Open Lending Corporation (LPRO) Q4 2020 Earnings Call Transcript

Open Lending Corporation (LPRO 1.85%)
Q4 2020 Earnings Call
Mar 09, 2021, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good afternoon and welcome to Open Lending's fourth-quarter 2020 earnings conference call. As a reminder, today's conference call is being recorded. On the call, today are John Flynn, chairman and CEO; Ross Jessup, president and COO; and Chuck Jehl, CFO. Earlier today, the company posted its fourth-quarter 2020 earnings release to its Investor Relations website. In the release, you will find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed on this call.

Before we begin, I'd like to remind you that this call may contain estimates and other forward-looking statements that represent the company's views as of today, March 9, 2021. Open Lending disclaims any obligation to update these statements to reflect future events or circumstances. Please refer to today's earnings release in our filings with the SEC for information concerning factors that could cause actual results to differ materially from those expressed or implied by such statements. And now, I'll pass the call over to you John for your opening remarks.

John Flynn -- Chairman and Chief Executive Officer

Thank you, operator, and good afternoon, everyone. Thanks again for joining us for the fourth quarter of the 2020 earnings conference call. I'd like to start today by reviewing our fourth quarter and our full-year 2020 highlights, as well as the progress we've made on our growth objectives. And Ross is going to provide an update on our OEM opportunity.

And finally, Chuck is going to review our chief for financials in greater detail and discuss our outlook for 2021. During the fourth quarter, we certified 26,822 loans, which was an increase of 19% as compared to the fourth quarter of 2019. We reported revenue of $39.6 million, which was an increase of 52%, and adjusted EBITDA of $24.8 million, which was an increase of 37% as compared to the fourth quarter of 2019. The fourth quarter was a great end to a very productive year for Open Lending.

For the full year, we reported a 20% increase in certified loan growth, a 17% increase in revenue, and a 7% increase in adjusted EBITDA. We also added 55 new customers in 2020, including large partnerships with several billion-dollar institutions. We experienced strong OEM captive search growth despite COVID-19 as Ross is going to discuss shortly. We also enhanced our focus on direct lending and refinance channels and also made progress on our initiative to provide seasonal relief to our OEM bank and credit union customers.

And of course, in 2020, we went public, which was an incredible milestone for us after building the business for the past 20 years. And with that, came a strong board as well and an expanded management team, which has positioned us well for many years to come. Now I'm going to spend a few minutes on our fourth-quarter 2020. Our lending partners continue to be very resilient during this time.

A combination of a recent influx of deposits as a result of COVID in addition to a low-interest rate environment has led lenders to search for higher risk-adjusted yields. This has led to the growth in auto loan originations further down the credit spectrum. During the quarter, we added 16 new customers, and we currently have approximately 355 active customers on our platform that are generating certified loans. This year, we continue to bring in additional resellers as well.

We announced a new large partnership in the fourth quarter as well; including OE Federal Credit Union, a $1.2 billion institution based in Livermore, California; Members 1st Federal Credit Union, a $5.3 billion institution based in Mechanicsburg, Pennsylvania; and Interra Credit Union, a $1.3 billion institution based in Goshen, Indiana. Our integration into the FIS originate platform is going well as well. We're currently live with one bank partner on the platform, and we continue to believe that this partnership is going to open up doors for us to market this to other banks that use that platform. Our enhanced focus on a refinance program to drive additional certified loan volume continues to be a great additional growth channel.

During the quarter, we grew our business with existing channel partners and we signed eight new credit unions and banks to the refinance program. We've also been working on other funding sources with third parties to expand our funding sources outside the banks' credit unions and the OEM that we currently partner with. And then lastly on the insurance partner side, our current insurance partners include CNA and AmTrust. We are in active discussions with various top insurance carriers to potentially partner with as a third insurance relationship as we now feel there's enough volume to support three insurance carriers without jeopardizing our relationship with our two existing partners, and we'll provide an update on that when we have more details.

So with that, I'm gonna go ahead and turn it over to Ross, so he could jump into the OEM opportunity that we currently have in front of us.

Ross Jessup -- President and Chief Operating Officer

Thank you, John. OEM captive certification originations were strong in the fourth quarter, which demonstrates tremendous growth despite the COVID-19 pandemic. As we laid out before, the OEM captive market is substantial with each captive opportunity representing a $30 million to $100 million annual revenue opportunity, and collectively more than a billion annual revenue opportunity. As of today, we currently serve two OEM captives, which we expect to continue to ramp and we'll be key drivers of growth in 2021.

Starting first with OEM No.2, which came back online in October. They have begun to ramp production back up and we are encouraged by the number of applications being submitted, loans booked and certified, and the opportunity ahead with the OEM. Moving on to OEM No.1. We experienced certification growth of over 200% from April to December, and are currently seeing applications from over 100% of their nationwide dealerships.

We also officially launched our expanded credit score offering for them. In addition to the 560 to 619 credit scores in all regions, they are now utilizing our platform were 560 to 679 credit scores in one of the four regions they service and look to expand to the other three over the next few months. This is a great example of how our customer has expanded their usage and saw tremendous benefit from our product. Subvention will also increase the opportunities at both current OEMs.

We launched subvention at OEM No.2 in January, and are very encouraged by the opportunity ahead. In addition, we took our findings from the seasoned relief at the OEM No.2 received from the SEC as well as their independent auditors and create a white paper on the topic. We only recently published the paper and have gotten many inquiries on how we can help others. Lastly, on OEMs, we have been very active in discussions with others and continue to build our pipeline and work together on data studies and the valued proposition we offer our platform.

