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

February 24, 2015 @ 4:38 pm By JD Alois

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.

“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.