Lending Club Reports Third Quarter 2015 Results

Q3 operating revenue up 104% year-over-year to $115.1 million

News provided by

Lending Club

Oct 29, 2015, 04:00 ET

SAN FRANCISCO, Oct. 29, 2015 /PRNewswire/ -- Lending Club (NYSE: LC), the world's largest online marketplace connecting borrowers and investors, today announced financial results for the third quarter ended September 30, 2015 and again raised its outlook for the remainder of the year.

Quarter Ended September 30,

Nine Months Ended September 30,

($ in millions)

2015

2014

% Change

2015

2014

% Change

Originations

$

2,235.6

$

1,165.2

92%

$

5,782.5

$

2,962.5

95%

Operating Revenue

$

115.1

$

56.5

104%

$

292.2

$

143.9

103%

Adjusted EBITDA(1)

$

21.2

$

7.5

181%

$

45.2

$

13.4

238%

(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 spectacular quarter, with revenue growth re-accelerating from 98% to 104%, and EBITDA jumping 181% year-over-year to reach 18.4% margin ," said Lending Club founder and CEO Renaud Laplanche. "With over 1.2 million customers, continuously high customer satisfaction, strong credit performance, increased marketing efficiency and lower customer acquisition costs, we are continuing to observe tremendous network effects and benefits of scale. Our results this quarter combined with our raised Q4 outlook lead us to forecast a near doubling of revenue again this year and look toward 2016 with high confidence."

Third Quarter 2015 Financial Highlights

Originations – Loan originations in the third quarter of 2015 were $2.24 billion, compared to $1.17 billion in the same period last year, an increase of 92% year-over-year. The Lending Club platform has now facilitated loans totaling over $13.4 billion since inception.

Operating Revenue – Operating revenue in the third quarter of 2015 was $115.1 million, compared to $56.5 million in the same period last year, an increase of 104% year-over-year. Operating revenue as a percent of originations, or revenue yield, was 5.15% in the third quarter, up from 4.85% in the prior year.

Adjusted EBITDA(2)  – Adjusted EBITDA was $21.2 million in the third quarter of 2015, compared to $7.5 million in the same period last year. As a percent of operating revenue, Adjusted EBITDA margin increased to 18.4% in the third quarter of 2015, up from 13.3% in the prior year.

Net Income – GAAP net income was $1.0 million for the third quarter of 2015, compared to a net loss of $7.4 million in the same period last year. GAAP net income included $13.5 million of stock-based compensation expense during the third quarter of 2015, compared to $10.5 million in the prior year.

Earnings Per Share (EPS) – Basic and diluted earnings per share was $0.00 for the third quarter, compared to basic and diluted EPS of ($0.12) in the same period last year.

Adjusted EPS(2)– Adjusted EPS was $0.04 for the third quarter of 2015, compared to $0.02 in the same period last year.

Cash, Cash Equivalents and Securities Available for Sale - As of September 30, 2015, cash, cash equivalents and securities available for sale totaled $918 million, with no outstanding debt.

"The third quarter demonstrated the operating leverage inherent in our business model, with marketing and operational efficiency delivering record contribution margin, flowing through to higher than planned EBITDA and GAAP profitability," said Carrie Dolan, CFO. "We remain excited by the opportunity that lies ahead and will continue to invest in product, automation, risk management and channel development to strengthen our platform and continue to penetrate and further expand our addressable market. We head into the fourth quarter with strong momentum and the confidence to raise our outlook for both revenue and margin."

Recent Business Developments

  • Rolled out a business line of credit product, ranging from $5,000 to $300,000, giving small businesses flexible access to affordable credit with interest rates starting at 5.9%. Business owners can draw the amount they need at any time, thus reducing the overall cost of their credit. Lending Club piloted the product with Alibaba.com and Ingram Micro customers in the last few months, and has now made it widely available to all qualified small businesses on its platform.
  • Launched Lending Club Open Integration that allows online advisors and broker-dealers to effortlessly offer Lending Club investments to their clients, using a set of Application Programming Interface (API) services that integrate directly into their distribution platforms. It provides the same functionality that currently exists on Lendingclub.com, including money movement, investing, reinvesting, real-time reporting of cash and holdings, and tax reporting.
  • Opened to retail investors in six new states during the third quarter and another three states subsequent to quarter end: Arkansas, Iowa, Indiana, Kansas, Missouri, Nebraska, Oklahoma, South Carolina, and Tennessee. Lending Club is now available to retail investors in 39 states.
  • Lending Club has facilitated over $13.4 billion in loans to more than 1.1 million borrowers since it launched in 2007. It counts over 100,000 active investors.

Guidance and Outlook
Based on the information available as of October 29, 2015, Lending Club provides the following outlook:

Fourth Quarter 2015 




Operating Revenues in the range of $128 million to $130 million, up from a previous range of $122 million to $124 million.

Adjusted EBITDA(2) in the range of $19 million to $21 million, up from a previous range of $13 million to $15 million.


