E-LOAN Reports Pro Forma Profitability and Positive Cash-Flow For 3rd Q 2001
E-LOAN Reports Record Revenues; Achieves Record Mortgage and Home Equity Direct Margin; Purchase Mortgage Business Up 65%; Cash Balance Increases to $27.2 Million
DUBLIN, CA -- (October 9, 2001) -- E-LOAN, Inc. (Nasdaq: EELN, Research, SEC Filings), an online lending company, today reported that it achieved pro forma profitability and positive cash-flow from operations for the first time in the third quarter ended September 30, 2001. Revenues for the third quarter of 2001 were $16.9 million, up 88 percent from the $9.0 million reported in the third quarter of 2000. Pro forma net income for the third quarter of 2001 was $0.3 million or $0.01 per share on 53.8 million shares, compared with a pro forma net loss of ($8.5) million or ($0.16) per share on 52.9 million shares during the third quarter of 2000. These results are $0.06 per share better than the First Call consensus estimate.
"We're extremely pleased to report pro forma profitability a quarter ahead of our most recent forecast and nine quarters ahead of our forecast at the time of our IPO," said Chris Larsen, E-LOAN's Chairman and CEO. "Our performance demonstrates the strength of our business model and affirms that like other financial services, consumer loans are perfectly suited for the Internet. The strong growth in our purchase mortgage business -- up 65 percent from last quarter -- is particularly exciting: it's further evidence that consumers are embracing and more willing than ever to trust the E-LOAN brand."
"The combination of record direct margin and record low customer acquisition costs represents the cornerstone of a highly profitable business," said Matt Roberts, E-LOAN's CFO. "As we continue to refine and build upon our low-cost producer strategy via systems and technology enhancements and marketing efficiencies, the overall customer experience improves while our costs continue to decline. For example, our customer acquisition costs have fallen to 21 percent of revenue -- well below our original target 30 percent -- while at the same time the number of E-LOAN customers who would recommend E-LOAN to a friend has grown to 90 percent." Pro forma results exclude compensation charges related to the company's stock option plan, amortization of goodwill on the acquisition of CarFinance.com, and amortization of marketing costs related to warrants to purchase the Company's common stock in connection with a marketing agreement. The amortization of marketing costs and goodwill concluded in the second and third quarters of 2001, respectively.
Q3'01 Loan Volume In the third quarter, E-LOAN sold 11,225 loans for a total dollar volume of $907.1 million. Of that total, 3,343 were mortgage loans for a total dollar volume of $702.3 million. E-LOAN sold 6,117 auto loans for a total dollar volume of $117.3 million. Also in the third quarter, E-LOAN sold 1,765 home equity loans for a total dollar volume of approximately $87.4 million.
Discussion of Q3'01
Results E-LOAN's revenues are primarily from mortgage, auto, and home equity loans that are funded and sold on the secondary market, as well as loans that are brokered or referred out to third party sources. Of the total revenue, $10.2 million or 61 percent was non-interest mortgage related, $1.7 million or 10 percent was auto related, $3.0 million or 18 percent was interest income on mortgage and home equity loans, $1.7 million or 10 percent was non-interest home equity related and $0.2 million or 1 percent was from other sources, principally credit card and small business loan partnerships. Operations expenses -- the fixed and variable costs of processing loan transactions -- totaled $10.2 million or 60 percent of revenue in the third quarter compared to $8.4 million or 94 percent of revenue in the same period last year. Of total operations expenses, $4.9 million was non-interest mortgage related expense, $2.1 million was auto-related expense, $2.1 million was interest expense on mortgage and home equity loans, and $1.0 million was non-interest home equity related. Direct operating margin is defined as revenue minus variable and fixed operations expense. Mortgage direct margin excluding interest totaled $5.3 million or 52 percent of mortgage revenue excluding interest. This represents an improvement to the 41 percent direct margin reported in the prior quarter. Home equity direct margin totaled $0.7 million or 42 percent of home equity revenue excluding interest. This represents an improvement to the 21 percent direct margin reported in the prior quarter. Auto direct margin was a loss of $0.4 million. Cash marketing expenses totaled $3.6 million or 21 percent of revenue in the third quarter compared to $6.3 million or 70 percent of revenue for the same period last year. Technology expenses were $1.5 million or 9 percent of revenue in the third quarter compared to $1.7 million or 18 percent of revenue for the same period last year. General and administrative expenses were $1.4 million or 8 percent of revenue in the third quarter compared to $1.5 million or 17 percent of revenue for the same period last year. Total assets at the end of the quarter were $80.3 million, which includes cash and cash equivalents of $27.2 million of which $4.5 million is restricted, and loans held for sale of $33.2 million. Total liabilities at the end of the quarter were $45.4 million and included $31.1 million in borrowings related to mortgage, home equity and auto loans held for sale. Total stockholders' equity at the end of the quarter was $34.9 million.
E-LOAN, Inc., an leading online lending company, offers consumer loans and debt management services online at http://www.eloan.com. Through the third quarter of 2001, E-LOAN originated over $6.4 billion in consumer loans. The company's loan processing centers are located in Dublin, CA and Jacksonville, FL.