Lending Club Reports Fourth Quarter and Full Year 2015 Results and Announces $150 Million Share Buyback

Full year operating revenue up 100% year-over-year to $427 million

News provided by

Lending Club

Feb 11, 2016, 07:30 ET

SAN FRANCISCO, Feb. 11, 2016 /PRNewswire/ -- Lending Club (NYSE: LC), the world's largest online marketplace connecting borrowers and investors, today reported record results highlighted by all-time highs in originations, operating revenue, contribution margin, adjusted EBITDA and GAAP profitability, while raising its FY2016 outlook. Over the past year, Lending Club has facilitated $8.4 billion in loans to consumers and small businesses and doubled its revenue.

"Our confidence is bolstered again by Lending Club's performance in 2015 and causes us to raise our outlook for 2016," said Lending Club founder and CEO Renaud Laplanche. "We have earned the trust of 1.4 million customers, have considerable room to grow our existing products, and intend to continue to expand both our product line and addressable population going forward. Our operating efficiency reached record levels in Q4, and our credit performance, marketing efficiency and customer satisfaction remain very strong. Accordingly, we are raising Lending Club's 2016 revenue guidance to $730 to $740 million, or 72 percent top line growth, and adjusted EBITDA guidance to $130 to $145 million. We believe there is tremendous long term potential that is not reflected in Lending Club shares and so we are taking this opportunity to use a small portion of our cash to buy back up to $150 million worth of our stock."

Quarter Ended December 31,

Fiscal Year Ended December 31,

($ in millions)

2015

2014

% Change

2015

2014

% Change

Originations

$   2,579.2

$   1,415.0

82%

$     8,361.7

$   4,377.5

91%

Operating Revenue

$      134.5

$        69.6

93%

$        426.7

$      213.4

100%

Adjusted EBITDA(1)

$        24.6

$          7.9

210%

$          69.8

$        21.3

228%






(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.

Fourth Quarter 2015 Financial Highlights

Originations – Loan originations in the fourth quarter of 2015 were $2.58 billion, compared to $1.41 billion in the same period last year, an increase of 82% year-over-year. The LendingClub platform has now facilitated over $16.0 billion in loans since inception.

Operating Revenue – Operating revenue in the fourth quarter of 2015 was $134.5 million, compared to $69.6 million in the same period last year, an increase of 93% year-over-year. Operating revenue as a percent of originations, or revenue yield, was 5.21% in the fourth quarter, up from 4.92% in the prior year.

Adjusted EBITDA(2)  – Adjusted EBITDA was $24.6 million in the fourth quarter of 2015, compared to $7.9 million in the same period last year. As a percent of operating revenue, Adjusted EBITDA margin increased to 18.3% in the fourth quarter of 2015, up from 11.4% in the prior year.

Net Income – GAAP net income was $4.6 million for the fourth quarter of 2015, compared to net loss of $9.0 million in the same period last year. GAAP net income included $13.7 million of stock-based compensation expense during the fourth quarter of 2015, compared to $11.3 million in the prior year.

Earnings Per Share (EPS) – Basic and diluted earnings per share was $0.01 for the fourth quarter, compared to basic and diluted EPS of ($0.07) in the same period last year.

Adjusted EPS(2) – Adjusted EPS was $0.05 for the fourth quarter of 2015, compared to $0.01 in the same period last year.

Cash, Cash Equivalents and Securities Available for Sale - As of December 31, 2015, cash, cash equivalents and securities available for sale totaled $921 million, with no outstanding debt.

"We closed out the year with a very strong fourth quarter revenue growth of 93% year over year, adjusted EBITDA growth of 210%, with an adjusted EBITDA margin of 18.3%, and delivered another quarter of GAAP profitability," said Carrie Dolan, CFO. "We remain confident in our ability to grow originations and revenue at a fast pace in the years to come and in the sustainability of our financial model in various economic environments."

