LendingClub Reports Second Quarter 2018 Results
SAN FRANCISCO, Aug. 7, 2018 /PRNewswire/ -- LendingClub Corporation (NYSE: LC), America's largest online lending marketplace connecting borrowers and investors, today announced financial results for the second quarter ended June 30, 2018 and provided guidance for the third quarter and full year 2018.
Highlights for the second quarter include:
-- Record net revenue of $177.0 million, up 27% year-over-year
-- Record originations of $2.8 billion, up 31% year-over-year
-- Improved Contribution Margin to 48.3% from 47.3% in the same quarter
last year
-- Delivered Adjusted EBITDA of $25.7 million, or a 14.5% Adjusted EBITDA
margin, up 11.3 percentage points year-over-year reflecting the
company's efforts to drive profitability
-- GAAP Consolidated Net Loss was $(60.8) million, or $(6.7) million
excluding $35.6 million of goodwill impairment related to the Company's
patient and education finance unit, which reflects the Company's focus
on growing the direct to consumer marketplace and $18.5 million of
expenses related to outstanding legacy issues disclosed by the Company
in 2016
Scott Sanborn, LendingClub CEO said, "We are executing well against the strategy we laid out at our investor day in December 2017 and our core business is firing on all cylinders. We are laser focused on the direct to consumer opportunity as we help our members on the path to financial success."
Three Months Ended Six Months Ended
June 30,
($ in millions) June 30, March 31, June 30, 2018 2017
2018 2018 2017
--- ---- ---- ----
Originations $2,818.3 $2,306.0 $2,147.3 $5,124.3 $4,106.1
Net Revenue $177.0 $151.7 $139.6 $328.6 $264.1
GAAP Consolidated Net Loss $(60.8) $(31.2) $(25.4) $(92.0) $(55.3)
Adjusted EBITDA (1) $25.7 $15.3 $4.5 $41.0 $4.6
------------------ ----- ----- ---- ----- ----
(1) Adjusted EBITDA is a non-GAAP
financial measure. Beginning in
the fourth quarter of 2017,
Adjusted EBITDA excludes legal
and regulatory expense related
to outstanding legacy issues.
Please see the discussion below
under the heading "Non-GAAP
Measures" and the reconciliation
at the end of this release.
Second Quarter 2018 Financial Highlights
Commenting on financial results, Tom Casey, LendingClub CFO said, "In the second quarter we delivered both strong topline growth and Adjusted EBITDA profitability as we continue to execute against our strategy."
Originations - Loan originations in the second quarter of 2018 were $2.8 billion, improving 31% compared to the same quarter last year and improving 22% sequentially.
Net Revenue - Net Revenue in the second quarter of 2018 was $177.0 million, improving 27% compared to the same quarter last year and improving 17% sequentially, driven primarily by a higher volume of loan originations in the second quarter of 2018 compared to the same quarter last year and compared to the first quarter of 2018.
GAAP Consolidated Net Loss - GAAP Consolidated Net Loss was $(60.8) million for the second quarter of 2018, increasing $35.4 million compared to the same quarter last year and $29.6 million sequentially. The increase in loss was primarily due to $35.6 million of goodwill impairment related to the Company's patient and education finance unit recorded in the second quarter of 2018.
Adjusted EBITDA ((2)) - Adjusted EBITDA was $25.7 million in the second quarter of 2018, improving $21.2 million compared to the same quarter last year and improving $10.3 million sequentially.
Contribution - Contribution was $85.4 million in the second quarter of 2018, improving $19.4 million compared to the same quarter last year and improving $11.0 million sequentially.
Earnings Per Share (EPS) - Basic and diluted EPS attributable to LendingClub was $(0.14) for the second quarter of 2018, compared to basic and diluted EPS attributable to LendingClub of $(0.06) in the same quarter last year and $(0.07) in the first quarter of 2018.
Adjusted EPS ((2)) - Adjusted EPS was $0.03 for the second quarter of 2018, compared to adjusted EPS of $(0.01) in the same quarter last year and $0.01 in the first quarter of 2018.
