What happened
Shares of LendingClub (LC 1.00%) were falling today after the peer-to-peer lending platform posted disappointing guidance in its second-quarter earnings report, even as its results topped headline estimates.
As of 10:02 a.m. ET, the stock was down 11.2%.
So what
LendingClub, which leverages a digital interface and AI technology to offer personal loans and banking services, continued to see sharp declines in its business in the second quarter.
Revenue fell 29.6% to $232.5 million, but that beat the consensus at $227.4 million.
Pre-provision-for-credit-loss revenue fell from $120.7 million to $81.4 million, and adjusted earnings per share tumbled from $0.45 to $0.09, but that also beat expectations at $0.04.
LendingClub also saw its balance sheet shrink, in line with its strategy of allowing brokered deposits to mature. Total assets declined from $8.8 billion in the prior quarter to $8.3 billion, and deposits fell $7.2 billion in the prior quarter to $6.8 billion. Loan origination was also down from $2.3 billion in the previous quarter to $2 billion.
CEO Scott Sanborn addressed the challenging environment, saying, "While we expect the headwinds in the marketplace to persist, we're managing the business prudently, continuing our disciplined credit underwriting, and developing new structures to meet the evolving needs of loan investors."
Now what
LendingClub expects loan originations to continue declining in the third quarter to between $1.4 billion and $1.7 billion, and it sees pre-provision net revenue of just $40 million to $50 million, down by close to half from the second quarter.
Given that guidance and management's commentary above, the fintech stock still seems to be waiting for consumer loan demand to recover, which may take time as interest rates are still rising.
