Open Lending Corporation (LPRO) Earnings Call Transcript & Summary

Good afternoon everybody. This is Matt O'Neill from Goldman Sachs. I'm Joined today by John, Ross and Chuck from Open Lending. The Open Lending is a relatively new company, at least as far as the public markets are concerned, however, it's been around for a while. And to start things off, John and team, I thought it might be helpful if we could just talk about the background of the company. Kind of how we got from Genesis many years ago to where we are today. And also give us a little background on all of yourselves history as well. That would be a good place to begin.

Well, just for the sake of intro, this is John Flynn. I'm the Chairman and CEO of the company. One of the Co-founders, myself and Ross and another gentleman started the company about 20 years ago. What I'll do is, I'll let Ross and chuck introduce themselves, and then I'll give you a quick background about where we've come from and kind of what we've created here. Ross, do you want to jump in.

Thanks, John. So this is Ross Jessup, I am the President and COO and Co-founder of the company. To date, I've been the CFO until we brought in Chuck Jehl to help us from a public angle. He's got an experience and background that was very beneficial during our De-SPAC and roadshow. And I've been in the financial business for years from the public accounting days many years ago to started the company with John and Sandy. And so excited to share more today.

Yes, good afternoon. I am Chuck Jehl. I'm Chief Financial Officer of Open Lending. I joined Ross and John back in, I guess it was April of 2020 as a consultant. Right about the time we were getting the public transaction done in June. Excited to be here. I permanently joined John and Ross in August, late August. As the CFO and building a team, putting a team in place for the public company infrastructure and compliance and accounting. And really excited to join these 2 gentlemen with this exciting company. And in my past -- as I was a past CFO of a public company on the New York Stock Exchange for about 4 years and then prior to that, Chief Accounting Officer in various roles in the past. So really excited to be here with John and Ross.

That's great. Thanks so much. So John, maybe if you wouldn't mind giving us a little background, Open Lending is a pretty unique elegant model brings together your platform and decisioning with the credit unions and banks as well as the auto dealers, increasingly the OEMs as well as the insurance partners. So maybe if you could give us an idea of how all those disparate parties kind of work together through you guys. I think that would be a great place to start?

Sure. Yes. And I think to your point, the history where we've come from my background, prior to meeting, Ross and Sandy, I was the CEO of a number of credit unions in the Washington, D.C. area, going back to actually starting in the late '70s as a teller. And then -- so I had spent 23 years inside the credit union industry, and then left there to start another company that handled the opposite side of the balance sheet for credit unions, which was an asset liability management company aimed at managing the investment portfolios of credit unions. I stepped aside from that. My wife continued to run it until 2 years ago, she sold that company. So we've been intimately involved with the credit union space now for upwards of 42 years. And the initial start for Open Lending was we were going to be a decisioning engine. We were going to go out and help credit unions automate their lending platforms to come back with a quicker decision for all of their auto portfolio. And just as we started this, 9/11 happened. And back in the late '90s, early 2000s, the majority of Credit Union's loan portfolio was auto loans. Probably 65% of their portfolio. So when 9/11 happened, all of the OEMs and the captives came out with 0% financing and sucked the majority of those prime loans away under credit union's portfolio. So as we were building out our loan origination platform, we realized that everything below a 680 was simply being denied or conditioned by credit unions to the point where the consumer couldn't get the loan. So we started to model the performance of that portfolio. And in the process of doing that, we also started a referral model which would take these consumers that were about to fall through the cracks of the credit union and typically end up not getting a loan and have to go start over, we created a referral model and started pitching it the TranSouth AmeriCredit, Household Finance. And in doing so, Triad Financial came back and said to us, we not only like the model you built, and we love to get these loans, we like the engine you've built. Would you consider licensing us your technology for us to decision? And Triad was Ford Motor Credit's subprime division. So we agreed to do that and in an effort to get them set up, they had to give us all of their buy guidelines, all their rate sheets, everything associated with funding that near prime subprime consumer. In getting them set up, we realized that they were treating that near prime consumer, what we'll say, was a 580 up to a 680 score with the same contract rate that they were 525 to 580. So what that pointed out is they were offsetting the risk of that lower-tier consumer by overcharging that near prime consumer. And knowing that we had access to credit union funds, which is probably the lowest source of capital to fund auto loans, we thought there's got to be a middle of the road that you can really help serve this underserved consumer. So we did a lot of modeling. We came up with and actually created this default insurance policy that allows these financial institutions to step in, build the cost of that insurance product into the interest rate to the consumer and still come back with a rate that was much lower than that of a subprime or near prime lender. So at the end of the day, what Open Lending really is, is a technology platform that enables financial institutions at the end of the day to access these A-rated insurance companies to provide a default insurance policy that sits behind every loan one at a time within a 5 second response back to either the car dealership or the loan officer. And at the end of the day, by being just that technology company, we take 0 balance sheet credit risk and we really just enable tons of more consumers that have access to near prime loans with rates that are more competitive than I'll find elsewhere, but give these lenders that safety net behind it. At the end of the day, we think it's about a $250 billion market. We had a study done at the end of 2018 into 2019 that showed there's about a $250 billion TAM of consumers that fall into this bucket that are looking for reasonable rates to get into auto loans?

