Q3 2021 Open Lending Corp Earnings Call
Afternoon, and welcome to open Lendings third quarter Twenty-twenty, what earnings conference call. During the presentation, all participants will be in a listen only mode.
Afterwards, we will conduct a question and answer session at that time. If you have a question. Please press the one followed by the four on your telephone if at anytime during the conference you need to reach an operator. Please press star Zero as a reminder, today's conference call is being recorded.
On the call today are John Flynn, Chairman, and CEO, and Ross Jessop, President and C O O and Chuck jail CFO earlier.
Earlier today the company posted its third quarter of 2021 earnings release too it's Investor Relations website in the release, you'll 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 view as of.
Today November 9th 2021 opened 19 disclaims any obligation to update these statements to reflect future events or circumstances. Please refer to today's earnings release and or filings with the SEC for more 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 opening remarks John.
Thank you operator, and good afternoon, everyone.
Thanks for joining us for open Lendings third quarter of 2021 earnings Conference call.
Like to start today are reviewing our third quarter highlights and the progress we've made on our growth objectives.
And we're also going to discuss the broader car manufacturing and lending landscape and provide an update on our OEM opportunity.
Finally, Chuck is going to review, our Q3 financial and are updated outlook for full year 2021.
Now do I high level results.
We're very pleased to report another record quarter at open lending Q.
Q3, 21 certified loans increased by 138%.
49332 starts.
We reported revenue of $58.9 million, which was an increase of 98%.
And adjusted EBITDA of $42.1 million.
There was an increase of 113% as compared to the third quarter of 2020.
We're very encouraged by the continued growth in our credit Union in Bank line, where we achieved a 91% year over year increase in search for the third quarter of 2021.
One is driven by the addition of new accounts further penetrating existing customers and expansion of our refinance program.
First on the existing customer side.
During the quarter, our top 10 customers, excluding Oems have increased their certification volume by 185% year to date 2021 as compared to the same period in 2020.
One way, we are growing our existing customer wallet chair.
By adding new credit unions and banks to refinance program.
During the quarter, we on board 11, new accounts and now have over 40 credit unions and banks that are acting as funding sources behind these refinance channel partners.
Ah refinance volume was nearly 30% of our total search in the third quarter 21.
As a result of our flexible business model.
Refinance channel has accommodated consumers by allowing them to modify their existing terms and lower their payments during these challenging times.
We mentioned on our last call that our largest credit union customer had recently implemented or refinance program lowering the bottom credit score from a 622 or 560 as a a.
Results of this implementation, we're happy to announce that this initiative has been a huge success and they are increase their volume by five times and continue to grow.
This is one example out of many of how.
While our partnership can be with our customers.
Continuing to grow the refinance channel is one way, we'll be able to help offset the temporary headwinds associated with affordability due to inflated values of used cars and the chip shortage, which are in turn impact in car sales, both new and used again Ross is going to touch base on this.
Topic in a few minutes.
And the new customer side, we signed 16, new accounts in the third quarter and four of these were tier one accounts classified as over 1 billion in assets and two with assets over $8 billion.
Momentum has also continued into the fourth quarter with seven new contract signed and nearly 20 have active implementations underway and.
In certain cases or permissible, we will announce the names of these large new customers once they've go online on the Lender's protection program.
Any of the inbound calls that we're getting some of the larger credit unions are related to the fact that they're all going to need to comply with Cecil in 2023 and.
And based on the recent Webinars, we co hosted with K P. M G.
These financial institutions, all have less than a year to prepare we.
We will continue to focus on this very important growth opportunity over the next 12 months.
We're also focused on three other initiatives to position us for long term growth.
I know we've touched on this previously.
But we continue to explore a third party funding sources to purchase loans, what we call a permanent capital vehicle while.
While the initiative as young we're very encouraged by the progress to date of these third party funding institutions utilizing our lenders protection platform to underwrite and decision loans.
Ah clarify we will not have any legal ownership in these funding sources.
Second we are in the early stages of work towards the ability to provide additional products to include better decision hang on prime loud as well as the ability to ensure other asset classes.
