8-K
Open Lending Corp (LPRO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
| FORM 8-K |
|---|
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 27, 2024
OPEN LENDING CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 001-39326 | 84-5031428 |
|---|---|---|
| (State or other jurisdiction<br>of incorporation) | (Commission<br>File Number) | (IRS Employer<br>Identification No.) |
1501 S. MoPac Expressway
Suite 450
Austin, Texas 78746
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: 512-892-0400
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br>Symbol(s) | Name of each exchange<br>on which registered |
|---|---|---|
| Common stock, par value $0.01 per share | LPRO | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On February 27, 2024, Open Lending Corporation (the “Company”) issued a press release announcing its financial results for the fiscal quarter and year ended December 31, 2023. A copy of the press release and additional supplemental financial information are attached as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K and are incorporated by reference herein.
The information furnished under this Item 2.02 and in the accompanying Exhibits 99.1 and 99.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| 99.1 | Earnings Release, datedFebruarya20231231-ex991.htm27, 2024, titled “Open Lending ReportsFourthQuarterand FullYear2023 Financial Results.” |
|---|---|
| 99.2 | Earnings Supplement Q4 and Full Year 2023 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| OPEN LENDING CORPORATION | |
|---|---|
| By: | /s/ Charles D. Jehl |
| Name: | Charles D. Jehl |
| Title: | Chief Financial Officer |
Date: February 27, 2024
2
Document
Exhibit 99.1
Open Lending Reports Fourth Quarter and Full Year 2023 Financial Results
AUSTIN, Texas, February 27, 2024 – Open Lending Corporation (Nasdaq: LPRO) (the “Company” or “Open Lending”), an industry trailblazer in lending enablement and risk analytics solutions for financial institutions, today reported financial results for its fourth quarter and full year ended December 31, 2023.
“We exceeded the high-end of our guidance range for certified loans and revenues in the fourth quarter, excluding a negative change in estimate associated with our profit share. In 2023, we continued to improve our product and technology and further refined our go-to-market strategy to position us well for growth,” said Keith Jezek, CEO of Open Lending. “In 2024, our priorities will be to optimize the core business as well as further expand into the bank segment. I believe our value proposition to the various players in the auto retail ecosystem is as strong as ever, and by executing on our priorities, we will be well-positioned to capture the pent-up demand as the industry inevitably recovers. I am proud of the continued execution by our team as we remain focused on our mission to change lives by making transportation affordable.”
Three Months Ended December 31, 2023 Highlights
•The Company facilitated 26,263 certified loans during the fourth quarter of 2023, compared to 34,550 certified loans in the fourth quarter of 2022.
•Total revenue was $14.9 million during the fourth quarter of 2023, compared to $26.8 million in the quarter of 2022. The fourth quarter of 2023 was negatively impacted by a $14.3 million reduction in estimated future profit share revenues related to business in historic vintages as compared to a $12.8 million reduction in the fourth quarter of 2022.
•Gross profit was $9.6 million during the fourth quarter of 2023, compared to $21.9 million in the fourth quarter of 2022.
•Net loss was $4.8 million during the fourth quarter of 2023, compared to a $4.2 million net loss in the fourth quarter of 2022.
•Adjusted EBITDA was $(2.1) million during the fourth quarter of 2023, compared to $8.5 million in the fourth quarter of 2022.
Twelve Months Ended December 31, 2023 Highlights
•The Company facilitated 122,984 certified loans during the year ended December 31, 2023, compared to 165,211 certified loans in the prior year.
•Total revenue was $117.5 million during the year ended December 31, 2023, compared to $179.6 million in the prior year. The year ended 2023 was negatively impacted by a $22.8 million reduction in estimated future profit share revenues related to business in historic vintages as compared to a $5.7 million reduction in the prior year.
•Gross profit was $95.2 million during the year ended December 31, 2023, compared to $159.6 million in the prior year.
•Net income was $22.1 million during the year ended December 31, 2023, compared to $66.6 million in the prior year.