Full Year 2015 




Operating Revenues in the range of $420 million to $422 million, up from $405 million to $409 million previously.

Adjusted EBITDA(2) in the range of $64 million to $66 million, up from $49 million to $53 million previously.


Full Year 2016 Outlook



Operating revenue growth of 70% and EBITDA margin expansion to 18% of revenues.


(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 $13.4 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, IN, KS, KY (accredited investors), LA, MA, ME, MN, MO, MS, MT, NE, NH, NV, NY, OK, RI, SC, SD, TN, 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 Third Quarter 2015 webcast and teleconference is scheduled to begin at 2:00 p.m. Pacific Time on Thursday, October 29, 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 9876352, 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 October 29, 2015, until November 6, 2015, by calling +1 (877) 344-7529 or +1 (412) 317-0088, with Conference ID 10074110. 

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

September 30,

Nine months ended

September 30,

2015

2014

2015

2014

Operating revenue






Transaction fees

$

100,420

$

52,622

$

258,553

$

133,835

Servicing fees

8,999

3,053

20,870

6,301

Management fees

2,900

1,608

7,663

4,163

Other revenue (expense)

2,743

(745)

5,140

(438)

Total operating revenue

115,062

56,538

292,226

143,861

Net interest income (expense) after fair value adjustments

1,214

(474)

2,199

(854)

Total net revenue

116,276

56,064

294,425

143,007

Operating expenses (1):






Sales and marketing

44,961

21,001

120,162

60,808

Origination and servicing

17,573

10,167

45,540

26,135

General and administrative






Engineering and product development

18,320

9,235

46,710

22,987

Other

33,239

22,613

89,328

55,875

Total operating expenses

114,093

63,016

301,740

165,805

Income (loss) before income tax expense

2,183

(6,952)

(7,315)

(22,798)

Income tax expense

1,233

419

2,249

1,059

Net income (loss)

$

950

$

(7,371)

$

(9,564)

$

(23,857)

Basic net income (loss) per share attributable to common stockholders

$

0.00

$

(0.12)

$

(0.03)

$

(0.41)

Diluted net income (loss) per share attributable to common stockholders

$

0.00

$

(0.12)

$

(0.03)

$

(0.41)

Weighted-average common shares – Basic

375,982,120

59,844,394

373,605,274

57,958,838

Weighted-average common shares – Diluted

401,934,880

59,844,394

373,605,274

57,958,838

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


Three months ended
September 30,

Nine months ended
September 30,

2015

2014

2015

2014

Sales and marketing

$

2,048

$

912

$

5,373

$

5,029

Origination and servicing

818

599

2,406

1,427

General and administrative






Engineering and product development

2,554

1,492

6,392

3,487

Other

8,059

7,534

23,387

15,946

Total stock-based compensation expense

$

13,479

$

10,537

$

37,558

$

25,889

LENDINGCLUB CORPORATION

OPERATING AND FINANCIAL HIGHLIGHTS

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

(Unaudited)












September 30,
2015

Three months ended

% Change

September 30,

2014

December 31,

2014

March 31,

2015

June 30,

2015

September 30,
2015

Q/Q

Y/Y

Operating Highlights:


















Loan originations (in millions)

$

1,165

$

1,415

$

1,635

$

1,912

$

2,236

17%

92%

Operating revenue

$

56,538

$

69,551

$

81,045

$

96,119

$

115,062

20%

104%

Contribution (1)

$

26,881

$

32,672

$

35,721

$

43,188

$

55,393

28%

106%

Contribution margin (1)

47.5%

47.0%

44.1%

44.9%

48.1%

N/M

N/M

Adjusted EBITDA (1)

$

7,517

$

7,916

$

10,646

$

13,399

$

21,157

58%

181%

Adjusted EBITDA margin (1)

13.3%

11.4%

13.1%

13.9%

18.4%

N/M

N/M

Adjusted EPS - diluted (1)

$

0.02

$

0.01

$

0.02

$

0.03

$

0.04

N/M

N/M

Standard Program Originations by Investor Type:


















Managed accounts, individuals

44%

48%

51%

50%

44%




Self-managed, individuals

25%

19%

24%

20%

20%




Institutional investors

31%

33%

25%

30%

36%




Total

100%

100%

100

100%

100%




Originations by Program:










Standard program

75%

78%

79%

76%

76%




Custom program

25%

22%

21%

24%

24%




Total

100%

100%

100%

100%

100%




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


















Notes

$

983

$

1,055

$

1,210

$

1,314

$

1,458

11%

48%

Certificates

1,601

1,797

2,067

2,381

2,692

13%

68%

Whole loans sold

1,373

1,874

2,300

2,853

3,548

24%

158%

Total

$

3,957

$

4,726

$

5,577

$

6,548

$

7,698

18%

95%

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


















Cash and cash equivalents

$

83

$

870

$

874

$

490

$

579

18%

N/M

Securities available for sale

$

—

$

—

$

—

$

398

$

339

(15)%

N/M

Loans

$

2,534

$

2,799

$

3,231

$

3,637

$

4,069

12%

61%

Notes and certificates

$

2,552

$

2,814

$

3,249

$

3,660

$

4,095

12%

60%

Total assets

$

2,815

$

3,890

$

4,328

$

4,783

$

5,360

12%

90%

Total stockholders' equity

$

142

$

973

$

982

$

996

$

1,016

2%

N/M

Condensed Cash Flow Information:


















