investor presentation...investor presentation november 2016 this presentation, including the...

Investor

Presentation

November 2016

This presentation, including the accompanying oral presentation (collectively, this “presentation”), does not constitute an offer to sell or the solicitation of an offer to buy any

securities. This presentation is provided by On Deck Capital, Inc. (“OnDeck”) for informational purposes only. No representations express or implied are being made by OnDeck or

any other person as to the accuracy or completeness of the information contained herein.

This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other legal authority. Forward-looking

statements include statements about scalability, growing distribution channels, credit predictability and information concerning our future financial performance, business plans and

objectives, potential growth opportunities, financing plans, competitive position, industry environment and potential market opportunities. Forward-looking statements can also be

identified by words such as "will," "enables," "expects”, “may,” "allows," "continues," "believes,“, “intends,” "anticipates," "estimates" or similar expressions. Forward-looking

statements are neither historical facts nor assurances of future performance. They are based only on our current beliefs, expectations and assumptions regarding the future of our

business, anticipated events and trends, the economy and other future conditions. Moreover, we do not assume responsibility for the accuracy and completeness of forward-looking

statements. As such, they are subject to inherent uncertainties, changes in circumstances, known and unknown risks and other factors that are difficult to predict and in many cases

outside our control.

As a result, you should not rely on any forward-looking statements. Our expected results may not be achieved, and actual results may differ materially from our expectations.

Important factors that could cause actual results to differ from our forward-looking statements are the risks that we may not be able to manage our anticipated or actual growth

effectively, that our credit models do not adequately identify potential risks, and other risks, including those under the heading “Risk Factors” in our Annual Report on Form 10-K for

the year ended December 31, 2015, our quarterly report on Form 10-Q for the quarter ended June 30, 2016 and in other documents that we file with the Securities and Exchange

Commission, or SEC, from time to time which are available on the SEC website at www.sec.gov. We undertake no obligation to publicly update any forward-looking statements for

any reason after the date of this presentation to conform these statements to actual results or to changes in our expectations, except as required by law.

In addition to U.S. GAAP financial information, this presentation includes certain non-GAAP financial measures. We believe that non-GAAP measures can provide useful

supplemental information for period-to-period comparisons of our core business and are useful to investors and others in understanding and evaluating our operating results. These

non-GAAP measures have not been calculated in accordance with U.S. GAAP. You should not consider them in isolation or as a substitute for an analysis of our results under U.S.

GAAP. There are a number of limitations related to the use of these non-GAAP measures compared to their nearest U.S. GAAP equivalents. In addition, other companies may

calculate non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial

measures as tools for comparison. The non-GAAP measures contained in this presentation include Adjusted EBITDA, Adjusted Net Income (Loss), Net Interest Margin After Credit

Losses, Adjusted Expense Ratio, Adjusted Operating Yield and certain operating expense categories excluding stock-based compensation. Please refer to pages 36 through 47 in

the Appendix of this presentation for a description of these non-GAAP measures, their limitations and reconciliations to U.S. GAAP.

Forward-Looking Statements

2

572890 781

1,124

12/31/14 12/31/15 9/30/15 9/30/16

1,158

1,8741,318

1,772

2014 2015 9M '15 9M '16

ORIGINATIONS$MM

• $5 Billion+ total originations

• 44% y-o-y Loans Under Management growth

• Scalable financial model

• 60,000+ small businesses served

• 5th Generation proprietary credit scoring model

• 76 net promoter score1

The Leading Online Platform for Small

Business Lending

1. Based on all OnDeck’s channels.

3

158255

187 209

2014 2015 9M '15 9M '16

GROSS REVENUE$MM

LOANS UNDER MANAGEMENT$MM

4

Investment Highlights

• Massive and underserved market

• Proprietary analytics and scoring models

• Integrated and scalable technology platform

• Robust customer acquisition channels

• Growth opportunity through “Platform-As-A-Service”

• Diversified funding platform

• Attractive financial profile

Small Business Lending Market is Massive

and Underserved

Sources: U.S. SBA, FDIC 6/30/16, Oliver Wyman, How “New-Form Lending” Will Shape Banks’ Small Business Strategies, 2013

1. As of September 30, 2016; Loans under management represents the Unpaid Principal Balance plus the amount of principal outstanding for loans held for sale, excluding net deferred origination costs, plus the amount of principal

outstanding of term loans the company serviced for others, each at the end of the period.

