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What changed in Open Lending Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Open Lending Corp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+180 added−163 removedSource: 10-K (2025-03-31) vs 10-K (2024-02-28)

Top changes in Open Lending Corp's 2024 10-K

180 paragraphs added · 163 removed · 144 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

38 edited+3 added−4 removed37 unchanged
Biggest changeIn 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.
Biggest changeThe underwriting profit on each loan is earned upfront and received over its life, with the majority received in the first 12 months of the loan. In 2024, LPP generated, on average, $479 in profit share revenue per loan, which excludes the change in estimate associated with profit share reported on certified loans.
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”).
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 8 it to, the Securities and Exchange Commission (“SEC”).
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.
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 prohibits 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 bureau 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.
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.
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 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.
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.
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. Available Information Our website address is www.openlending.com and our investor relations website is investors.openlending.com.
The default insurance coverage offered to our customers transfers the majority of the risk and increased losses to the insurers. Intuitive solution with seamless integration. With five-second decisioning, LPP is an intuitive, easy to use technology platform. LPP can be integrated into the existing loan origination system of financial institutions and automotive lenders.
The default insurance coverage offered to our customers transfers the majority of the risk and increased losses to the insurers. Intuitive solution with seamless integration. With five-second decisioning, LPP is an intuitive, easy to use technology platform. LPP can be integrated into the existing loan origination system of financial institutions and automotive 5 lenders.
For automotive lenders that do not have size and scale, the result is a compressed return on assets on their super prime and prime loan portfolios. The near-prime and non-prime segment is much less efficient and consumer behavior is driven more by monthly loan payments than interest rates.
For automotive lenders that do not have size and scale, the result is a compressed return on assets on their super prime and prime loan portfolios. The near-prime and non-prime segment is less efficient and consumer behavior is driven more by monthly loan payments than interest rates.
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. 6 Government Regulation We operate in a heavily regulated industry that is highly focused on consumer protection.
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.
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, OEM captive finance companies and sub-prime lenders.
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.
The laws, regulations 7 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.
The insurance carriers contract with our wholly owned subsidiary, Insurance Administrative Services, LLC (“IAS”), to perform claims administration and in turn pay us administrative fees representing a portion of the insurance premiums paid by the automotive lenders. IAS provides continuity of customer service and allows for a seamless experience between LPP, insurance carriers and automotive lenders.
Our insurance partners contract with our wholly owned subsidiary, Insurance Administrative Services, LLC (“IAS”), to perform claims administration and in turn pay us administrative fees representing a portion of the insurance premiums paid by the automotive lenders. IAS provides continuity of customer service and allows for a seamless experience between LPP, insurance partners and automotive lenders.
We believe our insurance carrier partners would require significant time and investment to build such a technology solution and lender network. No customer acquisition cost and limited operating expenses. LPP alleviates the need for its insurance carrier partners to bear any marketing, software development or technology infrastructure costs to insure loans.
We believe our insurance partners would require significant time and investment to build such a technology solution and lender network. No customer acquisition cost and limited operating expenses. LPP alleviates the need for our insurance partners to bear any marketing, software development or technology infrastructure costs to insure loans.
Given the costs and financial goals of our automotive lenders and the specific risks posed by each loan, the goal of LPP is to find the lowest interest rate for borrowers. Increased approvals and higher loan amounts. We believe that automotive lenders using LPP are able to provide more loan approvals to near-prime and non-prime borrowers.
Borrowers Lower interest rates. Given the costs and financial goals of our automotive lenders and the specific risks posed by each loan, the goal of LPP is to find the lowest interest rate for borrowers. Increased approvals and higher loan amounts. We believe that automotive lenders using LPP are able to provide more loan approvals to near-prime and non-prime borrowers.
This streamlined workflow makes borrower point-of-sale financing available for automotive lenders of all sizes. Insurance Carriers Access to our proprietary technology and lenders. Over the past two decades, we have built and refined our technology in an effort to deliver significant value to automotive lenders.
This streamlined workflow makes borrower point-of-sale financing available for automotive lenders of all sizes. Insurance Partners Access to our proprietary technology and lenders. Over the past two decades, we have built and refined our technology in an effort to deliver significant value to automotive 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.
We also 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.
In an effort to manage risk, most automotive lenders concentrate their loan portfolios in super prime and prime auto loans. Automotive lenders’ appetite for these loans results in a very efficient market where competition is expressed through interest rates.
