government investigations; • changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business; • adverse market reaction to any indebtedness we may incur or securities we may issue in the future; • changes in market valuations of similar companies or speculation in the press or the investment community with respect to us or our industry; • adverse announcements by us or others and developments affecting us; • announcements by our competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures or capital commitments; • actions by institutional stockholders; and • increases in market interest rates that may lead investors in our shares to demand a higher yield, and in response the market price of shares of our common stock could decrease significantly.
In addition, our results of operations could be below the expectations of public market analysts and investors due to a number of potential factors, including the following: • variations in our quarterly or annual results of operations; • additions or departures of key management personnel; • the loss of key automotive lenders or a reduction in the amount of certified loans generated by such lenders; • changes in our earnings estimates (if provided) or failure to meet analysts’ earnings estimates; • publication of research reports about our industry, litigation and government investigations; • changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business; • adverse market reaction to any indebtedness we may incur or securities we may issue in the future; • changes in market valuations of similar companies or speculation in the press or the investment community with respect to us or our industry; • adverse announcements by us or others and developments affecting us; • announcements by our competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures or capital commitments; • actions by institutional stockholders; and 26 • increases in market interest rates that may lead investors in our shares to demand a higher yield, and in response the market price of shares of our common stock could decrease significantly.
Risks Related to Our Common Stock • An active trading market for our common stock may not be sustained, which may make it difficult to sell the shares of our common stock purchased by our stockholders. • The market price of our common stock has been and may continue to be volatile, which could cause the value of our stockholders’ investment to decline. • Because we have no current plans to pay cash dividends on our common stock, our stockholders may not receive any return on investment unless they sell our common stock for a price greater than the purchase price. • Certain provisions of our certificate of incorporation and bylaws could hinder, delay or prevent a change in control, which could adversely affect the price of our common stock.
Risks Related to Ownership of Our Common Stock • An active trading market for our common stock may not be sustained, which may make it difficult to sell the shares of our common stock purchased by our stockholders. • The market price of our common stock has been and may continue to be volatile, which could cause the value of our stockholders’ investment to decline. • Because we have no current plans to pay cash dividends on our common stock, our stockholders may not receive any return on investment unless they sell our common stock for a price greater than the purchase price. • Certain provisions of our certificate of incorporation and bylaws could hinder, delay or prevent a change in control, which could adversely affect the price of our common stock.
Given the complex, rapidly changing and competitive technological and business environment in which we operate, and the potential risks and uncertainties of intellectual property-related litigation, an assertion of an infringement claim against us may cause us to spend significant amounts to defend the claim (even if we ultimately prevail), pay significant monetary damages, lose significant revenues, be prohibited from using the relevant systems, processes, technologies or other intellectual property (temporarily or permanently), cease offering certain products or services, or incur significant license, royalty or technology development expenses.
Given the complex, rapidly changing and competitive technological and business environment in which we operate, and the potential risks and uncertainties of intellectual property-related litigation, an assertion of an infringement claim against us may cause us to spend significant amounts to defend the claim (even if we ultimately prevail), pay significant monetary damages, lose significant revenues, be prohibited from using the relevant systems, processes, technologies or other intellectual property 20 (temporarily or permanently), cease offering certain products or services, or incur significant license, royalty or technology development expenses.
The 2022 Credit Agreement contains affirmative and negative covenants customarily applicable to senior secured credit facilities, including covenants that, among other things, will limit or restrict the ability of the loan parties, subject to negotiated exceptions, to incur additional indebtedness and additional liens on their assets, engage in mergers or acquisitions or dispose of assets, pay dividends or make other distributions, voluntarily prepay other indebtedness, enter into transactions with affiliated persons, make investments, and change the nature of their businesses.
The Credit Agreement contains affirmative and negative covenants customarily applicable to senior secured credit facilities, including covenants that, among other things, will limit or restrict the ability of the loan parties, subject to negotiated exceptions, to incur additional indebtedness and additional liens on their assets, engage in mergers or acquisitions or dispose of assets, pay dividends or make other distributions, voluntarily prepay other indebtedness, enter into transactions with affiliated persons, make investments, and change the nature of their businesses.
If any regulatory agency’s assessment of the quality of automotive lenders’ assets, operations, lending practices, investment practices or other aspects of their business changes, or those with respect to insurance carriers, it may materially reduce automotive lenders’ or insurance carriers’ earnings, capital ratios and share price in such a way that affects our business.
If any regulatory agency’s assessment of the quality of automotive lenders’ assets, operations, lending practices, 23 investment practices or other aspects of their business changes, or those with respect to insurance carriers, it may materially reduce automotive lenders’ or insurance carriers’ earnings, capital ratios and share price in such a way that affects our business.
There is no assurance that any future settlements will not have a material adverse effect on our business. 23 In addition, the laws and regulations applicable to us are subject to administrative or judicial interpretation. Some of these laws and regulations have been enacted only recently and may not yet have been interpreted or may be interpreted infrequently.
There is no assurance that any future settlements will not have a material adverse effect on our business. In addition, the laws and regulations applicable to us are subject to administrative or judicial interpretation. Some of these laws and regulations have been enacted only recently and may not yet have been interpreted or may be interpreted infrequently.
There has been some turnover in automotive lenders, as well as varying activation rates and volatility in usage of our platform by automotive lenders, and this may continue or increase in the future. Agreements with automotive lenders are cancellable on thirty days’ notice and do not require any minimum monthly level of application submissions.
There has been some turnover in automotive lenders, as well as varying activation rates and volatility in usage of 11 our platform by automotive lenders, and this may continue or increase in the future. Agreements with automotive lenders are cancellable on thirty days’ notice and do not require any minimum monthly level of application submissions.
The 2022 Credit Agreement also contains customary events of default (subject to thresholds and grace periods), including payment default, covenant default, cross default to other material indebtedness, and judgment defaults. Our ability to comply with these covenants may be affected by events beyond our control, such as market fluctuations impacting net income.
