Lending Club Reports Second Quarter 2015 Results

Q2 operating revenue up 98% year-over-year to $96.1 million

Aug 04, 2015, 16:00 ET from Lending Club

SAN FRANCISCO, Aug. 4, 2015 /PRNewswire/ -- Lending Club (NYSE: LC), the world's largest online marketplace connecting borrowers and investors, today announced financial results for the second quarter ended June 30, 2015 and raised its outlook for the remainder of the year.

 

Quarter Ended June 30,

Six Months Ended June 30,

($ in millions)

2015

2014

% Change

2015

2014

% Change

Originations

$  1,911.8

$   1,005.9

90%

$  3,546.8

$  1,797.3

97%

Operating Revenue

$       96.1

$       48.6

98%

$     177.2

$       87.3

103%

Adjusted EBITDA(1)

$       13.4

$         4.0

235%

$       24.0

$         5.9

310%

(1) Adjusted EBITDA is a non-GAAP financial measure. Please see the discussion below under the heading "Non-GAAP Measures" and the reconciliation at the end of this release.

"We had another very strong quarter with accelerating revenue growth from 17% to 19% quarter over quarter and expanding margins from 13.1% in Q1 to 13.9% in Q2." said Renaud Laplanche, CEO and founder. "Strong platform effects, industry leading position, superior engineering, and record high customer satisfaction translating into a loyal repeat customer base, have helped us continue to lower our acquisition costs this quarter. These results and the continued momentum we are seeing give us the confidence to, once again, raise our outlook for the full year in terms of both growth and margins."

Second Quarter 2015 Financial Highlights

Originations – Loan originations in the second quarter of 2015 were $1.91 billion, compared to $1.01 billion in the same period last year, an increase of 90% year-over-year. The Lending Club platform has now facilitated loans totaling roughly $11.2 billion since inception.

Operating Revenue – Operating revenue in the second quarter of 2015 was $96.1 million, compared to $48.6 million in the same period last year, an increase of 98% year-over-year. Operating revenue as a percent of originations, or our revenue yield, was 5.03% in the second quarter, up from 4.83% in the prior year.

Adjusted EBITDA(2)  – Adjusted EBITDA was $13.4 million in the second quarter of 2015, compared to $4.0 million in the same period last year. As a percent of operating revenue, Adjusted EBITDA margin increased to 13.9% in the second quarter of 2015, up from 8.2% in the prior year.

Net Loss – GAAP net loss was $4.1 million for the second quarter of 2015, compared to a net loss of $9.2 million in the same period last year. Lending Club's GAAP net loss included $12.5 million of stock-based compensation expense during the second quarter of 2015, compared to $8.3 million in the second quarter of 2014.

Loss Per Share (EPS) - Basic and diluted loss per share was ($0.01) for the second quarter of 2015 compared to EPS of ($0.16) in the same period last year.

Adjusted EPS(2) Adjusted EPS was $0.03 for the second quarter of 2015 compared to $0.01 in the same period last year.

Cash, Cash Equivalents and Securities Available for Sale - As of June 30, 2015, cash, cash equivalents and securities available for sale totaled $888 million, with no outstanding debt.

"The second quarter was another example of how our diversified borrower channel and investor mix is driving fast and efficient growth," said Carrie Dolan, CFO. "We continue to see improving sales and marketing efficiency in our standard personal loan product and we saw better than expected acceptance and response rates in our custom products. With demand remaining strong on both the borrower and investor sides of our online credit marketplace, our increasing confidence in our near-term and long-term opportunities is reflected in our raised outlook."

Recent Business Developments

  • Opened to investors in Texas and Arizona in the second quarter and, subsequent to the quarter end, opened to investors in Arkansas, Iowa and Oklahoma. Lending Club is now available to investors in 33 states.
  • Opened to borrowers in Nebraska and North Dakota. Lending Club is now available to borrowers in 47 states.
  • Investor base exceeds 100,000 active individual investors who collectively invested over $1 billion on the Lending Club platform in Q2.
  • Launched an alliance with Ingram Micro (NYSE: IM), the world's largest wholesale technology distribution company, to be the exclusive provider of unsecured lines of credit and term loans up to $300,000 for Ingram Micro's tens of thousands of U.S. value-added resellers, and with Zulily (NASDAQ: ZU), a specialty online retailer that's topped a billion a year in sales.

Outlook

Based on the information available as of August 4, 2015, Lending Club provides the following outlook:

Third Quarter 2015 

Operating Revenues in the range of $106 million to $108 million.   

Adjusted EBITDA(2) in the range of $12 million to $14 million.