Third expanding our business insurance partnership relationships as you know, we provide a tremendous value to our insurance carrier partners and we believe the R. O is generated for the insurer.
Ah well in excess of other lines of business due to high underwriting profitability and low capital charges.
Our current partners are very pleased and we're in discussions with a few more it will give us even more capacity as well as help us with our initiative, possibly expand into other verticals.
As a reminder, these are unique in value added partnerships, which are exclusive in nature.
On October 25th through the 27th we held our annual executive lending round table.
Had over 200 credit Union Bank executive join US here in Austin, Texas for three days of round table discussion.
This event was the largest attended conference we posted since founding the company it.
It was a clear indication that our lending partners are hungry for new ideas on how to grow their auto portfolios and the absence of chips, a new car inventory.
Before I turn it over to Ross to review, our OEM business as well as the global semiconductor supply chains impact to our business I would like to remind everyone of a few key points.
As you've heard us say on previous calls over 80% of our business is typically used cars.
With inflated used car values, it's making it increasingly difficult for our target market. That's consumers with scores of $5 60 to 680 to be able to qualify for a loan due to the payment to income threshold that we have in place.
With that I'd like to offer a couple of insights based on our prior experiences during these types of cycles.
For starters this pandemic induced recessionary cycle as presented patterns that we're familiar with based on over 20 years of data in history.
Heading into recession, we typically see supply in excess of demand and market conditions soften <unk>.
Inversely once the market trough, we experience a period of insufficient supply and demand returns.
We also see specific metrics that are times can forecast the inflection point.
Currently we are experiencing very low levels of dealer inventory low levels of incentives offered by dealers and dealers transacting with the highest quality of fire from a credit score perspective.
In some instances new vehicles are selling over MSRP and used car inventories are being priced up.
While it can be challenging to know when we have precisely turned the corner and reached that inflection point, we do know that in prior cycles. The recovery spans a period of 6% to 18 months.
Over that timeframe pricing inevitably moderates and consequently volumes increased notably.
We do believe that we will be well positioned to capture our share of the estimated 5 million plus units of excess Amanda currently are forecast that.
It is important to note that we continue to be disciplined and the way we run our business.
While others in the market are relaxing underwriting standards, we remain steadfast in our position. So we want to set our partners up for long term success by delivering appropriate risk adjusted returns under auto loan portfolios and.
And with that I'm going to go ahead and turn this over to Ross Thanks, John as John mentioned.
Spend a few minutes to talk about the general Lindy landscape first on the chip shortage Oems are allocating the limited production of chips to the most profitable units jewelry, the more expensive and less affordable units.
Due to this new vehicle inventory continues to decline down 67% from a year ago.
This is also led to less incentives being offered which impacts the near term opportunity for subvention offering.
Average incentive spending per unit in October 2021.
The expected to reach a record low of approximately $1600, which is down from almost 3500 in October 2020.
This will obviously impact our business if the shortage continues for a long time however.
There are a few staff that are suggesting that we may be in a trough and that we should see an inventory recovery in the coming months.
As an example, the vice President of sales operations that key America recently said that despite ongoing supply chain issues of jip shortages.
We expect are available supply and robust customer interest will help us to have a strong finish for the year.
In addition, some of the largest Oems.
The more optimistic on supply.
Board recently predicted increased volume in the final months of 2021.
G M plans to resume production of the Malibu for the first time since February 2021, as an indication that is chipped supplies or stable enough to be able to even its lowest priority vehicles.
Despite all these short term conditions, we're still seeing a lot of engagement and excitement with the current and prospective OEM partners soon.
Similar to the Greta use a big space.
As a reminder, there are many benefits to them to partner with Us first.
[noise] earnings and roadways, two captives with credit performance net of default insurance payments comparable to promise.
Second they were able to generate low risk revenues by leveraging their existing infrastructure and network.
Third they.
They experienced increased profitability due to credit loss release under the seasonal standards.
And most importantly increase repeat buyers by keeping consumers in the captive customer ecosystem.
