2018 Archives - Lend Academy

LendingClub and Prosper Tax Information for 2019

We share information related to filing your taxes with LendingClub and Prosper for the 2018 tax year.

March 20, 2019 By Ryan Lichtenwald 1 Comment

[Disclaimer: I am not an accountant nor am I qualified to provide tax advice. You should seek professional advice before taking action on any of the ideas presented here.]

Every year we provide information related to filing your taxes as an investor in LendingClub and Prosper loans. Both platforms have been around for many years and at this point not much is changing on a year to year basis. Our post last year has details which are still relevant today as you file your taxes for 2018.

You van view last year’s post on filing your taxes with LendingClub and Prosper here: https://www.lendacademy.com/lendingclub-prosper-tax-information-2018/

LendingClub has provided an update to their tax guide for retail investors. You can download the 2018 version of this document which will be helpful if you are new to the process. If you want to see a comparison of the 2017 and 2018 tax guide a Lend Academy forum member has created a link which shares the differences. The major changes apply to boxes 1f and 1g and are shown below.

Click to view forum thread

It’s also worth noting that LendingClub works with TurboTTax and they share how TurboTax users can import their LendingClub tax forms.

Prosper has also updated their tax guide for 2018. It is available for download here.

OnDeck Q4 2018 Earnings Review

Today OnDeck hosted their Q4 2018 earnings call and provided an update across all aspects of their business.

February 12, 2019 By Ryan Lichtenwald 1 Comment

Last quarter the the big news for OnDeck was the creation of their technology subsidiary called ODX, a platform that houses their lending as a service offering. While OnDeck has had a longstanding partnership with JP Morgan Chase it showed a renewed focus on that side of the business and a look into what the future at OnDeck may look like.

The company achieved much of what they set to do in 2018 and posted another solid quarter as they rounded out the year. Q4 2018 net income came in at $14 million on gross revenues of $109.5 million. The company ended the year with a total of $27.7 million in net income. Below is a snapshot of their Q4 and 2018 full year highlights.

After coming off a tough Q1 2018, the company turned the rest of the year around and moved well into profitable territory. What has been a main driver of profitability for the company has been decreasing funding costs since Q2 2018 even as originations have increased and interest rates broadly have increased. Sales and marketing expenses as a percentage of originations have also held steady at 1.7% for Q4. As of Q4 2018 the company still had $246 million of excess debt capacity.

You can see below how OnDeck has been able to consistently increase revenue over time even as their business model shifted. Gain on sale revenue, or loans sold to investors was just a small sliver of revenue back in Q4 2017. What I imagine many investors are keeping a close eye on is the other revenue category which has remained stagnant over the past year.

It appears as though the partnership with OnDeck hasn’t yet resulted in a meaningful increase of revenue. OnDeck noted that JP Morgan Chase volume increased in Q4 after a dip both in Q2 and Q3. ODX is slated for a full rollout in 2019 and OnDeck plans to expand their work with PNC, which was announced late last year as their second bank partner. Commenting on the pipeline of bank partnerships through ODX, CEO Noah Breslow noted that the pipeline has strengthened since the last earnings call and there is a mix of large scale banks and mid-sized to smaller banks which have entered the pipeline.

On the origination side, the company increased volume $10 million sequentially. OnDeck did share that they saw an increase in charge offs and delinquencies in Q4 which were attributed to some selective testing the company was doing. They have since ended these tests and kept the ones that were performing well.

Looking forward there are a few interesting things happening at OnDeck. While it won’t have a meaningful impact on their business in 2019, OnDeck recently announced they were entering the equipment finance space. OnDeck also has their Australian business which is not often talked about. They grew their portfolio organically 80% in 2018 albeit this is likely off of a smaller base. Last December OnDeck shared they were merging their Canadian business with Evolocity Financial Group creating OnDeck Canada which will be the second largest online small business lender in Canada once the deal closes midyear.

OnDeck provided the below guidance for Q1 2019 and the full year.

