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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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42-1709682
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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1400 Broadway, 25th Floor, New York, New York
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10018
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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¨
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Accelerated filer
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x
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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x
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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x
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Page
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PART I - FINANCIAL INFORMATION
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Item 1.
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Financial Statements (Unaudited)
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Unaudited Condensed Consolidated Balance Sheets
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Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income
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Unaudited Condensed Consolidated Statements of Cash Flows
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Notes to Unaudited Condensed Consolidated Financial Statements
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Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 4.
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Controls and Procedures
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PART II - OTHER INFORMATION
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||
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Item 1.
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Legal Proceedings
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Item 1A.
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Risk Factors
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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Item 3.
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Defaults Upon Senior Securities
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Other Information
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Item 6
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Exhibits
|
|
|
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|
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Signatures
|
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March 31,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
70,415
|
|
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$
|
71,362
|
|
Restricted cash
|
44,709
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|
|
43,462
|
|
||
Loans held for investment
|
1,010,944
|
|
|
952,796
|
|
||
Less: Allowance for loan losses
|
(118,921
|
)
|
|
(109,015
|
)
|
||
Loans held for investment, net
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892,023
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|
|
843,781
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|
||
Property, equipment and software, net
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17,455
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|
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23,572
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|
||
Other assets
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15,824
|
|
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13,867
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|
||
Total assets
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$
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1,040,426
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$
|
996,044
|
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Liabilities and equity
|
|
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|
||||
Liabilities:
|
|
|
|
||||
Accounts payable
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$
|
3,038
|
|
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$
|
2,674
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Interest payable
|
2,429
|
|
|
2,330
|
|
||
Funding debt
|
730,024
|
|
|
684,269
|
|
||
Corporate debt
|
7,969
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|
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7,985
|
|
||
Accrued expenses and other liabilities
|
29,499
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|
|
32,730
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|
||
Total liabilities
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772,959
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|
729,988
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|
||
Commitments and contingencies (Note 9)
|
|
|
|
||||
Stockholders’ equity (deficit):
|
|
|
|
||||
Common stock—$0.005 par value, 1,000,000,000 shares authorized and 77,752,143 and 77,284,266 shares issued and 74,264,491 and 73,822,001 outstanding at March 31, 2018 and December 31, 2017, respectively.
|
389
|
|
|
386
|
|
||
Treasury stock—at cost
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(8,083
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)
|
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(7,965
|
)
|
||
Additional paid-in capital
|
496,588
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|
|
492,509
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|
||
Accumulated deficit
|
(224,752
|
)
|
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(222,833
|
)
|
||
Accumulated other comprehensive loss
|
(118
|
)
|
|
(52
|
)
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||
Total On Deck Capital, Inc. stockholders' equity
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264,024
|
|
|
262,045
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Noncontrolling interest
|
3,443
|
|
|
4,011
|
|
||
Total equity
|
267,467
|
|
|
266,056
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|
||
Total liabilities and equity
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$
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1,040,426
|
|
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$
|
996,044
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Three Months Ended March 31,
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||||||
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2018