In an effort to manage risk, most automotive lenders concentrate their loan portfolios in super prime and prime auto loans. Automotive lenders’ appetite for these loans results in an efficient market where competition is expressed through interest rates.
The insurance carriers issue default insurance to our customers, thereby creating a direct contractual relationship between the insurer and the lender. We allocate loan applications to insurance carriers based on pre-determined percentages, which are embedded within LPP.
Our insurance partners issue default insurance to our customers, thereby creating a direct contractual relationship between the insurer and the lender. We allocate loan applications to insurance partners based on pre-determined percentages, which are embedded within 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.
Automotive Lenders Our customers are credit unions, regional banks, finance companies and OEM captive finance companies 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.
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.
LPP supports loans made to near-prime and non-prime borrowers and is designed to underwrite default insurance by linking automotive lenders to our insurance partners. The platform uses risk-based pricing models which enable automotive lenders to assess the credit risk of a potential borrower using data-driven analysis.
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.
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 partners who provide default insurance to automotive lenders on individual automotive loans processed through LPP, which underwrites the risk on each loan application.
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.
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 (“OEM captive finance companies”).
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.
As of December 31, 2024, we had 205 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.
Revenue is comprised of program fees paid by automotive lenders for the use of LPP to underwrite loans; fees paid by insurers for claims administration services; and profit-sharing with insurers that provide default insurance to automotive lenders.
Revenue is comprised of program fees paid by automotive lenders for the use of LPP to underwrite loans; profit-sharing with our insurance partners that provide default insurance to automotive lenders; and fees paid by our insurance partners for claims administration services.
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.
Our proprietary risk models project loan performance, including expected losses and prepayments, in arriving at the optimal contract interest rate. 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.
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.
LPP program fees vary as a percentage of the loan amount, averaging $515 per loan in 2024, and are recognized upon receipt of the loan by the consumer. The program fee is typically paid either in one single payment in the month following loan certification or in equal monthly payments over the 12 months following loan certification.
Statutes, regulations and practices that have been in place for many years may be changed, and new laws have been, and may continue to be, introduced to address real and perceived problems in the financial services industry in general and automotive lending in particular. These laws and how they are interpreted continue to evolve.
Statutes, regulations and practices that have been in place for many years may be changed, including under the new U.S. administration, and new laws have been, and may continue to be, introduced to address real and perceived problems in the financial services industry in general and automotive lending in particular. These laws and how they are interpreted continue to evolve.
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.
In 2024, we transitioned our customers who previously used Arch to our other insurance carriers. 4 See “ Item 1A—Risk Factors—Risks Related to Our Business—If we lose one of more of our insurance partners 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 bureau score generally between 560 and 699, also referred to as consumers.
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.
Insurance Partners As of December 31, 2024, we partner with three active insurance partners to provide auto loan default insurance policies for LPP certified loans. Our insurance partners are required to maintain not less than “A-” Financial Strength Rating by A.M. Best insurance rating company.
In addition, by providing claims administration services, we minimize the insurer carriers’ administrative burden in servicing insurance policies. Diversified risk with increased return on equity. Auto loan default coverage is a relatively unique line of insurance for insurers and, historically, our insurance carrier partners have experienced significant underwriting profitability. Borrowers Lower interest rates.
In addition, by providing claims administration services, we minimize the insurer carriers’ administrative burden in servicing insurance policies. Diversified risk with increased return on equity. Auto loan default coverage is a relatively unique line of insurance for insurers and, historically, the default insurance our insurance partners have provided through LPP has generated underwriting profits for our insurance partners.
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.
Since our inception in 2000, we have facilitated over one million automotive loans representing over $25.1 billion in originations, accumulated more than 20 years of proprietary data and developed over two million unique risk profiles. We currently serve 441 active lenders. Lenders Protection Platform Our flagship product, LPP, is a cloud-based automotive lending enablement platform.
We refer to loans facilitated through LPP as certified loans based on the date the loan is awarded to the consumer. We generate revenue of approximately 4% of the balance on each certified loan.
We refer to loans facilitated through LPP as certified loans based on the date the loan is awarded to the consumer.
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.
However, Arch 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.
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.
We refer to the prior periods as historic vintages. 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.
We receive 72% of the aggregate monthly insurance underwriting profit on each insurer’s portfolio, calculated as the monthly premium earned by the carrier less the carrier’s expenses and incurred losses. The underwriting profit on each loan is earned upfront and received over its life, with the majority received in the first 12 months of the loan.
