Author Topic: Prosper files 2012 10-K with the SEC (Updated with Q1-2013 10-Q)  (Read 7732 times)

Xenon481

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http://www.sec.gov/Archives/edgar/data/1416265/000114036113013123/form10k.htm


Q2 2009 - Loss before other income: $2,617,400
Q3 2009 - Loss before other income: $2,289,092
Q4 2009 - Loss before other income: $2,868,908
Q1 2010 - Loss before other income: $2,747,524
Q2 2010 - Loss before other income: $2,787,434
Q3 2010 - Loss before other income: $2,404,217
Q4 2010 - Loss before other income: $2,566,804
Q1 2011 - Loss before other income: $3,097,283
Q2 2011 - Loss before other income: $2,837,560
Q3 2011 - Loss before other income: $2,837,290
Q4 2011 - Loss before other income: $3,519,037
Q1 2012 - Loss before other income: $4,690,488
Q2 2012 - Loss before other income: $3,545,603
Q3 2012 - Loss before other income: $4,448,773
Q4 2012 - Loss before other income: $4,764,596
Q1 2013 - Loss before other income: $4,504,040

The average quarterly burn rate for 2012 was $4,362,365 which is ~43% higher than 2011's average quarterly burn rate.

At the end of 2012, Prosper had $2,300,073 in "Cash and cash equivalents" (cash and treasuries). In January 2013, they received another round of VC funding of ~$20m, so that puts Prosper at essentially $22.3million in known cash reserves.

- If 2012 Q4's burn rate was to hold constant, then Prosper would need another VC infusion in ~14 months from the end of 2012 (~Feb 2014).
- If 2013's average burn rate holds closer in line with 2012's average burn rate, then Prosper would need another VC infusion in ~15 months from the end of 2012 (~Mar 2014).
- If 2013's average burn rate is 20% higher than 2012's, then it is just ~13 months (~Jan 2014).
- If 2013's average burn rate is 30% higher than 2012's, then ~12 months (~Dec 2013).
- 40% higher average would be ~11 months.


- Prosper spent an average of ~$861k/month on salaries and benefits.
- Prosper spent an average of ~$474k/month on marketing. 30% of which was spent in Q4.
- Prosper spent an average of ~$276k/month on "Professional Services" which is primarily legal fees for the Class Action.
- Prosper spent an average of ~$110k/month on rebates and promotions.
- Prosper spent an average of ~$102k/month on facilities and maintenance.


Edit: Added Q1-2013 loss to the list
« Last Edit: May 18, 2013, 09:40:40 AM by Xenon481 »
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ee1x

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Re: Prosper files 2012 10-K with the SEC
« Reply #1 on: March 21, 2013, 12:39:02 PM »
Thanks for breaking this down for us, Xenon. Definitely something that all Prosper investors should be keeping a close eye on.
Investing since March 2012

Peter

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Re: Prosper files 2012 10-K with the SEC
« Reply #2 on: March 21, 2013, 05:12:45 PM »
Thanks Xenon. This is about what I expected from Prosper in Q4. It was a disastrous quarter any way you slice it. But any extrapolation of the burn rate from that terrible quarter is going to be misleading. There is a new management team in place now with a new growth trajectory - increased top-line numbers should reduce the burn rate.

We are already seeing signs of better numbers with March month-to-date volume up 64% over last month. To me, the really interesting numbers are going to be Q2 this year. That will be the first full quarter of the new management team and should show record loan volume and we will see what the expenses do. I expect a reduced burn rate from Q4 2012. Feel free to criticize me if I am wrong.

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Xenon481

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Re: Prosper files 2012 10-K with the SEC
« Reply #3 on: March 21, 2013, 06:03:44 PM »
increased top-line numbers should reduce the burn rate.

That has not been true for essentially the entirety of Prosper's post-SEC existence; and this can be seen in the list of quarterly losses in my post.

Other than a few minor and temporary blips, Prosper's burn rate has historically continued to increase (often dramatically) even as their top-line revenues increase. Prosper has thus far been unable to scale their revenues in line with (let alone ahead of) their expenses. For every $X that they add in revenues, they seem to keep adding Y% even more in expenses.

Quote
I expect a reduced burn rate from Q4 2012.

I did give an extrapolation for a ~10% reduced burn rate; It's the one where they would have ~15 months before needing an additional VC infusion.


