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LendingClub (LC) Posts In Line Q3 Earnings, Stock Tanks 18%

Zacks Equity Research
Updated

Shares of LendingClub Corporation LC plunged 18.1% in the after-hours trading following the release of its third-quarter 2017 results. Adjusted earnings per share of 3 cents were in line with the Zacks Consensus Estimate. Further, the figure compared favorably with the prior-year quarter’s loss of 4 cents.

The results largely benefited from top-line growth and rise in loan originations. While adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) showed exceptional improvement, fall in loan balance and an increase in expenses were the undermining factors.

Results for the reported quarter included several significant items. Including these, consolidated net loss was $6.7 million compared with net loss of $36.5 million in the year-ago quarter.

Revenues & Costs Rise

Total net revenues increased 34% year over year to $154 million. The rise was primarily due to an increase in all revenue components. The figure marginally missed the Zacks Consensus Estimate of $154.4 million.

Total operating expenses came in at $160.7 million, reflecting a rise of 6% from the prior-year quarter. The increase was primarily due to higher sales and marketing costs.

Adjusted EBITDA totaled $20.9 million against adjusted loss before interest, taxes, depreciation, and amortization of $9.2 million in the prior-year quarter.

In the reported quarter, loan originations were $2.4 billion, up 24% from the year-ago quarter.

As of Sep 30, 2017, cash and cash equivalents were $384 million, down 29% from the prior quarter. Loans were down 10% sequentially to $3.4 billion. Total stockholders' equity was $1 billion, up 2% from the Sep 30, 2017 level.

Guidance

Concurrent with the results, management provided guidance for fourth-quarter 2017:
 

  • Total net revenues in the range of $158-$163 million

  • Adjusted EBITDA in the range of $19-$23 million

  • Stock-based compensation of nearly $15 million

  • Depreciation and amortization and other net adjustments of roughly $11 million

  • Net loss in the range of $7-$3 million


Our Viewpoint

LendingClub’s revenue growth is commendable. Also, increase in loans originations and rising adjusted EBITDA are impressive. However, declining loan balance is a headwind.

LendingClub Corporation Price, Consensus and EPS Surprise

 

LendingClub Corporation Price, Consensus and EPS Surprise | LendingClub Corporation Quote

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Currently, LendingClub 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 Stocks in the Same Space

MoneyGram International Inc. MGI reported earnings of 24 cents per share, which surpassed the Zacks Consensus Estimate by 4.4%. Results benefited from lower expenses, partially offset by a decline in revenues.

Moody's Corporation MCO reported third-quarter 2017 adjusted earnings of $1.52 per share, which handily outpaced the Zacks Consensus Estimate of $1.44. Results were attributable to impressive revenue growth, reflecting strong issuance in the quarter. However, higher expenses were on the downside.

CIT Group Inc.’s CIT third-quarter 2017 adjusted earnings from continuing operations of $1.02 per share beat the Zacks Consensus Estimate of 84 cents. Lower expenses and a fall in provision for credit losses helped the company deliver exceptional results. However, a decline in revenues hurt results to some extent

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Moody's Corporation (MCO) : Free Stock Analysis Report
 
LendingClub Corporation (LC) : Free Stock Analysis Report
 
Moneygram International, Inc. (MGI) : Free Stock Analysis Report
 
CIT Group Inc (DEL) (CIT) : Free Stock Analysis Report
 
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