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Prosper Reports Strong Second Quarter Growth; Closes $500 Million Securitization Transaction
[August 14, 2017]

Prosper Reports Strong Second Quarter Growth; Closes $500 Million Securitization Transaction


Prosper, a leading marketplace lending platform for consumer loans, today reported significant growth during the second quarter of 2017. Driven by strong demand for its personal loan product, Prosper facilitated $775 million in loan originations through its platform, up 32% quarter-over-quarter and 74% year-over-year. The company also grew transaction fee revenue 32% quarter-over-quarter and 84% year-over-year.

"We are very pleased with our second quarter results which demonstrate our ability to generate positive operating cash flow as we grow loan originations and transaction revenue with disciplined expense management," said David Kimball, CEO, Prosper Marketplace. "Our growth was driven by strong interest from borrowers, our partnership with a consortium of investors, and innovations from our talented team."

Additionally, the company recently closed the second securitization from the Prosper Marketplace Issuance Trust, Series 2017-2, "PMIT 2017-2." Approximately $500 million of notes were issued for PMIT 2017-2 which priced at tighter levels versus the PMIT 2017-1 transaction that closed in May 2017. Almost 45 unique investors have now participated in the two securitizations issued under the PMIT program. Credit Suisse Securities (USA) LLC and Jefferies LLC served as joint book runners on the transaction, which was rated by Fitch Ratings, Inc. and Kroll Bond Rating Agency, Inc.

"With this second securitization, we continued to see strong demand for our assets, underscoring investors' confidence in our business and this asset class in general," said Usama Ashraf, CFO, Prosper Marketplace.

The following table summarizes the financial highlights from the quarter:



Key Operating and Financial Metrics (Unaudited)
(in thousands)
    Three Months Ended June 30,
    2017   2016
Loan Originations   $ 774,700     $ 445,300  
Transaction Fees, Net     35,423       19,276  
Servicing Fees, Net     6,793       7,676  
Net Loss     (41,405 )     (35,628 )
Adjusted EBITDA(1)     6,716       (11,619 )
Net Cash Provided by (Used in) Operating Activities     8,579       (18,341 )
   

Summary of Key Financial Highlights:

  • Prosper facilitated $775 million in loan originations through its platform, up 32% quarter-over-quarter and 74% year-over-year driven by strong demand for its personal loan product.
  • Transaction fee revenue rose to $35.4 million, up 32% quarter-over-quarter and 84% year-over-year.
  • The company reported a Net Loss of $41.4 million in the second quarter of 2017, which included $39.3 million in non-cash charges related to warrants to purchase preferred stock that were issued to a consortium of investors and a third party in connection with a settlement agreement.
  • Prosper generated $8.6 million of Net Cash from Operating Activities and Adjusted EBITDA(1) of $6.7 million in the second quarter of 2017, driven by an increase in origination volume, improved marketing efficiencies and lower general and administrative expenses.

(1) Adjusted EBITDA is a non-GAAP Financial measure. The accompanying schedule to this press release provides a reconciliation of this non-GAAP financial measure to the most directly comparable financial measure calculated and presented in accordance with GAAP. Our non-GAAP financial measures should not be considered as an alternative 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 $10 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.

PROSPER MARKETPLACE, INC.
RECONCILIATION OF NET (News - Alert) INCOME (LOSS) TO ADJUSTED EBITDA
(UNAUDITED)
(IN THOUSANDS)
    Three Months Ended June 30,
    2017   2016  
Net Loss   $ (41,405 )   $ (35,628 )
Fair Value of Warrants Vested on Sale of Borrower Loans     16,887       -  
Depreciation Expense:        
Servicing and Origination     1,357       981  
General & Administration - Other     1,293       1,461  
Amortization of Intangibles     177       1,007  
Impairment of Intangibles     1,999       240  
Stock-based Compensation     3,312       6,359  
Restructuring Charges     647       14,061  
Change in Fair Value of Warrants     22,416       -  
Interest Income on Available for Sale Securities, Cash and Cash Equivalents     (64 )     (205 )
Income Tax Expense     97       105  
Adjusted EBITDA   $ 6,716     $ (11,619 )
   


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