Again, we don't have any additional OEMs in our 2021 guidance. We continue to focus on this opportunity. With that, I would like to turn it over to Chuck to discuss the financials in greater detail. Chuck?

Chuck Jehl -- Chief Financial Officer

Thanks, Ross. Now let's move to our solid Q4 and full-year financial results before I review our outlook for full-year 2021. We are pleased to report 2020 financial results that are -- that largely beat our expectations for the year. For the full year as compared to 2019, total certified loans increased by 20%.

Total revenue increased 17%. Gross profit increased approximately 17%, and adjusted EBITDA increased 7%. In 2020, we signed 55 new contracts with auto lenders compared to 77 new contracts signed in 2019, with a focus on larger institutions in 2020. During the quarter ended December 31, we facilitated 26,822 certified loans and 16 new contracts were executed with new lenders.

In addition, we have 14 active implementations with go-live dates in the next 60 days. Total revenue for the fourth quarter of 2020 increased 52% to $39.6 million as compared to the fourth quarter of 2019. With profit share making up $25.9 million, including $7.5 million from performance obligations that were satisfied in previous periods as a result of improved macroeconomic conditions and the continued overall portfolio performing better than we expected in the fourth quarter of 2020. Program fees were $12.4 million, and claims administration fees were $1.3 million in the fourth quarter of 2020.

Gross profit was $36.7 million in fourth-quarter 2020, an increase of 54% due to higher levels of loans certified as compared to fourth-quarter 2019 and the ASC 606 change in estimate discussed above. The gross margin was 93% in the fourth quarter, compared to 91.2% in the same period of 2019. Selling, general and administrative expenses were $12.4 million in the fourth quarter of 2020, compared to $6.4 million in the previous year quarter. The increase in SG&A cost is a result of the incremental cost related to becoming a public company, as we continue implementing the internal control and compliance procedures required of public companies.

Operating income was $24.3 million in fourth-quarter 2020, compared to $17.4 million in the previous year quarter. The increase is primarily driven by a 19% increase in certified loans as compared to the fourth quarter of 2019 and the recognition of the $7.5 million profit share related to historical vintages as a result of better-than-expected performance for the portfolio due to our enhanced underwriting standards and corresponding lower-than-expected defaults and claims. Net income for the fourth quarter of 2020 was $15.2 million, compared to $17.4 million net income in fourth-quarter 2019. The decrease was primarily due to the one-time transaction cost associated with the merger and the incremental cost of becoming a public company.

Adjusted EBITDA for the fourth quarter of 2020 was $24.8 million as compared to $18.1 million in fourth-quarter 2019. A reconciliation from GAAP to non-GAAP financial measures can be found at the back of our press release. We exited 2020 with $294 million in total assets of which $101.5 million was unrestricted cash, and $89.3 million was contract assets. We had $267.4 million in total liabilities, of which $157.7 million was in debt and approximately $92.4 million associated with our obligations under the tax receivable agreement associated with the merger.

On December 9, 2020, we announced the pricing of an upsized underwritten public offering of 9.5 million shares of our common stock at an offering price of $28 per share. Open Lending did not sell any shares, and we did not receive any proceeds from the offering. Upon closing the offering on December 14, 2020, we purchased from the selling stockholders approximately 1.4 million shares of our common stock for $37.5 million. Also, I wanted to briefly give you an update on our share count by post the offering.

We had approximately 126.8 million shares outstanding on December 31, 2020. We posted an updated investor presentation and fourth-quarter 2020 earnings supplemental to our Investor Relations site, which includes a slide that lays out our current share count. Now moving to our guidance for 2021. Based on fourth-quarter results and trends into March, we are reaffirming our previously announced guidance ranges as follows: total certified loans to be between $161,000 and $206,000.

Total revenue to be between $184 million and $234 million. Adjusted EBITDA to be between $125 million and $168 million and adjusted operating cash flow to be between $81 million and $111 million. Now with that, we'll turn it back over to the operator, and we're happy to take some questions from the group. Thank you.

Questions & Answers:

Operator

[Operator Instructions] And our first question is from Ashish Sabadra with Deutsche Bank. Please proceed with your question.

Ashish Sabadra -- Deutsche Bank -- Analyst

Thanks for taking my questions. Good results. I was wondering if you can provide any update on OEM No.3. You had talked about the data study that you had conducted for that OEM.

Any progress on signing up the OEM No.3? Thanks.

Ross Jessup -- President and Chief Operating Officer

You bet, Ashish, this is Ross. Yes. So when we did a data study, we presented them late in 2020. It was kind of a one-sided study because, at that point in time, they had not given us the statuses of whether they had approved or declined that.

Well, they actually did provide that to us. About two weeks ago, we finished that side of it and presented that study back to them. Last week, the results were fantastic, basically, of the applications they sent us, we provided them a 51% lift in approvals. 41% of those were actually as requested approval.

So meaning, there are no counters in that. So, we're very pleased with that, and we presented that back to them. They are meeting this week on the results of that. In the meantime, they've actually asked us for a sample program agreement and insurance policy, so that they can review that internally from a -- from their accounting side, basically from their interest in getting their arms around the CECL relief benefit.

Ashish Sabadra -- Deutsche Bank -- Analyst

Thant's great news. Thanks for that color, Ross. And maybe just my follow-up question would be on the CECL relief. You talked about the white paper that was published.