Past performance is not a guarantee of future results (especially as situations change), but in this case, it is enlightening to look at the trends.
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Bilgefisher

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Re: Prosper files 2012 10-K with the SEC
« Reply #4 on: March 22, 2013, 12:13:55 PM »
While not their largest costs, I do tend to wonder why prosper and LC choose to reside in one of the most expensive markets and most business unfriendly states.

SeanMcD

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Re: Prosper files 2012 10-K with the SEC
« Reply #5 on: March 22, 2013, 05:37:35 PM »
The catch-22 of any tech-heavy startup.  Sure, it's much cheaper to set up in North Dakota, but that doesn't help if you can't hire any programmers.

Bilgefisher

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Re: Prosper files 2012 10-K with the SEC
« Reply #6 on: March 28, 2013, 12:27:56 PM »
Sean,
You make a valid point.  I'm not suggesting ND, but there are plenty of markets with capable programers that are far cheaper than SF.

The programing they are doing is hardly revolutionary where you need the latest advances in technology.

Jason

Peter

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Re: Prosper files 2012 10-K with the SEC
« Reply #7 on: March 28, 2013, 04:27:36 PM »
I don't think access to programmers enters into the equation - there are plenty of places with qualified people in that area. I think the reason they are in SF, and keep in mind they moved there from the relatively low rent Redwood City in 2011, is access to capital. There are plenty of VC's, hedge funds, and other large financial institutions with money in SF and that is why they chose to locate there in my opinion.
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Xenon481

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Re: Prosper files 2012 10-K with the SEC
« Reply #8 on: March 28, 2013, 06:35:08 PM »
I don't think access to programmers enters into the equation - there are plenty of places with qualified people in that area. I think the reason they are in SF, and keep in mind they moved there from the relatively low rent Redwood City in 2011, is access to capital. There are plenty of VC's, hedge funds, and other large financial institutions with money in SF and that is why they chose to locate there in my opinion.

Prosper has ALWAYS been headquartered and had most of their on-shore staff located in San Francisco at the current 111 Sutter Street, 22nd Floor location. An extremely high rent office.  All the way back to 2006.
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Peter

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Re: Prosper files 2012 10-K with the SEC
« Reply #9 on: March 28, 2013, 07:05:20 PM »
Xenon, I stand corrected. Must have had a brain fart - I was referring to Lending Club of course. And yes, I realize that Prosper has been in the same high rent location for many years. But I doubt they will be renewing their lease when it expires - the new management team are much more focused on cost control than the last one.
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rawraw

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Re: Prosper files 2012 10-K with the SEC
« Reply #10 on: March 29, 2013, 05:16:52 AM »
I wonder what Prosper's "Efficiency ratio" is and how that has trended.

Xenon481

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Re: Prosper files Q1-2013 10-Q with the SEC
« Reply #11 on: May 18, 2013, 09:39:52 AM »
The Motley Fool says to Avoid Prosper Like The Plague.

Read about historical Prosper actions/problems at Prospers.org

rawraw

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Re: Prosper files 2012 10-K with the SEC (Updated with Q1-2013 10-Q)
« Reply #12 on: May 18, 2013, 11:31:49 AM »
Guys, come over to the dark side of Lending Club.  We have cookies! :)

Probably a good thing they got the bankruptcy remote vehicle.

Zach

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Re: Prosper files 2012 10-K with the SEC (Updated with Q1-2013 10-Q)
« Reply #13 on: May 18, 2013, 11:43:07 AM »
Guys, come over to the dark side of Lending Club.  We have cookies! :)

Probably a good thing they got the bankruptcy remote vehicle.

Haha +1

Peter

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Re: Prosper files 2012 10-K with the SEC (Updated with Q1-2013 10-Q)
« Reply #14 on: May 18, 2013, 09:36:05 PM »
While I always appreciate Xenon's counterbalance to my rosy view of Prosper and where they are at I think just throwing out the quarterly loss number with no commentary doesn't tell much of a story any more. There is a new management team that from what I can gather are very focused on costs and who are fully aware of Prosper's dismal record when it comes to cash burn.

The loss numbers do have to come down and I will be shocked if they don't come very fast over the next couple of quarters. Because what Xenon doesn't mention is that April volume was huge for Prosper which almost certainly resulted in a record month in revenue. And May is blowing April's numbers out of the water.
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