Profit share represents our participation in the underwriting profit generated through the use of LPP. We receive 72% of the aggregate monthly insurance underwriting profit on each insurer’s portfolio, calculated as the monthly premium earned by the carrier less the carrier’s expenses and incurred losses.
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.
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 this market more competitive, resulting in more attractive loan terms. We operate a business-to-business model. Our customers are 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.
LPP enables automotive lenders to expand their lending guidelines to offer loans to borrowers with lower credit bureau scores, potentially leading to increased loan originations and higher loan advance rates. LPP integrates directly with automotive lenders’ existing 3 loan origination systems, facilitating electronic delivery of all-inclusive loan rates in real-time to automotive lenders.
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.
Our Business Model We specialize in risk-based pricing and modeling and provide automated decision-technology for automotive lenders throughout the U.S. 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 websites and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report.
We use our website as a channel of distribution for material company information. Important information, including news releases, financial information, earnings and analyst presentations, and information about upcoming presentations and events is routinely posted and accessible at investors.openlending.com. Our websites and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report.
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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.
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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. 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.
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The near-prime and non-prime automotive loan origination market is a large, underserved sector, estimated at $270 billion annually. We currently serve approximately 2% of this market, providing a significant growth opportunity. In addition, our market opportunity related to the refinancing of near-prime and non-prime automotive loans is estimated at $40 billion annually.
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On November 13, 2024, we mutually agreed with Arch Insurance North America (“Arch”) to terminate our program management agreement with Arch, effective as of November 15, 2024. Arch will no longer provide auto loan default insurance policies for LPP certified loans.
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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.
Added
We compete with providers that offer credit decisioning and underwriting software and services to credit unions, regional banks, finance companies, OEM captive finance companies and other lenders that make auto loans to borrowers, including near-prime and non-prime borrowers.
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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.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn addition, our Information Security team, which reports directly to our Chief Information Officer (“CIO”), performs regular internal vulnerability scans across our information technology systems, and we use an independent third-party service provider for the completion of bi-annual penetration testing to maintain our SOC II compliance. Our employees are a key element of our cybersecurity and data privacy defenses.
Biggest changeWe also perform an annual evaluation of our alignment with the U.S. Commerce Department’s National Institute of Standards and Technology framework. In addition, our Information Security team performs regular internal vulnerability scans across our information technology systems, and we use an independent third-party service provider for the completion of bi-annual penetration testing to maintain our SOC II compliance.
These measures include automated source code testing to help align our security infrastructure with 29 application security best practices, and automated scanning and alerts to assess compliance against established security baselines. Our cybersecurity risk management process also includes defined timeframes for addressing vulnerabilities or other gaps identified by our automated detection and scanning tools.
These measures include automated source code testing to help align our security infrastructure with application security best practices, and automated scanning and alerts to assess compliance against established security baselines. Our cybersecurity risk management process also includes defined timeframes for addressing vulnerabilities or other gaps identified by our automated detection and scanning tools.
The Audit Committee of our Board of Directors is primarily responsible for the oversight of risks from cybersecurity threats and is informed about cybersecurity risks through presentations from our CIO and our Chief Technology Officer (“CTO”), and other members of our management responsible for day-to-day management and mitigation of cybersecurity risks, as well as through its direct participation in our ERM process, which holistically addresses risks faced by us, including cybersecurity risk.
The Audit Committee of our Board of Directors is primarily responsible for the oversight of risks from cybersecurity threats and is informed about cybersecurity risks through presentations from members of our management responsible for day-to-day management and mitigation of cybersecurity risks, as well as through its direct participation in our ERM process, which holistically addresses risks faced by us, including cybersecurity risk.
These individuals are informed about and monitor the prevention, mitigation, detection, and remediation of cybersecurity incidents through their management of, and participation in, the cybersecurity risk management and strategic processes described above, including the operation of our Incident Response Plan.
Our cybersecurity risk management processes are led by members of our management team, who are informed about and monitor the prevention, mitigation, detection, and remediation of cybersecurity incidents through management of, and participation in, the cybersecurity risk management and strategic processes described above, including the operation of our Incident Response Plan.
In addition, we established measures to help mitigate the risk of exposure of personally identifiable information (“PII”). We have also implemented phishing protection and data loss prevention tools designed to enhance our cybersecurity throughout our information technology systems.
We also conduct internal incident response tests, phishing test campaigns and other security-enhancing exercises throughout the year. In addition, we established measures to help mitigate the risk of exposure of 29 personally identifiable information (“PII”). We have also implemented phishing protection and data loss prevention tools designed to enhance our cybersecurity throughout our information technology systems.
