Dan Dolev : Hey, guys. Actually, really pretty good results. I mean, I’m a little surprised by the initial kind of knee-jerk stock reaction. Do you think, is this, I mean, if you had to guess, is this, if you look at 2Q versus what people were expecting, is something kind of changed, was do you think there’s been a bit of a mis-modeling, that just kind of, a little bit of a misunderstanding in terms of 2Q? Because if I look at trends overall, they seem to be more optimistic than pessimistic, especially if I look at the UMI, which is continuing to trend down, and your loan performance, which is in line with the expectation, I’m trying to sort of connect the dots here.
Dave Girouard: Yes, hey, Dan. Basically, the Q2 guidance is as it is because rates have moved up during the first quarter, and that’s the tightening due to observation of deterioration, and as we’ve mentioned previously in the primer segment, so that’s fully felt in the second quarter. We do have hope that these rates are as high as they’ll be and they’ll come off these rates. But in any case, we feel like this sort of pandemic and post pandemic stimulus effect is really running its course. So that gives us some comfort that we’re kind of back to the world that we know, which is we can make improvements to the funnel and to the models and grow on a month-to-month basis really just based on advancement of the technology. That you’re not seeing that really in the Q2 guidance because we’re just fully getting to this place where we think the models are reflecting the risk out there. But we think there’s, we feel pretty comfortable with the second half of the year.
Dan Dolev : Got it. Yes. Because if I look at the UMI, it seems to be going down, which is a positive signal, correct?
Dave Girouard: Yes, UMI just very recently took a dip, which of course is something we like to see. But it’s really important to say that it moves a lot week to week. We do update the site every week and you’ll see it jump around a bit. It has taken a nice turn and we would love to see that become a trend, but we don’t bank on that by any stretch. There’s certainly a lot of noise in that UMI number on a week-to-week basis.
Operator: And we’ll take a question from David Scharf with Citizens JMP.
David Scharf: Hey, good afternoon, and thanks for taking my questions as well. Hey, Sanjay, kind of wondering, you had mention, I think, in the update about $2.7 billion of committed capital inflow deals over the next 12 months, as you think of notwithstanding, obviously, consumer demand and some of the macro uncertainties you still can’t predict, but as you think about your overall volume expectations, should we think about that as pretty much funding entirely new origination activity or is your guess 12 months from now we’re going to see less balance sheet exposure to the core personal loan product? Meaning is some of that $2.7 billion going to be focused on perhaps whole loan sales of the existing retention?
Sanjay Datta: Hey, David. Sure. Yes, that figure, I would say, is the number that we believe we have pretty direct line of sight to as of right now and the majority of it is forward funding. I would say that as the platform scales and certainly as the credit environment and markets become more constructive, and we said that we have some signals or some reasons to believe that’s currently happening. We would hope to increase that number along with the scaling of the platform. So there continue to be more opportunities beyond that $2.7 billion in the pipeline. And I think we said before, we want to keep it at some reasonable ratio of the overall platform size. So I guess the implication of all of that is that as the platform grows, if we’re doing our job right on the capital market side, we should be reducing balance sheet exposure to whole loans.
David Scharf: Got it. And then just as a follow-up, maybe on the thing, on those whole loans, on the credit side, I guess the roughly $51 million of net fair value adjustment and earnings, I guess it’s fair value accounting that’s principally current period losses plus any mark-to-market. Is that $51 million comprised entirely of charge-offs, or did you take any kind of net write-ups or write-downs on the fair value of the loans you’ve retained?
Sanjay Datta: So, yes, certainly a large part of it, are the ongoing sort of charge-offs from the whole loans that are on our balance sheet. But I think if you look into some of the materials in the deck, you’ll see that some amount of that was some writing down of our risk positions in some of these co-investment structures largely flowing from what we’ve been talking about, which is this sort of degradation at the prime end of the lower spectrum now. You’re starting to see that reflected in some of the mark-downs.
Operator: And our next question is from Rob Wildhack with Autonomous Research.
Rob Wildhack: Hi, guys. Just wanted to clarify something you’ve said earlier. Do you intend to reduce the absolute number of loans on the balance sheet, or just the core personal loans on the balance sheet, or just the R&D loans on the balance sheet?
Sanjay Datta: Hey, Rob. I mean, I think our intention would certainly be to reduce exposure to the core personal loan business, that of courses is pending both the scaling of the platform, but also the level of engagement that we’re getting from the capital markets. I think it’s probably fair to say that compared to the amount of R&D loans we have on the balance sheet today, which is principally comprised of auto, we could imagine in a perfect world that being reduced as well. But both of those, I think, intentions are contingent on certain external things.
Rob Wildhack: Okay. Got it. Can you give some color on just how low you’d like to go from the $530 million in core personal or the $1 billion cap that you’ve discussed in the past? And then, I’m curious why make this change right now? You’ve spoken in the past about the attractive return profile of the loans, and I think today you sound pretty positive on the macro outlook or the return profile going forward. So why the decision to hold fewer loans now?
