IOU Financial Inc. Reports Second Quarter 2021 Financial Results and Breaks All-Time Record in Monthly Loan Originations
IOU Financial reported impressive growth in loan originations, achieving US$34.4 million in Q2 2021, up 36.1% from Q1 2021 and 272.4% from Q2 2020. July 2021 marked the company’s highest monthly volume at US$18.5 million. The firm aims for total loan originations of US$165M to US$200M for 2021, significantly higher than US$84.9M in 2020. Financial highlights include a corporate cash position of US$11.1 million and a reduced adjusted net loss of US$0.3 million in Q2 2021 compared to US$2.7 million in Q2 2020.
- Loan originations grew 36.1% quarter-over-quarter and 272.4% year-over-year in Q2 2021.
- Record monthly loan originations of US$18.5 million in July 2021.
- Targeting US$165M to US$200M in loan originations for 2021, a substantial increase from US$84.9M in 2020.
- Corporate cash position of US$11.1 million as of June 30, 2021.
- Adjusted gross revenue decreased 49.9% to US$2.4 million in Q2 2021 compared to Q2 2020.
- Interest revenue plummeted 93.9% year-over-year, reflecting a drop in average loan receivables by 82.5%.
Company highlights strong quarter-to-quarter growth in loan originations, shares progress on Post-Pandemic Growth Plans and announces migration to marketplace strategy.
- Loan origination volume grew to US
$34.4 million in Q2 2021, representing an increase of36.1% over Q1 2021 and representing an increase of272.4% over Q2 2020. - IOU added US
$18.5 million in loan originations in July 2021, representing the highest monthly loan origination volume in the history of the Company. - IOU continued to sell its loan originations to institutional buyers as part of its marketplace growth strategy.
- The Company maintained a corporate cash position of
$11.1 million at June 30, 2021 despite the repurchase of$1.9 million in convertible debentures.
MONTREAL, Aug. 26, 2021 /PRNewswire/ - IOU FINANCIAL INC. ("IOU" or "the Company") (TSXV: IOU), a leading online lender to small businesses (IOUFinancial.com), announced today its results for the three and six-month period ended June 30, 2021.
"We are delivering on our Post-Pandemic Growth Plan and these growth figures are the result," said Robert Gloer, President and CEO. "We are committed to continue delivering on our plans and maximizing the growth potential of the marketplace strategy."
The Company is focused on bringing its loan origination volumes back to pre-pandemic levels and returning to profitability on an annual basis by maximizing its exposure to the post-COVID-19 pandemic economic recovery. For all of 2021, the Company is targeting loan originations in the range of US
In order to achieve this goal, IOU is investing in its Post-Pandemic Growth Plan (PPGP), first announced during its Q1 2021 Financial Results, by targeting 3 key strategic areas:
- Product expansion: The Company intends to expand its ability to support the post-pandemic growth of small businesses with innovative new funding products designed to meet a wider range of business needs.
- Product distribution: IOU is focussed on launching initiatives to expand its network of quality brokers, adding to its sales team, and investing in marketing and communications programs to generate new levels of awareness, differentiation and growth.
- Technology innovation: The Company is investing in its IOU360 technology platform to better support its network of brokers, merchants and employees with a frictionless user experience for all stakeholders.
The Company is advancing on all fronts with improvements to the IOU360 technology platform underway, a contribution of over US
In addition to the 3 strategic areas outlined above, IOU will further support growth in loan originations by migrating from a loan portfolio strategy (which involves funding directly to IOU's balance sheet) to a marketplace strategy whereby its loan origination growth will be primarily sold to institutional purchasers. This will provide the Company with significantly more room to grow and will necessitate the introduction of new key performance indicators (KPIs) in order to provide meaningful visibility into the performance of the Company. It should be noted that the marketplace strategy will also render previous key performance indicators (KPIs) - such as portfolio yield, cost of borrowing rate, provisional credit loss rates (PCL), net credit loss rates (NCL), allowance for expected credit losses ratio (ACL) and stage 3 delinquency ratios associated with the loan portfolio - irrelevant, and the Company will therefore discontinue the disclosure of these previous KPIs. Instead, the Company will introduce new KPIs to provide meaningful insights into the performance of its marketplace strategy as part of its Q3 2021 Financial Results.
The Company's growth strategies are further supported by strategic additions to the management team announced on August 4, 2021, providing IOU with a clear structure to execute on its growth strategies.
FINANCIAL HIGHLIGHTS
Please refer to the table below for adjustments made to IFRS gross revenue and operating expenses in order to better reflect the actual operating performance of the business.