Cash, Cash Equivalents and Securities Available for Sale - As of June 30, 2018, cash, cash equivalents and securities available for sale totaled $492.0 million, excluding $92.0 million in securities available for sale subject to regulatory risk retention requirements.
Loans Held for Sale by the Company - As the Company continues to build its investor programs, it is using cash to accumulate loans for future transactions. Loans held for sale by the Company at the end of the second quarter of 2018 were $515.3 million, which were financed with $249.2 million of debt outstanding under the Company's warehouse credit facilities.
Outlook
Based on the information available as of August 7, 2018, LendingClub provides the following outlook for the third quarter and full year 2018:
Third Quarter 2018
Total Net Revenue in the range of $175 million to $185 million
GAAP Consolidated Net Loss ((3)) in the range of $(15) million to $(10) million
Adjusted EBITDA((2)(3)) in the range of $18 million to $23 million
Reconciling Items between GAAP Consolidated Net Loss and non-GAAP Adjusted EBITDA consisting of stock-based compensation of approximately $20 million, and depreciation, impairment, amortization and other net adjustments of approximately $13 million. Outstanding legacy issues are not forecasted in GAAP Net Income (Loss) or Adjusted EBITDA.
Full Year 2018
Total Net Revenue in the range of $680 million to $705 million
GAAP Consolidated Net Loss ((3)) in the range of $(124) million to $(109) million
Adjusted EBITDA((2)(3)) in the range of $75 million to $90 million
Reconciling Items between GAAP Consolidated Net Loss and non-GAAP Adjusted EBITDA consisting of stock-based compensation of approximately $77 million, expenses related to outstanding legacy issues of $35.5 million and goodwill impairment of $35.6 million that were recognized in the first half of 2018, and depreciation, impairment, amortization and other net adjustments of approximately $51 million.
(2) Adjusted EBITDA and Adjusted EPS are
non-GAAP financial measures. Please
see discussion below under the
heading "Non-GAAP Measures" and the
reconciliations at the end of this
release.
(3) Forecasted GAAP Consolidated Net Loss
excludes expenses associated with
outstanding legacy issues, as those
expenses are neither probable nor
estimable as of the time of this
earnings release. Adjusted EBITDA
and Adjusted EPS will also exclude
expenses associated with outstanding
legacy issues as more fully
described in the discussion below
under "Non-GAAP Measures." We will
update forecasted GAAP Consolidated
Net Loss as expenses associated with
outstanding legacy issues become
available for the remainder of the
year. For the first half of 2018, we
recognized $35.5 million of expenses
related to outstanding legacy issues
and $35.6 million of goodwill
impairment related to the Company's
patient and education finance unit,
which are now reflected in our full
year 2018 GAAP Consolidated Net
Loss.
About LendingClub
LendingClub was founded to transform the banking system to make credit more affordable and investing more rewarding. Today, LendingClub's online credit marketplace connects borrowers and investors to deliver more efficient and affordable access to credit. Through its technology platform, LendingClub is able to create cost efficiencies and passes those savings onto borrowers in the form of lower rates and to investors in the form of risk-adjusted returns. LendingClub is based in San Francisco, California. Currently, residents of the following states may invest in LendingClub notes: AL, AR, AZ, CA, CO, CT, DC, DE, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MA, ME, MD, MI, MN, MO, MS, MT, ND, NE, NH, NJ, NV, NY, OK, OR, RI, SC, SD, TN, TX, UT, VA, VT, WA, WI, WV, or WY. All loans are made by federally regulated issuing bank partners. More information is available at https://www.lendingclub.com.
Conference Call and Webcast Information
The LendingClub second quarter 2018 webcast and teleconference is scheduled to begin at 2:00 p.m. Pacific Time on Tuesday, August 7, 2018. A live webcast of the call will be available at http://ir.lendingclub.com under the Events & Presentations menu. To access the call, please dial +1 (888) 317-6003, or outside the U.S. +1 (412) 317-6061, with conference ID 8812060, ten minutes prior to 2:00 p.m. Pacific Time (or 5:00 p.m. Eastern Time). An audio archive of the call will be available at http://ir.lendingclub.com. An audio replay will also be available on August 7, 2018, until August 14, 2018, by calling +1 (877) 344-7529 or +1 (412) 317-0088, with Conference ID 10122295. LendingClub has used, and intends to use, its investor relations website, Blog (http://blog.lendingclub.com), Twitter handle (@LendingClub) and Facebook page (https://www.facebook.com/LendingClubTeam) as a means of disclosing material non-public information and to comply with its disclosure obligations under Regulation FD.
