Sign in

You're signed outSign in or to get full access.

LC

LendingClub Corp (LC)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered 20% YoY revenue growth to $217.7M and 21% YoY originations to $2.0B, supported by improved loan sale pricing and lower deposit costs; EPS was $0.10 and PPNR rose 52% YoY to $73.8M .
  • Consensus comparison: Revenue beat S&P Global consensus ($217.7M vs $214.3M, +1.6%); EPS was a slight miss ($0.10 vs $0.106). Management noted an $8.5M qualitative reserve build and $2.6M FV mark—without these adjustments, net income would have been “nearly $20M,” implying an adjusted EPS beat . Values retrieved from S&P Global*.
  • Q2 2025 guidance raised: originations $2.1–$2.3B and PPNR $70–$80M, signaling acceleration from Q1 and sustained strength in pricing and funding channels .
  • Catalysts: Fitch-rated structured certificates unlocking insurance demand; continued bank buyer participation; AI-driven member engagement (DebtIQ, Tally, Cushion IP); and the purchase of an SF HQ with no material financial impact, all supporting growth, pricing, and engagement narratives .

What Went Well and What Went Wrong

What Went Well

  • Pricing and funding: “Improved loan sales pricing for fifth straight quarter,” with structured certificates now Fitch-rated; management cited 30–50 bps price uplift on rated deals and growing insurance demand .
  • Credit outperformance: Net charge-off ratio improved to 4.8% (consumer 4.7%) vs 6.9% prior year; delinquency trends improved YoY, enabling better marketplace pricing and investor demand .
  • Engagement and product innovation: DebtIQ drove ~60% higher log-ins and ~30% increase in issuance among enrolled members; TopUp expanded to refinance competitor loans; Cushion IP adds AI spending intelligence to the app .

What Went Wrong

  • EPS modestly below consensus; CFO raised qualitative reserves by $8.5M and cut FV marks by $2.6M, dampening reported earnings despite strong underlying momentum .
  • Servicing fees fell QoQ to $12.7M due to higher prepayments; management expects rebound in Q2 as prepayment dynamics normalize .
  • Marketing spend stepped up (to $29.2M) with channel reactivation, pressuring near-term expense ratios; management expects efficiencies to improve across Q3–Q4 as models and creative optimize .

Financial Results

Headline P&L and EPS vs prior quarters

MetricQ3 2024Q4 2024Q1 2025
Total Net Revenue ($M)$201.9 $217.2 $217.7
Non-Interest Income ($M)$61.6 $74.8 $67.8
Net Interest Income ($M)$140.2 $142.4 $149.96
Provision for Credit Losses ($M)$47.5 $63.2 $58.1
Non-Interest Expense ($M)$136.3 $142.9 $143.9
Net Income ($M)$14.5 $9.7 $11.7
Diluted EPS ($)$0.13 $0.08 $0.10
Net Interest Margin (%)5.63% 5.42% 5.97%

Originations and Mix

MetricQ3 2024Q4 2024Q1 2025
Total Originations ($B)$1.913 $1.846 $1.989
Marketplace Loans ($B)$1.403 $1.241 $1.314
Held-for-Investment Originations ($B)$0.510 $0.605 $0.675
HFI % of Total (%)27% 33% 34%

KPIs and Balance Sheet

MetricQ3 2024Q4 2024Q1 2025
PPNR ($M)$65.5 $74.3 $73.8
Marketing Expense ($M)$26.2 $23.4 $29.2
Marketing / Originations (%)1.37% 1.27% 1.47%
Net Charge-Offs ($M)$55.8 $46.0 $48.9
NCO Ratio (HFI, %)5.4% 4.5% 4.8%
CET1 Ratio (%)15.9% 17.3% 17.8%
Tier 1 Leverage (%)11.3% 11.0% 11.7%
Deposits ($B)$9.460 $9.068 $8.906
Total Assets ($B)$11.038 $10.631 $10.483

Results vs Wall Street Consensus (S&P Global)

MetricActual (Q1 2025)ConsensusSurprise
Revenue ($M)$217.7 $214.3*+$3.4M / +1.6%
Primary EPS ($)$0.10 $0.106*-$0.006 / -5.7%

Values retrieved from S&P Global*.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Originations ($B)Q1 2025$1.8–$1.9 Actual $2.0 Beat vs guide
PPNR ($M)Q1 2025$60–$70 Actual $73.8 Beat vs guide
Originations ($B)Q2 2025—$2.1–$2.3 Raised sequential trajectory
PPNR ($M)Q2 2025—$70–$80 Raised sequential trajectory
Originations ($B)Q4 2025 exit>$2.3 “On track” per Q1 call Maintained
ROTCE (%)Q4 2025 exit>8 “On track” per Q1 call Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Loan sales pricing & bank buyersPricing up; banks returned, ~1/3 of Q4 volume target; pipeline building Four consecutive quarters of pricing increases; banks ~1/3 of volume; testing rated certificates Fifth straight pricing improvement; Fitch-rated certificates closed; insurance demand; price +30–50 bps vs standard Improving
Deposit costs & NIMNIM 5.63%; funding costs elevated NIM dip to 5.42%; exited high-cost deposit; LevelUp savings drove lower costs NIM 5.97%; lower deposit costs; NIM to remain ~current absent Fed moves Improving/stable
Credit performanceNCO ratio 5.4% (down from 6.2%) NCO 4.5%; strong recoveries; tight box NCO 4.8%; consumer 4.7%; added qualitative reserves for macro uncertainty Improving with cautious reserves
Marketing & acquisitionSeasonally ramp in Q2–Q3; LevelUp Savings launch Plan to restart dormant channels exiting Q1; ramp in Q2–Q3 Stepped up spend; channels reactivated; expected optimization by Q3–Q4 Ramping
AI/Technology & engagementTally tech acquisition announced DebtIQ engagement lift; app adoption Cushion IP acquired; DebtIQ drives ~60% logins, ~30% issuance; TopUp enhanced Accelerating
Insurance/Institutional funding—Working toward rated senior security; opens insurance Closed first rated insurance deal; pipeline building Expanding

