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LC

LendingClub Corp (LC)·Q2 2025 Earnings Summary

Executive Summary

  • LendingClub delivered a decisive beat: Q2 2025 EPS of $0.33 vs S&P Global consensus $0.15 and total net revenue of $248.4M vs $227.4M consensus; PPNR rose 70% YoY to $93.7M, ROE reached 11.1% and ROTCE 11.8% as NIM expanded to 6.14%. Bold beats driven by stronger originations, marketplace pricing and credit outperformance . Consensus values retrieved from S&P Global.*
  • Management raised near-term targets: Q3 originations guided to $2.5B–$2.6B, PPNR $90M–$100M, and ROTCE 10%–11.5%, up from prior Q4 2025 >8% ROTCE target; CFO expects similar performance in Q4 despite seasonal headwinds, signaling momentum into year-end .
  • Strategic funding catalysts: extended Blue Owl partnership up to $3.4B over two years, and closed inaugural Fitch-rated structured certificate transaction with BlackRock; these broaden capital sources and support higher loan sale pricing .
  • Credit quality was a key driver: net charge-off ratio improved to 3.0% (vs 6.2% YoY), provision increased modestly despite doubling HFI retention; CFO noted ~$9M provision benefit and ~$11M fair value mark improvement tied to credit performance, which may not repeat .

What Went Well and What Went Wrong

What Went Well

  • Marketplace momentum and pricing: non-interest income rose 60% YoY to $94.2M, with marketplace revenue up 59% YoY; management highlighted investor demand and improved sale prices supported by Fitch-rated structures .
  • Efficiency and profitability: PPNR up 70% YoY to $93.7M; efficiency ratio improved to 62.3%, delivering double-digit ROE/ROTCE ahead of schedule (“exceptional quarter…double digit ROTCE…ahead of schedule”) .
  • Strategic partnerships and products: Blue Owl extension (up to $3.4B), first BlackRock deal, and launch of LevelUp Checking to deepen engagement and cross-sell; CEO: “look forward to building on the momentum over the second half of the year” .

What Went Wrong

  • Higher marketing and opex to fund growth: non-interest expense up 17% YoY to $154.7M as marketing rose 26% YoY; management guided further marketing increases, implying near-term pressure on efficiency as channels optimize .
  • One-time tailwinds likely to normalize: CFO flagged ~$11M fair value mark improvement and ~$9M provision benefit tied to credit outperformance as non-recurring contributors to PP&R above guidance .
  • Provision increased with retention: provision rose to $39.7M vs $35.6M YoY driven by increased HFI retention, even as credit metrics improved; net fair value adjustments remained negative, reflecting expected credit losses in fair value portfolios .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Total net revenue ($USD Millions)$217.2 $217.7 $248.4
Non-interest income ($USD Millions)$74.8 $67.8 $94.2
Net interest income ($USD Millions)$142.4 $150.0 $154.2
PPNR ($USD Millions)$74.3 $73.8 $93.7
Provision for credit losses ($USD Millions)$63.2 $58.1 $39.7
Net income ($USD Millions)$9.7 $11.7 $38.2
Diluted EPS ($USD)$0.08 $0.10 $0.33
Net interest margin (%)5.42% 5.97% 6.14%

Segment and revenue component breakdown

ComponentQ4 2024Q1 2025Q2 2025
Origination fees ($M)$64.7 $69.9 $87.6
Servicing fees ($M)$17.4 $12.7 $16.4
Gain on sales of loans ($M)$15.0 $12.2 $13.5
Net fair value adjustments ($M)$(25.0) $(29.3) $(27.9)
Marketplace revenue ($M)$72.2 $65.6 $89.6
Other non-interest income ($M)$2.7 $2.1 $4.5
Net interest income ($M)$142.4 $150.0 $154.2

KPIs and balance sheet

KPIQ4 2024Q1 2025Q2 2025
Total loan originations ($B)$1.85 $1.99 $2.39
Marketplace loan originations ($B)$1.24 $1.31 $1.70
HFI originations ($B)$0.61 $0.68 $0.69
Net interest margin (%)5.42% 5.97% 6.14%
Efficiency ratio (%)65.8% 66.1% 62.3%
ROTCE (%)3.1% 3.7% 11.8%
Net charge-off ratio (%)4.5% 4.8% 3.0%
Total deposits ($B)$9.07 $8.91 $9.14
Total assets ($B)$10.63 $10.48 $10.78

Estimates vs actual (S&P Global consensus vs reported)

MetricConsensus (S&P Global)ActualSurprise
EPS ($)0.15234*0.33 +0.17766*
Total net revenue ($M)227.43*248.44 +21.01*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Loan originationsQ2 2025$2.1B–$2.3B Actual $2.39B Beat vs guide
PPNRQ2 2025$70M–$80M Actual $93.7M Beat vs guide
Loan originationsQ3 2025—$2.5B–$2.6B Raised sequentially
PPNRQ3 2025—$90M–$100M Raised sequentially
ROTCEQ3 2025>8% target in Q4 2025 10%–11.5% Raised meaningfully

