Achieves Record Gross Revenue, Net Revenues and Origination Volume

NEW YORK, November 2, 2015 /PRNewswire/ — OnDeck® (NYSE:ONDK), the leader in online lending for small business, today announced financial results for its third quarter ended September 30, 2015.

Financial Highlights

  • Gross revenue was a record $67.4 million for the quarter, up 55% from the prior year period.
  • Net revenue was $46.0 million for the quarter, up 109% from the prior year period.
  • Adjusted EBITDA* was $9.0 million for the quarter, up from $2.6 million in the prior year period.
  • Adjusted Net Income* was $7.4 million for the quarter, up from $1.5 million in the prior year period.
  • GAAP net income attributable to On Deck Capital, Inc. common stockholders was $3.7 million for the quarter, compared to a loss of $3.3 million in the prior year period.

Key Business Highlights

  • Origination volume increased to a record $483 million for the quarter, reflecting growth of 54% over the prior year period.
  • A record $174 million1 of loans were sold through OnDeck Marketplace®, OnDeck’s institutional investor loan purchase platform. These loan sales were executed at record gain-on-sale levels and increased to 38% of term loan originations during the third quarter of 2015.
  • OnDeck broadened its partnership with Intuit, launching the Quickbooks Financing Line of Credit to provide more efficient access to lower rate financing.
  • OnDeck announced an important strategic expansion of its product suite to provide a greater range of financing solutions for small businesses – including term loan amounts as high as $500,000 with payback lengths as long as 36 months, and lines of credit as high as $100,000.

“OnDeck achieved very strong results during the third quarter,” said Noah Breslow, OnDeck’s chief executive officer, “with sequential originations growth supported by continued traction in our Direct and Strategic Partner channels. We’ve continued to demonstrate our industry leadership, most recently through broadening our partnership with Intuit and implementing a significant natural expansion of our product suite, which was powered by our small business lending platform and represented the continuation of our strategy to move up-market and retain our customers as they grow. Providing simple and convenient credit solutions designed to address the diverse capital needs of small businesses, at competitive rates and with outstanding customer service, enables OnDeck to be a first-choice option for this important sector of our economy.”

“OnDeck generated record originations, gross revenues and net revenues, leading to record Adjusted EBITDA and GAAP profitability in the quarter,” said Howard Katzenberg, OnDeck’s chief financial officer. “The higher gross revenue and Adjusted EBITDA relative to our third quarter 2015 financial guidance was driven primarily by increased loan originations, our continued ramp of Marketplace at increased gain on sale levels, and an improved credit outlook resulting in a release of loan loss reserves. As we look towards the remainder of 2015, the fundamentals of our financial model remain strong, and we remain confident in the growth prospects of our business.”

Review of Financial Results for the Third Quarter of 2015

Originations grew to $483 million during the third quarter of 2015, up 54% from the comparable prior year period and 15% sequentially. Originations growth primarily reflected strength in the company’s Direct and Strategic Partner channels which collectively increased 92% over the prior year period and 21% sequentially.

Gross revenue increased to $67.4 million during the third quarter of 2015, up 55% from the comparable prior year period. The increase in gross revenue was primarily due to growth in outstanding loan balances as well as increased volume sold through the OnDeck Marketplace and a higher gain on sale rate. The increase in the gain on sale included a $2.4 million gain related to retained loan servicing rights, of which $1 million was related to servicing rights for loans sold prior to the third quarter of 2015. The effective interest yield for the third quarter of 2015 was 37.9%, down from 41.6% in the comparable prior year period, reflecting the continued mix shift to lower cost distribution channels, an increase in average term loan length over the period, and OnDeck’s continuing efforts to lower pricing and origination fees for repeat loan customers. Reflecting these trends, the average APR of loans originated in the third quarter was 42.7%, a decline from 52.8% in the prior year period.

Net revenue increased to $46.0 million during the third quarter of 2015, up 109% from the comparable prior year period. Net revenue margin increased to 68.3% during the third quarter of 2015 from 50.7% in the prior year period, principally due to a lower Provision Rate.

The Cost of Funds Rate during the third quarter of 2015 increased to 5.7% of Average Funding Debt Outstanding, up from 5.4% in the comparable prior year period. The majority of the increase was due to higher amortization of debt issuance costs and unused commitment fees relating to the company’s newly established credit facilities with SunTrust and Bank of America.

Provision for loan losses during the third quarter of 2015 decreased to $16.2 million, down from $17.4 million during the year ago period. The Provision Rate in the third quarter of 2015 was 5.1% compared to 6.0% in the comparable prior year period. The decline in the Provision Rate was primarily due to an improved credit outlook on the seasoned portfolio, resulting in a $5.5 million release of the June 30, 2015 loan loss reserve.

Operating expenses were $42.5 million during the third quarter of 2015, up 99% over the comparable prior year period as OnDeck increased investment in customer acquisition marketing, expanded its technology and analytics teams to support growth, incurred additional general and administrative expenses related to operating as a public company, and increased its reserve for unfunded line of credit commitments.

Adjusted EBITDA improved to $9.0 million for the quarter, versus $2.6 million in the comparable prior year period.

Adjusted Net Income improved to $7.4 million, or $0.11 per basic share and $0.10 per diluted share, for the quarter versus $1.5 million, or $0.23 per basic and diluted share, in the comparable prior year period.

OnDeck had GAAP net income attributable to On Deck Capital, Inc. common stockholders of $3.7 million, or $0.05 per basic and diluted share, for the quarter which compares to GAAP net loss attributable to On Deck Capital, Inc. common stockholders of $3.3 million, or $0.51 per basic and diluted share, in the comparable prior year period.

Guidance for Fourth Quarter 2015 and Full Year 2015

OnDeck provided the following guidance for the three months and full year ending December 31, 2015.

Fourth Quarter 2015

    • Gross revenue between $64 million and $66 million reflecting, in part, three fewer business days in the period as compared to the third quarter of 2015.
    • Adjusted EBITDA between negative $1 million and breakeven, reflecting the fewer business days and a provision rate for the period within the company’s targeted range of 6-7%.

Full Year 2015

      • Gross revenue between $251 million and $253 million.
      • Adjusted EBITDA between $15 million and $16 million.

Conference Call

OnDeck will host a conference call to discuss third quarter 2015 financial results on November 2, 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 55963420.

About OnDeck

OnDeck (NYSE: ONDK), the leader in online lending for small business, is committed to powering Main Street’s growth through lending and technology innovation. Using advanced technology, analytics and the OnDeck Score® – the company’s proprietary small business credit scoring system – OnDeck makes real-time lending decisions based on thousands of data points and a business’ individual needs. By combining its proven credit platform with outstanding customer service, OnDeck offers small businesses a complete financing solution, including a range of term loans and lines of credit as well as a streamlined process that respects a small business owner’s time.

OnDeck also partners with small business service providers, enabling them to seamlessly 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 $3 billion to more than 700 different industries in all 50 U.S. states and 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. OnDeck is a publicly traded company on the New York Stock Exchange.

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 Income (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 fourth 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 for, are approved for and actually borrow from us; our future financial performance, including our expectations regarding our revenue, cost of revenue, net profit or net 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 Contact:
Kathryn Harmon Miller

Media Contact:
Sophie Fischman

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

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