Market Overview

Prosper Reports Second Quarter Results; over $13 Billion of Loans Originated since Inception

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Prosper, a leading peer-to-peer lending platform connecting borrowers
and investors, today reported financial results for the second quarter
of 2018. Year-over-year loan originations increased 12% to $867 million,
Net Loss decreased 70% to ($12.6) million and Adjusted EBITDA(1) increased
31% to $8.8 million. During the quarter, Prosper also announced that it
has facilitated the origination of over 1 million loans. More than $13
billion in loans have originated through Prosper's platform since 2006.

"For the fifth consecutive quarter we successfully balanced growth with
generating positive Adjusted EBITDA," said David Kimball, CEO, Prosper.
"Maintaining a balanced marketplace that provides value to both
borrowers and investors remains our highest priority. Throughout 2018,
Prosper has been raising interest rates and significantly tightening
credit in order to ensure that we continue to provide a fair price for
borrowers and a solid risk-adjusted return for investors."

Financial highlights include:

  • Total Net Revenue, which includes the non-cash impact related to
    warrants to purchase preferred stock, was flat year-over-year at $31.7
    million in Q2 2018 compared to $31.4 million in Q2 2017
  • Core Revenue(1), which excludes the non-cash impact related
    to warrants to purchase preferred stock, increased $4.0 million or 8%
    year-over-year to $52.3 million in Q2 2018 compared to $48.3 million
    in Q2 2017
  • Net Loss decreased by $28.8 million or 70% to ($12.6) million in Q2
    2018 compared to a Net Loss of ($41.4) million in Q2 2017
  • Adjusted EBITDA(1) increased $2.1 million or 31% to $8.8
    million in Q2 2018 compared to $6.7 million in Q2 2017, the fifth
    consecutive quarter of positive Adjusted EBITDA(1)
    generated by Prosper
  • During Q2 2018, Prosper also upsized its committed revolving warehouse
    facility to $200 million as the company continues to invest in loans
    originated through the Prosper platform alongside our investors

The following table summarizes the financial highlights from the quarter:

 

Key Operating and Financial Metrics (Unaudited)

(in thousands)

   
     

Three Months Ended June 30,

     

2018

   

2017

Loan Originations     866,894     774,700
Transaction Fees, Net     37,988     35,423
Servicing Fees, Net     7,487     6,793
Total Net Revenue     31,675     31,447
Core Revenue (1)     52,308     48,334
Net Loss     (12,599)     (41,405)
Adjusted EBITDA(1)     8,807     6,716
   

(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 $13 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 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.

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,

      2018    

2017

Total Net Revenue     $ 31,675     $ 31,447

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

    (20,633)     (16,887)
Core Revenue     $ 52,308     $ 48,334
   
   
PROSPER MARKETPLACE, INC.
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(UNAUDITED)
(IN THOUSANDS)
 
      Three Months Ended June 30,
      2018     2017
Net Loss     $ (12,599)     $ (41,405)
Fair Value of Warrants Vested on Sale of Borrower Loans     20,633     16,887
Depreciation Expense:            
Servicing and Origination     1,413     1,357
General & Administration – Other     1,007     1,293
Amortization of Intangibles     89     177
Impairment of Intangibles     -     1,999
Stock-Based Compensation     2,253     3,312
Restructuring Charges     271     647
Change in Fair Value of Warrants     (3,998)     22,416
Interest Income on Available for Sale Securities, Cash and Cash
Equivalents
    (271)     (64)
Income Tax Expense     9     97
Adjusted EBITDA     $ 8,807     $ 6,716
   

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