Funding Circle Holdings Plc · LSE:FCH
Funding Circle — FY2024 Earnings Presentation
35 slides from Funding Circle's earnings presentation, 2025
Slide 1: Full Year 2024 Results
Full Year 2024 Results
Slide 2: Strong operational and financial progress
Strong operational and financial progress £1.9bn Executed against plan to be a simpler, leaner and profitable business Credit extended • Sold US business: gain on sale of £10m +47% YoY • Restructured UK business: annualised benefit of ~£15m Strong growth with profit ahead of expectations £160m Reven
Slide 3: We have transformed the business, expanding our product set, serving more customer needs
We have transformed the business, expanding our product set, serving more customer needs 2021: Borrow Today: Borrow, pay later & spend Borrow Longer term Pay later Monthly Spend Daily >25% >70% A customer transaction every Credit extended from new 2024 FlexiPay revenue from cashflow products Term Lo
Slide 4: We provide a superior customer experience powered by data and technology
We provide a superior customer experience powered by data and technology Scaling in 2024 Proprietary data sources 3x growth Monthly active mobile app users AI powered risk models 6 min 77% Application time Instant decisions >100% Scalable, stable and secure Growth in transactions cloud infrastructur
Slide 5: Continued SME demand for finance with robust and attractive returns despite a challenging backdrop
Continued SME demand for finance with Robust and attractive robust and attractive returns despite a loan returns challenging backdrop for UK SMEs ~5% Annualised term loan returns (above swap rate) Good performance and proven resilience through the cycle GDP and consumer confidence low Insolvencies r
Slide 6: Our impact: Building the place where small businesses get the finance they need to win
Our impact: Building the place where small businesses get the finance they need to win £14.6bn+ credit extended to 110,000+ SMEs to date Impact in 2024: 87,000+ £7.2bn £2.0bn jobs supported GDP contribution Tax revenue contribution Bass Place 6
Slide 7: 2024 Strategic Highlights
2024 Strategic Highlights 7
Slide 8: Borrow: Strategic priorities driving continued growth momentum and operating leverage
Borrow: Strategic priorities driving continued growth momentum and operating leverage Continued product and credit innovation with Growth Guarantee Scheme and marketplace expansion Entered third season of rugby sponsorship and strengthened existing channels Simpler, leaner, profitable driven through
Slide 9: Pay later and spend: Solving SMEs biggest pain point with FlexiPay and Cashback Credit Card
Pay later and spend: Solving SMEs biggest pain point with FlexiPay and Cashback Credit Card Large addressable market Pay later FlexiPay Line of Credit £1.3trn SME B2B payments Flexible line of credit for managing short term cash flow by e.g. paying bills or supplier invoices using bank transfer or c
Slide 10: Pay later and spend: strong growth driven by new and existing customers
Pay later and spend: strong growth driven by new and existing customers FlexiPay transactions volumes Strong recurring dynamics in balances outstanding FlexiPay & Cashback credit card end of month balances by half year cohort, £m1 ~66,000 in 2023 ~142,000 in 2024 FlexiPay revenue growth 3.4x 1. End
Slide 11: Financial Performance
Financial Performance 11
Slide 12: Strong 2024 results vs raised guidance
Strong 2024 results vs raised guidance Term Loans FlexiPay Group Guidance 2024 Result Guidance 2024 Result Guidance 2024 Result Revenue growth >10% vs 2023 14.5% 3x vs 2023 3.4x n/a 23% Loss similar to PBT pre Full Year Margin >12%¹ 13.3% 2023 of (£15.6m) £3.4m exceptionals Positive¹ (£16.2m) 1 Guid
Slide 13: Simplified, profitable business
Simplified, profitable business Continuing Group financial performance £m 2024 2023 Change Focus on continuing business1 excluding exceptional costs Total income 161.7 129.7 25% • Revenue increase of 23% with continued growth in both Term Loans and FlexiPay Fair value gains 4.2 3.1 35% Cost of funds
Slide 14: Term Loans PBT margins >13%
Term Loans PBT margins >13% Strong growth, PBT ~triples, demonstrating operating leverage; £m Loans under Originations Revenue 2 Costs 2 PBT 2 Management1, 2 Margins 5.2% 13.3% Growth of 33% driven by LuM levelled out with Continuing top line Operational leverage commercial loans and legacy Covid sc
