Open Lending Corporation Q1 2023 Earnings Call
[music].
Good afternoon, and welcome to open Lendings first quarter 20 twenty-three earnings Conference call. As a reminder, today's conference call is being recorded on the call today are Keith Jessica C E O and Chuck jail CFO earlier today, the company posted its first quarter 2020.
Earnings release, too, it's 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 estimated in other forward looking statements that represent the company's view.
As of today May 9th 2023 open lending disclaims any obligation to update these statements to reflect the future events or circumstances. Please refer to today's earnings release, and our filings with the SEC for more information concerning factors that could cause actual results differ from those expressed or implied.
With such statements and now I'll pass the call over to Mister Keith Gestic. Please go ahead. Thank you operator and good afternoon, everyone. Thank you for joining us today for open Loomings first quarter of 2023 earnings conference call for.
For the first quarter. Our results were ahead of our expectations, despite the economic and industry dynamics impacting our business. We face continued liquidity constraints at a majority of our credit union customers and the impact of rising interest rates on our business. We continue to experience demand-side challenges specifically affordability.
As near a nonprime consumers are being hit Disproportionally by rising interest rates, resulting in lower disposable income.
Consumer sentiment remains below its historical average.
In addition to use retail market for the past two years as as low as it has been in over a decade.
However, we are seeing modest signs of improvement in the new auto market since we last spoke in February .
Now, let me turn to our queue one highlights during.
During the quarter, we certified 32408 loans.
Generated total revenue of $38.4 million <unk>.
Gross profit of $32.9 million and adjusted EBITDA of $21.2 million.
We exceeded the high end of our queue one guidance range for all metrics certified loans revenue and adjusted EBITDA I would like to thank all the team members had opened lending for their contributions to these positive results.
As I mentioned, the pandemic related new automobile supply constraints are slowly improving specifically semiconductor chip shortfalls have been mostly replenished.
<unk> are running their plants with improved efficiency.
Transportation bottlenecks, perhaps east.
East fleets.
Fleets have rebuilt our stock.
And dealers are intelligently growing their new inventory.
Taking a closer look at the new auto retail market at 16 million units the new light vehicles. Sarah in April was up 13.5% sequentially as compared to December and up 10% over April 2022.
New vehicle inventory continues to expand and in many instances inventory is up nearly 70% year over year.
Fleet cells also increase dinner up 50% year over year and at 21.7% of total volume.
The highest share since the pandemic.
While improving new automobile Amex are welcome news and the used retail market sales declined 8% in April from March and were down 8%.
From a year ago the.
The recovery of new supply has been non linear and has fluctuated month to month you supply US currently estimated at an average of 40 days down from 49 days in January 2023.
They used at a retail market continues to show signs of pent up demand due to affordability factors facing near an nonprime buyers.
Consumers are holding on to their autos longer, but eventually the increase maintenance and repair costs will be outweighed by the benefit of getting into a newer vehicle. We have seen this dynamic in prior cycles and note that the average age of a used vehicle on the road is over 12 years old.
An all time high.
This pent up demand will create opportunity for open learning is used vehicle values moderate and interest rates decline.
Like other consumer credit categories auto loan delinquencies have continued to increase as a result of current economic conditions.
Accordingly, we tightened our underwriting in in late March increased our vehicle value discount factor.
This action effectively increases our credit default insurance pricing to reflect and compensate us appropriately.
For the potential additional risk we are taking.
With this incremental adjustment.
Our average credit default insurance premium has increased by an additional 5%.
Recall that this incremental premium is in addition to.
The 12% premium increase in second quarter of 2022.
As always we will continue to monitor risk and portfolio performance and.
And we have the flexibility and ability to make additional adjustments.
Now turning to other program underwriting changes we made in 2022 in early 2023, along with brief updates on each.
And second quarter of 2022.
We made changes to expand loan limits and extend the term of qualifying vehicles to 84 months.
As of the first quarter of 2023.
84 month term loans comprised 15% of our volume and importantly claims to date are lower than expected since our initial rollout.
That performance has yielded stronger unit economics based on higher credit default insurance premium.
In better than expected performance due.
Due to lower claims and model.
As you May recall, we put in place tighter a payment to income or PCI constraints at the onset of the pandemic and.