Yes, that's really helpful. I guess one of the follow-ons, and maybe you can elaborate on the history from sort of back around 9/11 through now, right? There's not too many 20-year-old companies putting up the type of growth that you guys are putting up now. So can you talk about the learnings over the last 2 decades through the great financial crisis, and then what's kind of allowed the business to really ramp from a trajectory standpoint to the numbers and results that we've been seeing more recently and are expecting going forward?

Sure. Yes, when we first started the company, all we had was some data from the 3 bureaus, what data we could find from the different securitizations that were going on. And in 2003, when we were building this company up, we partnered with our a small insurance company out of Madison, Wisconsin, that they're kind of the 8,000-pound gorilla in the credit union space that I call CUNA Mutual, and we had a 5-year agreement with them, where they would be the underwriter behind all of this. So over that 5-year time frame, we were able to capture enough data on real performance of this near prime sector even through the 07, 08 area. And when we started the company, we only had about, what I'll call, 210 different risk profiles that we would look at. We would be looking at credit score term, things like that. And one of the things, as we started to gather this data, we realized that a lot of the performance of these vehicle loans were not just driven by score. Obviously, the bureaus are good at predicting the likelihood that a loan might default. But they're not good at predicting the severity of loss. So over this 5-year history, we were able to start gathering data on the vehicle depreciation speeds over time. We came up with things like credit depth, FICO score is one great indicator, but how long they've been in the bureau and how many positive trade lines they have or another indicator of how they're going to perform? Did the loan come through what we call your traditional indirect channel being coming from a car dealership versus walking into an institution? So over that 5-year time frame, we were able to capture a lot more data, and then the reason we left CUNA Mutual as our carrier was they were limiting us to just credit unions. That was the nature of what they could ensure, and we realized that there was a much bigger pond to fish in by going after some of the larger banks and some of the captive finance arms. So we relaunched the company in 2010. And then a lot of the things we've developed over that time. The data and the interfaces that we've been able to build into the core systems are I think what really differentiate us from any other company out there. And then I mentioned earlier, the severity of loss. By having access now to the depreciation speeds, we marry up the collateral with the consumer so that we know 1 year down the road, 1 particular make of car is going to outperform a different make and have a less severity given the same LTV and the same FICO score. So we believe that the moat that we've built around the company by bringing all of these data elements together and having now 20 years of history is really what's catapulted us into now bringing on some of the larger captive finance arms. And I think -- and we'll get into a little more detail, and Chuck will -- we'll bring back a lot of the details on this. But when we did decide to go public and we used KPMG to help us with our IPO readiness, a lot of the people on the phone might be familiar with CECL, which is current expected credit losses, we believe our program is going to provide a lot of the bigger banks, some significant CECL relief, but we'll get into that in a little more detail a little further on.