Roundup of Q2 2018 Earnings: GreenSky, OnDeck, LendingClub

We review the three fintech companies that reported earnings today.

August 7, 2018 By Ryan Lichtenwald Leave a Comment

The reality is that most fintech companies today in the US are private. We often learn of key milestones through press releases, but we often don’t get full transparency into what is happening in the business. This is why we’ve always taken great interest in the publicly traded online lenders. Today, OnDeck, GreenSky and Lending Club all reported their Q2 2018 earnings. Below we share the highlights of each from our perspective.

GreenSky

GreenSky went public just a few months ago on May 24, 2018. Their IPO was significant for a couple of reasons. One was the lack of US based fintech IPOs over the last few years and the second was that GreenSky is a wildly successful business. Last year they reported $139 million in net income on revenues of $326 million.

In the second quarter of 2018, the company grew revenue 28.3% to $105.7 million quarter over quarter and adjusted EBITDA was $52.1 million. In the prepared statement as part of the press release, CEO David Zalik noted that crossing $100 million in revenue and $50 million in adjusted EBITDA were milestones for the company. The company also increased transaction volume by 36% with the increase of home improvement merchants and elective health care providers utilizing the platform. Pro forma net income for the quarter was $33.5 million and the company ended the quarter with $236.6 million in cash.

Also of significance was a strategic partnership that was announced yesterday with American Express. This will further Greensky’s reach by accessing merchants who accept American Express. Under the partnership, customers will have access to point of sale loans for large purchases. What’s also interesting is the two companies are piloting a direct-to-consumer installment loan offering to some American Express Card Members. This will be first focused on the home improvement space in select markets, but if this pilot goes well it wouldn’t be surprising to see this partnership being the first example of a fintech and credit card company teaming up to tackle the broader personal loan category.

OnDeck

OnDeck reported net income of $5.8 million for the quarter with gross revenues of $95.6 million, up 10% year over and 6% from the previous quarter. Originations grew to $587 million, up 26% from the prior year period, but down slightly from the previous quarter. The company’s trend of increasing the number of loans funded and decreasing the average loan size continues. [Read more…]

Review of OnDeck Q1 2018 Earnings Results

OnDeck has been working towards executing on their five strategic initiatives for 2018.

May 8, 2018 By Ryan Lichtenwald 1 Comment

This morning OnDeck released their Q1 2018 earnings. Last quarter we highlighted that the company had reached GAAP profitability which was a significant milestone. While the company posted a net loss of $1.9 million for the quarter, this was within guidance. Gross revenues were $90 million, coming in at the top end of projections for the quarter. The increase in revenue was attributable to higher interest income or the company’s effective interest yield, or EIY which came in at 35.6%, compared to 34.8% in the previous quarter. OnDeck also beat on adjusted income which came in at $6.4 million (Q1 2018 guidance was between $1 and $5 million).

The below chart outlines OnDeck’s revenue sources. It’s interesting to note that OnDeck reported zero for gain on sale revenue. While this hasn’t made up a significant amount of the business for quite some time, there has been a small amount of revenue coming from this source in previous quarters. It seems they have officially shut the marketplace down for the time being. It is also worth noting that other revenue remained consistent. This is a number to keep an eye on as it includes income from OnDeck-as-a-Service, with OnDeck’s longstanding partnership with JPMorgan Chase as the central piece here. While the company may continue to grow originations this is the area with the most potential of upside for the company. Noah Breslow noted that another significant bank partnership would be announced this year, along with a new lending product which could boost originations.

Originations were up 8% from the previous quarter at $591 million. At the same time the company was able to control sales in marketing costs which came in slightly lower than the previous quarter. This is a significant decrease from the prior year period. [Read more…]

Setting Up LendingClub’s Automated Investing Tool

LendingClub has recently updated the way users can setup automated investing within their account.

