After looking at the filing I find it striking that the engineering/product development costs have risen and that G&A have gone up as well. If they stayed flat year-over-year they could have saved $17 million.Makes you wonder what they are spending money to develop/engineer and where the administrative costs are going.
In general, operational expenses (OPEX) rose 4.3% year to year. Most of this of course is labor.
It would have been better if opex had been held constant, but as a practical matter, that is quite difficult to do. Costs rise this year vs last year because of not just things you do this year, but things you did LAST YEAR as well. If you gave a person a raise in the middle of last year, you will have half a year of that increased salary in last year's sum, but a full year of it in this year's sum. Same thing happens when you hired a person last year. Even if you freeze all hiring and all salary increases this year, opex this year will be higher than last year. I suspect that almost all hiring is indeed frozen, but that performance raises are continuing. Can't hold the tech people otherwise.
The only way to do better at controlling opex is to lay off folks. From a practical matter, Scott had one chance to do that. He made a decision how many to lay off at that time. In retrospect I think it might have been better to have cut a bit more heavily, but I'm not the guy who had to make those decisions, and its always easy to criticize looking back.
He has controlled sales & marketing costs. I believe that almost all of those costs go to acquire borrowers. Prior S&M campaign was designed to grow borrowers, whereas now we're merely holding flat, which one should be able to do with a smaller S&M program.
It is difficult to see how they're going to grow back into profitability enough to support the stock price in the near future. I can't make my spreadsheet come out with any reasonable numbers.
