This afternoon Lending Club published her Result for Q3 2020. They have rebounded from second quarter lows, showing origins up 79% quarter over quarter to $ 584 million (that’s still a 83% year-over-year decrease). Quarterly revenue was $ 74.7 million, exceeding analyst expectations by nearly $ 17 million. LendingClub’s net loss for the quarter was $ 34.3 million, or negative earnings per share of $ 0.38, which was also well above expectations.
Here is a summary of their financial results:
- $ 584.1 million in lending, down 83% year over year and up 79% sequentially.
- Net sales of $ 74.7 million, down 64% year over year and up 70% sequentially.
- GAAP consolidated net loss of $ 34.3 million ($ 0.38 per share attributable to common stockholders) compared to a loss of $ (0.4) million ($ 0.00 per share attributable to common stockholders) attributable to) in the third quarter of 2019 and a loss of $ (78.5) million ($ 0.87) per share attributable to common stock) in the second quarter of 2020.
- Adjusted EBITDA of $ 4.3 million, down 89% year over year, and improving 116% sequentially.
- Adjusted EBITDA margin of 5.8%, 13.7 percentage points lower than in the previous year and 68.8 percentage points higher in sequence.
- Adjusted net loss of $ 23.1 million ($ 0.25 adjusted net loss per share) compared to adjusted net income of $ 8.0 million ($ 0.09 adjusted net income per share) for the third quarter of 2019 and an adjusted net loss from . $ (54.3) million ($ (0.60) Adjusted Net Loss per Share) for the second quarter of 2020.
Here’s what CEO Scott Sanborn said about these quarterly results:
Although the short-term economic outlook is uncertain, we run LendingClub for long-term success and the measures we are taking to strengthen our business after COVID are bearing fruit. Our credit is doing well, investor confidence is returning, we have improved cost efficiency and built a significant amount of liquidity as we work towards completing the Radius acquisition, which remains our top strategic priority.
Tom Casey, CFO of LendingClub said:
We are expecting origination to recover from a low in the second quarter and corresponding revenue growth. ”He continued,“ We also closed the quarter with a significant increase in cash as we made a strategic decision to sell and sell credit Generate additional liquidity while paying off a significant amount of debt and reducing the balance sheet to mitigate risk.
It is interesting to see the dramatic changes in origins by funding source, as shown in the graph above. Managed accounts (usually high net worth individuals, family offices, and other institutional investors who invest directly in credit) have declined significantly in the last quarter, and while the percentage of banks when you do the math has gone down, banks did in this one Their total investment increased from approximately $ 221 million in the second quarter to $ 239 million in the third quarter. We also know that LendingClub made the decision last month close their retail platform End of the year so we know that self-directed retail investors will see a sharp decline when these loans expire next year.
LendingClub reported that consumer credit continues to hold up and do better than originally expected. Surveys show that consumers spend two-thirds of their stimulus checks on paying off debt or increasing savings. They also found that both credit card spending and high-cost revolving loans decreased year over year.
They also reported on their all-important takeover of Radius Bank. While unable to provide many details, they said the acquisition is still on the same schedule as it has been since it was announced earlier this year. They filed their official Y-3 application with the Federal Reserve last quarter.
In the Q&A on the conference call, Sanborn stated that they are still primarily focusing on their existing origination customer base, with that group accounting for around 80% of total origins for the quarter. You will slowly increase marketing to new customers so that percentage will decrease.
Overall, this was a positive earnings report considering where they were in the last quarter. The stock rose in after-hours trading, according to this solid report.
Peter Renton is chairman and co-founder of LendIt Fintech, the world’s first and largest digital media and events company focused on fintech. Peter has been writing about Fintech since 2010 and is the author and creator of the Fintech One-on-One Podcast, the first and longest running Fintech interview series. Peter has been interviewed by the Wall Street Journal, Bloomberg, The New York Times, CNBC, CNN, Fortune, NPR, Fox Business News, the Financial Times, and dozen other publications.