Significantly Narrows Quarterly Loss
Demonstrates Progress on Strategic Priorities
On Track to Achieve GAAP Profitability by Year End
Signs Major Multi-Year Contract with JPMorgan Chase

NEW YORK, Aug. 7, 2017 /PRNewswire/ — OnDeck® (NYSE:ONDK), the leader in online lending for small business, today announced second quarter 2017 financial results, provided an update regarding its ongoing $45 million cost rationalization plan, and reaffirmed the Company is on track to achieve GAAP profitability by the end of 2017.

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“OnDeck’s second quarter 2017 results demonstrated solid progress toward achieving our strategic priorities,” said Noah Breslow, OnDeck’s chief executive officer.  “Our credit policy adjustments that began in the middle of the first quarter continue to yield benefits, with sequential improvements in both our Provision Rate and 15+ Day Delinquency Ratio.  We also further implemented our $45 million cost rationalization plan, lowering our annual operating expense run rate going forward to approximately $160 million.  Reflecting these initiatives, the net loss applicable to OnDeck common stockholders, which included a $3.2 million severance charge, decreased to $1.5 million in the second quarter of 2017, an improvement of more than $16 million from the prior year quarter.  We are on track to return to sequential originations growth in Q3 and achieve GAAP profitability by year end, and we look forward to profitable growth off a lower expense base in 2018.”

Today, OnDeck also announced that it has expanded its collaboration with JPMorgan Chase for up to four years to provide the underlying technology supporting Chase’s online lending solution to its small business customers.  Chase plans to continue to refine the offering, including expanding access and enhancing features throughout next year.

Review of Financial Results for the Second Quarter of 2017
Loans Under Management ended the period at $1.1 billion as the Company originated $464.4 million of loan volume in the second quarter of 2017.  Originations were down 19% sequentially, which is consistent with the expectations provided last quarter due to the Company’s strategic decision to tighten credit management.

Gross revenue increased to $86.7 million during the second quarter of 2017, up 25% year-over-year and driven primarily by higher interest income.  The Effective Interest Yield for the second quarter of 2017 was 32.8%, primarily reflecting the impact of higher delinquency and net charge-off rates in the second quarter of 2017 relative to the prior year period.  The weighted average APR for loans originated in the second quarter of 2017 was 43.2%.

Gain on sale was $0.3 million during the second quarter of 2017, primarily reflecting the Company’s decision to reduce the percentage of term loans sold through OnDeck Marketplace to less than 5%, as announced last quarter.  Loans sold or designated as held for sale through OnDeck Marketplacerepresented 2.3% of term loan originations in the second quarter of 2017.

Net revenue was $42.3 million during the second quarter of 2017, up 47% versus the prior year period.

Provision for loan losses during the second quarter of 2017 was $32.7 million and the Provision Rate was 7.2%.  The Provision Rate in the quarter primarily reflected net loss rate expectations for loans originated in the second quarter.  The Provision Rate improved sequentially from 8.7% due to the credit tightening the Company implemented in the middle of the first quarter.

At the end of the second quarter of 2017, the 15+ Day Delinquency Ratio was 7.2% and the average term loan age in OnDeck’s portfolio was 4.9 months.  The Net Charge-off rate in the quarter was 18.5%, reflecting both an increase in the dollar amount of net charge-offs and the impact of a contracting portfolio in the quarter.  In anticipation of higher net charge-offs, the Company had built loss reserves in prior periods, mitigating the impact on financial results for the second quarter of 2017.

The Cost of Funds Rate during the second quarter of 2017 was 6.2%.

Operating expense, inclusive of a $3.2 million charge for severance, was $44.6 million during the second quarter of 2017. Operating expense as a percent of revenue improved to 51% in the quarter, down from 68% in the prior year period.  Operating expense was favorably impacted by continued execution of the $45 million cost rationalization plan, which was largely complete at the end of the second quarter.  OnDeck expects operating expense to be approximately $40 million for each the third and fourth quarters of 2017.

GAAP net loss attributable to On Deck Capital, Inc. common stockholders was $1.5 million, or $0.02 per basic and diluted share, for the quarter, which compares to $17.9 million, or $0.25 per basic and diluted share, in the prior year period.