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|
2017
|
||||
Revenue:
|
|
|
|
||||
Interest income
|
$
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86,369
|
|
|
$
|
87,111
|
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Gain on sales of loans
|
—
|
|
|
1,484
|
|
||
Other revenue
|
3,911
|
|
|
4,297
|
|
||
Gross revenue
|
90,280
|
|
|
92,892
|
|
||
Cost of revenue:
|
|
|
|
||||
Provision for loan losses
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36,293
|
|
|
46,180
|
|
||
Funding costs
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11,821
|
|
|
11,277
|
|
||
Total cost of revenue
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48,114
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|
|
57,457
|
|
||
Net revenue
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42,166
|
|
|
35,435
|
|
||
Operating expense:
|
|
|
|
||||
Sales and marketing
|
10,598
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|
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14,819
|
|
||
Technology and analytics
|
11,007
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15,443
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|
||
Processing and servicing
|
5,221
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4,535
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|
||
General and administrative
|
17,725
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11,887
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|
||
Total operating expense
|
44,551
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|
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46,684
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|
||
Income (loss) from operations
|
(2,385
|
)
|
|
(11,249
|
)
|
||
Other expense:
|
|
|
|
||||
Interest expense
|
(51
|
)
|
|
(353
|
)
|
||
Total other expense
|
(51
|
)
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(353
|
)
|
||
Loss before provision for income taxes
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(2,436
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)
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(11,602
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)
|
||
Provision for income taxes
|
—
|
|
|
—
|
|
||
Net income (loss)
|
(2,436
|
)
|
|
(11,602
|
)
|
||
Net loss attributable to noncontrolling interest
|
518
|
|
|
544
|
|
||
Net income (loss) attributable to On Deck Capital, Inc. common stockholders
|
$
|
(1,918
|
)
|
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$
|
(11,058
|
)
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Net income (loss) per share attributable to On Deck Capital, Inc. common shareholders:
|
|
|
|
||||
Basic and diluted
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$
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(0.03
|
)
|
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$
|
(0.15
|
)
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Weighted-average common shares outstanding:
|
|
|
|
||||
Basic and diluted
|
73,977,241
|
|
|
71,854,287
|
|
||
Comprehensive loss:
|
|
|
|
||||
Net loss
|
$
|
(2,436
|
)
|
|
$
|
(11,602
|
)
|
Other comprehensive loss:
|
|
|
|
||||
Foreign currency translation adjustment
|
(113
|
)
|
|
400
|
|
||
Comprehensive loss
|
(2,549
|
)
|
|
(11,202
|
)
|
||
Comprehensive loss attributable to noncontrolling interests
|
50
|
|
|
(180
|
)
|
||
Net loss attributable to noncontrolling interest
|
518
|
|
|
544
|
|
||
Comprehensive loss attributable to On Deck Capital, Inc. common stockholders
|
$
|
(1,981
|
)
|
|
$
|
(10,838
|
)
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net income (loss)
|
$
|
(2,436
|
)
|
|
$
|
(11,602
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Provision for loan losses
|
36,293
|
|
|
46,180
|
|
||
Depreciation and amortization
|
2,174
|
|
|
2,596
|
|
||
Amortization of debt issuance costs
|
1,230
|
|
|
797
|
|
||
Stock-based compensation
|
3,210
|
|
|
3,491
|
|
||
Amortization of net deferred origination costs
|
12,399
|
|
|
11,883
|
|
||
Changes in servicing rights, at fair value
|
131
|
|
|
701
|
|
||
Gain on sales of loans
|
—
|
|
|
(1,484
|
)
|
||
Unfunded loan commitment reserve
|
171
|
|
|
119
|
|
||
Gain on extinguishment of debt
|
—
|
|
|
(229
|
)
|
||
Loss on disposal of fixed assets
|
5,713
|
|
|
—
|
|
||
Gain on lease termination
|
(1,481
|
)
|
|
—
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Other assets
|
(3,484
|
)
|
|
1,120
|
|
||
Accounts payable
|
364
|
|
|
(1,231
|
)
|
||
Interest payable
|
99
|
|
|
488
|
|
||
Accrued expenses and other liabilities
|
(471
|
)
|
|
(8,053
|
)
|
||
Originations of loans held for sale
|
—
|
|
|
(33,042
|
)
|
||
Capitalized net deferred origination costs of loans held for sale
|
—
|
|
|
(911
|
)
|
||
Proceeds from sale of loans held for sale
|
—
|
|
|
33,326
|
|
||
Principal repayments of loans held for sale
|
—
|
|
|
722
|
|
||
Net cash provided by operating activities
|
53,912
|
|
|
44,871
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Purchases of property, equipment and software
|
(313
|
)
|
|
(145
|
)
|
||
Proceeds from sale of fixed assets
|
(45
|
)
|
|
—
|
|
||
Capitalized internal-use software
|
(1,398
|
)
|
|
(1,219
|
)
|
||
Originations of term loans and lines of credit, excluding rollovers into new originations
|
(499,775
|
)
|
|
(469,913
|
)
|
||
Proceeds from sale of loans held for investment
|
—
|
|
|
10,008
|
|
||
Payments of net deferred origination costs
|
(14,193
|
)
|
|
(12,314
|
)
|
||
Principal repayments of term loans and lines of credit
|
417,034
|
|
|
389,976
|
|
||
Purchase of loans
|
—
|
|
|
(13,518
|
)
|
||
Net cash used in investing activities
|
(98,690
|
)
|
|
(97,125
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Investments by noncontrolling interests
|
—
|
|
|
3,443
|
|
||
Purchase of treasury shares
|
(119
|
)
|
|
(205
|
)
|
||
Proceeds from exercise of stock options and warrants
|
39
|
|
|
195
|
|
||
Issuance of common stock under employee stock purchase plan
|
764
|
|
|
1,246
|
|
||
Proceeds from the issuance of funding debt
|
59,373
|
|
|
66,119
|
|
||
Proceeds from the issuance of corporate debt
|
10,000
|
|
|
—
|
|
||
Payments of debt issuance costs
|
(74
|
)
|
|
(2,488
|
)
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Repayments of funding debt principal
|
(14,602
|
)
|
|
(2,794
|
)
|
||
Repayments of corporate debt principal
|
(10,000
|
)
|
|
—
|
|
||
Net cash provided by financing activities
|
45,381
|
|
|
65,516
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(303
|
)
|
|
421
|
|
||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
300
|