Fiscal Year 2015 

Total Revenues in the range of $405 million to $409 million, up from $385 million to $392 million previously.  

 Adjusted EBITDA(2) in the range of $49 million to $53 million, up from $40 million to $46 million previously.

(2) Adjusted EBITDA and Adjusted EPS are non-GAAP financial measures. Please see the discussion below under the heading "Non-GAAP Measures" and the reconciliations at the end of this release. 

About Lending Club

Lending Club's mission is to transform the banking system to make credit more affordable and investing more rewarding. The company's technology platform enables it to deliver innovative solutions to borrowers and investors. Since launching in 2007, the Lending Club platform has facilitated over $11.2 billion in consumer loans and has more than doubled annual loan volume each year. We operate at a lower cost than traditional bank lending programs, so we're able to pass the savings on to borrowers in the form of lower rates and to investors in the form of solid returns. Lending Club has been prominently recognized as a leader for its growth and innovation, including being named one of Forbes' America's Most Promising Companies three years in a row, a CNBC Disruptor two years in a row, a 2012 World Economic Forum Technology Pioneer, and one of The World's 10 Most Innovative Companies in Finance by Fast Company. Lending Club is based in San Francisco, California. More information is available at https://www.lendingclub.com. Currently only residents of the following states may invest in Lending Club notes: AR, AZ, CA, CO, CT, DE, FL, GA, HI, IA, ID, IL, KY (accredited investors), LA, MA, ME, MN, MS, MT, NH, NV, NY, OK, RI, SD TX, UT, VA, VT, WA, WI, WV, or WY. All loans made by WebBank, a Utah-chartered Industrial Bank, Member FDIC.

Conference Call and Webcast Information

The Lending Club Second Quarter 2015 webcast and teleconference is scheduled to begin at 2:00 p.m. Pacific Time on Tuesday, August 4, 2015. 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 5811720, ten minutes prior to 2:00 p.m. Pacific Time (or 5:00 p.m. Eastern Time). An audio archive of the call will be available at http://ir.lendingclub.com. An audio replay will be also available the evening of August 4, 2015, until August 11, 2015, by calling +1 (877) 344-7529 or +1 (412) 317-0088, with Conference ID 10069982. 

Non-GAAP Measures

Our non-GAAP measures have limitations as analytical tools and you should not consider them in isolation or as a substitute for an analysis of our results under GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. Contribution, contribution margin, adjusted EBITDA, adjusted EBITDA margin, and adjusted EPS should not be viewed as substitutes for, or superior to, net income (loss), and basic and diluted EPS, as prepared in accordance with GAAP. Other companies, including companies in our industry, may calculate these measures differently, which may reduce their usefulness as a comparative measure. Contribution, contribution margin, adjusted EBITDA, adjusted EBITDA margin and adjusted EPS do not consider the potentially dilutive impact of stock-based compensation. Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and adjusted EBITDA and adjusted EBITDA margin do not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements. Adjusted EBITDA and adjusted EBITDA margin do not reflect tax payments that may represent a reduction in cash available to us. Please see the "Reconciliation of GAAP to Non-GAAP Measures" tables at the end of this release.

In evaluating contribution, contribution margin, adjusted EBITDA, adjusted EBITDA margin and adjusted EPS, you should be aware that in the future we will incur expenses similar to the adjustments in this presentation.

Safe Harbor Statement

Some of the statements in this above are "forward-looking statements." The words "anticipate," "believe," "estimate," "expect," "intend," "may," "outlook," "plan," "predict," "project," "will," "would" and similar expressions may identify forward-looking statements, although not all forward-looking statements contain these identifying words. The Company may not actually achieve the plans, intentions or expectations disclosed in forward-looking statements, and you should not place undue reliance on forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in forward-looking statements. The Company does not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Information in this press release is not an offer to sell securities or the solicitation of an offer to buy securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

Additional information about Lending Club is available in the prospectus for Lending Club's notes, which can be obtained on Lending Club's website at https://www.lendingclub.com/info/prospectus.action.  

