Lending Club Q4 and 2018 Full Year Results

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Lending Club recently announced financial results for the fourth quarter and full year ended December 31, 2018.

  • Lending Club built strong operational and financial momentum, delivered on its goals in a dynamic and competitive market, and demonstrated the power of its data and scale as well as the flexibility of its model.
  • Record loan origination of $10.9 billion, up 21% year-over-year with application growth of 35%.
  • Record Net Revenue of $694.8 million, up 21% year-over-year.
    GAAP Consolidated Net Loss of $(128.2) million compared to $(154.0) million in 2017.
  • Record Adjusted EBITDA of $97.5 million, up 119% year-over-year.
    Adjusted EBITDA Margin of 14.0%, up 6.2 percentage points year-over-year, reflecting ongoing process efficiencies to increase operating leverage, control fixed costs and better serve our growing customer base.
  • Adjusted Net Loss of $(32.4) million compared to $(73.6) million in 2017.

Fourth quarter 2018 results ahead of expectations

  • Loan origination of $2.9 billion, up 18% year-over-year.
    Net Revenue of $181.5 million, up 16% year-over-year.
  • GAAP Consolidated Net Loss of $(13.4) million compared to $(92.1) million in the fourth quarter of 2017.
  • Adjusted EBITDA of $28.5 million, up 49% year-over-year.
  • Adjusted EBITDA Margin of 15.7%, up 3.5 percentage points year-over-year.
  • Adjusted Net Loss of $(4.1) million compared to $(11.8) million in the fourth quarter of 2017.
  • In 2019, responsible revenue growth and cost structure simplification to benefit both GAAP Consolidated Net Income and Adjusted Net Income

Focused on margin expansion and responsible growth in 2019 while preparing for uncertain macroeconomics conditions.

  • Expect full year 2019 Net Revenue to be in the range of $765 million to $795 million; GAAP Consolidated Net Loss and Adjusted Net Loss both in the range of ($29) million to ($9) million; and Adjusted EBITDA in the range of $115 million to $135 million.
  • In a seasonally slower first quarter, expect Net Revenue to be in the range of $162 million to $172 million; GAAP Consolidated Net Loss and Adjusted Net Loss both in the range of $(20) million to $(15) million; and Adjusted EBITDA in the range of $13 million to $18 million.
  • Targeting Adjusted Net Income profitability over the second half of 2019, supported by our cost structure simplification program.
  • “With more than a trillion dollars of U.S. credit card debt, our mission to help our customers improve their financial health has never been more urgent,” said Scott Sanborn, CEO of LendingClub. “Our record results in 2018 prove that our business model and strategy are working and our investments in innovation and simplification mean we are targeting Adjusted Net Income profitability over the second half of 2019.”

Lending Club remains well positioned over the long term

Lending Club provides tools that help Americans on their path to financial health through lower borrowing costs and a seamless user experience.

The company is the market leader in personal loans, a $130 billion+ industry and the fastest growing segment of consumer credit in the United States, and has an estimated addressable revolving debt market opportunity of more than $1 trillion.

The company’s marketplace gives it unique strengths which enable it to expand its market opportunity, competitive advantage, and growth potential:

  • Our marketplace model generates savings for borrowers by finding and matching the lowest cost of capital with the right borrower and attracts investors with the lowest cost of capital by efficiently generating targeted returns and duration diversification;
  • Our broad spectrum of borrowers and investors enables us to serve more customers and to enhance our marketing efficiency; and
  • Scale, data and innovation enable us to generate and convert demand efficiently while managing price and credit risk effectively (2.5 million+ customers).

The company is enhancing its operating leverage and capacity to generate cash with efficiency initiatives.

Fourth Quarter 2018 Financial Highlights

Commenting on financial results, Tom Casey, CFO of LendingClub said, “We delivered on the revenue and margin goals that we set out at our investor day in December 2017. In 2018, our net revenues grew 21% with G&A and tech costs growing more slowly, helping Adjusted EBITDA Margins increase 6.2 percentage points to 14%. In 2019 we are taking further action to simplify the company, putting us on the path to GAAP profitability.”

Loan Originations – Loan originations in the fourth quarter of 2018 were $2.9 billion, improving 18% compared to the same quarter last year and declining 1% from the third quarter of 2018.

Net Revenue – Net Revenue in the fourth quarter of 2018 was $181.5 million, improving 16% compared to the same quarter last year and declining 2% from the third quarter of 2018, driven primarily by a higher volume of loan originations in the fourth quarter of 2018 compared to the same quarter last year and a lower volume of loan originations in the fourth quarter of 2018 compared to the third quarter of 2018, respectively.

GAAP Consolidated Net Loss – GAAP Consolidated Net Loss was $(13.4) million for the fourth quarter of 2018, improving $78.7 million compared to the same quarter last year and improving $9.3 million from the third quarter of 2018. The decrease in loss for the fourth quarter of 2018 compared to the same quarter last year and compared to the third quarter of 2018 was primarily driven by a decline in expenses related to the resolution of certain legacy issues.

Adjusted EBITDA  Adjusted EBITDA was $28.5 million in the fourth quarter of 2018, improving $9.4 million compared to the same quarter last year and improving $0.4 million from the third quarter of 2018.

Adjusted Net Loss – Adjusted Net Loss was $(4.1) million in the fourth quarter of 2018, improving $7.6 million compared to the same quarter last year and improving $3.2 million from the third quarter of 2018.

Contribution – Contribution was $91.0 million in the fourth quarter of 2018, improving $15.7 million compared to the same quarter last year and improving $2.6 million from the third quarter of 2018.

Earnings Per Share (EPS) – Basic and diluted EPS attributable to LendingClub was $(0.03) for the fourth quarter of 2018, compared to basic and diluted EPS attributable to LendingClub of $(0.22) in the same quarter last year and $(0.05) in the third quarter of 2018.

Adjusted EPS – Adjusted EPS was $(0.01) for the fourth quarter of 2018, compared to Adjusted EPS of $(0.03) in the same quarter last year and $(0.02) in the third quarter of 2018.

Cash, Cash Equivalents and Securities Available for Sale – As of December 31, 2018, cash, cash equivalents and securities available for sale totaled $543.4 million, of which $53.6 million in securities were pledged as collateral.

Loans Held for Sale by the Company – As the Company continues to build its investor programs, it uses cash to accumulate loans for future transactions. Loans held for sale by the Company at the end of the fourth quarter of 2018 were $840.0 million, which included approximately $300 million in loans that the Company was required to consolidate related to its Company-sponsored securitization transaction that occurred in the fourth quarter of 2018. The loans held for sale were financed with $256.4 million of payables to securitization note holders and $306.8 million of debt outstanding under the Company’s warehouse credit facilities.

Read the full press release from Lending Club

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