Can you just talk about the opportunity there, any conversation with regional banks? And how do you think about the CECL relief opportunity on the bank front? Thanks.

Ross Jessup -- President and Chief Operating Officer

You bet. I mean, really, it has resonated with quite a few institutions we've talked about. We have another OEM captive that wanted to actually specifically ask some questions to our -- and we brought our advisors into that call. And basically, they were helping with the questions.

They also asked for a sample copy of the program agreement and insurance policy. last week, we provided that to them. And hopefully, those discussions will continue, which we definitely foresee that happening. We've also provided that document back to OEM No.1 as well as the other ones we're talking to.

And of course -- and we actually are doing a webinar. Do you want to talk, John, about that?

John Flynn -- Chairman and Chief Executive Officer

Yeah. And I think you had asked, too, on the bank side, what impact it had. we've got probably the most active or the most -- the highest number of bank prospects that we've had since we started the company. And I think it's resonated well.

We've got a number of these larger banks that have reached out looking for that CECL document that we've put together. We've provided that to a few of them. We do have two or three of them now asking for what data is necessary to do that same data study that Ross just alluded to from a standpoint of what impact, we could have for these different banks. So, I think it's been very positively received.

And that to Ross' point, we're in the process of putting together a webinar where we're going to host the do's and don'ts of CECL. Our advisors are going to do about a 30-minute presentation on what they need to be doing to prepare for CECL. And then we're going to fill in some backdrop information about how we feel this product fits that need. So I think it should be very well received.

Ashish Sabadra -- Deutsche Bank -- Analyst

That's a very helpful color. Congrats once again. Thank you.

Ross Jessup -- President and Chief Operating Officer

Thank you.

Operator

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

Peter Heckmann -- D.A. Davidson -- Analyst

Good afternoon, gentlemen. Thanks for taking my question. Could you give us a little bit of maybe a percentage -- a relative percentage of the third by the two OEMs in the quarter? And then maybe talk about any change in your relative expectations of where those OEMs may be able to ramp to, probably, five mid to the end of this year when they're fully ramped?

Chuck Jehl -- Chief Financial Officer

Yeah. How are you doing? This is Chuck. In our supplemental filing that we have on the website where we actually have the OEMs in total there. So we don't actually break out the actual OEM NO.1 and OEM No.2.

So in fourth quarter, we had a little under 8,000 certs of our 26,822 that were related to OEM No.1 and OEM No.2. So how they're ramping, as we think about 2021 and OEM No.2 came back on in October and Ross can jump in, but we're encouraged by the ramp that, that OEM has done through into 2021 even. And -- but we think the full ramp to -- for OEM No.2 to be back to the 8,000 to 10,000 that we've talked about in a later part of the year in the ramp. And in OEM 1 is -- as we talked about, had 200% growth from April through December and continues to grow into '21.

And we feel like they'll soon be at 1,000 certs per month level and growing by the end of the year to call it, 1,200 to 1,500 toward the late year.

Peter Heckmann -- D.A. Davidson -- Analyst

Got it. Got it. Ok. And then just with some unusual comparisons with last year.

Anything that's worth calling out just in terms of the cadence of quarterly earnings in the first half? I guess to the extent that you've reviewed the consensus that does it appear to be approximately in the right range? Or any additional color you'd like to give as regards that issue?

Chuck Jehl -- Chief Financial Officer

Obviously, March is seasonality is a great month for the company, and we're encouraged by where we're heading into the year. If December into January was really good for us. And then, I'll tell you that just like everybody in the United States, Texas got hit really hard on weather in February, about a week there. It was very difficult, and that will impact us a bit in the February period.

But I'll tell you that as we reaffirmed our guidance today, we feel good about full-year '21 and which is why we reaffirmed it in the ranges. So you think about our growth, I mean, on the low end of the range, it's 70% year-over-year growth, on the high end of the range, it's 120% growth. So, we feel good about where we're heading for the year. In apps, app flow is really high and coming in strong, and had a record at the company this month for apps in coming in.

So we feel encouraged.

Peter Heckmann -- D.A. Davidson -- Analyst

Appreciate it.

Chuck Jehl -- Chief Financial Officer

You bet.

Operator

Our next question is from Randy Binner with B. Riley. Please proceed with your question.

Randy Binner -- B. Riley FBR Inc. -- Analyst

Hey, thank you. I wanted to just focus on the expense line a little bit. You mentioned to your script that there are some public company expenses, but like G&A was a little bit higher and that there was kind of another expense item of $4.4 million. So, I just wanted to clarify why each was elevated if the G&A was just elevated to map higher revenue and then where the public company expense fit into that?

Chuck Jehl -- Chief Financial Officer

You bet. How are you doing? Randy, it's Chuck. Yes. If you think about Q4 '20 over '19, and really, we've hired 27 people in 2020 as we've navigated to become a public company going public in June.

So it's really comp and benefits increase of hiring the 27 folks, accounting and legally associated with taking the company public and getting ready for Sarbanes-Oxley compliance and that kind of thing and then some insurance-related cost public domain and in particular, D&O. So that's really what I was referring to in the prepared remarks about increased cost. In the SG&A line. In the other expense line, the $4.3 million that you're referring to, and then we'll file our 10-K later in the week, what that is, it's a non-cash charge to basically related to a change in the measurement of our tax receivable agreement that was part of the merger transaction.

