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LendingClub Reports Q2 Revenue Growth, Raises 2017 Outlook

LendingClub (NYSE:LC) is out with Q2 numbers and the marketplace lending platform is showing a top line increase for the quarter and for the first half of the year. Loan originations in Q2 increased versus same quarter year prior as well.

During Q2 top line revenue came in at $139.6 million versus Q2 in 2016 at $103.4 million. For the first six months of 2017, LendingClub reported revenue of $264.1 million versus the first six months year prior of $255.7 million

Loan originations increased in the second quarter came in $2.147 billion. This is an increase from Q2 of 2017 when LendingClub delivered $1.955 billion in originations.

Scott Sanborn, LendingClub CEO, commented on the results;

“It’s great to be back to growth. Our second quarter results demonstrate the power of the LendingClub platform and the capability of our team to execute. We are excited about the momentum building in the business and the massive opportunity that lies ahead.”

Tom Casey, LendingClub CFO, added;

“We closed Q2 with the second highest revenue in our company’s history and returned to Adjusted EBITDA profitability. Based on the second quarter results and how we are tracking against our initiatives, we are raising our financial outlook for the year.”

LendingClub increased guidance for the current quarter and the full year.

Based on the information available as of August 7, 2017, LendingClub has increased its guidance for the full year and third quarter 2017:

Full Year 2017

Total Net Revenue in the range of $585 million to $600 million.
Net Income (Loss) in the range of $(69) million to $(61) million.
Adjusted EBITDA in the range of $50 million to $58 million.
Reconciling Items between net loss and non-GAAP adjusted EBITDA consisting of stock-based compensation of approximately $75 million, depreciation and amortization and other net adjustments of approximately $44 million.

Third Quarter 2017

Total Net Revenue in the range of $154 million to $159 million.
Net Income (Loss) in the range of $(12) million to $(8) million.
Adjusted EBITDA in the range of $18 million to $22 million.
Reconciling Items between net loss and non-GAAP adjusted EBITDA consisting of stock-based compensation of approximately $19 million, depreciation and amortization and other net adjustments of approximately $11 million.

LendingClub has experienced a tough year as investors backed away from the entire online lending industry during 2016. LendingClub has pursued a strategy of cost cutting and enticing borrowers back to the platform while adding new services and boosting the executive bench. Sanborn has been promising a return to growth and, at least according to Q2, he has delivered.  Shares responded positively in after hours trading largely based on improving guidance.

LendingClub added that they have “built sustainable momentum on both sides of their marketplace”, with stronger borrower demand and the ability to leverage technology and data to “say yes more often” while delivering better risk adjust returns to investors.

The online lender said they were seeing more interest from regulators that view Fintech as a way to increase financial inclusion. LendingClub pointed to data that indicates online lending is concentrated in areas where banks are pulling back and closing branches, and where there is less competition among banks. Fintech can also offer better prices to consumers. Additionally, LendingClub credit models can go beyond FICO to identify good borrowers that traditional lenders may overlook or overcharge.

Additional information is available below.

Earnings Per Share (EPS) – Basic and diluted EPS attributable to LendingClub was $(0.06) for the second quarter of 2017, compared to basic and diluted EPS attributable to LendingClub of $(0.07) in the first quarter of 2017 and $(0.21) in the same quarter last year.

Adjusted EPS – Adjusted EPS was $(0.01) for the second quarter of 2017, compared to adjusted EPS of $(0.02) in the first quarter of 2017 and $(0.09) in the same quarter last year.

Cash, Cash Equivalents and Securities Available for Sale – As of June 30, 2017, cash, cash equivalents and securities available for sale totaled $764 million, with no outstanding debt.

Other key accomplishments during the quarter include:

Borrowers

  • Achieved 10% sequential growth to over $2.1 billion in originations, driven by strong borrower demand
  • Successfully launched multiple conversion initiatives, including pricing optimization and a redesigned website
  • Improved sales and marketing efficiency by over 7% sequentially
  • Credit continues to perform in line with expectations as observed in both vintage and portfolio trends

Investors

  • Successfully executed the first self-sponsored securitization thereby opening a new funding source, expanding the investor base with 20 new investors, and generating a new repeatable revenue stream
  • Record number of managed accounts and institutional investors participating on the platform in the quarter
  • Successfully launched new iOS mobile application for retail investors

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