Press release

Prosper Reports First Quarter Financial Results

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Prosper, a leading peer-to-peer lending platform connecting borrowers
and investors, today reported financial results for the first quarter of
2019.

“Our first quarter results reflect our continued emphasis on sustainable
long-term growth and profitability as we focus on credit and pricing
discipline in our personal loan business while making significant
investments in our new home equity business,” said David Kimball, CEO,
Prosper Marketplace. “We are also very pleased with the funding
stability and diversification we have achieved through new investors and
committed financing facilities as we near the end of our $5 billion
purchase agreement with a consortium of investors that was signed in
2017.”

During the quarter, Prosper closed its second warehouse facility with
$300 million in commitments, providing the company with $500 million in
total committed warehouse capacity and also sponsored its first
securitization with collateral contributed by Prosper. This was the
sixth issuance under the Prosper Marketplace Issuance Trust (PMIT)
program with total issuance of $2.8 billion since the program’s launch
in 2017.

Financial summary:

  • Total Net Revenue, which includes the non-cash impact related to
    warrants to purchase preferred stock, decreased to $30.1 million in Q1
    2019 compared to $30.5 million in Q1 2018.
  • Core Revenue(1), which excludes the non-cash impact related
    to warrants to purchase preferred stock, decreased to $39.8 million in
    Q1 2019 compared to $45.7 million in Q1 2018.
  • Net Loss increased to ($22.7) million in Q1 2019 compared to a Net
    Loss of ($11.4) million in Q1 2018.
  • Adjusted EBITDA(1) decreased to $0.4 million in Q1 2019
    compared to $4.5 million in Q1 2018.
 

Key Operating and Financial Metrics (Unaudited)

(in thousands)

 
Three Months Ended March 31,
          2019       2018
Loan Originations         $ 598,197        

$

744,127

 
Transaction Fees, Net           26,294           31,354  
Servicing Fees, Net           6,202           7,184  
Total Net Revenue           30,077           30,450  
Core Revenue (1)           39,824           45,729  
Net Loss           (22,714 )         (11,401 )
Adjusted EBITDA(1)           357           4,520  
             

(1) Core Revenue and Adjusted EBITDA are non-GAAP financial measures.
The accompanying schedules to this press release provide a
reconciliation of each of these non-GAAP financial measures to the most
directly comparable financial measure calculated and presented in
accordance with GAAP. Our non-GAAP financial measures should not be
considered as alternatives to, or more meaningful than, our financial
results prepared in accordance with GAAP.

About Prosper Marketplace

Prosper’s mission is to advance financial well-being. The company’s
online lending platform connects people who want to borrow money with
individuals and institutions that want to invest in consumer credit.
Borrowers get access to affordable fixed-rate, fixed-term personal
loans. Investors have the opportunity to earn solid returns via a
data-driven underwriting model. To date, over $14 billion in personal
loans have been originated through the Prosper platform for debt
consolidation and large purchases such as home improvement projects,
medical expenses and special occasions.

Prosper Marketplace, Inc. was founded in 2005 and is headquartered in
San Francisco. The lending platform is owned by Prosper Funding LLC, a
subsidiary of Prosper Marketplace, Inc. Loans originated through the
Prosper marketplace are made by WebBank, member FDIC. Visit www.prosper.com and
follow @Prosperloans to learn more. Prosper notes are offered by Prospectus.

Use of Non-GAAP Financial Measures

Core Revenue and Adjusted EBITDA are non-GAAP financial measures. The
accompanying schedules to this press release provide a reconciliation of
each of these non-GAAP financial measures to the most directly
comparable financial measure calculated and presented in accordance with
GAAP. The non-GAAP financial measure of Core Revenue is defined as our
Total Net Revenue adjusted to exclude the Fair Value of Warrants Vested
on Sale of Borrower Loans. The non-GAAP financial measure of Adjusted
EBITDA is defined as Net Loss adjusted for interest income on available
for sale securities and cash and cash equivalents, income tax expense,
depreciation and amortization, impairment of intangible assets, stock
based compensation expense, fair value of warrants vested on the sale of
borrower loans, restructuring charges, and fair value adjustments for
warrant liabilities.

These non-GAAP financial measures should not be considered as
alternatives to, or more meaningful than, our financial results prepared
in accordance with GAAP.

     

PROSPER MARKETPLACE, INC.

RECONCILIATION OF TOTAL NET REVENUE TO CORE REVENUE

(UNAUDITED)

(IN THOUSANDS)

 
        Three Months Ended March 31,
        2019     2018
Total Net Revenue       $ 30,077       $ 30,450  
Less: Fair Value of Warrants Vested on Sale of Borrower Loans         (9,747 )       (15,279 )
Core Revenue       $ 39,824       $ 45,729  
   
 

PROSPER MARKETPLACE, INC.

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

(UNAUDITED)

(IN THOUSANDS)

 
Three Months Ended March 31,
        2019     2018
Net Loss       $ (22,714 )     $ (11,401 )
Fair Value of Warrants Vested on Sale of Borrower Loans         9,747         15,279  
Depreciation Expense:              
Servicing and Origination         1,146         1,578  
General & Administration – Other         654         1,136  
Amortization of Intangibles         70         112  
Stock-Based Compensation         1,614         2,331  
Restructuring Charges         82         323  
Change in Fair Value of Warrants         10,058         (4,604 )
Interest Income on Available for Sale Securities, Cash and Cash
Equivalents 		        (329 )       (244 )
Income Tax Expense         29         10  
Adjusted EBITDA       $ 357       $ 4,520