Non-GAAP Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: contribution, contribution margin, adjusted EBITDA, adjusted EBITDA margin, and adjusted EPS. Our non-GAAP measures do have limitations as analytical tools and you should not consider them in isolation or as a substitute for an analysis of our results under GAAP.
We believe these non-GAAP measures provide management and investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and enable comparison of our financial results with other public companies, many of which present similar non-GAAP financial measures.
In particular, we believe contribution and contribution margin are useful measures of direct product profitability because the measures illustrate the relationship between the costs most directly associated with revenue generating activities and the related revenue, and the effectiveness of the direct costs in obtaining revenue. Contribution is calculated as net revenue less "sales and marketing" and "origination and servicing" expenses on the Company's Statements of Operations, adjusted to exclude non-cash stock-based compensation expense within these captions and (income) loss attributable to noncontrolling interests. Contribution margin is a non-GAAP financial measure calculated by dividing contribution by total net revenue. We believe that adjusted EBITDA and adjusted EBITDA margin are important measures of operating performance because it allows for the comparison of our core operating results, including our return on capital and operating efficiencies, from period to period by removing outstanding legacy issues that will result in elevated legal costs (including ongoing regulatory and government investigations, indemnification obligations and litigation), the impact of depreciation, impairment and amortization in our asset base, share-based compensation, income tax effects, and other non-operating expenses. We believe adjusted EPS is a useful measure used by investors and analysts in our sector because non-cash items like stock-based compensation and amortization of intangibles can vary significantly due to many factors unrelated to the business, as well as certain other expenses that are unrelated to business performance, such as outstanding legacy issues discussed below.
In the fourth quarter of 2017, the company included a new adjustment for outstanding legacy issues that result in elevated legal costs (including ongoing regulatory and government investigations, indemnification obligations and litigation), to calculate adjusted EBITDA and adjusted EPS. We expect expenses in the future to include resolution of additional matters that arose from legacy management, including indemnification legal expenses paid by the Company for former employees, and settlements of regulatory investigations and examinations. Legacy legal expenses incurred in 2017 and prior were generally offset by insurance proceeds, resulting in no net material cumulative impact to earnings. As such, prior period amounts were not reclassified for the change in how we calculate adjusted EBITDA and adjusted EPS.
There are a number of limitations related to the use of these non-GAAP financial measures versus their most comparable GAAP measure. In particular, many of the adjustments to derive the non-GAAP financial measures reflect the exclusion of items, specifically stock-based compensation expense, depreciation, impairment and amortization in our asset base, outstanding legacy issues that will result in elevated legal costs (including ongoing regulatory and government investigations, indemnification obligations and litigation) and the related income tax effects of the aforementioned exclusions that are recurring and will be reflected in our financial results for the foreseeable future. Other companies, including companies in our industry, may calculate these measures differently, which may reduce their usefulness as a comparative measure.
For more information on our non-GAAP financial measures and a reconciliation of such measures to the nearest GAAP measure, please see the "Reconciliation of GAAP to Non-GAAP Measures" tables at the end of this release.
Safe Harbor Statement
Some of the statements above, including statements regarding borrower and investor demand and anticipated future financial results are "forward-looking statements." The words "anticipate," "believe," "estimate," "expect," "intend," "may," "outlook," "plan," "predict," "project," "will," "would" and similar expressions may identify forward-looking statements, although not all forward-looking statements contain these identifying words. Factors that could cause actual results to differ materially from those contemplated by these forward-looking statements include: the outcomes of pending governmental investigations and pending or threatened litigation, which are inherently uncertain; the impact of management changes and the ability to continue to retain key personnel; our ability to achieve cost savings from restructurings; our ability to continue to attract and retain new and existing retail and institutional investors; competition; overall economic conditions; demand for the types of loans facilitated by us; default rates and those factors set forth in the section titled "Risk Factors" in our most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K, each as filed with the SEC. We may not actually achieve the plans, intentions or expectations disclosed in forward-looking statements, and you should not place undue reliance on forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in forward-looking statements. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Information in this press release is not an offer to sell securities or the solicitation of an offer to buy securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.
