Funding Circle Reports FY22 Results, Remains Focused on Global Business Strategy

Funding Circle (LSE:FCH) has published its Preliminary Results for the year ended 31 December 2022.

Funding Circle reports Group total income (guidance) of £140m – £155m; £148.7m for FY 2022; and £206.9m for FY 2021. And Adjusted EBITDA (guidance) of Positive Adjusted EBITDA; £6.8m for FY 2022; and £91.8m for FY 2021.

The business delivered “a solid financial performance, with Adjusted EBITDA and income in line with the guidance set at the HY results in September 2022.”

Here are the financial highlights:

According to Funding Circle, this performance “reflects the transition from Government lending schemes (e.g. CBILS and RLS) to commercial lending in 2022, as well as the decision to take a prudent approach to lending in light of the challenging UK economic environment.”

Loan returns “remain attractive with upgraded returns for several cohorts, and the Company has seen continued institutional demand to fund loans.”

As a reminder, Funding Circle had “laid out its medium-term plan last year to transform into a multi-product platform, serving a direct and embedded audience.”

A year into this plan, the Company is making progress against its three strategic pillars:

  • Attract more businesses: two Lending as a Service (LaaS) partnerships in the US
  • Say yes to more businesses: expanded into new customer segments with super prime in the US and near prime in the UK
  • #1 in new products: tripled FlexiPay transactions from H1 to H2; launched FlexiPay card in beta.

Commenting on the results, Lisa Jacobs, CEO, said:

“We’ve made good progress against our medium-term strategy, expanding our reach in distribution and depth in products. We introduced lending as a service in the US, and expanded our product set through the launch of super prime loans in the US and near prime loans in the UK. We have continued to see strong engagement with FlexiPay — so our customers can now not only borrow, but pay and spend with Funding Circle for the first time.”

She added:

“I’m really pleased with how the business reacted to the evolution of the economic environment and transitioned back to commercial lending, with government schemes phasing out in 2022. Overall we delivered a solid financial performance. We were prudent in our lending in 2022, and will continue to be whilst conditions remain challenging — as expected in the UK in 2023, where we have pushed out our 2025 income targets by a year. We’re confident in the US and are excited about new FlexiPay growth over the medium term. Having built strong foundations to deliver against the plan, we expect to double Group income over the next three years.”

Funding Circle has introduced guidance for 2023 and updated its medium-term guidance:

  • UK Loans reflects the challenging economic environment in 2023 pushing back 2025 targets by one year.
  • US Loans guidance for 2023 shows strong momentum and medium-term guidance is unchanged.

The significant progress they’ve made on FlexiPay means they have outlined their expectations for the first time, including a step up in investment in 2023.

Now including FlexiPay, Funding Circle targets a doubling of Group total income by 2025.

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