Yes. That's fantastic. That's really helpful. Actually, I learned a couple of things there as well. So I really appreciate that. I guess as we sort of start walking through the buckets of growth, and we've already alluded to it a bit here. But the transition from kind of the more exclusive used dealer market into the OEM space and particularly the working in tandem and then really working more in partnership as I kind of understand it with the captive finance arms. And maybe you can articulate how you kind of broke into that segment? And then I think a question I've asked you guys over the last month or year here, have been around kind of what prevents the proverbial dominos to kind of fall on the OEMs as far as what's once 1 or 2 that you've got now on board are getting positive results there. Why won't the rest of the OEM community, maybe with some obvious exceptions probably follow suit over time. And so yes, maybe you could walk through that history a little bit and the opportunity.

Ross, do you want to talk about the OEM a little bit?

You bet. And so Matt, we feel the same way that you do that, that it is a matter of time. We started working -- John and I, we followed some OEMs 3, 4 years ago. And their question was, hey, this sounds too good to be true. This is perfect. Can you share with us a referenceable account of another OEM captive that you're doing business with. And it wasn't until August of '19 that we landed our first and launched our first captive. So it was about a 1 year sales cycle on that captive. It's a foreign captive, great brand of vehicles. I think what really helped the messaging is adding another feature to the product that we currently have just been offering lenders is we -- telling that lender that captive, hey, we have the ability to help you now book loans on your balance sheet, keep that consumer in your brand. So they're making that monthly payment back to that OEM. And that way naturally, when that person is ready to buy new another vehicle, it is natural that you already have kept that relationship. So typically, a lot of these captives have referral relationships out to companies like Santander, Westlake or some of these others that when the credit score gets below a certain level, they just basically have a partnership where they just shoot that application over. When it gets fulfilled, they might share in some of the revenue fees. So yes, they're able to sell metal, but they aren't able to gain that, that long-term relationship and keep it as well as make that investment in interest yield that they can do with our program. So when we first went to the first OEM, and we were successful at selling them, they launched this from a credit score of 560 to 619, wanted to do it in a pilot. That pilot was an 8-month pilot. They have 4 geographic areas in the United States, and we launched it in one of them. And then about April of 2020, they rolled it out to the other 3, still within that same credit bandwidth. And it's been doing so well that they, early in the fourth quarter, launched it in a higher band for some of their denied applications for that 620 to 679, again, in a pilot format with the intent to roll that out after about a 4-month test. And results have been great. They're rolling that out. They should be rolling that out here. It will all be done by Q1 and that will be across the nation in all 4 of the markets. It's going well. So I think everything that we've been telling them, the public is right in place. OEM #1 is doing great. They expand it. We should be kind of hitting the quantities and revenue that we expected and told the market. The second OEM is one of the largest here domestically. And they launched with us in October of '19. They have a division that operates outside of their brand of vehicles, and that was the initial one that we launched, it went really well. We did about 3,500 units in March of 2020. With COVID and the fact that they stop manufacturing vehicles and had to deploy their capital inside their dealerships. They put that division with us on hold for a period of time. But as we announced in our third quarter, that's back on track, relaunched and doing very well and should be hitting some of those same levels really soon. So we're excited about that. They also started using us in one of their 17 marketplace -- one of their 14 marketplaces for used. And again, in the fourth quarter, just like we told The Street, they started rolling that out across all their markets for used. And then we're excited -- things seem to be tracking along as planned. And then the final stage is the subvention piece where for those that are not familiar with subvention, the OEM has a lot of marketing dollars that they have. And they basically pipe that down to the captive to help subsidize that loan offer to the consumer at a lower interest rate to help move metal in certain, but it's done at the collateral level. So we had to make some customizations here in our software and we're finished with that. They're rolling it out. And I'm sure when we get ready to talk about earnings, we can give a lot more detail on that. But we're super excited about the subvention side and what's also great about the functionality of that, the way we have built it, we believe, from our discussions with other OEMs, we'll be able -- when we bring on and talk about new cars, other OEMs, we've got that piece built now. So we should be able to accelerate the expansion of that side of the business. Chuck, do you want to talk about kind of maybe just some of our cert volume?