|
|
13,683
|
|
||
Cash, cash equivalents, and restricted cash at beginning of year
|
114,824
|
|
|
123,986
|
|
||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
115,124
|
|
|
$
|
137,669
|
|
|
|
|
|
||||
Reconciliation to amounts on consolidated balance sheets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
70,415
|
|
|
$
|
72,997
|
|
Restricted cash
|
44,709
|
|
|
64,672
|
|
||
Total cash, cash equivalents and restricted cash
|
$
|
115,124
|
|
|
$
|
137,669
|
|
|
|
|
|
||||
Supplemental disclosure of other cash flow information
|
|
|
|
||||
Cash paid for interest
|
$
|
10,483
|
|
|
$
|
10,257
|
|
Supplemental disclosures of non-cash investing and financing activities
|
|
|
|
||||
Stock-based compensation included in capitalized internal-use software
|
$
|
68
|
|
|
$
|
92
|
|
Unpaid principal balance of term loans rolled into new originations
|
$
|
90,810
|
|
|
$
|
70,059
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Numerator:
|
|
|
|
||||
Net loss
|
$
|
(2,436
|
)
|
|
$
|
(11,602
|
)
|
Less: net loss attributable to noncontrolling interest
|
518
|
|
|
544
|
|
||
Net loss attributable to On Deck Capital, Inc. common stockholders
|
$
|
(1,918
|
)
|
|
$
|
(11,058
|
)
|
Denominator:
|
|
|
|
||||
Weighted-average common shares outstanding, basic and diluted
|
73,977,241
|
|
|
71,854,287
|
|
||
Net loss per common share, basic and diluted
|
$
|
(0.03
|
)
|
|
$
|
(0.15
|
)
|
|
Three Months Ended March 31,
|
||||
|
2018
|
|
2017
|
||
Anti-dilutive common share equivalents
|
|
|
|
||
Warrants to purchase common stock
|
22,000
|
|
|
22,000
|
|
Restricted stock units
|
3,874,666
|
|
|
3,487,022
|
|
Stock options
|
8,234,689
|
|
|
10,056,752
|
|
Employee stock purchase program
|
32,449
|
|
|
51,491
|
|
Total anti-dilutive common share equivalents
|
12,163,804
|
|
|
13,617,265
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Term loans
|
$
|
847,403
|
|
|
$
|
804,227
|
|
Lines of credit
|
145,192
|
|
|
132,012
|
|
||
Total unpaid principal balance
|
992,595
|
|
|
936,239
|
|
||
Net deferred origination costs
|
18,349
|
|
|
16,557
|
|
||
Total loans held for investment
|
$
|
1,010,944
|
|
|
$
|
952,796
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Balance at beginning of period
|
$
|
109,015
|
|
|
$
|
110,162
|
|
Recoveries of loans previously charged off
|
3,345
|
|
|
2,617
|
|
||
Loans charged off
|
(29,732
|
)
|
|
(40,884
|
)
|
||
Provision for loan losses
|
36,293
|
|
|
46,180
|
|
||
Allowance for loan losses at end of period
|
$
|
118,921
|
|
|
$
|
118,075
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Current loans
|
$
|
904,660
|
|
|
$
|
850,060
|
|
Delinquent: paying (accrual status)
|
50,338
|
|
|
49,252
|
|
||
Delinquent: non-paying (non-accrual status)
|
37,597
|
|
|
36,927
|
|
||
Total
|
$
|
992,595
|
|
|
$
|
936,239
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
By delinquency status:
|
|
|
|
||||
Current loans
|
$
|
904,660
|
|
|
$
|
850,060
|
|
1-14 calendar days past due
|
21,080
|
|
|
23,611
|
|
||
15-29 calendar days past due
|
12,068
|
|
|
12,528
|
|
||
30-59 calendar days past due
|
19,557
|
|
|
22,059
|
|
||
60-89 calendar days past due
|
13,850
|
|
|
12,809
|
|
||
90 + calendar days past due
|
21,380
|
|
|
15,172
|
|
||
Total unpaid principal balance
|
$
|
992,595
|
|
|
$
|
936,239
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Fair value at the beginning of period
|
$
|
154
|
|
|
$
|
1,131
|
|
Addition:
|
|
|
|
||||
Servicing resulting from transfers of financial assets
|
52
|
|
|
430
|
|
||
Changes in fair value:
|
|
|
|
||||
Change in inputs or assumptions used in the valuation model
|
—
|
|
|
—
|
|
||
Other changes in fair value
(1)
|
(131
|
)
|
|
(701
|
)
|
||
Fair value at the end of period (Level 3)
|
$
|
75
|
|
|
$
|
860
|
|
|
|
|
|
|
|
|
Outstanding
|
||||||
|
Type
|
|
Maturity Date
|
|
Weighted Average Interest Rate at March 31, 2018
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Funding Debt:
|
|
|
|
|
|
|
|
|
|
||||
ODAST II Agreement
|
Securitization
|
|
May 2020
(1)
|
|
4.7%
|
|
$
|
250,000
|
|
|
$
|
250,000
|
|
ODART Agreement
|
Revolving
|
|
March 2019
|
|
4.4%
|
|
112,499
|
|
|
102,058
|
|
||
RAOD Agreement
|
Revolving
|
|
November 2018
|
|
5.1%
|
|
98,983
|
|
|
86,478
|
|
||
ODAC Agreement
|
Revolving
|
|
May 2019
|
|
9.0%
|
|
75,454
|
|
|
62,350
|
|
||
ODAF Agreement
|
Revolving
|
|
February 2020
(2)
|
|
8.9%
|
|
75,000
|
|
|
75,000
|
|
||
PORT II Agreement
|
Revolving
|
|
December 2018
|
|
4.3%
|
|
72,630
|
|
|
63,851
|
|
||
Other Agreements
|
Various
|
|
Various
(3)
|
|
Various
|
|
50,378
|
|
|
50,706
|
|
||
|
|
|
|
|
|
|
734,944
|
|
|
690,443
|
|
||
Deferred debt issuance cost
|
|
|
|
|
|
|
(4,920
|
)
|
|
(6,174
|
)
|
||
Total Funding Debt
|
|
|
|
|
|
|
730,024
|
|
|
684,269
|
|
||
|
|
|
|
|
|
|
|
|
|
||||
Corporate Debt:
|
|
|
|
|
|
|
|
|
|
||||
Square 1 Agreement
|
Revolving
|
|
October 2018
|
|
6.0%
|
|
8,000
|
|
|
8,000
|
|
||
Deferred debt issuance cost
|
|
|
|
|
|
|
(31
|
)
|
|
(15
|
)
|
||
Total Corporate Debt
|
|
|
|
|
|
|
7,969
|
|
|
7,985
|
|
|
March 31, 2018
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
:
|
|
|
|
|
|
|
|
||||||||
Servicing assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
75
|
|
|
$
|
75
|
|
Total assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
75
|
|
|
$
|
75
|
|
|
December 31, 2017
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
:
|
|
|
|
|
|
|
|
||||||||
Servicing assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
154
|
|
|
$
|
154
|
|
Total assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
154
|
|
|
$
|
154
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
|
Servicing Assets
|
||||||
Default rate assumption:
|
|
|
|
||||
Default rate increase of 25%
|
$
|
(23
|
)
|
|
$
|
(40
|
)
|
Default rate increase of 50%
|
$
|
(43
|
)
|
|
$
|
(76
|
)
|
Cost to service assumption:
|
|
|
|
||||
Cost to service increase by 25%
|
$
|
(36
|
)
|
|
$
|
(63
|
)
|
Cost to service increase by 50%
|
$
|
(71
|
)
|
|
$
|
(126
|
)
|
|
March 31, 2018
|
||||||||||||||||||
|
Carrying Value
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans held for investment
|
$
|
892,023
|
|
|
$
|
989,477
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
989,477
|
|
Total assets
|
$
|
892,023
|
|
|
$
|
989,477
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
989,477
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed-rate debt
|
$
|
300,377
|
|
|
$
|
293,408
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
293,408
|
|
Total fixed-rate debt
|
$
|
300,377
|
|
|
$
|
293,408
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
