OnDeck Capital (ONDK) reported earnings on Mon 29 July 19 (b/o)

** charts after earnings **

OnDeck Capital misses by $0.03, reports revs in-line; guides Q3 revs below consensus; lowers FY19 guidance; announces $50 mln repurchase, says pursuing bank charter

Reports Q2 (Jun) earnings of $0.09 per share, excluding non-recurring items, $0.03 worse than the S&P Capital IQ Consensus of $0.12; revenues rose 15.5% year/year to $110.25 mln vs the $110.11 mln S&P Capital IQ Consensus.

The OnDeck Board has authorized the repurchase of up to $50 million of common stock with the shares to be retained in Treasury and available for possible reissuance.

Co issues downside guidance for Q3, sees Q3 revs of $108-112 mln vs. $112.18 mln S&P Capital IQ Consensus; sees Adj-NI of $1-5 mln.

Co issues downside guidance for FY19, sees FY19 revs of $438-448 mln (Prior $435-455 mln) vs. $448.12 mln S&P Capital IQ Consensus; sees Adj-NI of $22-30 mln (Prior $30-40 mln). 

"Our second quarter financial results reflect the continued execution of our 2019 priorities focused on growing the U.S. lending business, investing in growth adjacencies and advancing our risk, technology and funding disciplines," said Noah Breslow, chief executive officer. "We are excited about our opportunities to create value for shareholders and our Board has authorized a significant stock repurchase program in recognition of our strong liquidity and capital positions. Further, after careful consideration and analysis, we have decided to pursue a bank charter, which will enable us to offer our small business customers a wider range of products while improving our financial profile."

OnDeck Capital in SEC filing discloses that it was recently informed that effective August 3, JPMorgan Chase Bank no longer intends to originate new small business loans through the Company's platform hosting the Chase Business Quick Capital program

• However, the Company will continue to act as servicer for up to two years with respect to JPM's loans previously originated through the Company's platform. The Company took a $0.9 million impairment charge for the quarter ended June 30, 2019 for the remaining capitalized technology supporting JPM originations.
• The online small business lender told analysts on its earnings call that JPMorgan Chase will no longer by originating new loans on the platform from next week. Chief Executive Noah Breslow said JPMorgan Chase had recently informed the company of the move, which follows a change in strategy at its business banking unit. "While disappointing, we appreciate that Chase recognized at a very early stage the opportunity to serve small businesses through online lending, and that our technology and platform were the right tools to support their efforts," Breslow said. In response to questions from analysts, he later conceded that OnDeck had to write down almost $1 million in Chase-specific technology, which is a headwind to earnings in the short term, but frees it up from legacy technology