LendingClub Reports Third Quarter 2018 Results

Record Loan Origination Volume and Record Net Revenue

PR Newswire

SAN FRANCISCO, Nov. 6, 2018

SAN FRANCISCO, Nov. 6, 2018 /PRNewswire/ -- LendingClub Corporation (NYSE: LC), America's largest online lending marketplace connecting borrowers and investors, today announced financial results for the third quarter ended September 30, 2018.

Lending Club, the world's largest online marketplace connecting borrowers and investors. (PRNewsFoto/Lending Club) (PRNewsFoto/Lending Club)

Third quarter results exceeded expectations

Progress resolving legacy issues

Raising full year guidance for Adjusted EBITDA*

*  Reconciling items between GAAP Consolidated Net Loss and non-GAAP Adjusted EBITDA consisting of stock-based compensation of approximately $77 million, expenses related to outstanding legacy issues of $51 million and goodwill impairment expense of $35.6 million that were recognized during the first nine months of 2018, and depreciation, impairment, amortization and other net adjustments of approximately $54 million. Outstanding legacy issues are not forecast in GAAP Net Income (Loss) or Adjusted EBITDA.

"We are achieving record results, resolving outstanding legacy issues and leveraging our data and scale to drive product and process efficiencies," said Scott Sanborn, CEO of LendingClub. "Together, we expect these will deliver responsible growth, operating leverage and GAAP profitability that positions LendingClub well for the long term."

LendingClub remains well positioned over the long term

 


Three Months Ended


Nine Months Ended
 September 30,

($ in millions)

September 30,
 2018


June 30,
 2018


September 30,
 2017


2018


2017

Originations

$

2,886.5



$

2,818.3



$

2,442.9



$

8,010.8



$

6,549.0


Net Revenue

$

184.6



$

177.0



$

154.0



$

513.3



$

418.1


GAAP Consolidated Net Loss

$

(22.7)



$

(60.8)



$

(6.7)



$

(114.7)



$

(61.9)


Adjusted EBITDA (1)

$

28.1



$

25.7



$

20.9



$

69.1



$

25.5





(1)            

Adjusted EBITDA is a non-GAAP financial measure. Beginning in the fourth quarter of 2017, Adjusted EBITDA excludes legal, regulatory and other expense related to legacy issues. Please see the discussion below under the heading "Non-GAAP Measures" and the reconciliation at the end of this release.


Third Quarter 2018 Financial Highlights

Commenting on financial results, Tom Casey, CFO of LendingClub said, "We are on track to deliver on the revenue and margin goals that we set out at our investor day in December 2017. Year to date, our net revenues grew 23% while G&A and tech costs grew 6%, helping Adjusted EBITDA margins to more than double to 13.5%."

Originations – Loan originations in the third quarter of 2018 were $2.9 billion, improving 18% compared to the same quarter last year and improving 2% sequentially.

Net Revenue – Net Revenue in the third quarter of 2018 was $184.6 million, improving 20% compared to the same quarter last year and improving 4% sequentially, driven primarily by a higher volume of loan originations in the third quarter of 2018 compared to the same quarter last year and compared to the second quarter of 2018.

GAAP Consolidated Net Loss – GAAP Consolidated Net Loss was $(22.7) million for the third quarter of 2018, declining $(16.1) million compared to the same quarter last year and improving $38.1 million sequentially. The increase in loss for the third quarter of 2018 compared to the same quarter last year was primarily driven by expenses related to outstanding legacy issues. The decrease in loss for the third quarter of 2018 compared to the second quarter of 2018 was primarily driven by $35.6 million of goodwill impairment expense related to the Company's patient and education finance unit recorded in the second quarter of 2018.

Adjusted EBITDA Adjusted EBITDA was $28.1 million in the third quarter of 2018, improving $7.2 million compared to the same quarter last year and improving $2.4 million sequentially.

Contribution Contribution was $88.5 million in the third quarter of 2018, improving $12.5 million compared to the same quarter last year and improving $3.0 million sequentially.

