The San Francisco-based LendingClub, as with many technology companies currently seeking the public markets, has quickly growing revenues but isn’t profitable.
The company had net revenue of $86.94 million in the first half of 2014, up from $37.09 million in the year-ago period. The cost of that revenue growth swung LendingClub from profit to loss. In The first half of 2013, LendingClub had net income of $1.74 million. In the same period this year, the company lost $16.49 million.
The company’s sales and marketing costs jumped from $16.12 million to $39.81 million when comparing the first half of 2013 and the first half of 2014.
LendingClub doesn’t loan out its own capital and collects fees of loans that are originated on its platform from both individuals and more sophisticated investors alike. The more loans that pass through its network, the more money that LendingClub nets without putting more immediate risk onto its books — a neat mechanism.
According to the S-1, LendingClub receives between 1 percent and 6 percent of the principal amount of loaned monies. Also, LendingClub charges investors a small percent — around 1, but variable — management fee, and takes a roughly 1 percent servicing fee on transacted payments.
According to CrunchBase, LendingClub has previously raised $392.9 million in venture capital over the course of 12 rounds — the company’s most recent capital infusion, $65 million, touched down in April of this year. LendingClub reported cash of just under $67 million in its S-1 document.
LendingClub’s loan volume has quickly grown. The company indicates that it has “facilitated” over $5 billion in loans since its birth in 2007. $1 billion of that tally occurred in the second quarter of 2014, implying rapid expansion of demand for its services. According to the filing, loan volume increased by 125 percent from the first half of 2013 to the first half of 2014.
The company’s preliminary S-1 doesn’t indicate what its ticker symbol will be, or what exchange it will list on. The document does indicate that the company intends to execute its offering this year.
LendingClub’s IPO could set a benchmark for other companies that have growing revenues and cost structures that lead to GAAP losses.