293,408
|
|
|
December 31, 2017
|
||||||||||||||||||
|
Carrying Value
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans held for investment
|
$
|
843,781
|
|
|
$
|
932,343
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
932,343
|
|
Total assets
|
$
|
843,781
|
|
|
$
|
932,343
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
932,343
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed-rate debt
|
$
|
300,706
|
|
|
$
|
293,512
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
293,512
|
|
Total fixed-rate debt
|
$
|
300,706
|
|
|
$
|
293,512
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
293,512
|
|
|
|
Three Months Ended March 31, 2018
|
||||||||||
|
|
On Deck Capital, Inc's stockholders' equity
|
|
Noncontrolling interest
|
|
Total
|
||||||
Balance as of January 1, 2018
|
|
262,045
|
|
|
4,011
|
|
|
266,056
|
|
|||
Net income (loss)
|
|
(1,918
|
)
|
|
(518
|
)
|
|
(2,436
|
)
|
|||
Stock based compensation
|
|
3,122
|
|
|
—
|
|
|
3,122
|
|
|||
Exercise of options and warrants
|
|
39
|
|
|
—
|
|
|
39
|
|
|||
Employee stock purchase plan
|
|
918
|
|
|
—
|
|
|
918
|
|
|||
Cumulative translation adjustment
|
|
(63
|
)
|
|
(50
|
)
|
|
(113
|
)
|
|||
Purchase of shares for treasury
|
|
(119
|
)
|
|
—
|
|
|
(119
|
)
|
|||
Balance at March 31, 2018
|
|
264,024
|
|
|
3,443
|
|
|
267,467
|
|
|||
|
|
|
|
|
|
|
||||||
Comprehensive loss:
|
|
|
|
|
|
|
||||||
Net loss
|
|
(1,918
|
)
|
|
(518
|
)
|
|
(2,436
|
)
|
|||
Other comprehensive income (loss):
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
|
(63
|
)
|
|
(50
|
)
|
|
(113
|
)
|
|||
Comprehensive income (loss):
|
|
(1,981
|
)
|
|
(568
|
)
|
|
(2,549
|
)
|
|||
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
|
|
Three Months Ended March 31, 2017
|
||||||||||
|
|
On Deck Capital, Inc.'s stockholders' equity
|
|
Noncontrolling interest
|
|
Total
|
||||||
Balance as of January 1, 2017
|
|
$
|
259,525
|
|
|
$
|
4,072
|
|
|
$
|
263,597
|
|
Net income (loss)
|
|
(11,058
|
)
|
|
(544
|
)
|
|
(11,602
|
)
|
|||
Stock based compensation
|
|
3,309
|
|
|
—
|
|
|
3,309
|
|
|||
Exercise of options and warrants
|
|
195
|
|
|
—
|
|
|
195
|
|
|||
Employee stock purchase plan
|
|
1,541
|
|
|
—
|
|
|
1,541
|
|
|||
Cumulative translation adjustment
|
|
220
|
|
|
180
|
|
|
400
|
|
|||
Purchase of shares for treasury
|
|
(205
|
)
|
|
—
|
|
|
(205
|
)
|
|||
Investments by noncontrolling interests
|
|
—
|
|
|
3,443
|
|
|
3,443
|
|
|||
Balance at March 31, 2017
|
|
253,527
|
|
|
7,151
|
|
|
260,678
|
|
|||
|
|
|
|
|
|
|
||||||
Comprehensive loss:
|
|
|
|
|
|
|
||||||
Net loss
|
|
(11,058
|
)
|
|
(544
|
)
|
|
(11,602
|
)
|
|||
Other comprehensive income (loss):
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
|
220
|
|
|
180
|
|
|
400
|
|
|||
Comprehensive income (loss):
|
|
$
|
(10,838
|
)
|
|
$
|
(364
|
)
|
|
$
|
(11,202
|
)
|
|
Number of
Options |
|
Weighted-
Average Exercise Price |
|
Weighted-
Average Remaining Contractual Term (in years) |
|
Aggregate
Intrinsic Value (in thousands) |
||||||
Outstanding at January 1, 2018
|
7,918,853
|
|
|
$
|
5.75
|
|
|
—
|
|
|
—
|
|
|
Granted
|
595,861
|
|
|
$
|
5.19
|
|
|
—
|
|
|
—
|
|
|
Exercised
|
(205,768
|
)
|
|
$
|
0.45
|
|
|
—
|
|
|
—
|
|
|
Forfeited
|
(5,853
|
)
|
|
$
|
13.08
|
|
|
—
|
|
|
—
|
|
|
Expired
|
(68,404
|
)
|
|
$
|
12.15
|
|
|
—
|
|
|
—
|
|
|
Outstanding at March 31, 2018
|
8,234,689
|
|
|
$
|
5.79
|
|
|
6.5
|
|
|
$
|
16,370
|
|
Exercisable at March 31, 2018
|
6,121,753
|
|
|
$
|
5.42
|
|
|
5.8
|
|
|
$
|
15,507
|
|
Vested or expected to vest as of March 31, 2018
|
8,119,911
|
|
|
$
|
5.79
|
|
|
6.5
|
|
|
$
|
16,329
|
|
|
Number of RSUs
|
|
Weighted-Average Grant Date Fair Value
|
|||
Unvested at January 1, 2018
|
3,342,640
|
|
|
$
|
6.18
|
|
RSUs and PRSUs granted
|
703,492
|
|
|
$
|
5.09
|
|
RSUs vested
|
(75,213
|
)
|
|
$
|
6.27
|
|
RSUs forfeited/expired
|
(96,253
|
)
|
|
$
|
5.70
|
|
Unvested at March 31, 2018
|
3,874,666
|
|
|
$
|
5.99
|
|
Expected to vest after March 31, 2018
|
3,267,046
|
|
|
$
|
6.12
|
|
|
March 31, 2018
|
|
March 31, 2017
|
|||||
Sales and marketing
|
535
|
|
|
$
|
771
|
|
||
Technology and analytics
|
597
|
|
|
783
|
|
|||
Processing and servicing
|
105
|
|
|
173
|
|
|||
General and administrative
|
1,973
|
|
|
1,764
|
|
|||
Total
|
$
|
3,210
|
|
—
|
|
$
|
3,491
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
|
|
|
As of or for the Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(dollars in thousands)
|
||||||
Originations
|
$
|
590,585
|
|
|
$
|
573,015
|
|
Effective Interest Yield
|
35.6
|
%
|
|
33.8
|
%
|
||
Cost of Funds Rate
|
6.8
|
%
|
|
5.9
|
%
|
||
Net Interest Margin*
|
31.3
|
%
|
|
30.0
|
%
|
||
Marketplace
Gain on Sale Rate
|
N/A
|
|
|
3.5
|
%
|
||
Provision Rate
|
6.1
|
%
|
|
8.7
|
%
|
||
Loan Reserve Ratio
|
12.0
|
%
|
|
11.5
|
%
|
||
15+ Day Delinquency Ratio
|
6.7
|
%
|
|
7.8
|
%
|
||
Net Charge-off Rate
|
10.9
|
%
|
|
14.9
|
%
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
|||||
Assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
49,812
|
|
|
$
|
63,588
|
|
Restricted cash
|
|
53,007
|
|
|
50,811
|
|
||
Loans held for investment
|
|
983,988
|
|
|
1,044,815
|
|
||
Less: Allowance for loan losses
|
|
(114,839
|
)
|
|
(115,597
|
)
|
||
Loans held for investment, net
|
|
869,149
|
|
|
929,218
|
|
||
Loans held for sale
|
|
—
|
|
|
856
|
|
||
Property, equipment and software, net
|
|
20,866
|
|
|
28,812
|
|
||
Other assets
|
|
14,026
|
|
|
19,717
|
|
||
Total assets
|
|
$
|
1,006,860
|
|
|
$
|
1,093,002
|
|
Liabilities and equity
|
|
|
|
|
||||
Liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
2,853
|
|
|
$
|
4,356
|
|
Interest payable
|
|
2,300
|
|
|
2,298
|
|
||
Funding debt
|
|
698,825
|
|
|
763,833
|
|
||
Corporate debt
|
|
4,482
|
|
|
27,969
|
|
||
Accrued expenses and other liabilities
|
|
31,410
|
|
|
36,385
|
|
||
Total liabilities
|
|
739,870
|
|
|
834,841
|
|
||
|
|
|
|
|
||||
Total On Deck Capital, Inc. stockholders' equity
|
|
263,195
|
|
|
253,345
|
|
||
Noncontrolling interest
|
|
3,795
|
|
|
4,816
|
|
||
Total equity
|
|
266,990
|
|
|
258,161
|
|
||
Total liabilities and equity
|
|
$
|
1,006,860
|
|
|
$
|
1,093,002
|
|
|
|
|
|
|
||||
Memo:
|
|
|
|
|
||||
Unpaid Principal Balance
|
|
$
|
966,327
|
|
|
$
|
1,023,882
|
|
Interest Earning Assets
|
|
$
|
966,327
|
|
|
$
|
1,024,731
|
|
Loans
|
|
$
|
983,988
|
|
|
$
|
1,045,671
|
|
•
|
Adjusted Net Income does not reflect the potentially dilutive impact of stock-based compensation; and
|
•
|
Adjusted Net Income excludes charges we are required to incur in connection with real estate dispositions and severance obligations.
