TrustBuddy just reported its Q2 2014 numbers which show that the company continues its strong growth announcing its best quarter ever with a positive deviation from the Q2 forecast update announced on June 18. Profitability was, as previously announced, burdened by costs for IT-system changes and adapations to the changing legal situation in several countries.
Internal revenue showed more than 30% year-on-year increase, lending volumes came in at SEK 207 million (Q1-14: SEK 189m, Q2-13: SEK 128 m), and with the record issue of close to 70,000 loans representing 77% year-on-year growth. At the time of the Q2 forecast update, the company made an assessment indicating that Q2 would correspond to the levels of Q1. TrustBuddy is now pleased to report a growth stronger than expected.
As previously announced, however, the group earnings was negatively affected as a result of the successful but highly intense efforts to launch the all-new platform and website. The Net operating income, EBITDA, reported at SEK -2.5 million, should be read in light of the significant investment and costs taken during the period in connection with the launch of the new platform and website, as well as for costs due to the changing legislative environment. TrustBuddy expects profitability to improve in Q3 and Q4, driven by the commencement of institutional funding of loans on the platform under the €40 million commitment announced last month.
Says CEO Jens Glaso in the report: “During the quarter TrustBuddy has continued to bolster its talent pool by appointing a new CTO, two new seniro lending capital officers, new Spanish and Danish country managers along with additional credit analysts. The high level of talent joining TrustBuddy will enable the company to rapidly propel to the next level.” Regarding the legal situation he continues: “In July, TrustBuddy’s application for a Swedish credit facilitator license was rejected by Finansinspektionen, and we have since been working hard marking sure that all the relevant issues are addressed.”
Elsewhere, TrustBuddy reiterates its FY 2014 outlook saying, amongst other things, that the market for P2P lending will continue growing strongly in 2014. It is expected that the American player, Lending Club, will conduct an IPO in 2014. The introduction will help create greater global interest and focus on the P2P industry, both from borrowers and from new lenders who want a more attractive alternative to conventional bank interest. TrustBuddy intends to continue its expansion into new markets during 2014. During the remaining quarters of 2014, the company’s focus will be on enhancing the product offering, operations and profitability for its customers and for TrustBuddy as a company. The clear trend of increasing volumes as seen in the previous year will continue in 2014, resulting in a significant increase in lending volume.
Judging from today’s report, TrustBuddy seems to be on track to meet its goals. We believe the market wants to hear news about the legal situation, primarily in Sweden, as a catalyst for a share price increase. Fundamentally, TrustBuddy continues on its impressive growth path and we believe the patient investor will be rewarded.
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