Earnings Per Share (EPS) – Basic and diluted EPS attributable to LendingClub was $(0.05) for the third quarter of 2018, compared to basic and diluted EPS attributable to LendingClub of $(0.02) in the same quarter last year and $(0.14) in the second quarter of 2018.

Adjusted EPS – Adjusted EPS was $0.03 for the third quarter of 2018, compared to adjusted EPS of $0.03 in both the same quarter last year and in the second quarter of 2018.

Cash, Cash Equivalents and Securities Available for Sale – As of September 30, 2018, cash, cash equivalents and securities available for sale totaled $513.5 million, including $108.0 million in securities available for sale subject to regulatory risk retention requirements of which $24.7 million in securities were pledged as collateral.

Loans Held for Sale by the Company – As the Company continues to build its investor programs, it uses cash to accumulate loans for future transactions. Loans held for sale by the Company at the end of the third quarter of 2018 were $459.3 million, which were financed with $185.8 million of debt outstanding under the Company's warehouse credit facilities.

About LendingClub

LendingClub was founded to transform the banking system to make credit more affordable and investing more rewarding. Today, LendingClub's online credit marketplace connects borrowers and investors to deliver more efficient and affordable access to credit. Through its technology platform, LendingClub is able to create cost efficiencies and passes those savings onto borrowers in the form of lower rates and to investors in the form of risk-adjusted returns. LendingClub is based in San Francisco, California. Currently, residents of the following states may invest in LendingClub notes: AL, AR, AZ, CA, CO, CT, DC, DE, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MA, ME, MD, MI, MN, MO, MS, MT, ND, NE, NH, NJ, NV, NY, OK, OR, RI, SC, SD, TN, TX, UT, VA, VT, WA, WI, WV, or WY. All loans are made by federally regulated issuing bank partners. More information is available at https://www.lendingclub.com.

Conference Call and Webcast Information

The LendingClub third quarter 2018 webcast and teleconference is scheduled to begin at 2:00 p.m. Pacific Time on Tuesday, November 6, 2018. A live webcast of the call will be available at http://ir.lendingclub.com under the Events & Presentations menu. To access the call, please dial +1 (888) 317-6003, or outside the U.S. +1 (412) 317-6061, with conference ID 1666482, ten minutes prior to 2:00 p.m. Pacific Time (or 5:00 p.m. Eastern Time). An audio archive of the call will be available at http://ir.lendingclub.com. An audio replay will also be available on November 6, 2018, until November 13, 2018, by calling +1 (877) 344-7529 or +1 (412) 317-0088, with Conference ID 10125163. LendingClub has used, and intends to use, its investor relations website, blog (http://blog.lendingclub.com), Twitter handle (@LendingClub) and Facebook page (https://www.facebook.com/LendingClubTeam) as a means of disclosing material non-public information and to comply with its disclosure obligations under Regulation FD.

Contacts

For Investors:
IR@lendingclub.com

Media Contact:
Press@lendingclub.com

Non-GAAP Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: contribution, contribution margin, adjusted EBITDA, adjusted EBITDA margin, and adjusted EPS. Our non-GAAP measures do have limitations as analytical tools and you should not consider them in isolation or as a substitute for an analysis of our results under GAAP.

We believe these non-GAAP measures provide management and investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and enable comparison of our financial results with other public companies, many of which present similar non-GAAP financial measures.

