Open Lending CorpLPRO
Open Lending Corp Revenue Disclosure
Contract Assets and Excess Profit Share Receipts
Contract Assets
The Company recognizes contract assets when it transfers services to a customer, recognizes revenue for amounts not yet billed, and the right to consideration is conditional on something other than the passage of time. Accounts receivable are recorded when the customer has been billed or the right to consideration is unconditional. Changes in the Company’s contract assets primarily result from the timing difference between the satisfaction of its performance obligation and receipt of the customer’s payment.
For performance obligations related to profit share revenue that were satisfied in previous periods, the Company evaluates and updates its profit share revenue forecast on a quarterly basis and adjusts contract assets accordingly. An increase in the profit share revenue forecast associated with performance obligations satisfied in previous periods, or historic vintages, is reported as a positive change in estimate and generates an increase in our contract asset, additional revenues and future expected cash flows. A decrease in the profit share revenue forecast associated with historic vintages is reported as a negative change in estimate and generates a decrease in our contract asset, a reduction in revenues and future expected cash flows. As the expected profit share variable consideration and related contract assets are recorded and updated on a quarterly basis, the amounts disclosed as “Changes in estimates of revenue from performance obligations satisfied in previous periods” in the table below includes adjustments to revenue recorded in the previous quarters of the same fiscal year reported.
Contract assets balances for the periods indicated below were as follows:
| Contract Assets | ||||||||||||||||||||||||||
| Profit Share | Program Fee | TPA Fee | Total | |||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Ending balance as of December 31, 2022 | $ | 65,889 | $ | 7,932 | $ | 1,609 | $ | 75,430 | ||||||||||||||||||
| Increase of contract assets due to new business generation | 66,113 | 64,245 | 10,055 | 140,413 | ||||||||||||||||||||||
Change in estimates of revenue from performance obligations satisfied in previous periods | (22,812) | — | — | (22,812) | ||||||||||||||||||||||
| Payables (receivables) transferred from contract assets | — | (67,440) | — | (67,440) | ||||||||||||||||||||||
| Payments received from insurance carriers | (86,383) | — | (9,942) | (96,325) | ||||||||||||||||||||||
| Provision for expected credit losses | 48 | 1 | (1) | 48 | ||||||||||||||||||||||
| Ending balance as of December 31, 2023 | 22,855 | 4,738 | 1,721 | 29,314 | ||||||||||||||||||||||
| Increase of contract assets due to new business generation | 52,979 | 57,350 | 10,107 | 120,436 | ||||||||||||||||||||||
Change in estimates of revenue from performance obligations satisfied in previous periods(1) | (48,546) | — | — | (48,546) | ||||||||||||||||||||||
| Payables (receivables) transferred from contract assets | 5,144 | (58,865) | — | (53,721) | ||||||||||||||||||||||
| Payments received from insurance carriers | (22,834) | — | (9,624) | (32,458) | ||||||||||||||||||||||
| Provision for expected credit losses | 35 | 6 | 1 | 42 | ||||||||||||||||||||||
| Ending balance as of December 31, 2024 | $ | 9,633 | $ | 3,229 | $ | 2,205 | $ | 15,067 | ||||||||||||||||||
(1) Includes $(5.1) million of estimated, non-recurring charges associated with future claim payments and previous profit share.
As of December 31, 2024 and 2023, the Company’s contract assets estimated to be received within one year consisted of $10.0 million and $28.7 million, respectively, and the portion estimated to be received beyond one year, consisted of $5.1 million and $0.6 million, respectively.
Excess Profit Share Receipts Liability
During the year ended December 31, 2024, the Company recorded a reduction in estimated profit share revenues of $96.1 million for changes in estimates of variable consideration primarily as a result of actual portfolio performance and forecast assumption changes related to increases in loan default frequency, partially offset by lower than anticipated severity of losses. The negative change in estimate related to profit share revenue caused the cash consideration previously received to be in excess of the expected profit share consideration at the loan level. The amount of excess funds and the forecasted losses were recorded as an excess profit share receipts liability and will be impacted by future changes in estimate related to profit share revenue. The excess profit share receipts liability is based on the current forecast of future losses of the active loan portfolio. There is generally no contractual obligation to return the excess funds while an insurance partner is actively participating in our profit share program; however, future expected profit share cash flows may be reduced.
The excess profit share receipts liability balance for the periods indicated below were as follows:
| Profit Share | ||||||||
| (in thousands) | ||||||||
| Ending balance as of December 31, 2023 | $ | — | ||||||
| Change in estimates of profit share revenue | 47,556 | |||||||
| Payments received from insurance carriers | — | |||||||
| Ending balance as of December 31, 2024 | $ | 47,556 | ||||||
Contract Costs
The fulfillment costs associated with the Company’s contracts with customers generally do not meet the criteria for capitalization and therefore are primarily expensed as incurred.
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About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.