Lendingclub Corporation · NYSE:LC
Lendingclub — Non-Deal Roadshow (June 2019)
40 slides from Lendingclub's roadshow presentation, Jun 19, 2019
Slide 1: Investor Roadshow Presentation Summer 2019
Exhibit 99.1 Investor Roadshow Presentation Summer 2019
Slide 2: Disclaimer
Disclaimer Some of the statements in this presentation, including statements regarding expected performance, are “forward-looking statements.” The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “outlook,” “plan,” “predict,” “project,” “will,” “would” and similar expressions ma
Slide 3: Summary
Summary LendingClub provides tools that help Americans save money on their path to financial health through lower borrowing costs and a seamless user experience. We also seek to help investors efficiently generate competitive risk-adjusted returns through diversification. The company is the market l
Slide 4: We provide tools that help Americans save money on their path to financial health
We provide tools that help Americans save Our Mission money on their path to financial health 3-year loan comparison: LendingClub personal loan vs. credit card ($10K starting balance) Credit Card MinimumPayments Only2 3-Year Pay Down3 Interest and Fees1 ~$5,900 ~$4,000 ~$3,100 Ending Balance ~$7,000
Slide 5: We help investors efficiently generate competitive risk-adjusted returns through diversification
We help investors efficiently generate competitive Our Mission risk-adjusted returns through diversification… Return vs. Duration 8% as of December 31, 2018 US Corporate High Yield 7% 1-5 Year US Corporate Unique higher-yielding/ High Yield short-duration asset 6% LendingClub* class can help provide
Slide 6: ...and by delivering competitive risk-adjusted returns
…and by delivering Our Mission competitive risk-adjusted returns 1-Year 3-Years 5-Years LendingClub Prime Loans* 4.15% 4.73% 5.87% Treasuries 0.86% 1.40% 2.01% 1-3 Year Treasuries 1.56% 0.95% 0.81% US Aggregate 0.01% 2.06% 2.52% 1-5 Year US Aggregate 1.37% 1.44% 1.42% US IG Corporate -2.51% 3.26% 3.
Slide 7: A $445B+ potential immediate market opportunity
Our Market A $445B+ potential immediate market opportunity ~$1.04T $670B $445B Transactor / Outside target low-rate / low-balance credit profile Remaining opportunity Interest-earning Within target ~3% balances credit profile LC penetration of immediate opportunity Card and personal loan Interest-ea
Slide 8: LendingClub has gained share in a growing market
Our Market LendingClub has gained share in a growing market Unsecured Personal Loan Originations $103 (in $ billions) 2x $87 $80 $75 $58 $47 2013 2014 2015 2016 2017 2018 4% LendingClub Share 10% See Sources/Notes on page 30 for important information relating to this page. 8
Slide 9: A market leading online marketplace, which benefits from network effects
A market leading online marketplace, Our Model which benefits from network effects Borrowers Investors Application Capital 3M+ 200k+ Mainstream Consumers1 Self-directed individuals 600-850 80+ FICO Range2 Managed Accounts $68K Loan Loan 60+ Median Income3 Banks 12.7% 90+ Loan Proceeds Purchase Avera
Slide 10: Customer satisfaction demonstrated by high Net Promoter Score (NPS)
Customer satisfaction demonstrated by Our Model high Net Promoter Score (NPS) See Sources/Notes on page 30 for important information relating to this page. 10
Slide 11: A diverse range of investor types on the platform
A Resilient Model A diverse range of investor types on the platform… 2010 2014 2018 $102.2M originations facilitated $4.4B originations facilitated $10.9B originations facilitated <10 Banks and Other Institutional >70 Banks and Other Institutional >230 Banks and Other Institutional <30K Self-directe
Slide 12: Enabled by product and channel innovation
A Resilient Model …enabled by product and channel innovation 2010 2014 2018 Block Trades and Whole Loans Fractional Loans Structured Programs1 See Sources/Notes on page 30 for important information relating to this page. 12
Slide 13: Helping our borrowers improve their financial health expands our market opportunity
Helping our borrowers improve their Our Strategy financial health expands our market opportunity Visitor to Member Product to Platform Develop products Unleash our tech and tools focused on and data-driven improving our marketplace model members’ financial beyond owned products. health. 13
Slide 14: Visitor to Member means...