And then second quarter of 2022, we initiated our new PTA pricing program, where loans with higher PTR ratios are charged a higher premium and Conversely loans with lower PTR ratios receive a discounted premium.
Early performance shows this enhancements has better aligned loss ratios across our program and is having a positive impact on volume.
Earlier this year, we increased our allowable vehicle age from nine to 11 years.
Went out that we did not increase the knowledge factor is this is the most significant driver of depreciation of a vehicle. This.
This change provided a small increase the certified loan volume, but most importantly reduced counter approvals.
Improved closure rates and provided flexibility to our customers with the all time high average age of used vehicles on the road without taking on much incremental risk.
Along with the vehicle age update we've reinstated our pre pandemic policy for a loan approval exploration window from 30 days.
To 45 days for our direct and refinance channels. This change offers our customers and partners sufficient time needed to complete their respective funding processes.
Although we don't have any direct exposure to the recent banking crisis.
I wanted to take a moment to address the current banking landscape and specifically.
How it relates to smaller banks and more importantly to our core customer credit unions.
The deposit outflows experienced by some of the recent regional bank failures have not been seen in credit unions. Furthermore, credit unions continue to lend to high quality consumers. There are members and given that a fundamentally operate more conservatively when it comes to managing their balance sheets with very little leverage they are not pressured to any.
<unk> and the type of investment activity soon recently by some of the failed institutions as there are mandated to serve their members not maximize returns.
The type of loans underwritten by credit unions are more conventional in nature.
In addition, it is more common for credit unions to have deliberate strategies when.
When it comes to loan pricing from an asset and liability matching standpoint, which further strengthens our position through lending cycles as evidenced during the great recession.
In fact during that time credit Union deposits actually grew since I reviewed as a safer place by consumers to keep their money.
On our last call our shared our 2023 focus areas that we believe position us effectively for the current environment and market improvement as it comes.
These are areas that support and strengthen our long term competitive advantages and include further refining and optimizing our sales channels.
Enhancing our technology offering.
And attracting and retaining talent.
First on sales operations and marketing, we're seeing good progress from the investments we made in 2022.
While we added eight new accounts in Q1 of 2023 as compared to 18 in Q1 of 2022, we achieved our goal of shifting our results to closing larger volume accounts with a higher targeted share of business to open lending the new accounts added during the quarter represent a 100% increase.
An average target sure to us per financial institutions signed up as compared to Q1 of 2022. In addition, we continued to enroll financial institutions, who operate loan originations systems for which we already have existing successful technology integration.
As a result, we anticipate continued further improvement and streamlined work flow and onboarding processes to reduce the number of days to first revenue.
Our marketing team has been instrumental in supporting our sales team with a strong lead generation program, including increased media presence in both earned and paid channels.
Leadership based on proprietary research.
Targeted personalized outreach to institutions.
Robust industry event participation to generate leads as well as the production of Shareable campaign assets and other enabling sales tool. We believe that we have the right resources in place to continue executing or go to market sales strategy that will position us well as the industry recovers.
Our account management team remains focused on engagement and collaboration with our existing customer base to both solidify and expand.
Their use of our program.
During these uncertain economic times, our team members continue to work with our clients to reinforce the risk mitigation value. Our program offers especially as it relates to the runoff of existing auto loans.
One additional area of focus is assisting individual accounts and growing their lending footprint.
In their respective markets.
We have also made strong progress on the technology front and Q1, we completed the major milestone of deploying a new internal platform for claims adjudication.
This platform not only brings notable efficiencies to our adjudication process, but also allows us to collect additional data needed for enhanced reporting and analytics.
We are in the process of completing a transition to the public cloud, which will allow us to grow in a cost efficient matter bring enhanced security to our framework and offer access to services and technologies not readily available in our existing on Prem environment.
To date, we have achieved all major internal milestones for this important initiative.
Finally, a significant program design change was introduced in the quarter that will streamline workflows and significantly increase efficiencies for our partners and clients.
As interest rates stabilize and our refinance channel volume returns are lender partners will be positioned to support the expected larger volumes with lenders protection.
Lastly on talent, we remain focused on building a strong people strategy to support an expedite open learning as long term growth objectives by hiring and retaining top talent.