5

28MMU.S. Small Businesses

OnDeck Unique US Small

Businesses Served

60K+

$80-120BnUnmet

Demand for Small

Business Lines

of Credit

$199BnBusiness Loan

Balances Under

$250,000 in

the U.S. in Q2 ꞌ16

$1.1Bn

OnDeck Loans Under

Management1

Diversity of Small Businesses

Creates Challenges for

Traditional Lenders…

CHALLENGES FOR TRADITIONAL

LENDERS

• Diverse businesses require manual underwriting

• Technology and data limitations

• Lack of standardized small business credit score

6

Credit Card Rev. Cash Rev. Monthly Exp. Inventory & Payroll

Landscaping Rev. Snow Removal Rev. Monthly Exp. Fuel & Payroll

Repair Rev. Subcontractor Rev. Monthly Exp. Supplies & Payroll

CASH FLOW PROFILE

Restaurant

Landscaping Company

Plumbing Company

Q1 Q2 Q3 Q4

…Leading to a Frustrating

Borrowing Experience

for Small Businesses

FRUSTRATIONS FOR SMALL

BUSINESSES

• Time consuming offline process

• Non-tailored credit assessment

• Product mismatch

• Rigid collateral requirements

77

• 5th Generationproprietary credit scoring model

• 100+ external data sources

• 10 Million+ small businesses in proprietary database

• 2,000+ data points per application

The OnDeck Score®

Proprietary and Purpose Built for Small Business

8

Score

A

B

C

D

E

RIS

K G

RA

DIN

G

• Probabilistic record linkage

• Dimensionality reduction

• Ensemble learning

• Exhaustive cross validation

• Feature engineering

• Adaptive learning

Proprietary Data

Analysis Platform

Public

RecordsCredit

Data

Social

Data

Proprietary

Data

Transactional

Data

Accounting

Data

F

We Rely on the OnDeck Score for Greater

Accuracy, Predictability and Access

(1) Analysis on OnDeck Score v5 using actual OnDeck loan performance data.

9

10

20

40

Random Personal Credit Score OnDeck Score

More Accurate than the Personal Credit Score

at Predicting Bad Credit Risk1…Resulting in Funding Significantly More

Loans for the Same Risk…

ACCEPTANCE RATE (%)

The OnDeck Score Personal Credit Score Random

90%

100%

0%

100% 40% 20% 10% 0%

% O

F D

EF

AU

LT

S E

LIM

INA

TE

D

10%

Score

Manual ReviewWeeks or Months

Offline33 Hours2

The OnDeck Solution for Small Business

Lending

1. Application time depends on customer having the required documentation available.

2. Source: Small business survey conducted by the Federal Reserve Bank of New York, Spring 2014.

3. Approximately 1/3 of customers are subjected to secondary, manual review process.

APPLY

TRADITIONAL LENDING

Several Days

OnlineMinutes1

Automated ReviewAs Fast as Immediately3

As Fast As Same Day

APPROVE FUND

10

TERM LOAN

(Launched in 2007)

LINE OF CREDIT

(Launched in 2013)

Use Case

Size $5,000 – $500,000 $5,000 – $100,000

Term 3 – 36 months 6 months3

Pricing4 Annual Interest Rate as low as 5.99%1

Average 43% APR2 13.99% – 39.9% APR

Payment Automated daily or weekly payments Automated weekly payments

Availability Renewal opportunity at ~50% paid down Draw on-demand

Tailored Products for Small Businesses

1. For select customers.

2. Based on Q3 ꞌ16 Originations.

3. 6 month reset upon each draw.

4. Pricing available through certain OnDeck strategic partners or channels may vary.

HiringNewStaff

Buying Inventory

Marketing Managing Cash Flow

11

60,000+Small Businesses Served

7 YearsMedian Time in Business

Established and Diverse Customer Base

$610,000Median Annual Revenue

700+Industries

12

Online Customer

Experience

Integrated and Scalable Technology Platform

100,000+Total Loans

Data Aggregation, Analytics &

Scoring

12 Million+Customer Payments

Technology Powered

Servicing & Collections

13

$5 Billion+Total Originations

Numbers represent loan units.

5,955

8,131 7,625

2013 2014 2015

7,103

18,790

29,516

2013 2014 2015

Diversified and Growing Distribution Channels

14

FUNDING ADVISORS

80%

20%

Direct and Strategic Partners Funding Advisors

CHANNEL MIX Q3 ‘16

Numbers represent loan units.

DIRECT & STRATEGIC PARTNERS

Expanding Partner Ecosystem

Includes affiliates, subsidiaries and divisions.

OnDeck Enabling Partners to Expand Core Solutions and Value Added Services

15

Banks

SMB Solution

Online Lending

ISOs/Processors

BALANCE SHEET

FUNDING MIX AS OF Q3 ‘16

Funding mix includes the principal balance outstanding in Loans Under Management as of September 30, 2016 for loans financed with funding debt or sold to OnDeck Marketplace investors.

Diverse Funding Model Focused on Flexibility

Target Mix75-85% of Term Loan

Originations

15-25% of Term Loan

Originations

Investor

Type

Investors Seeking Fixed

Returns

Investors Seeking Variable

Returns

FlexibilityScalable as Originations

Grow

Greater Product and Investor

Flexibility

Cost Low Cost Execution Profitable Revenue Stream

ResiliencyCapital-Light Structure, Equity

Contribution Aligns Interests

Diversified Risk Exposure,

Servicing Fee Aligns Interests

Securitization / Warehouse

Marketplace

Securitization

Warehouse Lines

OnDeck

Marketplace®

16

Consistent Portfolio Performance Over Time

1. Represents net lifetime charge-offs of the unpaid principal balances charged off less recoveries of loans previously charged off. A given cohort’s net lifetime charge-off ratio equals the cohort’s net lifetime charge-offs through

September 30, 2016 divided by the cohort’s total original loan volume. Repeat loans in both the numerator and denominator include the full renewal loan principal amount. The chart includes all term loan originations, regardless

of funding source, including loans sold through our OnDeck Marketplace or held for sale on our balance sheet.