So we had a change in the state apportionment rate for state taxes in the fourth quarter that drove that up. And we adjusted that out of EBITDA. If you -- once you look back at the reconciliation on the table, that's just kind of merger-related transaction costs associated with that change, that rate change.

Randy Binner -- B. Riley FBR Inc. -- Analyst

Ok. And that's one time. That's caught up?

Chuck Jehl -- Chief Financial Officer

That's right.

Randy Binner -- B. Riley FBR Inc. -- Analyst

Thank you.

Chuck Jehl -- Chief Financial Officer

You bet. Thanks, Randy.

Operator

Our next question is from Joseph Vafi with Canaccord. Please proceed with your question.

Joseph Vafi -- Canaccord Genuity -- Analyst

Hey guys. Good afternoon. Great to see all the continued progress. Just circling back on the OEMs.

Is it fair to say do you think that after OEM No.1 ramps, those increased FICO score ranges across those three extra regions that you'd say kind of OEM No.1, at that point, kind of fully ramped other than their own organic growth in their business? And then is there any OEM No.4 discussions that are worth talking about right now? And then I have a quick follow-up.

John Flynn -- Chairman and Chief Executive Officer

Yeah, Joe, good to catch up here. Yeah OEM No.1, basically, I do not think that they're capped after the rollout of the 3 different markets. There's still a lot of opportunities that we are in discussion with for them to consider adopting a subvention and the way we use it, and we're having those discussions. We provided them some information.

Actually, a document to show them what data points we would need to have through our API from them to us so we can render back sub-vented approvals. And so they've -- they're digesting that now, and we are going to have those discussions here soon. And then the OEM No.4, there is one that we've talked to for a while. And we're pleased to announce that they're back.

They're engaged. They want us. We've asked them about a data study. We actually receive that information from them yesterday.

And so our risk team is going to be countering through the numbers to see what kind of lift we can give them. And so this is kind of very current news. And it's an opportunity that we believe really fits the wheelhouse of what makes sense from our product standpoint.

Joseph Vafi -- Canaccord Genuity -- Analyst

Great. That's really exciting. Looking forward to hearing more on that. And then just secondly, just -- I know this was a very different year, clearly.

And also your first as a public company and maybe, Chuck, if you could kind of walk us through, if things kind of normalize kind of on an economic basis and performance-related revenue normalizes and other things, how should we think in any year, how revenue tracks to cert growth? Because -- I mean, it looks like some quarters, certs are up more and revenues up less and vice versa. So kind of as a business, if we get to a normalized world, how should we think of cert growth versus revenue growth? Thanks.

Chuck Jehl -- Chief Financial Officer

You bet. Yes, I'll start, Joe. So the one thing I'd tell you is, and when we file our 10-K, we got a really good disclosure in the back where we break out what's truly originations on new business for particular profit share versus what is the change in estimate based on better-than-expected performance like we had in Q4. So I'd tell you, it's pretty linear as you go -- cert will grow with revenue.

And you'll just need to kind of focus on that disclosure in the MD&A that kind of backs out the adjustments related to historical vintages. So I think you could think about that, they grow together with pretty linear growth.

Joseph Vafi -- Canaccord Genuity -- Analyst

Great. Great results, guys. Thanks.

Chuck Jehl -- Chief Financial Officer

Thanks. Yeah. Thank you.

Operator

Our next question is from John Davis with Raymond James. Please proceed with your question.

John Davis -- Raymond James -- Analyst

Hey, good afternoon guys. First, just wanted to touch on OEM No.2 and the ramp, I guess, relative to your expectations? Are they kind of where you thought they would be by now given the October ramp? Or just any kind of color there would be helpful.

Ross Jessup -- President and Chief Operating Officer

Yeah, John, I would say that the relaunch is definitely on a track like we thought it would be as far as putting in getting them back live with the division that operates outside of their dealerships. The rollout to the inside the dealerships for the users that took place is on schedule and I think ramping over the next two or three months to where we think it will be. But the subvention rollout is more of a controlled rollout. They've got the one market that's active.

They -- even in the secondary market they targeted--were here in Texas. And it was targeted during the storm that we just experienced. And so that got delayed a little bit. But it's ongoing.

The good news is, it seems like everything it is going like they -- we wanted it to from, not getting any negative from the dealer feedback. And it's just progress that they are rolling this out and very involved and -- but I would hope it would be a little bit further along than it is, but I'm still very pleased about where it's going to be as soon as that ramp continues.

John Davis -- Raymond James -- Analyst

Ok. That's a great color. And then if I look at the 4Q profit share, it was a good bit better than what we were expecting. I'm guessing that credit across all asset classes is pretty phenomenal right now.

That was more stimulus on the way. So as I look at the '21 guide, obviously, it's reiterated, all else equal, should better profit share from better credit, drive potential upside? Is there any kind of moving pieces that may be offset that as we look out into '21?

Chuck Jehl -- Chief Financial Officer

Yeah. I mean, listen, I mean, obviously, in Q4, we had the $7.5 million change that lower claims, lower default rates. I mean, back when we -- earlier part of 2020 when COVID hit, none of us expected unemployment to go down so quickly when it spiked. The stimulus -- none of us has seen a pandemic like this.

So we really are excited that our book, really performed better than we all expected, which is why we had the change in estimate. So I would -- in our KPIs, we've normalized the KPIs to exclude the change in an estimate due to ASC 606 on historical vintages. So it doesn't spike the averages on the profit share. But I think if you think about -- if you're going into '21, $650 to $700 per cert is a good average to use, and that's really kind of -- for the 3 months ended December 31, we averaged about $686 on the profit share.