We will continue driving company culture centered on creating a diverse and collaborative environment to unlock value and foster growth for individuals teams and the business.
That said, we will be measured and thoughtful as we add team members throughout the remainder of 2023.
Having managed scaled businesses in the auto sector through the great recession I continued to be encouraged by the response of our team and in our ability to manage through the current environment I remain confident about our position in 2023 and beyond as we execute on our mission to help both lenders and underserved consumers I believe our value proposition.
To the various players in the auto retail ecosystem is as strong as ever we remain committed to our goal of gaining market share by signing new accounts and expect to be well positioned to meet pent up demand as the industry continues to recover.
Now with that I would like to turn the call over to Chuck to review Q1 in further detail as well as provide our thoughts on the outlook for Q2 Chuck.
Thanks, Keith during the first quarter of 2023, we facilitated 32408 certified loans compared to 43944 certified loans in the first quarter of 2022.
Total revenue for the first quarter of 2023 was $38 $4 million compared to $51 million in the first quarter of 2022.
Two breakdown total revenues in the first quarter of 2023 profit share revenue represented $18.6 million program fees were $17.3 million and claims administration fees and other or $2.5 million.
It is important to note that while our certified loan volume was down 26% in the first quarter of 2023 as compared to the first quarter of 2022, our program fee revenue was down only 12% due to mix of business certified which resulted in higher program fee unit economics.
Turning to profit sure I want to remind everyone that profit share revenue is comprised of the expected earned premiums less expected claims to be paid over the life of the contracts less expenses attributable to the program.
The net profit share to us is 72% and the monthly receipts from my insurance carriers reduce our contract asset each period.
Profit share revenue in the first quarter of 2023 associated with new originations was $17 $9 million or $552 per certified loan as compared to $25.7 million or $584 per certified loan in the first quarter of 2022.
And first quarter of 2023, we recorded a positive point 7 million change an estimated future profit share related to business and historic vintages.
In Anaheim used vehicle value index, which tracks the prices car dealers pay wholesale at auction for used cars is is one of the industry factors, we consider in evaluating or change an estimate each period.
As you May recall this index filled nearly 15% in 2022, the largest one year decline in the history of the index.
However, in the first quarter of 2023 index increased 6.2% as compared to December .
This was an unseasonable increase for the man I'm not seen since 2008.
Accordingly, this increase was a positive impact on our contract asset.
Another positive factor impacting the contract asset with slower prepay speeds due to the elevated interest rate environment and loans remaining in the portfolio longer than expected.
Both positive events were offset by higher than anticipated loan defaults dress apply to the portfolio as a result of rising auto loan delinquencies and projected claim frequency.
In comparison during the first quarter of 2022 revenue included a positive $2.6 million change an estimated future revenues on certified loans originated in historical periods.
Gross profit was $32.9 million in gross margin was approximately 86% in the first quarter of 2023 as a as compared to $45.3 million in gross margin approximately 90% in the first quarter of 2022.
Selling general and administrative expenses were $15 $8 million in the first quarter of 2023 compared to $13 million in the first quarter of 2022 and.
And compared to $17 $2 million in the fourth quarter of 2022.
The increase year over year is primarily due to additional team members to support our focus on our go to market sales strategy and investment in our technology.
The decrease from fourth quarter of 2022, as a result of our measured and controlled approach to incurring incremental cost in the current environment.
Operating income was $17 $1 million in the first quarter of 2023 compared to $32 $2 million in the first quarter of 2022.
Net income for the first quarter of 2023 was $12.5 million compared to net income of $23.2 million in the first quarter of 2022.
Basic and diluted earnings per share was 10 in the first quarter of 2023 as compared to 18 in the previous year quarter.
Adjusted EBITDA for the first quarter of 2023 was $21.2 million as compared to $33.8 million in the first quarter of 2022.
There's a reconciliation of GAAP to non-GAAP financial measures that can be found at the back of our earnings press release.
We exited the quarter with $372 $9 million in total assets of which $210.6 million was an unrestricted cash $65 $9 million was in contract assets and $63 $9 million in net deferred tax assets.
We had $167.3 million in total liabilities of which $146 $6 million was an outstanding debt.
We generate a $27.5 million in cash during the quarter before repurchasing $3 1 million shares of our common stock for approximately $21.3 million at an average price of $6.87 per share.