2. As of September 30, 2016, principal balance of all term loans in Loans Under Management still outstanding was 0% for all cohorts except the 2014, Q1 ‘15, Q2 ’15, Q3 ’15, Q4 ’15, Q1 ’16, Q2 ’16 and Q3 ‘16 cohorts, which had

principal outstanding of 0.1%, 0.5%, 1.1%, 4.1%, 14.6%, 29.5%, 60.0% and 88.6%, respectively.

3. Represents the initial contractual term at origination.

NET CHARGE-OFFS BY COHORT 1

9.6 11.1 8.8 7.5 8.7 9.2 10.0 11.2 11.9 11.9 12.3 13.2 13.2 13.7 13.1Avg. Term

(months)3

17

5.5%

9.0%

6.4%

4.4%

5.5%

6.9% 6.9% 7.1% 7.0%6.5% 6.3%

4.8%

3.2%

0.8%

0.0%

2007 2008 2009 2010 2011 2012 2013 2014 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '162 2222222 2 2 2 2 2

Growth StrategyBrand and direct

marketing

Strategic partnership

Data and analytics

Product expansion

Expand customer lifetime value

International expansion

18

Industry Leading Management Team

19

James HobsonCOO

Paul RosenSales

Howard KatzenbergCFO

Barbara LambotteCapital Markets

Krishna VenkatramanData & Analytics

Pamela RiceTechnology

Andrea GellertMarketing

Noah BreslowCEO

Cory KampferLegal

MANAGEMENT TEAM BOARD OF DIRECTORS

David HartwigSapphire Ventures

Bruce P. NolopFormer CFOE*TRADE Financial Corporation

Neil WolfsonSF Capital Group

Noah BreslowChairman of the Board

Jane J. ThompsonWalmart Financial ServicesCFPB Advisory Board

Ronald VerniFormer CEOSage Software

James Robinson IIIRRE VenturesFormer CEO, American Express

Daniel S. HensonFormer EVPGE Capital Corporation

TEAM EXPERIENCE

Gagan KanjliaProduct

Robert YoungInternational

Hyeyeon ParkRisk

• Healthy growth trajectory

• Structural protections with product and portfolio design

• Compelling customer LTV

• Diversified funding model

• Inherent operating leverage with scale

20

Financial Highlights

$320$382

$466

$572

$675$719

$781

$890

$982

$1,053

$1,124

88%89%

91%86% 81% 72% 65% 61%

67%

75%79%

14%

19% 28%35%

39%

33%

25%

21%

3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31 3/31 6/30 9/30

Consistent Loans Under Management Growth

($MM)

BALANCE SHEET LOANSONDECK MANAGED PORTFOLIO

2014 2016

21

2015

$29

$36

$44

$50

$56

$63$67 $68

$63

$70

$77

92%93%

93%90% 86% 79% 72% 70%

85%92%

92%

14%21% 28% 30% 15%

8%

8%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

Strong Revenue Growth

The sum of the quarters may not exactly match the annual numbers due to rounding

22

INTEREST INCOMEGAIN ON SALE AND OTHER REVENUE

($MM)

2014 20162015

Compelling Customer Lifetime Value

1. Includes upfront internal and external commissions as well as direct marketing expenses.

2. Contribution is defined to include interest income and fees collected on initial and repeat loans, less acquisition costs for repeat loans, less the following items for both initial and repeat loans: estimated third party processing and

servicing expenses, estimated funding costs (excluding any cost of equity capital) and charge offs. For this purpose, processing and servicing expenses are estimated based on the mix of new and renewal originations and

outstanding principal balances. Includes all loans originated in the period. New and repeat loans sold funding cost is estimated based on the average on-balance sheet cost of funds rate in the period. Estimates may be adjusted

in subsequent periods to reflect updated information.

3. Return on Investment (ROI) is contribution divided by initial acquisition cost. Acquisition costs include upfront internal and external commissions as well as direct marketing expenses.

4. Figures may not foot due to rounding.

23

($MM)