Our Strategy Visitor to Member means… Relationship- Driven Benefits. Supportive Community. People Helping People. Personalization. 14
Slide 15: Product to Platform means...
Our Strategy Product to Platform means… Financial Services Marketplace Unleash our tech and data-driven Personal marketplace model Loans beyond owned Lender products. Product Platform Marketplace Model The marketplace model strengthens our business and enables member benefits. 15
Slide 16: We're helping millions of Americans take an active role in improving their financial health
We’re helping millions of Americans take an Our Impact active role in improving their financial health Acquiring a loan I am saving With LendingClub, through you guys thousands of not only are we was painless and dollars and now going to be alright, stress-free. have no credit card we’re going to de
Slide 17: Our Competitive Advantages: Marketing efficiency
Our Competitive Marketing efficiency – our broad range of investors enables us to serve a broad spectrum of borrowers, which means Advantages we can monetize more of our marketing dollars Other Banks Retail Managed Institutional Competitors SP SP SP SP ✓ ✓ A A A A ✓ ✓ Typical bank competitor B B B B
Slide 18: Our Competitive Advantages: Cost of capital
Our Competitive Cost of capital – Our bank partners have a low cost of capital, enabling us to offer low rates and savings to borrowers while Advantages delivering competitive risk-adjusted returns to investors Cost of Deposits 2.3% 0.9% 0.7% Typical LC partner bank Typical national bank Typical onl
Slide 19: Our Competitive Advantages: Data, scale, and innovation
Our Competitive Data, scale, and innovation enable us to generate and convert demand efficiently while managing price and Advantages credit risk effectively Loans approved within 24 hours Personal loan volumes (as % of total loans approved) 100% 70% 90% 60% 80% 50% 70% 60% 40% 50% 30% 40% 20% 30% 20
Slide 20: Simplifying & Transforming LendingClub
Simplifying & Transforming Innovation, simplification program, and LendingClub focus on partnerships are transforming LendingClub Innovation, simplification program, and partnerships are transforming LendingClub. ▪ Data driven innovation is growing applications (up 31% year-over-year in Q1 2019), ac
Slide 21: Growing Margins, Boosted by Simplification Program
Growing Margins, Boosted by Simplification Program 2016 2017 2018 2019 Guidance* (mid-point) 20% $125 $150 $98 $100 15% $45 $50 10% $0 ($13) 5% ($27) ($50) ($100) 0% ($128) ($150) ($146) ($154) -5% ($200) GAAP Net income ($m) Adjusted EBITDA** ($m) Adjusted EBITDA margin (%) *Guidance excludes certa
Slide 22: An Important Profitability Inflection Point
An Important Targeting Adjusted Net Income profitability Inflection Point over H2 2019 Adjusted Net Income (Loss), $m 0 -10 -20 -30 -40 -50 -60 H1 17 H2 17 H1 18 H2 18 H1 19 H2 19 2019 Guidance* *Guidance excludes certain expenses that are either non-recurring or unusual in nature. Full year guidanc
Slide 23: Valuation Considerations
Valuation Net cash and other financial assets; Considerations Valuation allowance (Net Operating Losses) ($ in thousands) (Unaudited) Dec. 31, 2018 (in millions, except per share amounts) Dec. 31, 2018 Cash and loans held for investment by the Company Valuation allowance $169.3 422.9 Cash and cash e
Slide 24: FTC Blog Post Updates
FTC Blog Post Updates READ MORE > READ MORE > See Sources/Notes on page 32 for important information relating to this page. 24
Slide 25: Additional information, Sources/Notes and Appendices
Additional information, Sources/Notes and Appendices
Slide 26: 2018 Full Year Highlights
2018 Full Year Highlights Strong momentum in dynamic market. ▪ Record loan origination volume ($10.9B) and record net revenue ($694.8M) ▪ Record Adjusted EBITDA* ($97.5M) up 119% from 2017, with EBITDA margins of 14.0%, up from 7.8% in 2017 ▪ Record customers served; 58% within 24 hours in 2018, up
Slide 27: Meeting Our 2018 Goals