The Credit Agreement also contains customary events of default (subject to thresholds and grace periods), including payment default, covenant default, cross default to other material indebtedness, and judgment defaults. Our ability to comply with these covenants may be affected by events beyond our control, such as market fluctuations impacting net income.
Certain of our vendor agreements are terminable on little or no notice, and if current vendors were to stop providing services to us on acceptable terms, we may be unable to procure alternatives from other vendors in a timely and efficient manner and on acceptable terms (or at all).
Certain of our vendor agreements are terminable on little or no notice, and if current vendors were to stop providing services to us on acceptable terms, we may be unable to 15 procure alternatives from other vendors in a timely and efficient manner and on acceptable terms (or at all).
In the event that one or more of our significant automotive lenders, or groups of automotive lenders terminate their relationships with us, or if one or more of our significant automotive lenders generates significantly fewer certified loans, the number of loans originated through LPP would decline, which would materially and adversely affect our business and, in turn, our revenue.
In the event that one or more of our significant automotive lenders, or groups of automotive lenders terminate their relationships with us, or if one or more of our 12 significant automotive lenders generates significantly fewer certified loans, the number of loans originated through LPP would decline, which would materially and adversely affect our business and, in turn, our revenue.
As a result of such competition, we may be unable to acquire certain assets or businesses, or take advantage of other strategic investment opportunities that we deem attractive; the purchase price for a given strategic opportunity may be significantly elevated; or certain other terms or circumstances may be substantially more onerous.
As a result of such competition, 21 we may be unable to acquire certain assets or businesses, or take advantage of other strategic investment opportunities that we deem attractive; the purchase price for a given strategic opportunity may be significantly elevated; or certain other terms or circumstances may be substantially more onerous.
Though it is difficult to determine what, if any, harm 14 may directly result from any specific interruption or attack, any failure to maintain performance, reliability, security and availability of our products to the satisfaction of our customers and their consumers may harm our reputation and our ability to retain existing customers.
Though it is difficult to determine what, if any, harm may directly result from any specific interruption or attack, any failure to maintain performance, reliability, security and availability of our products to the satisfaction of our customers and their consumers may harm our reputation and our ability to retain existing customers.
Although automotive lenders generally are under no obligation to use LPP in generating their loans, the integrated loan and insurance offering by 12 LPP encourages the use of LPP by automotive lenders. Any adverse accounting determinations concerning loans generated by automotive lenders using LPP could negatively affect further adoption of LPP.
Although automotive lenders generally are under no obligation to use LPP in generating their loans, the integrated loan and insurance offering by LPP encourages the use of LPP by automotive lenders. Any adverse accounting determinations concerning loans generated by automotive lenders using LPP could negatively affect further adoption of LPP.
Further, we may incur significant costs to resolve any such disruptions in service, which could adversely affect our business. 15 Litigation, regulatory actions and compliance issues could subject us to significant fines, penalties, judgments, remediation costs and/or requirements resulting in increased expenses.
Further, we may incur significant costs to resolve any such disruptions in service, which could adversely affect our business. Litigation, regulatory actions and compliance issues could subject us to significant fines, penalties, judgments, remediation costs and/or requirements resulting in increased expenses.
We may also raise capital through equity financings in the future. As part of our business strategy, we may acquire or make investments in complementary 27 companies, products, or technologies and issue equity securities to pay for any such acquisition or investment.
We may also raise capital through equity financings in the future. As part of our business strategy, we may acquire or make investments in complementary companies, products, or technologies and issue equity securities to pay for any such acquisition or investment.
These events could interrupt our business or operations, result in 16 significant legal and financial exposure, supervisory liability, damage to our reputation and a loss of confidence in the security, confidentiality and integrity of our systems, products and services.
These events could interrupt our business or operations, result in significant legal and financial exposure, supervisory liability, damage to our reputation and a loss of confidence in the security, confidentiality and integrity of our systems, products and services.
There also may be risks that exist, or that develop in the future, that 20 we have not appropriately anticipated, identified or mitigated, including when processes are changed or new products and services are introduced.
There also may be risks that exist, or that develop in the future, that we have not appropriately anticipated, identified or mitigated, including when processes are changed or new products and services are introduced.
Recently, the credit markets have experienced instability, resulting in credit and liquidity concerns and increased loan default 11 rates. Many lenders have subsequently reduced their willingness to make new loans and have tightened their credit requirements.
Recently, the credit markets have experienced instability, resulting in credit and liquidity concerns and increased loan default rates. Many lenders have subsequently reduced their willingness to make new loans and have tightened their credit requirements.
The access by unauthorized persons to, or the improper disclosure by us of, confidential information regarding consumers, LPP customers or our proprietary information, software, methodologies and business secrets could interrupt our business or operations, result in significant legal and financial exposure, supervisory liability, damage to our reputation or a loss of confidence in the security, confidentiality and integrity of our systems, products and services, all of which could have a material adverse impact on our business.
The access by unauthorized persons to, or the improper disclosure by us of, confidential information regarding consumers, LPP customers or our proprietary information, software, methodologies and business secrets could interrupt our business or operations, result in significant legal and financial exposure, supervisory liability, damage to our reputation or a loss of confidence in the security, confidentiality and integrity of our systems, products and services, all of which could have a material adverse impact on our business, financial condition, and results of operations.
Insurance producing and 21 claims administration services subject us to state regulation on a 50-state basis. The complex regulatory environment of the credit and insurance industries are subject to constant change and modification.
Insurance producing and claims administration services subject us to state regulation on a 50-state basis. The complex regulatory environment of the credit and insurance industries are subject to constant change and modification.
Our business would suffer if we fail to attract and retain highly skilled employees. Our future success will depend on our ability to identify, hire, develop, motivate and retain highly qualified personnel for all areas of our organization, particularly information technology and sales. Trained and experienced personnel are in high demand and are in short supply.
Our business would suffer if we failed to attract and retain highly skilled employees. Our future success will depend on our ability to identify, hire, develop, motivate and retain highly qualified personnel for all areas of our organization, particularly information technology and sales. Trained and experienced personnel are in high demand and are in short supply.