The CIO and CTO report and provide updates to the Audit Committee on risks from cybersecurity threats quarterly or as needed. 30
Our management team reports and provides updates to the Audit Committee on risks from cybersecurity threats quarterly or as needed.
We administer mandatory and regular awareness programs for employees on cybersecurity. We require all new employees to complete security awareness training upon hire, and existing employees must complete security awareness training annually thereafter. We also conduct internal incident response tests, phishing test campaigns and other security-enhancing exercises throughout the year.
Our employees are a key element of our cybersecurity and data privacy defenses. We administer mandatory and regular awareness programs for employees on cybersecurity. We require all new employees to complete security awareness training upon hire, and existing employees must complete security awareness training annually thereafter.
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We also perform an annual evaluation of our alignment with the U.S. Commerce Department’s National Institute of Standards and Technology framework.
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Our cybersecurity risk management processes are led by members of our management team, including our CIO and our CTO, who hold degrees in Management Information Systems and Computer Science, respectively, along with an average of 21 years of prior work experience in various roles involving information technology, including cybersecurity, compliance, systems, and programming.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIn 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
Biggest changeIn 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. 30 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePeriod 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.
Biggest changePeriod Total number of shares purchased (1) Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be purchased under the plans or programs (in millions) 10/01/2024-10/31/2024 52,122 $ 5.71 — $ — 11/01/2024-11/30/2024 — $ — — $ — 12/01/2024-12/31/2024 — $ — — $ — Total 52,122 — (1) Includes shares purchased from employees to satisfy their payroll tax withholding obligations related to share-based awards that vested during those months.
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.
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, 2024.
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”).
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 2025 Annual Meeting of Stockholders (“2025 Proxy Statement”) entitled “ Equity Compensation Plan Information. ” 31 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, 2024, there were 23 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 March 25, 2025, there were 23 registered stockholders of record.
Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes appearing in
Item 6. [Reserved] 32 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes appearing in
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.
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.
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.
Data for the S&P 500 Index and the Peer Group assumes reinvestment of dividends. 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.
Removed
(2) Our Board of Directors authorized share repurchases under the Share Repurchase Program for up to $75.0 million effective through March 31, 2024.
Removed
Refer to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations within this Annual Report for additional information on our share repurchases.
Removed
Data for the S&P 500 Index and the Peer Group assumes reinvestment of dividends.

Item 7. Management's Discussion & Analysis

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

83 edited+32 added−10 removed195 unchanged
Biggest changeSummary 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.
Biggest changeAny inaccuracies or errors in our models could have an adverse effect on our business. • We have in the past recorded, and may in the future record, significant valuation allowances on our deferred tax assets, which may have a material impact on our results of operations and cause fluctuations in such results. • 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 partners 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. 9 • 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 partners could be harmed. • We depend on the accuracy and completeness of information about consumers and any misrepresented information could adversely affect 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. • Our management has limited experience in operating a public company.
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.
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.
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.
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.
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 Credit Agreement, dated as of March 19, 2021, by and among the Company, Wells Fargo Bank, 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”).
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.
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.
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.
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. 19 Our ability to comply with these covenants may be affected by events beyond our control, such as market fluctuations impacting net income.
Furthermore, we may be responsible for any legacy liabilities of businesses we acquire or be subject to additional liability in connection with other strategic investments. The existence or amount of these liabilities may not be known at the time of acquisition, or other strategic investment, and may have a material adverse effect on our business.
Furthermore, we may be responsible for any legacy liabilities of businesses we acquire or be subject to additional liability in connection with other strategic initiatives or investments. The existence or amount of these liabilities may not be known at the time of acquisition, or other strategic investment, and may have a material adverse effect on our business.
Recently, consumer financial services companies have experienced increased reputational harm as consumers and regulators take issue with certain practices and judgments, including, for example, fair lending, credit reporting accuracy, lending to members of the military, state licensing (for automotive lenders, servicers and money transmitters) and debt collection.
Consumer financial services companies have experienced increased reputational harm as consumers and regulators take issue with certain practices and judgments, including, for example, fair lending, credit reporting accuracy, lending to members of the military, state licensing (for automotive lenders, servicers and money transmitters) and debt collection.
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).
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).
Many of the risks associated with the use of open source software cannot be eliminated and could adversely 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.
Many of the risks associated with the use of open source software cannot be eliminated and could adversely affect our business. To the extent that we seek to grow through future acquisitions, or other strategic initiatives, investments or alliances, we may not be able to do so effectively.