Adjusted EBITDA* was $3.3 million for the quarter, compared to negative $12.4 million in the prior year period.

Unpaid Principal Balance was $953.8 million at the end of the second quarter of 2017, up 21% over the prior year period.  Balances were 7% lower than the end of the first quarter of 2017 due to the Company’s strategic decision to tighten credit management.

Total Funding Debt at the end of the second quarter of 2017 was $719 million, up 30% over the prior year period and down 9% sequentially, primarily reflecting the changes in Unpaid Principal Balance. OnDeck continued to enhance its funding capabilities during the second quarter of 2017, extending the maturity date of its $100 million credit facility with SunTrust Bank to November 2018 and decreasing the facility’s funding cost by 50 basis points. OnDeck also extended the maturity date of its asset-backed debt facility that finances its line of credit offering to May 2019, increased the facility’s borrowing capacity to $100 million, and decreased the funding costs by 200 basis points.

At the end of the second quarter of 2017, cash and cash equivalents were $78 million.

Guidance for Third Quarter and Full Year 2017
OnDeck provided the following guidance for the three months ending September 30, 2017 and reiterated its guidance for the full year ending December 31, 2017:

Third Quarter 2017

  • Gross revenue between $82 million and $86 million.
  • Adjusted EBITDA between $1 million and $5 million.

Full Year 2017

  • Gross revenue between $342 million and $352 million.
  • Adjusted EBITDA between $5 million and $15 million.

Conference Call
OnDeck will host a conference call to discuss second quarter 2017 financial results on August 7, 2017 at 8:00 AM 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 (866) 393-4306 for calls within the U.S., or by dialing (734) 385-2616 for international calls. The conference ID is 54111057.

About OnDeck
OnDeck (NYSE: ONDK) is the leader in online small business lending. Since 2007, the company has powered Main Street’s growth through advanced lending technology and a constant dedication to customer service. OnDeck’s proprietary credit scoring system – the OnDeck Score® – leverages advanced analytics, enabling OnDeck to make real-time lending decisions and deliver capital to small businesses in as little as 24 hours. OnDeck offers business owners a complete financing solution, including the online lending industry’s widest range of term loans and lines of credit. To date, the company has deployed over $7 billion to more than 70,000 customers in 700 different industries across the United States, Canada and Australia. OnDeck has an A+ rating with the Better Business Bureau and operates the educational small business financing website For more information, please visit

*About Non-GAAP Financial Measures
This press release and its attachments include Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Expense Ratio and Adjusted Operating Yield all of which exclude stock-based compensation, as well as Net Interest Margin and Net Interest Margin After Credit Losses, all of 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,” “targets,” “expects,” “intends, “may,” “allows,” “continues,” “believes,” “anticipates,” “estimates” or similar expressions. These include statements regarding guidance on gross revenue and Adjusted EBITDA for the third quarter and full year 2017, timing and anticipated savings from our cost rationalization plan, our expected return to sequential originations growth, and our plan and the timing for achieving positive Adjusted EBITDA and GAAP profitability. 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.  Important 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 for, are approved for and actually borrow from us; our future financial performance, including our expectations regarding our revenue, cost of revenue, expectations of future losses, net profit or net margin, operating expenses, ability to generate cash flow, and ability to achieve, and maintain, future GAAP profitability; our liquidity and working capital requirements, including the availability and pricing of debt facilities, securitizations and OnDeck Marketplace sales to fund our existing operations and planned growth, and the consequences of mismatches in the timing or amounts of resources available to fund additional loans or draws on lines of credit; the effect on our business of originating loans without third-party funding sources; the impact of increased utilization of cash to fund originations; the effect on our business of utilizing cash for voluntary loan purchases from third parties; our ability to hire and retain necessary qualified employees, particularly following our workforce reductions announced in February and May 2017; 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; 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 increased 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, including the availability and pricing of possible warehouse financing and securitization and OnDeck Marketplace transactions; our failure to anticipate or adapt to future changes in our industry; 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; 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, 2016, and in other documents that we file with theSecurities 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 Contact:
Scott Reynolds

Media Contact:
Jim Larkin

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