2014

$46$37

$16

Acquisition

Cost1Contribution2 +Q1 +Q2 +Q3 +Q4

or

$143Return3

after 11 quarters

$46Investment

$40

$14

$12

+Q5

$10

Through

Sept 30, 2016+Q6

$7

ALL TERM LOAN CUSTOMERS ACQUIRED IN 2014

• Average 2.2 loans per customer through 11 quarters

3.1x+ROI

$7

+Q7

Customer Lifetime Value Stable Over Time

1. Contribution as defined on the previous page.

2. Return on Investment (ROI) as defined on the previous pages.

24

COHORT CONTRIBUTION PER CUSTOMER 1

--

1.0x

2.0x

3.0x

4.0x

+7 Quarters +11 Quarters+3 Quarters

2013

2014

-

5,000

10,000

2015

RETURN ON INVESTMENT 2

ALL TERM LOAN CUSTOMERS ACQUIRED IN 2013, 2014 AND 2015

2014

2013

+7 Quarters +11 Quarters

2015

+3 Quarters

30%

20%21%

17%

2013 2014 2015 9M '16

Operating Leverage Potential as LUM Scales

1. See appendix for a reconciliation of these non-GAAP measures.

PROVISION RATE

COST OF FUNDS RATE

OPERATING EXPENSE EX. SBC AS A PERCENTAGE OF

AVERAGE LUM 1

Operating leverage potential as LUM scales in 2016 and 2017

6.0% 6.6% 5.8%6.4%

2013 2014 2015 9M '16

11.3%

6.2% 5.5% 5.9%

2013 2014 2015 9M '16 S&M ex. SBC T&A ex. SBC

P&S ex. SBC G&A ex. SBC

25

Adj. EBITDA and Adj. Net Income (Loss)

See appendix for a reconciliation of these non-GAAP measures.

26

$15.8

($30.5)

$9.0

($10.8)

$11.4

($35.7)

$7.4

($12.9)

Adjusted EBITDA Adjusted Net Income (Loss)

9M ‘15 9M ‘16 Q3 ‘15 Q3 ‘16

Building Shareholder Value

27

• Expand our addressable market and increase customer lifetime value

with a full spectrum of SMB credit products and by investing in long-term

customer relationships

• Drive sustainable net revenue growth for the longer term, prioritizing stable

credit quality across the portfolio

• Leverage technology and analytics leadership to extend our competitive

“moats” while driving operating leverage and enhancing profitability

• Diversify our funding sources by type and investor to balance risk retention

with flexibility and resiliency over an economic cycle

Supplemental

Performance

Metrics

28

Additional Metrics for Evaluating

Performance

Note: See appendix for definitions of non-GAAP measures, their limitations and reconciliations to GAAP.

Note: Net Interest Margin After Credit Losses, Adjusted Expense Ratio and Adjusted Operating Yield are annualized metrics. Annualization is based on business days assuming 252 business days per year, which is weekdays per

year less U.S. Federal Reserve Bank holidays.

Funding Cost

Interest Income

Net Charge-offs

Net Interest Income After Credit Losses

Average Interest Earning Assets

Stock-based Comp. (SBC)

Operating Expense

Operating Expense (Ex. SBC)

Average LUM

÷

Net Interest Margin After Credit Losses Adjusted Expense Ratio Adjusted Operating Yield=

÷

29

• Describes earnings

potential (spread) of loan

book

• Comparable to reported

metrics of other finance

companies

Benefits of Metrics


Net Interest Margin After Credit Losses

Adjusted Expense Ratio Adjusted Operating Yield=

• Describes efficiency of

operating expense base

relative to LUM

• Should correlate with a

more traditional “efficiency

ratio” when funding mix

stabilizes

• Describes potential

operating income of LUM

at scale and with no

Marketplace

• Proxy for Return on Assets

(ROA) of LUM

30

Historical Performance


Figures may not exactly foot due to rounding


22%

19% 20%

17%

20%19% 19%

Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16

Adjusted Expense Ratio

21% 20% 20%21%

18% 17% 17%

Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16

Adjusted Operating Yield

1%

(1%) (1%)

(5%)

3% 2% 2%

Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16

31

Appendix

32

Net Cumulative Lifetime Charge-off Ratios –

All Loans

As of September 30, 2016, net charge-off as a percentage of original loan amount for all term loan originations, regardless of funding source, including loans sold through OnDeck Marketplace or held for sale on our balance sheet.

33

0%

1%

2%

3%

4%

5%

6%

7%

8%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

2012

2013

2014

2015

2016 Q1

2016 Q2

2016 Q3

or

$117Return3

after 7 quarters

$54Investment

2.2x+ROI

ALL TERM LOAN CUSTOMERS ACQUIRED IN 2015

• Average 1.6 loans per customer through 7 quarters

• 2014 cohort was 2.3x ROI at comparable seasoning

Customer Lifetime Value Stable Despite

Increased Competitive Pressures

1. Includes upfront internal and external commissions as well as direct marketing expenses.

2. Contribution is defined to include interest income and fees collected on initial and repeat loans, less acquisition costs for repeat loans, less the following items for both initial and repeat loans: estimated third party processing and

servicing expenses, estimated funding costs (excluding any cost of equity capital) and charge offs. For this purpose, processing and servicing expenses are estimated based on the mix of new and renewal originations and

outstanding principal balances. Includes all loans originated in the period. New and repeat loans sold funding cost is estimated based on the average on-balance sheet cost of funds rate in the period. Estimates may be adjusted

in subsequent periods to reflect updated information.

3. Return on Investment (ROI) is contribution divided by initial acquisition cost. Acquisition costs include upfront internal and external commissions as well as direct marketing expenses.

