Nebula Acquisition : Q2 2020 Earnings Supplement

Earnings Supplement

Q2 2020

Introduction to Open Lending

2m+	50%+
Unique Risk Profiles	2019A EBITDA
margin
15+
$64.9m
Years of	2019A EBITDA
Proprietary Data
$1.8bn	~50%
2019A Annual	2019A-2021E Revenue CAGR(1)
Loans Facilitated(2)	+300
~$250bn
2018 Underlying	Active Automotive
Lenders(4)
Addressable Market(3)

Specialized Lending Enablement Platform for the Near-Prime Market

Powered by Proprietary Data, Advanced Decisioning Analytics,

an Innovative Insurance Structure and Scaled Distribution

1. Revenue CAGR calculated using midpoint of high and low 2021 revenue estimates
2. Reflects actual loans through December.
3. Source: Experian, New York Federal Reserve.

(4)

Active automotive lender is defined as an automotive lender that issued at least one insured loan in the previous quarter.

2

Massive, Underserved Population

Open Lending Enables Banks, Credit Unions, OEM Captives and Other Financial Institutions to Profitably

Lend to Traditionally Underserved Near-PrimeBorrowers

~$250bn

2018 Underserved

Auto Loan Opportunity(1)

Lender Type

Banks / OEMs

Credit Unions

Finance Companies

Buy-HerePay-Here

490	560	630	700	770
		Credit Score

(1)	Open Lending empowers its bank, credit union, and OEM captive customers to profitably lend to consumers with credit scores be tween 560 and 699.	3
(2)	Note: Graph is illustrative.

Driving Value Creation Across the Entire Ecosystem

• More Customers
• Higher Loan Volumes
• CECL Relief
• Lower Risk
• Customer Satisfaction & Retention
• Increased ROA
• Increased Car Sales
• Optimized Sales Process
• Better Financing Options
• Quicker Underwriting

Insurers

Lenders

Dealers

Consumers

• Top-LineGrowth
• Diversified Risk
• Consistent Flow
• Increased ROE
• • Increased Sales
  • Customer Satisfaction
  • More Financing Options

OEMs	 Higher Retention

• More Approvals
• Higher Loan Amounts
• Better Rates
• Appropriate Down Payments

4

Compelling Investment Thesis Intact

1

2

3

4

5

6

Substantial Market

Opportunity

Attractive

Business Model

Significant Growth

Opportunities

Resilient Model Through Cycles

Experienced

Management Team

Compelling Financial

Profile

• Expanding and underserved market opportunity with strong secular drivers with <1% share(1)
• Opportunity to accelerate market share gains as credit unions prove resilience
• Currently ~$250bn underlying market with current solution; expanding market as consumers enter near prime
• ~$1,160 revenue per loan on Lenders Protection Program(2) without taking any balance sheet risk(3)
• Considerable barriers to entry; 15+ years of proprietary data and 5-second underwriting decisions
• Lack of consumer acquisition and distribution costs increasingly relevant
• New customer growth and penetration expected to outweigh impact of slower economic growth
• Near-termdrivers of attainable growth, guidance does not reflect potential OEM upside
• Lending partners offer low cost solution in a large market, business model with no loss exposure
• Compelling solution for lenders seeking to mitigate risk during uncertain market conditions
• Historically recessions have seen a net increase in near prime consumers, increasing the addressable market
• Visionary management team with deep domain expertise, selectively growing already strong team
• Large financial commitment to transaction even more relevant today
• 53% 2019A to 2021E Cert CAGR, $125-168m 2021E EBITDA, 69.9% 2019 Adjusted EBITDA(4) margin
• Base of over 300 active automotive lenders(5) lenders with 100%+ net retention(6)

1. Based on $1.76bn loans facilitated in 2019, out of underlying TAM of $250bn of annual near-prime auto lending.
2. The Lenders Protection Program (which we commonly refer to as "Lenders Protection") , prior to impacts of COVID or other temp orary adjustments
3. Based on ~$23k average loan amount, consistent with Open Lending enabling loans. Represents illustrative unit economics for c redit union, bank and OEM customers based on 2019, prior to impacts of COVID or other temporary adjustments.
4. EBITDA reconciliation of net income to consolidated adjusted EBITDA on page 14