Yes, sure. I'd be glad to. I mean I'll jump in on the OEMs with Ross. OEM #1, obviously, we've talked publicly about this. OEM #1, we believe, once fully ramped, will be about 1,500 certs a month. In OEM #2, we've publicly said we'll be between 8,000 to 10,000 certs per month. The real question, as you know, Matt, and we -- John, Ross and I, we're 100% confident in our guidance numbers for '21. It's -- in that 160 to 200,000 range for total certs, we don't give a breakout in our guidance by OEM #1 or #2. With the second wave of COVID, this new reported strand that's out there and then timing of the vaccine. There's a lot of unknowns in the world, as we all know, and that are outside of our control. But we're very focused on running the business. We're encouraged by the trends of both OEMs and the growth. It's not a matter of if, it's just a matter of when, when these OEMs get to those levels. So we're very encouraged about it. And I know Ross is working on other OEMs as well for the future. And I don't have any -- don't have a third OEMs in our '21 guidance, as you know.

Yes, absolutely. Very, very -- sorry, go ahead.

So I was just going to say, one of the key things to any one of these funding sources, OEMs, big banks, any of them is having that interface that I talked about earlier. When you can respond back within 5 seconds, that's key. And we are in the process of working on the interface that [ Ott ] currently handles that transaction for 3 OEMs. So the beauty of it is, once that's built, you go in arm and arm, you've removed some of the hurdles of selling any of those OEMs.

Yes, right. Maybe you can articulate a little bit more on exactly what it is, the extent to which it's different because you're talking about building a little bit a new system for the OEM. What exactly are you building? And how is that different, I guess, from the historical model with the used sort of dealer networks?

It's not different in that. Anybody that's been like looking at different deals out there, MeridianLink was a deal that sold not that long ago. There's a bunch of what I referred to as loan origination platforms. Fiserv owns a bunch of them under different names, FIS owns the originate platform, MeridianLink has 4 or 5 different smaller names under their umbrella. And what we've spent a lot of time and money building is an interface that says, if RouteOne, Dealertrack, any platform sends an application to one of those loan origination platforms, it is coded in a way that says, if the loan falls below X, X being a 680 score or whatever, they define, or whatever other elements they choose not to underwrite without us, that LOS will trigger that application to us and literally, within 5 seconds, we've underwritten the loan and gotten back to them with a complete offer to include stipulations, offer term. So getting on their radar to build that interface between the 2 platforms is what really removes a lot of hurdles.

John, if I could add one thing. I think it's very important that at the end of the -- end result at the F&I person, it's very important that our relationship with the finance arm that they are unaware that we exist. We don't want the F&I person, and they don't want the F&I person actually knowing that there's a default insurance in place. And just so where they can keep that messaging unbeknown to the consumer out there, and you don't want to change the behavioral side of things. So we've gone to great lengths to make sure when -- make sure we render back our decision at XML to the interface, it goes in a way. It looks just like what that OEM would be set -- that captive would be sending to the F&I in a normal course of business.

Yes. That makes a lot of sense. And maybe not to put the cart before the horse, we've sort of gone over OEM #1, the opportunity with OEM #2 that's now back up and running. How do we think about that cadence of the presumably ongoing discussions with OEM #3, maybe you're already in the Rolodex of OEMs 4, 5, et cetera, as this gets built, so you can kind of walk right in, ready to hit the play button, how are you guys thinking about the continued rollout, understanding, of course, there's a lot of these unknowns over the next hopefully not too many months around COVID and things like that?

Yes. I'll talk about our strategy from a rollout marketing standpoint. Basically, as we're trying to go at it not only from the financing, but from the OEM parent angle as well. And so we have folks involved with our company that have been in automotive, all their life. They have great C-level type relationships. And just like there's OEM #3, there's probably 3 or 4 more that are very similar that we're having some great deep discussions of our product. If you look, they all have their business plans for '21 and '22 of moving metal and what some of their goals are. And we really do fit into that. So trying to make sure that OEM knows that we have a mechanism that could help their captive arm to help them meet their business goals is very important. So we're very active in that. We've -- I think one of the things that really resonates very well is when you can take application data that's actually theirs. And then we run it through our model, we look at from the application like how many of these loans did you approve? How many did you not approve? And then of those 2 subsets, we run it through our model and say, "Hey, of the ones that you did not approve, we could have helped you approve 30% of those 40%, whatever it may be. And here's what the pricing will look like from a contract rate. So really, we take theirs, and we try to do this lift opportunity of that expanded amount from that existing application flow where they can now do. What we also find is there's just a lot of applications they get to that floor, and they're just cut off. So really, we're opening up, not only within the applications they're looking at, but some that historically, they've not tried to even receive it all from their dealerships. We now could help them communicate that with their F&I folks as well.

