LendingClub Corporation LC was up nearly 6% following the release of second-quarter 2015 results on Aug 4, after the market closed. Adjusted earnings of 3 cents per share significantly outpaced the Zacks Consensus Estimate of a loss of 2 cents. Moreover, earnings came in substantially above the prior-year quarter figure of 1 cent.
Results benefited from considerable growth in revenues, partly offset by escalating costs. Also, a surge in loan origination acted as a tailwind.
Net loss, on a GAAP basis, was $4.1 million or 1 cent per share compared with loss of $9.2 million or 16 cents per share in the year-ago quarter.
Performance in Detail
Total operating revenue jumped 98% year over year to $96.1 million. The rise was attributable to a drastic increase in all revenue components. Further, this compared favorably with the Zacks Consensus Estimate of $90.0 million.
Total operating expenses surged 77% year over year to $100.7 million. The upswing was caused by a rise in all expense components.
Adjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”) totaled $13.4 million, up significantly from $4.0 million in the prior-year quarter. Further, adjusted EBITDA margin came in at 13.9%, up from 8.2% in the year-ago quarter.
In the reported quarter, loan originations were $1.91 billion, up 90% from $1.01 billion recorded a year ago.
As of Jun 30, 2015, cash and cash equivalents were $888 million, up from $69 million as of Jun 30, 2014. Notably, the company had no outstanding debt as of Jun 30, 2015.
Further, loans grew 56% year over year to $3.64 billion as of Jun 30, 2015. Total stockholders' equity summed $996 million, up from $137 million as of Jun 30, 2014.]
Other Developments
LendingClub 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. Presently, the company is available to investors in 33 states.
LendingClub is now also available to borrowers in 47 states, having opened to borrowers in Nebraska and North Dakota during the reported quarter.
LendingClub announced alliance with Ingram Micro IM, to serve as the exclusive provider of unsecured lines of credit and term loans of up to $300,000 for the latter’s tens of thousands of U.S. value-added resellers; and with zulily, Inc. ZU, a specialty online retailer that has topped a billion a year in sales.
Outlook
LendingClub provided guidance for the third quarter of 2015, and also raised the previously provided outlook for 2015. Operating revenues are expected in the range of $106–$108 million for the third quarter of 2015. Also, management anticipates adjusted EBITDA within $12–$14 million.
For 2015, total revenue is projected in the range of $405–$409 million, up from the previous guidance of $385–$392 million. Moreover, adjusted EBITDA is expected within $49–$53 million, up from the prior projection of $40–$46 million.
Our Take
LendingClub seeks to maximize the use of technology to make borrowing cheaper and easier. However, at the same time, the company needs to constantly maintain and upgrade its online platform, and this will increase its technology-related expenses.
Despite minimal overhead costs involved with brick-and-mortar branches, the company incurs significant expenditure for selling and marketing its products. As a result, the high-cost scenario is further worsened, hampering the company’s bottom line.
Currently, LendingClub carries a Zacks Rank #2 (Buy).
Among other finance companies, Hercules Technology Growth Capital, Inc. HTGC is scheduled to report results on Aug 6.
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