Lending Club (NYSE:LC), the largest marketplace lending platform in the US, released quarterly earnings results today. Originations declined dramatically from the same quarter in 2016. Originations also dipped versus Q4. Obviously the online lender would prefer to report the exact opposite. While the results were not great they did beat guidance published after Q4. A bigger question is whether Lending Club can execute and deliver on the online lending dream and drive significant, sustainable growth.
Lending Club benefits from modern technology, low overhead, and a culture of innovation. On the other side of the coin, customer acquisition costs remain high in comparison to some other lenders. This can be mitigated in part by providing a growing number of services to their consumers. Once they have signed you leverage that relationship to provide a growing number of financial services. There is also a need to diversify funding channels – something Lending Club is currently doing.
Below is the Lending Club Q1 earnings deck. The company is predicted Q2 growth of 6% to 10%. Full year sequential growth is expected to be 15% to 19%. Time will tell.