LendingClub Reports an “Adjusted” Profit, Tops Guidance for Q3

LendingClub (NYSE:LC), the leading US-based marketplace lending platform, has released Q3 earnings results. According to published results, LendingClub beat previously provided guidance and delivered its first profitable quarter in memory. LendingClub said it “achieved break-even GAAP earnings per share” and adjusted earnings per share of $0.09  or $8million. The provided guidance was a range of zero to $5 million.

Shares in LendingClub moved higher in after-hours trading.

LendingClub reported record loan originations of $3.3 billion a 16% increase year over year..

Net revenue came in at $204.9 million up 11% over same period year prior.

Importantly, LendingClub said it was “actively assessing options to obtain a national bank charter to enhance LendingClub’s ability to serve its members.”

During the last quarter earnings call, LendingClub revealed its interest in providing bank-like services. The digital banking sector is a hot segment of Fintech as innovative financial services firms seek to challenge, and perhaps replace, lumbering brick and mortar bank operations.

Lending Club
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Scott Sanborn, CEO of LendingClub, commented on the results:

“Returning to Adjusted Net Income profitability is an important milestone for LendingClub. Our strategy is working and we are executing with discipline on our mission to help more borrowers improve their financial health, while growing our market opportunity, generating competitive returns for our platform investors, building our resiliency and compounding our competitive advantages.”

Tom Casey, CFO of LendingClub, provided expectations for an improving Q4:

“We are again raising our Adjusted EBITDA and Adjusted Net Income guidance. Our simplification program is transforming LendingClub with 19% of our workforce through variable cost business process outsourcing and 49% located outside San Francisco. This transformation of our cost structure enables us to grow responsibly and increase our operating leverage in 2019 and beyond.”

Additional results include:

GAAP Consolidated Net Loss of $(0.4) million ($0.00 per share) compared to $(22.7) million ($(0.27) per share) in the third quarter of 2018.

  • Record Adjusted EBITDA of $40.0 million, up 43% year-over-year.
  • Record Adjusted EBITDA Margin of 19.5%, up 4.3 percentage points year-over-year primarily driven by improving cost efficiency in customer acquisition, and origination and servicing.
  • Adjusted Net Income of $8.0 million ($0.09 per share) compared to a loss of $(7.3) million ($(0.09) per share) in the third quarter of 2018.
  • Net Cash and Other Financial Assets As of September 30, 2019, net cash and other financial assets totaled $736.3 million.

The earnings call is scheduled for 5PM ET.

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