Breaches of these covenants will result in a default under the 2022 Credit Agreement, subject to any applicable cure rights, in which case the administrative agent may accelerate the outstanding term loan. 19 If such acceleration under the 2022 Credit Agreement occurs, our ability to fund operations could be seriously harmed.
Breaches of these covenants will result in a default under the Credit Agreement, subject to any applicable cure rights, in which case the administrative agent may accelerate the outstanding term loan. If such acceleration under the Credit Agreement occurs, our ability to fund operations could be seriously harmed.
Borrowings under the 2022 Credit Agreement bear interest at a variable rate based on the net secured leverage ratio. Our obligations under the 2022 Credit Agreement are guaranteed by all of our subsidiaries and secured by substantially all of our assets and substantially all of our subsidiaries’ assets, in each case, subject to certain customary exceptions.
Borrowings under the Credit Facilities bear interest at a variable rate based on the net secured leverage ratio. Our obligations under the Credit Agreement are guaranteed by all of our subsidiaries and secured by substantially all of our assets and substantially all of our subsidiaries’ assets, in each case, subject to certain customary exceptions.
A significant percentage of our program fee revenue is concentrated with our top ten automotive lenders, and the loss of one or more significant automotive lenders could have a negative impact on operating results. Our top ten automotive lenders (including certain groups of affiliated automotive lenders) accounted for a significant percentage of the total program fee revenue in 2022.
A significant percentage of our program fee revenue is concentrated with our top ten automotive lenders, and the loss of one or more significant automotive lenders could have a negative impact on operating results. Our top ten automotive lenders (including certain groups of affiliated automotive lenders) accounted for a significant percentage of the total program fee revenue in 2023.
Our future growth will depend, among other things, on our ability to maintain an operating platform and management system sufficient to address growth and will require us to incur significant additional expenses and to commit additional senior management and operational resources. 13 As a result of our growth, we face significant challenges in: • securing commitments from existing and new automotive lenders to provide loans to consumers; • maintaining existing and developing new relationships with additional automotive lenders; • maintaining adequate financial, business and risk controls; • training, managing and appropriately sizing workforce and other components of business on a timely and cost-effective basis; • navigating complex and evolving regulatory and competitive environments; • increasing the number of borrowers in, and the volume of loans facilitated through, LPP; • entering into new markets and introducing new solutions; • continuing to revise proprietary credit decisioning and scoring models; • continuing to develop, maintain and scale our platform; • effectively using limited personnel and technology resources; • maintaining the security of our platform and the confidentiality of the information (including personally identifiable information) provided and utilized across our platform; and • attracting, integrating and retaining an appropriate number of qualified employees.
Our future growth will depend, among other things, on our ability to maintain an operating platform and management system sufficient to address growth and will require us to incur significant additional expenses and to commit additional senior management and operational resources. 13 As a result of our growth, we may face significant challenges in: • securing commitments from existing and new automotive lenders to provide loans to consumers; • maintaining existing and developing new relationships with additional automotive lenders; • maintaining existing and developing new relationships with additional insurance carriers; • maintaining adequate financial, business and risk controls; • implementing and maintaining internal controls and the accuracy and timeliness of our financial reporting; • training, managing and appropriately sizing workforce and other components of business on a timely and cost-effective basis; • navigating complex and evolving regulatory and competitive environments; • increasing the number of borrowers in, and the volume of loans facilitated through, LPP; • entering into new markets and introducing new solutions; • continuing to revise proprietary credit decisioning and scoring models; • continuing to develop, maintain and scale our platform; • effectively using limited personnel and technology resources; • maintaining the security of our platform and the confidentiality of the information (including personally identifiable information) provided and utilized across our platform; and • attracting, integrating and retaining an appropriate number of qualified employees.
While we regularly conduct security assessments of significant third-party service providers, no assurance is given that our third-party information security protocols are sufficient to withstand a cyber-attack or other security breach.
We regularly conduct security assessments of significant third-party service providers, but no assurance is given that our third-party information security protocols are sufficient to withstand a cyber-attack or other security breach.
The producer and claims service agreements with these insurance carriers generally contain customary termination provisions that allow them to terminate the agreement upon written notice after the occurrence of certain events including, among other things, breach of the producer agreement; changes in regulatory requirements making the agreement unenforceable; or for convenience once the agreement’s fixed term has come to an end.
The producer and claims service agreements with these insurance carriers generally contain customary termination provisions that allow them to terminate the agreement upon written notice after the occurrence of certain events including, among other things, breach of the producer agreement; changes in regulatory requirements making the agreement unenforceable; or for convenience once a specified term has come to an end.
As of December 31, 2022, a significant portion of the outstanding shares of our common stock is held by entities affiliated with us and our executive officers and directors.
As of December 31, 2023, a significant portion of the outstanding shares of our common stock is held by entities affiliated with us and our executive officers and directors.
If we lose one or more of our insurance carriers and are unable to replace their commitments, it could have a material adverse effect on our business. As of December 31, 2022, we relied on four insurance carriers to insure the loans generated by the automotive lenders using LPP.
If we lose one or more of our insurance carriers and are unable to replace their commitments, it could have a material adverse effect on our business. As of December 31, 2023, we relied on three insurance carriers to insure the loans generated by the automotive lenders using LPP.
If we were found to be in violation of applicable state licensing requirements by a court or a state, federal, or local enforcement agency, we could be subject to fines, damages, injunctive relief (including required modification or discontinuation of our business in certain areas), criminal penalties and other penalties or consequences, and the loans originated through LPP could be rendered void or unenforceable in whole or in part, any of which could have a material adverse effect on our business. 24 We may in the future be subject to federal or state regulatory inquiries regarding our business.
If we were found to be in violation of applicable state licensing requirements by a court or a state, federal, or local enforcement agency, we could be subject to fines, damages, injunctive relief (including required modification or discontinuation of our business in certain areas), criminal penalties and other penalties or consequences, and the loans originated through LPP could be rendered void or unenforceable in whole or in part, any of which could have a material adverse effect on our business.