•Adjusted EBITDA was $50.2 million during the year ended December 31, 2023, compared to $105.7 million in the prior year.
Adjusted EBITDA is a non-GAAP financial measure. A reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure is provided in the financial table included at the end of this press release. An explanation of this measure and how it is calculated is also included under the heading “Non-GAAP Financial Measures.”
First Quarter 2024 Outlook
Based on trends into 2024, the Company is issuing its first quarter 2024 guidance ranges as follows:
| Total Certified Loans | 24,000 - 28,000 |
|---|---|
| Total Revenue | $26 - $30 million |
| Adjusted EBITDA | $10 - $14 million |
The guidance provided above includes forward-looking statements within the meaning of U.S. securities laws. See “Forward-Looking Statements” below.
Conference Call
Open Lending will host a conference call to discuss the fourth quarter and full year 2023 financial results today at 5:00 pm ET. The conference call will be webcast live from the Company's investor relations website at https://investors.openlending.com/ under the “Events” section. The conference call can also be accessed live over the phone by dialing (877) 407-4018, or for international callers (201) 689-8471; the conference ID is 13743278. An archive of the webcast will be available at the same location on the website shortly after the call has concluded.
About Open Lending
Open Lending (Nasdaq: LPRO) provides loan analytics, risk-based pricing, risk modeling and default insurance to auto lenders throughout the United States. For over 20 years, we have been empowering financial institutions to create profitable auto loan portfolios with less risk and more reward. For more information, please visit www.openlending.com.
Forward-Looking Statements
This press release includes certain statements that are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995, including statements related to market trends, consumer behavior and demand for automotive loans, as well as future financial performance under the heading “First Quarter 2024 Outlook” above. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These statements are based on various assumptions and on the current expectations of the Company’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the Company’s control. These forward-looking statements are subject to a number of risks and uncertainties, including general economic, market, political and business conditions; applicable taxes, inflation, supply chain disruptions including global hostilities and responses thereto, interest rates and the regulatory environment; the outcome of judicial proceedings to which Open Lending may become a party; and other risks discussed in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2023. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that the Company presently does not know or that it currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect the Company’s expectations, plans or forecasts of future events and views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its assessments to change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company’s assessments as of any date subsequent to the date of this press release. Accordingly, undue reliance should not be placed upon the forward-looking statements.
Non-GAAP Financial Measures
The non-GAAP financial measures included in this press release are financial information that has not been prepared in accordance with GAAP. The Company uses Adjusted EBITDA, Adjusted EBITDA margin and Adjusted operating cash flows internally in analyzing our financial results and believes these measures are useful to
investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance. The Company believes that the use of non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial results with other companies in our industry, many of which present similar non-GAAP financial measures to investors.
The Company believes these measures provide useful information to investors and others in understanding and evaluating its operating results in the same manner as its management and board of directors. In addition, these measures provide useful measures for period-to-period comparisons of our business, as they remove the effect of certain non-cash items and certain non-recurring variable charges. Adjusted EBITDA is defined as GAAP net income excluding interest expense, income taxes, depreciation and amortization expense of property and equipment, and share-based compensation expense. Adjusted EBITDA margin is defined as Adjusted EBITDA expressed as a percentage of total revenue. Adjusted operating cash flows is defined as Adjusted EBITDA, minus CAPEX, +/- change in contract assets.
Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measure provided in the financial statement tables included below in this press release.
