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LendingClub posts fourth straight quarter of loss, improves outlook

Published 05/04/2017, 07:42 PM
© Reuters. Lending Club banner hangs on the facade of the the New York Stock Exchange

By Anna Irrera and Sruthi Shankar

(Reuters) - Online lender LendingClub Corp raised its revenue forecast for the full year as it reported its fourth straight quarterly loss on Thursday, almost a year after a scandal involving its business practices.

The San Francisco-based company has been trying to move on from the issues that emerged in May 2016, including the sale of loans to a large investor, that led to the ouster of then-Chief Executive and founder Renaud Laplanche.

On Thursday, LendingClub finance chief Tom Casey forecast the company would generate full-year revenue of between $575 million and $595 million, up from his earlier forecast of $565 million to $595 million.

Analysts had forecast revenue of $590 million, according to Thomson Reuters I/B/E/S.

For the first quarter, the company reported a loss of 2 cents per share on an adjusted basis. Analysts had expected a loss of 3 cents per share, according to Thomson Reuters I/B/E/S.

Net operating revenue fell 18.3 percent to $124.5 million, above the average analyst expectation of $122.8 million.

LendingClub shares fell 3 percent to $5.90 in after-hours trading

LendingClub, one of the largest peer-to-peer lenders, runs a website where consumers apply for loans funded by individual or institutional investors.

Over the past year it has made large investments to fix flaws and regain the trust of investors, including improvements to its technology, underwriting and pricing models.

Still, its loan originations fell significantly in the past quarter as operating expenses grew 4.3 percent to $154.37 million.

The company originated $1.96 billion in loans in the first quarter, a 29 percent drop from a year earlier, and a 1 percent fall from the last three months of 2016.

Problems emerged for LendingClub last year when it acknowledged it altered documentation when selling $22 million in loans to investment bank Jefferies Group. The loans were later repurchased by LendingClub.

Banks who had stopped purchasing loans on the platform in the wake of the scandal have since returned to buying them through LendingClub, the company said.

Banks funded 40 percent of total originations for the quarter, up from 31 percent in the last three months of 2016.

Chief Executive Scott Sanborn said in an interview on Thursday the company expected its recovery efforts to produce results this quarter.

© Reuters. Lending Club banner hangs on the facade of the the New York Stock Exchange

"We said we were planning to return to growth on the one year anniversary (from the departure of Laplanche) and we continue to maintain that plan," Sanborn said.

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