LENDINGCLUB CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)

Three months ended

June 30,

Six months ended

June 30,

2015

2014

2015

2014

Operating revenue

Transaction fees

$

85,651

$

45,801

$

158,133

$

81,213

Servicing fees

6,479

1,468

11,871

3,248

Management fees

2,548

1,461

4,763

2,555

Other revenue (expense)

1,441

(109)

2,397

307

Total operating revenue

96,119

48,621

177,164

87,323

Net interest income (expense) after fair value adjustments

798

(396)

985

(380)

Total net revenue

96,917

48,225

178,149

86,943

Operating expenses (1):

Sales and marketing

40,317

19,225

75,201

39,807

Origination and servicing

15,287

8,566

27,967

15,968

General and administrative

Engineering and product development

16,062

8,030

28,390

13,752

Other

29,002

20,951

56,089

33,262

Total operating expenses

100,668

56,772

187,647

102,789

Loss before income tax expense

(3,751)

(8,547)

(9,498)

(15,846)

Income tax expense

389

640

1,016

640

Net loss

$

(4,140)

$

(9,187)

$

(10,514)

$

(16,486)

Basic net loss per share attributable to common stockholders

$

(0.01)

$

(0.16)

$

(0.03)

$

(0.29)

Diluted net loss per share attributable to common stockholders

$

(0.01)

$

(0.16)

$

(0.03)

$

(0.29)

Weighted-average common shares – Basic

372,841,945

57,971,180

372,401,583

56,903,128

Weighted-average common shares – Diluted

372,841,945

57,971,180

372,401,583

56,903,128

(1) Includes stock-based compensation expense as follows:

Three months ended

June 30,

Six months ended

June 30,

2015

2014

2015

2014

Sales and marketing

$

1,806

$

615

$

3,325

$

4,117

Origination and servicing

867

470

1,588

828

General and administrative

Engineering and product development

2,432

1,258

3,838

1,995

Other

7,381

5,976

15,328

8,412

Total stock-based compensation expense

$

12,486

$

8,319

$

24,079

$

15,352

 

LENDINGCLUB CORPORATION

OPERATING AND FINANCIAL HIGHLIGHTS

(In thousands, except percentages and number of employees, or as noted)

(Unaudited)

June 30, 2015

Three months ended

% Change

June 30,

2014

September 30,

2014

December 31,

2014

March 31,

2015

June 30,

2015

Q/Q

Y/Y

Operating Highlights:

Loan originations (in millions)

$

1,006

$

1,165

$

1,415

$

1,635

$

1,912

17%

90%

Operating revenue

$

48,621

$

56,538

$

69,551

$

81,045

$

96,119

19%

98%

Contribution (1)

$

21,915

$

26,881

$

32,672

$

35,721

$

43,188

21%

97%

Contribution margin (1)

45.1%

47.5%

47.0%

44.1%

44.9%

N/M

N/M

Adjusted EBITDA (1)

$

4,002

$

7,517

$

7,916

$

10,646

$

13,399

26%

235%

Adjusted EBITDA margin (1)

8.2%

13.3%

11.4%

13.1%

13.9%

N/M

N/M

Adjusted EPS - diluted (1)

$

0.01

$

0.02

$

0.01

$

0.02

$

0.03

N/M

N/M

Standard Program Originations by Investor Type:

Managed accounts, individuals

46%

44%

48%

51%

50%

Self-managed, individuals

23%

25%

19%

24%

20%

Institutional investors

31%

31%

33%

25%

30%

Total

100%

100%

100%

100%

100%

Originations by Program:

Standard program

81%

75%

78%

79%

76%

Custom program

19%

25%

22%

21%

24%

Total

100%

100%

100%

100%

100%

Servicing Portfolio by Method Financed (in millions, at end of period):

Notes

$

881

$

983

$

1,055

$

1,210

$

1,314

9%

49%

Certificates

1,481

1,601

1,797

2,067

2,381

15%

61%

Whole loans sold

981

1,373

1,874

2,300

2,853

24%

191%

Total

$

3,343

$

3,957

$

4,726

$

5,577

$

6,548

Select Balance Sheet Information (in millions, at end of period):

Cash and cash equivalents

$

69

$

83

$

870

$

874

$

490

(44)%

N/M

Securities available for sale

$

$

$

$

$

398

N/M

N/M

Loans

$

2,326

$

2,534

$

2,799

$

3,231

$

3,637

13%

56%

Notes and certificates

$

2,337

$

2,552

$

2,814

$

3,249

$

3,660

13%

57%

Total assets

$

2,582

$

2,815

$

3,890

$

4,328

$

4,783

11%

85%

Total stockholders' equity

$

137

$

142

$

973

$

982

$

996

1%

N/M

Condensed Cash Flow Information:

Net cash flow from operating activities

$

2,043

$

13,258

$

14,525

$

6,495

$

15,278

Cash flow related to loans

(242,789)

(241,279)

(304,472)

(479,976)

(458,923)

Other

(116,739)

(10,382)

(27,125)

1,276

(425,803)

Net cash used in investing activities

(359,528)

(251,661)

(331,597)

(478,700)

(884,726)

Cash flow related to notes and certificates

242,759

248,802

301,593

483,543

462,978

Other

119,085

3,317

802,585

(6,993)

22,811

Net cash flow from financing activities

361,844

252,119

1,104,178

476,550

485,789

Net change in cash and cash equivalents

$

4,359

$

13,716

$

787,106

$

4,345

$

(383,659)

Employees and contractors (2)

628

742

843

976

1,136

Notes: 

N/M Not meaningful. 