In particular, we believe contribution and contribution margin are useful measures of direct product profitability because the measures illustrate the relationship between the costs most directly associated with revenue generating activities and the related revenue, and the effectiveness of the direct costs in obtaining revenue. Contribution is calculated as net revenue less "sales and marketing" and "origination and servicing" expenses on the Company's Statements of Operations, adjusted to exclude non-cash stock-based compensation expense within these captions and (income) loss attributable to noncontrolling interests. Contribution margin is a non-GAAP financial measure calculated by dividing contribution by total net revenue. We believe that adjusted EBITDA and adjusted EBITDA margin are important measures of operating performance because it allows for the comparison of our core operating results, including our return on capital and operating efficiencies, from period to period by removing outstanding legacy issues that have resulted in elevated legal costs (including ongoing regulatory and government investigations, indemnification obligations and litigation), the impact of depreciation, impairment and amortization in our asset base, share-based compensation, income tax effects, and other non-operating expenses. We believe adjusted EPS is a useful measure used by investors and analysts in our sector because non-cash items like stock-based compensation and amortization of intangibles can vary significantly due to many factors unrelated to the business, as well as certain other expenses that are unrelated to business performance, such as outstanding legacy issues discussed below.

In the fourth quarter of 2017, the company included an adjustment for outstanding legacy issues that have resulted in elevated legal costs (including ongoing regulatory and government investigations, indemnification obligations and litigation), to calculate adjusted EBITDA and adjusted EPS. We expect expenses in the future to include resolution of additional matters that arose from legacy management, including indemnification legal expenses paid by the Company for former employees, and settlements of regulatory investigations and examinations. Legacy legal expenses incurred in 2017 and prior were generally offset by insurance proceeds, resulting in no net material cumulative impact to 2017 earnings. As such, prior period amounts were not reclassified for the change in how we calculate adjusted EBITDA and adjusted EPS.

There are a number of limitations related to the use of these non-GAAP financial measures versus their most comparable GAAP measure. In particular, many of the adjustments to derive the non-GAAP financial measures reflect the exclusion of items, specifically stock-based compensation expense, depreciation, impairment and amortization in our asset base, outstanding legacy issues that have resulted in elevated legal costs (including ongoing regulatory and government investigations, indemnification obligations and litigation) and the related income tax effects of the aforementioned exclusions that are recurring and will be reflected in our financial results for the foreseeable future. Other companies, including companies in our industry, may calculate these measures differently, which may reduce their usefulness as a comparative measure.

For more information on our non-GAAP financial measures and a reconciliation of such measures to the nearest GAAP measure, please see the "Reconciliation of GAAP to Non-GAAP Measures" tables at the end of this release.

Safe Harbor Statement

Some of the statements above, including statements regarding borrower and investor demand and anticipated future financial results are "forward-looking statements." The words "anticipate," "believe," "estimate," "expect," "intend," "may," "outlook," "plan," "predict," "project," "will," "would" and similar expressions may identify forward-looking statements, although not all forward-looking statements contain these identifying words. Factors that could cause actual results to differ materially from those contemplated by these forward-looking statements include: the outcomes of pending governmental investigations and pending or threatened litigation, which are inherently uncertain; the impact of management changes and the ability to continue to retain key personnel; our ability to achieve cost savings from restructurings; our ability to continue to attract and retain new and existing retail and institutional investors; competition; overall economic conditions; demand for the types of loans facilitated by us; default rates and those factors set forth in the section titled "Risk Factors" in our most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K, each as filed with the SEC. We may not actually achieve the plans, intentions or expectations disclosed in forward-looking statements, and you should not place undue reliance on forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in forward-looking statements. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Information in this press release is not an offer to sell securities or the solicitation of an offer to buy securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

Additional information about LendingClub is available in the prospectus for LendingClub's notes, which can be obtained on LendingClub's website at https://www.lendingclub.com/info/prospectus.action.

