Lending Club Announces Results for Q4. States $7.6 Billion in Loans to Date.

Lending Club (NYSE: LC), the worlds largest peer to peer lending platform, announced its Q4 fiscal results earning an adjusted $0.01 per share on operating revenue of $69.6 million. This was the first quarterly report by the company since it’s IPO in December of 2014.

The company announced loan originations of $1.415 billion, compared to $698 million in the same period last year, an increase of 103% year-over-year. Lending Club stated it has facilitated loans totaling over $7.6 billion since the company launched.Lending Club IPO

“We have continued to expand our reach through 2014 by doubling the size of the business again, while continuing to invest heavily in future growth and risk management,” said Renaud Laplanche, CEO and founder of Lending Club. “Our IPO in December was an important milestone in the life of the company, and everyone at Lending Club is excited about the next 5 to 10 years and committed to delivering more value and a great experience to our customers. 2015 is going to be another investment year, and we intend to continue growing originations and revenue at a fast, yet deliberate pace.”

Operating revenue in the 4th quarter of 2014 was $69.6 million, compared to $33.5 million in the same period last year, an increase of 108% year-over-year. Operating revenue as a percent of originations, known as our “revenue yield”, in the fourth quarter was 4.92%, up from 4.79% in the prior year.

“We are entering 2015 with strong momentum on many fronts, and we intend to continue to execute on our strategy of fast yet disciplined growth,” said Carrie Dolan, CFO of Lending Club. “We will also continue to aggressively invest in product development, engineering, process automation, and the buildup of support and risk management functions to pave the way for our long term growth opportunity.”

Lending Club gave a forward looking statement of expected earnings for Q2 of:

  • Operating Revenues in the range of $74 million to $76 million.
  • Adjusted EBITDA(3) in the range of $6 million to $9 million.

Fiscal year totals for 2015 were estimated to come in at:

  • Total Revenues in the range of $370 million to $380 million.
  • Adjusted EBITDA(3) in the range of $33 million to $42 million.

Quarter Ended

Fiscal Year Ended

December 31,

December 31,

($ in millions)

2014

2013

% Change

2014

2013

% Change

Originations

$1,415

$698

103%

$4,378

$2,065

112%

Operating Revenue(1)

$69.6

$33.5

108%

$213.4

$98.0

118%

Adjusted EBITDA(1)(2)

$7.9

$6.5

22%

$21.3

$15.2

40%

 (1) Fourth quarter 2014 First Call consensus operating revenue and EBITDA were $66.7 million and $6.6 million, respectively, as of February 23, 2015.  EBITDA and Adjusted EBITDA exclude stock based compensation expense and other non-recurring charges. 

(2) Adjusted EBITDA is a non-GAAP financial measure. Please see the discussion below under the heading “Non-GAAP Measures” and the reconciliation at the end of this release. 

Other Business Highlights

  • Expanded addressable market by launching super prime loans in the fourth quarter with interest rates starting at 3.99% (4.97% APR (Annual Percentage Rate)) for consumers with excellent credit.
  • Continued the integration of Springstone and launched a “true no interest” product for 6, 12, 18 or 24 months, delivering a transparent, consumer friendly no-interest patient financing experience.
  • In the first quarter of 2015, announced three strategic partnerships with Google, Alibaba and BancAlliance, a national consortium of 200 community banks.

Fourth Quarter 2014 Financial Highlights

Adjusted EBITDA(3)  – Adjusted EBITDA was $7.9 million in the fourth quarter of 2014, compared to $6.5 million in the same period last year.

Net Income/Loss– GAAP net loss was ($9.0) million for the fourth quarter of 2014, compared to a net income of $2.9 million in the same period last year. Lending Club’s GAAP net loss included $11.3 million of stock-based compensation expense during the fourth quarter of 2014.

Earnings (Loss) Per Share (EPS)  – Basic and diluted loss per share was ($0.07) for the fourth quarter of 2014 compared to EPS of$0.00 in the same period last year.

Adjusted EPS(3) Adjusted EPS was $0.01 for the fourth quarter of 2014 compared to $0.02 in the same period last year.

Cash and Cash Equivalents – As of December 31, 2014, cash and cash equivalents totaled $870 million, with no outstanding debt.