4. Figures may not foot due to rounding.

34

($MM)

2015

$54$42

$21

Acquisition

Cost1Contribution2 +Q1 +Q2

$43

Through Sept 30, 2016

$12

+Q3

Current Debt Facilities

1. Total funding debt principal. Balances and capacities as of September 30, 2016, subject to borrowing conditions.

2. The period during which remaining cash flow can be used to purchase additional loans expires April 30, 2018.

3. The period during which new borrowings may be made under this facility expires in August 2018.

4. While the lenders under our corporate debt facility and partner synthetic participation have direct recourse to us as the borrower thereunder, lenders to our subsidiaries do not have direct recourse to us.

5. Funding Debt as of September 30, 2016 was $651.7 million.

Borrower Maturity Date WA Interest Rate Principal Outstanding Borrowing Capacity

Funding Debt 1,4

OnDeck Asset Securitization Trust II LLC May-20 2 4.7% $250.0 $250.0

OnDeck Account Receivables Trust 2013-1 LLC Sept-17 3.2% 106.1 162.4

Receivable Assets of OnDeck, LLC May-17 3.5% 100.0 100.0

Prime OnDeck Receivable Trust, LLC June-17 2.8% 67.3 100.0

OnDeck Asset Funding I LLC Aug-19 3 7.8% 64.5 100.0

On Deck Asset Company, LLC May-17 9.8% 59.9 75.0

Small Business Asset Fund 2009 LLC Oct-16 through Aug-17 6.5% 5.5 5.5

Partner Synthetic Participations 4 Oct-16 through June-18 Various 3.6 3.6

Total Funding Debt $656.9 5 $796.5

Corporate Debt 1,4

On Deck Capital, Inc. Jan-17 4.5% $12.7 $20.0

35

($MM)

$000s 2014 2015 Q1 ‘15 Q2 ‘15 Q3 ‘15 Q4 ‘15 Q1 ‘16 Q2 ‘16 Q3 ’16

Net Interest Margin After Credit Losses Reconciliation

Interest Income $145,275 $195,048 $48,699 $50,248 $48,624 $47,477 $53,479 $63,886 $71,361

Funding Costs (17,200) (20,244) (5,045) (4,771) (5,126) (5,302) (5,722) (8,374) (8,452)

Net Charge-offs (37,071) (71,357) (16,110) (19,269) (16,704) (19,274) (17,041) (20,129) (23,067)

Net Interest Income After Credit Losses $91,004 $103,447 $27,544 $26,208 $26,794 $22,901 $30,716 $35,383 $39,842

Divided By: Business Days in Period 252 252 61 64 65 62 62 64 64

Net Interest Income After Credit Losses Per Business Day $361 $411 $452 $410 $412 $369 $495 $553 $623

Multiplied By: Average Business Days Per Year 1 252 252 252 252 252 252 252 252 252

Annualized Net Interest Income After Credit Losses $90,972 $103,572 $113,904 $103,320 $103,824 $92,988 $124,740 $139,356 $156,996

Divided By: Average Interest Earning Assets $349,844 $539,096 $520,757 $537,819 $531,223 $555,423 $619,724 $741,226 $841,270

Net Interest Margin After Credit Losses 26.0% 19.2% 21.9% 19.2% 19.5% 16.7% 20.1% 18.8% 18.7%

Non-GAAP Net Interest Margin After Credit

Losses Calculation and Reconciliation

Note: See following slide for further definition, uses and limitations of this non-GAAP metric.

1. Annualization is based on business days assuming 252 business days per year, which is weekdays per year less U.S. Federal Reserve Bank holidays.

36

Net Interest Margin After Credit Losses, or NIM After Credit Losses, is calculated as our business day adjusted annualized Net Interest Income After Credit Losses divided by Average Interest Earning Assets.

Net Interest Income After Credit Losses represents interest income less funding cost and net charge-offs. Interest income is net of deferred costs and fees on loans held for investment and held for sale. Net deferred origination costs in loans held for investment and loans held for sale consist of deferred origination costs as offset by corresponding deferred origination fees. Deferred origination fees include fees paid up front to us by customers when loans are funded. Deferred origination costs are limited to costs directly attributable to originating loans such as commissions, vendor costs and personnel costs directly related to the time spent by the personnel performing activities related to loan origination. Funding cost is the interest expense, fees, and amortization of deferred debt issuance costs we incur in connection with our lending activities across all of our debt facilities. Net charge-offs are charged-off loans in the period, net of recoveries. Annualization is based on business days assuming 252 business days per year, which is weekdays per year less U.S. Federal Reserve Bank holidays.

Management believes that using Net Interest Margin After Credit Losses is useful to analyze the lending operating performance of the business unaffected by the provision for loan losses impact of the growth in originations. In accordance with GAAP, we recognize revenue on loans over their term, but provide for probable credit losses on the loans at the time they are originated. With respect to the forward-looking guidance of this metric, OnDeck is not able to provide a reconciliation of this non-GAAP measure to GAAP. Certain items that impact these measures have not yet occurred, are out of OnDeck’s control and/or cannot be reasonably predicted, and as a result, reconciliation of the forward-looking non-GAAP guidance measures to GAAP is not available without unreasonable effort.