Got it.

I think you made a key point there. These are incremental applications whether it's an OEM, a credit union, a bank, they're looking at 100 apps to approve 50 and fund 35. We're taking what was incremental flow that might have been denied and fallen to the floor with a simple push of a button and turning that into an earning asset for them.

In addition to an incremental car sold in those cases as well, right?

Right, exactly.

Yes. So as you think about the OEMs kind of desire to work with you guys, how do you stack rank the various kind of opportunities, be it selling an incremental car to that near prime borrower who may have fallen in the cracks of subprime, really high rates ends up walking away, gets denied on the other end from the captive. So you are selling the car to expanding that captive TAM as far as allowing them to have that relationship on a slightly lower FICO car buyer than they otherwise would have been able to or would have done on their own historically, as well as maybe longer term, conceptually the CECL relief and the subvention. I'm guessing the answer is all of the above, but how do you guys think about that? And what really gets the OEMs excited when you're kind of explaining what it is you guys can do?

Yes, it's great. I mean it is all the above. I mean even in the OEM side, you have folks that are responsible for aftermarket sales like GAP and warranty. And you think about in those situations where they're able to also do the financing, they get to benefit from those other products as well. So -- and if that person is tasked with growing that market, which they are, then they see that as the #1 objective, moving metal is #1 objective. And it just really depend on who you're talking to. The main thing is we're just helping both of them grow and grow profitably.

Got it. All right. Well, I know we spent a lot of time on the OEM opportunity. I thought maybe we could shift a little gears a little bit, no pun intended, to the kind of credit union bank side. You guys are well into the 300-plus partners last I checked as far as credit unions and banks that are on the platform. I end up getting a lot of questions just around the value prop to those players, right? So I understand there's the CECL dynamic. There's being able to put an auto loan on the books with the relative low funding costs that the credit unions have in a FICO spectrum that they probably otherwise wouldn't have done by virtue of the insurance. And so can you just help us understand those value drivers for a credit union and bank coming on the platform? And what gets them excited to work with you?

Sure. I think from a credit union standpoint, again, and you hit the nail on the head. They're after loans. They've got such a low cost of capital that they can really be the lowest cost provider out there. And I think one of the selling points for us in the credit union space. Again, I'll go back to having managed over $1 billion of credit union funds in a previous company. Credit unions are very limited into what they can invest in. They're not going to go out there and be doing a lot of different tricky investments that are going to get them into trouble. They typically list and stick with like 3-year treasuries just because it's a safe deal, and it's a short term. Well, if we can go in and sell a credit union, in today's world, I didn't look at the 3-year treasury today, but let's just say it was 180 basis points, and they're paying 80 basis points to get money in the door. So they're going to maybe make 100 basis points in yield if they're lucky with a 3-year term. Well, if we can go ahead and show them, a, how to help more consumers get into a car that can get them to work and generate a yield of about 230 to 280 basis points, true net at the end of the day with the same average life piece of paper that gets the CFO excited. People in there. They're helping more consumers, which was really the whole premise behind credit union being formed back in the late 30s. They're helping more consumers get to work. They're generating more yield. And to Ross's point, even credit unions sell things like GAP and service contracts. So if they can provide fee income back to the credit union on loans that they typically wouldn't have done, it's going to help their loan-to-share ratio, put more money to work and generate more fee income at the end of the day. And to your point, with CECL, it's funny. Ross and I used to kid. We've almost named this pre-CEL because we've had credit unions not having to set aside their allowance for loan loss, fund for that future loss going back as recently as 2008. So they've been actually using our program in a way to set aside that reserve throughout the use of our default policy for upwards of 12 years now. So from a standpoint of tackling that market, credit unions today represent about 22% of the autos that are funded every year in the United States. And today, we have about 7% of that market. But just in 2020, we brought on more of the largest shops. We kind of started focusing on bringing on the $10 billion-plus credit unions versus the $200 million shops. Because they can help more consumers quicker. Focused on doing that, we've had what I believe to be a record year in 2020. CECL, from a standpoint of helping the banks, that's just now coming into light whereas APMG has given us to go ahead to say that they believe our product is CECL compliant. So I think we're just now starting to open up some doors with some of the larger funding banks in the auto space.