(5)	Active automotive lender is defined as an automotive lender that issued at least one insured loan in the previous quarter.	5
(6)	Based on net retention over last 4 years, where each year had over 100% net retention

Attractive Fee and Profit Share Revenue Model

Today, Open Lending Generates ~$1,160 in revenue per Loan(1) on Average Comprised of

Program Fee, Admin Fee and Insurance Profit Share

		Monthly Payments		Insurance Premium
Consumers	Access to Credit	Lenders	Default Protection	Insurers
1	Program Fee (~$470) (1)		1	2	3
 Fee based on the initial loan amount

• Recognized upfront and for majority of loans is paid upfront

Administration Fee (~$65)

2		Fixed % fee of monthly earned insurance premium
		Paid monthly over the life of the loan

Profit Share (~$626) (2)

3		Fixed % of the monthly underwriting profit for all lenders
	Recognized upfront and received from carrier over the

term of the loan

Direct model shown above. For indirect model, dealers interact with consumer.

(1) Based on 2019 numbers.7

(2) Based on ~$23k average loan amount, consistent with Open Lending enabling loans. Represents illustrative unit economics for c redit union, bank and OEM customers based on 2019, prior to impacts of COVID or other temporary adjustments.

Financial Highlights

Total Certs

Revenue

($mm)

Adj. EBITDA

($mm)

Adj. Operating Cash Flow1

($mm)

Q2 2020

18,684

$22.1 million

$15.4 million

$11.1 million

(1) Defined as Adj. EBITDA, minus CAPEX, plus or minus change in contract assets	8

Recent Accomplishments

Company Highlights

• Closed the business combination with Nebula Acquisition Corp. on June 10, 2020
• LPRO began trading on the Nasdaq Stock Market on June 11, 2020
• Named a winner of NAFCU (National Association of Federally-Insured Credit Unions) Services' 2020 Innovation Awards

Swift Response to

Challenged Economic

Environment

• Implemented changes to underwriting model - largely took effect by April 1
• • Tightened underwriting standards and increased premiums(1)
• Enhanced focus on Refinance Program to drive additional cert volume

		Credit union and bank lenders are well capitalized and expected to have ample liquidity
Open Lending and		Insurers modestly impacted relative to other industries and anticipating profitability through 2020
Partners Strongly
	Low interest rate environment, traditional lenders retrenching, and commuters shifting away from public modes of
Positioned
		transportation are driving positive trends
		Partnered with 17 new refinance lenders in Q2
		Added 28 customers in the first six months of 2020; 11 new lender contracts executed in Q2
Q2 Update		12 active implementations with "go live" dates in the next 60 days, which is projected to produce approximately
		4,000 certified loans annually, once fully implemented
		New credit union partnerships such as GreenState Credit Union, US Eagle Federal Credit Union and Clark
		Country Credit Union.

(1)

Premium increase via model change involving vehicle values that results effectively results in higher premiums

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Growth Plan

1.  Expand Core Business
2.  OEM Opportunity
3.  CECL Relief
4.  Launch into New Channels
5.  Broaden Our Offerings

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Q2 2020 Key Performance Indicators

			Three Months Ended June 30,				Six Months Ended June 30,			Years ended December 31,
			2020			2019				2020			2019			2019			2018			2017
Certs
CU & Bank Certs			16,242			20,008				35,104			36,953			74,242			56,705			42,790
OEM Certs			2,442			-				11,604			-			4,192			-			-
Total Certs			18,684			20,008				46,708			36,953			78,434			56,705			42,790
Unit Economics
Avg. Profit Share Revenue per Cert	$	651	$	747	$	341	$	698	$	676			N/A(1)			N/A(1)
Avg. Program Fee Revenue per Cert			471			474				460			472			468			443			399
Originations
Facilitated Loan Origination Volume ($ in 000)	$	409,934	$	447,331	$	1,037,031	$	821,452	$	1,755,175	$	1,246,551	$	937,553
Average Loan Size			21,940			22,358				22,202			22,230			22,377			21,983			21,911
Channel Overview
New Vehicle Certs as a % of Total			11.9%			10.7%				14.4%			10.5%			12.0%			12.7%			15.5%
Used Vehicle Certs as a % of Total			88.2%			89.3%				85.6%			89.5%			88.0%			87.3%			84.5%
Indirect Certs as a % of Total			72.3%			61.2%				75.8%			61.4%			63.3%			61.2%			68.0%
Direct Certs as a % of Total			27.8%			38.8%				24.3%			38.6%			36.7%			38.8%			32.0%

1. Effective January 1, 2019, the Company adopted ASC 606 which requires us to recognize the full amount of profit share revenue up front. This was not retroactively applied to prior periods and therefore 2018 and 2017 are not comparable.