Contact:
ICR for Open Lending
Investors
openlending@icrinc.com
OPEN LENDING CORPORATION
Consolidated Balance Sheets
(Unaudited, in thousands, except share data)
| December 31, 2023 | December 31, 2022 | |||
|---|---|---|---|---|
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | $ | 240,206 | $ | 204,450 |
| Restricted cash | 6,463 | 4,069 | ||
| Accounts receivable, net | 4,616 | 5,721 | ||
| Current contract assets, net | 28,704 | 54,429 | ||
| Income tax receivable | 7,035 | 9,714 | ||
| Other current assets | 2,852 | 2,361 | ||
| Total current assets | 289,876 | 280,744 | ||
| Fixed assets, net | 3,913 | 2,573 | ||
| Operating lease right-of-use asset, net | 3,990 | 4,610 | ||
| Contract assets | 610 | 21,001 | ||
| Deferred tax asset, net | 70,113 | 65,128 | ||
| Other assets | 5,535 | 5,575 | ||
| Total assets | $ | 374,037 | $ | 379,631 |
| Liabilities and stockholders’ equity | ||||
| Current liabilities | ||||
| Accounts payable | $ | 375 | $ | 288 |
| Accrued expenses | 8,131 | 6,388 | ||
| Current portion of debt | 4,688 | 3,750 | ||
| Third-party claims administration liability | 6,464 | 4,055 | ||
| Other current liabilities | 932 | 626 | ||
| Total current liabilities | 20,590 | 15,107 | ||
| Long-term debt, net of deferred financing costs | 139,357 | 143,683 | ||
| Operating lease liabilities | 3,450 | 4,082 | ||
| Other liabilities | 5,060 | 3,935 | ||
| Total liabilities | 168,457 | 166,807 | ||
| Commitments and contingencies | ||||
| Stockholders’ equity | ||||
| Preferred stock, $0.01 par value; 10,000,000 shares authorized and none issued and outstanding | — | — | ||
| Common stock, $0.01 par value; 550,000,000 shares authorized, 128,198,185 shares issued and 118,819,795 shares outstanding as of December 31, 2023 and 128,198,185 shares issued and 123,646,059 shares outstanding as of December 31, 2022 | 1,282 | 1,282 | ||
| Additional paid-in capital | 502,032 | 499,625 | ||
| Accumulated deficit | (193,749) | (215,819) | ||
| Treasury stock at cost, 9,378,390 shares at December 31, 2023 and 4,552,126 at December 31, 2022 | (103,985) | (72,264) | ||
| Total stockholders’ equity | 205,580 | 212,824 | ||
| Total liabilities and stockholders’ equity | $ | 374,037 | $ | 379,631 |
OPEN LENDING CORPORATION
Consolidated Statements of Operations
(Unaudited, in thousands, except share data)
| Three Months Ended December 31, | Year Ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |||||
| Revenue | ||||||||
| Program fees | $ | 13,482 | $ | 18,309 | $ | 64,092 | $ | 80,611 |
| Profit share | (1,132) | 6,066 | 43,301 | 90,056 | ||||
| Claims administration and other service fees | 2,589 | 2,446 | 10,067 | 8,927 | ||||
| Total revenue | 14,939 | 26,821 | 117,460 | 179,594 | ||||
| Cost of services | 5,365 | 4,896 | 22,282 | 19,968 | ||||
| Gross profit | 9,574 | 21,925 | 95,178 | 159,626 | ||||
| Operating expenses | ||||||||
| General and administrative | 12,002 | 11,165 | 43,043 | 35,950 | ||||
| Selling and marketing | 4,349 | 4,148 | 17,485 | 17,856 | ||||
| Research and development | 1,500 | 1,839 | 5,575 | 8,205 | ||||
| Total operating expenses | 17,851 | 17,152 | 66,103 | 62,011 | ||||
| Operating income (loss) | (8,277) | 4,773 | 29,075 | 97,615 | ||||
| Interest expense | (2,820) | (2,297) | (10,661) | (5,832) | ||||
| Interest income | 3,018 | 1,627 | 10,335 | 1,995 | ||||
| Other expense, net | 118 | 1 | 109 | (238) | ||||
| Income (loss) before income taxes | (7,961) | 4,104 | 28,858 | 93,540 | ||||