Meeting Our 2018 Goals Strategic Targets 2018 Strategic Goals Status Accelerate personal loan growth while prudently managing credit. Invest in auto and leverage secured capabilities for personal loans. Strengthen our investor franchise by expanding securitizations and growing new structures. Addres
Slide 28: Meeting Our Goals
Meeting Our Goals Guidance** Full Year Mid-Point 2018 Results Net Revenue $692.5M $694.8M GAAP Consolidated Net Loss n/a $(128.2M) Contribution Margin* 47.5% 48.8% Adjusted EBITDA $82.5M $97.5M Adjusted EBITDA Margin 11.9% 14.0% Adjusted Net Loss $(45.5M)** $(32.4M)1 *Contribution is calculated as n
Slide 29: Sources/Notes
Sources/Notes Page # Data Source(s) 3 $445bn estimated potential immediate addressable market opportunity TransUnion data as of 1Q2019, TransUnion custom analysis and LendingClub analysis 4 Notes: 1) Borrowers who received a loan via LendingClub to consolidate existing debt or pay off their credit c
Slide 30: Sources/Notes
Sources/Notes Page # Data Source(s) 8 Unsecured personal loan originations # TransUnion LendingClub share LendingClub data and analysis 9 Notes: 1) Across all products. Mainstream customer means a customer who uses our mainstream product (i.e., unsecured personal loans). 2) FICO range reflects Lendi
Slide 31: Sources/Notes
Sources/Notes Page # Data Source(s) 18 Cost of deposits LendingClub analysis Fed Fund “Effective Federal Funds Rate” by Fed: https://fred.stlouisfed.org/series/FEDFUNDS Credit Card Rate “Commercial Bank Interest Rate on Credit Card Plans, All Accounts” by Fed: https://fred.stlouisfed.org/series/TERM
Slide 32: Sources/Notes
Sources/Notes Page # Data Source(s) 23 Notes: 1) Comparable GAAP measure cannot be provided as not practicable. Net cash and other financial assets LendingClub Form 10-Q, for the quarterly period ended March 31, 2019, p. 73: https://ir.lendingclub.com/Cache/397858348.pdf Net valuation allowance per
Slide 33: Appendix A - Disclaimer
Appendix A - Disclaimer LendingClub Prime Loan returns are calculated by Brismo according to the methodology found here: (https://www.altfidata.com/methodology-guide/), and investors should make their own assessment of reliability of third-party data. Brismo verified performance is provided for info
Slide 34: Appendix B Financial Reconciliations
Appendix B Financial Reconciliations 34
Slide 35: Reconciliation of GAAP to Non-GAAP Financial Guidance
Reconciliation of GAAP to Non-GAAP Financial Guidance (1) Year Ended Three Months Ended (in millions) 2019 1Q 2019 GAAP Consolidated net loss (2) $(29) - $(9) $(20) - $(15) Adjusted net loss (2) $(29) - $(9) $(20) - $(15) Stock-based compensation expense 81 18 Depreciation, amortization and other ne
Slide 36: Reconciliation of GAAP to Non-GAAP Financial Guidance
Reconciliation of GAAP to Non-GAAP Financial Guidance (1) Year Ended Three Months Ended (in millions) 2019 2Q 2019 GAAP Consolidated net loss (2) $(37) - $(17) $(11) - $(6) Cost structure simplification expense (3) 4 — Legal, regulatory and other expense related to legacy issues (4) 4 — Adjusted net
Slide 37: Adjusted EBITDA Definition and Reconciliation
Adjusted EBITDA Definition and Reconciliation Adjusted EBITDA is a non-GAAP financial measure that we calculate as net income (loss) before depreciation, impairment and amortization expense, stock-based compensation expense, income tax expense (benefit), acquisition related expenses, cost structure
Slide 38: Contribution Reconciliation & Definition
Contribution Reconciliation & Definition Contribution is a non-GAAP financial measure that we calculate as net revenue less “sales and marketing” and “origination and servicing” expenses on the Company’s Statements of Operations, adjusted to exclude cost structure simplification and non-cash stock-b
Slide 39: Contribution as a Percent of Originations
Contribution as a Percent of Originations Contribution is a non-GAAP financial measure that we calculate as net revenue less “sales and marketing” and “origination and servicing” expenses on the Company’s Statements of Operations, adjusted to exclude cost structure simplification and non-cash stock-
Slide 40: LendingClub
= LendingClub