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…]