Lending Club Beats The Street And Raises Its Outlook

After what can best and only be described as a rough run for the last year or so for the team at Lending Club, things appear to have picked up some as of the marketplace lender’s latest quarterly earnings report.

The firm logged the second-highest quarterly revenue in its history, a situation that had the firm’s long-concerned investors sending the stock up a full 8 percent in after hours trading.

By the numbers, the performance was also in line with what investors wanted to see — revenue was up 35 percent to $139.6 million during Q2, a solid beat on the analysts’ consensus estimate of $136.4 million. Originations returned to growth in the second quarter, up 10 percent to $2.15 billion. Meanwhile, operating expenses fell by 12.5 percent to $165.1 million in the quarter.

Revenue for the year — on the strength of that big performance — got an upward revision to the range of $585 million to $600 million, a reasonable pick-up on the previous forecast of $575 million to $595 million.

Chief Executive Scott Sanborn said in a conference call that the company was “back on our front foot.”

Lending Club has spent much of the time since May 2016 on its back foot following an internal investigation that revealed a series of concerning issues about how loans were handled and packaged for investors.  The firm was forced to acknowledge it had altered documentation when selling $22 million in loans to investment bank Jefferies Group to make the quality of the loans within the package seem higher than they were.  The loans were later repurchased by Lending Club.

The loan malpractices led to the ouster of then-Chief Executive and founder Renaud Laplanche. It also led to mass desertions of investors from the platform — which, in turn, caused originations to crater.  Under Sanborn’s leadership since June of last year, Lending Club has been working double time to win back the trust of investors, bank lenders and other partners who had taken a step back from doing business with the company.

Lending Club reported a net loss of $25.5 million, or 6 cents per share, for the second quarter ending June 30, compared with a loss of $81.4 million, or 21 cents per share, a year earlier.

“Feels great to get management focused back on executing the business,” he said.