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LendingClub could see GAAP profitability by end of FY'17, executives say

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LendingClub could see GAAP profitability by end of FY'17, executives say

LendingClub Corp. executives said the company could see GAAP profitability toward the end of 2017.

The digital lending company has posted a series of quarterly GAAP net losses since the first quarter of 2016, but LendingClub CEO Scott Sanborn expects the third quarter to be the company's biggest revenue quarter in its history.

"LendingClub is back," Sanborn said during a second-quarter earnings conference call with investors. "Back to our growth trajectory, back to executing on our vision and back to focusing on delivering value for our customers."

Macroeconomic factors were favorable to the company in the second quarter, with low unemployment rates, interest rates and oil prices, along with an increase in consumer confidence and household formation, Sanborn said. At the same time, the company saw near all-time highs in credit card, auto and student loan debt levels.

For the third quarter, LendingClub expects total net revenue of $154 million to $159 million, a net loss of $12 million to $8 million and adjusted EBITDA to range between $18 million and $22 million. For the full year, the company expects to see total net revenue of $585 million to $600 million, a full-year net loss of $69 million to a net loss of $61 million and adjusted EBITDA of $50 million to $58 million.

The company launched its loan securitization effort in the second quarter, during which LendingClub saw about $3.7 million in total revenue related to its securitization efforts, CFO Thomas Casey said on the call. The company said net revenue as a percent of originations was up 14 basis points sequentially to 6.50% thanks to the securitization program's revenue.

LendingClub is hoping to have at least one prime securitization per quarter, and expects to bring in somewhere in the $100 million range per quarter, Sanborn said. The company expects to build out its securitization platform to become a "predictable program that we can come to market each quarter," Casey said.

"This is an extension of our existing platform," Sanborn said. "Investors like the fact that we're putting skin in the game, and it's generating a new revenue stream for us that we can benefit from."