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
AI/technology initiativesQ1: Acquired Cushion IP; enhanced TopUp, DebtIQ driving 60% higher logins and 30% higher issuance Launched LevelUp Checking with 1% cashback on essentials and 2% cashback for on-time loan payments; opening 6× more checking accounts per day; DebtIQ enhancements in beta Strengthening engagement, multi-product ecosystem expanding
Marketplace pricing and fundingQ4/Q1: Fifth straight quarter of pricing improvements; first Fitch-rated certificate with insurance buyer (30–50 bps better) Blue Owl partnership extended up to $3.4B; inaugural $100M BlackRock transaction; continued investor demand Broadening investor base, supportive pricing
Macro/rates and deposit costsQ1: NIM up to ~6% driven by lower deposit costs and repricing; beta ~100% with caution on future cuts NIM 6.14%; deposit repricing beta near 100%; expects thoughtful repricing as Fed cuts; potential sale price uplift if curve moves NIM stable; selective repricing ahead
Credit and provisioningQ4/Q1: Qualitative reserve raised at Q1 amid uncertainty; NCOs improved; 2024 vintage loss expectations declining NCO ratio 3.0%; provision modest despite higher retention; ~$9M provision benefit and ~$11M fair value mark improvement; warns non-repeatability Improving core credit; one-time tailwinds
Capital and ROTCEQ4 guide: ROTCE >8% in Q4 2025 Q3 ROTCE guided to 10%–11.5%; marginal ROTCE on personal loans ~25%–30%; CET1 at 17.5% supports growth Raised return targets; ample capital

Management Commentary

  • CEO: “We had an exceptional quarter…Strong revenue growth combined with credit outperformance resulted in $38 million of net income, delivering double digit ROTCE in excess of our target and ahead of schedule.”
  • CEO: “We…extended our forward flow agreement with Blue Owl for up to $3.4 billion…closed our first transaction with BlackRock…introduced LevelUp Checking…”
  • CFO: “PP&R…was $94 million…above our guidance…driven by stronger-than-forecasted originations and an improvement in fair value marks of approximately $11 million…which may not repeat in future quarters.”
  • CFO: “Taxes…were $15.8 million, or 29%…due to a change in California tax law…long-term statutory tax rate expectation is now reduced to 25.5% from 27%.”

Q&A Highlights

  • Competition and marketing efficiency: Management maintaining ~50/50 mix of new vs repeat borrowers; marketing efficiency initially strong but expected to moderate as volumes grow; originations benefitting from multi-channel expansion .
  • Credit dynamics: Student loan repayment resumption had no material impact; qualitative reserves unchanged in Q2; unusually low NCOs reflect both improving credit and timing/recovery dynamics, expected to drift up modestly as vintages season .
  • Capital and returns: CET1 17.5% retained to fund growth without raising common equity; marginal ROTCE on personal loans ~25%–30% attractive; buybacks remain a consideration but growth prioritized .
  • Deposit repricing and NIM: Near-100% beta achieved; future cuts to be managed selectively to sustain growth; potential loan sale price improvement if curve moves down .
  • Mix of originations: Plan to grow both balance sheet and marketplace to optimize in-period economics vs lifetime earnings; strong investor demand enables balanced approach .

Estimates Context

  • Q2 2025 beat: EPS $0.33 vs $0.15 consensus; revenue $248.4M vs $227.4M consensus, reflecting stronger originations, improved marketplace pricing and net interest income on a larger balance sheet with lower deposit costs . Consensus values retrieved from S&P Global.*
  • Revisions likely: Given PP&R and ROTCE outperformance and raised Q3 guidance, Street models likely need higher revenue, PP&R, and ROTCE assumptions, with near-term opex increases (marketing, product) tempering margin expansion trajectory .

Key Takeaways for Investors

  • Bold beat and raised guidance set a positive near-term narrative; Q3 targets imply continued momentum with double-digit ROTCE and higher originations, a clear catalyst path into Q4 despite seasonality .
  • Funding partnerships (Blue Owl, BlackRock) expand capital access and support sale pricing; expect marketplace volumes and pricing to remain supportive as Fitch-rated programs scale .
  • Credit tailwinds are real but partially one-time; normalize expectations as fair value marks and provision benefits may not repeat; core credit trend remains favorable (NCO ratio at 3.0%) .
  • Operating leverage improving, but marketing spend will rise near term to fuel growth; efficiency ratio trending better (62.3%) as revenue growth outpaces opex .
  • NIM stable at ~6.1% with selective repricing ahead; rate cuts could modestly lower deposit costs and improve sale prices; watch curve and deposit betas .
  • Capital strength (CET1 17.5%) supports balance sheet growth without equity raises; marginal ROTCE of 25%–30% on personal loans underscores value of retained HFI volumes .
  • Trading lens: Near-term upside bias from guidance raise and funding catalysts; monitor credit normalization, marketing efficiency trajectory, and any macro-driven reserve changes in Q3/Q4 .
Notes:
- Consensus estimates and surprises are sourced from S&P Global (Primary EPS Consensus Mean, Revenue Consensus Mean). Values retrieved from S&P Global.*