Additional information about LendingClub is available in the prospectus for LendingClub's notes, which can be obtained on LendingClub's website at https://www.lendingclub.com/info/prospectus.action.
LENDINGCLUB CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
---- ---- ---- ----
Net revenue:
Transaction fees $135,926 $107,314 $247,108 $206,006
Investor fees 27,400 21,116 55,295 42,296
Gain on sales of loans (1) 11,880 4,445 24,551 6,337
Other revenue (1) 1,467 1,949 2,924 3,695
Net interest income and fair value adjustments:
Interest income 127,760 157,260 265,778 318,256
Interest expense (100,898) (150,340) (211,741) (308,947)
Net fair value adjustments (1) (26,556) (2,171) (55,269) (3,588)
----------------------------- ------- ------ ------- ------
Net interest income and fair value adjustments (1) 306 4,749 (1,232) 5,721
------------------------------------------------- --- ----- ------ -----
Total net revenue 176,979 139,573 328,646 264,055
----------------- ------- ------- ------- -------
Operating expenses: (2)
Sales and marketing 69,046 55,582 126,563 110,165
Origination and servicing 25,593 21,274 48,238 41,723
Engineering and product development 37,650 35,718 74,487 71,478
Other general and administrative 57,583 52,495 109,892 96,069
Goodwill impairment 35,633 - 35,633 -
Class action settlement and regulatory litigation expense 12,262 - 25,762 -
--------------------------------------------------------- ------ --- ------ ---
Total operating expenses 237,767 165,069 420,575 319,435
------------------------ ------- ------- ------- -------
Loss before income tax expense (60,788) (25,496) (91,929) (55,380)
Income tax expense (benefit) 24 (52) 63 (92)
Consolidated net loss (60,812) (25,444) (91,992) (55,288)
Less: Income attributable to noncontrolling interests 49 10 50 10
--- --- --- ---
LendingClub net loss $(60,861) $(25,454) $(92,042) $(55,298)
==================== ======== ======== ======== ========
Net loss per share attributable to LendingClub:
Basic $(0.14) $(0.06) $(0.22) $(0.14)
Diluted $(0.14) $(0.06) $(0.22) $(0.14)
Weighted-average common shares - Basic 421,194,489 406,676,996 419,754,893 403,510,351
Weighted-average common shares - Diluted 421,194,489 406,676,996 419,754,893 403,510,351
---------------------------------------- ----------- ----------- ----------- -----------
(1) In the fourth quarter of 2017, the
Company separately reported "Gain
(Loss) on sales of loans" and "Net
fair value adjustments" from
"Other revenue (expense)." These
changes had no impact on "Total
net revenue." Prior period amounts
have been reclassified to conform
to the current period
presentation.