And full year, it was $658 million. So I would think about it that way.

John Davis -- Raymond James -- Analyst

OK, great. Thanks, guys.

Chuck Jehl -- Chief Financial Officer

You bet.

Operator

Our next question is from Bob Napoli with William Blair. Please proceed with your question.

Bob Napoli -- William Blair -- Analyst

Hi, good afternoon, John, Ross, and Chuck.

Ross Jessup -- President and Chief Operating Officer

Hi, Bob.

Bob Napoli -- William Blair -- Analyst

Thank you. I guess the growth in CU and bank certs were flattish, up a little bit year over year, while the OEM certs, obviously, up tremendously. Just your thought on the growth rate of the credit union and bank certs in 2021 and the long-term potential.

John Flynn -- Chairman and Chief Executive Officer

Sure. I think if you remember some of the conversations, we purposely if you will, kind of mutated the book to look ratio by making some underwriting changes. However, if you talk -- we talked about discounting the advance from 100% of clean trade down to 95%. And we've looked at that right now.

And we feel like -- again, to the point about profits here, we feel like we were booking better paper by doing what we did and cut back on a search a little bit, which is what made that flat. I think we are currently looking at right now, changing that back to taking that advance up to 100% instead of 95%. And we've gone in and done a study that shows that had the book-to-look ratio stayed at what it was prior to that change, there would have been about 11,500 more search done in that same time frame from the credit unions. So it was purposely done.

I think you'll see we are signing right now some of the bigger credit unions that we had hoped to go after. I think Chuck alluded to the number of shops that are in implementation right now.

Chuck Jehl -- Chief Financial Officer

14, right?

John Flynn -- Chairman and Chief Executive Officer

Yes. We had a bunch of them signing up near the end of 2020 that didn't get launched through at the end of the year, so they're launching now.

Chuck Jehl -- Chief Financial Officer

Yeah, I'll jump in there, Bob. And so the 55 customers that we had that we signed up for in 2020 we had 30 of those, 14 went live in Q4, and then 16 of those are going live in January and February. So a lot of the implementation delay, COVID-19 and the difficulty there, and the challenges. But we're really encouraged by those going live now coming back on and ramping, and that will help in our growth going into '21 for the credit union banks.

John Flynn -- Chairman and Chief Executive Officer

I think one thing I'd add to that, and you'll see what -- we've really enhanced the refi channel partner.

Chuck Jehl -- Chief Financial Officer

Absolutely.

John Flynn -- Chairman and Chief Executive Officer

And again, I'll just use -- you've heard me talk about Pentagon launching a few of those. Their volume has doubled in the last two months. And that's with only launching one of the six refi channel partners that are on their list to launch. So we're starting to see a lot of uptick in the same-store sales, which I think is going to be a big lift this year.

Bob Napoli -- William Blair -- Analyst

Great. That used to be my next question is going to be on refi. So I guess I get it. Thanks.

John Flynn -- Chairman and Chief Executive Officer

You're welcome.

Bob Napoli -- William Blair -- Analyst

Thank you. Just how do you step back your public company now, you're generating some -- a pretty slick model, generating very attractive returns and cash flows what are you most concerned about? Where do you think competition? Where do you -- how do you think about competition, potential competition? I mean you have an attractive model that your competitors and your customers can now see. Do you have any -- where do you have concerns about the competition? And how do you stay in front of that?

John Flynn -- Chairman and Chief Executive Officer

I'll certainly let any of these guys add to that, and this is John Flynn. But again, we feel like -- and I alluded to this in the opening comments, we're a 20-year-old company, and it's taken 20 years to build these models, to build the interfaces, to build the relationships. Ross has always made the comment. If you had a big bank come out with something like we've created to try to get more applications in, you're not going to see 350 credit unions jump on the bandwagon have wanted to run their business through a bank or through somebody other than somebody that's agnostic like we are to the channels.

We've got 20 years' worth of data. We continue to fine-tune that data. We've not -- our exclusive relationships with the carriers exist. Somebody is going to have to really gather up a lot of what we've spent 20 years gathering to attract another carrier that would be interested in writing something like this.

So again, I think we've built a pretty strong moat around the company. Having said all of that, it's a $250 billion market. We've underwritten $2 billion worth of loans last year. And there's a lot of room in this space if somebody were to try to compete.

Chuck Jehl -- Chief Financial Officer

Yeah. A lot of white space on the TAM. I mean, like John said, about 1% is all we're penetrating and growing.

Ross Jessup -- President and Chief Operating Officer

So, I think the main thing is we're not sitting around patting ourselves on the back of what our underwriting looks like today when -- without looking at what we can do from an enhancement, bringing in additional alternative data scorecards, the best of breed underwriting, and the latest. And our risk team is all over trying to make sure that we're on top of that.

Bob Napoli -- William Blair -- Analyst

Thank you, appreciate it.

Ross Jessup -- President and Chief Operating Officer

Thanks, Bob.

Operator

Our next question is from Vincent Caintic with Stephens. Please proceed with your question.

Vincent Caintic -- Stephens Inc. -- Analyst

Thanks. So, good afternoon. Thanks for taking my questions. First of

Ross Jessup -- President and Chief Operating Officer

Hi, Vincent.

Vincent Caintic -- Stephens Inc. -- Analyst

Hey, Good afternoon. The first two questions actually, just a quick follow-up. But when -- so on the non-OEM opportunity, could you give how much of -- say how much of 2020 was from refis and then how you think about refi's going forward?

