Press release

Prosper Reports Third Quarter 2019 Financial Results

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Prosper, a leading peer-to-peer lending platform connecting borrowers and investors, today reported financial results for the third quarter of 2019. Personal loan originations increased 13% compared to Q3 2018 as the company continued to provide credit-worthy borrowers access to affordable credit and attractive risk-adjusted returns to individual and institutional investors.

Prosper also recently announced its collaboration with BBVA USA to provide an end-to-end digital Home Equity Line of Credit (HELOC) solution that allows customers to complete an online application in minutes and receive an instant pre-qualification. The digital platform saves customers weeks compared to the traditional application process and offers HELOC customers access to competitive rates and no origination fees. Homeowners in Texas, Arizona, Florida, and Alabama can apply for a HELOC through Prosper’s website (www.prosper.com/heloc).

Financial summary:

  • Total Net Revenue increased to $43.4 million in Q3 2019 compared to $20.7 million in Q3 2018.
  • Core Revenue(1), which excludes the non-cash impact related to warrants to purchase preferred stock, increased to $43.4 million in Q3 2019 compared to $40.2 million in Q3 2018.
  • Net Income increased to $10.8 million in Q3 2019 compared to a Net Loss of $(19.8) million in Q3 2018.
  • Adjusted EBITDA(1) increased to ($0.7) million in Q3 2019 compared to ($5.4) million in Q3 2018.

“In the third quarter of 2019, we delivered double digit year-over-year growth in our personal loan business while generating attractive risk-adjusted returns for our investors through disciplined pricing and risk management. The combination of new product features, an increasingly seamless user experience, and a diverse investor base has set us up for continued double-digit growth and success in 2020,” said David Kimball, CEO, Prosper Marketplace. “We’re very excited about the recent announcement of our new digital HELOC platform in collaboration with BBVA USA. A home equity line of credit can be a smart solution for homeowners who need access to a credit line for things like debt consolidation or home improvement, and we have improved what has traditionally been a cumbersome and confusing process. ”

Key Operating and Financial Metrics (Unaudited)

(in thousands)

 

 

Three Months Ended September 30,

 

2019

2018

Personal Loan Originations

720,520

640,262

Total Net Revenue

43,361

20,682

Core Revenue (1)

43,361

40,243

Net Income (Loss)

10,769

(19,779)

Adjusted EBITDA(1)

(736)

(5,435)

(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 $16 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 September 30,

 

2019

2018

Total Net Revenue

$

43,361

$

20,682

 

Less: Fair Value of Warrants Vested on Sale of Borrower Loans

 

(19,561

)

Core Revenue

$

43,361

$

40,243

 

 

PROSPER MARKETPLACE, INC.

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

(UNAUDITED)

(IN THOUSANDS)

 

 

Three Months Ended September 30,

 

2019

2018

Net Income (Loss)

$

10,769

 

$

(19,779

)

Fair Value of Warrants Vested on Sale of Borrower Loans

 

19,561

 

Depreciation Expense:

 

 

Servicing and Origination

 

1,299

 

 

1,291

 

General & Administration – Other

 

536

 

 

994

 

Amortization of Intangibles

 

71

 

 

89

 

Stock-Based Compensation

 

988

 

 

1,828

 

Restructuring Charges

 

218

 

Change in Fair Value of Warrants

 

(14,217

)

 

(9,283

)

Interest Income on Available for Sale Securities, Cash and Cash Equivalents

 

(211

)

 

(362

)

Income Tax Expense

 

29

 

 

8

 

Adjusted EBITDA

$

(736

)

$

(5,435

)