 

LENDINGCLUB CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three months ended December 31,

Year ended December 31,

2013

2014

2013

2014

Operating revenue

Transaction fees 

$

30,616

$

63,289

$

85,830

$

197,124

Servicing fees

1,466

5,233

3,951

11,534

Management fees

1,000

1,794

3,083

5,957

Other revenue (expense)

403

(765)

5,111

(1,203)

Total operating revenue

33,485

69,551

97,975

213,412

Net interest income (expense) after loss provision and fair value adjustments

12

(1,430)

27

(2,284)

Total net revenue

33,497

68,121

98,002

211,128

Operating expenses(1):

Sales and marketing 

12,460

26,470

39,037

87,278

Origination and servicing

6,173

12,151

17,217

38,286

General and administrative:

Engineering and product development

4,782

11,714

13,922

34,701

Other

7,224

26,492

20,518

82,367

Total operating expenses

30,639

76,827

90,694

242,632

Income (loss) before income taxes

2,858

(8,706)

7,308

(31,504)

Income tax expense 

331

1,390

Net income (loss)

$

2,858

$

(9,037)

$

7,308

$

(32,894)

Basic net income (loss) per share attributable to common stockholders

$

0.00

$

(0.07)

$

0.00

$

(0.44)

Diluted net income (loss) per share attributable to common stockholders

$

0.00

$

(0.07)

$

0.00

$

(0.44)

Weighted-average common shares – Basic

54,818,852

127,859,281

51,557,136

75,573,742

Weighted-average common shares – Diluted

83,324,440

127,859,281

81,426,976

75,573,742

(1)Includes stock-based compensation expense as follows:

Three months ended December 31,

Year ended December 31,

2013

2014

2013

2014

Sales and marketing

$

547

$

1,029

$

1,313

$

6,058

Origination and servicing

255

713

424

2,140

General and administrative:

Engineering and product development

1,151

1,824

2,171

5,311

Other

983

7,695

2,375

23,641

Total stock-based compensation expense

$

2,936

$

11,261

$

6,283

$

37,150

 

LENDINGCLUB CORPORATION

OPERATING AND FINANCIAL HIGHLIGHTS 

(in thousands, except percentages and number of employees, or as noted)

(Unaudited)

Three months ended

Change

December 31, 2013

March 31,
2014

June 30,
2014

September 30, 2014

December 31, 2014

Q4-2014 vs
Q3-2014

Q4-2014 vs
Q4-2013

Operating highlights:

Loan originations (in millions)

$

698

$

791

$

1,006

$

1,165

$

1,415

21%

103%

Operating revenue

$

33,485

$

38,702

$

48,621

$

56,538

$

69,551

23%

108%

Contribution(1)

$

15,654

$

14,578

$

21,915

$

26,881

$

32,672

22%

109%

Contribution margin(1)

46.7%

37.7%

45.1%

47.5%

47.0%

n/m(2)

n/m

Adjusted EBITDA(1)

$

6,514

$

1,866

$

4,002

$

7,517

$

7,916

5%

22%

Adjusted EBITDA margin(1)

19.5%

4.8%

8.2%

13.3%

11.4%

n/m

n/m

Adjusted EPS – diluted(1)

$

0.02

$

0.00

$

0.01

$

0.02

$

0.01

n/m

n/m

Standard Program Originations by Investor Type:

Managed accounts, individuals

59%

57%

46%

44%

48%

Self-managed, individuals

27%

27%

23%

25%

19%

Institutional investors

14%

16%

31%

31%

33%

     Total

100%

100%

100%

100%

100%

Originations by Program:

Standard program

92%

90%

81%

75%

78%

Custom program

8%

10%

19%

25%

22%

    Total

100%

100%

100%

100%

100%

Balance Sheet Information (in millions, at end of period):

Cash and cash equivalents

$

49

$

65

$

69

$

83

$

870

n/m

n/m

Loans, at fair value

$

1,829

$

2,110

$

2,326

$

2,534

$

2,799

10%

53%

Total assets

$

1,943

$

2,229

$

2,582

$

2,815

$

3,890

38%

100%

Notes and certificates, at fair value

$

1,840

$

2,120

$

2,337

$

2,552

$

2,814

10%

53%

Total stockholders’ equity

$

68

$

69

$

137

$

142

$

973

n/m

n/m

Condensed Cash Flow Information:

Net cash provided by (used in) operating activities

$

(15,063)

$

20,094

$

2,043

$

13,258

$

14,525

10%

n/m

Net cash flow from loan-related investing activities

(332,118)

(305,525)

(242,789)

(241,279)

(304,472)

26%

-8%

Net cash flow from all other investing activities

(6,159)

(8,764)

(116,739)

(10,382)

(27,125)

161%

340%

   Total net cash used in investing activities

(338,277)

(314,289)

(359,528)

(251,661)

(331,597)

32%

-2%

Net cash flow from note and certificate-related financing activities

336,763

304,954

242,759

248,802

301,593

21%

-10%

Net cash flow from all other financing activities

3,690

4,541

119,085

3,317

802,585

n/m

n/m

   Total net cash provided by financing activities

340,453

309,495

361,844

252,119

1,104,178

338%

224%

   Total net change in cash and cash equivalents

$

(12,887)