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.
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.
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.
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.
In addition, the terms of our existing financing arrangements restrict or limit our ability to pay cash dividends. Accordingly, we may not pay any dividends on our common stock in the foreseeable future. Future offerings of debt or equity securities by us may adversely affect the market price of our common stock.
In addition, the terms of our existing financing arrangements restrict or limit our ability to pay cash dividends. Accordingly, we may not pay any dividends on our common stock in the foreseeable future. 27 Future offerings of debt or equity securities by us may adversely affect the market price of our common stock.
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.
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.
Information security risks in the financial services industry have increased recently, in part because of evolving technologies, the use of the internet and telecommunications technologies (including mobile devices) to conduct financial and other business transactions and the increased sophistication and activities of organized criminals, perpetrators of fraud, hackers, terrorists and others.
Information security risks in the financial services industry have increased, in part because of evolving technologies, the use of the internet and telecommunications technologies (including mobile devices) to conduct financial and other business transactions and the increased sophistication and activities of organized criminals, perpetrators of fraud, hackers, terrorists and others.
There is no assurance that we will be able to manage expanding operations, including from acquisitions, investments or alliances, effectively or that we will be able to continue to grow, and any failure to do so could adversely affect our ability to generate revenue and control our expenses.
There is no assurance that we will be able to manage expanding operations, including from acquisitions, initiatives, investments or alliances, effectively or that we will be able to continue to grow, and any failure to do so could adversely affect our ability to generate revenue and control our expenses.
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.
An inactive trading market may also impair 25 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.
Negative public opinion can arise from many sources, including actual or alleged misconduct, errors or improper business practices by employees, automotive lenders, insurance carriers, automobile dealers, outsourced service providers or other counterparties; litigation or regulatory actions; failure by us, automotive lenders, or automobile dealers to meet minimum standards of service and quality; inadequate protection of consumer information; failure of automotive lenders to adhere to the terms of their LPP agreements or other contractual arrangements or standards; failure of insurance carriers and our subsidiary, IAS, to satisfactorily administer claims; compliance failures; and media coverage, whether accurate or not.
Negative public opinion can arise from many sources, including actual or alleged misconduct, errors or improper business practices by employees, automotive lenders, insurance partners, automobile dealers, outsourced service providers or other counterparties; litigation or regulatory actions; failure by us, automotive lenders, or automobile dealers to meet minimum standards of service and quality; inadequate protection of consumer information; failure of automotive lenders to adhere to the terms of their LPP agreements or other contractual arrangements or standards; failure of our insurance partners and our subsidiary, IAS, to satisfactorily administer claims; compliance failures; and media coverage, whether accurate or not.
District Court for the Western District of Texas shall be the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, or the Federal Forum Provision.
District Court for the 28 Western District of Texas shall be the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, or the Federal Forum Provision.
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.
The producer and claims service agreements with these insurance partners 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.
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. Fraud is prevalent in the financial services industry and is likely to increase as perpetrators become more sophisticated.
Fraudulent activity could negatively impact our business and could cause automotive lenders to be less willing to originate loans or insurance partners to be less willing to underwrite policies through the use of LPP. Fraud is prevalent in the financial services industry and is likely to increase as perpetrators become more sophisticated.
We are required to comply with numerous federal, state, and local laws and regulations that regulate, among other things, the manner in which we administer LPP, the terms of the loans that automotive lenders originate, the products of insurance carriers, production of those products, insurance claims administration, and the fees that we may charge.
We are required to comply with numerous federal, state, and local laws and regulations that regulate, among other things, the manner in which we administer LPP, the terms of the loans that automotive lenders originate, the products of insurance partners, production of those products, insurance claims administration, and the fees that we may charge.
Given that our primary customers are automotive lenders in the customer financial services space, any reputational risk associated with our customers is in turn attributable to us. Maintaining a positive reputation is critical to our ability to attract and retain existing and new automotive lenders, insurance carriers, investors and employees.
Given that our primary customers are automotive lenders in the customer financial services space, any reputational risk associated with our customers is in turn attributable to us. Maintaining a positive reputation is critical to our ability to attract and retain existing and new automotive lenders, insurance partners, investors and employees.
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.
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 2024.
Our ability to attract automotive lenders to LPP is significantly dependent on our ability to effectively evaluate a consumer’s credit profile and likelihood of default and potential loss in accordance with automotive lenders’ and insurance carriers’ underwriting policies. Our business depends significantly on the accuracy and success of our underwriting model.
