Funding Circle to offload US business after losses widen
Funding Circle will offload its US arm in order to focus on its more profitable UK business, after the small business lender widened its losses in 2023.
The former peer-to-peer lending platform reported “strong profit” in UK loans, which was offset by continued investment into its FlexiPay offering and its US business. This led to group earnings of -£3.9m for the 12 months ending 31 December 2023; down from £9.5m in 2022.
Group losses widened year-on-year, reaching £33.2m in 2023, compared with a pre-tax loss of £12.9m the previous year.
Read more: Funding Circle granted small business lending licence in the US
Funding Circle’s chief executive Lisa Jacobs (pictured) said that the results were in line with expectations, and highlighted the strong performance of the company’s UK loans and FlexiPay solution.
“I’m pleased with our 2023 performance,” said Jacobs.
“We delivered a solid set of results in FY 2023, in line with our expectations, and made good progress against our multi-product strategy.
“In the UK, we have expanded our product range with the rollout of our card product so customers can now borrow, pay and spend with Funding Circle.
“Our UK loans business was profitable and our FlexiPay business grew strongly with transactions nearly quadrupling. We continue to deliver a superior experience for our customers.”
The company now intends to focus on the profitable elements of its UK business, while selling its US arm. Funding Circle said that it has received early indications of interest in this business.
“Looking ahead, we will be focused on our UK business – comprising UK loans and FlexiPay – to drive improved group cash and profits and deliver greater shareholder value,” added Jacobs.
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“Whilst the US business offers attractive long term growth, it also requires a significant amount of cash and capital to grow the small business administration (SBA) proposition and we don’t believe that this is the best course of action for the group. We have received indications of interest for the US business and will update further in due course.”
Over the next three to four years Funding Circle expects net income growth of 15-20 per cent per year, with pre-tax profit margins of approximately 15 per cent.
Jacobs said that she expects the UK business to deliver a pre-tax profit by the end of the second half of 2024, adding that the business has “an attractive growth and profitability profile over the medium term.”
She added that she believes that Funding Circle’s share price materially undervalues the business and announced a £25m share buy-back scheme.
Read more: Funding Circle’s losses widen despite UK profit
