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Lending Club Reports Fourth Quarter and Full Year 2015 Results and Announces $150 Million Share Buyback
PR Newswire
Full year operating revenue up 100% year-over-year to $427 million

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.

 Lending Club, the world’s largest online marketplace connecting borrowers and investors.

"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.

 

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SOURCE Lending Club

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