Achieves Record Gross Revenue of $56.5 million and Record Origination Volume of $416 million

NEW YORK, April 28, 2015 /PRNewswire/ — OnDeck® (NYSE: ONDK), a leading platform for small business lending, today announced financial results for its first quarter ended March 31, 2015.

Financial Highlights

  • Gross revenue was a record $56.5 million for the quarter, up 98% from the prior year period.
  • Adjusted EBITDA* was a loss of $1.8 million for the quarter, compared to a loss of $5.8 million in the prior year period.
  • Adjusted Net Loss* improved to a loss of $3.3 million for the quarter, compared to a loss of $6.9 million in the prior year period.
  • GAAP net loss was $5.3 million for the quarter, compared to a net loss of $13.7 million in the prior year period.

Key Business Highlights

  • Origination volume increased to a record $416 million for the quarter, reflecting growth of 83% over the prior year period.
  • OnDeck continued to expand its strategic partner channel, including a new partnership with Angie’s List and an expanded alliance with Prosper.
  • OnDeck Marketplace®, OnDeck’s institutional investor loan purchase platform, grew to 24% of term loan originations during the first quarter of 2015, up from 18% in the fourth quarter of 2014.
  • OnDeck expanded its product offering in Canada and established OnDeck Australia.

“2015 is off to a great start with many significant achievements,” said Noah Breslow, chief executive officer, OnDeck. “Not only did OnDeck continue to deepen our market penetration with an expanded product offering in Canada, but we also announced notable strategic partnerships and the company’s expansion into Australia. These milestones reflect our commitment to continual innovation and solidify our position as a market leader.”

“OnDeck delivered another strong financial performance amid a period of investment,” said Howard Katzenberg, chief financial officer, OnDeck. “We generated record originations volume and record gross revenue, while also maintaining the credit quality of our portfolio and passing along savings to our customers in the form of lower average APRs.”

Review of Financial Results for the First Quarter of 2015
Originations grew to $416 million during the first quarter of 2015, up 83% from the comparable prior year period. Originations growth reflected strength in all three distribution channels, particularly in the direct and strategic partner channels.

Gross revenue increased to $56.5 million during the first quarter of 2015, up 98% from the comparable prior year period. The increase in gross revenue was primarily due to growth in originations as well as increased volume sold through the OnDeck Marketplace during the first quarter of 2015 compared to the prior year period. The effective interest yield for the first quarter of 2015 was 36.7%, down from 41.2% in the comparable prior year period, reflecting the continued mix shift to lower cost distribution channels, an increase in average term length over the period and OnDeck’s continuing efforts to lower pricing for customers as it achieves cost efficiencies. Reflecting these trends, the average APR of loans originated in the first quarter was 49.3%, a decline from 59.9% in the prior year period.

Net revenue increased to $28.3 million during the first quarter of 2015, up 286% from the comparable prior year period. Net revenue margin increased to 50.1% during the first quarter of 2015 from 25.7% in the prior year period, principally due to a lower Cost of Funds Rate and a lower Provision Rate.

The Cost of Funds Rate during the first quarter of 2015 declined to 5.1% of Average Funding Debt Outstanding, down from 9.3% in the comparable prior year period. The improvement was primarily the result of the company’s continued shift to lower-cost funding sources, including the company’s securitization that closed in the second quarter of 2014.

Provision for loan losses during the first quarter of 2015 increased to $23.1 million, up from $16.6 million during the year ago period, primarily as a result of the growth in originations. The Provision Rate in the first quarter of 2015 was 7.2%, compared to 8.4% in the comparable prior year period.

Operating expenses were $33.5 million during the first quarter of 2015, up 135% over the comparable prior year period as OnDeck increased investment in direct marketing, expanded its technology and analytics teams to support growth and incurred additional general and administrative expenses related to operating as a public company. Operating expense as a percent of gross revenue for the first quarter of 2015 was 59.4%, up from 50.0% during the year ago period, reflecting these investments.

Adjusted EBITDA was a loss of $1.8 million in the quarter, an improvement from a loss of $5.8 million in the comparable prior year period.

Adjusted Net Loss improved to a loss of $3.3 million, or $0.05 per basic share, for the quarter versus a loss of $6.9 million, or $1.46 per basic share, in the comparable prior year period.

OnDeck had a GAAP net loss of $5.3 million, or $0.08 per basic share, for the quarter which compares to a GAAP net loss of $13.7 million, or $3.47 per basic share, in the comparable prior year period.

Guidance for Second Quarter 2015 and Full Year 2015
OnDeck provided the following guidance for the three months ending June 30, 2015 and year ending December 31, 2015.

Second Quarter 2015

  • Gross revenue between $58 million and $60 million
  • Adjusted EBITDA between a loss of $3 million and a loss of $4 million

Full Year 2015

    • Gross revenue between $257 million and $261 million
    • Adjusted EBITDA between a loss of $6 million and a loss of $8 million, driven by the impact of expansion to Australia and continued growth investments.

Conference Call
OnDeck will host a conference call to discuss first quarter 2015 financial results on May 4, 2015 at 5:00 PM ET. Hosting the call will be Noah Breslow, Chief Executive Officer, and Howard Katzenberg, Chief Financial Officer. The conference call can be accessed toll free by dialing (877) 201-0168 for calls within the U.S., or by dialing (647) 788-4901 for international calls. The conference ID is 23530259.