Our ability to attract automotive lenders to LPP is significantly dependent on our ability to effectively evaluate a consumer’s credit profile and likelihood of default and potential loss in accordance with automotive lenders’ and insurance partners’ underwriting policies. Our business depends significantly on the accuracy and success of our underwriting model.
We have service mark registrations in the U.S. We also own the domain name rights for Openlending.com, Openlending.net, Openlending.us, Dev-openlending.com, Lendersprotection.org, Lendersprotection.us, Lend-pro.org, Lend-pro.us, Lend-pro.net, Lendpro.net, Lendpro.org, Lendpro.us, Lend-pro.com, Lendersprotection.com, Sayyestomoreloans.com, Sayyestomoreloans.net, as well as other words and phrases important to our business.
We have service mark registrations in the U.S. We also own the domain name rights for Openlending.com, Openlending.net, Openlending.us, Dev-openlending.com, Lendersprotection.org, Lendersprotection.us, Lend-pro.com, Lend-pro.org, Lend-pro.us, Lend-pro.net, Lendpro.net, Lendpro.io, Lendpro.info, Lendpro.org, Lendpro.us, Lendersprotection.com, Sayyestomoreloans.com, Sayyestomoreloans.net, as well as other words and phrases important to our business.
Negative public opinion can diminish the value of our brand and adversely affect our ability to attract and retain automotive lenders and insurance carriers as a result of which our operations may be materially harmed and we could be exposed to litigation and regulatory action.
Negative public opinion can diminish the value of our brand and adversely affect our ability to attract and retain automotive lenders and insurance partners as a result of which our operations may be materially harmed and we could be exposed to litigation and regulatory action.
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.
In the normal course of our business, we collect, process and retain sensitive and confidential information regarding automotive lenders, insurance partners and consumers. We also have arrangements with certain third-party service providers that require us to share consumer information.
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 partners 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.
Strategic risk is the risk from changes in the business environment, improper implementation of decisions or inadequate responsiveness to changes in the business environment.
Strategic risk is the risk from changes in the business environment, improper implementation of decisions or inadequate responsiveness to changes in the business 20 environment.
This could damage our reputation and relationships with automotive lenders and insurance carriers, which 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.
This could damage our reputation and relationships with automotive lenders and insurance partners, which 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 may in the future seek to grow our business by exploring potential acquisitions or other strategic investments or alliances. We may not be successful in identifying businesses or opportunities that meet our acquisition or expansion criteria.
We may in the future seek to grow our business by exploring potential acquisitions or other strategic initiatives, investments or alliances. We may not be successful in identifying businesses or opportunities that meet our acquisition, expansion or investment criteria.
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.
If the underwriting models we use contain errors or are otherwise ineffective, our reputation and relationships with automotive lenders and insurance partners could be harmed.
In the event insurer losses cause one of our insurance carriers to cease providing insurance, it would have a material adverse effect on our operations and financial results. The severity of loss on consumer defaults impacts our profit share revenue.
In the event insurer losses cause one 11 of our insurance partners to cease providing insurance, it would have a material adverse effect on our operations and financial results. The severity of loss on consumer defaults impacts our profit share revenue.
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.
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 our insurance partners, it may materially reduce automotive lenders’ or insurance partners’ earnings, capital ratios and share price in such a way that affects our business.
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.
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 adversely affected.
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, tariffs, uncertainty or changes in monetary and related policies, market volatility, consumer confidence and unemployment rates are among the most significant factors that impact consumer spending behavior.
Weakening economic conditions, in particular increases in unemployment, will lead to increased defaults and insurance claim payments, resulting in higher losses for insurance carriers. Increased claim payments may affect the willingness of insurance carriers to provide default insurance.
Weakening economic conditions, in particular increases in unemployment, will lead to increased defaults and insurance claim payments, resulting in higher losses for our insurance partners. Increased claim payments may affect the willingness of our insurance partners to provide default insurance.
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 lose one or more of our insurance partners and are unable to replace their commitments, it could have a material adverse effect on our business. As of December 31, 2024, we relied on three active insurance partners to insure the loans generated by the automotive lenders using LPP.
Risks Related to Our Regulatory Environment • We are subject to some federal and state consumer protection laws.
Risks Related to Our Regulatory Environment • We are subject to certain federal and state consumer protection laws.