Our use of Net Interest Margin After Credit Losses has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

• Net Interest Margin After Credit Losses is the rate of net return we achieve on our Average Interest Earning Assets outstanding during a period. It does not reflect the return from loans sold through OnDeck Marketplace, specifically our gain on sale revenue. Similarly, Average Interest Earning Assets does not include the unpaid principal balance of loans sold through Marketplace. Further, Net Interest Margin After Credit Losses does not include servicing revenue related to loans previously sold, fair value adjustments to servicing rights, monthly fees charged to customers for our line of credit, and marketing fees earned from our issuing bank partners, which are recognized as the related services are provided.

• Net Interest Margin After Credit Losses reflects net charge-offs in the period rather than provision for loan losses. To the extent that originations continue to grow significantly, our charge-offs will likely be lower than the probable credit losses inherent in the portfolio upon origination. Furthermore, provision for loan losses consists of amounts charged to income during the period to maintain an allowance for loan losses, or ALLL. In addition to net charge-offs, our ALLL represents our estimate of the expected credit losses inherent in our portfolio of term loans and lines of credit and is based on a variety of factors, including the composition and quality of the portfolio, loan specific information gathered through our collection efforts, delinquency levels, our historical loss experience and general economic conditions.

• Funding cost does not reflect interest associated with debt used for corporate purposes.


37

$000s 2014 2015 Q1 ‘15 Q2 ‘15 Q3 ‘15 Q4 ‘15 Q1 ‘16 Q2 ‘16 Q3 ‘16

Adjusted Expense Ratio Reconciliation

Operating Expense $80,510 $161,585 $33,549 $38,193 $42,456 $47,387 $44,559 $47,528 $49,395

Less: Stock-Based Compensation (2,842) (11,582) (2,042) (2,316) (3,707) (3,517) (3,752) (3,910) (3,761)

Operating Expense (Ex. SBC) $77,668 $150,003 $31,507 $35,877 $38,749 $43,870 $40,807 $43,618 $45,634


Operating Expense (Ex. SBC) Per Business Day $308 $595 $517 $561 $596 $708 $658 $682 $713


Operating Expense (Ex. SBC) $77,616 $149,940 $130,284 $141,372 $150,192 $178,416 $165,816 $171,864 $179,676

Divided By: Average LUM $392,486 $726,216 $627,379 $692,490 $748,266 $835,930 $939,787 $1,020,752 $1,087,641

Adjusted Expense Ratio 19.8% 20.6% 20.8% 20.4% 20.1% 21.3% 17.6% 16.8% 16.5%

Non-GAAP Adjusted Expense Ratio

Calculation and Reconciliation

Note: See following page for further definition, uses and limitations of this non-GAAP metric.


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Adjusted Expense Ratio represents our annualized operating expense, adjusted to exclude the impact of stock-based compensation, divided

by Average Loans Under Management, or Average LUM. Loans Under Management represents the Unpaid Principal Balance plus the amount

of principal outstanding of loans held for sale, excluding net deferred origination costs, plus the amount of principal outstanding of term loans

we serviced for others at the end of the period. Average LUM is calculated as the average of Loans Under Management at the beginning of

the period and the end of each month in the period. Annualization is based on business days assuming 252 business days per year, which is

weekdays per year less U.S. Federal Reserve Bank holidays.

Management believes that using the Adjusted Expense Ratio is a useful to analyze the level of operating expenses incurred by the business

compared to the level outstanding principal of loans, regardless of the funding source deployed to fund the loan. With respect to the forward-

looking guidance of this metric, OnDeck is not able to provide a reconciliation of this non-GAAP measure to GAAP. Certain items that impact

these measures have not yet occurred, are out of OnDeck’s control and/or cannot be reasonably predicted, and as a result, reconciliation of

the forward-looking non-GAAP guidance measures to GAAP is not available without unreasonable effort.

Our use of Adjusted Expense Ratio has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for

analysis of our results as reported under GAAP. Some of these limitations are:

• Adjusted Expense Ratio does not reflect the potentially dilutive impact of equity-based compensation.

• Adjusted Expense Ratio is based on the unpaid principal balance of loans outstanding, regardless of funding source, and does not take into

account the revenue earned in the period and may not correspond with the timing of the expenses incurred to originate new loans.

Adjusted Expense Ratio

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$000s 2014 2015 Q1 ‘15 Q2 ‘15 Q3 ‘15 Q4 ‘15 Q1 ‘16 Q2 ‘16 Q3 ’16

Sales and Marketing (Ex. SBC) / Average LUM Reconciliation

Sales and Marketing Expense $33,201 $60,575 $12,675 $14,981 $15,847 $17,072 $16,548 $16,757 $16,789

Less: Sales and Marketing Stock-Based Compensation (686) (3,081) (575) (594) (1,011) (901) (888) (941) (920)

Sales and Marketing Expense (Ex. SBC) $32,515 $57,494 $12,100 $14,387 $14,836 $16,171 $15,660 $15,816 $15,869


Sales and Marketing Expense (Ex. SBC) Per Business Day $129 $228 $198 $225 $228 $261 $253 $247 $248


