Company Continues to Diversify Investor Base with New Pentagon Federal (PenFed)
Credit Union Partnership
SAN FRANCISCO, August 13, 2019 – Prosper, a leading peer-to-peer lending platform connecting borrowers and investors, today reported financial results for the second quarter of 2019. Personal loan originations increased 27% compared to the first quarter of 2019, and the company has now generated positive adjusted EBITDA in eight out of the last nine quarters.
Financial summary:
- Total Net Revenue, which includes the non-cash impact related to warrants to purchase preferred stock, increased to $42.9 million in Q2 2019 compared to $31.7 million in Q2 2018.
- Core Revenue(1), which excludes the non-cash impact related to warrants to purchase preferred stock, decreased to $50.7 million in Q2 2019 compared to $52.3 million in Q2 2018.
- Net Loss decreased to ($0.6) million in Q2 2019 compared to a Net Loss of ($12.6) million in Q2 2018.
- Adjusted EBITDA(1) decreased to $5.3 million in Q2 2019 compared to $8.8 million in Q2 2018.
“Prosper had a strong second quarter driven by solid consumer demand for our personal loan product and stable funding. We successfully exited the arrangement with a consortium of investors that was signed in 2017, and have replaced that funding with a variety of new investors, including a partnership with PenFed Credit Union that covered over 10% of our personal loan volume last month,” said David Kimball, CEO, Prosper Marketplace. “We also continue to make significant investments in our digital HELOC product, using our expertise in consumer lending to dramatically improve the traditional experience of obtaining a HELOC.”
The unique funding partnership with PenFed offers Prosper applicants the opportunity to become PenFed members during the loan application process, also making them eligible for other desirable PenFed products like credit cards, auto loans and deposits.
With Prosper’s HELOC product, customers can complete an online application in minutes, and receive an instant HELOC offer. HELOCs originated using the Prosper platform have no origination fee and offer the same competitive rates as banks.
Also during the second quarter, Prosper continued beta-testing a mobile app for its investor community. The Prosper Invest app lets individual investors manage their account from their mobile device – from adjusting their investment portfolio, to transferring and allocating funds, to checking their returns. The app is now available for download on iOS and Android devices by visiting: https://www.prosper.com/invest.
Key Operating and Financial Metrics (Unaudited)
(in thousands)
| Three Months Ended June 30, | ||
| 2019 | 2018 | |
| Loan Originations | 759,858 | 866,894 |
| Transaction Fees, Net | 33,876 | 37,988 |
| Servicing Fees, Net | 5,172 | 7,487 |
| Total Net Revenue | 42,930 | 31,675 |
| Core Revenue (1) | 50,735 | 52,308 |
| Net Loss | (569) | (12,599) |
| Adjusted EBITDA(1) | 5,331 | 8,807 |
(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 $15 billion in personal loans have been originated through the Prosper platform for 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 lending 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, 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)
| Three Months Ended June 30, | ||
| 2019 | 2018 | |
| Total Net Revenue | $ 42,930 | $ 31,675 |
| Less: Fair Value of Warrants Vested on Sale of Borrower Loans | (7,805) | (20,633) |
| Core Revenue | $ 50,735 | $ 52,308 |
PROSPER MARKETPLACE, INC.
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(UNAUDITED)
(IN THOUSANDS)
| Three Months Ended June 30, | ||
| 2019 | 2018 | |
| Net Loss | $ (569) | $ (12,599) |
| Fair Value of Warrants Vested on Sale of Borrower Loans | 7,805 | 20,633 |
| Depreciation Expense: | ||
| Servicing and Origination | 1,276 | 1,413 |
| General & Administration – Other | 527 | 1,007 |
| Amortization of Intangibles | 70 | 89 |
| Stock-Based Compensation | 1,235 | 2,253 |
| Restructuring Charges | 4 | 271 |
| Change in Fair Value of Warrants | (4,729) | (3,998) |
| Interest Income on Available for Sale Securities, Cash and Cash Equivalents | (317) | (271) |
| Income Tax Expense | 29 | 9 |
| Adjusted EBITDA | $ 5,331 | $ 8,807 |