LendingClub is taking aggressive steps to cut costs as it seeks to end a long run of quarterly losses.
The online lending pioneer said Tuesday that it outsourced more than 400 operations support jobs by the end of the first quarter — the latest step in an effort to improve its margins.
Last month, LendingClub announced the opening of a new office in the Salt Lake City area, which will enable the company to reduce its presence in high-cost San Francisco, its headquarters city. The firm expects to fill most of the Utah site’s 550-employee capacity by the end of the year, and to realize annual salary savings of 25%.
By the end of 2019, LendingClub will have reduced its real-estate footprint in San Francisco by 123,000 square feet, Chief Financial Officer Thomas Casey said Tuesday during the company’s quarterly earnings call.
Also last month, LendingClub
Cost cutting is key to LendingClub’s plan to achieve adjusted profitability in the second half of the year. The company reported Tuesday that it lost $19.9 million in the first quarter of 2019, according to generally accepted accounting principles. That represented an improvement over a $31.1 million loss in the first quarter of 2018.
Between 2016 and 2018, the company reported net losses of $428 million as it contended with the fallout of a scandal that led to the departure of founder Renaud Laplanche in May 2016.
As of March 31, LendingClub reported cash and cash equivalents of $402 million, which was down from $870 million at the end of 2014, shortly after the firm’s initial public offering.
Total operating expenses rose by 6.3% to $194.3 million during the first quarter, as compared to the same period a year earlier, though certain categories of expenses declined as a percentage of loan originations.
Loan originations rose by 18% to $2.7 billion during the first quarter, and net revenue increased by 15% to $174.4 million.
During the company’s earnings call, LendingClub CEO Scott Sanborn made his most extensive public comments to date about the possibility of obtaining a bank charter — an option that numerous online lenders have been considering in recent months.
Sanborn said that having a bank charter would enable LendingClub to improve its margins and to offer more products and services. But he did not commit to pursuing that path.
“Obtaining a bank charter is a significant undertaking, and it’s a long road,” Sanborn said. “There’s a lot to evaluate, and that evaluation will take time and will involve some expense. So we’ll update you as our thinking evolves.”
