[Sean Cash]

They were indeed profitable in the third quarter. It Explains the timing of their IPO filing. However, they got whacked hard in the 1st quarter, their highest quarterly loss by far over the last 8 quarters. 2013 was a smooth trend. 2014 has been bumpy. A wild swing up and down.



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[channin19]

The timing coincides with their to move to a more direct channel sales and marketing approach.

[Guy In The Know]

They were indeed profitable in the third quarter. It Explains the timing of their IPO filing. However, they got whacked hard in the 1st quarter, their highest quarterly loss by far over the last 8 quarters. 2013 was a smooth trend. 2014 has been bumpy. A wild swing up and down.



Click to see full size

This is a business where GAAP accounting requires that origination growth include a provision for expected losses. this provision is not the equivalent of write-offs, or actual losses. if the businesses was growing much slower this provision would be much lower. the accounting is complicated and likely mis-interpreted by many casual readers.

[cardinalequity]

This kind of says it all

What does the company’s filing tell us?
OnDeck isn’t profitable. The company brought in $108 million in revenue during the first nine months of this year but reported a net loss of $14.4 million, according to the filing.

The company is not profitable now and never will be

Isaac what makes you so certain of that? Be specific not just for me but for other readers on here

[isaacdstern]

I can go on and on for days why their model is broken

[isaacdstern]

Hey but on the other side of that coin they are the ones with a $1.5Billion IPO, so maybe losing money is the way to go

[Sean Cash]

This is a business where GAAP accounting requires that origination growth include a provision for expected losses. this provision is not the equivalent of write-offs, or actual losses. if the businesses was growing much slower this provision would be much lower. the accounting is complicated and likely mis-interpreted by many casual readers.

I issue no comment on their financials, I am just presenting what is now public information. It will be interesting to read what stock analysts write.

[DirectMedia_Scott]

Hey but on the other side of that coin they are the ones with a $1.5Billion IPO, so maybe losing money is the way to go

They needed to loose money.

Hear me out.

OD isn't about running a profitable advance business. It's about their platform and technology; eventually it's about the distribution of that technology.

In order to verify that their technology (underwriting) was properly identifying merchants that would default, they needed to fund those merchants in order to establish a statistically significant set of data that would show these merchants would indeed default; proof of concept.

So essentially, they were throwing good money after bad, with their fingers crossed that they would be right about things not working. My own opinion is that this approach was not only used to sort out who would default and who wouldn't (verifying OD's technology as a viable means to underwrite) but also what margins/factors could be implemented effectively. To reference today's Business Week article, you'll see that their "effective APR" has been lowered. My opinion is that they found a threshold that yields the best ROI before diminishing returns.

So yes, if you want a 1.5 Billion IPO - Don't worry about building a book of advances, worry about forming a technology and then providing proof of concept. This way every major banking institution in the world will come to you for that proprietary system to help increase their own book of small business loans.

Just my two cents.

[CreditGuy]

I can go on and on for days why their model is broken

So they've managed to pull the wool over the eyes of Goldman, Deutsche Bank, BofA, Jeffries, First Round, RRE, SAP, Google, Peter Thiel, Tiger Global, and all the other investors, but you know what's really going on despite all those investors being privy to the books and you've never seen them. Okay, guy.

[isaacdstern]

once they rolled out their "revolutionary algorithm" default rate skyrocketed

you simply cant cut out verifying landlords and doing merchant interviews. Sure their are many parts of underwriting you can automate buy once you take out key components of underwriting a business you are dead in the water.

This is not like getting approved for a credit card where a computer can make the up and down decision easily

Again call me crazy for trying to run a for profit business...but in the end they are going to have the last laugh

$1.5 Billion...geese!

[Sean Cash]

speaking of profitability.... http://dailyfunder.com/magazine/with...al-be-the-way/

[Guy In The Know]

Isaac...the more you whine, the worse you look

I bet they could be profitable charging your rates

[Guy In The Know]

I issue no comment on their financials, I am just presenting what is now public information. It will be interesting to read what stock analysts write.

I know and I am not being critical of you. Your insights are always reasonable and you are doing a service to the industry.

[isaacdstern]

not whining...just don't understand their model...clearly they know what they are doing though as they are the ones getting a $1.5M valuation

Isaac...the more you whine, the worse you look

I bet they could be profitable charging your rates

[bizloanbroker]

after 36 straight losing quarters magically they make money in the 3rd quarter of this year which "coincidentally" is right when they announce their IPO...can anyone say financial engineering

[isaacdstern]

OnDeck IPO: Is There Substance Behind The 'Nonbanking' Hype?



http://m.seekingalpha.com/article/2686595-ondeck-ipo-is-there-substance-behind-the-nonbanking-hype?source=google_news