With that backdrop I'm Gonna give you a brief update on Oh, you've never wanted to which combined have grown 205% year to date in 2021.
First for the <unk> number one.
The third quarter 2021, we experienced certification growth of approximately 38% compared to Q3 of 20.
I bet you the chip shortage earlier.
His impact the new car volumes as over 65% of their volume was new vehicles earlier this year.
<unk> number two.
Certified loan growth continues Q3 of 21 as a reminder, OEM number two came back online in October 2020, after going offline due to the COVID-19 pandemic.
The chip shortages also impacting this OEM, but we're excited by around and it was working just as design it will be a major part of our growth plan with affordability and the supply chips returns to normal levels.
We've been able to grow are used volumes across all three channels, which has allowed us to continue growing our business. During this time.
We expanded terms with 75 months in early April 2021, as requested by the OEM and have seen the seventy-five mutt loads represent about 17% of their origination since April 2021.
We could do to work through contractual implementation workflows, we're engineering into the Ssw with one of these oem's provider to expand our current integration to include the bells and whistles that their clients will need to include for example submission.
In other dealer facing enhancements. This work will enable our systems to be ready, we could do make good progress will be <unk> provider and OEM and we'll keep you updated on our progress.
In summary, even though the light vehicles are is down nearly 25% we continue to grow our year over year volumes with our two existing Oems.
We are optimistic.
That would inventories begin to build and the smaller returns to a positive trend line, we will benefit based on the picked up demand and the market.
I will now turn it over to just discuss are cute to repent angels at outlook in more detail.
Thanks Ross.
During the third quarter of 2021, we facilitated 49332 certified loans compared to 20696 certified loans in Q3 of 20.
138% increase year over year.
We execute to 16 contracts with new customers in.
In addition, we have nearly 20 active implementations would go live dates in the next 60 to 90 days.
Total revenue for third quarter of 2021 increased 98% to $58 $9 million as compared to $29.8 million in third quarter of 2020.
Profit your revenue consisted of $35.4 million of total revenue program fees were 21.6 million and claims administration fee for $1.8 million.
Now, we'd like to further breakdown $35.4 million in profit share revenue recognized in the third quarter of 2021.
Profit share associated with new originations in the third quarter of 21 was $27.9 million or $566 per certified alone.
As compared to $14.7 million or $711 per certified loan in the third quarter of 2020.
As previously disclosed in April of 2021, we remove the vehicle valued discount established as part of our underwriting changes implemented at the onset of COVID-19.
Which had the effect of increasing insurance premiums and corresponding profit share to us during the pandemic.
Definitely 15% per certified alone.
As a result of transitioning back to pre Covid normalized underwriting standards are average profit share unit economics, and third quarter of 2021 are comparable to pre COVID-19 profits your economics.
This change in underwriting has improved our closure rates driven record certified lone volumes and expanded our competitive position in the market.
Also include in profit share revenues third quarter of 2021 was 7.5 million change and estimated revenues from certified loans originated in previous periods. As a result of improved macroeconomic conditions and the continued overall portfolio performing better than we expected due to lower defaults and claims as a reminder.
Profit shares pay dues monthly by the insurance carriers from the underwriting profit associated with lenders protections risks under ASC six O. Six we recognize the estimated prophet sure upfront and the month alone is certified based on our forecast of defaults prepayments severity outstanding principal and premium on a loan Butler.
<unk> we.
We have adjustments to our contract assets due to estimation of revenue from loans originated in previous periods on a prospective basis.
And our supplemental earning slides posted on our website, we have slides to further explain changes in contract assets profit share revenue and unit economic trends.
Consistent with the last quarter, we break down the change and estimates over the past quarters between realized portfolio performance and perspective changes in assumptions for future periods.
We would like to point out that during the last 12 months almost 90% of our positive changes and estimates related to profit share revenue due to actual realized portfolio performance.
Acyclic lower than projected claims in severity of losses and historical periods drove these positive changes.
Which increased our estimate in our contract asset profit share revenues and in turn drives near term cash flows.