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Reconciliation of Net Income (Loss) to Adjusted Net (Loss) Income
|
|
|
|
||||
Net loss
|
$
|
(2,436
|
)
|
|
$
|
(11,602
|
)
|
Adjustments:
|
|
|
|
||||
Net loss attributable to noncontrolling interest
|
518
|
|
|
544
|
|
||
Stock-based compensation expense
|
3,210
|
|
|
3,491
|
|
||
Real estate disposition charges
|
4,187
|
|
|
—
|
|
||
Department relocation and executive transition expenses
|
911
|
|
|
—
|
|
||
Adjusted Net Income (Loss)
|
$
|
6,390
|
|
|
$
|
(7,567
|
)
|
•
|
Net Interest Margin is the rate of net return we achieve on our Average Interest Earning Assets outstanding during a period. It does not reflect the return from loans sold through OnDeck
Marketplace
, specifically our gain on sale revenue. Similarly, Average Interest Earning Assets does not include the unpaid principal balance of loans sold through OnDeck
Marketplace
. Further, Net Interest Margin does not include servicing revenue related to loans previously sold, fair value adjustments to servicing rights, monthly fees charged to customers for our line of credit, and marketing fees earned from our issuing bank partners, which are recognized as the related services are provided.
|
•
|
Funding costs do not reflect interest associated with debt used for corporate purposes.
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Reconciliation of Interest Income to Net Interest Margin (NIM)
|
|
|
|
||||
Interest income
|
$
|
86,369
|
|
|
$
|
87,111
|
|
Less: Funding costs
|
(11,821
|
)
|
|
(11,277
|
)
|
||
Net interest income
|
74,548
|
|
|
75,834
|
|
||
Divided by: calendar days in period
|
90
|
|
|
90
|
|
||
Net interest income per calendar day
|
828
|
|
|
843
|
|
||
Multiplied by: calendar days per year
|
365
|
|
|
365
|
|
||
Annualized net interest income
|
302,220
|
|
|
307,695
|
|
||
Divided by: Average Interest Earning Assets
|
$
|
966,327
|
|
|
$
|
1,024,731
|
|
Net Interest Margin (NIM)
|
31.3
|
%
|
|
30.0
|
%
|
|
Three Months Ended March 31,
|
||
Percentage of Originations (Dollars)
|
2018
|
|
2017
|
Direct and Strategic Partner
|
71%
|
|
72%
|
Funding Advisor
|
29%
|
|
28%
|
•
|
the business must be approximately 50% paid down on its existing loan;
|
•
|
the business must be current on its outstanding OnDeck loan with no material delinquency history; and
|
•
|
the business must be fully re-underwritten and determined to be of adequate credit quality.
|
|
Three Months Ended March 31,
|
||
Percentage of Originations (Dollars)
|
2018
|
|
2017
|
New
|
48%
|
|
51%
|
Repeat
|
52%
|
|
49%
|
|
For the Quarter
|
|
For the Year
|
|||||||
|
Q1 2018
|
Q4 2017
|
Q3 2017
|
Q2 2017
|
Q1 2017
|
|
2016
|
2015
|
2014
|
2013
|
Weighted Average Term Loan "Cents on Dollar" Borrowed, per Month
|
2.08¢
|
1.97¢
|
1.96¢
|
1.94¢
|
1.95¢
|
|
1.82¢
|
1.95¢
|
2.32¢
|
2.65¢
|
Weighted Average APR - Term Loans and Lines of Credit
|
46.0%
|
43.8%
|
43.8%
|
43.2%
|
44.0%
|
|
41.4%
|
44.5%
|
54.4%
|
63.4%
|
•
|
Channel Mix
- In general, loans originated from the direct and strategic partner channels have lower EIYs than loans from the funding advisor channel. This is primarily due to the lower pricing of loans in the direct and strategic partner channels, which reflect lower acquisition costs and lower loss rates compared to loans in the funding advisor channel. The direct and strategic partner channels' have, in the aggregate, made up
71%
and
72%
of total originations during the
first quarter
ended
March 31,
2018
and
2017
respectively. We expect the combined direct and strategic partner channels', as well as the funding advisor channel's, percentage of originations in 2018 to remain generally comparable to 2017 levels.
|
•
|
Term Mix
- In general, term loans with longer durations have lower annualized interest rates. Despite lower EIYs, total revenues from customers with longer loan durations are typically higher than the revenue of customers with shorter-term, higher EIY loans because total payback is typically higher compared to a shorter length term for the same principal loan amount. Following the introduction of our 24-month and 36-month term loans, the average length of new term loan originations had increased from
10.8
for the year December 31, 2014 to
13.3
for the year ended December 31, 2016. As part of our 2017 credit tightening policy, when appropriate, the offered duration of term loans to certain customers was shortened to control duration risk. For the three-months ended March 31, 2018, the average length of new term loan originations had decreased to
11.4
months.
|
•
|
Customer Type Mix
- In general, loans originated from repeat customers historically have had lower EIYs than loans from new customers. This is primarily due to the fact that repeat customers typically have a higher OnDeck
Score
and are therefore deemed to be lower risk. In addition, repeat customers are more likely to be approved for longer terms than new customers given their established payment history and lower risk profiles. Finally, origination fees can be reduced or waived for repeat customers due to our loyalty program, contributing to lower EIYs.
