This week’s B2B Data Digest is all about earnings stats from the world of corporate FinServ and FinTech. As is always the case during earnings season, there is good news and bad — but a look at earnings data shows the pendulum swinging dramatically both ways, especially when it comes to the business lending market, with RBS’s long road to profitability and LendingClub’s losses at opposite ends of the spectrum.
Despite the ongoing fallout from its Global Restructuring Group scandal, Royal Bank of Scotland posted its first profits in a decade on Friday (Feb. 23). Reports in CNBC said the company posted $1.05 billion for 2017, significantly beyond analyst expectations and a sharp turnaround from 2016’s $9.71 billion loss.
“Our financial strength is much clearer,” said RBS CEO Ross McEwan in a statement. “We still have more to do in cost reduction, however this reflects progress we have made in making the bank more efficient.”
Shares of RBS dropped 4 percent at market open Friday, according to reports, with analysts and investors still waiting on expected penalties from the U.S. Department of Justice’s investigation of RBS misconduct. The bank is also facing intense scrutiny in the U.K. for its mistreatment of small business customers as Federation of Small Businesses head Mike Cherry called on the bank to reinvest those profits in the small businesses it harmed. Cherry also highlighted RBS’s branch closure efforts, which may have helped boost financial figures but aren’t helping SMBs, he said.
Commercial payments company WEX beamed over its Q4 2017 earnings data released last week. The company posted a 14 percent year-over-year revenue jump of $331.3 million, with price per share hitting $1.49, which beat out analysts’ estimates.
In a statement, CEO Melissa Smith said the company is “extremely pleased” with its performance, pointing to “positive contributions from all three of our segments, driving 2017 revenues to record levels.”
The company’s Travel and Corporate Solutions unit posted a 17 percent increase in purchase volume, hitting $7.4 billion during the quarter. Its Health and Employee Benefits Solution also grew, while WEX noted the U.S. retail fuel price increase during the quarter as another bump to its fuel transactions operations.
There hasn’t been a clear picture of success for HPE since Hewlett Packard broke off into two, creating this separate enterprise-facing unit. But its Q1 FY 2018 results posted last week showed optimistic data, with an 11 percent increase year over year in first quarter net revenue, which hit $7.7 billion.
HPE attributed its earnings per share value of $0.89 — significantly above previous company outlook estimates of $0.01 to $0.05 per share — to U.S. tax reform.
In a statement, Antonio Neri, HPE’s president and CEO, said the data signals the company’s ability to work out previous kinks that have prevented it from stronger performance in the past.
“Our stronger Q1 performance is proof that we have the right strategy and improved execution,” he said. “We had good revenue growth across every business segment, continued to execute HPE Next with no disruption to the business, and delivered strong shareholder return in the form of share repurchases and dividends.”
HPE’s financial services unit saw an 8 percent year-over-year revenue increase to $888 million.
Australia’s largest small business accounting company MYOB said SMBs drove the firm’s profits for FY 2017. The company posted $47.6 million in after-tax profits, a 16.3 percent increase from FY 2016. Its calendar year 2017 revenues hit $326.7 million, landing 618,000 small business subscribers and 399,000 online subscribers by the end of the year (up from 304,000 and 225,000, respectively, at the start of the year).
The data shows a 60 percent increase year over year in subscribers volume; MYOB CEO Tim Reed said the company should hit 1 million across Australia and New Zealand by the end of the decade.
“The rewards of automation and accurate data feeds are significant and generate greater efficiencies and savings for our SMEs and advisors,” Reed said in a statement Friday.
Its preliminary class action settlement, combined with lackluster earnings, made for a rough financial report for alternative lender LendingClub.
The company announced last week the settlement in a series of class action lawsuits has reached $125 million, with $77.3 million paid by the company directly, and the rest covered by insurance.
While revenues were up 20 percent year over year, hitting $156.4 million, guidance missed analyst expectations of $161 million (the company expects as much as $155 million). Its full year guidance also missed analyst expectations.
Despite the data, CFO Thomas Casey said during the company’s earnings call that awareness of the alternative finance is on the rise. Its CEO Scott Sanborn, meanwhile, expressed confidence in the company’s asset that is “well-positioned for a rising rate environment, given its short duration and relatively higher return.”
LendingClub shares fell more than 4 percent after the company released the figures.