Continued strong loan performance from a risk perspective will result in additional positive changes in our contract assets profit share revenues and near term cash flows.
Gross profit was $52.5 million in third quarter of 2021, an increase of 93%.
Driven primarily by the increase in certified loans in the third quarter of 2021 is compared to the third quarter of 2020.
Gross margin was nearly 90% in the third quarter of 21 compared to 92% in third quarter of 2020.
Now, let's turn to selling in general administrative expenses, which were $11.8 million in the third quarter of 2021 compared to seven seven millions of the previous year quarter.
The increase primarily represents employee compensation and benefits, including sure based compensation related to head Count addition to enhance internal controls financial reporting and compliance functions risks in information technology for a public company.
Operating income was $47 million in the third quarter of 2021 compared to $19.5 million in third quarter of 2020.
Net income in the third quarter of 2021 was $29.4 million compared to a net loss of $71.1 million in third quarter of 2020.
As a reminder, we haven't $83 1 million expenses in third quarter of 2020 that were associated with the business combination specifically a non-cash charge as a result of the change in fair value of contingent consideration earn out shares which were accounted for his liability awards.
All contingent earn out sure milestones were met in the third quarter of 2020.
Adjusted EBITDA for the third quarter of 2021 was $42.1 million as compared to $19.7 million in third quarter of 2020.
There is a reconciliation from gap to non-GAAP financial measures that can be found at the back of our earnings release, we exited the quarter with $293 $2 million in total assets of which $99 million was an unrestricted cash $114.3 million was in contract assets and $66 million in deferred tax assets.
We had $165 7 million in total liabilities of which $147 million was an outstanding debt.
We had approximately $126 2 million shares outstanding on September 30th 2021, we posted and updated investor presentation, and third quarter of 2021, earning supplemental to our Investor Relations website, which includes a slide that lays out our current sure counts.
Now move into our guidance for 2021.
Based on third quarter results and trends into the fourth quarter of 2021, we're narrowing or previously announced guidance range is as follows total certified loans to be between 165170 4000.
At the midpoint our growth is approximately 80% against the backdrop of a sore that is contracted over 25%.
Total revenue to be between $200 million and $212 million adjusted EBITDA to be between $140 million and $150 million and adjusted operating cash flow to be between $110 million and $125 million.
Even though we are narrowing or previously reported guidance ranges. We're excited about the resiliency of our business despite inflated car values and the global semiconductor chip shortages.
Further we are still within the guidance ranges provided 18 months ago, which demonstrates the predictability of our business model.
And narrowing our guidance we took the following factors into consideration.
Portability index for our target credit score of 560 to 680 due to continue inflated used car values.
The global semiconductor chip shortage.
<unk> is that a streamline their supply chain, having moved toward just in time manufacturing processes.
Disruption in the transportation networks, and raw material shortages and low levels of dealer inventory.
With that I will now turn it back over to John who will make a few closing comments before moving to Q&A John.
Thanks, Chuck I want to thank everyone for joining us today for our third quarter of 2021 earnings cough.
We remain excited about the future and the opportunity ahead for us to do.
I will leave you with a couple of thoughts here.
We successfully navigated through the first.
Phase of COVID-19, and 2020.
We also navigated through the surge of the Delta Berrien throughout 2021, continuing to grow our business and.
And we will navigate through the inventory and affordability constraints.
Our business model has proven that it's very resilient and we are well positioned as these headwinds subside.
As you may recall or Tam is over $250 billion.
Only have low single digit penetration today, which leads to significant white space and more opportunity.
Want to thank everybody again for joining us. Thank you.
Thank you and if you would like to rest or for a question. Please press. The one followed by the four on your telephone you'll hear a three tone prompt talking all the general questions and your line will be accessed from the conference to obtain information.
If your question has been answered and you would like to Australia registration. Please press the one followed by three.
Once again, that's one four to rest or for question. One brief moment for the first question.
Okay.
And we do have a question from Vincent can take with Stevens. Please go ahead joins open.
Hey, Thanks. Good afternoon. Thanks for taking my question I, just first wanted to touch on the guidance and what's applied for the fourth quarter.