May 2, 2018 By Ryan Lichtenwald 1 Comment

In our last post and accompanying video we outlined how to setup a LendingClub account in 2018. One of the benefits of doing this was being able to see all of the recent changes LendingClub has made to the investor experience.

In the latest video we review the interface which allows LendingClub investors to enable automated investing. This functionality has been around for quite some time, but LendingClub has changed the way it looks from a user’s perspective.

In this video I discuss:

The three ways you can invest in LendingClub loans
The benefits of LendingClub’s automated investing tool
The options within automated investing including custom mix and platform mix
How fast $5,000 was deployed through automated investing

Now that funds have been invested in LendingClub loans I am beginning to receive principal and interest payments. Our next post in this series will focus on the current performance of the account.

If you have any questions about automated investing or opening up a LendingClub account please let us know in the comments below.

Finalists Announced for the LendIt Fintech Industry Awards 2018

The LendIt team has combed through hundreds of applications to determine the finalists in 21 categories.

February 15, 2018 By Ryan Lichtenwald Leave a Comment

The LendIt Fintech Industry Awards recognizes the leaders in the fintech community. Last year we held the inaugural Awards show and it was a big hit. We quickly realized how much an event like this was appreciated and needed to shine the spotlight on people and companies who are working hard to innovate in financial services.

For 2018 we have built on last year’s success and received a tremendous amount of applications. The LendIt content team went through over 450 submissions and carefully chose the finalists listed below. Congratulations to all of the finalists!

From here we hand off to a community of judges who will then select the winners for each category. The winners will be announced at the 2018 Industry Awards ceremony held on April 10 (Day two of LendIt Fintech) in San Francisco. There are still a limited number of tickets left for the event, you can learn more and register for a ticket here.

Here is the list of all the awards finalists for 2018.

Fintech Innovator of the Year

Affirm
Varo Money
Better Mortgage
Upstart
Plaid
Circle
loanDepot

Executive of the Year

Raul Vazquez, Oportun
Anthony Hsieh, loanDepot
Max Levchin, Affirm
David Klein, CommonBond
Renaud Laplanche, Upgrade Inc.
David Kimball, Prosper
Yihan Fang, Yirendai

Fintech Woman of the Year

Blythe Masters, Digital Asset
Kathryn Petralia, Kabbage
Stephanie Alsbrooks, defi SOLUTIONS
Marla Blow, FS Card
Denise Thomas, ApplePie Capital
Olympia De Castro, Community Investment Management
Stephanie Klein, Braviant Holdings

Blockchain Innovator of the Year [Read more…]

Review of OnDeck Q4 2017 Earnings Results

OnDeck has achieved GAAP profitability and announced some interesting new developments for 2018.

February 13, 2018 By Ryan Lichtenwald 1 Comment

As projected, OnDeck reported GAAP profitability when they announced their Q4 2017 earnings earlier this morning. They have been on this journey of driving efficiency across their business as they shifted their funding model to a balance sheet centric model. In the fourth quarter they generated $5 million of GAAP profit. To put this in perspective, this is $41 million better than the prior year period. This puts them on solid footing as they look towards priorities for 2018. Originations for the quarter were $546 million, up 3% from the prior quarter.

Gross revenue came in at $87.7 million, up 7% year over year. Gain on sale revenue or revenue from loans sold on OnDeck’s marketplace to investors totaled $0.6 million. As with previous quarters in 2017 this now represents a pretty small part of OnDeck’s business. Other income totaled $3.5 million, up slightly from $3.4 million in the previous quarter. This is primarily income from their OnDeck-as-a-Service business which includes the partnership with JPMorgan Chase. While it is still a small part of their business, this is where I believe there is tremendous upside for the company.

Even though they reported an originations record with their JPMorgan Chase partnership, it is clear it is still early days. Loans are currently only available to select JPMorgan Chase customers and there is much more potential as they expand the scope. While still small, OnDeck-as-a-Service offers higher gross margins for the company.