We have approximately $36 million remaining under our board approved share repurchase program.
Now moving onto our guidance for Q2 2003.
While supply may have troughed and began improving our near Nonprime consumers are continuing to feel the impact of high financing costs compared to a year ago and the upward pressure on affordability and overall demand.
We are continuing to monitor our data looking for indications that affordability is beginning to stabilize but this continues to be a challenge.
The auto sector is clearly felt the effects of the federal Reserve's initiative to tighten monetary policy.
Conversely should the fed lean more dovish going forward, we would expect to see an improvement in our business based on our analysis of prior recessionary cycles.
Until we have more visibility uncertainty and our customers auto portfolio growth. We feel it continues to be prudent to provide guidance on a quarterly basis.
Guidance for the second quarter of 2023 is as follows.
Total certified loans to be between 29030 3000.
Total revenue to be between $33 million and $37 million.
And adjusted EBITDA to be between $16 million and $20 million.
And our guidance we have taken the following factors into consideration the affordability index of our target credit score borrowers you to continue elevated used car values inflation elevated interest rates compared to a year ago levels and the financial condition of the near a non prime borrower.
We have a strong balance sheet, which has allowed us to thoughtfully invest in our business and repurchase are common stock at attractive prices, while maintaining financial flexibility that will position us very well as demand fundamentals improve.
We would like to thank everyone for joining us today, and we will now take your questions.
Thank you.
Just a question. This is the one that followed by the four on your telephone.
Alright, So you Tom prompt technology request.
It's a question has been answered and you would like to withdraw registration. Please first no one followed by <unk>.
One moment. Please for the first question, which comes from the line David Sharp with Jmp's Securities. Please go ahead.
[noise] yeah. Good afternoon, thanks for taking my questions.
Keith.
I wanted to start out.
Visiting just the.
Landscape at at the core credit Union.
Funding sources I appreciate the <unk>.
Color on.
What a deposit trends there.
But I'm I'm looking at my notes from last quarter and I know at the time.
You had mentioned, particularly with the rise in rates.
That you know.
They obviously have <unk>.
Probably more alternatives.
In terms of asset classes to invest in now can you just provide an update on.
What you're seeing in terms of Kennedy overall origination pull out there.
Just.
Another way of saying just how competitive.
Our auto loans are attractive are they relative to other asset classes.
Over the last few months.
Yeah, I certainly appreciate that thoughtful question.
Unions had been wonderfully resilient for first quarter of 2023, they maintain their leadership and loan originations.
Producing 35% of all new loan originations out there. So they have maintained their first place position over banks them captives. So they are continuing to do very very well as you know the way their source for them to to replenish liquidity is through deposits through the runoff of existing loans and through securitization.
<unk> and I know firsthand through conversations with principles that some of our large customers that they are working diligently on on progressing on all three of those fronts and I just have to say that they have been incredibly resilient. If you look at our numbers for Q1 back out the refi channel and look at credit unions only <unk>.
Actually up 13% quarter on quarter from the same time last year for our core credit Union customer base. So that credit unions have been very very resilient and are doing a wonderful job.
Got it now.
It's helpful and.
Follow up maybe staying in the same general topic [laughter].
When you increase effectively increased premiums.
Default policies.
Can you talk about I guess number number one I I assumed a credit union.
[noise] assumes that added expense.
You know.
Just based on what you're seeing from competitors you know how does that impact the competitiveness of your product when you implement another premium increase.
Yeah for sure.
The enduring value propositions that we have is that they're all of the cost of the program or first and foremost success based only and then secondly, they're all rolled into the contract right with the consumer and so none of these costs are borne by the credit union themselves, they're flowed through to the to the end consumer.
And so when we raise the premium it doesn't have the effect at all of increasing the expenses of our credit Union partners or any of our partners for that matter.
At all now of course, we take into account the competitiveness of the resulting rate and model in decreases or increases in volume Accordingly, and I've been very pleased with the performance of this most recent initiative.
Got it thank you very much.
Thank you.
The next question comes from line of Bob, but naturally with William Black. Please go ahead.
Hi, This is meant to Jane's answer about Natalie can you guys hear me okay.
Yeah, Hi, Spencer.