I look at the midpoint of the range for the fourth quarter at it implies about four and a half thousand of search and I was just wondering when we look at the third quarter.
It's down.
And just when we think about the fourth quarter guidance and looking to join trying to use the fourth quarter a good run right.
And you've been adding.
And lenders not only and lenders as an example, you just wondering when you think about those additions and when they generate start to generate certification volumes.
Is that enough to offset some of these industry headwinds. Thank you.
Yeah, Hey, Vincent How're you doing this Chuck.
We basically our guidance had been on the market for over 18 months in the recent we can really saw the impact of the chips as well as the affordability.
On our target Tyco or credit score really impact us beginning late September timeframe into the fourth quarter here. So it's really really more around the inflated car values affordability as well as just inventory and the Sars down 25%, both new and used.
And it's just that we felt it was time to to basically narrow that guidance a bit from the 18 month old guidance.
We came off a record Q3 the business is strong we feel really good about where we're heading into 2022.
There's a lot of pent up demand out there that we believe we are well positioned for when when things correct and the inventories get to get restocked events, and one thing I would add to that.
We mentioned the refinance channel during the call as well and the number of attendees that we had at our user group meeting.
Think you're going to see we had a lot of interest in credit unions that we're not aware of that and banks looking to sign up for that refinance channel and there's a lot of opportunity there.
We bring them on.
These are accounts that are live with us today, that's not a six month ramp to get up and running on a refinance channels. So I think you're going to see.
Some good tailwind here, but the refinance yeah and all that.
A little bit more we believe these are temporary headwinds and this will work itself out over time so.
Think we've already added 60, plus new customers in 2021 through through October and that's ahead of last year, a full year. So continue having a lot of interest in new customers coming aboard as Johnson.
Okay, great Yeah, I appreciate that and so the 60 plus new customers I guess, when you think about what an average customer could generate once you're mature and how long does it take for them to be.
Mature you know what are you thinking about that not only them opportunity.
Four to six months from the time, we get them Purdue.
Producing their first served a ramp up.
Unless it's refi again refi is not as more of a turnkey program pension.
Where once we hook them up with.
One of the five or six different refinance channels, we have live they can start producing loans as early as 30 days out.
Okay. Thank you for that and the last one for me I know you talked about kind of the OEM engagement is still high just maybe any updates you can provide on the OEM pipeline and we saw in.
In the quarter one of your lending partners is becoming a captive OEM lender just if there's any thoughts you can decide on the pipeline. Thank you.
Yes. It is in this Ross.
So we have a great relationship with the the party you are talking about and with that announcement just closing last week, we're excited about it.
We've actually been in discussions with that particular captive.
14, or 15 months separately.
But we are we are ready to have those deeper discussions we are.
We will let.
Our client direct that but we certainly are very excited about it and happy for their success and the opportunity is going to be big and and we certainly are ready to to to have those deeper discussion whenever they direct us but.
That's about all I can talk about today with that.
As it relates to.
Two the other Oems.
The one that is extremely close with.
Our work, we're doing with that.
Partner.
Look at it signing a statement of work here.
Potentially obligating ourselves, where that work, which shows our commitment and belief that this is going to go through and.
We have lots of implementation type.
Meetings ongoing with them legal work right now contractual.
Work evaluating the documents and yes, we are excited about that as well.
Certainly we look forward to give them more updates as we as we can on that opportunity.
Citing.
That's very helpful. Thanks very much.
Our next question is from Joseph.
<unk> with Canaccord. Please go ahead you lines open.
Hey, guys good app.
And I see the continued growth bite the headwinds just just following up on Vincent what's in there and maybe this one's for Ross.
It sounds like OEM number threes, moving forward and you're moving through kind of I T and legal.
<unk>.
Six cent you can talk about it is is that.
Is there more to do with this OEM relative to their internal.
Check boxes versus some of the other Oems you've signed it then maybe all the follow up after that.
I think they're the.
Level of enthusiasm on that side has not changed at all.
The.