Management Commentary

  • “We generated $2 billion in loan volume, a 21% increase over last year… Total net revenue grew 20%… pre-provision net revenue grew 52%” — Scott Sanborn (CEO) .
  • “We increased our provision by $8.5M and decreased the fair value… by $2.6M… Without these adjustments, the net result would have been nearly $20M of net income…” — Andrew LaBenne (CFO) .
  • “Our structured certificates program… obtained an investment-grade rating from Fitch… unlocking access to the industry's more than $8 trillion in assets.” — Scott Sanborn (CEO) .
  • “DebtIQ… is already driving nearly 60% higher log-ins… 30% increase in loan issuance… TopUp now allows members to refinance competitor loans.” — Scott Sanborn (CEO) .
  • “We purchased a San Francisco headquarters… at a fraction of the pre-pandemic cost with potential future upside and no material financial impact.” — Company press release .

Q&A Highlights

  • Investor demand and pricing: April transactions executed as planned at “the right price”; pipeline of new buyers; rated products support tighter spreads; marketplace design avoids securitization volatility .
  • Guidance context: Q2 PPNR $70–$80M embeds higher marketing and tech spend; provision quantitative factors remain strong; qualitative additions will be re-evaluated at Q2 end .
  • Bank buyers: Existing bank demand remained steady; new bank buyers entering pipeline; timing variable but durability strong once onboard .
  • Servicing fees: QoQ decline driven by prepayments; expected rebound in Q2 .
  • Deposits/NIM: Big step-down in funding costs realized; NIM likely to hover near current levels without further Fed moves .
  • Capital and buybacks: Capital levels strong; buybacks remain an option but growth prioritized .

Estimates Context

  • EPS: Q1 2025 actual $0.10 vs S&P Global consensus $0.106; slight miss. Seven EPS estimates contributed to consensus*.
  • Revenue: Q1 2025 actual $217.7M vs S&P Global consensus $214.3M; modest beat. Nine revenue estimates contributed to consensus*.
    Values retrieved from S&P Global*.

Key Takeaways for Investors

  • Lending momentum is accelerating with improved loan sale pricing, lower funding costs, and expanded retention, positioning Q2 originations at $2.1–$2.3B and PPNR at $70–$80M .
  • The Fitch-rated structured certificates open insurance channels and support pricing (30–50 bps tighter), adding resiliency and optionality alongside bank buyers; a continued mix shift can further lift marketplace economics .
  • Credit remains a differentiator: materially lower NCOs vs prior year and disciplined underwriting underpin demand and margins; qualitative reserves reflect prudent macro caution rather than performance deterioration .
  • Near-term EPS optics were dampened by conservative reserves and FV marks; underlying profitability and ROE trajectory are positive, with management “on track” for Q4 originations and ROTCE targets .
  • Product and AI execution (DebtIQ, TopUp, Tally, Cushion IP) is improving engagement and issuance, supporting lifetime value and cross-sell while reducing servicing costs—an underappreciated lever for margin expansion .
  • Tactical watch: monitor Q2 pricing stability, servicing fee rebound, and marketing efficiency progression into Q3–Q4; upside if bank and insurance funding scale faster than expected .
  • Medium-term thesis: balance sheet at scale, capital-light marketplace, and robust capital ratios (CET1 17.8%, Tier 1 leverage 11.7%) enable growth while absorbing macro variability—risk-managed compounding story with multiple funding levers .
Citations: All figures and statements are sourced from the company’s Q1 2025 8-K and press release **[1409970_0001409970-25-000015_q125exhibit991er.htm:0]** **[1409970_0001409970-25-000015_q125exhibit991er.htm:1]** **[1409970_0001409970-25-000015_q125exhibit991er.htm:4]** **[1409970_0001409970-25-000015_q125exhibit991er.htm:5]** **[1409970_0001409970-25-000015_q125exhibit991er.htm:6]** **[1409970_0001409970-25-000015_q125exhibit991er.htm:9]** **[1409970_0001409970-25-000015_q125exhibit991er.htm:12]**, Q1 2025 earnings call **[1409970_LC_3424031_1]** **[1409970_LC_3424031_3]** **[1409970_LC_3424031_4]** **[1409970_LC_3424031_5]** **[1409970_LC_3424031_6]** **[1409970_LC_3424031_9]** **[1409970_LC_3424031_11]** **[1409970_LC_3424031_14]** **[1409970_LC_3424031_15]**, related Q1 2025 press releases (Cushion IP, HQ purchase) **[1409970_20250429SF75977:0]** **[1409970_20250417SF67577:0]**, and prior quarter releases/transcripts for trend (Q4 2024: **[1409970_20250128SF06217:1]** **[1409970_20250128SF06217:3]** **[1409970_20250128SF06217:5]** **[1409970_20250128SF06217:8]**; Q3 2024: **[1409970_20241023SF38313:0]** **[1409970_20241023SF38313:3]** **[1409970_20241023SF38313:4]** **[1409970_20241023SF38313:5]** **[1409970_20241023SF38313:7]**).