Higher interest rates may also increase the payment obligations of consumers, which may reduce the ability of consumers to remain current on their obligations to automotive lenders and, therefore, lead to increased delinquencies, defaults, consumer bankruptcies and charge-offs, and decreasing recoveries, all of which could have an adverse effect on our business.
Higher interest rates have also increased the payment obligations of consumers, which has reduced and may continue to reduce the ability of consumers to remain current on their obligations to automotive lenders and, therefore, has led and may continue to lead to increased delinquencies, defaults, consumer bankruptcies and charge-offs, and decreasing recoveries, all of which could have an adverse effect on our business.
With respect to state regulation, although we seek to comply with applicable state insurance, insurance brokering, insurance agency regulations, third-party administration company statutes and similar statutes in all U.S. jurisdictions, and with licensing and other requirements that we believe may be applicable to us, if we are found to not have complied with applicable laws, we could lose one or more licenses or authorizations or face other sanctions or penalties or be required to obtain a license in one or 22 more such jurisdictions, which may have an adverse effect on our ability to make LPP available to borrowers in particular states and, thus, adversely impact our business.
If we are found to have failed to comply with applicable laws, including state insurance, insurance brokering, and insurance agency regulations, third-party administration company statutes and similar statutes in all U.S. jurisdictions, and with licensing and other requirements that we believe may be applicable to us, we could lose one or more licenses or authorizations or face other sanctions or penalties or be required to obtain a license in one or more such jurisdictions, which may have an adverse effect on our ability to make LPP available to borrowers in particular states and, thus, adversely impact our business.
We have experienced rapid growth, which may be difficult to sustain, and which may place significant demands on operational, administrative and financial resources. Our growth has caused significant demands on operations, marketing, compliance and accounting infrastructure, and has resulted in increased expenses, which we expect to continue as we grow.
Our growth may be difficult to manage and may place significant demands on operational, administrative and financial resources. Our growth has caused significant demands on operations, marketing, compliance and accounting infrastructure, and has resulted in increased expenses, which we expect to continue as we grow.
Our projections, including guidance, are subject to significant risks, assumptions, estimates and uncertainties. As a result, our projected revenues, market share, expenses and profitability may differ materially from our expectations. We operate in a rapidly changing and competitive industry, and our projections will be subject to the risks and assumptions made by management with respect to our industry.
As a result, our projected revenues, market share, expenses and profitability may differ materially from our expectations. We operate in a rapidly changing and competitive industry, and our projections will be subject to the risks and assumptions made by management with respect to our industry.
While we have developed policies and procedures designed to assist in compliance with these laws and regulations, no assurance is given that our compliance policies and procedures will be effective.
No assurance is given that our compliance policies and procedures designed to assist in compliance with these laws and regulations will be effective.
The consumer lending industry is highly competitive and increasingly dynamic as emerging technologies continue to enter the marketplace. Technological advances and heightened e-commerce activities have increased consumers’ accessibility to products and services, which has intensified the desirability of offering loans to consumers through digital-based solutions.
Our success depends on our ability to generate usage of LPP. The consumer lending industry is highly competitive and increasingly dynamic as emerging technologies continue to enter the marketplace. Technological advances and heightened e-commerce activities have increased consumers’ accessibility to products and services, which has intensified the desirability of offering loans to consumers through digital-based solutions.
If an actual or perceived breach of security occurs to our systems or a third party’s systems, we could also be required to expend significant resources to mitigate the breach of security and to address matters related to any such breach, including notifying users or regulators.
If an actual or perceived breach of security occurs to our systems or a third party’s systems, we could also be required to expend significant resources to mitigate the breach of security and to address matters related to any such breach, including notifying users or regulators. Our projections, including guidance, are subject to significant risks, assumptions, estimates and uncertainties.
Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operation. 9 Summary of Risk Factors Risks Related to Our Business • Our results of operations and continued growth depend on our ability to retain existing and attract new automotive lenders, and a significant percentage of program fee revenue for us is concentrated with our top ten customers. • Our revenue is impacted, to a significant extent, by the general economy and the financial performance of automotive lenders. • The ongoing global semiconductor chip supply shortage has negatively affected, and may continue to negatively affect, our business. • Our results depend, to a significant extent, on the active and effective adoption of LPP by automotive lenders. • If we lose one or more of our insurance carriers and are unable to replace their commitments, it could have a material adverse effect on our business. • Privacy concerns or security breaches relating to LPP could result in economic loss, damage our reputation, deter users from using our products and expose us to legal penalties and liability. • Changes in market interest rates have and could continue to have an adverse effect on our business. • Our vendor relationships subject us to a variety of risks, and the failure of third parties to comply with legal or regulatory requirements or to provide various services that are important to our operations could have an adverse effect on our business. • Fraudulent activity could negatively impact our business and could cause automotive lenders to be less willing to originate loans or insurance carriers to be less willing to underwrite policies through the use of LPP. • Cyber-attacks and other security breaches could have an adverse effect on our business. • Disruptions in the operation of our computer systems and third-party data centers could have an adverse effect on our business. • If the underwriting models we use contain errors or are otherwise ineffective, our reputation and relationships with automotive lenders and insurance carriers could be harmed and could have a material adverse effect on our business. • We depend on the accuracy and completeness of information about consumers and any misrepresented information could adversely affect our business. • We rely extensively on models in managing many aspects of our business.