Geopolitical conflicts, including Russia’s invasion of Ukraine and the conflict between Israel and Hamas, have resulted in supply chain disruption, increased costs for transportation and energy, increased inflationary pressures, higher interest rates and volatility in global markets, which may adversely affect our business and our results of operations.
Geopolitical conflicts, including Russia’s invasion of Ukraine and the conflict in the Middle East, have resulted in supply chain disruption, increased costs for transportation and energy, increased inflationary pressures, higher interest rates and volatility in global markets, which may adversely affect our business and our results of operations.
In addition, even if a potential acquisition target or other strategic investment is identified, we may not be successful in completing such acquisition or integrating such new business or other investment.
In addition, even if a potential acquisition target or other strategic investment is identified, we may not be successful in completing such acquisition, launching and implementing such initiative or integrating such new business or other investment.
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.
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. 10 Risks Related to Our Business Our results of operations and continued growth depend on our ability to retain existing, and attract new, automotive lenders.
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.
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.
Although we have systems and processes that are designed to protect data, prevent data loss, disable undesirable accounts and activities and prevent or detect security breaches, we cannot assure that such measures will provide absolute security.
We cannot assure that the systems and processes that are designed to protect data, prevent data loss, disable undesirable accounts and activities and prevent or detect security breaches will provide absolute security.
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.
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 partners; • 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.
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.
If an 14 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.
The contours of the Dodd-Frank UDAAP standard remain uncertain and there is a risk that certain features of our business could be deemed to be a UDAAP. • Our industry is highly regulated and is undergoing regulatory transformation, which results in inherent uncertainty. • 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.
The contours of the Dodd-Frank UDAAP standard remain uncertain and there is a risk that certain features of our business could be deemed to be a UDAAP. • Potential legal, regulatory, and policy changes by the new U.S. administration may directly affect financial institutions and the global economy. • Our industry is highly regulated and is undergoing regulatory transformation, which results in inherent uncertainty. • 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.
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.
Federal Reserve raised the federal funds rate in 2022 and 2023 to combat inflation. 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.
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.
If any of our insurance partners were to terminate their agreements with us and we are unable to replace their commitments through new or existing insurance partners, it could have a material adverse effect on our business, operations and financial condition.
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.
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. 13 We have pursued and may in the future continue to pursue growth opportunities, which may result in significant demands on operational, administrative and financial resources.
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.
These events also could impair the ability of third parties to provide critical services to us. All of these adverse effects of 17 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.
We and automotive lenders may not be able to anticipate or implement effective preventive measures against all security breaches of these types, especially because the techniques used change frequently and because attacks can originate from a wide variety of sources. We employ prevention, detection and response mechanisms designed to prevent, detect, contain and mitigate security incidents.
We and automotive lenders may not be able to anticipate or implement effective preventive measures against all security breaches of these types, especially because the techniques used change frequently and because attacks can originate from a wide variety of sources. Prevention and early detection efforts may be thwarted by sophisticated attacks and malware designed to avoid prevention and detection.
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.
No assurance is given that our third-party information security protocols are sufficient to withstand a cyber-attack or other security breach.
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.
Changes in market interest rates have had 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.
Our issuance of additional capital stock in connection with financings, acquisitions, investments, our stock incentive plans or otherwise will dilute all other stockholders. We expect to issue additional capital stock in the future that will result in dilution to all other stockholders. We expect to grant equity awards to employees, directors, and consultants under our stock incentive plans.
We expect to issue additional capital stock in the future that will result in dilution to all other stockholders. We expect to grant equity awards to employees, directors, and consultants under our stock incentive plans. We may also raise capital through equity financings in the future.
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.
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.
In addition, in the past, following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against these companies. Such litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.
In addition, in the past, following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against these companies.
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.
Sales of a substantial amount of our common stock could cause the price of our securities to fall. As of December 31, 2024, a significant portion of the outstanding shares of our common stock is held by entities affiliated with us and our executive officers, directors, and founders.
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.
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.
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.
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.
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.
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 partners and on consumers.
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.
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. We rely in part on third-party resellers to assist us in acquiring and retaining lender customers.
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.
The declaration, amount and payment of any future dividends will be at the sole discretion of our Board of Directors.
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.
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. 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.
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.
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.
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.
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.
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. Any such issuances of additional capital stock may cause stockholders to experience significant dilution of their ownership interests and the per share value of our common stock to decline.
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.
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.
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.
We have pursued and may in the future continue to pursue growth opportunities, which may result in significant demands on operations, marketing, compliance and accounting infrastructure, and has resulted in increased expenses, which we expect to continue as we grow.
