OnDeck, Lending Club to Announce Earnings TodayAugust 8, 2016 | By: Sean Murray
Both OnDeck and Lending Club are scheduled to host their Q2 earnings calls today At 5 PM EST.
For Lending Club, investors will have an opportunity to assess the damage that rocked the company in May. Back then, the sudden resignation of the CEO was brought on by a loan manipulation scandal and conflicts of interests. That led to a DOJ Grand Jury investigation that was compounded by a New York Department of Financial Services subpoena in an unrelated probe. The ensuing appetite to buy their loans waned, forcing Lending Club to use their own balance sheet to ensure the flow of their business went on uninterrupted. On July 28th, CEO Scott Sanborn announced that they were NOT becoming a balance sheet lender and were holding only 2% of their expected quarterly loan volume. More recently, investment bank Jefferies is said to have sold $105 million in bonds backed by Lending Club loans, showing signs that confidence in the company’s product remains.
OnDeck isn’t embracing the tech company characterization as much as they used to. Earlier in the year, CEO Noah Breslow described the company as a “non-bank commercial lender” in an interview on CNBC. As such, origination growth at the expense of all else is no longer likely to excite investors who have shifted to judging the company on its path to profitability and its long term plan to sustainability. In Q1, they were asked what would happen if the company stopped the marketplace aspect and just held all its loans on balance sheet. The response? More short term losses, due to accounting standards. Two things investors will surely be looking at is the cost of marketing in Q2 in the face of increasing competition and loan performance.Last modified: August 8, 2016
Sean Murray is the founder of deBanked, an 11-year veteran of the merchant cash advance industry, a casual Lending Club and Prosper note investor, the co-founder of Daily Funder, an alternative lending speaker, consultant, writer, and enthusiast. Connect with me on LinkedIn or follow me on twitter.