Chuck Jehl -- Chief Financial Officer

Yeah. I think if you think about the full-year search for 2020, the refi is probably, call it, 12% to 13% of that -- for that 2020 year. One thing to keep in mind, Vincent, is as the OEMs ramp, there'll be -- that percent will be diluted by the OEM growth.

Ross Jessup -- President and Chief Operating Officer

Even, even though the actual right order and refi.

John Flynn -- Chairman and Chief Executive Officer

And a refi, we didn't really focus on refi until the COVID hit. Yes, we were -- a lot of our business was all indirect and direct. And we really kind of pivoted our sales force to go out and start selling the channel partners that we were in the process of creating relationships with. So I don't think you really started to see any lift from the refi side of that before June or July from a standpoint of getting any real volume.

So you're really looking at 6 months out of the year from a standpoint of trying to tie a percentage in there.

Chuck Jehl -- Chief Financial Officer

Yeah. That's a great point. In our investor presentation, not the supplement, we've got a slide that talks about the refi program. And I think February over February 2020 to 2021 application up on refi 51%.

Vincent Caintic -- Stephens Inc. -- Analyst

Ok. That's great. Second, just a quick clarifying thing. So the -- or the change in estimates.

So I think the first quarter, you had a $12 million decreases to the profit share estimate. And then last quarter, you took it up to $4 million. In this quarter, you're taking it up to $7.5 million. So you're kind of -- you're back to where you were expecting before and profit share expectations going forward should be about the same.

Is that -- am I understanding that about right?

Chuck Jehl -- Chief Financial Officer

Yeah. I mean yes, Vincent, you're understanding it right. I mean, I'll tell you that I think it was about $13 million negative. Second-quarter had a slight downward adjustment as well.

And so for the year, and like I said, when we file our 10-K, you'll see a table that historical vintages were adjusted downward about 1.6% for the full year. We recovered most of the change in estimate from the pre-COVID period or the COVID period. So we think we've got a robust process on the 606. It's -- at the executive level, we're all involved.

Our risk team does a great job. I mean, it's a process we go through every quarter, and we've got a great model that we're enhancing. And so we'll keep you posted. But as that changes, we'll make changes in the estimates.

But we're very pleased with how the book performed and the performance with fewer defaults and claims.

Vincent Caintic -- Stephens Inc. -- Analyst

Ok. Great. That's very helpful. Thanks so much.

Chuck Jehl -- Chief Financial Officer

You bet. Thanks, Vincent.

Operator

And our next question is from David Scharf with JMP Securities. Please proceed with your question.

David Scharf -- JMP Securities -- Analyst

Thank you. Good afternoon guys.

Chuck Jehl -- Chief Financial Officer

Hey, David.

David Scharf -- JMP Securities -- Analyst

Maybe first on the guidance, and this is more a sort of general question/observation. It's a fairly wide range still from the top to the bottom end of all the guidance metrics, approaching sort of 30% CASM between the low end and high end. And just trying to get a sense, I mean, you've painted a picture of fairly good visibility into the progress of the OEMs into the go-live roadmap over the next 60 days of a lot of new bank partners and so on and so forth. Is maintaining this 30% gap between high and low end, primarily a function of still COVID-related uncertainty sort of macro issues? Is it related more to industry competitive factors, other unknowns? Just trying to get a sense of how we ought to be thinking about what are some of the major factors that would lead one to navigate to the low end versus the high end?

Chuck Jehl -- Chief Financial Officer

Yeah. Dave, this is Chuck. I mean, one, it's early. It's early in the year.

We were encouraged -- are encouraged from Q4 into March now. You're right, there are unknowns out there with COVID. And we had the second wave and the vaccination rollout and all of that. So we felt like it was prudent -- we reaffirmed and feel really good about where those ranges are, albeit maybe it's wide.

But I'll tell you that 70% on the low end of growth versus 120 is phenomenal growth on any point in that guidance. I think the midpoint is 95%. So we'll -- obviously, the time period between reporting now for full-year '20 to Q1 is pretty short. And we're going to watch March.

March is a great month for us. And historically, it's from a seasonality perspective. And we'll give more thoughts around full-year '21 when we come back in May and talk again.

David Scharf -- JMP Securities -- Analyst

Got it. And no, no, clearly, there are a few companies very few that would be disappointed with the low end of your growth range. Just a context for the different variables at play.

Chuck Jehl -- Chief Financial Officer

You bet.

David Scharf -- JMP Securities -- Analyst

Just a quick follow-up. On the carrier side, kind of looking at my notes, I believe that you had mentioned on the third-quarter call that a third carrier was kind of getting close to the short strokes that they may actually be on board April, May this year. Is that still the case? It sounded like perhaps you were widening the net in terms of who you're talking with?

John Flynn -- Chairman and Chief Executive Officer

And you just hit the nail on the head. This is John Flynn. We -- as a result of some inbound calls from our existing carriers, we slowed that down and wanted to make sure that we were going to have the volumes there to be able to feed the different carriers that we did bring on. And as a result of that, with the use of our broker and our independent actuarial firm, we've identified upwards of 4 or 5 other carriers that are extremely interested in what we're doing.

