The leading marketplace lending platform in the US Lending Club (NYSE:LC) reported Q4 and 2015 full year results this morning. The company also reported that, to date, it has facilitated over $16 billion in consumer and SME loans. Lending Club also revealed its intent to launch a share buyback program of $150 million. Lending Club beat analyst expectations and shares were boosted by the positive outlook delivered by Lending Club.
Net income for Lending Club was $4.6 million for Q4 of 2015, compared to net
loss of $9.0 million in the same period last year. Net income included $13.7 million of stockbased compensation expense during the fourth quarter of 2015, compared to $11.3 million in the year prior. Earnings per share were stated at $0.01 for Q4. In 2014, Q4 saw a loss of $0.07 per share.
Lending Club CEO and founder Renaud Laplanche expressed “confidence” in the coming year and raised guidance, once again;
“Our confidence is bolstered again by Lending Club’s performance in 2015 and causes us to raise our outlook for 2016,” said Lending Club founder and CEO Renaud Laplanche. “We have earned the trust of 1.4 million customers, have considerable room to grow our existing products, and intend to continue to expand both our product line and addressable population going forward. Our operating efficiency reached record levels in Q4, and our credit performance, marketing efficiency and customer satisfaction remain very strong. Accordingly, we are raising Lending Club’s 2016 revenue guidance to $730 to $740 million, or 72 percent top line growth, and adjusted EBITDA guidance to $130 to $145 million. We believe there is tremendous long term potential that is not reflected in Lending Club shares and so we are taking this opportunity to use a small portion of our cash to buy back up to $150 million worth of our stock.”
Lending Club reported that Loan originations in Q4 of 2015 were $2.58 billion, compared to
$1.41 billion in the same period last year, an increase of 82% year-over-year. Operating revenue in the fourth quarter of 2015 was $134.5 million, compared to $69.6 million in the same period last year, an increase of 93% year-over-year. Operating revenue as a percent of originations, or revenue yield, was 5.21% in the fourth quarter, up from 4.92% in the prior year. Adjusted EBITDA was $24.6 million in the fourth quarter of 2015, compared
to $7.9 million in the same period last year. As a percent of operating revenue, Adjusted EBITDA margin increased to 18.3% in the fourth quarter of 2015, up from 11.4% in the prior year. Net income was $4.6 million for the fourth quarter of 2015, compared to net
loss of $9.0 million in the same period last year.
“We closed out the year with a very strong fourth quarter revenue growth of 93% year over year, adjusted EBITDA growth of 210%, with an adjusted EBITDA margin of 18.3%, and delivered another quarter of GAAP profitability,” said Carrie Dolan, CFO. “We remain confident in our ability to grow originations and revenue at a fast pace in the years to come and in the sustainability of our financial model in various economic environments.”
Other Metrics & Business Highlights
- The Lending Club platform reached a $10 billion annual origination run rate in Q4 2015;
- Lending Club’s servicing portfolio reached $9.0 billion at year end, paying out $4.1 billion of principal and interest payments to investors in 2015. Based on our current forecasts, the portfolio will pay out over $7.0 billion in principal and interest to investors in 2016, which if reinvested would provide sufficient capital available to fund over half of 2016 targeted originations;
- The average investor return after credit losses and fees in 2015 was nearly 8%. Investor returns’ lack of correlation with other asset classes and investors’ desire to diversify away from a volatile stock market, with the S&P 500 down nearly 1% in 2015, drove $8.4 billion in investments to the Lending Club platform in 2015;
- We opened to retail investors in six new states during the fourth quarter and another two states subsequent to quarter end. Lending Club is now available to retail investors in 43 states and the District of Columbia.
Lending Club Outlook
Based on the information available as of February 11, 2016, Lending Club provides the following outlook:
First Quarter 2016
Operating Revenues in the range of $147 million to $149 million.
Adjusted EBITDA in the range of $25 million to $27 million.
Full Year 2016
Operating Revenues in the range of $730 million to $740 million, representing a growth rate of 72% from 2015, up from an implied range of $714 million to $717 million as indicated in our early November guidance.
Adjusted EBITDA in the range of $130 million to $145 million, representing a margin of roughly 19% at the midpoint, up from an implied guidance of $129 million as indicated in our early November guidance.
The board of directors has approved a share repurchase program under which Lending Club may repurchase up to $150 million of the Company’s common shares in open market or privately negotiated transactions in compliance with Securities and Exchange Act Rule 10b-18. This repurchase plan is valid for one year and does not obligate the Company to acquire any particular amount of common stock, and may be suspended at any time at Lending Club’s discretion.