(2) Includes stock-based compensation
expense as follows:
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2018 2017 2018 2017
---- ---- ---- ----
Sales and marketing $2,023 $1,967 $3,883 $4,266
Origination and servicing 1,102 1,354 2,174 2,770
Engineering and product development 5,464 5,773 10,743 12,361
Other general and administrative 11,208 9,994 20,798 19,189
------ ------
Total stock-based compensation expense $19,797 $19,088 $37,598 $38,586
====================================== ======= ======= ======= =======
LENDINGCLUB CORPORATION
OPERATING HIGHLIGHTS
(In thousands, except percentages and number of employees, or as noted)
(Unaudited)
June 30, 2018
Three Months Ended % Change
June 30, March 31, December 31, September 30, June 30, Q/Q Y/Y
2018 2018 2017 2017 2017
---- ---- ---- ---- ----
Operating Highlights:
Loan originations (in millions) $2,818 $2,306 $2,438 $2,443 $2,147 22% 31%
Net revenue $176,979 $151,667 $156,455 $154,030 $139,573 17% 27%
Consolidated net loss $(60,812) $(31,180) $(92,098) $(6,659) $(25,444) 95% 139%
Contribution (1) (2) $85,416 $74,436 $75,351 $75,908 $66,028 15% 29%
Contribution margin (1) (2) 48.3% 49.1% 48.2% 49.3% 47.3% (2)% 2%
Adjusted EBITDA (1) (2) $25,670 $15,333 $19,048 $20,895 $4,483 67% N/M
Adjusted EBITDA margin (1) (2) 14.5% 10.1% 12.2% 13.6% 3.2% 44% N/M
EPS - diluted $(0.14) $(0.07) $(0.22) $(0.02) $(0.06) 100% 133%
Adjusted EPS - diluted (1) $0.03 $0.01 $0.01 $0.03 $(0.01) N/M N/M
Originations by Investor Type:
Managed accounts 19% 20% 26% 24% 31%
Self-directed 7% 10% 10% 10% 13%
Banks 40% 48% 36% 42% 44%
LendingClub inventory (3) 18% 9% 11% 9% - %
Other institutional investors 16% 13% 17% 15% 12%
--- --- --- --- ---
Total 100% 100% 100% 100% 100%
===== === === === === ===
Originations by Program:
Personal loans - standard program 74% 76% 74% 73% 72%
Personal loans - custom program 18% 15% 17% 18% 18%
Other - custom program (4) 8% 9% 9% 9% 10%
------------------------- --- --- --- --- ---
Total 100% 100% 100% 100% 100%
===== === === === === ===
Personal Loan Originations by Loan Grade - Standard Loan Program (in millions):
A $506.0 $414.6 $364.7 $279.7 $242.1 22% 109%
B 610.2 524.5 555.3 487.4 416.7 16% 46%
C 575.4 474.8 504.4 639.8 558.2 21% 3%
D 296.3 248.0 278.3 229.4 190.0 19% 56%
E 70.3 63.3 79.6 90.8 82.7 11% (15)%
F 18.4 14.0 24.6 28.6 32.8 31% (44)%
G 3.9 2.6 10.5 35.5 15.9 50% (75)%
Total $2,080.5 $1,741.8 $1,817.4 $1,791.2 $1,538.4 19% 35%
===== ======== ======== ======== ======== ========
N/M Not meaningful.
(1) Represents a non-GAAP measure. See
"Reconciliation of GAAP to Non-GAAP
Measures."
(2) Beginning in the third quarter of
2017, contribution and adjusted
EBITDA exclude (income) loss
attributable to noncontrolling
interests. Prior period amounts have
been reclassified to conform to the
current period presentation.
Additionally, beginning in the
fourth quarter of 2017, adjusted
EBITDA excludes legal and regulatory
expense related to outstanding
legacy issues.
(3) Beginning in the third quarter of
2017, the Company introduced
"LendingClub inventory" as a new
line item presented to separately
show the percentage of loan
originations in the period that were
purchased by the Company during the
period and not yet sold as of the
period end.
(4) Comprised of education and patient
finance loans, auto refinance loans,
and small business loans.
LENDINGCLUB CORPORATION
OPERATING HIGHLIGHTS (Continued)
(In thousands, except percentages and number of employees, or as noted)
(Unaudited)
June 30, 2018
Three Months Ended % Change
June 30, March 31, December 31, September 30, June 30, Q/Q Y/Y
2018 2018 2017 2017 2017
---- ---- ---- ---- ----
Servicing Portfolio by Method Financed (in millions, at end of period):
Notes 1,428 1,518 1,608 1,683 1,740 (6)% (18)%
Certificates 967 1,125 1,291 2,020 2,281 (14)% (58)%
Secured borrowings 143 187 243 - - (24)% N/M
Whole loans sold 9,512 8,571 8,178 7,627 7,081 11% 34%
Loans invested in by the Company 523 581 593 175 49 (10)% N/M
Total 12,573 11,982 11,913 11,505 11,151 5% 13%
===== ====== ====== ====== ====== ======
Employees and contractors (5) 1,779 1,812 1,837 1,779 1,627 (2)% 9%
N/M Not meaningful.
(5) As of the end of each
respective period.
