LendingClub (LC)

Digital lending platform LendingClub (NYSE:LC) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 31.9% year on year to $266.2 million. Its GAAP profit of $0.37 per share was 21.7% above analysts’ consensus estimates.

Company Overview

Pioneering peer-to-peer lending in the US before evolving into a digital bank, LendingClub (NYSE:LC) operates a marketplace that connects borrowers with lenders, offering personal loans, auto refinancing, and banking services.

Personal loan providers offer unsecured credit for various consumer needs. The sector benefits from digital application processes, increasing consumer comfort with online financial services, and opportunities in underserved credit segments. Headwinds include credit risk management in unsecured lending, regulatory oversight of lending practices, and intense competition affecting margins from both traditional and fintech lenders.

LendingClub's competitors include digital lending platforms like SoFi (NASDAQ:SOFI) and Upstart (NASDAQ:UPST), traditional banks offering online lending services such as Marcus by Goldman Sachs (NYSE:GS), and fintech companies like Prosper Marketplace and Avant.

A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, LendingClub’s revenue grew at an exceptional 24.7% compounded annual growth rate over the last five years. Its growth beat the average financials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. LendingClub’s recent performance shows its demand has slowed significantly as its revenue was flat over the last two years. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, LendingClub reported wonderful year-on-year revenue growth of 31.9%, and its $266.2 million of revenue exceeded Wall Street’s estimates by 3.9%.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For Personal Loan companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.

The pre-tax profit margin includes interest because it's central to how financial institutions generate revenue and manage costs. Tax considerations are excluded since they represent government policy rather than operational performance, giving investors a clearer view of business fundamentals.

Over the last four years, LendingClub’s pre-tax profit margin has fallen by 20.5 percentage points, going from negative 5.9% to 14.5%. It has also expanded by 7.9 percentage points on a two-year basis, showing its expenses have consistently grown at a slower rate than revenue. This typically signals prudent management.

In Q3, LendingClub’s pre-tax profit margin was 21.5%. This result was 12.6 percentage points better than the same quarter last year.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

LendingClub’s full-year EPS flipped from negative to positive over the last five years. This is a good sign and shows it’s at an inflection point.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

LendingClub’s EPS grew at an astounding 34.3% compounded annual growth rate over the last two years, higher than its flat revenue. This tells us management responded to softer demand by adapting its cost structure.

We can take a deeper look into LendingClub’s earnings quality to better understand the drivers of its performance. LendingClub’s pre-tax profit margin has expanded over the last two years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q3, LendingClub reported EPS of $0.37, up from $0.13 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects LendingClub’s full-year EPS of $0.88 to grow 47.4%.

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, LendingClub has averaged an ROE of 8.3%, uninspiring for a company operating in a sector where the average shakes out around 10%.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, LendingClub has averaged a Tier 1 capital ratio of 17.4%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

It was good to see LendingClub beat analysts’ EPS expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 6.3% to $17.55 immediately after reporting.

Updated: December 3, 2025 at 11:34 PM EST

Before making an investment decision, investors should account for LendingClub’s business fundamentals and valuation in addition to what happened in the latest quarter.

There is a lot to like about LendingClub. For starters, its revenue growth was exceptional over the last five years. On top of that, its expanding pre-tax profit margin shows the business has become more efficient, and its spectacular EPS growth over the last five years shows its profits are trickling down to shareholders.

LendingClub’s P/E ratio based on the next 12 months is 12.6x. Looking at the financials landscape today, LendingClub’s fundamentals really stand out, and we like it at this price.

Wall Street analysts have a consensus one-year price target of $21.91 on the company (compared to the current share price of $18.72), implying they see 17% upside in buying LendingClub in the short term.