LendingClub Corporation Q2 FY2025 earnings call

• Originations volume: Achieved 32% year-on-year growth through marketing and product innovation, with better-than-expected marketing efficiency as they returned to channels like direct mail and online advertising.
• Credit performance: Strong, with vast data sets, advanced models, and decades of experience leading to consistent outperformance against competition and own expectations, and resilient borrower base.
• Funding partnerships: Extended forward flow agreement with Blue Owl for up to $3.4 billion of new originations and closed first transaction with BlackRock via the recently launched Fitch rated structured certificate program.
• New products: Launched LevelUp Checking with cash back rewards for on-time loan payments, LevelUp Savings with $2.7 billion in deposits and 80% of accounts meeting the highest rate threshold, and DebtIQ in limited beta testing for broader rollout later in the year.

In the second quarter of 2025, LendingClub originated $2.4 billion in loans, a 32% year-on-year growth. Total revenue was $248 million, up 33% from the same quarter the prior year. Noninterest income was $94 million, up 60% year-on-year, driven by more originations sold through the marketplace and improved loan sales pricing. Net interest income was $154 million, up 20% year-on-year. Net income was $38 million, a 156% increase compared to the same quarter last year. The Marketplace business contributes significantly to noninterest income, while net interest income comes from loans held on the balance sheet.

• Third quarter origination guidance: Anticipates originations to be $2.5 billion to $2.6 billion, up 31% to 36% year-on-year.
• PPNR guidance: Expect PPNR in the range of $90 million to $100 million, up 37% to 53% year-on-year, driven by higher marketplace volumes, stable loan pricing, and growing net interest income.
• ROTCE: Increasing ROTCE target to a range of 10% to 11.5% for the third quarter, reflecting top line momentum translating to bottom line earnings.

• Competitive environment: New entrants to the personal lending space may face challenges in building effective bureau inference models, but LendingClub is confident in its ability to compete due to its product variety and infrastructure.
• Macro environment: Continues to monitor the macro environment, but data demonstrates the effectiveness of underwriting and resilience of the borrower base.
• Tax variability: Effective tax rate may vary quarter-to-quarter due to changes in tax laws, but long-term statutory tax rate expectation is reduced to 25.5% from 27%.

Q: About competition, what's LendingClub's view?

A: Scott says they feel good about competing, have product variety and infrastructure to get desired customers, and aren't concerned about ability to compete at current growth.

Q: On marketing efficiency going forward, how to think about it?

A: Andrew says marketing efficiency may not stay at current levels as volumes grow, but Scott adds they leaned into new channels to reach current members with strong response while maintaining roughly 50-50 new versus repeat business Q: On credit quality and student loan impact?

A: Andrew says credit metrics are strong with lower provision following qualitative adjustment, and Scott says LendingClub proactively reduced exposure to student loan population and sees no change in performance since payments resumed Q: On rebrand update?

A: Scott says they're working on a rebrand this year, likely next year coinciding with LevelUp Checking and DebtIQ being open market products, to have broader permission than LendingClub