LENDINGCLUB CORPORATION
Condensed Consolidated Balance Sheets
(In Thousands, Except Share and Per Share Amounts)
(Unaudited)
June 30, December 31,
2018 2017
---- ----
Assets
Cash and cash equivalents $434,179 $401,719
Restricted cash 221,688 242,570
Securities available for sale 149,804 117,573
Loans held for investment at fair value 2,358,629 2,932,325
Loans held for investment by the Company at fair value 9,621 361,230
Loans held for sale by the Company at fair value 515,307 235,825
Accrued interest receivable 26,635 33,822
Property, equipment and software, net 110,895 101,933
Intangible assets, net 19,929 21,923
Goodwill - 35,633
Other assets 102,396 156,278
------------ -------
Total assets $3,949,083 $4,640,831
============ ========== ==========
Liabilities and Equity
Accounts payable $13,841 $9,401
Accrued interest payable 23,609 32,992
Accrued expenses and other liabilities 200,098 228,380
Payable to investors 111,003 143,310
Notes, certificates and secured borrowings at fair value 2,377,080 2,954,768
Payable to securitization note and residual certificate holders (includes $1,479 at fair value as of
December 31, 2017) - 312,123
Payable to credit facilities 349,232 32,100
Total liabilities 3,074,863 3,713,074
----------------- --------- ---------
Equity
Common stock, $0.01 par value; 900,000,000 shares authorized; 425,466,820 and 419,756,546 shares issued,
respectively; 423,184,120 and 417,473,846 shares outstanding, respectively 4,255 4,198
Additional paid-in capital 1,368,100 1,327,206
Accumulated deficit (481,461) (389,419)
Treasury stock, at cost; 2,282,700 shares (19,485) (19,485)
Accumulated other comprehensive loss (393) (5)
------------------------------------ ---- ---
Total LendingClub stockholders' equity 871,016 922,495
-------------------------------------- ------- -------
Noncontrolling interests 3,204 5,262
------------------------
Total equity 874,220 927,757
------------ ------- -------
Total liabilities and equity $3,949,083 $4,640,831
============================ ========== ==========
LENDINGCLUB CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In thousands, except percentages and per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, March 31, December 31, September 30, June 30, June 30, June 30,
2018 2018 2017 2017 2017 2018 2017
---- ---- ---- ---- ---- ---- ----
Contribution reconciliation:
Consolidated net loss $(60,812) $(31,180) $(92,098) $(6,659) $(25,444) $(91,992) $(55,288)
Engineering and product development expense 37,650 36,837 37,926 32,860 35,718 74,487 71,478
Other general and administrative expense 57,583 52,309 48,689 46,925 52,495 109,892 96,069
Class action settlement and regulatory litigation expense 12,262 13,500 77,250 - - 25,762 -
Stock-based compensation expense 3,125 2,932 2,782 2,640 3,321 6,057 7,036
Income tax expense (benefit) 24 39 711 13 (52) 63 (92)
(Income) Loss attributable to noncontrolling interests (49) (1) 91 129 (10) (50) (10)
------------------------------------------------------ --- --- --- --- --- --- ---
Contribution (1) $85,416 $74,436 $75,351 $75,908 $66,028 $159,852 $119,193
=============== ======= ======= ======= ======= ======= ======== ========
Total net revenue $176,979 $151,667 $156,455 $154,030 $139,573 $328,646 $264,055
Contribution margin (1) 48.3% 49.1% 48.2% 49.3% 47.3% 48.6% 47.1%
---------------------- ---- ---- ---- ---- ---- ---- ----
Adjusted EBITDA reconciliation:
Consolidated net loss $(60,812) $(31,180) $(92,098) $(6,659) $(25,444) $(91,992) $(55,288)
Acquisition and related expense (2) - - - - 56 - 349
Depreciation and impairment expense:
Engineering and product development 10,197 9,247 11,487 9,026 8,483 19,444 16,277
Other general and administrative 1,420 1,419 1,281 1,246 1,305 2,839 2,603
Amortization of intangible assets 959 1,035 1,035 1,034 1,057 1,994 2,219
Goodwill impairment 35,633 - - - - 35,633 -
Legal and regulatory expense related to legacy issues (3) 18,501 16,973 80,250 - - 35,474 -
Stock-based compensation expense 19,797 17,801 16,291 16,106 19,088 37,598 38,586
Income tax expense (benefit) 24 39 711 13 (52) 63 (92)
(Income) Loss attributable to noncontrolling interests (49) (1) 91 129 (10) (50) (10)
------------------------------------------------------ --- --- --- --- --- --- ---
Adjusted EBITDA (1) $25,670 $15,333 $19,048 $20,895 $4,483 $41,003 $4,644
================== ======= ======= ======= ======= ====== ======= ======
Total net revenue $176,979 $151,667 $156,455 $154,030 $139,573 $328,646 $264,055
Adjusted EBITDA margin (1) 14.5% 10.1% 12.2% 13.6% 3.2% 12.5% 1.8%
------------------------- ---- ---- ---- ---- --- ---- ---
(1) Beginning in the third quarter of
2017, contribution and adjusted
EBITDA exclude (income) loss
attributable to noncontrolling
interests. Prior period amounts
have been reclassified to conform
to the current period
presentation.
