OnDeck Q4 Originations Dip, Instant Funding Clients Almost Double

OnDeck fell short of expectations with its fourth-quarter earnings report on Tuesday (Feb. 11), and the financial services firm registered a decrease in loan origination volume.

Chief Executive Officer Noah Breslow said in a fourth-quarter earnings release, “Our fourth quarter closed out a year of significant progress at OnDeck, highlighted by solid growth in U.S. lending, advancement of our strategic initiatives and improved capital efficiency.”

In a call with analysts, Breslow said the company nearly doubled the number of clients who have enrolled in its instant funding option. As he noted in the call, “Customers who have activated this feature have higher utilization than other line-of-credit customers.”

Breslow pointed out that the company’s analytics capabilities were enhanced in 2019 with innovations in its fraud prevention capabilities. He also said the company made “long-term investments in our next-generation technology infrastructure, which will allow us to bring new products and features to market faster in 2020 and beyond.”

Adjusted net income came in at $3.3 million, or 5 cents per diluted share, which was below analyst estimates of 9 cents. Loan originations were $618 million, which was down 2 percent from the prior quarter and 6 percent from the year-ago quarter. Interest and finance income was $108.8 million.

For the full year 2020, OnDeck forecasts an adjusted net income of $25 million to $35 million. Gross revenue is expected to be $465 million to $485 million. And the company forecasts net income of $25 million to $35 million.

As previously reported, OnDeck beat expectations with its third-quarter earnings report on Oct. 24, with a rise in loan origination volume. Adjusted net income had come in at $7.8 million, or 10 cents per diluted share, which was higher than analysts’ forecasts of 7 cents at the time.

Loan originations had arrived at $629 million, which were up 6 percent from the prior quarter and down 3 percent from the year-ago quarter. Interest and finance income was $108.2 million.