OnDeck Capital, the online lender whose initial public offering raised eyebrows in December, posted a net loss of $4.3 million for the fourth quarter in its first report as a public company.
The per-share loss of one cent was slightly narrower than the average loss estimate of 9.2 cents from analysts polled by Bloomberg.
The online lender's net revenue surged 186% to $25.4 million, but was hurt partly by a $20.4 million provision for loan losses. Interest income rose 107%, to $45.4 million.
At $27.5 million, total operating expenses exceeded revenue by about $2.1 million. For the entire year operating expenses rose 81%, driven by continued investment in direct marketing and expansion of data and analytics teams, the lender said in its press release.
Sales and marketing expenses increased 153% to $11.4 million and drove quarterly costs as OnDeck seeks to further scale up to justify its IPO valuation. General and administrative costs were $7.7 million, outpacing technology and analytics costs by $1.7 million, perhaps surprising for a firm that hangs its hat on internal analytics and a proprietary credit scoring system.
OnDeck increased its origination volume by 120% to $369 million, which it reported to be a record for a quarter. However the company's effective interest yield narrowed 5.2 percentage points, which the company attributed to a "shift in distribution channels" and an increase in the average length of a loan and efforts to lower pricing for consumers. The lender is trying to reduce its reliance on brokers now that it's under increased scrutiny following its IPO. There has been speculation over pricing problems for online cash advance lenders like OnDeck, which received an unflattering profile from Bloomberg Businessweek due to high fees paid by some borrowers. Last month OnDeck opened a small business marketplace for institutional investors as a potential way to access more capital while reducing lending costs and rates.
The company's cost of funds, a major factor for nonbank lenders, decreased 4.2 percentage points to 6.2% of average funding debt. OnDeck attributed this to the closing of a securitization transaction in the second quarter of 2014.
"We will continue to increase our marketing and brand building efforts to raise awareness of our products and further invest in technology and data innovation to expand our product set and meet more of Main Street's credit needs," chief executive officer Noah Breslow said in the press release.