| Income tax expense (benefit) | (3,119) | 8,293 | 6,788 | 26,920 | ||||
| Net income (loss) | $ | (4,842) | $ | (4,189) | $ | 22,070 | $ | 66,620 |
| Net income (loss) per common share | ||||||||
| Basic | $ | (0.04) | $ | (0.03) | $ | 0.18 | $ | 0.53 |
| Diluted | $ | (0.04) | $ | (0.03) | $ | 0.18 | $ | 0.53 |
| Weighted average common shares outstanding | ||||||||
| Basic | 119,366,013 | 125,763,245 | 120,826,644 | 126,108,329 | ||||
| Diluted | 119,680,269 | 125,794,209 | 121,474,880 | 126,261,614 |
OPEN LENDING CORPORATION
Consolidated Statements of Cash Flows
(Unaudited, in thousands)
| Year Ended December 31, | ||||
|---|---|---|---|---|
| 2023 | 2022 | |||
| Cash flows from operating activities | ||||
| Net income (loss) | $ | 22,070 | $ | 66,620 |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||
| Share-based compensation | 9,492 | 5,449 | ||
| Depreciation and amortization of fixed assets | 1,159 | 915 | ||
| Amortization of debt issuance costs | 428 | 424 | ||
| Non-cash operating lease cost | 620 | 579 | ||
| Deferred income taxes | (4,985) | 375 | ||
| Other | 15 | — | ||
| Changes in assets & liabilities: | ||||
| Accounts receivable, net | 1,105 | 804 | ||
| Contract assets, net | 46,116 | 37,527 | ||
| Other current and non-current assets | (507) | (2,685) | ||
| Accounts payable | 86 | (996) | ||
| Accrued expenses | 1,183 | 2,405 | ||
| Income tax receivable, net | 2,699 | (8,369) | ||
| Operating lease liabilities | (561) | (495) | ||
| Third-party claims administration liability | 2,409 | 1,005 | ||
| Other current and non-current liabilities | 1,329 | 3,873 | ||
| Net cash provided by operating activities | 82,658 | 107,431 | ||
| Cash flows from investing activities | ||||
| Purchase of property and equipment | (123) | (238) | ||
| Capitalized software development costs | (2,055) | (386) | ||
| Net cash used in investing activities | (2,178) | (624) | ||
| Cash flows from financing activities | ||||
| Proceeds from term loans | — | 150,000 | ||
| Payments on term loans | (3,750) | (123,594) | ||
| Payments on revolving facility | — | (25,000) | ||
| Payment of deferred financing cost | — | (976) | ||
| Shares repurchased | (37,322) | (18,018) | ||
| Shares withheld for taxes related to restricted stock units | (1,258) | (209) | ||
| Net cash (used in) provided by financing activities | (42,330) | (17,797) | ||
| Net change in cash and cash equivalents and restricted cash | 38,150 | 89,010 | ||
| Cash and cash equivalents and restricted cash at the beginning of the period | 208,519 | 119,509 | ||
| Cash and cash equivalents and restricted cash at the end of the period | $ | 246,669 | $ | 208,519 |
| Supplemental disclosure of cash flow information: | ||||
| Interest paid | $ | 10,313 | $ | 3,520 |
| Income tax paid, net | $ | 9,075 | $ | 36,112 |
| Non-cash investing and financing: | ||||
| Share-based compensation for capitalized software development | $ | 88 | $ | — |
| Capitalized software development costs accrued but not paid | $ | 248 | $ | — |
| Accrued excise tax associated with share repurchases | $ | 314 | $ | — |
OPEN LENDING CORPORATION
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited, in thousands)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Net income (loss) | $ | (4,842) | $ | (4,189) | $ | 22,070 | $ | 66,620 | ||||
| Non-GAAP adjustments: | ||||||||||||
| Interest expense | 2,820 | 2,297 | 10,661 | 5,832 | ||||||||
