Funding Circle Announces H1 2019 Results

Online lending platform Funding Circle announced on Thursday the numbers of H1 2019, which are the results for the first six months of 2019, ending on June 30th. According to Samir Desai, the CEO and Co-Founder of Funding Circle, the online lending platform grew in revenue by 29% and it now has  £3.54bn of loans under management. He also stated:

Funding Circle Founders

“As previously announced, we expect to grow revenues by c.20% this year due to the uncertain economic environment and proactive actions we have taken. We continue to benefit from strong repeat dynamics from borrowers, with 46% of Group revenue coming from existing customers, and attracting new investors to the platform. We remain confident in our aim to become the world’s largest small business loans provider, helping millions of businesses to create jobs and support economic growth. Small businesses remain underserved. Our platform allows them to access the finance they need in a fast and affordable way, whilst at the same time, opening up a stable and attractive asset class to a broad range of investors.”

The H1 2019 Financial Summary includes the following:

  • Group revenue of £81.4 million (H1 2018: £63.0 million) up 29%.
  • Group segment adjusted EBITDA of £1.2 million (H1 2018: £3.3 million) with margin of 1% (H1 2018: 5%).
  • UK segment adjusted EBITDA of £13.9 million (H1 2018: £11.2 million) with margin of 26% (H1 2018: 26%).
  • Adjusted EBITDA loss of £19.7 million (H1 2018 loss: £13.9 million); with margin of negative 24% (H1 2018: negative 22%).
  • Loss before tax of £30.8 million (H1 2018 loss: £27.1 million).
  • Basic loss per share of 8.9 pence (H1 2018 loss: 10.6 pence).
  •  Free cash outflow of £28.1 million (H1 2018 outflow: £22.5 million).
  • Cash of £270.0 million (31 December 2018: £333.0 million).  Of the £63.0 million reduction, £30.0 million relates to short term net investments to fund the launch of new Asset Backed Securities (“ABS”) bond products and a further £5.6 million to fund the launch of new private funds.

Operating and Strategic Summary:

  • Loans under management up 37% to £3.54 billion (H1 2018: £2.58 billion)
  • Originations up 14% to £1.19 billion (H1 2018: £1.04 billion)
  • In the US, Funding Circle passed $2.0 billion of cumulative loan originations and $1.0 billion of loans under management in H1 2019, making it one of the 50 largest SME loan portfolios in the country
  • Significant economic and social impact generated by lending to SMEs:
  • In April 2019, Funding Circle, in collaboration with Oxford Economics, published its third Economic Impact Report which estimated that in 2018 businesses that borrowed through Funding Circle unlocked 115,000 jobs and contributed £6.5 billion to GDP across the UK, US, Germany and the Netherlands
  • In total, more than 72,000 SMEs have accessed finance through Funding Circle since 2010
  • Market-leading satisfaction scores lead to strong repeat behaviour:
  • 46% of Group revenue from existing customers, up from 41% in H1 2018. Net Promoter Scores between 80-90 in UK and US
  • When asked about who they would go to first for a loan in future, 82% of borrowers say they would choose Funding Circle rather than their bank
  • Deep and diverse investor base:
    • In H1 2019, approximately £210 million of new lending commitments were secured from pension funds, insurance companies, government entities and banks
    • Additionally, Funding Circle launched four new funding products – UK and US ABS bonds and UK and European private funds
    • In total, more than 92,000 investors lend on the Funding Circle platform, earning projected annual returns of 5.0-8.5% across all geographies in 2019 – c.5,000 new investors started lending in H1 2019 alone

Funding Circle went on to add:

Our guidance for 2019 is unchanged from the Q2 Trading Update including revenue growth to be c.20% and adjusted EBITDA loss margin for 2019 to be better than for 2018. Funding Circle remains confident of delivering its stated strategy and generating long-term value for shareholders”

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