Net cash flow from operating activities

$

13,258

$

14,525

$

6,495

$

15,278

$

31,577




Cash flow related to loans

(241,279)

(304,472)

(479,976)

(458,923)

(504,065)




Other

(10,382)

(27,125)

1,276

(425,803)

(53,427)




Net cash used in investing activities

(251,661)

(331,597)

(478,700)

(884,726)

(557,492)




Cash flow related to notes and certificates

248,802

301,593

483,543

462,978

507,870




Other

3,317

802,585

(6,993)

22,811

106,785




Net cash flow from financing activities

252,119

1,104,178

476,550

485,789

614,655




Net change in cash and cash equivalents

$

13,716

$

787,106

$

4,345

$

(383,659)

$

88,740




Employees and contractors (2)

742

843

976

1,136

1,305





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

Nine months ended

September 30,

2014

December 31,

2014

March 31,

2015

June 30,

2015

September 30,
2015

September 30,
2014

September 30,
2015

Contribution reconciliation:





















Net income (loss)

$

(7,371)

$

(9,037)

$

(6,374)

$

(4,140)

$

950

$

(23,857)

$

(9,564)

Net interest expense (income) and other adjustments

474

1,430

(187)

(798)

(1,214)

854

(2,199)

General and administrative expense:












Engineering and product development

9,235

11,714

12,328

16,062

18,320

22,987

46,710

Other

22,613

26,492

27,087

29,002

33,239

55,875

89,328

Stock-based compensation expense

1,511

1,742

2,240

2,673

2,865

6,456

7,778

Income tax expense

419

331

627

389

1,233

1,059

2,249

Contribution

$

26,881

$

32,672

$

35,721

$

43,188

$

55,393

$

63,374

$

134,302

Total operating revenue

$

56,538

$

69,551

$

81,045

$

96,119

$

115,062

$

143,861

$

292,226

Contribution margin

47.5%

47.0%

44.1%

44.9%

48.1%

44.1%

46.0%























Adjusted EBITDA reconciliation:





















Net income (loss)

$

(7,371)

$

(9,037)

$

(6,374)

$

(4,140)

$

950

$

(23,857)

$

(9,564)

Net interest expense (income) and other adjustments

474

1,430

(187)

(798)

(1,214)

854

(2,199)

Acquisition and related expense

301

293

294

403

937

2,819

1,634

Depreciation expense:












Engineering and product development

1,447

1,868

2,744

3,261

3,808

3,326

9,813

Other

322

383

404

524

708

784

1,636

Amortization of intangible assets

1,388

1,387

1,545

1,274

1,256

2,510

4,075

Stock-based compensation expense

10,537

11,261

11,593

12,486

13,479

25,889

37,558

Income tax expense

419

331

627

389

1,233

1,059

2,249

Adjusted EBITDA

$

7,517

$

7,916

$

10,646

$

13,399

$

21,157

$

13,384

$

45,202

Total operating revenue

$

56,538

$

69,551

$

81,045

$

96,119

$

115,062

$

143,861

$

292,226

Adjusted EBITDA margin

13.3%

11.4%

13.1%

13.9%

18.4%

9.3%

15.5%























Adjusted net income and earnings per share (EPS):





















Net income (loss)

$

(7,371)

$

(9,037)

$

(6,374)

$

(4,140)

$

950

$

(23,857)

$

(9,564)

Acquisition and related expense

301

293

294

403

937

2,819

1,634

Stock-based compensation expense

10,537

11,261

11,593

12,486

13,479

25,889

37,558

Amortization of acquired intangible assets

1,388

1,387

1,545

1,274

1,256

2,510

4,075

Income tax effects related to acquisitions

419

331

627

389

1,233

1,059

2,249

Adjusted net income

$

5,274

$

4,235

$

7,685

$

10,412

$

17,855

$

8,420

$

35,952

GAAP diluted shares (1)

59,844

127,859

371,959

372,842

401,935

57,959

373,605

Diluted effect of preferred stock conversion (2)

249,351

195,608

—

—

—

249,351

—

Other dilutive equity awards

27,993

39,488

38,166

32,808

—

30,295

31,144

Non-GAAP diluted shares

337,188

362,955

410,125

405,650

401,935

337,605

404,749

Adjusted EPS – diluted

$

0.02

$

0.01

$

0.02

$

0.03

$

0.04

$

0.02

$

0.09

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.

Logo - http://photos.prnewswire.com/prnh/20140417/76307

SOURCE Lending Club

Related Links

http://www.lendingclub.com

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