The integration that we're building with the third party will have subvention will have all of our certification piece of technology that needed to be added to our current integration with them and they are a little.
Start to work and get it done.
Here early next year, and we'll be able to launch afterwards so.
At the same time, we're working through the business side of it about how they're going to use our program, where we are in legal we've gotten management buy in.
From this and so we're working through it and certainly would look forward to when we get actually share assigning.
Assigning date and kind of that implementation.
Land, which will definitely affect 2022.
That's great to hear off and then you think I mean, I know, you'll probably provide a 22 guide.
Maybe on your coupon number do you think.
All of those well you'll be able to incorporate some of that OEM number three in the 22 guys at this point or.
But.
You'll have to make maybe a game time decision on that as we get closer.
I think that certainly our plan and hopefully there is another one as well but for sure. That's part of our plan. We haven't finished the development of it yet we're working with it but it sure looks like that's going to be a part of it right.
That's great.
Alright, Thanks Scott.
Great. Thank Joe model really differentiate it thanks.
If you'd like to register for a question. Please press one four on your telephone we do have a question from Peter Heckman with Ta Davidson. Please go ahead you want children.
Good afternoon. Thank you for taking the question continued really strong growth on the bank and a credit Union side.
Just just for the record.
I'm just trying to have a number of right how many.
Hi customer suggest at the end of the quarter.
You haven't the energy and time during the course do you have any we signed Peter or are you talking that total customers approximately 400 total cost active customers.
Okay, all right and then so when you think about relative sizing you've got the.
Top 10 customers that.
Generally I would characterize it as kind of mid tier credit Union.
You are talking in the past about moving.
Into the higher tiers.
How do you see that progression happening and.
Just a little bit of any additional thoughts I mean, right now it looks to me like you're doing.
You have to make 100 search or.
FYI customer.
But you talked about maybe some larger institutions that could potentially do couple thousand.
Can you give us a little more color on some of those discussions.
Sure.
We mentioned earlier to that of the ones that we signed in the last quarter. There was four I think pier one accounts over $1 billion in assets and two of those were over $8 billion.
To your point of the average of 100 startup.
An institution is kind of misleading in that we've got some shops.
Doing as high as 2500, a month and then some of the smaller shops might do 50 to 100 and they are a good account.
With the onslaught of see saw coming into light and 2023.
Had a lot of interest that our user group meeting, we actually had KPMG at our as one of our presenters that the function that we had here a couple of weeks ago and.
Yeah, they made it very clear that the larger institutions.
I'll need to be compliant by 2023, which is really just a year out so they're all starting to ask the right questions.
Position themselves for the ability to take advantage of that seasonal reduction as a result of having these loans insured.
Some of our larger shops that were signing on.
Are anticipating doing certainly more than 100 deals per month, and those up or tears.
Okay.
It's really helpful and it just keeps.
You want more I mean, how are you thinking about capital allocation going forward somebody's been generating really strong cash flow.
It should be in a net cash position.
And the model.
About a year out how do you think about allocating at between.
Julie M&A share repurchase dividend what are your thoughts.
What are your early thought there.
Yeah, you just Chuck obviously, we think about capital location, all the time and.
First and foremost invested in our business, our technology enhancements and development as we think about lenders protection going forward in our human resources, we invested in a lot of folks is this past year and will continue to invest in sales marketing and technology.
We look at M&A and we first we're focused on the organic just because the white space in the <unk> is so large and as John was talking about the credit unions I.
I think we're 400, you know call at 390 credit unions today out of 5000, plus there's a great opportunity to continue penetrating there so but yeah M&A for the right opportunity.
Would definitely be something we'd look at is that created value for shareholders and accretive to our business and then of course, you know on the balance sheet. We've we've historically as you know we've done a couple of share buybacks and participated in the secondaries. We believe in the stock in the story and and that's definitely.
A priority in an allocation opportunity for us so so all of the above in la.
Low leverage in and not allowed to do on the balance sheet. So.
Those are all opportunities force.
Great I appreciate it thanks, so much.
Thanks Pete.
Our next question is from my Grondahl with Northland Capital markets. Please go ahead and one is open.