LENDINGCLUB CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)



Three Months Ended
 September 30,


Nine Months Ended
 September 30,


2018


2017


2018


2017

Net revenue:








Transaction fees

$

137,781



$

121,905



$

384,889



$

327,911


Investor fees

29,169



20,499



84,464



62,795


Gain on sales of loans (1)

10,919



6,680



35,470



13,017


Other revenue (1)

1,458



1,375



4,382



5,070


Net interest income and fair value adjustments:








Interest income

115,514



151,532



381,292



469,788


Interest expense

(90,642)



(139,681)



(302,383)



(448,628)


Net fair value adjustments (1)

(19,554)



(8,280)



(74,823)



(11,868)


Net interest income and fair value adjustments (1)

5,318



3,571



4,086



9,292


Total net revenue

184,645



154,030



513,291



418,085


Operating expenses: (2)








Sales and marketing

73,601



59,570



200,164



169,735


Origination and servicing

25,431



21,321



73,669



63,044


Engineering and product development

41,216



32,860



115,703



104,338


Other general and administrative

57,446



46,925



167,338



142,994


Goodwill impairment





35,633




Class action and regulatory litigation expense

9,738





35,500




Total operating expenses

207,432



160,676



628,007



480,111


Loss before income tax expense

(22,787)



(6,646)



(114,716)



(62,026)


Income tax (benefit) expense

(38)



13



25



(79)


Consolidated net loss

(22,749)



(6,659)



(114,741)



(61,947)


Less: Income (Loss) attributable to noncontrolling interests

55



(129)



105



(119)


LendingClub net loss

$

(22,804)



$

(6,530)



$

(114,846)



$

(61,828)


Net loss per share attributable to LendingClub:








Basic

$

(0.05)



$

(0.02)



$

(0.27)



$

(0.15)


Diluted

$

(0.05)



$

(0.02)



$

(0.27)



$

(0.15)


Weighted-average common shares - Basic

424,359,142



412,778,995



421,306,508



406,633,850


Weighted-average common shares - Diluted

424,359,142



412,778,995



421,306,508



406,633,850




(1)

In the fourth quarter of 2017, the Company separately reported "Gain (Loss) on sales of loans" and "Net fair value adjustments" from "Other revenue (expense)." These changes had no impact on "Total net revenue." Prior period amounts have been reclassified to conform to the current period presentation.





(2)

Includes stock-based compensation expense as follows:




Three Months Ended
 September 30,


Nine Months Ended
 September 30,


2018


2017


2018


2017

Sales and marketing

$

1,791



$

1,591



$

5,674



$

5,857


Origination and servicing

1,104



1,049



3,278



3,819


Engineering and product development

5,332



4,640



16,075



17,001


Other general and administrative

11,544



8,826



32,342



28,015


Total stock-based compensation expense

$

19,771



$

16,106



$

57,369



$

54,692



 

LENDINGCLUB CORPORATION


OPERATING HIGHLIGHTS


(In thousands, except percentages and number of employees, or as noted)


(Unaudited)















September 30, 2018



Three Months Ended


% Change



September 30,
 2018


June 30,
 2018


March 31,
 2018


December 31,
 2017


September 30,
 2017


Q/Q


Y/Y


Operating Highlights:


Loan originations (in millions)

$

2,886



$

2,818



$

2,306



$

2,438



$

2,443



2

%


18

%


Net revenue

$

184,645



$

176,979



$

151,667



$

156,455



$

154,030



4

%


20

%


Consolidated net loss

$

(22,749)



$

(60,812)



$

(31,180)



$

(92,098)



$

(6,659)



63

%


N/M


Contribution (1) (2)

$

88,453



$

85,416



$

74,436



$

75,351



$

75,908



4

%


17

%


Contribution margin (1) (2)

47.9

%


48.3

%


49.1

%


48.2

%


49.3

%


(1)

%


(3)

%


Adjusted EBITDA (1) (2)

$

28,052



$

25,670



$

15,333



$

19,048



$

20,895



9

%


34

%


Adjusted EBITDA margin (1) (2)

15.2

%


14.5

%


10.1

%


12.2

%


13.6

%


5

%


12

%


EPS - diluted

$

(0.05)



$

(0.14)



$

(0.07)



$

(0.22)



$

(0.02)



64

%


(150)

%


Adjusted EPS - diluted (1)

$

0.03



$

0.03



$

0.01



$

0.01



$

0.03



%


%


Originations by Investor Type:


Managed accounts

21

%


19

%


20

%


26

%


24

%






Self-directed

7

%


7

%


10

%


10

%


10

%






Banks

38

%


40

%


48

%


36

%


42

%






LendingClub inventory (3)

15

%


18

%


9

%


11

%


9

%






Other institutional investors

19

%


16

%


13

%


17

%


15

%






Total

100

%


100

%


100

%


100

%


100

%






Originations by Program:


Personal loans - standard program

71

%


74

%


76

%


74

%


73

%






Personal loans - custom program

22

%


18

%


15

%


17

%


18

%






Other - custom program (4)

7

%


8

%


9

%


9

%


9

%






Total

100

%


100

%


100

%


100

%


100

%






Personal Loan Originations by Loan Grade – Standard Loan Program (in millions):


A

$

607.0



$

506.0



$

414.6



$

364.7



$

279.7



20

%


117

%


B

563.3



610.2



524.5



555.3



487.4



(8)

%


16

%


C

506.1



575.4



474.8



504.4



639.8



(12)

%


(21)

%


D

286.9



296.3



248.0



278.3



229.4



(3)

%


25

%


E

72.7



70.3



63.3



79.6



90.8



3

%


(20)

%


F

21.7



18.4



14.0



24.6



28.6



18

%


(24)

%


G

5.4



3.9



2.6



10.5



35.5



38

%


(85)

%


Total

$

2,063.1



$

2,080.5



$

1,741.8



$

1,817.4



$

1,791.2



(1)

%


15

%




N/M Not meaningful.


(1)

Represents a non-GAAP measure. See "Reconciliation of GAAP to Non-GAAP Measures."


(2)

Beginning in the third quarter of 2017, contribution and adjusted EBITDA exclude (income) loss attributable to noncontrolling interests. Prior period amounts have been reclassified to conform to the current period presentation. Additionally, beginning in the fourth quarter of 2017, adjusted EBITDA excludes legal, regulatory and other expense related to legacy issues.


(3)

Beginning in the third quarter of 2017, the Company introduced "LendingClub inventory" as a new line item presented to separately show the percentage of loan originations in the period that were purchased by the Company during the period and not yet sold as of the period end.


(4)

Comprised of education and patient finance loans, auto refinance loans, and small business loans.


 

LENDINGCLUB CORPORATION


OPERATING HIGHLIGHTS (Continued)


(In thousands, except percentages and number of employees, or as noted)


(Unaudited)















September 30, 2018



Three Months Ended


% Change



September 30,
 2018


June 30,
 2018


March 31,
 2018


December 31,
 2017


September 30,
 2017


Q/Q


Y/Y


Servicing Portfolio by Method Financed (in millions, at end of period):



Notes

$

1,347



$

1,428



$

1,518



$

1,608



$

1,683



(6)

%


(20)

%


Certificates

830



967



1,125



1,291



2,020



(14)

%


(59)

%


Secured borrowings

108



143



187



243





(24)

%


N/M


Whole loans sold

10,475



9,512



8,571



8,178



7,627



10

%


37

%


Loans invested in by the Company

464



523



581



593



175



(11)

%


165

%


Total

$

13,224



$

12,573



$

11,982



$

11,913



$

11,505



5

%


15

%


Employees and contractors (5)

1,835



1,779



1,812



1,837



1,779



3

%


3

%































N/M Not meaningful.

(5)

As of the end of each respective period.