Annualized Sales and Marketing Expense (Ex. SBC) $32,508 $57,456 $49,896 $56,700 $57,456 $65,772 $63,756 $62,244 $62,496


Sales and Marketing (Ex. SBC) / Average LUM 8.3% 7.9% 8.0% 8.2% 7.7% 7.9% 6.8% 6.1% 5.7%

Non-GAAP Sales and Marketing

(Ex. SBC) / Average LUM Calculation and Reconciliation

Note: Sales and Marketing (Ex. SBC) / Average LUM is a component of the Adjusted Expense Ratio. Management believes that using Sales and Marketing (Ex. SBC) / Average LUM is useful to analyze operating expenses incurred

by the business compared to the level outstanding principal of loans, regardless of the funding source deployed to fund the loan. See slide titled “Adjusted Expense Ratio” in this appendix for the uses and limitations of these non-

GAAP metrics.


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$000s 2014 2015 Q1 ‘15 Q2 ‘15 Q3 ‘15 Q4 ‘15 Q1 ‘16 Q2 ‘16 Q3 ’16

Technology and Analytics (Ex. SBC) / Average LUM Reconciliation

Technology and Analytics Expense $17,399 $42,653 $8,587 $10,206 $11,111 $12,749 $14,087 $13,757 $15,050

Less: Technology and Analytics Stock-Based Compensation (539) (2,351) (436) (504) (778) (632) (757) (887) (793)

Technology and Analytics Expense (Ex. SBC) $16,860 $40,302 $8,151 $9,702 $10,333 $12,117 $13,330 $12,870 $14,257


Technology and Analytics Expense (Ex. SBC) Per Business

Day$67 $160 $134 $152 $159 $195 $215 $201 $223


Annualized Technology and Analytics Expense (Ex. SBC) $16,884 $40,320 $33,768 $38,304 $40,068 $49,140 $54,180 $50,652 $56,196


Technology and Analytics (Ex. SBC) / Average LUM 4.3% 5.6% 5.4% 5.5% 5.4% 5.9% 5.8% 5.0% 5.2%

Non-GAAP Technology and Analytics


Note: Technology and Analytics (Ex. SBC) / Average LUM is a component of the Adjusted Expense Ratio. Management believes that using Technology and Analytics (Ex. SBC) / Average LUM is useful to analyze operating expenses

incurred by the business compared to the level outstanding principal of loans, regardless of the funding source deployed to fund the loan. See slide titled “Adjusted Expense Ratio” in this appendix for the uses and limitations of these

non-GAAP metrics.


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$000s 2014 2015 Q1 ‘15 Q2 ‘15 Q3 ‘15 Q4 ‘15 Q1 ‘16 Q2 ‘16 Q3 ’16

Processing and Servicing (Ex. SBC) / Average LUM Reconciliation

Processing and Servicing Expense $8,230 $13,053 $2,703 $3,015 $3,352 $3,983 $4,215 $4,865 $5,181

Less: Processing and Servicing Stock-Based Compensation (219) (775) (147) (156) (227) (245) (343) (211) (227)

Processing and Servicing Expense (Ex. SBC) $8,011 $12,278 $2,556 $2,859 $3,125 $3,738 $3,872 $4,654 $4,954


Processing and Servicing Expense (Ex. SBC) Per Business

Day$32 $49 $42 $45 $48 $60 $62 $73 $77


Annualized Processing and Servicing Expense (Ex. SBC) $8,064 $12,348 $10,584 $11,340 $12,096 $15,120 $15,624 $18,396 $19,404


Processing and Servicing (Ex. SBC) / Average LUM 2.1% 1.7% 1.7% 1.6% 1.6% 1.8% 1.7% 1.8% 1.8%

Non-GAAP Processing and Servicing


Note: Processing and Servicing (Ex. SBC) / Average LUM is a component of the Adjusted Expense Ratio. Management believes that using Processing and Servicing (Ex. SBC) / Average LUM is useful to analyze operating expenses

incurred by the business compared to the level outstanding principal of loans, regardless of the funding source deployed to fund the loan. See slide titled “Adjusted Expense Ratio” in this appendix for the uses and limitations of these

non-GAAP metrics.


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$000s 2014 2015 Q1 ‘15 Q2 ‘15 Q3 ‘15 Q4 ‘15 Q1 ‘16 Q2 ‘16 Q3 ’16

General and Administrative (Ex. SBC) / Average LUM Reconciliation

General and Administrative Expense $21,680 $45,304 $9,584 $9,991 $12,146 $13,583 $9,709 $12,149 $12,375

Less: General and Administrative Stock-Based Compensation (1,398) (5,375) (884) (1,062) (1,690) (1,739) (1,764) (1,871) (1,821)

General and Administrative Expense (Ex. SBC) $20,282 $39,929 $8,700 $8,929 $10,456 $11,844 $7,945 $10,278 $10,554


General and Administrative Expense (Ex. SBC) Per

Business Day$80 $158 $143 $140 $161 $191 $128 $161 $165


Annualized General and Administrative Expense (Ex. SBC) $20,160 $39,816 $36,036 $35,280 $40,572 $48,132 $32,256 $40,572 $41,580


General and Administrative (Ex. SBC) / Average LUM 5.1% 5.5% 5.7% 5.1% 5.4% 5.8% 3.4% 4.0% 3.8

Non-GAAP General and Administrative


Note: General and Administrative (Ex. SBC) / Average LUM is a component of the Adjusted Expense Ratio. Management believes that using General and Administrative (Ex. SBC) / Average LUM is useful to analyze operating

expenses incurred by the business compared to the level outstanding principal of loans, regardless of the funding source deployed to fund the loan. See slide titled “Adjusted Expense Ratio” in this appendix for the uses and

limitations of these non-GAAP metrics.