Hi, This is Michael on for Mike and Thanks for taking my question.
Maybe first options you mentioned, one large credit union customer moving from 620 560.
Further credit scores with the refi would you say that sort of an average.
Move that bottom bracket or is that very quite a bit cross that customer base.
Yeah, It's a mixed bag you know we have some institutions.
Come out of the suits doing.
562, whatever their cutoff as of 680 660, they all get to pick what they consider to be their triggers but that this was a big move for a bag shop to go that low and.
I think it's kind of generate some significant volume in those lower tiers.
We have a lot of shops to call that low right now.
Got it and then you just mentioned KPMG with your throat.
Sort of a customer.
Conference do you get a lot of uncertainty.
Inbound interest through their conversations they're having with their customers.
We do.
I think we have I mentioned that in a call that.
People a great presentation, probably 30 minute presentation at our at our round table and.
Since then we've gotten quite a bit of calls from the large any size shop, knowing that they need to comply with that same laid out a really good scare.
Schedule of events, if you will of what needs to happen between now and going live.
I think it prompted a lot of interest in a lot of our shops.
Thank you and our next question is from James Fussing with Morgan Stanley. Please go ahead of your own gentlemen.
Thank you I just wanted to ask on.
Purser economics et cetera, you know it seemed like it was kicked down a little bit maybe now we're just trying to.
In terms of getting our modeling correctly.
Where do you see that average profit share revenue per search saddling we've.
We've seen this kicked down a little bit as conditions of normalized but just want to make sure that we understand the put some tapes of what's happening there and what do you think it may settle out.
Yeah, How're you doing James is Chuck Yeah, I mean, we talked about a little bit in the last quarter in April of 21, we removed our vehicle valued discount that we had in place for on the onset of Covid, which which increased premium and profit sure do.
$20 and 21.
We had in queue to we only had a two months of that impact. If you will so that 582 and profit share that we recognized on the new originations in Q2 came down slightly in Q3, just based on having three full months in there for that being removed. So we feel like that $5 65 assert is ah.
Used on the mix that we had this quarter is a good number to model and I think I'll compare that back to Q1 of 20 prior to the the underwriting changes when Covid came came about and we were about 564 and a search. So we're we're right in that pre COVID-19 normalised level.
Used on the mix that we had this quarter is a good number to model and I think I'll compare that back to Q1 of 20 prior to the the underwriting changes when Covid came came about and we were about 564 and a search. So we're we're right in that pre COVID-19 normalised level.
That's very detailed really appreciate that and then.
When you think of going back to I think one of your first questions was just like.
You're looking at the market right now and obviously, you've got the benefit of additional.
Additional.
Banks coming on perhaps the OEM and next year, but at the same time as that you're hopefully going to see a bottom in the overall size of the market.
What are you is this kind of low forties, the right run right to start the year 22, one or like what like I'm trying to get a sense of your ambitions and what the puts and takes are for next year as we think about like all the different potential drivers.
Yeah, that's a great question.
Our early thoughts on 22, and you know we will provide more on 22 is on the next quarter call.
As the economy fully reopens, we're going to be a direct beneficiary of that I mean, there is pent up demand.
I think I think Ross is comments, there's over 5 million units of demand out there.
In the marketplace, we monitor inventory levels pricing dynamics noon, the supply chain shortages and.
We believe will return to significant growth growth profile is inventory restocked. So the pace of the recovery. We believe based on the current data that we're close to a trough.
We have no reason to believe that we can't get back to significant growth in Q3 record levels. We just came off a record quarters the company and and believe we can get back to that soon and continue beyond that is our growth continues.
That's great. Thanks, a lot.
You bet. Thank you.
And there are no further questions. So I'll turn the call back to management.
I appreciate everybody coming on today and the questions have been great anything else, we can answer.
Or an open book here, so look forward to continuing.
Working with you in moving this forward thanks to everybody. Thanks, Thanks for your time.
Have a good night.
That concludes the call for today, we thank you for your participation as you. Please disconnect your line.
[music].