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LendingClub (LC) Reports Loss in Q2, Revenues Improve Y/Y

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LendingClub Corporation (LC - Free Report) reported second-quarter 2019 adjusted loss of 1 cent per share compared with the Zacks Consensus Estimate of a loss of 10 cents. The figure also compares unfavorably with the earnings of 15 cents reported in the prior-year quarter.

Higher revenues, lower expenses and an upbeat outlook for third-quarter 2019 were the positives. Further, the results reflected higher volume of loan originations. However, lower loan balances and fall in cash and cash equivalents were headwinds.

After taking into consideration non-recurring items, consolidated net loss was $10.7 million or 12 cents per share compared with net loss of $60.9 million or 72 cents reported in the year-ago quarter.

Notably, financials have been retroactively adjusted to reflect a 1-for-5 reverse stock split effective as of Jul 5, 2019.

Revenues Improve, Costs Fall

Total net revenues grew 7.8% year over year to $190.8 million. This upside was driven by higher volume of loan originations. The reported figure, however, lagged the Zacks Consensus Estimate of $191.7 million.

Total operating expenses were $201.9 million, down 15.1% year over year. This downside resulted from absence of goodwill impairment and regulatory litigation expenses.

Adjusted EBITDA totaled $33.2 million, up 29.2% from the prior-year quarter’s reported tally.

In the June-end quarter, loan originations were $3.1 billion, up 11% year over year.

As of Jun 30, 2019, cash and cash equivalents were $334.7 million, down 10.3% from the Dec 31, 2018 level. Loans held for investment at fair value were down 21.1% from the end of December 2018 to $1.5 billion. Total stockholders’ equity was $873.6 million, slightly up from $869.2 million recorded as of Dec 31, 2018.

Guidance

Concurrent with the results, management provided its guidance for the third quarter as well as updated the guidance for 2019.

Third-Quarter 2019

  • Total net revenues of $200-$210 million, up 8-14% year over year
  • Adjusted EBITDA of $35-$40 million
  • GAAP and adjusted net loss of $0-$5 million


Full-Year 2019

  • Total net revenues of $765-$795 million.
  • Adjusted EBITDA of $120-$135 million. Notably, the lower end has been revised up from $115 million.
  • GAAP consolidated net loss of $38-$23 million, up from the prior guidance of $37-$17 million. The updated guidance reflects $18 million year-to-date expenses regulatory, cost-structure simplification expense and other costs recorded during the first half of 2019.
  • Adjusted net loss of $20-$5 million, improving from the previous estimate of $29-$9 million.


Bottom Line

LendingClub’s revenue growth is commendable on the back of strong loan originations. Also, rise in adjusted EBITDA is impressive.

Nonetheless, declining loan balance is a headwind. Furthermore, the company’s exposure to numerous legal hassles might keep expenses elevated in the near term.
 

LendingClub Corporation Price, Consensus and EPS Surprise

LendingClub Corporation Price, Consensus and EPS Surprise

LendingClub Corporation price-consensus-eps-surprise-chart | LendingClub Corporation Quote

LendingClub currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

CIT Group Inc.’s second-quarter earnings from continuing operations of $1.32 per share surpassed the Zacks Consensus Estimate of $1.13. In the prior-year quarter, the company recorded adjusted earnings from continuing operations of $1.00. Notably, the reported quarter did not have any noteworthy items. Results benefited from stable operating expenses, lower provisions and a modest rise in net interest revenues.

Moody's (MCO - Free Report) reported second-quarter 2019 adjusted earnings of $2.07 per share, which handily outpaced the Zacks Consensus Estimate of $1.98. Also, the figure improved 1% from the year-ago quarter. Results were largely driven by impressive Moody’s Analytics segment performance and a strong balance sheet position.

Hercules Capital Inc.’s (HTGC - Free Report) second-quarter net investment income of 36 cents per share outpaced the Zacks Consensus Estimate of 33 cents. The bottom line also came in 38.5% higher than the year-ago figure. Results benefited from higher total investment income, increase in net asset value and growth in investment portfolio. However, rise in operating expenses acted as a headwind.

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