LendingClub (LC) Stock Down On Q4 Loss, Disappointing View

Shares of LendingClub Corporation LC declined 4.7% following the release of its fourth-quarter and 2016 results. The company reported loss per share of 8 cents in the quarter, against earnings of 1 cent recorded in the prior-year quarter. The Zacks Consensus Estimate was loss of 9 cents.

Results in the reported quarter included several significant items. Including these, net loss on a GAAP basis came in at $32.3 billion as against net income of $4.6 million in the year-ago quarter.

For 2016, loss was 38 cents per share compared with loss of 1 cent in 2015. On GAAP basis, net loss was $146 million, wider than the net loss of $5 million in the prior year.

 

Lower Revenues, Rise in Costs Hurt Bottom Line

Total net revenue fell 3.7% year over year to $130.5 million in the reported quarter. The fall was due to a decrease in all revenue components, except servicing fees. However, the figure outpaced the Zacks Consensus Estimate of $122 million.

For 2016, total net revenue was $500.8 million, an increase of 16.5% from 2015.

Total operating expenses were $163.0 million, a jump of 25% from the prior-year quarter. The increase was triggered by rise in all expense components.

Adjusted loss before interest, taxes, depreciation, and amortization totaled $2.2 million, as against adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $24.6 million in the prior-year quarter.

In the reported quarter, loan originations were $1.99 billion, down 23% from the year-ago quarter.

As of Dec 31, 2016, cash and cash equivalents were $516 million, down nearly 1% from the prior quarter. Further, loans were down 2.3% sequentially to $4.31 billion. Total stockholders' equity summed $976 million, relatively stable from the Sep 30, 2016 level.

Guidance

Based on the information available as of Feb 14, 2017, LendingClub provided the following outlook:

First-quarter 2017
 

  • Total net revenue in the range of $117–$122 million
  • Adjusted loss before interest, taxes, depreciation, and amortization in the range of $10–$5 million
  • Net loss in the range of $43–$38 million

2017
 

  • Total net revenue in the range of $565–$595 million
  • Adjusted EBITDA in the range of $40–$55 million
  • Net loss in the range of $84–$69 million

Our Take

Results reflect the turmoil faced by the company during 2016. Also, given the lower volumes of loan in the reported quarter and dismal outlook for first-quarter 2017, it is expected that the headwinds shall continue hurting the company’s financials.

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.

Some stocks in the same industry like Square, Inc. SQ, PRA Group, Inc. PRAA and MoneyGram International, Inc. MGI are expected to announce their results on Feb 22, Feb 28 and Mar 16, respectively.

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