Hi, I was wondering if you could maybe talk through some of the swing factors within the guidance that might lead you to land at that the higher end with the lower end of your range.
Ranch.
Yeah, Yeah sure this Chuck his mentor.
As we think about the guidance, obviously, the overall macro environment and you'll an auto industry, leading indicators that we look at it and.
The elevated used car values.
Obviously, obviously the Mannheim in the prepared comments you saw where it actually unseasonably went up not seen since then so eight.
The continued consumer.
Consumer sentiment, where it's at inflation as well as interest rates and the unprecedented.
Right environment over the Alaska Test 10 connections now and over last year.
Which is about 500.
Points and right. So all of those things the timing of that and and maybe as affordability, which we talk supply is improving a bit but that's on the new front and if you think about our business.
Primarily used affordability is still the demand.
Impacts so so it is affordability for the newer nonprime consumer improves that that will help us get to the high end.
Over to the mid point.
Seed.
But it will exceed that is just more improvement there around the overall macro so.
Okay. Thank you and would you may be say I'm hearing you correctly that.
The the mid point of guidance assume some incremental improvements in affordability is that fair.
Yeah, I think I think the mid point, we feel good about the midpoint of the guide based on current conditions and we.
We were really proud of the efforts of our collective team in this environment in Q1 and is Keith pointed out in the in the call we exceeded search revenue and adjusted EBITDA on all fronts.
And do everything we can to execute and run the business and.
And control what we can so.
Thank you I appreciate it I'll get back in the queue.
You bet. Thank you.
The next question comes from the line of Joseph Lassie with chemical or just go ahead.
Hey, guys. Good afternoon, thanks for taking our questions maybe an update first on your insurance carrier partners you know given the news last quarter on CNA of how that is going.
Relative to.
The the existing ones and volumes to each and any other comments on the carriers and now the follow up.
Yeah, Hey, Hey, Joe This Chuck kind of good to hear from you.
As you mentioned Cni's CNA gave us the notice last quarter of notice to to not write new business. After this year I'll tell you. It's been very good transition so far with with CNA.
There's still writing new business.
Transitioning it over time, but they'll write that through the balance of the year, but keep in mind there'll still be an insurance carrier for many loans that they written there in the pool.
2017, when they came on so so it's orderly it's a good relationship and.
And we feel really good about that transition I think the key is with our three carriers that we had the day, we have plenty of capacity for our 2023 going beyond growth of our business as we look forward into 24 and beyond so we feel really good about the capacity of our three carriers collectively.
Got it that's helpful. And then you know, it's just kind of looking at you know at a high level and this.
This used car market Keith can provide some insight here you know it it feels like there's kind of a soft landing hard landing potential.
<unk> that could play out obviously.
If inventories on the youth front improve pretty quickly we may see more certain volume but.
You know if it increased.
Quickly I I'd assume that prices would be coming down to so now how are you thinking about the inputs two year model.
I think yeah relative to.
Pricing.
Used car pricing and how that may affect your underwriting if we were to see the used car market kind of.
Cover here with with higher inventories rather quickly and then obviously, we got interest rates.
And a few other moving parts yet so just any color on that.
Yeah, I mean, I think you captured help pretty well and just and just your question and this and this is Keith speaking.
Yeah, we're certainly looking at at volumes, you know being a at Lowe's and the used market and that supply side problem is then also compounded by problems with affordability, which we have a numerator I think on the good side of the equation that affordability is getting slightly better the Cox Moody index.
Which we tracked pretty pretty regularly you know has been up at all time highs as recently as December it's took down over the last three months. So that's that's a little sign of relief to affordability, and especially affordability hits you know our cohort of consumers, especially hard. So we're seeing we're seeing a little sign of improvement there, albeit affordability story.
<unk>.
Elevated blood levels compared to a store <unk> historical norms.
Great. Thanks.
<unk> and Joe Joe One thing I'd add is you know on the premium increase that we discussed the collateral adjustment that we put in in late late March.
That's obviously is for the environment, where the elevated used car values are higher.
We felt it was prudent to similar to what we did in Q2 of 22 to put an adjustment in to appropriate price our premium for the risks were taking it in this environment. So so that's really Ah.
Move to preserve and protect our unit economics as well as a reward the company for the risk we take.