 

LENDINGCLUB CORPORATION


Condensed Consolidated Balance Sheets


(In Thousands, Except Share and Per Share Amounts)


(Unaudited)





September 30,
2018


December 31,
2017


Assets





Cash and cash equivalents

$

348,018



$

401,719



Restricted cash

203,258



242,570



Securities available for sale (includes $24,748 and $0 pledged as collateral at fair
value, respectively)

165,442



117,573



Loans held for investment at fair value

2,133,829



2,932,325



Loans held for investment by the Company at fair value

12,198



361,230



Loans held for sale by the Company at fair value

459,283



235,825



Accrued interest receivable

24,546



33,822



Property, equipment and software, net

110,510



101,933



Intangible assets, net

18,988



21,923



Goodwill



35,633



Other assets

113,896



156,278



Total assets

$

3,589,968



$

4,640,831



Liabilities and Equity





Accounts payable

$

8,778



$

9,401



Accrued interest payable

22,050



32,992



Accrued expenses and other liabilities

136,629



228,380



Payable to investors

96,767



143,310



Notes, certificates and secured borrowings at fair value

2,152,316



2,954,768



Payable to securitization note and residual certificate holders (includes $1,479 at fair
value as of December 31, 2017)



312,123



Credit facilities and securities sold under repurchase agreements

305,336



32,100



Total liabilities

2,721,876



3,713,074



Equity





Common stock, $0.01 par value; 900,000,000 shares authorized; 428,434,596 and
419,756,546 shares issued, respectively; 426,151,896 and 417,473,846 shares
outstanding, respectively

4,284



4,198



Additional paid-in capital

1,384,933



1,327,206



Accumulated deficit

(504,265)



(389,419)



Treasury stock, at cost; 2,282,700 shares

(19,485)



(19,485)



Accumulated other comprehensive income (loss)

172



(5)



Total LendingClub stockholders' equity

865,639



922,495



Noncontrolling interests

2,453



5,262



Total equity

868,092



927,757



Total liabilities and equity

$

3,589,968



$

4,640,831



 

LENDINGCLUB CORPORATION


RECONCILIATION OF GAAP TO NON-GAAP MEASURES


(In thousands, except percentages and per share data)


(Unaudited)





Three Months Ended


Nine Months Ended



September 30,
 2018


June 30,
 2018


March 31,
 2018


December 31,
 2017


September 30,
 2017


September 30,
 2018


September 30,
 2017


Contribution reconciliation:


Consolidated net loss

$

(22,749)



$

(60,812)



$

(31,180)



$

(92,098)



$

(6,659)



$

(114,741)



$

(61,947)



Engineering and product development expense

41,216



37,650



36,837



37,926



32,860



115,703



104,338



Other general and administrative expense

57,446



57,583



52,309



48,689



46,925



167,338



142,994



Goodwill impairment



35,633









35,633





Class action and regulatory litigation expense

9,738



12,262



13,500



77,250





35,500





Stock-based compensation expense

2,895



3,125



2,932



2,782



2,640



8,952



9,676



Income tax (benefit) expense

(38)



24



39



711



13



25



(79)



(Income) Loss attributable to noncontrolling interests

(55)



(49)



(1)



91



129



(105)



119



Contribution (1)

$

88,453



$

85,416



$

74,436



$

75,351



$

75,908



$

248,305



$

195,101



Total net revenue

$

184,645



$

176,979



$

151,667



$

156,455



$

154,030



$

513,291



$

418,085



Contribution margin (1)

47.9

%


48.3

%


49.1

%


48.2

%


49.3

%


48.4

%


46.7

%


Adjusted EBITDA reconciliation:


Consolidated net loss

$

(22,749)



$

(60,812)



$

(31,180)



$

(92,098)



$

(6,659)



$

(114,741)



$

(61,947)



Acquisition and related expense (2)













349



Depreciation and impairment expense:















Engineering and product development

13,221



10,197



9,247



11,487



9,026



32,665



25,303



Other general and administrative

1,488



1,420



1,419



1,281



1,246



4,327



3,849



Amortization of intangible assets

940



959



1,035



1,035



1,034



2,934



3,253



Goodwill impairment



35,633









35,633





Legal, regulatory and other expense related to legacy issues (3)

15,474



18,501



16,973



80,250





50,948





Stock-based compensation expense

19,771



19,797



17,801



16,291



16,106



57,369



54,692



Income tax (benefit) expense

(38)



24



39



711



13



25



(79)



