from Funding Circle Plc (isin : GB00BG0TPX62)
Funding Circle Plc: Full Year 2024 Results
Funding Circle Plc (FCH) Funding Circle Holdings plc Full Year 2024 Results
STRONG GROWTH WITH PROFIT AHEAD OF EXPECTATIONS ON TRACK TO DELIVER MEDIUM TERM GUIDENCE
Funding Circle Holdings plc (“Funding Circle” or the “Group”) today announces results for the twelve months ended 31 December 2024.
Lisa Jacobs, Funding Circle CEO, commented: “2024 was a transformative year for Funding Circle. We successfully executed our plan to build a simpler, leaner, and more profitable business while making strong progress in expanding our Term Loans and FlexiPay offerings. The results we are reporting today show strong revenue growth of 23% to £160m and FY profit of £3.4m, ahead of market expectations.
“Strong SME demand drove growth in our Term Loans business, allowing us to support more borrowers than ever and increase originations by 33%. At the same time, FlexiPay, our shorter-term lending product, continues to see rapid adoption.
“Our commitment to product expansion, powered by our leading data and technology capabilities, has strengthened our role in supporting small businesses. The launch of our Cashback credit card in the second half of the year enhances our offering, enabling businesses not only to borrow and pay later but also to spend with Funding Circle.
“With strong foundations in place, we are confident in our strategy and the opportunities ahead. We remain on track to achieve our medium-term target of over £200m in revenue, with PBT margins exceeding 15%.”
Financial Summary:
1 The comparative financial information has been re-presented to exclude the US business which is presented as discontinued operations. The Continuing Group excludes the US discontinued operations. 2 Credit extended includes Originations and Transactions and Balances under management include LuM and Lines of Credit. 3 Net income is also referred to as “Revenue”. 4 Unrestricted cash refers to total cash less cash that is restricted in use.
Operational & Strategic Summary:
Looking ahead:
We have made a good start to the year, we have attractive growth opportunities and are on track to deliver our medium term guidance in 2026 of 15-20% revenue CAGR from FY23 and PBT margins of >15%, equating to:
Board Changes
The Company noted in the FY 2023 Annual Report and Accounts that there would be some upcoming changes in Board composition in respect of some of its long-tenured Directors.
Geeta Gopalan, Chair of the Audit & Risk Committee and Senior Independent Director, and Neil Rimer, Non-Executive Director, have both informed the Board of their intention to step down later this year. To ensure a smooth transition and maintain Board continuity, they will stand for re-election at the forthcoming Annual General Meeting and, subject to shareholder approval, intend to continue to serve as Directors until suitable candidates have been identified and appointed.
With Ken Stannard now in place as Chair Designate, the Nomination Committee has renewed its search process for independent Non-Executive Directors, with the appropriate skills and experience to drive the business through the next phase of growth.
Analyst presentation: Management will host a presentation and conference call for institutional investors and analysts at 9:30am UK time (BST), on Thursday 6 March 2025.
To watch and listen to the webcast, with the opportunity to submit written questions, please use this link to register and gain access to the event.
For conference call access, please dial +44 33 0551 0200 or +1 786 697 3501. Quote ‘Funding Circle Full Year Results’ when prompted by the operator.
An on-demand replay and transcript will also be available on the Funding Circle website following the presentation.
For further details:
Funding Circle Holdings plc ir@fundingcircle.com Lisa Jacobs, Chief Executive Officer Tony Nicol, Chief Financial Officer
Headland Consultancy Stephen Malthouse and Jack Gault (+44 20 3805 4822)
Forward looking statements and other important information: This document contains forward looking statements, which are statements that are not historical facts and that reflect Funding Circle’s beliefs and expectations with respect to future events and financial and operational performance. These forward looking statements involve known and unknown risks, uncertainties, assumptions, estimates and other factors, which may be beyond the control of Funding Circle and which may cause actual results or performance to differ materially from those expressed or implied from such forward looking statements. Nothing contained within this document is or should be relied upon as a warranty, promise or representation, express or implied, as to the future performance of Funding Circle or its business. Any historical information contained in this statistical information is not indicative of future performance.
The information contained in this document is provided as of the dates shown. Nothing in this document should be construed as legal, tax, investment, financial, or accounting advice, or solicitation for or an offer to invest in Funding Circle.
About us: Funding Circle is the UK’s leading SME finance platform. We operate in a large, attractive and growing market, with over £80bn of outstanding debt in the UK SME market and £1.3trn of B2B SME payments each year. In the UK, Funding Circle has extended £14.6bn in credit to c.110,000 businesses.
We provide an unrivalled customer experience, powered by data and technology. This advantage is clear in our credit assessment process, with our models 3x better at discriminating risk than traditional bureau scores. It also delivers superior results for our customers. 77% of applicants receive an instant decision, we have a strong NPS of 79 and see strong repeat usage, especially with FlexiPay.
We are constantly looking at ways to innovate our product offering which enables customers to borrow, pay later and spend with Funding Circle and serve more small business needs. In Q3 2024, we launched a new Cashback credit card for everyday business spending.