Summary of Risk Factors Risks Related to Our Business • Our results of operations and continued growth depend on our ability to retain existing, and attract new, automotive lenders, and a significant percentage of our program fee revenue is concentrated with our top ten automotive lenders. • Our revenue is impacted, to a significant extent, by the economic, political, and market conditions as well as the financial performance of automotive lenders. • Our results depend, to a significant extent, on the active and effective adoption of LPP by automotive lenders. • If we lose one or more of our insurance carriers and are unable to replace their commitments, it could have a material adverse effect on our business. • Changes in market interest rates have had and could continue to have an adverse effect on our business. • Privacy concerns or security breaches relating to LPP could result in economic loss, damage our reputation, deter users from using our products and expose us to legal penalties and liability. • We rely in part on third-party resellers to acquire and retain lender customers, and our failure to develop and manage these relationships effectively could adversely affect our business, results of operations, and relationships with our customers. • Our vendor relationships subject us to a variety of risks, and the failure of third parties to comply with legal or regulatory requirements or to provide various services that are important to our operations could have an adverse effect on our business. • Fraudulent activity could negatively impact our business and could cause automotive lenders to be less willing to originate loans or insurance carriers to be less willing to underwrite policies through the use of LPP. • Cyber-attacks and other security breaches could have a material adverse effect on our business. • Disruptions in the operation of our computer systems and third-party data centers could have an adverse effect on our business. • If the underwriting models we use contain errors or are otherwise ineffective, our reputation and relationships with automotive lenders and insurance carriers could be harmed. • We depend on the accuracy and completeness of information about consumers and any misrepresented information could adversely affect our business. 10 • We rely extensively on models in managing many aspects of our business.
Higher interest rates often lead to higher rates charged to the consumer, which could negatively impact the ability of automotive lenders to generate volume and in turn, our ability to generate revenues on loans originated using LPP.
Higher interest rates have led to higher rates charged to the consumer, which have negatively impacted the ability of automotive lenders to generate volume and in turn, our ability to generate revenues on loans originated using LPP.
If a significant number of existing automotive lenders decide to stop using LPP or to use other competing platforms, thereby reducing their use of LPP, it would have a material adverse effect on our business and results of operations. Our revenue is impacted, to a significant extent, by the general economy and the financial performance of automotive lenders.
If a significant number of existing automotive lenders decide to stop using LPP or to use other competing platforms, thereby reducing their use of LPP, it would have a material adverse effect on our business and results of operations.
These events also could impair the ability of third parties to provide critical services to us. All of these adverse effects of catastrophic events could result in a decrease in the use of our solution and payments to us, which could have a material adverse effect on our business.
All of these adverse effects of catastrophic events could result in a decrease in the use of our solution and payments to us, which could have a material adverse effect on our business.
As compared to our competitors, we could be subject to more stringent state or local regulations or could incur marginally greater compliance costs as a result of regulatory changes.
New laws or regulations also require us to incur significant expenses to ensure compliance. As compared to our competitors, we could be subject to more stringent state or local regulations or could incur marginally greater compliance costs as a result of regulatory changes.
Any inaccuracies or errors in our models could have an adverse effect on our business. • The consumer lending industry is highly competitive and is likely to become more competitive and our inability to compete successfully or maintain or improve our market share and margins could adversely affect our business. • We may in the future expand to new industry verticals outside of the automotive industry, and failure to comply with applicable regulations, or accurately predict demand or growth in those new industries, could have an adverse effect on our business. • The 2022 Credit Agreement (as defined hereinafter) that governs our credit facility contains various covenants that could limit our ability to engage in activities that may be in our best long-term interest. • We may be unable to sufficiently protect our proprietary rights and may encounter disputes from time to time relating to our use of the intellectual property of third parties. • Our risk management processes and procedures may not be effective. • Some aspects of our platform include open source software, and any failure to comply with the terms of one or more of these open source licenses could negatively affect our business. • To the extent that we seek to grow through future acquisitions, or other strategic investments or alliances, we may not be able to do so effectively. • The global economic impacts of Russia’s invasion of Ukraine could adversely affect our business, financial condition or operating results. 10 Risks Related to Our Regulatory Environment • We are subject to some federal and state consumer protection laws.
Any inaccuracies or errors in our models could have an adverse effect on our business. • The consumer lending industry is highly competitive and is likely to become more competitive, and our inability to compete successfully or maintain or improve our market share and margins could adversely affect our business. • We may in the future expand to new industry verticals outside of the automotive industry, and failure to comply with applicable regulations, or accurately predict demand or growth, in those new industries, could have an adverse effect on our business. • The Credit Agreement (as defined hereinafter) that governs our Credit Facilities (as defined hereinafter) contains various covenants that could limit our ability to engage in activities that may be in our best long-term interests. • We may be unable to sufficiently protect our proprietary rights and may encounter disputes from time to time relating to our use of the intellectual property of third parties. • Our risk management processes and procedures may not be effective. • Some aspects of our platform include open source software, and any failure to comply with the terms of one or more of these open source licenses could negatively affect our business.
Changes in market interest rates have and could continue to have an adverse effect on our business. The fixed interest rates charged on the loans that automotive lenders originate are calculated based upon market benchmarks at the time of origination. Market benchmarks typically rise when the U.S. Federal Reserve raises the federal funds rate, and the U.S.
The fixed interest rates charged on the loans that automotive lenders originate are calculated based upon market benchmarks at the time of origination. Market benchmarks typically rise when the U.S. Federal Reserve raises the federal funds rate, and the U.S. Federal Reserve continued raising the federal funds rate in 2023 to combat inflation.
Our business, the consumer financial services industry and automotive lenders’ businesses, are sensitive to macroeconomic conditions. Economic factors such as interest rates, inflation, changes in monetary and related policies, market volatility, consumer confidence and unemployment rates are among the most significant factors that impact consumer spending behavior.
Economic factors such as interest rates, inflation, changes in monetary and related policies, market volatility, consumer confidence and unemployment rates are among the most significant factors that impact consumer spending behavior.
Although we devote significant resources and management focus to ensuring the security, confidentiality and integrity of our systems through information security and business continuity programs, our facilities and systems, and those of automotive lenders, insurance carriers and third-party service providers, are vulnerable to external or internal security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming or human errors, and other similar events.
Our facilities and systems, and those of automotive lenders, insurance carriers and third-party service providers, are vulnerable to external or internal security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming or human errors, and other similar events.
Any reduction in usage of LPP, or a reduction in the lifetime profitability of loans under LPP in an effort to attract or retain business, could reduce our revenues and earnings.