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Q2 2020 Financial Update

	Three Months		Six Months
($ in 000)	Ended June 30		Ended June 30			Years Ended December 31,
	2020		2020		2019			2018			2017

Revenue
Program fees	$	8,793	$
Profit share		12,163
Claims administration service fees		1,111
Total revenue		22,067
Cost of services		1,827
Gross profit		20,240
Operating expenses
General and administrative		14,650
Selling and marketing		1,295
Research and development		349
Operating income		3,946
Other income/expense
Change in fair value of contingent consideration		(48,802)
Interest expense		(3,644)
Interest income		44
Other income		3
Net income (loss) before income taxes		(48,453)
Provision (benefit) for income taxes		1,352
Net income (loss)	$	(49,805)	$
Adjusted EBITDA	$	15,414	$

21,505	$	36,667	$	25,044	$	17,064
15,938		53,038			24,835			13,735
2,054		3,142			2,313			1,581
39,497		92,847			52,192			32,380
4,322		7,806			4,603			3,019
35,175		85,041			47,589			29,361
18,218		13,774			12,125			7,986
3,373		7,482			6,188			4,532
707		1,170			802			691
12,877		62,615			28,474			16,152
(48,802)		-			-			-
(4,408)		(322)			(341)			(418)
61		24			13			10
3		197			170			85
(40,269)		62,514			28,316			15,829
1,364		(30)			37			59
(41,633)	$	62,544		$	28,279		$	15,770
24,971	$	64,925	$	31,309	$	17,273

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Reconciliation of Net Income (Loss) to Consolidated Adjusted EBITDA

($ in 000)		Three Months Ended June 30,			Six Months Ended June 30,
	2020			2019			2020			2019
Net Income (Loss)	$	(49,805)	$	17,484	$	(41,633)	$	30,388
Less: Non-GAAP adjustments:
Change in fair value of contingent consideration(1)		48,802			-			48,802			-
Transaction bonuses(2)		9,112			-			9,112			-
Interest Expense		3,644			82			4,408			168
Share-based compensation(3)		2,189			487			2,676			1,010
Depreciation and amortization		120			26			242			52
Income Taxes		1,352			21			1,364			(99)
Total adjustments		65,219			616			66,604			1,131

Adjusted EBITDA	$	15,414	$	18,100	$	24,971	$	31,519
Total Revenue	$	22,067	$	25,183	$	39,497	$	44,667
Adjusted EBITDA margin		69.9%			71.9%			63.2%			70.6%

1. Reflects non-cash charges for the change in the estimated fair value of contingent consideration earn-out shares from June 10 through June 30, 2020.
2. Reflects transaction bonuses awarded to key employees and directors in connection with the business combination.
3. Represents non-cash charges associated with the Class B Unit Incentive Plan of Open Lending, LLC. For the three months ended June 30, 2020 represents accelerated vesting of the legacy plan as result of the business combination.

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Share Count

Shares	In millions
Total Shares Outstanding at June 30, 2020	95.3
Contingent Consideration Shares Achieved	23.8
Total Shares Outstanding at August 10, 2020	119.1
Dilutive Effect of Public Warrants (1) (2)	3.4
Total Diluted Shares Outstanding	122.5

1. Calculated using the Treasury Stock Method which assumes cashless exercise by warrant holders utilizing the closing market price of our common stock on August 10, 2020 of $18.37. There are 9,166,659 warrants outstanding that have an exercise price of $11.50 per whole share.
2. The Company may call the warrants for redemption: in whole and not in part; at a price of $0.01 per warrant; upon not less than 30 days' prior written notice of redemption to each warrant holder; and if, and only if, the reported last sale price of the common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-day trading period ending three business days before we send the notice of redemption to the warrant holders. Please see our effective Form S-1 Registration Statement for complete details.

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