LC Q3 Deep Dive: Marketplace Growth, Product Expansion, and Disciplined Credit Drive Results

Digital lending platform LendingClub (NYSE:LC) reported Q3 CY2025 results beating Wall Street’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.

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StockStory’s Take

LendingClub’s third quarter saw robust financial performance, with revenue and profit both surpassing Wall Street expectations. Management attributed the strong results to 37% growth in loan originations and a near tripling of earnings per share. CEO Scott Sanborn highlighted the effectiveness of LendingClub's product suite, noting that their targeted marketing and disciplined credit underwriting attracted both new and repeat customers. Sanborn stated, “We continue to be very successful at attracting our target customers,” emphasizing the platform’s ability to outperform peers on credit metrics and maintain high loan investor demand.

Looking ahead, LendingClub’s outlook is defined by ongoing investments in marketing, a focus on scaling its digital platform, and continued product innovation. Management pointed to new product launches such as LevelUp checking and targeted marketing efforts as key to driving future growth. CFO Drew LaBenne explained that the company expects to leverage its strong balance sheet and capital position to support originations and product expansion, stating, “Loan investor demand remains strong, loan sales pricing continues to trend higher, and our product and marketing initiatives are driving high-quality volume growth.”

Key Insights from Management’s Remarks

Management attributed LendingClub’s quarterly momentum to a combination of strong borrower demand, solid loan investor appetite, and higher marketplace revenue driven by product and marketing initiatives.

• Originations surge: LendingClub delivered its highest loan origination volume in three years, driven by heightened consumer demand for refinancing and increased investment from loan buyers. Originations grew across both new and repeat customers, aided by ongoing marketing channel expansion.
• Marketplace revenue expansion: The company’s marketplace revenue rose by 75%, buoyed by strong performance in structured certificate sales and improving loan sales prices. New rated products designed for insurance investors attracted significant interest, supporting broader investor participation and higher loan pricing.
• Disciplined credit underwriting: Management emphasized continued outperformance in credit metrics versus peers, with a net charge-off ratio of 2.9%. CEO Scott Sanborn noted that LendingClub’s risk management practices and focus on higher-quality borrowers insulated the company from broader industry credit concerns.
• Product engagement and app adoption: New offerings like LevelUp checking and DebtIQ, along with an enhanced mobile app, led to a 7x increase in account openings and a 50% rise in monthly app logins among borrowers. These engagement efforts have enabled lower customer acquisition costs and increased repeat borrowing.
• Deposit and funding optimization: LendingClub maintained healthy deposit growth through its LevelUp savings product, which now represents the majority of deposit growth for the year. The company reported a shift from brokered to relationship deposits, improving funding stability and supporting ongoing asset growth.

Drivers of Future Performance

LendingClub’s forward guidance centers on continued originations growth, a balanced approach to loan sales and balance sheet expansion, and disciplined investment in marketing and technology.

• Marketing channel optimization: The company plans to scale its marketing spend to support new customer acquisition and repeat borrowing, while closely tracking the efficiency of each channel. Management believes these efforts will create a sustainable flywheel effect for lifetime customer value.
• Balanced loan allocation: LendingClub will continue to balance growth between on-balance-sheet lending and marketplace loan sales, depending on investor demand and pricing. Management stated that originations growth should be sufficient to support both portfolio expansion and investor relationships.
• Risk and credit vigilance: The company expects charge-off ratios to revert to more normalized levels as newer loan vintages mature, and has factored these dynamics into its provisioning. Management remains cautious, monitoring shifts in borrower quality and staying focused on disciplined underwriting standards.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will be monitoring (1) LendingClub’s ability to further scale new product adoption and deepen member engagement through its mobile app and LevelUp suite, (2) the evolution of loan investor demand and pricing for marketplace sales, especially among insurance and institutional buyers, and (3) continued credit performance as new loan vintages mature. The efficiency of incremental marketing investments and progress toward a potential rebrand will also be important indicators.

LendingClub currently trades at $17.48, up from $16.52 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free for active Edge members).

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