Any reduction in usage of LPP, or a reduction in the lifetime profitability of loans under LPP in an effort to attract or retain business, could reduce our revenues and earnings. If we are unable to compete effectively for customer usage, our business could be materially and adversely affected.
To the extent inflated used car values revert to normalized levels, future decreases in used car values could increase severity of loss, which could have a material adverse impact to our profit share revenue. The ongoing global semiconductor chip supply shortage has negatively affected, and may continue to negatively affect, our business.
To the extent inflated used car values revert to normalized levels, future decreases in used car values could increase severity of loss, which could have a material adverse impact to our profit share revenue.
An inactive trading market may also impair our ability to raise capital by selling shares of capital stock, attract and motivate employees through equity incentive awards, and acquire other companies, products, or technologies by using shares of capital stock as consideration. 26 There can be no assurance that we will be able to comply with the continued listing standards of the Nasdaq.
An inactive trading market may also impair our ability to raise capital by selling shares of capital stock, attract and motivate employees through equity incentive awards, and acquire other companies, products, or technologies by using shares of capital stock as consideration.
Dealers’ sales may decrease or fail to increase as a result of factors outside of their control, such as the macroeconomic conditions referenced above, or business conditions affecting a particular automobile dealer, industry vertical or region. Weak economic conditions also could extend the length of dealers’ sales cycle and cause customers to delay making (or not make) purchases of automobiles.
Dealers’ sales may decrease or fail to increase as a result of factors outside of their control, such as the macroeconomic and political conditions referenced above, or business conditions affecting a particular automobile dealer, industry vertical or region.
Certain provisions of our certificate of incorporation and bylaws could make it more difficult for a third party to acquire us without the consent of our Board of Directors.
Certain provisions of our certificate of incorporation and bylaws could hinder, delay or prevent a change in control, which could adversely affect the price of our common stock. Certain provisions of our certificate of incorporation and bylaws could make it more difficult for a third party to acquire us without the consent of our Board of Directors.
If we are unable to compete effectively for customer usage, our business could be materially and adversely affected. 18 Because our business is heavily concentrated on consumer lending in the U.S. automobile industry, our results are more susceptible to fluctuations in that market than the results of a more diversified company would be.
Because our business is heavily concentrated on consumer lending in the U.S. automobile industry, our results are more susceptible to fluctuations in that market than the results of a more diversified company would be. Our business currently is concentrated on supporting consumer lending in the U.S. automobile industry.
We may not be able to attract, develop and maintain the skilled workforce necessary to operate our business, and labor expenses may increase as a result of a shortage in the supply of qualified personnel, which will negatively impact our business.
We may not be able to attract, develop and maintain the skilled workforce necessary to operate our business, and labor expenses may increase as a result of a shortage in the supply of qualified personnel, which will negatively impact our business. 19 The Credit Agreement that governs our Credit Facilities contains various covenants that could limit our ability to engage in activities that may be in our best long-term interests.
Our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, which may adversely affect the amount, timing and nature of our future offerings. 28 Certain provisions of our certificate of incorporation and bylaws could hinder, delay or prevent a change in control, which could adversely affect the price of our common stock.
Our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, which may adversely affect the amount, timing and nature of our future offerings.
Consumer finance and insurance regulation is constantly changing, and new laws or regulations, or new interpretations of existing laws or regulations, could have a material adverse impact on our ability to operate as currently intended.
Consumer finance and insurance regulation is constantly changing, and new laws or regulations, or new interpretations of existing laws or regulations, could have a material adverse impact on our ability to operate as currently intended. 22 These regulatory changes and uncertainties make our business planning more difficult and could result in changes to our business model and potentially adversely impact results of operations.
These computer systems and third-party data centers may encounter service interruptions at any time due to system or software failure, natural disasters, severe weather conditions, pandemics, terrorist attacks, cyber-attacks or other events. Any such catastrophes could have a negative effect on our business and technology infrastructure (including our computer network systems), on automotive lenders and insurance carriers and on consumers.
These computer systems and third-party data centers may encounter service interruptions at any time due to system or software failure, natural disasters, severe weather conditions, pandemics, terrorist attacks, cyber-attacks or other events.
The declaration, amount and payment of any future dividends will be at the sole discretion of our Board of Directors.
We have no current plans to pay cash dividends on our common stock. The declaration, amount and payment of any future dividends will be at the sole discretion of our Board of Directors.
LPP is vulnerable to software bugs, computer viruses, internet worms, break-ins, phishing attacks, attempts to overload servers with denial-of-service, or other attacks or similar disruptions, any of which could lead to system interruptions, delays, or shutdowns, causing loss of critical data or the unauthorized access of data.
Techniques used to gain unauthorized access to data and systems, disable or degrade service, or sabotage systems, are constantly evolving, and we may be unable to anticipate such techniques or implement adequate preventative measures to avoid unauthorized access or other adverse impacts to such data or our systems. 14 LPP is vulnerable to software bugs, computer viruses, internet worms, break-ins, phishing attacks, attempts to overload servers with denial-of-service, or other attacks or similar disruptions, any of which could lead to system interruptions, delays, or shutdowns, causing loss of critical data or the unauthorized access of data.
As a result, the outcome of legal and regulatory actions arising out of any state or federal inquiries we receive could be material to our business, results of operations, financial condition and cash flows and could have a material adverse effect on our business, financial condition or results of operations.
As a result, the outcome of legal and regulatory actions arising out of any state or federal inquiries we receive could be material to our business, results of operations, financial condition and cash flows and could have a material adverse effect on our business, financial condition or results of operations. 25 Risks Related to Ownership of Our Common Stock An active trading market for our common stock may not be sustained, which may make it difficult to sell the shares of our common stock purchased by our stockholders.
Federal Reserve is widely expected to continue raising the federal funds rate in 2023 to combat inflation. Any such increases in the market benchmark would result in increases in the interest rates on new loans. Increased interest rates have and may continue to adversely impact the spending levels of consumers and their ability and willingness to borrow money.
