Marketplace lending platform Lending Club (NYSE:LC), announced Q1 2017 results showing a decline in originations versus Q4 and same quarter year prior. Lending Club has now topped $26 billion in loan originations since platform launch ten years ago. Lending Club is the largest personal loan provider in the U.S. with a borrower base of almost 2 million individuals. Lending Club beat their own outlook released during their last earnings report. The company topped their expectations for quarterly net revenue, income, and EBITDA.
According to their release, Lending Club saw loan originations in Q1 2017 of $1.96 billion, down 1.44% from the fourth quarter of 2016. Originations in Q1 of 2016 came in at $2.75 billion – a significant decline (28.8%).
Lending Club CEO Scott Sanborn stated;
“We redeployed resources for growth and invested heavily in our technology platform in the first quarter. With continued strong investor demand, I am pleased with the acceleration we saw as we exited the quarter.”
Tom Casey, Lending Club CFO, added;
“We delivered on our financial performance for the quarter, with significant investment in initiatives that position us well for growth through the remainder of 2017 and well into the future.”
Net revenue in the first quarter of 2017 was $124.5 million, down 5% from Q4 but ahead of expectations for the “seasonally difficult quarter”. Net revenue as a percent of originations, or revenue yield, was 6.36% in the first quarter, down 21 basis points sequentially, driven primarily by a $4.3 million favorable adjustment to the servicing asset valuation in the fourth quarter and the increasing of bank purchases of higher grade loans.
GAAP net loss was $(29.8) million for the first quarter of 2017, improving $2.4 million from the fourth quarter of 2016, resulting from the decrease in revenue noted above, and a decrease of $13.2 million in other general and administrative expenses. The decrease in other general and administrative expenses was primarily driven by an insurance recovery of $9.6 million. GAAP net loss also includes $13.3 million of expenses primarily associated with the Board Review that was disclosed in 2016.
Basic and diluted EPS was $(0.07) for the first quarter of 2017, compared to basic and diluted EPS of $(0.08) in the fourth quarter of 2016. Adjusted EPS was $(0.02) for both the first quarter of 2017 and the fourth quarter of 2016.
Key developments by the company included;
- Banks further increased their purchasing, funding 40% of total originations for the quarter, up from 31% in the fourth quarter, and retail investors expanded to 15%, up from 13% in the prior quarter
- Lending Club initiated activities to support the securitization of Lending Club loans with external partners
- Ended the quarter with a servicing portfolio of $11.1 billion, delivered $2.0 billion of principal and interest payments to investors throughout the quarter
- Ended the first quarter of 2017 with cash, cash equivalents and securities available for sale totaling $781 million, with no outstanding debt
Lending Club provided the following outlook for the full year and second quarter 2017:
Full Year 2017
Total Net Revenue in the range of $575 million to $595 million.
Net Income (Loss) in the range of $(77) million to $(67) million.
Adjusted EBITDA(4) in the range of $45 million to $55 million.
Reconciling Items between net loss and non-GAAP adjusted EBITDA consisting of stock based compensation of approximately $78 million, depreciation and amortization and other net adjustments of approximately $44 million.
Second Quarter 2017
Total Net Revenue in the range of $132 million to $137 million.
Net Income (Loss) in the range of $(35) million to $(30) million.
Adjusted EBITDA(4) in the range of $(2.5) million to $2.5 million.
Reconciling Items between net loss and non-GAAP adjusted EBITDA consisting of stock based compensation of approximately $21 million, depreciation and amortization and other net adjustments of approximately $11 million.
The Lending Club first quarter 2017 webcast and teleconference is scheduled to begin at 2:00 p.m. Pacific Time on Thursday, May 4, 2017. A live webcast of the call will be available at http://ir.lendingclub.com under the Events & Presentations menu. To access the call, please dial +1 (888) 317-6003, or outside the U.S. +1 (412) 317-6061, with conference ID 8746644, ten minutes prior to 2:00 p.m. Pacific Time (or 5:00 p.m. Eastern Time).