|
•
|
Product Mix
- In general, loans originated by line of credit customers have lower EIYs than loans from term loan customers. This is primarily due to the fact that lines of credit are expected to have longer lifetime usage than term loans, enabling more time to recoup upfront acquisition costs. For the three months ended
2018
, the average line of credit APR was
32.4%
, compared to the average term loan APR which was
48.0%
. Further, draws by line of credit customers have increased to
20.5%
of total originations in
2018
from
18.0%
in
2017
.
|
Effective Interest Yield
|
||||||||||||||||
For the Quarter
|
|
For the Year
|
||||||||||||||
Q1 2018
|
|
Q4 2017
|
|
Q3 2017
|
|
Q2 2017
|
|
Q1 2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
35.6%
|
|
34.8%
|
|
33.1%
|
|
33.5%
|
|
33.8%
|
|
33.2%
|
|
35.4%
|
|
40.4%
|
|
42.7%
|
•
|
New loans that are designated at origination to be sold, referred to as “Originations of loans held for sale;” and
|
•
|
Loans that were originally designated as held for investment that are subsequently designated to be sold at the time of their renewal and which are considered modified loans, referred to as “Originations of loans held for investment, modified."
|
|
Three Months Ended March 31,
|
||||
|
2018
|
|
2017
|
||
Originations of loans held for sale
|
—
|
|
|
33,042
|
|
Originations of loans held for investment, modified
|
—
|
|
|
9,204
|
|
Marketplace
originations
|
—
|
|
|
42,246
|
|
|
For the Year
|
|
For the Quarter
|
|||||||
|
2013
|
2014
|
2015
|
2016
|
|
Q1 2017
|
Q2 2017
|
Q3 2017
|
Q4 2017
|
Q1 2018
|
Principal Outstanding as of March 31, 2018 by Period of Origination
|
0.0%
|
0.0%
|
0.0%
|
1.0%
|
|
3.9%
|
9.9%
|
27.2%
|
57.3%
|
86.7%
|
|
For the Year
|
|
For the Quarter
|
|||||||||||||||||||||||||
Originations
|
2013
|
2014
|
2015
|
2016
|
|
Q1 2017
|
Q2 2017
|
Q3 2017
|
Q4 2017
|
Q1 2018
|
||||||||||||||||||
All term loans (in millions)
|
$
|
459
|
|
$
|
1,158
|
|
$
|
1,874
|
|
$
|
2,404
|
|
|
$
|
573
|
|
$
|
464
|
|
$
|
531
|
|
$
|
546
|
|
$
|
591
|
|
Weighted average term (months)
|
10.0
|
|
11.2
|
|
12.4
|
|
13.2
|
|
|
12.3
|
|
11.8
|
|
12.1
|
|
12.2
|
|
11.8
|
|
•
|
Demand for Our Loans
. Generally, we believe a strong economic climate tends to increase demand for our loans as consumer spending increases and small businesses seek to expand and more potential customers may meet our underwriting requirements, although some small businesses may generate enough additional cash flow that they no longer require a loan. In that climate, traditional lenders may also approve loans for a higher percentage of our potential customers.
|
•
|
Credit Performance
. In a strong economic climate, our customers may experience improved cash flow and liquidity, which may result in lower loan losses. In a weakening economic climate or recession, the opposite may occur. We factor economic conditions into our loan underwriting analysis and reserves for loan losses, but changes in economic conditions, particularly sudden changes, may affect our actual loan losses. These effects may be partially mitigated by the short-term nature and repayment structure of our loans, which should allow us to react more quickly than if the terms of our loans were longer.
|
•
|
Loan Losses
. Our underwriting process is designed to limit our loan losses to levels consistent with our risk tolerance and financial model. Our aggregate loan loss rates from 2013 through 2015 were consistent with our financial targets while 2016 was higher than our financial target as we incurred higher than estimated loss rates on certain longer-term loans. Our 2017 loan loss levels were also higher than our financial targets largely because we were taking corrective action throughout the first half of the year to address the higher 2016 loan losses. Our first quarter 2018 loan loss levels are consistent with our financial targets. Our overall loan losses are affected by a variety of factors, including external factors such as prevailing economic conditions, general small business sentiment and unusual events such as natural disasters, as well as internal factors such as the accuracy of the OnDeck
Score
, the effectiveness of our underwriting process and the introduction of new types of loans, such as our line of credit, with which we have less experience to draw upon when forecasting their loss rates. Our loan loss rates may vary in the future.
|
•
|
Funding Costs.
Changes in monetary and fiscal policy may affect generally prevailing interest rates. Interest rates may also change for reasons unrelated to economic conditions. To the extent that interest rates rise, our funding costs will increase and the spread between our Effective Interest Yield and our Cost of Funds Rate may narrow to the extent we cannot correspondingly increase the interest rates we charge our customers. As we have grown, we have been able to lower our Cost of Funds Rate by negotiating more favorable interest rates on our debt and accessing new sources of funding. However, we expect our Cost of Funds Rate to gradually move higher in 2018 due to anticipated increases in the interest rate environment.