We're under NDAs with quite a few of them. We're just trying to see which is the right fit, where can they help us grow? What introductions can they make versus us just picking somebody that can write the paper, whether we're looking at geographic growth opportunities or different areas like that? So we're in the process of narrowing that down. We do believe we'll have one on board this year, just like we did mention in the previous calls. And based on the interest that we're seeing and the volumes that we're anticipating seeing coming in from the different OEMs and banks, we might conceivably bring on two of them.

So that's not for a lack of interest from insurance carriers. It's been more of us making sure that we're dotting our I's and crossing our T's to make sure we bring on the right partner.

David Scharf -- JMP Securities -- Analyst

Got it. Thank you. Congratulations.

Chuck Jehl -- Chief Financial Officer

Thank you.

Operator

Our next question is from John Hecht with Jefferies. Please proceed with your question.

John Hecht -- Jefferies -- Analyst

Absolutely. Thanks. Thanks for taking my questions guys. And good afternoon.

Circling back a little bit to the profit share because I understand you've recaptured some of the revenue that you thought you might get when things were really uncertain earlier last year. But you also revised your underwriting fees and so forth, I think the middle of the year to account for increased credit risk. That was obviously logical at the time, but we just -- we haven't seen that credit cycle yet. So I guess the question is, are you underwriting to increased risk or less risk, number one? And number two, wouldn't we expect the margins in the profit share to at least remain elevated relative to maybe where they were before until we do see that charge-off cycle occur?

Ross Jessup -- President and Chief Operating Officer

Yeah, John, this is Ross. Yes, you're exactly right. Whenever we saw vehicle valuations drop back in April, and we went ahead, and we took a 5% decrease to the value of the vehicles. And we've left that in place.

Obviously, that movie made a lot of sense at that point in time, and there still was a risk with the Hertz situation and all that out there. We are definitely looking across credit unions of banks asking our carriers to look into that and consider moving that back to where it was pre-COVID. The purpose being, we can get our values at the level that tracks with what's happening from the Manheim Index. That will cause our interest rates to be lower, and our close ratios to be higher.

We actually did a study looking at the top 20 lenders by credit score and what their interest rates did during the last quarter compared to what they were in the first quarter and almost all of them, all their interest rates decreased in a time where ours were actually increasing. And so we believe it will be a great move from a competitive standpoint to just kind of realign that. Now what that means from all of the -- all we have booked is there are future assumptions that will be affected by a change in the removal of that 5%. If we think the values will normalize, it actually could help increase future profit share accordingly.

Chuck Jehl -- Chief Financial Officer

But as we look out into '21, we still have some stress levels on our profit share with the unknowns of -- with the vaccine and COVID. So I think that's part of the answer, too, is that those stress levels are still out there just with the unknown.

Ross Jessup -- President and Chief Operating Officer

And some of that could free up, it would...

Chuck Jehl -- Chief Financial Officer

Could absolutely free up. Absolutely.

John Hecht -- Jefferies -- Analyst

Ok. Great. That's helpful context and color. I appreciate that.

And second, nonrelated question, it sounds like -- it sounds like you have an active bank that you brought on the platform and recently, and you've got a lot of banks in the pipeline. Maybe can you just characterize what's the bank that -- not who is, but what are the characteristics of the bank you're working with? And how is that ramp going? And then you mentioned the pipeline, maybe talk about what is the sales process or sales cycle looks like? And how -- what's the cadence that we might expect to see other banks coming on the platform?

Ross Jessup -- President and Chief Operating Officer

You may talk about one of them that went live in December, one of our finance company banks that went life basically and had a great -- came out of the gates with over 100 loans in the month and is tracking to a 400 level. And that's just basically in the first 4 months. And is it proves out that in the finance side of it? And John will talk about some other banks.

John Flynn -- Chairman and Chief Executive Officer

And when I mentioned one bank live on a platform, that was in reference to a particular interface that we had built into the FIS platform. It's a bank out of Memphis, and they launched with just a few car dealerships to get started. They've now just taken us back out to, I think, upwards of a few hundred dealerships. So we're anticipating that ramp to take off.

But my comment about growing from there was, one of the hurdles we always face is making sure the interface is built that any particular bank is currently working on. And in this case, that was the FIS, what's known as the originating platform. While now that, that one bank is up and running and all the bugs are knocked off the interface, FIS will actually help us market to 12, 14 other banks that are on that identical platform. So by removing those hurdles, and you've always heard us talk about doing rev shares instead of going out and hiring a big sales force.

What we will do now is utilize the FIS sales force to help us open some doors to the banks that are on that other platform. And then they generate back a portion of our program fee and payment for building the interface. So it's been a great model for us over the years. Every interface we built, they then go out and help sell us to the users that are on that platform, and it just saves us a lot of door-knocking.

So it's been a great way for us to open doors.

John Hecht -- Jefferies -- Analyst

Great. I appreciate the color. Thanks, guys.

Ross Jessup -- President and Chief Operating Officer

Thank you.

Operator

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

Mike Grondahl -- Northland Securities -- Analyst

Yeah, thanks, guys. With OEM 3 and potentially OEM No. 4, clearly, you're working with them, exchanging some data but everything takes time. What sort of the odds or is it practical that they could be delivering certs later this year?

Chuck Jehl -- Chief Financial Officer

Yeah, How are you doing, Mike? This is Chuck. As I'm learning the business with John and Ross, I mean, these OEMs and these large banks are -- they're long sales cycle, and our '21 guidance just one and two. And we're doing everything we can. And Ross is 100% focused on it and the team, and we'd rather really just talk about it in past tents and not really -- and come back to you when that happens and not really try to give you odds on what might happen.