Yes. And just to make sure everybody kind of watching is understanding, being that we're a kind of a technology conference. Obviously, CECL has changed the accounting requirements on life of loan expected loss allowance. And so effectively, what's happening in the background by virtue of your partnership with the insurers is that a bank doesn't need to fully provision for the potential losses because now presumably through the regulators' eyes as well, in the instance of the default, they'll, of course, recover the vehicle, sell it at auction and then be made whole, if not more so, with the insurance product, right? And so there's really a lot of added insulation there, if not complete insulation versus having that loan on their books without the default product as well paired with it. Is that accurate?

I am going to say that if you ever get sick of what you're doing, we'd love to have you come over and that was the perfect example.

All right. Good. I'm glad I've got the -- I'm glad I've got it. I did cover some credit card companies previously. So that's good. I guess as we think about -- like one question I get, it seems like probably somewhat trivial, but when you have so many partners on the banking and credit union side, how do you guys ultimately choose who gets that next cert, right? Like is it a randomized dynamic? Do certain credit unions and banks have slightly different parameters? So you got to look at the subset, that particular certification fits the bucket that, that bank is happy with? Or is it truly just a randomized assortment?

Well, I think one of the things you're going to find is that the F&I guy really decides where that loan is going to go. But you've hit the nail on the head. Every institution defines its parameters within our platform. So everybody's got a different cost of funds, a different servicing cost, what they expect to get when they sell the vehicle and they set up their pricing within our platform. When an application hits us, it bumps up against that pricing element and sends a response back to the dealer. So the dealer, 80% of our flow is indirect flow. So every one of our institutions, whether it's through CUDL, Dealertrack, Route One, there might be 5 different offers that go back to the dealer. But the sad thing about all that, one of our credit unions might have the lowest rate, but a bank or a different credit union might be paying that dealer 300 basis points to get that paper in the door, which is 1 point. So the poor consumer never even sees the lowest rate. They get sold the highest rate that's going to make the F&I guy the most money, which is one of the things that we can get into a little more detail, but we've launched a third channel within our platform, which is a refinance channel, which is to go out and target those consumers that may have gotten too high of a rate at the dealer. And try to refinance them into one of our funding sources at a lower rate.

Understood. So just looking at the time here, we have about 5 minutes left. I have a couple of questions I wanted to hit on as well as there's some questions in the Q&A that we've either more or less touched on or aligned with a couple of the other questions I had. So the last leg of the stool that, I guess, we really have not paid probably as much attention to so far in our chat has been on the insurance partner side. I believe on the last earnings call, I think I asked about the 2 partners today and ultimately adding a third, if not more, down the road. I believe you said that the third partner may be on board and potentially doing the first cert by second quarter this year. I figure I'd just check in on kind of that time line, how those discussions are going? And then ultimately, again, there's a lot of rate-limiting factors potentially, right? There's hundreds of banks and credit unions, a couple of insurance providers. Where is the pain point, if you have an abundance of certifications coming in one day that you run out of bank partner funding, you run out of insurance, partner kind of capacity is the sky the limit for the foreseeable future? And how do all those kind of dynamics play together?