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
Period-to-Period
|
|||||||||||
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest income
|
$
|
86,369
|
|
|
95.7
|
%
|
|
$
|
87,111
|
|
|
93.8
|
%
|
|
$
|
(742
|
)
|
|
(0.9
|
)%
|
Gain on sales of loans
|
—
|
|
|
—
|
|
|
1,484
|
|
|
1.6
|
|
|
(1,484
|
)
|
|
(100.0
|
)
|
|||
Other revenue
|
3,911
|
|
|
4.3
|
|
|
4,297
|
|
|
4.6
|
|
|
(386
|
)
|
|
(9.0
|
)
|
|||
Gross revenue
|
90,280
|
|
|
100.0
|
|
|
92,892
|
|
|
100.0
|
|
|
(2,612
|
)
|
|
(2.8
|
)
|
|||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Provision for loan losses
|
36,293
|
|
|
40.2
|
|
|
46,180
|
|
|
49.7
|
|
|
(9,887
|
)
|
|
(21.4
|
)
|
|||
Funding costs
|
11,821
|
|
|
13.1
|
|
|
11,277
|
|
|
12.2
|
|
|
544
|
|
|
4.8
|
|
|||
Total cost of revenue
|
48,114
|
|
|
53.3
|
|
|
57,457
|
|
|
61.9
|
|
|
(9,343
|
)
|
|
(16.3
|
)
|
|||
Net revenue
|
42,166
|
|
|
46.7
|
|
|
35,435
|
|
|
38.1
|
|
|
6,731
|
|
|
19.0
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Sales and marketing
|
10,598
|
|
|
11.7
|
|
|
14,819
|
|
|
16.0
|
|
|
(4,221
|
)
|
|
(28.5
|
)
|
|||
Technology and analytics
|
11,007
|
|
|
12.2
|
|
|
15,443
|
|
|
16.6
|
|
|
(4,436
|
)
|
|
(28.7
|
)
|
|||
Processing and servicing
|
5,221
|
|
|
5.8
|
|
|
4,535
|
|
|
4.9
|
|
|
686
|
|
|
15.1
|
|
|||
General and administrative
|
17,725
|
|
|
19.6
|
|
|
11,887
|
|
|
12.8
|
|
|
5,838
|
|
|
49.1
|
|
|||
Total operating expenses
|
44,551
|
|
|
49.3
|
|
|
46,684
|
|
|
50.3
|
|
|
(2,133
|
)
|
|
(4.6
|
)
|
|||
Loss from operations
|
(2,385
|
)
|
|
(2.6
|
)
|
|
(11,249
|
)
|
|
(12.1
|
)
|
|
8,864
|
|
|
78.8
|
|
|||
Other expense:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest expense
|
(51
|
)
|
|
(0.1
|
)
|
|
(353
|
)
|
|
(0.4
|
)
|
|
302
|
|
|
(85.6
|
)
|
|||
Total other expense:
|
(51
|
)
|
|
(0.1
|
)
|
|
(353
|
)
|
|
(0.4
|
)
|
|
302
|
|
|
(85.6
|
)
|
|||
Loss before provision for income taxes
|
(2,436
|
)
|
|
(2.7
|
)
|
|
(11,602
|
)
|
|
(12.5
|
)
|
|
9,166
|
|
|
(79.0
|
)
|
|||
Provision for income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net loss
|
$
|
(2,436
|
)
|
|
(2.7
|
)%
|
|
$
|
(11,602
|
)
|
|
(12.5
|
)%
|
|
$
|
9,166
|
|
|
(79.0
|
)%
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
Period-to-Period
|
|||||||||||
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Revenue:
|
|
|||||||||||||||||||
Interest income
|
$
|
86,369
|
|
|
95.7
|
%
|
|
$
|
87,111
|
|
|
93.8
|
%
|
|
$
|
(742
|
)
|
|
(0.9
|
)%
|
Gain on sales of loans
|
—
|
|
|
—
|
|
|
1,484
|
|
|
1.6
|
|
|
(1,484
|
)
|
|
(100.0
|
)
|
|||
Other revenue
|
3,911
|
|
|
4.3
|
|
|
4,297
|
|
|
4.6
|
|
|
(386
|
)
|
|
(9.0
|
)
|
|||
Gross revenue
|
$
|
90,280
|
|
|
100.0
|
%
|
|
$
|
92,892
|
|
|
100.0
|
%
|
|
$
|
(2,612
|
)
|
|
(2.8
|
)%
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
Period-to-Period
|
|||||||||||
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Provision for loan losses
|
$
|
36,293
|
|
|
40.2
|
%
|
|
$
|
46,180
|
|
|
49.7
|
%
|
|
$
|
(9,887
|
)
|
|
(21.4
|
)%
|
Funding costs
|
11,821
|
|
|
13.1
|
|
|
11,277
|
|
|
12.2
|
|
|
544
|
|
|
4.8
|
|
|||
Total cost of revenue
|
$
|
48,114
|
|
|
53.3
|
%
|
|
$
|
57,457
|
|
|
61.9
|
%
|
|
$
|
(9,343
|
)
|
|
(16.3
|
)%
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
Period-to-Period
|
|||||||||||
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Sales and marketing
|
$
|
10,598
|
|
|
11.7
|
%
|
|
$
|
14,819
|
|
|
16.0
|
%
|
|
$
|
(4,221
|
)
|
|
(28.5
|
)%
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
Period-to-Period
|
|||||||||||||||
|
2018
|
|
2017
|
|
Change
|
|
|
|||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Technology and analytics
|
$
|
11,007
|
|
|
12.2
|
%
|
|
$
|
15,443
|
|
|
16.6
|
%
|
|
$
|
(4,436
|
)
|
|
(28.7
|
)%
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
Period-to-Period
|
|||||||||||||||
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Processing and servicing
|
$
|
5,221
|
|
|
5.8
|
%
|
|
$
|
4,535
|
|
|
4.9
|
%
|
|
$
|
686
|
|
|
15.1
|
%
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
Period-to-Period
|
|||||||||||||||
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage of
Gross Revenue |
|
Amount
|
|
Percentage
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
General and administrative
|
$
|
17,725
|
|
|
19.6
|
%
|
|
$
|
11,887
|
|
|
12.8
|
%
|
|
$
|
5,838
|
|
|
49.1
|
%
|
|
Maturity
Date |
|
Weighted
Average Interest Rate |
|
Borrowing
Capacity |
|
Principal
Outstanding |
||||
|
|
|
|
|
(in millions)
|
||||||
Funding Debt:
|
|
|
|
|
|
||||||
OnDeck Asset Securitization Trust II LLC
|
May 2020
(1)
|
|
4.7%
|
|
$
|
250.0
|
|
|
$
|
250.0
|
|
OnDeck Account Receivables Trust 2013-1 LLC
|
March 2019
|
|
4.4%
|
|
214.1
|
|
|
112.5
|
|
||
Receivable Assets of OnDeck, LLC
|
November 2018
|
|
5.1%
|
|
119.7
|
|
|
99.0
|
|
||
On Deck Asset Company, LLC
|
May 2019
|
|
9.0%
|
|
100.0
|
|
|
75.5
|
|
||
OnDeck Asset Funding I, LLC
|
February 2020
(2)
|
|
8.9%
|
|
150.0
|
|
|
75.0
|
|
||
Prime OnDeck Receivable Trust II, LLC
|
December 2018
|
|
4.3%
|
|
125.0
|
|
(4)
|
72.6
|
|
||
Other Agreements
|
Various
(3)
|
|
Various
|
|
50.4
|
|
|
50.4
|
|
||
Total Funding Debt
(5)
|
|
|
|
|
$
|
1,009.2
|
|
|
$
|
734.9
|
|
Corporate Debt:
|
|
|
|
|
|
|
|
||||
On Deck Capital, Inc.
