LendingClub beats Wall Street estimates but net loss widens

(Reuters) - U.S. online lender LendingClub Corp LC.N on Tuesday topped Wall Street estimates for quarterly profit, but posted a wider net loss from a year ago as it wrote down the value of one of its units.

A Lending Club banner hangs on the facade of the the New York Stock Exchange in New York, New York, United States December 11, 2014. REUTERS/Brendan McDermid/File Photo

Shares were down 2.4 percent at $3.99 in after-hours trading.

Chief Executive Scott Sanborn said in an interview that while the company’s patient and education finance unit was performing well it “was not growing at the rate we had anticipated when we acquired it.” LendingClub had acquired the business in 2014 for $140 million.

The company’s second-quarter net loss widened to $60.9 million from $25.5 million a year earlier, due largely to two extraordinary expenses including a $36.5 million goodwill impairment for the patient and education finance unit.

Excluding one-time items, LendingClub earned 3 cents per share. Analysts on average had expected 2 cents per share, according to Thomson Reuters I/B/E/S.

Total revenue rose to a record $177 million from $140 million but a 44 percent jump in operating expenses contributed to the wider loss for the San Francisco-based online lender.

San Francisco-based LendingClub is one of the most prominent firms in a cohort of tech-savvy companies that connect consumers looking for loans with individuals or institutional investors such as banks through its website.

It has been seeking to turn itself around since May 2016, when an internal investigation into a series of loan malpractices led to the ouster of then-CEO and founder Renaud Laplanche.

The incident caused the volume of loans originated through the company to drop and investors to leave the platform.

LendingClub has since sought to boost growth by improving its marketing and getting customers to return to its platform when looking for another loan.

These efforts are paying off, Sanborn said.

In the most recent quarter, LendingClub originated a record $2.82 billion in loans, up 31 percent from a year earlier.

“Since our inception, about a quarter of our more than two million members have gone back to us at least once for another loan,” Sanborn said on a call with analysts.

Earnings were also boosted by higher revenue from transaction fees which rose 27 percent to $136 million in the second quarter ended June 30.

LendingClub maintained its forecast for 2018 revenue of between $680 million and $705 million.

Earlier on Tuesday, LendingClub rival OnDeck Capital Inc ONDK.N reported a better-than-expected profit, helped by higher loan originations.

(The story corrects origination figure from millions to billions in 12th paragraph.)

Reporting by Anna Irrera in New York and Diptendu Lahiri in Bengaluru; editing by Sai Sachin Ravikumar and Matthew Lewis