These increases in the market benchmark resulted in increases in the interest rates on new loans. Increased interest rates have impacted and may continue to adversely impact the spending levels of consumers and their ability and willingness to borrow money.
These anti-takeover provisions could substantially impede stockholders’ ability to benefit from a change in control or change our management and board of directors and, as a result, may adversely affect the market price of our common stock and stockholders’ ability to realize any potential change of control premium.
These anti-takeover provisions could substantially impede stockholders’ ability to benefit from a change in control or change our management and board of directors and, as a result, may adversely affect the market price of our common stock and stockholders’ ability to realize any potential change of control premium. 28 Our amended and restated bylaws designate specific courts as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.
A failure to maintain and/or improve current technology and business processes could cause disruptions in our operations or cause our solution to be less competitive, all of which could have a material adverse effect on our business. 17 If the underwriting models we use contain errors or are otherwise ineffective, our reputation and relationships with automotive lenders and insurance carriers could be harmed.
A failure to maintain and/or improve current technology and business processes could cause disruptions in our operations or cause our solution to be less competitive, all of which could have a material adverse effect on our business.
If any of our other insurance carriers were to terminate their agreements with us and we are unable to replace their commitments, it could have a material adverse effect on our business, operations and financial condition. Our financial condition and results of operations have been and may continue to be adversely affected by the impact of the COVID-19 pandemic.
If any of our other insurance carriers were to terminate their agreements with us and we are unable to replace their commitments through new or existing insurance carriers, it could have a material adverse effect on our business, operations and financial condition. Changes in market interest rates have had and could continue to have an adverse effect on our business.
Any significant inaccuracies or errors in assumptions could impact the profitability of the products to automotive lenders, as well as the profitability of our business, and could result in our underestimating potential losses and overstating potential automotive lender returns.
Any significant inaccuracies or errors in assumptions could impact the profitability of the products to automotive lenders, as well as the profitability of our business, and could result in our underestimating potential losses and overstating potential automotive lender returns. 18 The consumer lending industry is highly competitive and is likely to become more competitive, and our inability to compete successfully or maintain or improve our market share and margins could adversely affect our business.
The decline of sales by dealers for any reason will generally result in lower credit sales and, therefore, lower loan volume and associated fee income for automotive lenders, and therefore, for us. This risk is particularly acute with respect to the largest automobile dealers associated with automotive lenders that account for a significant amount of our platform revenue.
This risk is particularly acute with respect to the largest automobile dealers associated with automotive lenders that account for a significant amount of our platform revenue.
In addition, significant increases in fraudulent activity could also lead to regulatory intervention, which could increase our costs and also negatively impact our business. Cyber-attacks and other security breaches could have an adverse effect on our business. In the normal course of our business, we collect, process and retain sensitive and confidential information regarding automotive lenders, insurance carriers and consumers.
In addition, significant increases in fraudulent activity could also lead to regulatory intervention, which could increase our costs and also negatively impact our business. 16 Cyber-attacks and other security breaches could have a material adverse effect on our business.
Because we have no current plans to pay cash dividends on our common stock, our stockholders may not receive any return on investment unless our common stock can be sold for a price greater than the purchase price. We have no current plans to pay cash dividends on our common stock.
So long as they continue to own a significant amount of the combined voting power, even if such amount is less than 50%, they will continue to be able to strongly influence decisions of the Company. 27 Because we have no current plans to pay cash dividends on our common stock, our stockholders may not receive any return on investment unless our common stock can be sold for a price greater than the purchase price.
The CFPB has filed a large number of UDAAP enforcement actions against consumer lenders for practices that do not appear to violate other consumer finance statutes. There is a risk that the CFPB could determine that certain features of automotive lender loans are unfair, deceptive or abusive, which could have a material adverse effect on our business.
The CFPB has filed a large number of UDAAP enforcement actions against consumer lenders for practices that do not appear to violate other consumer finance statutes.
Regulations relating to privacy, information security, and data protection could increase our costs, affect or limit how we collect and use personal information, and adversely affect our business opportunities. We are subject to various privacy, information security and data protection laws, including requirements concerning security breach notification, and our business could be negatively impacted by them.
We are subject to various privacy, information security and data protection laws, including requirements concerning security breach notification, and our business could be negatively impacted by them. For example, in connection with our administration of LPP, we are subject to the GLBA and implementing regulations and guidance.
Our executive officers and directors and certain affiliated stockholders own a significant portion of the outstanding voting stock of the Company as of the date of this report. Each share of our common stock initially entitles stockholders to one vote on all matters presented to stockholders generally.
Each share of our common stock initially entitles stockholders to one vote on all matters presented to stockholders generally.
We also have arrangements with certain third-party service providers that require us to share consumer information.
In the normal course of our business, we collect, process and retain sensitive and confidential information regarding automotive lenders, insurance carriers and consumers. We also have arrangements with certain third-party service providers that require us to share consumer information.
If actual results differ from our estimates, analysts may negatively react, and our stock price could be materially and adversely impacted.
If actual results differ from our estimates, analysts may negatively react, and our stock price could be materially and adversely impacted. We rely in part on third-party resellers to acquire and retain lender customers, and our failure to develop and manage these relationships effectively could adversely affect our business, results of operations, and relationships with our customers.
Our 2022 Credit Agreement (as defined hereinafter) provides for credit facilities (“Credit Facilities”) consisting of a senior secured term loan facility of up to $150.0 million along with a senior secured revolving loan facility of up to $150.0 million at any time outstanding.
The Credit Agreement, dated as of March 19, 2021, by and among the Company, Wells Fargo, N.A., as administrative agent, and the financial institutions party thereto as lenders, as amended by the First Amendment to Credit Agreement, dated as of September 9, 2022 (collectively, the “Credit Agreement”), provides for credit facilities consisting of a senior secured term loan facility of up to $150 million (the “Term Loan due 2027”) along with a senior secured revolving loan facility of up to $150 million at any time outstanding (the “revolving Credit Facility” and, together with the Term Loan due 2027, the “Credit Facilities”).
