OnDeck reported a Q1/17 net loss of $11.1 million compared to a net loss of $12.6 million for the same quarter in 2016. The company said gross revenue of $92.9 million, up 48.4% from $62.6 million in Q1/16, was partially offset by loan loss provisions of $46.2 million up from $25.4 million a year earlier. The following highlights were excerpted from the report:
“Our first quarter 2017 results and our continuing initiatives to reduce costs demonstrate the progress we are making toward achieving our financial performance objectives,” said Noah Breslow, OnDeck’s CEO. “During the quarter, we continued to focus on tightening our credit management and improving the operating leverage inherent in our technology-enabled model. Our credit policy adjustments have begun to yield benefits, as demonstrated by the sequential improvement in our provision rate and our improving outlook for this metric for the remaining three quarters of 2017. Additionally, we are encouraged that roll rates for 2016 loans stabilized during the quarter, and that performance of loans with maturities of 15 months or longer is in line with the recalibrated expectations we set last quarter.
“In the first quarter of 2017, we began the process to realign our cost structure with the announcement of a $20 million cost rationalization plan. These actions drove meaningful efficiencies in our operating expense base in the first quarter, resulting in our GAAP operating expense margin declining to 50% from 71% in the prior year period and a 330 basis point reduction in our adjusted expense ratio year-over-year. As part of our continued commitment to drive efficiencies and reduce OnDeck’s operating expenses, we are implementing an additional $25 million of annual run rate operating expense savings relative to our year-end 2016 exit run rate. We will continue to prioritize improving credit performance and reducing costs, which will decrease originations and portfolio growth in the short term. As a result of our strategic actions, we are targeting the achievement of GAAP profitability in the second half of 2017, which will provide a strong foundation for profitable growth in 2018.”
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