$

15,300

$

4,359

$

13,716

$

787,106

n/m

n/m

Other operating metrics:

Employees and contractors (at end of period)

426

475

628

742

843

14%

98%

Servicing Portfolio by Method Financed (in millions, at end of period):

Notes

$

688

$

792

$

881

$

983

$

1,055

7%

53%

Certificates

1,172

1,350

1,481

1,601

1,797

12%

53%

Whole loans sold

407

638

981

1,373

1,874

36%

n/m

    Total

$

2,267

$

2,780

$

3,343

$

3,957

$

4,726

19%

109%

Notes:

(1) Represents a Non-GAAP measure.  See Reconciliation of GAAP to Non-GAAP measures.

(2) Not meaningful.

 

LENDINGCLUB CORPORATION

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(In thousands, except percentages and per share data)

(Unaudited)

Three months ended

Year Ended

December 31,
2013

March 31,
2014

June 30,
2014

September 30, 2014

December 31, 2014

December 31, 2013

December 31, 2014

Contribution reconciliation:

Net income (loss)

$

2,858

$

(7,299)

$

(9,187)

$

(7,371)

$

(9,037)

$

7,308

$

(32,894)

Net interest expense (income) and other adjustments

(12)

(16)

396

474

1,430

(27)

2,284

General and administrative expense:

    Engineering and product development

4,782

5,722

8,030

9,235

11,714

13,922

34,701

    Other

7,224

12,311

20,951

22,613

26,492

20,518

82,367

Stock-based compensation expense

802

3,860

1,085

1,511

1,742

1,737

8,198

Income tax expense 

640

419

331

1,390

Contribution 

$

15,654

$

14,578

$

21,915

$

26,881

$

32,672

$

43,458

$

96,046

Total operating revenue

$

33,485

$

38,702

$

48,621

$

56,538

$

69,551

$

97,975

$

213,412

Contribution margin

46.7%

37.7%

45.1%

47.5%

47.0%

44.4%

45.0%

Adjusted EBITDA reconciliation:

Net income (loss)

$

2,858

$

(7,299)

$

(9,187)

$

(7,371)

$

(9,037)

$

7,308

$

(32,894)

Net interest expense (income) and other adjustments

(12)

(16)

396

474

1,430

(27)

2,284

Acquisition and related expense

1,141

1,378

301

293

3,113

Depreciation and amortization:

    Engineering and product development

577

791

1,088

1,447

1,868

1,336

5,194

    Other

155

216

245

322

383

327

1,166

Amortization of intangible assets

1,123

1,388

1,387

3,898

Stock-based compensation expense

2,936

7,033

8,319

10,537

11,261

6,283

37,150

Income tax expense

640

419

331

1,390

Adjusted EBITDA

$

6,514

$

1,866

$

4,002

$

7,517

$

7,916

$

15,227

$

21,301

Total operating revenue

$

33,485

$

38,702

$

48,621

$

56,538

$

69,551

$

97,975

$

213,412

Adjusted EBITDA margin

19.5%

4.8%

8.2%

13.3%

11.4%

15.5%

10.0%

Adjusted net income (loss) and net income (loss) per share:

GAAP net income (loss) 

$

2,858

$

(7,299)

$

(9,187)

$

(7,371)

$

(9,037)

$

7,308

$

(32,894)

Acquisition and related expense

1,141

1,378

301

293

3,113

Stock-based compensation

2,936

7,033

8,319

10,537

11,261

6,283

37,150

Amortization of acquired intangible assets

1,123

1,388

1,387

3,898

Income tax effects related to acquisitions

640

419

331

1,390

Adjusted net income

$

5,794

$

875

$

2,273

$

5,274

$

4,235

$

13,591

$

12,657

GAAP diluted shares

83,324

55,781

57,971

59,844

127,859

81,427

75,574

Diluted effect of preferred stock conversion (1)

240,195

240,195

249,029

249,351

195,608

241,905

235,745

Other dilutive equity awards(2)

28,397

27,469

27,993

39,488

40,767

Non-GAAP diluted shares

323,519

324,373

334,469

337,188

362,955

323,332

352,086

Adjusted net income per diluted share

$

0.02

$

0.00

$

0.01

$

0.02

$

0.01

$

0.04

$

0.04

Notes:

(1)

Gives effect to the conversion of convertible preferred stock into common stock as though the conversion had occurred at the beginning of the period under the “if converted” method.

(2)

In Q4’13, Other dilutive equity awards were included in GAAP diluted shares as the Company had reported net income.

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