Loan Originations: In Q2 2021, the Company funded US
Adjusted Gross Revenue: Decreased
Interest Revenue: Interest revenue decreased
Servicing and Other Income: Servicing and other income increased
Servicing income increased
Adjusted gross revenue decreased to
Cost of Revenue: Decreased from
The cost of revenue for the six-month period ended June 30, 2021 decreased from
Adjusted Operating Expenses: Increased
Adjusted Net Loss: IOU closed on its second quarter ended June 30,2021 with an adjusted net loss of
IFRS Net Loss: IOU closed on its second quarter ended June 30, 2021 with IFRS net earnings of
Adjusted and IFRS net earnings (loss) | ||||
Three-Month | Six-Month | |||
2021 | 2020 | 2021 | 2020 | |
For the period ended June 30 | ||||
$ | $ | $ | $ | |
Interest revenue | 232,598 | 3,815,288 | 824,210 | 8,784,674 |
Servicing & other income | 2,129,388 | 903,282 | 3,803,768 | 2,337,675 |
Adjusted Gross Revenue | 2,361,986 | 4,718,570 | 4,627,978 | 11,122,349 |
Interest expense | 352,568 | 933,936 | 677,000 | 1,918,415 |
(Recovery of) Provision for loan losses | (369,069) | 4,813,545 | (306,305) | 10,055,554 |
Recoveries | (18,952) | (132,270) | (123,916) | (442,744) |
Cost of Revenue | (35,453) | 5,615,211 | 246,779 | 11,531,225 |
Adjusted Net Revenue (Loss) | 2,397,439 | (896,641) | 4,381,199 | (408,876) |
Adjusted operating expense | 2,675,606 | 1,837,597 | 5,097,082 | 4,444,677 |
Income tax expense | - | - | - | |
Adjusted Net Loss | (278,167) | (2,734,238) | (715,883) | (4,853,553) |
Adjusted Net Loss per Share | (0.00) | (0.02) | (0.01) | (0.06) |
Adjusted Net Loss | (278,167) | (2,734,238) | (715,883) | (4,853,553) |
Non-cash gain on sales of loans | 1,586,130 | 420,977 | 2,688,811 | 1,207,554 |
Non-cash amortization of servicing asset | (1,193,981) | (746,785) | (1,917,979) | (1,593,850) |
Non-cash stock-based compensation | (80,588) | (19,701) | (101,019) | (54,984) |
Non-recurring (loss) gain | (22,640) | - | (22,640) | 73,478 |
Net Earnings (Loss) per IFRS | 10,754 | (3,079,747) | (68,710) | (5,221,355) |
Net Earnings (Loss) per Share | 0.00 | (0.04) | (0.00) | (0.06) |
IOU's financial statements and management discussion & analysis for the quarter ended June 30, 2021 have been filed on SEDAR and are available at www.sedar.com.
CORPORATE UPDATE
The Company has implemented a work from home program whereby the majority of its Canadian employees can work remotely. As a result, the Company agreed to sub-lease the majority of its office space in Montreal, Quebec it currently rents from Palos to a third-party. The sub-lease term commences October 1, 2021 and ends on April 20, 2027 and is subject to head landlord approval. The sub-lease agreement will result in approximately
CONFERENCE CALL
The Company will hold a conference call at 4:30 (EST) on September 1, 2021, to discuss its financial results. The dial-in number to access the conference call from Canada and the United States is 1 (800) 430-8332 (toll-free), conference ID: 58373354.
About IOU Financial Inc.
IOU Financial Inc. is a wholesale lender that provides quick and easy access to growth capital to small businesses through a network of preferred brokers across the US and Canada. Built on its proprietary IOU360 technology platform that connects underwriters, merchants and brokers in real time, IOU Financial has become a trusted alternative to banks by underwriting US
Forward Looking Statements
Certain information set forth in this news release may contain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the control of IOU including, but not limited to, the impact of general economic conditions, industry conditions, dependence upon regulatory and shareholder approvals, the execution of definitive documentation and the uncertainty of obtaining additional financing. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. IOU does not assume any obligation to update or revise its forward-looking statements, whether as a result of new information, future events, or otherwise.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Definitions
- Adjusted gross revenue is defined as gross revenue prepared in accordance with IFRS for the period, plus amortization of servicing assets less gain on sale of loans. The Company uses adjusted gross revenue as it eliminates items that do not necessarily reflect how the Company is performing. Specifically, it eliminates the non-cash gain on sale of loans and the non-cash amortization of servicing assets which influence operating results depending on the timing and amount of the loan sales.
- Adjusted operating expenses is calculated as follows: total operating expenses prepared in accordance with IFRS for the period less: stock-based compensation and non-recurring costs, plus non-recurring gains. The period-to-date ratios are calculated on a three-point basis, using December, March and June period end balances, presented on an annualized basis. The Company uses adjusted operating expenses as it eliminates items that do not necessarily reflect how the Company is performing. Specifically, it eliminates non-cash stock-based compensation which is given at different times and prices and non-recurring costs and gains which affects operating results only periodically.
- The calculation of adjusted net (loss) earnings is defined as net (loss) earnings for the period prepared in accordance with IFRS less: gain on sale of loans and non-recurring gains, plus: amortization of servicing assets, stock-based compensation and non-recurring costs.
View original content:https://www.prnewswire.com/news-releases/iou-financial-inc-reports-second-quarter-2021-financial-results-and-breaks-all-time-record-in-monthly-loan-originations-301363388.html
SOURCE IOU Financial Inc.
FAQ
What were IOU Financial's loan origination figures for Q2 2021?
How does IOU Financial's loan origination volume compare to previous years?
What is IOU Financial's adjusted net loss for Q2 2021?
What is the revenue guidance for IOU Financial for 2021?