(1)

Represents a Non-GAAP measure. See Reconciliation of GAAP to Non-GAAP measures.

(2)

As of the end of each respective period.

 

LENDINGCLUB CORPORATION

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(In thousands, except percentages and per share data)

(Unaudited)

Three months ended

Six months ended

June 30,

2014

September 30,

2014

December 31,

2014

March 31,

2015

June 30,

2015

June 30,

2014

June 30,

2015

Contribution reconciliation:

Net loss

$

(9,187)

$

(7,371)

$

(9,037)

$

(6,374)

$

(4,140)

$

(16,486)

$

(10,514)

Net interest expense (income) and other adjustments

396

474

1,430

(187)

(798)

380

(985)

General and administrative expense:

Engineering and product development

8,030

9,235

11,714

12,328

16,062

13,752

28,390

Other

20,951

22,613

26,492

27,087

29,002

33,262

56,089

Stock-based compensation expense

1,085

1,511

1,742

2,240

2,673

4,945

4,913

Income tax expense

640

419

331

627

389

640

1,016

Contribution

$

21,915

$

26,881

$

32,672

$

35,721

$

43,188

$

36,493

$

78,909

Total operating revenue

$

48,621

$

56,538

$

69,551

$

81,045

$

96,119

$

87,323

$

177,164

Contribution margin

45.1%

47.5%

47.0%

44.1%

44.9%

41.8%

44.5%

Adjusted EBITDA reconciliation:

Net loss

$

(9,187)

$

(7,371)

$

(9,037)

$

(6,374)

$

(4,140)

$

(16,486)

$

(10,514)

Net interest expense (income) and other adjustments

396

474

1,430

(187)

(798)

380

(985)

Acquisition and related expense

1,378

301

293

294

403

2,519

697

Depreciation expense:

Engineering and product development

1,088

1,447

1,868

2,744

3,261

1,879

6,005

Other

245

322

383

404

524

461

928

Amortization of intangible assets

1,123

1,388

1,387

1,545

1,274

1,123

2,819

Stock-based compensation expense

8,319

10,537

11,261

11,593

12,486

15,352

24,079

Income tax expense

640

419

331

627

389

640

1,016

Adjusted EBITDA

$

4,002

$

7,517

$

7,916

$

10,646

$

13,399

$

5,868

$

24,045

Total operating revenue

$

48,621

$

56,538

$

69,551

$

81,045

$

96,119

$

87,323

$

177,164

Adjusted EBITDA margin

8.2%

13.3%

11.4%

13.1%

13.9%

6.7%

13.6%

Adjusted net loss and net loss per share:

Net loss

$

(9,187)

$

(7,371)

$

(9,037)

$

(6,374)

$

(4,140)

$

(16,486)

$

(10,514)

Acquisition and related expense

1,378

301

293

294

403

2,519

697

Stock-based compensation expense

8,319

10,537

11,261

11,593

12,486

15,352

24,079

Amortization of acquired intangible assets

1,123

1,388

1,387

1,545

1,274

1,123

2,819

Income tax effects related to acquisitions

640

419

331

627

389

640

1,016

Adjusted net income

$

2,273

$

5,274

$

4,235

$

7,685

$

10,412

$

3,148

$

18,097

GAAP diluted shares (1)

57,971

59,844

127,859

371,959

372,842

56,903

372,402

Diluted effect of preferred stock conversion (2)

249,029

249,351

195,608

247,379

Other dilutive equity awards

27,469

27,993

39,488

38,166

32,808

31,190

34,458

Non-GAAP diluted shares

334,469

337,188

362,955

410,125

405,650

335,472

406,860

Adjusted net income per diluted share

$

0.01

$

0.02

$

0.01

$

0.02

$

0.03

$

0.01

$

0.04

Notes: 

(1)

Equivalent to the basic and diluted shares reflected in the quarterly EPS calculations.

(2)

For the fourth quarter of 2014 and prior quarters, gives effect to the conversion of convertible preferred stock into common stock as though the conversion had occurred at the beginning of the period under the "if converted" method.

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SOURCE Lending Club



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