Other Metrics & Business Highlights

  • The Lending Club platform reached a $10 billion annual origination run rate in Q4 2015;
  • Lending Club's servicing portfolio reached $9.0 billion at year end, paying out $4.1 billion of principal and interest payments to investors in 2015. Based on our current forecasts, the portfolio will pay out over $7.0 billion in principal and interest to investors in 2016, which if reinvested would provide sufficient capital available to fund over half of 2016 targeted originations;
  • The average investor return after credit losses and fees in 2015 was nearly 8%. Investor returns lack of correlation with other asset classes and investor's desire to diversify away from a volatile stock market, with the S&P 500 down nearly 1% in 2015, drove $8.4 billion in investments to the Lending Club platform in 2015;
  • We opened to retail investors in six new states during the fourth quarter and another two states subsequent to quarter end. Lending Club is now available to retail investors in 43 states and the District of Columbia.

Outlook

Based on the information available as of February 11, 2016, Lending Club provides the following outlook:

First Quarter 2016 




Operating Revenues in the range of $147 million to $149 million.

Adjusted EBITDA(2) in the range of $25 million to $27 million.


Full Year 2016 




Operating Revenues in the range of $730 million to $740 million, representing a growth rate of 72% from 2015, up from an implied range of $714 million to $717 million as indicated in our early November guidance.

Adjusted EBITDA(2) in the range of $130 million to $145 million, representing a margin of roughly 19% at the midpoint, up from an implied guidance of $129 million as indicated in our early November guidance.


(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. 

Share Repurchase

The board of directors has approved a share repurchase program under which Lending Club may repurchase up to $150 million of the Company's common shares in open market or privately negotiated transactions in compliance with Securities and Exchange Act Rule 10b-18. This repurchase plan is valid for one year and does not obligate the Company to acquire any particular amount of common stock, and may be suspended at any time at Lending Club's discretion.

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 $16.0 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 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: AL, AR, AZ, CA, CO, CT, DC, DE, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MA, ME, MI, MN, MO, MS, MT, NE, NH, NJ, NV, NY, OK, OR, 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's Fourth Quarter and Full Year 2015 webcast and teleconference is scheduled to begin at 5:30 a.m. Pacific Time on Thursday, February 11, 2016. 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 6137204, ten minutes prior to 5:30 a.m. Pacific Time (or 8:30 a.m. Eastern Time). An audio archive of the call will be available at http://ir.lendingclub.com. An audio replay will be also available on February 11, 2016, until February 18, 2016, by calling +1 (877) 344-7529 or +1 (412) 317-0088, with Conference ID 10079107. 

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 December 31,

Twelve months ended December 31,

2015

2014

2015

2014

Operating revenue:






Transaction fees

$

114,955

$

63,289

$

373,508

$

197,124

Servicing fees

11,941

5,233

32,811

11,534

Management fees

3,313

1,794

10,976

5,957

Other revenue (expense)

4,262

(765)

9,402

(1,203)

Total operating revenue

134,471

69,551

426,697

213,412

Net interest income (expense) after fair value adjustments

1,047

(1,430)

3,246

(2,284)

Total net revenue

135,518

68,121

429,943

211,128

Operating expenses: (1)(2)






Sales and marketing

53,537

26,035

171,526

85,652

Origination and servicing

17,696

11,661

61,335

37,326

Engineering and product development

23,887

12,923

77,062

38,518

Other general and administrative

35,245

26,208

122,182

81,136

Total operating expenses

130,365

76,827

432,105

242,632

Income (loss) before income tax expense

5,153

(8,706)

(2,162)

(31,504)

Income tax expense

584

331

2,833

1,390

Net income (loss)

$

4,569

$

(9,037)

$

(4,995)

$

(32,894)

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

$

0.01

$

(0.07)

$

(0.01)

$

(0.44)

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

$

0.01

$

(0.07)

$

(0.01)

$

(0.44)

Weighted-average common shares – Basic

378,631,340

127,859,281

374,872,118

75,573,742

Weighted-average common shares – Diluted

402,634,010

127,859,281

374,872,118

75,573,742

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


Three months ended December 31,

Twelve months ended December 31,

2015

2014(2)

2015(2)

2014(2)