So -- but we -- but listen, we're focused on it and working every day to do that.

Mike Grondahl -- Northland Securities -- Analyst

Got it. Got it. And then as a follow-up, you guys, I think, implemented a price increase in May of 2020. Any thoughts on keeping that price increase or adjusting for the environment?

Ross Jessup -- President and Chief Operating Officer

Yes. And Mike, the -- so the price increase was an indirect event because whenever we decrease the value of vehicles by 5%, what that did is that actually made -- that actually caused a 15% increase in premium. So we technically, we didn't increase the premium by 15%, but by reducing the value of all the vehicle collateral that came throughput it into a higher loan-to-value. And so it tracked to a higher premium.

So -- and just -- so that is what we're considering basically evaluating and seeing if we need to have that 5% discount as it relates to the vehicle values. And certainly, it doesn't appear that there are issues with vehicle values in the future like we thought that was back in April.

John Flynn -- Chairman and Chief Executive Officer

Sure, Mike. That was the comment I made about the book to look ratio shouldn't have stayed like it was before we made that change would have represented an additional 11,000 seats last year.

Mike Grondahl -- Northland Securities -- Analyst

And do you roughly know when you'll make a decision by on that? Or is it just a sort of month-to-month look at it?

Ross Jessup -- President and Chief Operating Officer

Yeah. We've had some initial discussions with our carriers, and we've been preparing the data here to look at that. And so when we get signed off and feel comfortable with that on our side, we can make an adjustment and have it effective 30, 45 days after -- through a technology release.

Mike Grondahl -- Northland Securities -- Analyst

Got it. Ok. Thank you.

Operator

[Operator Instructions] Our next question is from Matt O'Neill with Goldman Sachs. Please proceed with your question.

Matthew O'Neill -- Goldman Sachs -- Analyst

Yeah, Good afternoon, Gentlemen. Thanks for squeezing me in to join in. Just had a couple of sort of nuanced follow-ups and thanks for all the transparency around the business and the update here. So I guess, first, could you help us just think through the sort of the constituents or pillars in the decisioning around the remeasurement.

And I know we've talked a lot about it so far. But as far as like what are the kind of one, two and three biggest factors that you guys look at, whether it's the kind of credit performance, used car prices. I was just kind of wondering if there's a way to rank order, those types of things so that we could think about how the measurement may trend going forward, understanding that we've gotten much of the way back to kind of where we were a year ago?

Ross Jessup -- President and Chief Operating Officer

I think, Matt, I think a lot of it, first of all, is in regards to defaults. Have defaults taken place compared to where we thought they would be? Are we seeing claims being filed higher than levels that we thought they would be? And so by tracking that first, we're looking at, are we kicking the can down the road, and then the develops will happen. Well, we're just not seeing it. So what we're doing is we do get data from the bureaus looking at 30, 60, 90-day delinquency trends.

And that maps very close now to when we're seeing claims possibly come in. And it's much lower than we would have anticipated and certainly what we modeled. The second part it deals with claims severity. And we're -- whatever our prior claims severity level was from a dollar standpoint, we are actually seeing claims at a much lower severity and that's because of much higher vehicle value, which is a cause of a limited inventory of new cars out there and the demand.

So I think those two are the largest components of that.

Chuck Jehl -- Chief Financial Officer

And just from the macro perspective, I mean, strengthen car sales, you think about used car values, the Manheim index, and unemployment rates and things like that. Obviously, we're focused on that.

Matthew O'Neill -- Goldman Sachs -- Analyst

Yeah, that's really helpful. As a follow-up, as you guys are having -- what sounds like an increased amount of sort of inbound from potential third and maybe fourth and beyond insurance partners. Is it safe to assume that like the existing economic share that you have contractually with your two primary providers today is effectively table stakes as you would be in discussions with subsequent or additional insurers because otherwise, you guys would theoretically be not kind of economically agnostic as far as which ensure to kind of pair with a subsequent loan, right, if they weren't in the same kind of economic arrangement as the first two partners? Is that logical?

John Flynn -- Chairman and Chief Executive Officer

Yeah. That would be identical.

Operator

And we have reached the end of the Q&A session. I'll now turn the call over to John Flynn for closing remarks.

John Flynn -- Chairman and Chief Executive Officer

Hey, guys, we really appreciate you taking the time to listen in and address -- we love addressing this kind of question. We're very wide open about where we're going with the company and where we've been. So appreciate you following us. Appreciate our investors, and looking forward to growing us into the next year.

Thanks.

Ross Jessup -- President and Chief Operating Officer

Thanks, everyone, for your time.

Operator

[Operator signoff]

Duration: 58 minutes

Call participants:

John Flynn -- Chairman and Chief Executive Officer

Ross Jessup -- President and Chief Operating Officer

Chuck Jehl -- Chief Financial Officer

Ashish Sabadra -- Deutsche Bank -- Analyst

Peter Heckmann -- D.A. Davidson -- Analyst

Randy Binner -- B. Riley FBR Inc. -- Analyst

Joseph Vafi -- Canaccord Genuity -- Analyst

John Davis -- Raymond James -- Analyst

Bob Napoli -- William Blair -- Analyst

Vincent Caintic -- Stephens Inc. -- Analyst

David Scharf -- JMP Securities -- Analyst

John Hecht -- Jefferies -- Analyst

Mike Grondahl -- Northland Securities -- Analyst

Matthew O'Neill -- Goldman Sachs -- Analyst

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