A cybersecurity breach where this information is stolen or made public would result in negative publicity and additional costs to mitigate the damage to customers.
Through the use of LPP, we gather and store personally identifiable information on consumers such as social security numbers, names and addresses. A cybersecurity breach where this information is stolen or made public would result in negative publicity and additional costs to mitigate the damage to customers.
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.
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.
Any delay or failure on our part to identify, negotiate, finance on favorable terms, consummate and integrate any such acquisition, or other strategic investment opportunity could impede our growth.
Any delay or failure on our part to identify, negotiate, finance on favorable terms, consummate and integrate any such acquisition, or other strategic investment opportunity could impede our growth. In addition, potential acquisitions or other strategic initiatives, investments or alliances may distract management, slow improvements in our existing products and services or result in unexpected significant costs and expenses.
Failure to comply with these laws and with regulatory requirements applicable to our business could subject us to damages, revocation of licenses, class action lawsuits, administrative enforcement actions, and civil and criminal liability, which may harm our business. Our industry is highly regulated and is undergoing regulatory transformation, which results in inherent uncertainty.
Failure to comply with these laws and with regulatory requirements applicable to our business could subject us to damages, revocation of licenses, class action lawsuits, administrative enforcement actions, and civil and criminal liability, which may harm our business. Potential legal, regulatory, and policy changes by the new U.S. administration may directly affect financial institutions and the global economy.
In addition, our agreements with our resellers are typically non-exclusive and do not prohibit them from working with our competitors or from offering competing products or services. We have limited control, if any, as to whether these strategic partners devote adequate resources to promoting, selling, and implementing our products as compared to our competitor’s products.
We have limited control, if any, as to whether these strategic partners devote adequate resources to promoting, selling, and implementing our products as compared to our competitor’s products.
Risks Related to Our Business Our results of operations and continued growth depend on our ability to retain existing, and attract new, automotive lenders. If automotive lenders make fewer overall automotive loans or cease to use LPP to make such loans, we will fail to generate future revenues.
If automotive lenders make fewer overall automotive loans or cease to use LPP to make such loans, we will fail to generate future revenues.
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.
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.
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.
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.
Any significant increase in inaccuracies resulting in losses could adversely affect our business. We rely extensively on models in managing many aspects of our business. Any inaccuracies or errors in our models could have an adverse effect on our business .
Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a further discussion of the updated profit share revenue forecast. We rely extensively on models in managing many aspects of our business. Any inaccuracies or errors in our models could have an adverse effect on our business .
We may not be able to manage expanding operations effectively, and any failure to do so could adversely affect the ability to generate revenue and control expenses. If we experience negative publicity, we may lose the confidence of automotive lenders and insurance carriers who use or partner with LPP and our business may suffer.
If we experience negative publicity, we may lose the confidence of automotive lenders and our insurance partners who use or partner with LPP and our business may suffer. Reputational risk, or the risk of negative publicity or to public opinion, is inherent to our business.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeTreasury 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.
Biggest changeAs of December 31, 2024, we had $140.6 million outstanding under the Term Loan due 2027, which is scheduled to mature on September 9, 2027. There were no amounts outstanding under the Revolving Credit Facility as of December 31, 2024.
Financial Statements and Supplementary Data. Our consolidated financial statements and supplementary data are included in this Annual Report beginning on page F-1. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None.
Our consolidated financial statements and supplementary data are included in this Annual Report beginning on page F-1. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None.
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.
Consumer spending and borrowing patterns related to auto purchases are influenced by economic factors such as unemployment rates, inflation, fluctuating interest rates, tariffs, changes in monetary and related policies, market volatility, and overall consumer confidence.
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.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Our operations activities are 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.
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.
Concentration Risk We rely on our three active insurance partners for a significant portion of our profit share and claims administration service fee revenue. Termination or disruption of these relationships could materially and adversely impact our revenue.
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.
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. Item 8. Financial Statements and Supplementary Data.
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.
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. The spread ranges from 1.625% to 2.375% per annum for Adjusted SOFR loans.
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.
See “Item 1A— Risk Factors—Risks Related to Our Business — If we lose one of more of our insurance partners and are unable to replace their commitments, it could have a material adverse effect on our business .” 44 Refer to Note 2 — Summary of Significant Accounting and Reporting Policies for the concentration of revenues from these customers.
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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 Term Loan due 2027 also exposes us to changes in short-term interest rates since interest rates on the underlying obligations are variable.

Other LPRO 10-K year-over-year comparisons