SAN FRANCISCO, March 29, 2019 – Prosper, a leading peer-to-peer lending platform connecting borrowers and investors, today reported financial results for the full year ended December 31, 2018.
“Last year we made good progress positioning the company for long-term sustainable growth and profitability with the development of our new digital HELOC product that is rolling out in 2019, while efficiently managing our personal loan business,” said David Kimball, CEO, Prosper Marketplace. “Over the last couple of years, we have significantly diversified our funding sources through new institutional and bank investors on our platform, $500 million of committed warehouse facilities, and our company sponsored securitization program that has attracted over 60 investors. We will continue to prioritize a balanced marketplace that provides a fair price for borrowers and solid risk-adjusted returns for our investors and bank partners.”
Financial highlights include:
- Total Net Revenue, which includes the non-cash impact related to warrants to purchase preferred stock, decreased to $104.4 million in 2018 compared to $116.2 million in 2017
- Core Revenue(1), which excludes the non-cash impact related to warrants to purchase preferred stock, increased slightly to $176.7 million in 2018 compared to $176.4 million in 2017
- Net Loss decreased to ($39.9) million in 2018 compared to a Net Loss of ($115.2) million in 2017
- Adjusted EBITDA(1) increased to $9.4 million in 2018 compared to $5.5 million in 2017
Launched in 2017, the Prosper Marketplace Issuance Trust securitization program has closed six successful securitizations to date totaling $2.8 billion. Last year, Prosper closed its first warehouse facility with $200 million in commitments. In March 2019, Prosper closed its second warehouse facility with $300 million in commitments, providing the company with $500 million in total committed warehouse capacity to invest in personal loans originated through the Prosper platform alongside our investors.
The following table summarizes the financial highlights from the year:
Key Operating and Financial Metrics (Unaudited)
(in thousands)
| Year Ended December 31, | ||
| 2018 | 2017 | |
| Loan Originations | 2,836,720 | 2,876,055 |
| Transaction Fees, Net | 123,373 | 130,174 |
| Servicing Fees, Net | 29,025 | 27,206 |
| Total Net Revenue | 104,361 | 116,235 |
| Core Revenue (1) | 176,677 | 176,357 |
| Net Loss | (39,945) | (115,158) |
| Adjusted EBITDA(1) | 9,448 | 5,460 |
(1) Core Revenue and Adjusted EBITDA are non-GAAP financial measures. The accompanying schedules to this press release provide a reconciliation of each of these non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with GAAP. Our non-GAAP financial measures should not be considered as alternatives to, or more meaningful than, our financial results prepared in accordance with GAAP.
About Prosper Marketplace
Prosper’s mission is to advance financial well-being. The company’s online lending platform connects people who want to borrow money with individuals and institutions that want to invest in consumer credit. Borrowers get access to affordable fixed-rate, fixed-term personal loans. Investors have the opportunity to earn solid returns via a data-driven underwriting model. To date, over $14 billion in personal loans have been originated through the Prosper platform for various purposes including debt consolidation and large purchases such as home improvement projects, medical expenses and special occasions.
Prosper Marketplace, Inc. was founded in 2005 and is headquartered in San Francisco. The platform is owned by Prosper Funding LLC, a subsidiary of Prosper Marketplace, Inc. Loans originated through the Prosper marketplace are made by WebBank, member FDIC. Visit www.prosper.com and follow @Prosperloans to learn more. Prosper notes are offered by Prospectus.
Cautionary Note Regarding Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as “may,” “believe,” “expect,” “project,” “estimate,” “intend,” “anticipate,” “plan,” “continue” or similar expressions. Forward-looking statements inherently involve many risks and uncertainties that could cause actual results to differ materially from those projected in these statements. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is based on the current plans and expectations of our management and is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished.
All forward-looking statements speak only as of the date of this press release. We undertake no obligation to update or revise any forward-looking statements that may be made in this press release to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. All forward-looking statements are expressly qualified in their entirety by the cautionary statements contained or referred to herein.
Use of Non-GAAP Financial Measures
Core Revenue and Adjusted EBITDA are non-GAAP financial measures. The accompanying schedules to this press release provide a reconciliation of each of these non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with GAAP. The non-GAAP financial measure of Core Revenue is defined as our Total Net Revenue adjusted to exclude the Fair Value of Warrants Vested on Sale of Borrower Loans. The non-GAAP financial measure of Adjusted EBITDA is defined as Net Loss adjusted for interest income on available for sale securities and cash and cash equivalents, SEC settlement costs, income tax expense, depreciation and amortization, impairment of intangible assets, stock-based compensation expense, fair value of warrants vested on the sale of borrower loans, restructuring charges, and fair value adjustments for warrant liabilities.
These non-GAAP financial measures should not be considered as alternatives to, or more meaningful than, our financial results prepared in accordance with GAAP.
PROSPER MARKETPLACE, INC.
RECONCILIATION OF TOTAL NET REVENUE TO CORE REVENUE
(UNAUDITED)
(IN THOUSANDS)
| Year Ended December 31, | ||
| 2018 | 2017 | |
| Total Net Revenue | $ 104,361 | $ 116,235 |
| Less: Fair Value of Warrants Vested on Sale of Borrower Loans | (72,316) | (60,122) |
| Core Revenue | $ 176,677 | $ 176,357 |
PROSPER MARKETPLACE, INC.
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(UNAUDITED)
(IN THOUSANDS)
| Year Ended December 31, | ||
| 2018 | 2017 | |
| Net Loss | $ (39,945) | $ (115,158) |
| Fair Value of Warrants Vested on Sale of Borrower Loans | 72,316 | 60,122 |
| Depreciation Expense: | ||
| Servicing and Origination | 5,664 | 5,853 |
| General & Administration – Other | 3,926 | 5,110 |
| Amortization of Intangibles | 378 | 1,385 |
| Impairment of Intangibles | – | 6,399 |
| Stock-Based Compensation | 8,401 | 12,238 |
| Restructuring Charges | 1,762 | 1,340 |
| Change in Fair Value of Warrants | (45,003) | 29,140 |
| Interest Income on Available for Sale Securities, Cash and Cash Equivalents | (1,223) | (461) |
| SEC Settlement Costs | 3,000 | – |
| Income Tax Expense (Benefit) | 172 | (508) |
| Adjusted EBITDA | $ 9,448 | $ 5,460 |