Lendingclub Corporation · NYSE:LC
Lendingclub — Q2 2020 Earnings Presentation
25 slides from Lendingclub's earnings presentation, Aug 4, 2020
Slide 1: Second Quarter 2020 Results
Second Quarter 2020 Results August 4, 2020
Slide 2: Disclaimer
Disclaimer Some of the statements in this presentation, including statements regarding the ability and timing to satisfy the closing conditions for the Radius acquisition (including obtaining regulatory approval), our ability to effectuate and the effectiveness of certain strategy initiatives, borro
Slide 3: 2020 Updates & Approach
2020 Updates & Approach == LendingClub
Slide 4: Macroeconomic Backdrop
Macroeconomic Backdrop COVID-19 has continued its impact on the US economy ▪ Continued macroeconomic uncertainty driven by resurgence of cases across the US, and resulting effects on state re-openings ▪ Unemployment is down from its peak, but job losses continue to remain high ▪ Peak job losses to d
Slide 5: Executing well against guiding principles
Executing well against 5 guiding principles 1 Keep Our Employees Safe 3 Protect Investor Returns ▪ Pre-COVID-19 vintages demonstrating resilience, with ▪ Employees continue to work from home productively and will have expected 3% returns for the most recent vintages the option to remain at home at l
Slide 6: Strong liquidity position
Strong liquidity position Maintaining strong cash and liquidity to maximize flexibility and prepare for bank capitalization LendingClub Exposure & Liquidity as of : 6/30/20 vs. 3/31/20 Assets & Liabilities ($MM)6 Cash & Cash Equivalents1 AFS – Securities2 AFS – Retained Interest2 Loans Held for Sale
Slide 7: Executed previously announced $70M cost reductions
Executed previously announced $70M1 cost reductions Ongoing cash operating expenses resized to be in-line with cash revenue to minimize impact on liquidity Variable Expense Savings ($50M)1 Restructuring Savings ($20M)1 ▪ Eliminated most marketing expenses ▪ Reduced staff by approximately 460 employe
Slide 8: Our shift to higher quality credit has improved the average borrower profile
Our shift to higher quality credit has improved the average borrower profile Prime Portfolio 2019 Q2 2020 Avg. FICO 708 721 Avg. Income1 $93,221 $107,589 Avg. Payment-to-Income 7.2%2 6.3% Joint Application % 17% 21% 1) Represents income of the average borrower, which could include more than one indi
Slide 9: Loan performance continues to improve
Loan performance continues to improve % of Loan Portfolio1 on Delinquency Rates2 for Non-Hardship Hardship Plans has come Portfolio has improved beyond ▪ Payment deferral requests declining, down from 12% to below 5% Pre-COVID-19 levels from 5.3% to 2.7% now below 5% of total loans at the end 14% of
Slide 10: Near-Term Outlook
Near-Term Outlook We expect our near-term financial results to reflect the following trends: ▪ Loan volumes remain modest but are recovering from the bottom as 5 of the top 10 investors have returned ▪ Selling assets on the balance sheet to maintain strong cash and liquidity to maximize flexibility
Slide 11: 2Q 2020 Results & Financial Metrics
2Q 2020 Results & Financial Metrics
Slide 12: LendingClub Platform Investors
LendingClub Platform Investors Move away from capital markets activities drove investor mix shift Platform Originations by Funding Source1 (As a % of total platform originations) 21% 20% 17% Other Institutional 25% Investors Banks 68% 38% 32% 43% 45% Managed Accounts Self-directed Investors 15% 17%
Slide 13: Loan Originations & Revenue
Lower revenue driven by lower Loan Originations & Revenue originations, partially offset by servicing and interest income Quarterly Loan Originations1 Quarterly Total Net Revenue1 ($ in millions) ($ in millions) Net Investor Revenue 204.9 Other Revenue Personal loans - standard 3,350 2 190.8 188.5 T
Slide 14: Contribution
Contribution dollars impacted by lower revenue; Contribution2 Contribution Margin remained at historical levels due to significant reduction of variable expenses Quarterly expenses impacting Contribution Margin1 Quarterly Contribution Margin1,2 ($ in millions) ($ in millions) 105.8 99.1 99.6 101.3 O
Slide 15: Adjusted EBITDA Margin
Adjusted EBITDA impacted by lower Adjusted EBITDA Margin2 revenue, partially offset by lower operating expenses Quarterly Expenses impacting Adjusted EBITDA Margin1 Quarterly Adjusted EBITDA1, 2 ($ in millions) ($ in millions) 66.4 65.8 62.3 59.7 Engineering & 40.0 39.0 Product 26.0 25.2 49.0 33.2 2
Slide 16: Adjusted Net Income (Loss)
Adjusted Net Income (Loss)2 Quarterly Expenses impacting Adjusted Net Income (Loss)1 Quarterly Adjusted Net Income (Loss)1, 2 ($ in millions) ($ in millions) 34.4 32.1 32.0 31.3 8.0 7.0 Depreciation, 26.7 amortization, & 13.9 (1.2) other net 14.0 15.3 13.2 adjustments 12.4 Stock-based 20.6 18.1 18.1
Slide 17: $14B servicing portfolio drove +$44M in cash from investor fees in 2Q20
$14B servicing portfolio drove +$44M in cash from investor fees in 2Q20 Servicing Portfolio Balance1 Adjusted Investor Fee Revenue2 ($ in millions) ($ in thousands) Adjusted Investor Fees % of Servicing Portfolio (Average) $16,011 $15,975 $15,522 $14,808 $51,362 $13,962 $48,471 $47,110 $44,315 $44,3
Slide 18: Appendix: Financial Reconciliations
Appendix: Financial Reconciliations
Slide 19: GAAP to Non-GAAP Reconciliation: Operating Expenses
GAAP to Non-GAAP Reconciliation: Operating Expenses Year Ended Dec. 31, Three Months Ended Six Months Ended (in thousands, except percentages) (unaudited) 2018 2019 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 2Q19 2Q20 Total net revenue $ 694,812 $ 758,607 $ 184,645 $ 181,521 $ 174,418 $ 190,807 $ 204,8
Slide 20: 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, restructuring costs
Slide 21: Contribution as a Percent of Originations
Contribution as a Percent of Originations Year Ended Dec. 31, Three Months Ended Six Months Ended (in thousands, except percentages or as noted) (unaudited) (1) 2018 2019 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 2Q19 2Q20 Loan originations ($ mm) $ 10,882 $ 12,290 $ 2,886 $ 2,871 $ 2,728 $ 3,130 $ 3,
Slide 22: Adjusted Net Income (Loss), Adjusted EBITDA, and Adjusted EBITDA Margin Reconciliation
Adjusted Net Income (Loss), Adjusted EBITDA, and Adjusted EBITDA Margin Reconciliation Adjusted Net Income (Loss) is a non-GAAP financial measure defined as net income (loss) attributable to LendingClub adjusted to exclude certain items that are either non-recurring, do not contribute directly to ma
Slide 23: Adjusted EPS Reconciliation
Adjusted EPS Reconciliation Adjusted EPS is a non-GAAP financial measure calculated by dividing Adjusted Net Income (Loss) attributable to both common and preferred stockholders by the weighted-average diluted common and preferred shares outstanding. Year Ended Dec. 31, Three Months Ended Six Months
Slide 24: Net Cash and Other Financial Assets
Net Cash and Other Financial Assets Net cash and other financial assets is calculated as cash and certain other assets and liabilities, including loans and securities available for sale, which are partially secured and offset by related credit facilities, and working capital. Three Months Ended (in
Slide 25: LendingClub
= LendingClub