LendingClub Corp (NYSE:LC), the world’s largest online marketplace connecting borrowers and investors, today announced financial results for the second quarter ended June 30, 2016 and re-established guidance for the third quarter.
“Our efforts to reengage investors are working, with fifteen of our top twenty largest investors back on the platform today,” said Lending Club’s CEO and President, Scott Sanborn. “Despite the unusual disruption to our supply of capital in May, we facilitated nearly $2 billion of loans to nearly 170,000 borrowers. While we still have a lot of work ahead, the value that we bring to borrowers and investors is stronger than ever, and we believe we have the resources and resolve to execute on our mission.”
Second Quarter 2016 Financial Highlights
Originations – Loan originations in the second quarter of 2016 were $1.96 billion, compared to $1.91 billion in the same period last year, an increase of 2% year-over-year. The Lending Club platform has now facilitated loans totaling nearly $21 billion since inception.
Operating Revenue – Operating revenue in the second quarter of 2016 was $102.4 million, compared to $96.1 million in the same period last year, an increase of 7% year-over-year. Operating revenue as a percent of originations, or revenue yield, was 5.24% in the second quarter, up from 5.03% in the same period last year.
Net Loss – GAAP net loss was $81.4 million for the second quarter of 2016, compared to a net loss of $4.1 million in the same period last year. The results for the second quarter of 2016 were negatively affected by a Goodwill impairment charge of $35.4 million related to the 2014 acquisition of Springstone, an increase in professional service fees of $14.9 million primarily due to matters identified in the board review previously announced, approximately $14.0 million in incentives paid to investors, and an increase in compensation related costs of $6.5 million associated with severance costs and a retention program.
Adjusted EBITDA(2) – Adjusted EBITDA was $(30.1) million in the second quarter of 2016, compared to $13.4 million in the same period last year. As a percent of operating revenue, Adjusted EBITDA margin decreased to (29.4)% in the second quarter of 2016, down from 13.9% in the same period last year.
Earnings Per Share (EPS) – Basic and diluted EPS was $(0.21) for the second quarter of 2016, compared to basic and diluted EPS of $(0.01) in the same period last year.
Adjusted EPS(2)– Adjusted EPS was $(0.09) for the second quarter of 2016 compared to $0.03 in the same period last year.
Cash, Cash Equivalents and Securities Available for Sale – As of June 30, 2016, cash, cash equivalents and securities available for sale totaled $832 million, with no outstanding debt.
Recent Business Developments
- The platform’s retail investor base remains a resilient source of capital and now includes over 135,000 self-managed active individual investors who collectively invested over $327 million in the second quarter, up 16% year-over-year;
- Since inception, the borrower base has increased to over 1.5 million borrowers;
- Servicing and Management Fee revenue associated with the servicing portfolio, excluding fair market value accounting adjustments, more than doubled to a record $19.3 million, up 128% year-over-year;
- In light of lower loan volumes in the second quarter and recognizing that the full scale return of investors may take time, inJune 2016, the company eliminated 179 positions in the organization;
- Lending Club ended the quarter with strong liquidity including $832 million in cash, equivalents and available for sale securities, and $120 million of undrawn credit facility;
- Jefferies successfully executed a three times oversubscribed near prime securitization in August 2016 for $134 million of unsecured Lending Club personal loans;
- Separately, Lending Club today announced several leadership changes.
Based on the information available as of August 8, 2016, Lending Club provides the following outlook for the third quarter of 2016:
Third Quarter 2016
Operating Revenue in the range of $95 million to $105 million.
Adjusted EBITDA(2) in the range of ($30) million to ($15) million.
(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. (Original Source)
Shares of Lendingclub are down nearly 4% to $4.60 in after-hours trading Monday. LC has a 1-year high of $15 and a 1-year low of $3.44. The stock’s 50-day moving average is $4.53 and its 200-day moving average is $6.40.
On the ratings front, LC has been the subject of a number of recent research reports. In a report issued on August 3, Oppenheimer analyst Jed Kelly initiated coverage with a Hold rating on LC. Separately, on July 26, Morgan Stanley’s James Faucette maintained a Hold 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, Jed Kelly and James Faucette have a total average return of 33.8% and 9.0% respectively. Kelly has a success rate of 65.9% and is ranked #95 out of 4102 analysts, while Faucette has a success rate of 78.1% and is ranked #367.
Overall, 2 research analysts have rated the stock with a Sell rating, 11 research analysts have assigned a Hold rating and one research analyst has given a a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $5.77 which is 20.7% above where the stock opened today.
LendingClub Corp. operates as an online credit marketplace. It engages in the provision of facilitating personal loans, business loans, and financing for elective medical procedures.