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LendingClub (LC) Q4 Earnings Beat Estimates, Expenses Down

Zacks Equity Research

LendingClub Corporation LC reported fourth-quarter 2018 adjusted earnings of 3 cents per share, surpassing the Zacks Consensus Estimate of 2 cents. Notably, the figure excludes certain non-recurring items along with stock-based compensation expenses.

Results reflected growth in revenues, driven by higher volume of loan originations. Moreover, a decline in expenses supported results to some extent. However, lower loan balances along with fall in cash and cash equivalents were headwinds for the company.

After taking into consideration non-recurring items, consolidated net loss was $13.4 million compared with net loss of $92.1 million reported in the year-ago quarter.

Revenues Improve & Costs Decline

Total net revenues grew 16.0% year over year to $181.5 million. The increase was driven by higher volume of loan originations. However, the reported figure marginally lagged the Zacks Consensus Estimate of $181.8 million.

Total operating expenses were $194.9 million, decreasing 21.4% from the prior-year quarter. The decline was due to the absence of class action and regulatory litigation expenses.

Adjusted EBITDA totaled $28.5 million, up 49.4% from the prior-year quarter.

In the reported quarter, loan originations were $2.9 billion, up 17.8% from the year-ago quarter.

As of Dec 31, 2018, cash and cash equivalents were $373 million, down 7.2% from the Dec 31, 2017 level. Loans held for investment at fair value were down 35.8% year over year to $1.9 billion. Total stockholders' equity was $869.2 million, down from $922.5 million recorded as of Dec 31, 2017.

Guidance

Concurrent with the results, management provided guidance for first-quarter and 2019.

First-Quarter 2019

  • Total net revenues of $162-$172 million
  • Adjusted EBITDA of $13-$18 million
  • Stock-based compensation expenses of nearly $18 million
  • Depreciation, amortization and other net adjustments of roughly $15 million
  • GAAP and adjusted net loss of $20-$15 million

Full-Year 2019

  • Total net revenues of $765-$795 million
  • Adjusted EBITDA of $115-$135 million
  • Stock-based compensation expenses of around $81 million
  • Depreciation, amortization and other net adjustments of roughly $63 million
  • GAAP 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. Further, 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 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 Other Finance Stocks

CIT Group CIT reported fourth-quarter 2018 adjusted earnings from continuing operations of $1.21 per share, surpassing the Zacks Consensus Estimate of $1.10. Also, the bottom line came in higher than the prior-year figure of 99 cents.

Moody's Corporation MCO reported fourth-quarter 2018 adjusted earnings of $1.63 per share, which missed the Zacks Consensus Estimate of $1.71. However, the figure improved 8% from the year-ago quarter.

Hercules Capital, Inc. HTGC is slated to announce quarterly results tomorrow.

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