LendingClub to cut staff by around 14% as higher interest rates take a bite

By Bill Peters

CEO cites macroeconomic headwinds and higher interest rates

Online lending platform LendingClub Corp. on Thursday said it would reduce its workforce by around 14%, or 172 employees, as it navigates the economic impact of interest rates that could stay higher for longer.

The company, whose marketplace connects borrowers and lenders, also forecast a third-quarter sales range whose midpoint was slightly below Wall Street estimates. LendingClub (LC) also announced layoffs earlier this year.

Shares of the company were up 2.2% on the efforts to cut costs.

"We continue to proactively implement various measures to navigate the persistent and ongoing macroeconomic headwinds and the resulting pressure in our marketplace, primarily driven by higher interest rates," Scott Sanborn, LendingClub's chief executive, said in a statement on Thursday. "To that end, we have made the very difficult decision to streamline our workforce."

However, he said he expected the company's marketplace revenue to rebound as people try to refinance their credit-card debt.

The online lending and financial-services platform also said it expects $198 million to $200 million in third-quarter sales, compared with FactSet forecasts for $199.4 million. LendingClub reports third-quarter results on Oct. 25.

The Federal Reserve has raised interest rates an an effort to tamp down inflation by pressuring businesses and consumers out of borrowing money, investing, hiring staff and buying things. While some economists have speculated that the Fed's rate-hiking days are largely behind it, many consumers are still struggling with higher prices, and worries persist about the impact on demand.

LendingClub said it expected the cuts announced Thursday to save $30 million to $35 million, as compared with the second quarter.

Shares of LendingClub are down 35.5% so far this year. By comparison, the S&P 500 Index SPX is up 13.7% over that period.

-Bill Peters

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10-12-23 1648ET

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