(2) Represents amounts related to costs
for due diligence related to past
business acquisitions, including
those the Company reviewed and
determined not to pursue a
transaction, as well as
incremental compensation expense
required to be paid under the
purchase agreement to retain key
former shareholder employees of an
acquired business.
(3) Includes expense related to
outstanding legacy issues. The
second quarter of 2018 and the
fourth quarter of 2017 also
include class action settlement
expense. Amounts prior to the
fourth quarter of 2017 have not
been reclassified because legacy
legal expenses incurred in 2017
and prior were generally offset by
insurance proceeds, resulting in
no net material cumulative impact
to earnings.
LENDINGCLUB CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (Continued)
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, March 31, December 31, September 30, June 30, June 30, June 30,
2018 2018 2017 2017 2017 2018 2017
---- ---- ---- ---- ---- ---- ----
Adjusted net loss reconciliation:
LendingClub net loss $(60,861) $(31,181) $(92,007) $(6,530) $(25,454) $(92,042) $(55,298)
Acquisition and related expense (1) - - - - 56 - 349
Stock-based compensation expense 19,797 17,801 16,291 16,106 19,088 37,598 38,586
Amortization of acquired intangible assets 959 1,035 1,035 1,034 1,057 1,994 2,219
Goodwill impairment 35,633 - - - - 35,633 -
Legal and regulatory expense related to legacy issues (2) 18,501 16,973 80,250 - - 35,474 -
Adjusted LendingClub net income (loss) $14,029 $4,628 $5,569 $10,610 $(5,253) $18,657 $(14,144)
===================================== ======= ====== ====== ======= ======= ======= ========
Adjusted EPS - diluted $0.03 $0.01 $0.01 $0.03 $(0.01) $0.04 $(0.04)
Non-GAAP diluted shares reconciliation:
GAAP diluted shares (3) 421,194 418,299 416,005 412,779 406,677 419,755 403,510
Other dilutive equity awards (4) - - - - - - -
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Non-GAAP diluted shares 421,194 418,299 416,005 412,779 406,677 419,755 403,510
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(1) Represents amounts related to costs
for due diligence related to past
business acquisitions, including
those the Company reviewed and
determined not to pursue a
transaction, as well as
incremental compensation expense
required to be paid under the
purchase agreement to retain key
former shareholder employees of an
acquired business.
(2) Includes expense related to
outstanding legacy issues. The
second quarter of 2018 and the
fourth quarter of 2017 also
include class action settlement
expense. Amounts prior to the
fourth quarter of 2017 have not
been reclassified because legacy
legal expenses incurred in 2017
and prior were generally offset by
insurance proceeds, resulting in
no net material cumulative impact
to earnings.
(3) Equivalent to the basic and diluted
shares reflected in the quarterly
EPS calculations.
(4) Other dilutive equity awards
include assumed exercises of
unvested stock options, net of
assumed repurchases computed under
the treasury method, which were
excluded from GAAP net loss per
share as their impact would have
been anti-dilutive.
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SOURCE LendingClub Corporation