(Income) Loss attributable to noncontrolling interests

(55)



(49)



(1)



91



129



(105)



119



Adjusted EBITDA (1)

$

28,052



$

25,670



$

15,333



$

19,048



$

20,895



$

69,055



$

25,539



Total net revenue

$

184,645



$

176,979



$

151,667



$

156,455



$

154,030



$

513,291



$

418,085



Adjusted EBITDA margin (1)

15.2

%


14.5

%


10.1

%


12.2

%


13.6

%


13.5

%


6.1

%




(1)

Beginning in the third quarter of 2017, contribution and adjusted EBITDA exclude (income) loss attributable to noncontrolling interests. Prior period amounts have been reclassified to conform to the current period presentation.


(2)

Represents amounts related to costs for due diligence related to past business acquisitions, including those the Company reviewed and determined not to pursue a transaction, as well as incremental compensation expense required to be paid under the purchase agreement to retain key former shareholder employees of an acquired business.


(3)

Includes class action and regulatory litigation expense and legal and other expenses, which are included in "Class action and regulatory litigation expense" and "Other general and administrative" expense, respectively, on the Company's Condensed Consolidated Statements of Operations. Amounts prior to the fourth quarter of 2017 have not been reclassified because legacy legal expenses incurred in 2017 and prior were generally offset by insurance proceeds, resulting in no net material cumulative impact to 2017 earnings.


 

LENDINGCLUB CORPORATION


RECONCILIATION OF GAAP TO NON-GAAP MEASURES (Continued)


(In thousands, except percentages and per share data)


(Unaudited)





Three Months Ended


Nine Months Ended



September 30,
 2018


June 30,
 2018


March 31,
 2018


December 31,
 2017


September 30,
 2017


September 30,
 2018


September 30,
 2017


Adjusted net loss reconciliation:














LendingClub net loss

$

(22,804)



$

(60,861)



$

(31,181)



$

(92,007)



$

(6,530)



$

(114,846)



$

(61,828)



Acquisition and related expense (1)













349



Stock-based compensation expense

19,771



19,797



17,801



16,291



16,106



57,369



54,692



Amortization of acquired intangible assets

940



959



1,035



1,035



1,034



2,934



3,253



Goodwill impairment



35,633









35,633





Legal, regulatory and other expense related to legacy issues (2)

15,474



18,501



16,973



80,250





50,948





Adjusted LendingClub net income (loss)

$

13,381



$

14,029



$

4,628



$

5,569



$

10,610



$

32,038



$

(3,534)



Adjusted EPS - diluted

$

0.03



$

0.03



$

0.01



$

0.01



$

0.03



$

0.08



$

(0.01)



Non-GAAP diluted shares reconciliation:


GAAP diluted shares (3)

424,359



421,194



418,299



416,005



412,779



421,307



406,634



Other dilutive equity awards (4)















Non-GAAP diluted shares

424,359



421,194



418,299



416,005



412,779



421,307



406,634






(1)

Represents amounts related to costs for due diligence related to past business acquisitions, including those the Company reviewed and determined not to pursue a transaction, as well as incremental compensation expense required to be paid under the purchase agreement to retain key former shareholder employees of an acquired business.


(2)

Includes class action and regulatory litigation expense and legal and other expenses, which are included in "Class action and regulatory litigation expense" and "Other general and administrative" expense, respectively, on the Company's Condensed Consolidated Statements of Operations. Amounts prior to the fourth quarter of 2017 have not been reclassified because legacy legal expenses incurred in 2017 and prior were generally offset by insurance proceeds, resulting in no net material cumulative impact to 2017 earnings.


(3)

Equivalent to the basic and diluted shares reflected in the quarterly EPS calculations.


(4)

Other dilutive equity awards include assumed exercises of unvested stock options, net of assumed repurchases computed under the treasury method, which were excluded from GAAP net loss per share as their impact would have been anti-dilutive.


 

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SOURCE LendingClub Corporation