Sure. Thanks, a lot guys.
Thank you no. Thank you.
As a reminder to registering my question. Please press the one followed by the four on your telephone keypad to your next question comes the lineup Vincent Teen Chick with Stevens. Please go ahead.
Good afternoon. Thanks for taking my questions Uhm first question, we've been tracking the OEM.
Incentive volumes and it does seem like a likely been starting to take back up again.
And I was wondering if you are seeing.
Improving discussions or or.
Improving volumes with Oems.
If if maybe there can be discussions in terms of you Oems or maybe some programs with us any vehicles.
Yeah I appreciate the question and this is Keith.
We are very pleased with our current OEM captive customers their up sequentially quarter on quarter. So Q forward, a Q1 of this year, they're up year on year. So this quarter compared to last year. So I think you kind of hit the nail on the head the the little bounce that we're seeing in new star driven by a little lift and incentives.
Is is flowing through to our customers and pleased to see that and always pleased to partner with them as it relates to future prospects I can safely say that we have the largest number of prospects in our <unk> our in our pipeline than we've ever had before that's including OEM captives very large banks and <unk>.
Answering sources are.
Our value proposition is as strong as it's ever been certainly.
Certainly checking the boxes of.
Legislative requirements, such a CRA certainly anticipating depreciation of assets. So we're very pleased of course these cell cycles are longer in nature than others, and so we want to be very cautiously optimistic, but but pleased with the progress we're making on that front.
Okay, great. Thanks for that and just following up on the profit share.
So I understand that a heightened underwriting for March.
I was wondering if you could talk about what is what macro assumptions built into the profit sharing you should be expecting that prospective changes that were highlighted in slides at the prospect of changes now comes back down or maybe just can produce volatile. Thank you.
Business Chucky I'll I'll take the question.
Kind of dovetailed back to what we discussed on the year and call. What we've done is is in the the 32400 search that we'd originated in Q1.
Those are those are at the $552.
Profit share unit economics, that's book to a 62% loss ratio and I just want to point out that that's that's got a 23% stress to our 50% benchmark or target loss ratio. So we feel like we've got adequate stress built into the new originations that we're putting on.
We've put this vehicle additional vehicle value discounting place, it's going to raise premium that will still safeguard future periods originations in these in the current conditions and as we think about the a good number to model as you think about enjoy the rest of the hillside is 550 is a good number for our profits here, where we are today.
They will continue to revoke robust quarterly process, we with our risk team very talented <unk> team Keith and I are very involved in the process and there's a lot of inputs. It's it's severity of loss, which is tied to the obviously closely to the Manhattan.
As well as.
Predicting defaults in default severe default frequency as well as prepay speeds and what we saw in this quarter is on the profit share is the manheim.
<unk> and that was a positive impact in our in our changing estimate, but we are we do stress defaults because the rising delinquencies as as well as defaults that we project into the future. So that's kind of that if you think about that realized in Q1 in in that perspective change. It was a net call at 700000, CIA change an estimate but as we think.
Forward, we feel like we've got adequate stress into the into the future on the current vintages and they are on the books and and feel good about where we are but obviously, it's facts and circumstances based in and we will address at each quarter.
Great very helpful. Thanks, so much.
I think you've mentioned.
The next question comes from lineup Peter Heckman, who is da Davidson. Please go ahead.
Good afternoon, gentlemen, thanks for taking the question I didn't hear you comment and I apologize that you had on the Oems.
Combined actually looked like 12% year over year, you talked about some of the dynamics behind that mother that.
It can be sustainable.
Giving guidance for the year, but I guess, what are you thinking about 30 seconds.
Second quarter guidance.
Yes, Hi, Pete this Chuck.
We've been pleased last couple of quarters with the sequential growth in our in our two Oems.
If you think about it you're absolutely right Q1 year over year is about a 12% increase.
Ms and and sequentially from Q4 to about a 7%. So so we were pleased to see that improvement Q.
Q for to Q1, and and then in our in our queue to guide that we put out I would tell you that we think it would be comparable in that range, where we were at in Q1, and maybe slightly better, but but we are encouraged with with the Oems in that volume picking back up as incentives have kicked back in a bit so.
Okay, Alright, that's good to hear and then.
So.
