LendingClub Corp (LC) Reports Third-Quarter 2015 Results


LendingClub Corp (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.

“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. (Original Source)

Shares of Lendingclub are up 5.65% to $14.41 in after-hours trading. LC has a 1-year high of $29.29 and a 1-year low of $10.28. The stock’s 50-day moving average is $13.75 and its 200-day moving average is $15.34.

On the ratings front, Lendingclub has been the subject of a number of recent research reports. In a report released today, BTIG analyst Mark Palmer maintained a Buy rating on LC, with a price target of $31, which implies an upside of 125.5% from current levels. Separately, on October 8, Morgan Stanley’s Smittipon Srethapramote maintained a Buy rating on the stock .

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Mark Palmer and Smittipon Srethapramote have a total average return of -5.5% and 2.0% respectively. Palmer has a success rate of 40.0% and is ranked #3669 out of 3808 analysts, while Srethapramote has a success rate of 47.6% and is ranked #1920.

The street is mostly Bullish on LC stock. Out of 7 analysts who cover the stock, 5 suggest a Buy rating , one suggests a Sell and one recommends to Hold the stock. The 12-month average price target assigned to the stock is $18.00, which implies an upside of 30.9% from current levels.

LendingClub Corp is an online marketplace connecting borrowers and investors to engage in transactions relating to standard or custom program loans.