Business Review 2024 was a successful year of change and transformation as we executed against our plan to deliver a simpler, leaner and profitable business. We have delivered strong revenue growth and profitability ahead of market expectations. Our business is in a strong position as the market leader in online SME lending. We have leveraged our data and technology strengths to expand our product set to serve more of our customers’ needs. We have delivered robust, attractive loan returns to our institutional investors through the cycle. We have an attractive go forward plan, driving sustained revenue growth and expanding our margins. Borrow, Pay Later and Spend: Our multiproduct transformation Three years ago we set an ambition to be a multi-product business, one that enabled businesses to not only borrow for the longer term, but to also pay later and spend, becoming a more important part of our customers’ lives and providing further growth opportunities. Over the last three years, we have delivered against this plan. Today, businesses can borrow with our Term Loan, for longer term investment; pay later, managing their cash flow through FlexiPay; or spend on our Cashback credit card. This shift is reaping strong rewards for our business. First, we have seen strong growth. In 2024, more than a quarter of our credit extended was via FlexiPay and FlexiPay revenue grew threefold. Secondly, we are seeing an increase in our share of our customers’ financing as over 70% of FlexiPay revenue came from existing Term Loan customers. Finally, we have increased our interactions and engagement with our customers. Three years ago, we interacted with a customer approximately every half an hour, today we interact with a customer every 92 seconds as they take a loan, FlexiPay a supplier or spend on their business credit card. Our competitive advantage: data and technology at the heart of everything we do We’ve delivered this by leveraging our credit, data and technology advantage, delivering the same great customer experience. SMEs want fast, easy access to credit. We provide that with a six minute application form, an instant decision for 77% of applicants and funding in businesses’ accounts in as little as 24 hours. This drives strong customer satisfaction with an NPS of 79 and enables our busy customers to get back to what they do best, running their business. Our AI powered risk models are trained with data from public sources alongside proprietary data on our hundreds of thousands of loans and transactions and are three times better at discriminating risk than the bureau scores alone. Despite the challenging macroeconomic environment of the last several years, our business has delivered well through the cycle. Loan returns have been robust and attractive, attracting further institutional investor demand and we have continued to attract and serve SME demand. Fuelling the nation’s SMEs We’re passionate about our mission. We provide the fuel to power SMEs up and down the country. We enable these entrepreneurs to build great businesses that create jobs, bring economic growth and support their communities. They aren’t the high growth venture-backed rocket ships, but they are the backbone of the economy - the florists, the manufacturers, the restauranteurs, the builders and countless others. They have a huge impact on the economy, but they have historically been underserved. For the last 15 years, we’ve been changing that with fast, easy finance that backs small businesses. As we continue to back these businesses, we’re also backing the economy. In 2024, lending through Funding Circle supported over 87,000 jobs; £7.2bn in GDP contribution and £2.0bn in tax receipts. We lent to businesses in every one of the country’s 650 constituencies. 2024: A simpler, leaner, high growth, profitable business In 2024, we executed well. We delivered £3.4m in PBT pre-exceptionals, above market expectations and up from a loss of £9.9m in 2023. Revenue grew by 23% to £160m. Alongside this, our credit extended grew 47% to £1.9bn. We have a strong balance sheet and, despite £33.7m of share buybacks in 2024, we finished the year with a healthy unrestricted cash position of £151m. Our core Term Loans business grew strongly with 33% origination growth, reaching £19.0m in PBT, a margin of 13.3% as we attracted more businesses and enhanced our product offering, launching government-backed Growth Guarantee Scheme loans and a broader Marketplace offering. FlexiPay, our pay later proposition, continued to show strong growth with revenue tripling over the course of the year. Businesses have now FlexiPaid more than 280,000 times. When we launched FlexiPay, we had a hypothesis that this would be a product that would attract both existing and new to Funding Circle customers, and this is the case - with ~30% of our 2024 FlexiPay revenue from new customers. We continue to see strong usage from existing FlexiPay customers, once a customer starts using FlexiPay it becomes part of their day to day cash flow management tools. In 2024, over 70% of revenue was from customers who had opened their FlexiPay account before 2024. In H2 2024, we launched our Cashback credit card, completing our ‘borrow, pay later and spend’ proposition. It is still early days for our Cashback credit card but initial metrics are in line with our expectations and we look forward to seeing further growth in 2025 and beyond. We sold the US business in July for a gain on sale of £10m and restructured the UK business, to deliver ~£15m in annualised cost savings from 2025. These were not easy decisions to make. We said goodbye to some talented Circlers who were vital in our business’s journey. However, these decisions were essential to position the Group for long term success - they have placed the business in a strong position to deliver against our medium-term plan with continued growth and profitability trajectory. Looking ahead 2024 was a strong year, but we are still just scratching the surface. The market opportunity is vast, there is over £80bn in SME loans outstanding, over £1trn in SME B2B payments and over £80bn in SME card transactions. We are in a strong position to capitalise on this opportunity with high customer satisfaction rates driven by proprietary and defensible data and technology advantages. Our four strategic priorities are focused on profitable, customer-led growth:
We have a strong, mission-driven team, a clear vision and plan. As we execute this plan, we'll become an even more integral part of our customers' lives, fuelling the success stories of hundreds of thousands more businesses and creating countless jobs. We see a future where Funding Circle is at the heart of SMEs' financial lives, providing the tools and resources they need to thrive.
Finance review
Overview of the year ended 31 December 2024 We were pleased with the strong operational and strategic performance in 2024. We saw significant growth in both of our businesses and improving Group profitability compared to 2023. The Group comprises two continuing Business Units which are at different stages of maturity: Term Loans (a longer-term financial product offering) and FlexiPay (a shorter-term working capital product).
In H2 2024 we launched the Cashback credit card. Given its recent launch, its contribution is relatively minimal. We have therefore included its results, transactions and balances in the FlexiPay segment.
The US business was sold on 1 July 2024 and is therefore treated as discontinued in the year.
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