| Income tax expense (benefit) | (3,119) | 8,293 | 6,788 | 26,920 | ||||||||
| Depreciation and amortization of fixed assets | 335 | 235 | 1,159 | 915 | ||||||||
| Share-based compensation expense | 2,666 | 1,885 | 9,492 | 5,449 | ||||||||
| Total adjustments | 2,702 | 12,710 | 28,100 | 39,116 | ||||||||
| Adjusted EBITDA | $ | (2,140) | $ | 8,521 | $ | 50,170 | $ | 105,736 | ||||
| Total revenue | $ | 14,939 | $ | 26,821 | $ | 117,460 | $ | 179,594 | ||||
| Adjusted EBITDA margin | (14) | % | 32 | % | 43 | % | 59 | % | ||||
| Adjusted operating cash flows(1) | ||||||||||||
| Adjusted EBITDA | $ | (2,140) | $ | 8,521 | $ | 50,170 | $ | 105,736 | ||||
| CAPEX | (590) | 13 | (2,178) | (624) | ||||||||
| Decrease (increase) in contract assets, net | 19,917 | 24,511 | 46,116 | 37,527 | ||||||||
| Adjusted operating cash flows | $ | 17,187 | $ | 33,045 | $ | 94,108 | $ | 142,639 |
(1) Adjusted operating cash flows is defined as Adjusted EBITDA, minus CAPEX, +/- change in contract assets.
q4_2023xsuppxslides
Earnings Supplement Q4 and Full Year 2023
2 23, 159, 221 149, 201, 61 20, 83, 150 3, 102, 170 146, 192, 219 166, 166, 166 Q4 2023 Financial Highlights Q4 2023 (1) See reconciliation of GAAP to non-GAAP financial measures on page 6 (2) Defined as Adj. EBITDA, minus CAPEX, +/- change in contract assets; see reconciliation of GAAP to non-GAAP financial measures on page 6 Q4 2022 Revenue $14.9 million $26.8 million Adj. EBITDA1 $(2.1) million $8.5 million Adj. Operating Cash Flows2 $17.2 million $33.0 million Total Certs 26,263 34,550
3 23, 159, 221 149, 201, 61 20, 83, 150 3, 102, 170 146, 192, 219 166, 166, 166 2023 Financial Highlights FY 2023 (1) See reconciliation of GAAP to non-GAAP financial measures on page 6 (2) Defined as Adj. EBITDA, minus CAPEX, +/- change in contract assets; see reconciliation of GAAP to non-GAAP financial measures on page 6 FY 2022 Revenue $117.5 million $179.6 million Adj. EBITDA1 $50.2 million $105.7 million Adj. Operating Cash Flow2 $94.1 million $142.6 million Total Certs 122,984 165,211
4 23, 159, 221 149, 201, 61 20, 83, 150 3, 102, 170 146, 192, 219 166, 166, 166 Key Performance Indicators Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Certs Credit Union & Bank 20,541 28,905 96,610 142,458 OEM 5,722 5,645 26,374 22,753 Total Certs 26,263 34,550 122,984 165,211 Unit Economics Avg. Profit Share Revenue per Cert (1) $ 501 $ 546 $ 538 $ 579 Avg. Program Fee Revenue per Cert $ 519 $ 530 $ 527 $ 488 Originations Facilitated Loan Origination Volume ($ in 000s) $ 764,149 $ 1,036,327 $ 3,614,303 $ 4,758,597 Average Loan Size $ 29,096 $ 29,995 $ 29,388 $ 28,803 Channel Overview New Vehicle Certs as a % of Total 13.9 % 15.3 % 13.4 % 10.3 % Used Vehicle Certs as a % of Total 86.1 % 84.7 % 86.6 % 89.7 % Indirect Certs as a % of Total 77.8 % 66.4 % 73.4 % 54.1 % Direct Certs as a % of Total 17.2 % 19.2 % 19.7 % 16.5 % Refinance Certs as a % of Total 5.0 % 14.4 % 6.9 % 29.4 % (1) Represents average profit share revenue per certified loan originated in the period excluding the impact of profit share revenue recognized in the period associated with historical vintages. The profit share revenue impact related to change in estimates of historical vintages was $(14.3) million and $(22.8) million for the three months and year ended December 31, 2023, respectively, and $(12.8) million and $(5.7) million, respectively, for the three months and year ended December 31, 2022, respectively.