With that comment any would imply that you don't expect you read my partner is related to kick in any material way in the second quarter.
Do you have any disability to that.
Yeah. It's good question refi, you'll are supplemental that got posted to the website.
Released one out you can seek Q1 of 23 revised that 8% of our overall searched compared to.
One year ago right at 40%. So so clearly one years a big change in your we talked about the right environment in the 500 plus points that the fed has taken action.
In our current guide we don't we don't anticipate in the queue to guide that refi returns.
During that time, and we will continue to monitor that but but no big change their for Q2.
Especially with the Feds action. This week 25 bps or late last week excuse me.
Right. Okay now that that's helpful and it just if I could speak just one more and.
Just trying to infer from from Kennedy.
Average.
For certain implied in second quarter guidance, if it doesn't appear that you.
It seems like the average program fee would refer.
Closer to 500.
And these were her back down from from the first quarter high.
Yeah, I would say on the program fee in that 500 plus range for the program fee would would be a good a good estimate.
Okay I appreciate it.
You bet. Thanks Pete.
As a reminder to registering my question. Please passed on one how about a four on our telephone keypad.
We now have a question from the line of John Davis with Raymond James. Please go ahead.
Hey, good afternoon, guys can you just want it and I apologize if I missed this earlier, but commentary on just the.
Financial institutions liquidity any kind of pullback from your banks and credit unions on the willingness to fund these loans, giving liquidity challenges that they may or may not have obviously, depending on financial institution, but just curious on on any kind of change in behavior from Europe is.
Yeah, and this is Keith.
Did mentioned earlier and happy to restate. It certainly what we have seen as for our credit Union core customer base.
<unk> you know.
And others that the actual number of certified loans quarter on quarter is up 13%. So despite everything that we're talking about with liquidity challenges in these restraints they are still making loans and they've maintained their number one position and loan origination.
Generation compared to banks and the captives. So so they are strong and are doing very well and are doing well on our program.
Okay. That's helpful and then as.
As we think about the two Q certain guide obviously you guys went public.
Via back when you know Covid and there's been a lot of different things that are going going on you know the guide implies I think flat to slightly down inserts into Q anything from a seasonality perspective or is this just kind of your best guess I don't know if historically like Q2 is down from Q1, just as any context behind the guide.
Re Pfizer not expect it to come back in any meaningful way, but in a color that would be helpful.
Yes, Jonas Chuck.
The mid point of the <unk> guide his call at 31 search those so that'd be down slightly in the mid point of where we exited which was is the high end of the the Q1 guide at 32400. So March I, just point out marches seasonally a high month for the company with the tax refund. So I guess, we think about trends into to a second call.
<unk> April we felt good about April in comparison to our our re forecast as well as our guide and will continue to monitor through May and June , but but feel good about the guide that we put out there, but I just want to point out marches seasonally or high high month.
Okay I forget.
Yeah. Thanks, John .
And we have a final question from Bob monopoly with William Blair. Please go ahead.
Hi, This is Spencer again and taken advantage of the busy knife Revlon with a follow up could you maybe just remind us the breakdown in that core credit Union and bank channel between credit unions and banks.
And just clarify if you happen to see it.
Any softness with with certain bank customers, albeit that's probably a small piece of that total channel.
Yeah, you just essentially are you just looking for the breakdown of the search between credit Union and banks.
The call at 26362 search that we did for the quarter.
It's it's primarily credit unions at point out.
Okay, I think I would say 80, 85% to 85% 90% of that is credit unions verse banks, we just roll R regional banks up with that in the in the supplemental.
Understood. Thank you said 26400 numbers, but I should be looking at 85 Tonight.
Right and that's primarily creditors.
Yeah.
<unk>. Thank you.
Okay you bet. Thank you.
And there are no further questions at this time I will now turn to call them back to you just continue with your presentation and our closing remarks.
Well I Wanna, Thank everybody for joining us today, we're pleased with the results that we just exhibited for Q1 and again when I send a sincere and heartfelt. Thank you to all of the open learning employees that made it possible. Thank you have a great day, thanks for joining us.
Oh that does conclude top of top war today, what are you thinking of our participation in please disconnect your line.
[music].
Uh-huh.
[music].
Okay.
[music].
Okay.
Okay.
[music].
[music].
[music].
[music].