Sales and marketing

$

1,746

$

863

$

7,250

$

5,476

Origination and servicing

748

538

2,735

1,653

Engineering and product development

3,449

2,182

11,335

6,445

Other general and administrative

7,721

7,678

29,902

23,576

Total stock-based compensation expense

$

13,664

$

11,261

$

51,222

$

37,150


(2)    

In the fourth quarter of 2015, the Company disaggregated the expense previously reported as "General and administrative" into "Engineering and product development" and "Other general and administrative" expense. Additionally, the Company reclassified certain operating expenses between "Sales and marketing," "Origination and servicing," "Engineering and product development" and "Other general and administrative" expense to align such classification and presentation with how the Company currently manages the operations and these expenses. These changes had no impact to "Total operating expenses." Prior period amounts have been reclassified to conform to the current presentation.

LENDINGCLUB CORPORATION

OPERATING AND FINANCIAL HIGHLIGHTS

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

(Unaudited)












December 31,
2015

Three months ended

% Change

December 31,
2014

March 31,
2015

June 30,
2015

September 30,
2015

December 31,
2015

Q/Q

Y/Y

Operating Highlights:

Loan originations (in millions)

$

1,415

$

1,635

$

1,912

$

2,236

$

2,579

15%

82%

Operating revenue

$

69,551

$

81,045

$

96,119

$

115,062

$

134,471

17%

93%

Contribution (1)(2)

33,256

36,488

44,344

57,257

65,732

15%

98%

Contribution margin (1)(2)

47.8%

45.0%

46.1%

49.8%

48.9%

N/M

N/M

Adjusted EBITDA (1)

$

7,916

$

10,646

$

13,399

$

21,157

$

24,556

16%

210%

Adjusted EBITDA margin (1)

11.4%

13.1%

13.9

18.4%

18.3%

N/M

N/M

Adjusted EPS - diluted (1)

$

0.01

$

0.02

$

0.03

$

0.04

$

0.05

N/M

N/M

Standard Program Originations by Investor Type:















Managed accounts, individuals

48%

51%

50%

44%

45%




Self-managed, individuals

19%

24%

20%

20%

17%




Institutional investors

33%

25%

30%

36%

38%




Total

100%

100%

100%

100%

100%




Originations by Program:












Standard program

78%

79%

76%

76%

77%




Custom program

22%

21%

24%

24%

23%




Total

100%

100%

100%

100%

100%




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



















Notes

$

1,055

$

1,210

$

1,314

$

1,458

$

1,576

8%

49%

Certificates

1,797

2,067

2,381

2,692

3,105

15%

73%

Whole loans sold

1,874

2,300

2,853

3,548

4,289

21%

129%

Total

$

4,726

$

5,577

$

6,548

$

7,698

$

8,970

17%

90%

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




















Cash and cash equivalents

$

870

$

874

$

490

$

579

$

624

8%

(28)%

Securities available for sale

$

—

$

—

$

398

$

339

$

297

(12)%

N/M

Loans

$

2,799

$

3,231

$

3,637

$

4,069

$

4,556

12%

63%

Notes and certificates

$

2,814

$

3,249

$

3,660

$

4,095

$

4,572

12%

62%

Total assets

$

3,890

$

4,328

$

4,783

$

5,360

$

5,794

8%

49%

Total stockholders' equity

$

973

$

982

$

996

$

1,016

$

1,042

3%

7%

Condensed Cash Flow Information:




















Net cash flow from operating activities

$

14,525

$

6,495

$

15,278

$

31,577

$

21,391




Cash flow related to loans

(304,472)

(479,976)

(458,923)

(504,065)

(591,626)




Other

(27,125)

1,276

(425,803)

(53,427)

105,844




Net cash used in investing activities

(331,597)

(478,700)

(884,726)

(557,492)

(485,782)




Cash flow related to notes and certificates

301,593

483,543

462,978

507,870

580,602




Other

802,585

(6,993)

22,811

106,785

(71,886)




Net cash flow from financing activities

1,104,178

476,550

485,789

614,655

508,716




Net change in cash and cash equivalents

$

787,106

$

4,345

$

(383,659)

$

88,740

$

44,325




Employees and contractors (3)

843

976

1,136

1,305

1,382





Notes:

N/M Not meaningful.