5 23, 159, 221 149, 201, 61 20, 83, 150 3, 102, 170 146, 192, 219 166, 166, 166 Financial Results ($ in '000s) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Revenue Program fees $ 13,482 $ 18,309 $ 64,092 $ 80,611 Profit share (1,132) 6,066 43,301 90,056 Claims administration and other service fees 2,589 2,446 10,067 8,927 Total revenue 14,939 26,821 117,460 179,594 Cost of services 5,365 4,896 22,282 19,968 Gross profit 9,574 21,925 95,178 159,626 Operating expenses General and administrative 12,002 11,165 43,043 35,950 Selling and marketing 4,349 4,148 17,485 17,856 Research and development 1,500 1,839 5,575 8,205 Total operating expenses 17,851 17,152 66,103 62,011 Operating income (loss) (8,277) 4,773 29,075 97,615 Interest expense (2,820) (2,297) (10,661) (5,832) Interest income 3,018 1,627 10,335 1,995 Other expense, net 118 1 109 (238) Income (loss) before income taxes (7,961) 4,104 28,858 93,540 Income tax expense (benefit) (3,119) 8,293 6,788 26,920 Net income (loss) $ (4,842) $ (4,189) $ 22,070 $ 66,620
6 23, 159, 221 149, 201, 61 20, 83, 150 3, 102, 170 146, 192, 219 166, 166, 166 Reconciliation of GAAP to Non-GAAP Financial Measures Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Net income (loss) $ (4,842) $ (4,189) $ 22,070 $ 66,620 Non-GAAP adjustments: Interest expense 2,820 2,297 10,661 5,832 Income tax expense (benefit) (3,119) 8,293 6,788 26,920 Depreciation and amortization of fixed assets 335 235 1,159 915 Share-based compensation expense 2,666 1,885 9,492 5,449 Total adjustments 2,702 12,710 28,100 39,116 Adjusted EBITDA $ (2,140) $ 8,521 $ 50,170 $ 105,736 Total revenue $ 14,939 $ 26,821 $ 117,460 $ 179,594 Adjusted EBITDA margin (14) % 32 % 43 % 59 % Adjusted EBITDA ($ in 000's) Adjusted operating cash flows ($ in 000's) Adjusted EBITDA $ (2,140) $ 8,521 $ 50,170 $ 105,736 CAPEX (590) 13 (2,178) (624) Decrease (increase) in contract assets, net 19,917 24,511 46,116 37,527 Adjusted operating cash flows $ 17,187 $ 33,045 $ 94,108 $ 142,639
7 23, 159, 221 149, 201, 61 20, 83, 150 3, 102, 170 146, 192, 219 166, 166, 166 Profit Share Revenue Change in Estimate Q4 2023 negative change in estimate of $14.3 million is associated with cumulative reported profit share revenue of approximately $380 million(1). Cumulative change in estimate at Q4 2023 is $5.6 million(2). ($ in millions) $4.9 $30.9 $2.6 $2.8 $1.7 $0.7 $(1.6) $(12.8) $(1.2) $(8.1) $(14.3) $5.6 Change in Estimate Cumulative Change in Estimate 2019 2020 2021 Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 -$50 -$25 $0 $25 $50 (1) Cumulative revenue from Accounting Standards Codification ("ASC") 606 implementation in 2019 through Q3 2023. (2) Cumulative change in estimate from ASC 606 implementation in 2019 through Q4 2023.
8 23, 159, 221 149, 201, 61 20, 83, 150 3, 102, 170 146, 192, 219 166, 166, 166 Total Current Share Count Shares In thousands Total Shares Outstanding February 27, 2024 118,877 Treasury Shares 9,321 Total Shares Issued 128,198