LendingClub (LC) Stock Up 12.4% Despite Incurring Loss In Q1
Zacks Investment Research | May 09, 2019 07:36AM ET
LendingClub Corporation’s (NYSE:LC) first-quarter 2019 adjusted loss of 3 cents per share came in line with the Zacks Consensus Estimate. The figure remained flat year over year.
Shares of the company rallied 12.4% since the release of the results, driven by higher revenues and an upbeat outlook for second-quarter 2019. Further, the results reflected higher volume of loan originations. However, higher expenses, along with lower loan balances and fall in cash and cash equivalents, were headwinds.
After taking into consideration non-recurring items, consolidated net loss was $19.9 million compared with net loss of $31.2 million reported in the year-ago quarter.
Revenues Improve, Costs Rise
Total net revenues grew 15% year over year to $174.4 million. This upside was driven by higher volume of loan originations. Further, the reported figure surpassed the Zacks Consensus Estimate of $169 million.
Total operating expenses were $194.3 million, flaring up 6.3% year over year. This upswing resulted from rise in all components of operating expenses, offset by the absence of class action and regulatory litigation expenses.
Adjusted EBITDA totaled $22.6 million, up 47.3% from the prior-year quarter’s reported tally.
In the March-end quarter, loan originations were $2.7 billion, up 18% year over year.
As of Mar 31, 2019, cash and cash equivalents were $402.3 million, up 7.9% from the Dec 31, 2018 level. Loans held for investment at fair value were down 9.8% from the prior-quarter end to $1.7 billion. Total stockholders’ equity was $864.8 million, down from $869.2 million recorded as of Dec 31, 2018.
Guidance
Concurrent with the results, management provided its guidance for second-quarter and 2019.
Second-Quarter 2019
- Total net revenues of $185-$195 million
- Adjusted EBITDA of $25-$30 million
- GAAP and adjusted net loss of $11-$6 million
Full-Year 2019
- Total net revenues of $765-$795 million
- Adjusted EBITDA of $115-$135 million
- GAAP consolidated net loss of $37-$17 million and adjusted net loss 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 remains a headwind. Furthermore, the company’s exposure to numerous legal hassles might keep expenses elevated in the near term.
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