OnDeck announced a record $590 million in originations for Q2 2016 in yesterdays earnings report. This is an increase from $569 million from Q1 2016. They have also crossed the $5 billion mark in total small business loan originations.
Our leadership position and diversified funding model enabled us to produce solid results this quarter. Although financial comparisons continue to be affected by our planned reduction in Marketplace sales and its resulting accounting impacts, we believe that retaining a greater percentage of loans on our balance sheet is the right decision for the long-term economics of the business. To that end, our Unpaid Principal Balance grew 57% year-over-year, which will drive future gross revenue.
The Unpaid Principal Balance now totals $790 million and is up 57% from the prior year period. Cash and equivalents total $78 million, down from $160 million at end of December 2015. The decrease in cash is directly related to the increase of funding loans on balance sheet.
Below are the key financial highlights taken from the press release:
- Gross revenue was $69.5 million for the quarter, up 10% from the prior year period.
- Net revenue was $28.9 million for the quarter, down 33% from the prior year period.
- GAAP net loss attributable to OnDeck common stockholders was $17.9 million for the quarter, compared to net income of $5.0 million in the prior year period.
- Adjusted EBITDA was a loss of $12.4 million for the quarter, compared to positive $8.7 million in the prior year period.
- Adjusted Net Loss was $14.0 million for the quarter, compared to Adjusted Net Income of $7.3 million in the prior year period.
When trying to understand OnDeck as a company, it’s important to understand what holding more loans on their balance sheet means from a financial perspective. The financial highlights above at a glance paint a pretty negative picture but there is more to the story. Historically, OnDeck has captured more revenue directly from the sales charge called “gain on sale revenue” due to selling loans on their marketplace. This gain is realized immediately and boosts quarterly revenue when a larger portion of loans are sold. [Read more…]