Lending Club signals plans to move into car loans and mortgages
Lending Club has reported another strong quarter, with loan origination up 90% YoY to $1.9bn, and signalled plans to expand in its quest to transform the 'entire banking industry'. CEO Renaud Laplanche, sees the car loan and mortgage markets as ripe for disruption. Today the US Treasury hosts an information gathering session into online lending as part of a broader consultation on the industry, suggesting the advance of tougher regulation in the sector.  

The largest marketplace lending platform in the United States reported Q2 results today. Lending Club (NYSE:LC) stated that loan originations grew to $1.91 billion versus the same period year prior where the direct lender facilitated $1.01 billion in loans. Lending Club said total loans have now surpassed $11.2 billion. Operating revenue hit $96.1 million. EBITDA stood at $13.4 million versus $4 million the year prior. Net loss, according to GAAP, came in at $4.1 million which compared favorable to a loss of $9.2 million in 2014.

Average analyst expectations were for the marketplace lending platform to report earnings of $0.02 cents per share on revenue of $91.6 million. Shares of Lending Club climbed after hours following the earnings report.

Renaud Laplanche, Lending Club CEO, stated;

“We had another very strong quarter with accelerating revenue growth from 17% to 19% quarter over quarter and expanding margins from 13.1% in Q1 to 13.9% in Q2. Strong platform effects, industry leading position, superior engineering, and record high customer satisfaction translating into a loyal repeat customer base, have helped us continue to lower our acquisition costs this quarter. These results and the continued momentum we are seeing give us the confidence to, once again, raise our outlook for the full year in terms of both growth and margins.”

The company provided Q3 forecast of operating revenue of $106 to $108 million for Q3 with EBITDA in the range of $12 to $14 million.

“The second quarter was another example of how our diversified borrower channel and investor mix is driving fast and efficient growth,” said Carrie Dolan, CFO. “We continue to see improving sales and marketing efficiency in our standard personal loan product and we saw better than expected acceptance and response rates in our custom products. With demand remaining strong on both the borrower and investor sides of our online credit marketplace, our increasing confidence in our near-term and long-term opportunities is reflected in our raised outlook.”

Lending Club estimates that full year revenue will range from $405 million to $409 million. EBITDA should top $49 million.

Lending Club was the first peer-to-peer or marketplace lending platform to go public in the US. The direct lender is a trailblazer in the internet finance space and foreshadows a transformation of the lending industry as finance quickly migrates from traditional banks to online lending.

Second Quarter 2015 Financial Highlights

Originations – Loan originations in the second quarter of 2015 were $1.91 billion, compared to $1.01 billion in the same period last year, an increase of 90% year-over-year. The Lending Club platform has now facilitated loans totaling roughly $11.2 billion since inception.

Operating Revenue – Operating revenue in the second quarter of 2015 was $96.1 million, compared to $48.6 million in the same period last year, an increase of 98% year-over-year. Operating revenue as a percent of originations, or our revenue yield, was 5.03% in the second quarter, up from 4.83% in the prior year.

Adjusted EBITDA(2) – Adjusted EBITDA was $13.4 million in the second quarter of 2015, compared to $4.0 million in the same period last year. As a percent of operating revenue, Adjusted EBITDA margin increased to 13.9% in the second quarter of 2015, up from 8.2% in the prior year.

Net Loss – GAAP net loss was $4.1 million for the second quarter of 2015, compared to a net loss of $9.2 million in the same period last year. Lending Club’s GAAP net loss included $12.5 million of stock-based compensation expense during the second quarter of 2015, compared to $8.3 million in the second quarter of 2014.

Loss Per Share (EPS) – Basic and diluted loss per share was ($0.01) for the second quarter of 2015 compared to EPS of ($0.16) in the same period last year.

Adjusted EPS(2)– Adjusted EPS was $0.03 for the second quarter of 2015 compared to $0.01 in the same period last year.

Cash, Cash Equivalents and Securities Available for Sale – As of June 30, 2015, cash, cash equivalents and securities available for sale totaled $888 million, with no outstanding debt.

Recent Business Developments

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. Lending Club is now available to investors in 33 states.

Opened to borrowers in Nebraska and North Dakota. Lending Club is now available to borrowers in 47 states.

Investor base exceeds 100,000 active individual investors who collectively invested over $1 billion on the Lending Club platform in Q2.

Launched an alliance with Ingram Micro (NYSE: IM), the world’s largest wholesale technology distribution company, to be the exclusive provider of unsecured lines of credit and term loans up to $300,000 for Ingram Micro’s tens of thousands of U.S. value-added resellers, and with Zulily (NASDAQ: ZU), a specialty online retailer that’s topped a billion a year in sales.

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