As mentioned previously, OnDeck has significantly reduced their operating expenses as part of their cost rationalization program instituted in 2017. They continued to cut expenses, announcing the termination of a portion of its New York headquarters lease. They also plan to shift hiring to lower cost offices.

Three other positive data points from the company in the fourth quarter were Provision Rate, 15+ Day Delinquency Ratio and Net Charge-Off Rates. These all hit 2017 lows for the quarter. In the earnings call, they noted this was due to multiple factors such as their credit tightening, modifying offer terms, adding manual underwriting where appropriate and their improved collections practices. Interestingly, OnDeck is finding more success in recovery rates by litigating charged off loans themselves instead of selling them post charge off.

OnDeck has several 2018 strategic priorities worth noting. Related to loan originations, they are looking to drive 10-15% loan growth. They are also investing $5 million in technology and analytics and will announce their second major bank leveraging OnDeck-as-a-Service. A new small business lending product is also slated to be announced in 2018.

OnDeck provided the full year and Q1 2018 guidance below:

Full Year 2018

Gross revenue between $370 million and $382 million.
GAAP Net income (loss) attributable to OnDeck between $(2) million and $10 million.
Adjusted Net income between $16 million and $28 million.

First Quarter 2018

Gross revenue between $86 million and $90 million.
GAAP Net income (loss) attributable to OnDeck between $(5.5) million and $(1.5) million.
Adjusted Net income between $1 million and $5 million.

Conclusion

Unsurprisingly there is a lot of interest from analysts about OnDeck-as-a-Service. Another significant bank partner announcement is going to be a big coup for the company. As CEO Noah Breslow noted though tech investments to build out these partnerships have a medium to long term payback. Some of their tech investments they are making now will make for less fixed costs down the road as new partners sign up. Breslow shared that inbound interest from other banks is gaining steam. As these partnerships build and the scope increases it is going to be interesting to see how this affects the bottom line. It wouldn’t surprise me if OnDeck continues to become more of a software provider than a lender themselves over the long term.

6 Key Trends in Fintech to Watch in 2018

In this guest post Alexander Prokhorov from FinSight Ventures shares what trends his firm is focused on in 2018.

January 10, 2018 By admin 1 Comment

[Editor’s note: This is a guest post from Alexander Prokhorov. He is a managing partner and co-founder of FinSight Ventures, which focuses on fintech and enterprise software and was an early investor in LendingClub, DianRong, FinanceIt, and Earnest. He has more than 16 years of experience in direct investments and financial services.]

Over the past three years, Finsight has invested in close to a dozen fintech companies around the world, and we recently celebrated our fifth exit. As I consider the best places to put fresh capital to work, the following trends deserve attention:

Convergence of Software and Financial Products One of the important lessons that Square taught the market is that bundles of software solutions (loyalty, POS, analytics, scheduling and many others) and lending are essential drivers in advancing growth of payment processing. Going forward, successful lending and payments solutions will need to be bundled with other software offerings. Finsight recently invested in DailyPay which integrates with payroll systems and is aiming to help more than 70 million hourly workers in the US get instant access to their wages. In 2018 in Europe, PSD2 regulation will drive banks to open access via APIs to consumer and business accounts to third party companies. For example, a consumer can direct a fintech company to pay utility bills directly from their bank account. This is a very important development, and one which shifts the power of bank data and management of funds back to consumers and businesses and will allow for further convergence of software and financial products.
InsureTech The transformation of the insurance industry will continue its pace from online distribution, which disrupts offline distribution channels such as brokers (like Limelight and others), to the development of new products (like MetroMile and Lemonade).

According to CB Insights, in 2019, more than 80% of insurance products for SMB in the US will continue to be distributed through offline channels

Technology is bringing greater overall efficiencies, lowering costs to back office, disrupting intermediaries, promoting mobile real-time engagement with customers, and sparking new insights to product and pricing.

