Shares of LendingClub Corporation LC rallied 11.6% following the release of third-quarter 2019 results. Adjusted earnings of 9 cents per share significantly surpassed the Zacks Consensus Estimate of a penny. Also, the figure reflects improvement from loss of 9 cents in the prior-year quarter.
Results reflect rise in revenues and lower expenses. Further, the quarter witnessed higher loan originations volume. Decline in loan balance was a concern.
After taking into consideration non-recurring items, consolidated net loss was $0.4 million or breakeven per share compared with net loss of $22.7 million or 27 cents in the year-ago quarter.
Revenues Improve, Costs Fall
Total net revenues grew 11% year over year to $204.9 million. This upside was driven by higher volume of loan originations. The top line beat the Zacks Consensus Estimate of $204 million.
Total operating expenses were $205.2 million, down 1% year over year. This decline was largely due to the absence of class action and regulatory litigation expenses.
Adjusted EBITDA was $40 million, up 43%.
In the September quarter, loan originations were $3.3 billion, up 16% year over year.
As of Sep 30, 2019, cash and cash equivalents were $200 million compared with $373 million on Dec 31, 2018. Loans held for investment at fair value were $1.24 billion, down from Dec 31, 2018 level of $1.88 billion. Total stockholders’ equity was $887.9 million, slightly up from $869.2 million recorded as of Dec 31, 2018.
Concurrent with the results, management provided guidance for the fourth quarter and updated the same for 2019.
- Total net revenues of $190-$210 million
- Adjusted EBITDA of $34-$396 million
- GAAP and adjusted net income of $0-$5 million
- Total net revenues of $760-$770 million. This is lower than prior target range of $765-$795 million
- Adjusted EBITDA of $130-$135 million. The lower end has been revised up from $120 million.
- GAAP consolidated net loss of $31-$26 million. This has been revised from the prior guidance of loss of $38-$23 million. The updated guidance reflects $26 million year-to-date expenses regulatory, cost-structure simplification expense and other costs recorded during the first nine months of 2019.
- Adjusted net loss of $5-$0 million, improving from the previous projection of loss of $20-$5 million.
LendingClub’s revenue growth is commendable on the back of strong loan originations. However, declining loan balance is 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-eps-surprise-chart | LendingClub Corporation Quote
LendingClub currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Finance Companies
LendingTree TREE delivered a positive earnings surprise of 34.7% in third-quarter 2019. Adjusted net income per share of $2.25 outpaced the Zacks Consensus Estimate of $1.67. Further, the figure was higher than the prior-year quarter’s $1.92 per share.
Credit Acceptance Corporation’s CACC third-quarter 2019 earnings of $8.73 per share missed the Zacks Consensus Estimate of $9.13. However, the bottom line was up 12.6% year over year. Notably, the figure includes certain non-recurring items.
Hercules Capital Inc.’s HTGC third-quarter 2019 net investment income of 37 cents per share outpaced the Zacks Consensus Estimate of 34 cents. The bottom line grew 19.4% from the year-ago figure.
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