(1)     

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

(2)    

Prior period amounts have been reclassified to conform to the current period presentation. See "Condensed Consolidated Statements of Operations" for further details.

(3)       

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

Twelve months ended

December 31,
2014

March 31,
2015

June 30,
2015

September 30,
2015

December 31,
2015

December 31,
2014

December 31,
2015

Contribution reconciliation:

Net income (loss)

$

(9,037)

$

(6,374)

$

(4,140)

$

950

$

4,569

$

(32,894)

$

(4,995)

Net interest expense (income) and other adjustments

1,430

(187)

(798)

(1,214)

(1,047)

2,284

(3,246)

Engineering and product development expense (1)

12,923

13,898

18,214

21,063

23,887

38,518

77,062

Other general and administrative expense (1)

26,208

26,410

28,247

32,280

35,245

81,136

122,182

Stock-based compensation expense (1)

1,401

2,114

2,432

2,945

2,494

7,129

9,985

Income tax expense

331

627

389

1,233

584

1,390

2,833

Contribution (1)

$

33,256

$

36,488

$

44,344

$

57,257

$

65,732

$

97,563

$

203,821

Total operating revenue

$

69,551

$

81,045

$

96,119

$

115,062

$

134,471

$

213,412

$

426,697

Contribution margin (1)

47.8%

45.0%

46.1%

49.8%

48.9%

45.7%

47.8%

Adjusted EBITDA reconciliation:
























Net income (loss)

$

(9,037)

$

(6,374)

$

(4,140)

$

950

$

4,569

$

(32,894)

$

(4,995)

Net interest expense (income) and other adjustments

1,430

(187)

(798)

(1,214)

(1,047)

2,284

(3,246)

Acquisition and related expense

293

294

403

937

733

3,113

2,367

Depreciation expense:












Engineering and product development

1,868

2,744

3,261

3,808

4,007

5,194

13,820

Other general and administrative

383

404

524

708

790

1,166

2,426

Amortization of intangible assets

1,387

1,545

1,274

1,256

1,256

3,898

5,331

Stock-based compensation expense

11,261

11,593

12,486

13,479

13,664

37,150

51,222

Income tax expense

331

627

389

1,233

584

1,390

2,833

Adjusted EBITDA

$

7,916

$

10,646

$

13,399

$

21,157

$

24,556

$

21,301

$

69,758

Total operating revenue

$

69,551

$

81,045

$

96,119

$

115,062

$

134,471

$

213,412

$

426,697

Adjusted EBITDA margin

11.4%

13.1%

13.9%

18.4%

18.3%

10.0%

16.3%

Adjusted net income and earnings per share (EPS):
























Net income (loss)

$

(9,037)

$

(6,374)

$

(4,140)

$

950

$

4,569

$

(32,894)

$

(4,995)

Acquisition and related expense

293

294

403

937

733

3,113

2,367

Stock-based compensation expense

11,261

11,593

12,486

13,479

13,664

37,150

51,222

Amortization of acquired intangible assets

1,387

1,545

1,274

1,256

1,256

3,898

5,331

Income tax effects related to acquisitions

331

627

389

1,233

584

1,390

2,833

Adjusted net income

$

4,235

$

7,685

$

10,412

$

17,855

$

20,806

$

12,657

$

56,758

GAAP diluted shares (2)

127,859

371,959

372,842

401,935

402,634

75,574

374,872

Diluted effect of preferred stock conversion(3)

195,608

—

—

—

—

235,745

—

Other dilutive equity awards

39,488

38,166

32,808

—

—

40,767

26,717

Non-GAAP diluted shares

362,955

410,125

405,650

401,935

402,634

352,086

401,589

Adjusted EPS – diluted

$

0.01

$

0.02

$

0.03

$

0.04

$

0.05

$

0.04

$

0.14

Notes:

(1)   

Prior period amounts have been reclassified to conform to the current period presentation. See "Condensed Consolidated Statements of Operations" for further details.

(2)     

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

(3)   

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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