Alternative Finances

Higher Fees Drive LendingClub’s Earnings Beat

Stronger-than-expected loan originations combined with increased transaction fees to push LendingClub’s quarterly earnings report past analyst expectations when the results went live shortly after the market closed yesterday (May 7).

The marketplace lending platform reported adjusted net loss of $11.25 million, or 3 cents a share — red ink, but less than the 4 cents per share loss analysts were forecasting.

Net revenue was up in the first quarter, increasing year on year 15 percent to $174.4 million — ahead of the $170.2 million market watchers were predicting.

That stronger-than-expected revenue outcome was driven by stronger-than-expected loan originations during the first quarter, which rose 18 percent year-on-year to $2.73 billion. That increase in originations drove an increase in transaction fees, which were up 22 percent to $135.4 million.

For the second quarter, the company expects net revenue between $185 million and $195 million, with the high end slightly below the average analyst estimate of $196.7 million.

“With 3 million borrowers served and our simplification efforts well underway, we are driving both revenue growth and margin expansion,” said Scott Sanborn, CEO of LendingClub. “We will continue to deliver on our strategy and focus on the bottom line as we push towards profitability.”

In other notable figures, LendingClub noted applications were up nearly one-third by 31 percent during Q1 compared to the same time period in 2018. Of those applicants, 73 percent were able to move from application to approval with 24 hours, a 57 percent increase from Q1 2018.  The firm also noted that nearly 40 percent of loans purchased by investors during Q1 were through “structured program channels” developed by LendingClub over the last 18 months.

The brand also called out its continued and increasing dedication to boosting efficiency.  Earlier this week LendingClub announced plans to relocate 350 jobs to Utah, including customer-support staff. The cuts are intended as a cost-cutting measure in response to rent prices within the Bay Area that are becoming unaffordable even for billion dollar firms.

“Growing exclusively in San Francisco simply doesn’t make financial sense,” Chief Executive Officer Scott Sanborn explained in a memo to staff, citing the skyrocketing cost of office space in the city. “As difficult as the decision is, it’s absolutely the right thing for the company and our shareholders.”

By the end of 2019, LendingClub expects its Bay Area footprint to have been reduced by 41 percent, down to 70,000 square feet.  The entire customer service operation will be Utah-based by year’s end.

 

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