I think there were 2 parts to that. One being the carriers and one being if the banks ran out of money. But on the carrier side, we've kind of actually slowed that down a little bit only because when we first mentioned looking for a third carrier, we started getting calls from our 2 main carriers saying, "Hey, guys, we have plenty of capacity here. We could underwrite 4x the capacity you're doing today and never miss a beat." And that was just from AmTrust. On the other side of that, CNA is our second carrier and even much bigger. So we're trying to balance the act here of at what point do you bring on that third carrier? And as a result of slowing it down, we've now been presented with a number of other carriers that may be interested in what we're doing. So we're just trying to pick the right one to make it -- bring them on at the right time. We do believe, hopefully, that we'll have that third one if we need them up and running in 2021, but there's real no need to bring them on instantly. Yes. From a standpoint of banks or credit unions running out of funds. Again, I don't see that happening for a while, but one of the things that -- we haven't brought this up a lot. We've mentioned it a little bit in passing. Yes, but we've -- before we decided to take the company public, we started looking at some alternatives of bringing some funding sources to the table, whether it's hedge funds, private equity firms, that want to generate some significant yield by funding this type of loan. We continue to look down the road of, is there opportunity to create a permanent capital vehicle. That could take on some of these loans should the need arise.

Right. Yes, diversified kind of sources there. That makes sense. And I guess understanding we're kind of the 2-minute mark. I want to leave off with kind of an open ended question, if you will. So if I sort of compartmentalize the growth of the business, there is kind of the long history and then kind of the post great financial crisis to now sort of Horizon 1, maybe Horizon 2 has been increasingly working on the OEMs, paired with CECL relief and subvention. As I think about kind of Horizon 3, right, where you guys are really -- when you look out past the next 3 to 5 years, right, is it other loan verticals, other dynamics within the auto space, whether it's leases or other things like that. How do we think about where you guys can take your expertise and sort of build platforms that either leverage the current one or kind of expand adjacently? And what has -- you guys internally kind of most excited on that, a kind of third horizon, longer-term view?

Ross, do you want to grab that?

No, I just think, for one, is we're going to keep our eye on the ball. I mean we're -- from what is -- you did say 3 to 5 years, which I'm glad you're out that far. But I do think -- I mean, for this year, I can't imagine us doing anything except focus on expanding and what we know, loans, not leases, but start looking at the lease program. That's the -- for me, that's the natural expansion would be stay in auto and expanded the lease as long as we can figure out how not to have the residual risk. We don't want to be [ in an RBI ] situation. But I think there's so much opportunity out there, OEM, banks were just scratching the surface on. A lot of it is centric to the CECL discussions. And the more that this resonates and the more that folks see that we have, we have something that directly addresses that. And the ability to go ahead and offset that requirement, day 1 of booking that lifetime losses, that's huge. And that's the benefit on top of what we've been out here doing for 20 years. So I just think that's that there's credit unions that are very, very large that we're working with, trying to attract and...

Increasing market share there, right.

And increasing market share, I mean, that's it. But I don't think geographic expansion is in our cards in '21. If we just stay what we're doing now, we can -- you look at our '21 guidance, and we got to hit that and hit or exceed that, and that's what we're focused on.

Understood. Any other comments there from John? Did I put you on the spot?

I agree with Ross. We continue to bring our C-level together and lay out at least quarterly jumps at a time. And one of the things that is built, but -- and we've talked about this in the past, we have the ability to price prime loans. And when we talk about CECL, typically, all we see are 680 and below scores hit our platform. Well, with the data, we could build that data into our loan origination platform or turn it into a decisioning engine that sits behind all the other LOSs and price the prime loans more appropriately and telling an institution instead of ensuring this loan, here's what you should set aside for your CECL calculation and charge a transaction fee for that. We're looking at the ability to term the engine that's already built into a SaaS-type model, if you will. And we're playing with, how would you price that? Would you put a small insurance premium behind it with a smaller tech fee? Or how would you price it out. So we're looking at all that.

Understood. Well, John, I understand we're probably a minute or 2 over time here. Really appreciate you all carving out some time for us, really educational and helpful as we all kind of learn this story. On the fly here, and I really appreciate it again. So thanks very much, all 3 of you.

Thanks for having us, Matt. I appreciate it.

I appreciate it.

All right. Have a good day. Bye.

Okay. Bye-bye.