The Power of the Machines Artificial intelligence and machine learning are transforming many industries, including financial services. Companies like LendingClub are using machines to discover new relationships and patterns to introduce more tailored financial offers to their customers. Finsight recently invested in SBDA Group, which analyzes transactional data found in consumer banks and helps to provide insights for more effective cross-selling of other products.

Elon Musk puts it this way: “The pace of progress in artificial intelligence (I’m not referring to narrow AI) is incredibly fast. Unless you have direct exposure to groups like Deepmind, you have no idea how fast – it is growing at a pace close to exponential.”

Emerging Economies Many growing companies in Africa, Asia, and Latin America are developing and adopting financial solutions, often faster and with more innovation than in developed economies.

Last year, Alipay and WeChat processed nearly $3 trillion of payments, up from $80 billion in 2012
In Kenya last December, fintech lending companies like Branch and Tala ranked higher in the Google Play Store than Facebook and Instagram.

Wealth Management Much has been said of standalone robo-advisors such as Wealthfront, Betterment and Nutmeg, but likely other leaders will emerge over time as technologies continue to empower and transform how financial advice is delivered. Currently, tools serving advisors are providing better access to different asset classes, decisioning, trading strategies, digital data.

Acorns services more than 2 million accounts, according to Crunchbase

Rise of Crypto and Blockchain 2018 will be the year of accelerated adoption by retail investors globally and the arrival of institutional capital to the crypto assets, further validating the notion of crypto as the “store of value” for the millenium. At the same time, software companies, corporations and governments are increasing adoption of applications powered by distributed ledgers.

The New York Times reported that in November 2017, Coinbase was sometimes opening more than 100,000 accounts per day, with total accounts for more than 13.3 million people, which is more than either Etrade or Charles Schwab
In December 2017, legendary Wall Street investor, Bill Miller, announced that half of the assets in the hedge fund he manages are in bitcoin

These six key fintech trends are at the forefront of our investment planning strategy going into 2018. I believe that based on what we’ve seen in 2017 and what is coming next, 2018 will be an exciting year to be investing and innovating in financial services.

Nominations for the 2nd Annual LendItFintech Industry Awards are Live!

Next year the LendItFintech Industry Awards Dinner will recognize leaders in fintech.

December 19, 2017 By Ryan Lichtenwald Leave a Comment

Since its inception, LendItFintech, a sister company to Lend Academy, has been more than just a conference producer. We pride ourselves on our written content both here at Lend Academy as well as the conference content at our events across the globe. We engage with the industry on a deep level to create the best events possible.

Last year when we were determining which new projects we should pursue we decided to dedicate resources to put on the inaugural LendItFintech Industry Awards Dinner. The entire LendItFintech team put on a fantastic event. It was great to recognize the companies leading in all areas of fintech and the executives that run those companies. You can view last year’s winners here. The atmosphere of the event is best captured in our recap video below.

The team is already hard at work putting our 2018 event together. Yesterday, we announced that nominations for the LendItFintech Industry Awards Dinner are now open. The dinner will be held on April 10, 2018 at One Market in San Francisco and the event will celebrate 500+ Fintech influencers and innovations and their outstanding achievements in 21 categories. We encourage fintech companies from around the world to apply for the categories that are the best fit.

Fintech Innovator of the Year
Executive of the Year
Fintech Woman of the Year
International Innovator of the Year
Top Consumer Lending Platform
Top Business Lending Platform
Top Real Estate Lending Platform
Emerging Lending Platform of the Year
Top Fintech Equity Investor
Most Innovative Bank
Most Promising Partnership
Most Innovative Mobile Technology
Top Professional Services Company of the Year
Top Investment Bank in Fintech
Best Journalist Coverage
Blockchain Innovator of the Year
The Most Innovative Token Economy
Excellence in Financial Inclusion
Top Emerging Technology Company
Top Enterprise Company
Most Successful Cross-Border Partnership

We have already confirmed thought leaders from the industry who will be judging the various awards categories. Beyond recognizing the success of the companies chosen as winners, the event serves as a unique networking opportunity. We hope to see you there next year!