About OnDeck
OnDeck (NYSE: ONDK), a leading platform for small business loans, is committed to increasing Main Street’s access to capital. OnDeck uses advanced lending technology and analytics to assess creditworthiness based on actual operating performance and not solely on personal credit. The OnDeck Score®, the company’s proprietary small business credit scoring system, evaluates thousands of data points to deliver a credit decision rapidly and accurately. Small businesses can apply for a line of credit or term loan online in minutes, get a decision immediately and receive funds in as fast as the same day. OnDeck also partners with small business service providers, enabling them to connect their customers to OnDeck financing. OnDeck’s diversified loan funding strategy enables the company to fund small business loans from various credit facilities, securitization and the OnDeck Marketplace®, a platform that enables institutional investors to purchase small business loans originated by OnDeck.

Since 2007, OnDeck has deployed more than $2 billion to more than 700 different industries in all 50 U.S. states, and also makes small business loans in Canada. The company has an A+ rating with the Better Business Bureau and operates the website which provides credit education and information about small business financing. On December 17, 2014, OnDeck started trading on the New York Stock Exchange under the ticker ONDK.

For more information, please visit and follow OnDeck on Twitter @OnDeckCapital.

*About Non-GAAP Financial Measures
This press release and its attachments include Adjusted EBITDA and Adjusted Net Loss, which are financial measures not calculated or presented in accordance with United States generally accepted accounting principles, or GAAP. We believe these non-GAAP measures provide useful supplemental information for period-to-period comparisons of our business and can assist investors and others in understanding and evaluating our operating results. However, these non-GAAP measures should not be considered in isolation or as an alternative to any measures of financial performance calculated and presented in accordance with GAAP. Other companies may calculate these or similarly titled non-GAAP measures differently than we do. See “Non-GAAP Reconciliation” later in this press release for a description of these non-GAAP measures and a reconciliation to the most directly comparable financial measures prepared in accordance with GAAP.

Safe Harbor Statement
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other legal authority. Forward-looking statements can be identified by words such as “will,” “enables,” “expects,” “allows,” “continues,” “believes,” “anticipates,” “estimates” or similar expressions. These include statements regarding guidance on gross revenue and Adjusted EBITDA for the second quarter and full year 2015. Forward-looking statements are neither historical facts nor assurances of future performance. They are based only on our current beliefs, expectations and assumptions regarding the future of our business, anticipated events and trends, the economy and other future conditions. As such, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and in many cases outside our control. Therefore, you should not rely on any of these forward-looking statements. Our expected results may not be achieved, and actual results may differ materially from our expectations. Factors that could cause or contribute to actual results to differing from our forward-looking statements include risks relating to: our ability to attract potential customers to our platform; the degree to which potential customers apply, are approved and actually borrow from us; our future financial performance, including our expectations regarding our revenue, cost of revenue, gross profit or gross margin, operating expenses, ability to generate cash flow, and ability to achieve, and maintain, future profitability; anticipated trends, growth rates and challenges in our business and in the markets in which we operate; the ability of our customers to repay loans; our continuing efforts to implement certain additional compliance measures related to our funding advisor channel and their potential impact; changes in product distribution channel mix; our ability to anticipate market needs and develop new and enhanced products and services to meet those needs; interest rates and origination fees on loans; maintaining and expanding our customer base; the impact of competition in our industry and innovation by our competitors; our anticipated growth and growth strategies, including through the possible introduction of new products and the possible expansion in existing or new international markets, and our ability to effectively manage that growth and our expenses; our ability to sell our products and expand; our reputation and possible adverse publicity about us or our industry; the availability and cost of our funding; our failure to anticipate or adapt to future changes in our industry; our ability to hire and retain necessary qualified employees to expand our operations; the impact of any failure of our solutions; our reliance on our third-party service providers; the evolution of technology affecting our products, services and markets; our compliance with applicable local, state and federal laws, rules and regulations and their application and interpretation, whether existing, modified or new; our ability to adequately protect our intellectual property; the effect of litigation or other disputes to which we are or may be a party; the increased expenses and administrative workload associated with being a public company; failure to maintain an effective system of internal controls necessary to accurately report our financial results and prevent fraud; our liquidity and working capital requirements; the estimates and estimate methodologies used in preparing our consolidated financial statements; the future trading prices of our common stock, the impact of securities analysts’ reports and shares eligible for future sale on these prices; and our ability to prevent or discover security breaks, disruption in service and comparable events that could compromise the personal and confidential information held in our data systems, reduce the attractiveness of the platform or adversely impact our ability to service the loans; and other risks, including those described in our Annual Report on Form 10-K for the year ended December 31, 2014 and in other documents that we file with the Securities and Exchange Commission from time to time which are or will be available on the Commission’s website at Except as required by law, we undertake no duty to update the information in this press release.

Investor Relations Contact:
Kathryn Harmon

Media Relations Contact:
Jonathan Cutler/Melissa Barto
JCUTLER media group

OnDeck, the OnDeck logo, OnDeck Score and OnDeck Marketplace are trademarks of On Deck Capital, Inc.

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