The outcome of any litigation cannot be guaranteed, and adverse outcomes affect us negatively. 25 Our executive officers, directors and principal stockholders control us and their interests may conflict with the interests of our other stockholders in the future.
Our executive officers, directors and principal stockholders control us, and their interests may conflict with the interests of our other stockholders in the future. Our executive officers and directors and certain affiliated stockholders own a significant portion of the outstanding voting stock of the Company as of the date of this Annual Report.
In that event, the price of our common stock could decline, perhaps significantly.
In that event, the price of our common stock could decline, perhaps significantly. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operation.
CNA will continue to provide auto loan default insurance policies for LPP certified loans until the terms of their producer and claims service agreements expire on December 31, 2023, unless mutual agreements with CNA are reached to transition new originations to our other insurance carriers prior to December 31, 2023.
On December 31, 2023, CNA’s producer and claims service agreements with us expired. CNA will no longer provide auto loan default insurance policies for LPP certified loans. As of the date of this Annual Report, we partner with AmTrust North America, Inc., American National Insurance Company, Arch Insurance North America, and Core Specialty.
Removed
Risks Related to the Business Combination and Integration of Businesses • Our management has limited experience in operating a public company. • We have and may continue to incur significant increased expenses and administrative burdens as a public company, which could have an adverse effect on our business, financial condition and results of operations.
Added
Risks Related to Our Regulatory Environment • We are subject to some federal and state consumer protection laws.
Removed
New vehicle production has declined substantially in 2021 and 2022 as compared to prior years, due in large part to the global semiconductor chip supply shortage and related supply chain disruptions. As a result, new vehicle inventory in the U.S. in 2021 and 2022 was appreciably lower than in prior years.
Added
Our revenue is impacted, to a significant extent, by the economic, political and market conditions as well as the financial performance of automotive lenders. Our business, the consumer financial services industry and automotive lenders’ businesses, are sensitive to macroeconomic conditions.

… 48 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+1 added−0 removed2 unchanged
Concentration Risk We rely on our three largest insurance partners for a significant portion of our profit share and claims administration service fees revenue. Termination or disruption of these relationships could materially and adversely impact our revenue.
Concentration Risk We rely on our largest insurance partner for a significant portion of our profit share and claims administration service fees revenue. Termination or disruption of these relationships could materially and adversely impact our revenue.
Consumer spending and borrowing patterns related to auto purchases are influenced by economic factors such as unemployment rates, inflation, interest rate levels, changes in monetary and related policies, market volatility, and overall consumer confidence.
Consumer spending and borrowing patterns related to auto purchases are influenced by economic factors such as unemployment rates, inflation, fluctuating interest rates, changes in monetary and related policies, market volatility, and overall consumer confidence.
We are also charged an unused commitment fee that ranges from 0.15% to 0.225% per annum on the average daily unused portion of the New Revolving Credit Facility, which is paid quarterly in arrears and is based on our total net leverage ratio. 45 Item 8.
The spread ranges from 1.625% to 2.375% per annum for Adjusted SOFR loans. We are also charged an unused commitment fee that ranges from 0.15% to 0.225% per annum on the average daily unused portion of the Revolving Credit Facility, which is paid quarterly in arrears and is based on our total net leverage ratio. 47 Item 8.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Our operations include activities in the U.S. These operations expose us to a variety of market risks, including the effects of changes in interest rates and changes in consumer attitudes toward vehicle ownership. We monitor and manage these financial exposures as an integral part of our overall risk management program.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Our operations include activities in the U.S. These operations expose us to a variety of market risks, including the effects of changes in interest rates and changes in consumer attitudes toward financing a vehicle purchase.
Borrowings under our 2022 Credit Agreement bear interest at a rate equal to the term Secured Overnight Financing Rate (“SOFR”) plus 0.10% (“Adjusted SOFR”) plus a spread that is based upon our total net leverage ratio. The spread ranges from 1.625% to 2.375% per annum for Adjusted SOFR loans.
There were no amounts outstanding under the Revolving Credit Facility as of December 31, 2023. Borrowings under our Credit Agreement bear interest at a rate equal to the term Secured Overnight Financing Rate (“SOFR”) plus 0.10% (“Adjusted SOFR”) plus a spread that is based upon our total net leverage ratio.
Market Risk In the normal course of business, we are exposed to market risk and have established policies designed to protect against the adverse effects of this exposure. We are exposed to risks associated with general economic conditions and the impact of the economic environment on the willingness of consumers to finance auto purchases.
We monitor and manage these financial exposures as an integral part of our overall risk management program. Market Risk In the normal course of business, we are exposed to market risk and have established policies designed to protect against the adverse effects of this exposure.
As of December 31, 2022, we had $149.1 million outstanding under the New Term Loan due 2027, which is scheduled to mature on September 9, 2027. There were no amounts outstanding under the New Revolving Credit Facility as of December 31, 2022.
Treasury securities. Our Term Loan due 2027 also exposes us to changes in short-term interest rates since interest rates on the underlying obligations are variable. As of December 31, 2023, we had $145.3 million outstanding under the Term Loan due 2027, which is scheduled to mature on September 9, 2027.
Interest Rate Risk Our earnings and cash flows are subject to fluctuations due to changes in interest rates on investment of available cash balances in money market funds and U.S. Treasury securities. Our New Term Loan due 2027 also exposes us to changes in short-term interest rates since interest rates on the underlying obligations are variable.
See “Item 1A— Risk Factors—Risks Related to Our Business — If we lose one of more of our insurance carriers and are unable to replace their commitments, it could have a material adverse effect on our business .” Interest Rate Risk Our earnings and cash flows are subject to fluctuations due to changes in interest rates on investment of available cash balances in money market funds and U.S.
Added
We are exposed to risks associated with general economic conditions and the impact of the economic environment on consumer spending levels, the willingness of consumers to enter into loans to finance purchases and consumers’ ability to afford financial obligations.

Other LPRO 10-K year-over-year comparisons