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LendingClub (LC) Q2 Loss Narrows, Revenues Top Estimates

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LendingClub CorporationLC reported second-quarter 2018 adjusted loss per share of 2 cents, which is narrower than the Zacks Consensus Estimate of a loss of 4 cents. Notably, the figure excludes expenses relating to regulatory litigation and goodwill impairment. Also, the figure reflects improvement from the prior-year quarter's loss of 6 cents.

Shares of LendingClub jumped 3.3% after the release of its second-quarter 2018 results. The company's results primarily benefited from higher revenues and rise in loan originations. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) displayed impressive growth. However, a decline in loan balance and a rise in operating expenses were the major headwinds.

After taking into consideration several significant items, consolidated net loss came in at $60.8 million compared with net loss of $25.4 million reported in the year-ago quarter.

Revenues Improve, Costs Flare Up

Total net revenues grew 26.8% year over year to $177 million. The upside primarily stemmed from higher volume of loan originations. Moreover, the reported figure outpaced the Zacks Consensus Estimate of $164 million.

Total operating expenses came in at $237.8 million, surging 44% from the prior-year quarter. The upswing primarily resulted from regulatory litigation expenses and goodwill impairment.

Adjusted EBITDA totaled $25.7 million, up significantly from $4.5 million recorded in the prior-year quarter.

In the reported quarter, loan originations were $2.8 billion, up 31% from the year-ago quarter.

As of Jun 30, 2018, cash and cash equivalents were $434.2 million, up nearly 8.1% from the 2017 year-end figure. Loans held for investment were down 19.6% to $2.4 billion from $2.9 billion as on Dec 31, 2017. Total stockholders' equity was $871 million, down 5.9% from the Dec 31, 2017 level.

Guidance

Concurrent with the June-end quarter results, management has provided guidance for third-quarter 2018 and full-year 2018.

Third-Quarter 2018

  • Total net revenues of $175-$185 million
  • Adjusted EBITDA of $18-$23 million
  • Stock-based compensation of nearly $20 million
  • Depreciation and amortization and other net adjustments of roughly $13 million
  • Net loss of $10-$15 million

Full-Year 2018

  • Total net revenues of $680-$705 million
  • Adjusted EBITDA of $75-$90 million
  • Stock-based compensation of around $77 million
  • Depreciation and amortization and other net adjustments of roughly $51 million
  • Net loss in the range of $109-$124 million

Bottom Line

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

Nonetheless, declining loan balance remains a headwind. Also, the company's exposure to numerous legal hassles might keep its expenses elevated in the near term.

LendingClub Corporation Price, Consensus and EPS Surprise

LendingClub Corporation Price, Consensus and EPS Surprise | LendingClub Corporation Quote

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

Performance of Stocks in the Same Space

CIT Group CIT reported second-quarter 2018 adjusted earnings from continuing operations of $1.00 per share, surpassing the Zacks Consensus Estimate of 97 cents. Also, this was above the prior-year quarter's figure of 68 cents.

Moody's Corporation MCO reported second-quarter 2018 adjusted earnings of $2.04 per share, which handily surpassed the Zacks Consensus Estimate of $1.88. Also, the bottom line improved 35% from the year-ago quarter.

Synchrony Financial's SYF second-quarter 2018 earnings per share of 92 cents surpassed the Zacks Consensus Estimate of 82 cents by 12.2%, mainly driven by interchange revenues and loan receivables growth. The bottom line also improved 51% year over year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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