|
October 2018
|
|
6.0%
|
|
$
|
30.0
|
|
|
$
|
8.0
|
|
|
As of and for the Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Cash and cash equivalents
|
$
|
70,415
|
|
|
$
|
72,997
|
|
Restricted cash
|
$
|
44,709
|
|
|
$
|
64,672
|
|
Loans held for investment, net
|
$
|
892,023
|
|
|
$
|
928,509
|
|
Cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
53,912
|
|
|
$
|
44,871
|
|
Investing activities
|
$
|
(98,690
|
)
|
|
$
|
(97,125
|
)
|
Financing activities
|
$
|
45,381
|
|
|
$
|
65,516
|
|
Contractual Obligations
|
|
Total
|
|
2018
|
|
2019-2020
|
|
2021-2022
|
|
Thereafter
|
|
|
(in thousands)
|
||||||||
Operating leases
|
|
$ 55,304
|
|
6,424
|
|
13,386
|
|
12,641
|
|
22,853
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
Exhibit
Number
|
|
Description
|
|
Filed /
Incorporated by
Reference from
Form *
|
|
Incorporated
by Reference
from Exhibit
Number
|
|
Date Filed
|
|
|
8-K
|
|
3.1
|
|
12/22/2014
|
||
|
|
8-K
|
|
3.1
|
|
8/3/2016
|
||
|
|
S-1
|
|
4.1
|
|
11/10/2014
|
||
|
|
S-1
|
|
4.6
|
|
11/10/2014
|
||
|
|
Filed herewith.
|
|
|
|
|
||
|
|
Filed herewith.
|
|
|
|
|
||
|
|
Filed herewith.
|
|
|
|
|
||
|
|
Filed herewith.
|
|
|
|
|
||
|
|
Filed herewith.
|
|
|
|
|
||
|
|
Filed herewith.
|
|
|
|
|
||
|
|
Filed herewith.
|
|
|
|
|
||
|
|
Filed herewith.
|
|
|
|
|
||
101.INS
|
|
XBRL Instance Document
|
|
Filed herewith.
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
Filed herewith.
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
Filed herewith.
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
Filed herewith.
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase Document
|
|
Filed herewith.
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
Filed herewith.
|
|
|
|
|
*
|
All exhibits incorporated by reference to the Registrant's Form S-1 or S-1/A registration statements relate to Registration No. 333-200043
|
+
|
Indicates a management contract or compensatory plan.
|
|
On Deck Capital, Inc.
|
|
|
|
/s/ Kenneth A. Brause
|
|
Kenneth A. Brause
Chief Financial Officer
(Principal Financial Officer)
|
Date: May 8, 2018
|
|
|
|
|
/s/ Nicholas Sinigaglia
|
|
Nicholas Sinigaglia
Chief Accounting Officer ( Principal Accounting Officer ) |
Date: May 8, 2018
|
|
1.
|
Job Title:
At the commencement of your employment, your job title will be Chief Financial Officer. In this capacity, you will report to Noah Breslow, Chief Executive Officer.
|
2.
|
Starting Date:
Your start date will be March 26, 2018.
|
3.
|
Compensation:
Your starting base salary will be $375,000.00 annually, paid semi-monthly. You will next be eligible for consideration for a salary adjustment for March 2019.
|
4.
|
Incentive Compensation:
You will receive a one-time Signing Bonus of $150,000 made payable in two installments. Based on a start date of March 26, 2018, the payments are as follows:
|
1.
|
$75,000 on or about June 29, 2018
|
2.
|
$75,000 on or about February 28, 2019
|
5.
|
Equity Compensation:
Subject to approval by the Company’s board of directors or its compensation committee, it will be recommended that you be granted an equity grant in the amount of $1,000,000. Fifty percent of the grant will be in restricted stock units covering shares of Company common stock having a “target value” of approximately $500,000. The remaining 50% will be in stock options. For purposes of the previous sentence, “target value” of a single share means the average of the closing prices of the Company’s common stock for the 30-trading day period ending on the date preceding the grant date of the RSUs. New hire RSU and option grants are subject to a four-year vesting period.
|
6.
|
Change in Control & Severance Agreement:
You will have the same severance and change in control agreements as similarly situated executives, except for the following:
|
a.
|
If terminated without cause within 12 months of your start date, 25% of your new hire options and time based RSUs will vest.
|
b.
|
If terminated without cause within 12 months of your start date, 33% of your new hire restricted cash grant will vest at target.
|
7.
|
Employee Benefits:
You will be eligible for all OnDeck employee benefits on your start date including: sick leave, medical, vision, and dental health insurance, life insurance, long-term disability insurance and business travel accident insurance. You will be entitled to vacation allowance consistent with similarly situated team members of the company. You will be eligible to participate in the OnDeck 401(k) Plan as of your start date. If you do not make an election or opt out of the plan, you will automatically be enrolled in the plan at a deferral rate of 4% approximately 60 days following your start date. You can change or stop your contribution anytime throughout the year.
|
8.
|
Acknowledgements:
You agree to comply with all Company policies, including the Code of Business Conduct and Ethics, Team Member Handbook, and Insider Trading Policy. You further acknowledge that at all times you shall be subject to, observe and carry out such rules, regulations, policies, directions and restrictions applicable to OnDeck.
|
/s/ Lorna Hagen
Chief People Officer
On Deck Capital, Inc.
|
|
/s/ Kenneth A. Brause
|
March 5, 2018
|
|
|
|
On Deck Capital, Inc.
|
||
|
|
|
By:
|
|
/s/ Noah Breslow
|
|
|
Noah Breslow,
Chief Executive Officer
|
|
|
|
||
/s/ Andrea Gellert
|
|
|
May 4, 2018
|
|
Andrea Gellert
|
|
|
|
Date
|
|
|
|
On Deck Capital, Inc.
|
||
|
|
|
By:
|
|
/s/ Noah Breslow
|
|
|
Noah Breslow,
Chief Executive Officer
|
|
|
|
||
/s/ Cory Kampfer
|
|
|
May 2, 2018
|
|
Cory Kampfer
|
|
|
Date
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of On Deck Capital, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/s/ Noah Breslow
|
|
Noah Breslow
Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of On Deck Capital, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/s/ Kenneth A. Brause
|
|
Kenneth A. Brause
Chief Financial Officer
|
|
/s/ Noah Breslow
|
|
Noah Breslow
Chief Executive Officer
|
|
/s/ Kenneth A. Brause
|
|
Kenneth A. Brause
Chief Financial Officer
|