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LendingClub (LC) Stock Up on Q1 Earnings Beat, Revenues Rise

Zacks Equity Research
Updated

Shares of LendingClub Corporation LC have jumped 23.4% since the release of its first-quarter 2018 results. Adjusted earnings per share of 1 cent beat the Zacks Consensus Estimate of breakeven. Also, the figure compares favorably with the prior-year quarter’s loss of 2 cents.

The results primarily benefited from higher revenues and rise in loan originations. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) showed impressive growth. However, a decline in loan balance and an increase in operating expenses were the major headwinds.

After taking in to consideration several significant items, consolidated net loss was $31.2 million compared with net loss of $29.8 million in the year-ago quarter.

Revenues & Costs Rise

Total net revenues grew 21.8% year over year to $151.7 million. The rise was primarily due to higher volume of loan originations. However, the figure lagged the Zacks Consensus Estimate of $155 million.

Total operating expenses were $182.8 million, up 18.4% from the prior-year quarter. The increase was primarily due to regulatory litigation expenses.

Adjusted EBITDA totaled $15.3 million, up significantly from 0.1 million in the prior-year quarter.

In the reported quarter, loan originations were $2.31 billion, up 17.7% from the year-ago quarter.

As of Mar 31, 2018, cash and cash equivalents were $405.1 million, up nearly 1% from the prior quarter. Loans held for investment were down 10.1% sequentially to $2.6 billion. Total stockholders' equity was $915.1 million, down 1.4% from the Dec 31, 2017 level.

Guidance

Concurrent with the results, management provided guidance for second-quarter 2018 and full-year 2018.

Second-quarter 2018

  • Total net revenues in the range of $162-$172 million

  • Adjusted EBITDA in the range of $12-$22 million

  • Stock-based compensation of nearly $20 million

  • Depreciation and amortization and other net adjustments of roughly $12 million

  • Net loss in the range of $10-$20 million


Full-Year 2018

  • Total net revenues in the range of $680-$705 million

  • Adjusted EBITDA in the range of $75-$90 million

  • Stock-based compensation of nearly $77 million

  • Depreciation and amortization and other net adjustments of roughly $51 million

  • Net loss in the range of $55-$70 million

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Our Viewpoint

LendingClub’s revenue growth is commendable on the back of strong loans originations. Also, rising adjusted EBITDA is impressive. However, declining loan balance is a headwind. Also, its exposure to numerous legal hassles will keep expenses elevated in the near term.

LendingClub Corporation Price, Consensus and EPS Surprise

 

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

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 Stocks in the Same Space

CIT Group Inc.’s CIT first-quarter 2018 adjusted earnings from continuing operations of 74 cents per share lagged the Zacks Consensus Estimate of 96 cents. Results were adversely impacted by a decline in net interest revenues and higher provision for credit losses. These were partly offset by lower expenses, a rise in non-interest income and a strong balance sheet.

Moody's Corporation MCO reported first-quarter 2018 adjusted earnings of $2.02 per share, which handily surpassed the Zacks Consensus Estimate of $1.78. Results were attributable to impressive revenue growth, reflecting strong issuance in the quarter. However, higher expenses were on the downside.

MoneyGram International Inc. MGI reported first-quarter 2018 earnings of 9 cents per share, missing the Zacks Consensus Estimate by 52.6%. Results were affected by the impact of the newly implemented, industry-leading compliance standards, along with ongoing geopolitical challenges in certain markets.

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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. (CIT) : Free Stock Analysis Report
 
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