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2014 2015 Q1 ‘15 Q2 ‘15 Q3 ’15 Q4 ’15 Q1 ‘16 Q2 ‘16 Q3 ’16

Adjusted Operating Yield Reconciliation

Net Interest Margin After Losses 1 26.0% 19.2% 21.9% 19.2% 19.5% 16.7% 20.1% 18.8% 18.7%

Less: Adjusted Expense Ratio 2 (19.8%) (20.7%) (20.8%) (20.4%) (20.1%) (21.3%) (17.6%) (16.8%) (16.5%)

Adjusted Operating Yield 6.2% (1.4%) 1.1% (1.2%) (0.5%) (4.6%) 2.5% 2.0% 2.2%

Non-GAAP Adjusted Operating Yield

Calculation and Reconciliation

Note: See following page for further definition, uses and limitations of this non-GAAP metric. Figures may not foot due to rounding.

1. See slide titled “Non-GAAP Net Interest Margin After Credit Losses Reconciliation.”

2. See slide titled “Non-GAAP Adjusted Expense Ratio Reconciliation.”

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Adjusted Operating Yield represents our Net Interest Margin After Credit Losses less the Adjusted Expense Ratio.

Management believes that using Adjusted Operating Yield is a useful tool to evaluate the operating performance of the business unaffected by

the growth in originations and regardless of funding strategy. With respect to the forward-looking guidance of this metric, OnDeck is not able to

provide a reconciliation of this non-GAAP measure to GAAP. Certain items that impact these measures have not yet occurred, are out of

OnDeck’s control and/or cannot be reasonably predicted, and as a result, reconciliation of the forward-looking non-GAAP guidance measures

to GAAP is not available without unreasonable effort.

Our use of Adjusted Operating Yield has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for

analysis of our results as reported under GAAP. Some of these limitations are:

• Net Interest Margin After Credit Losses uses Average Interest Earning Assets in the denominator of the calculation whereas Adjusted

Expense Ratio uses Average Loans Under Management in the denominator. Subtracting one metric from the other is purely illustrative and

does not reflect the operating performance of the business.

• Using Adjusted Operating Yield as a measure to compare Net Interest Margin After Credit Losses to Adjusted Expense Ratio assumes that

loans sold through the OnDeck Marketplace are of similar origination, performance characteristics and return as loans held for investment

and held for sale, which are funded on-balance sheet through our asset-backed revolving facilities, asset-backed securitization facilities,

and internal equity.

• Using Net Interest Margin After Credit Losses as a measure to compare against Adjusted Expense Ratio assumes that the rate of return of

loans funded through the OnDeck Marketplace is similar to that of our loans held for investment or held for sale. Should our Marketplace

Gain on Sale Rates materially differ, both positively or negatively, this may limit the utility of comparing Net Interest Margin After Credit

Losses to Adjusted Expense Ratio as a means of measuring the operations of the business.

Adjusted Operating Yield

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Adjusted EBITDANine Months Ended

September 30,

Three Months Ended

September 30,

(000s) 2015 2016 2015 2016

Net Income (Loss) $2,912 ($49,022) $3,507 ($17,173)

Adjustments:

Corporate Interest Expense 250 186 70 111

Income Tax Expense - - - -

Depreciation and Amortization 4,621 6,887 1,678 2,452

Stock-Based Compensation Expense 8,065 11,423 3,707 3,761

Adjusted EBITDA $15,848 ($30,526) $8,962 ($10,849)

Non-GAAP Adjusted EBITDA Reconciliation

Adjusted EBITDA represents our net income (loss), adjusted to exclude interest expense associated with debt used for corporate purposes (rather than funding costs associated with lending activities), income tax expense,

depreciation and amortization and stock-based compensation expense.

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Adjusted Net Income (Loss)Nine Months Ended

September 30,

Three Months Ended

September 30,

(000s) 2015 2016 2015 2016

Net Income (Loss) $2,912 ($49,022) $3,507 ($17,173)

Adjustments:

Net Loss Attributable to Noncontrolling Interest 458 1,920 226 539

Stock-Based Compensation Expense 8,065 11,423 3,707 3,761

Adjusted Net Income (Loss) $11,435 ($35,679) $7,440 ($12,873)

Non-GAAP Adjusted Net Income (Loss)

Reconciliation

Adjusted Net Income (Loss) per share represents our net income (loss) adjusted to exclude net loss attributable to noncontrolling interest and stock-based compensation expense.

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