05 September 2024
STRONG HALF YEAR PERFORMANCE AND DELIVERY AGAINST STRATEGIC OBJECTIVES SIMPLER, LEANER AND PROFITABLE BUSINESS WITH HIGH GROWTH
Funding Circle Holdings plc (“Funding Circle” or the “Group”) today announces results for the six months ended 30 June 2024.
Commenting on the results, Lisa Jacobs, Funding Circle CEO, says:
We are delivering on the plan I laid out in March to be simpler, leaner and profitable whilst continuing to show strong growth. In May, we simplified and streamlined the business to deliver £15m annualised savings in 2025 and in July we completed the sale of our US business for a gain of £10m.
The first half was stronger than our expectations with annual revenue growth of over 30%; 12% up on H2 2023. We were profitable a half earlier than we set out in our guidance in March and are today upgrading our guidance to be profitable for the full year (versus prior guidance of H2 profitable).
We are reaffirming our medium-term guidance of 15-20% revenue growth and PBT margins of more than 15% and continue to be excited about the long-term growth and profitability of the business as we execute against our plan.
We will commence a further share buyback of up to £25m following the conclusion of the existing £25m share buyback.
| £m | H1 2024 | H2 20232 | H1 20231 |
| UK Term Loan originations | 692 | 589 | 471 |
| FlexiPay Transactions | 226 | 144 | 90 |
| Net income (“Revenue”)2 | 79.1 | 70.4 | 59.7 |
| Profit/(loss) before taxation (before exceptional items) | 0.5 | (2.5) | (7.4) |
| Loss before taxation (after exceptional items) | (2.1) | (2.5) | (7.4) |
| Unrestricted Cash3 | 164.4 | 169.6 | 172.5 |
1 The comparative financial information has been re-presented to exclude the US business which is presented as discontinued operations.
2 Net income is also referred to as “Revenue”.
3 Unrestricted cash refers to total cash less cash that is restricted in use. The restricted cash is cash that is not available for general use by the company as it is held within investment vehicles and generally payable to third parties. £23.1m of cash at 30 June 2024 relates to the US business and is held in a disposal Group.
Financial Summary:
- For the Continuing Group, UK Term Loan (“Term Loan”) originations grew to £692m (H1 2023: £471m) and FlexiPay transactions scaled to £226m (H1 2023: £90m) underlining the strength of the business.
- Net income (“Revenue”) was £79.1m, 32% growth on H1 2023 and 12% on H2 2023.
- PBT pre-exceptionals was £0.5m (H2 2023: PBT negative £2.5m and H1 2023: PBT negative £7.4m) reflecting the profitable growing Term loans business funding the planned investment in FlexiPay.
- Term Loans increased profitability with PBT pre-exceptionals of £9.2m (H2 2023: £5.1m and H1 2023: £1.4m).
- Exceptional items of £2.6m related to the simplification and streamlining of the business announced in May 2024, led to a Loss before tax of £2.1m (H1 2023: £7.4m loss).
- Unrestricted cash remained healthy at £164.4m (31 December 2023: £169.6m).
- Robust and attractive returns across all products with continued institutional investor demand; c.£2bn of future funding in place.
Operational & Strategic Summary:
- Executed against our plan for a simpler, leaner and profitable business:
- Successful sale of US business to iBusiness Funding for a gain on sale of £10m.
- Progressed cost-efficiency actions, to deliver c.£15m of annualised benefit in 2025 and, together with the US sale, reduced total headcount to c.760 (Dec 2023: c.1,100).
- Continued to drive growth and innovate across all our products to support our strategic ambitions:
- Term Loans: launched the government’s Growth Guarantee Scheme (GGS); expanded product segments and third-party integrations within our Marketplace offering. This offering now accounts for 11% of term loan originations to provide the widest possible support to small businesses.
- FlexiPay: 57% growth in transaction value on H2 2023 to £226m (H2 2023: £144m and H1 2023: £90m); continued enhancement of proposition, including increased flexibility of repayment terms.
- Cashback Credit Card: beta launched in Q3 with full roll-out in H2 2024.
Outlook: Attractive, growing and profitable business
- Term Loans revenue growth guidance remains at greater than 10% year on year growth. We expect PBT margins to be ahead of our previous guidance.
- FlexiPay guidance remains unchanged. FlexiPay revenue growth will be 3X that of the prior year and FlexiPay losses will be similar to that of the prior year.
- Building on the H1 2024 performance, the Group will be PBT profitable for the Full Year vs H2 2024 in previous guidance. Over the Medium Term we expect revenue growth of 15-20% CAGR with PBT margins of >15%.
| FY 2024 | ||
| Terms Loans | FlexiPay | |
| Revenue | >10% growth vs. 2023 | 3x growth vs 2023 |
| Profit before tax1 |
>12% margins |
Continued investment, with losses at a similar level to FY23 |
| Profit before tax1 | The UK businesses (Term Loans and FlexiPay) will be PBT positive for 2024 | |
1Pre-exceptional items
Share buyback
We announced a share buyback programme of up to £25m in March 2024 which is expected to complete in Q4 2024. We intend to do a further share buyback of up to £25m once the existing programme completes and will announce this programme separately before it commences.
Board changes
As we announced in May, Oliver White, Executive Director and CFO, will be standing down from his role. He will begin his transition to Tony Nicol, currently Director of Finance and Investor Relations, today and step down from the Board on 1 January 2025. We are hugely grateful to Oliver for his contribution to Funding Circle and the important role he has played in putting the Company in a strong position to grow in the coming years.
Analyst presentation:
Management will host a presentation and conference call for institutional investors and analysts at 9:30am UK time (BST), on Thursday 5 September 2024.
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, with the opportunity to ask live questions, please dial +44 33 0551 0200 or +1 786 697 3501. Quote ‘Funding Circle Half 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.
Investor relations and media relations:
Funding Circle Investor Relations
Tony Nicol
ir@fundingcircle.com
Funding Circle Media Relations
Angeli Everitt (+44 20 3830 1325)
press@fundingcircle.com
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.