LendingClub Earnings Surprise Energizes Investors

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Peer-to-peer loan maker LendingClub Corp. (NYSE: LC) released its third-quarter 2016 results before markets opened Monday. The company reported an adjusted diluted per share loss of $0.04 and total revenues of $114.56 million. In the same period a year ago, the company reported an adjusted profit per share of $0.04 on revenues of $116.28 million. Third-quarter results also compare to the Thomson Reuters consensus estimates for a net loss of $0.07 per share and $103.31 million in revenues.

The company’s net loss for the quarter totaled $36.49 million. On a GAAP basis, the quarterly per share loss came to $0.09, and the principal adjustment was a $17.92 million charge related to stock-based compensation. Operating revenue totaled $112.6 million in the third quarter, up from $102.4 million in the second quarter, but down from $115.1 million in the third quarter of last year.

Third-quarter incentives to lenders reduced operating income by $11 million. The company said that it paid no incentives in September.

In early May, LendingClub fired its CEO and delayed filing its first-quarter financial statements. A month later the company postponed its annual shareholders’ meeting, and in late June announced that it had appointed a new CEO and that it would cut 179 jobs.

CEO Scott Sanborn said:

While we’ve made incredible progress, there is still work to be done. In the months ahead we are focused on increasing the diversity and resiliency of our funding mix, realigning our resources, and regaining our operating rhythm. Today’s results, along with our new executive team, and the return of banks to our platform, give me confidence as we begin our planning for 2017.

LendingClub CFO Tom Casey added:

We entered September without the need for investor incentives and delivered solid sequential revenue growth and margin improvement. While expenses remain elevated, we are heading into the fourth quarter with improving fundamentals and increasing confidence, and a plan to put the company on a path to long term growth and margin expansion.

For the fourth quarter, LendingClub expects operating revenues in the range of $116 million to $123 million and an adjusted EBITDA loss of $5 million to $15 million. The company also forecast a $38 million to $48 million net loss.

Analysts are looking for fourth-quarter revenues of $115.24 million and a per share loss of $0.03. For the full year, the current consensus estimate calls for a loss per share of $0.14 on revenues of $472.37 million.

Shares traded up about 4.3% in premarket trading Monday to $5.35, after closing Friday at $5.13. The stock’s 52-week range is $3.44 to $14.90, and the consensus 12-month price target is $7.32.

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