Slide 15: Strong FlexiPay revenue growth
Strong FlexiPay revenue growth Growth and costs in line with expectations; £m Transactions End of month Revenue Costs PBT balances Increased in line with Grew strongly, in line transactions and yield. Anticipated j-curve with cost growth from up-front costs for Ongoing momentum in with transactions
Slide 16: Focused cost management
Focused cost management Revenue increase of 23% versus 9% operating expenses increase Operating expenses (excl. ECL) Marketing costs grew (+23%) £m • Variable based marketing costs remain ~30% of revenue Non-marketing costs held broadly flat (+4%) Marketing • Share based payment costs (“SBP”) increa
Slide 17: Restructuring savings on track
Restructuring savings on track Annualised cash savings of £15m offsetting impact of salary inflation and Group cost absorption • Restructure in H1 24 resulting in annualised cash savings of £15m for FY25; Salaries £13m, Overheads £2m • £6.5m of the salary saving and £1m of overhead saving was achiev
Slide 18: Capital efficient model built for scale
Capital efficient model built for scale Using the right funding for the right product; strong investor demand Loans & balances under management £m Platform Funding for Term Loans business • £2.7bn LuM 96% • Forward Flow agreements: Banks, Asset managers, Insurers • Weighted average life: c.2.5 years
Slide 19: Track record of delivering robust and attractive loan returns through the cycle
Track record of delivering robust and attractive loan returns through the cycle ~5% Annualised net returns, above cost of capital, to institutional investors with no change to expectations since H1 24 £2.1bn Future funding in place 1 Annual ised net returns by cohort after servicing fees and bad deb
Slide 20: Robust levels of net assets and cash
Robust levels of net assets and cash Term Loans and FlexiPay collectively cash generative Net assets Unrestricted cash £m £m • Shares bought back (and subsequently cancelled) • Term Loans and FlexiPay collectively cash generative and covers investment in FlexiPay lines of credit • US generated a net
Slide 21: Capital Allocation Framework
Capital Allocation Framework Available cash Capital allocation framework £m Deliver growth strategy in MTP Share buyback Future growth opportunities (remaining c.£16m) Management Buffer¹ (c.£45m) Invest to make platform stronger Distributions to shareholders 1 Capi tal held for operational buffer (~
Slide 22: Outlook
Outlook On track to deliver on our guidance • Confident start to business performance in 2025 • Confirming that we are on track to deliver our Medium Term Guidance in 2026: Guidance £ equivalent 15-20% CAGR 2023 Revenue At least £200m to 2026 PBT Margin >15% At least £30m Constructive & Co. 22
Slide 23: Looking Ahead/Wrap up
Looking Ahead/Wrap up 23
Slide 24: Looking ahead
Looking ahead Strategic priorities focused on profitable, customer-led growth Get to Yes Expand our audience Scale our products Deliver a seamless end to end customer lifetime experience Anna Cake Couture 24
Slide 25: Concluding remarks
Concluding remarks • Executed against plan to be a simpler, leaner and profitable business • Strong growth with profit ahead of expectations • Multiple products serving more customer needs • On track for medium term guidance with attractive growth and profit trajectory Foundry Gyms 25 25
Slide 26: Q&A
Q&A Lisa Jacobs Tony Nicol CEO CFO 26
Slide 27: Thank you.
Thank you. Business finance that backs you 27
Slide 28: Disclaimer
Disclaimer Information regarding forward-looking statements This Presentation includes forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond the Group’s control and all of which are based on the Group’s current belief
Slide 29: Appendices
Appendices 29
Slide 30: Borrow, Pay later, Spend
Borrow Pay later Spend Term Loan FlexiPay line of credit Cashback credit card Loan for long term investment Flexible line of credit for paying bills, supplier Cashback credit card for everyday business purposes to support business growth invoices and managing short term cashflow using spending or lo
Slide 31: Multi-product view
Multi-product view Borrow Pay later Spend Term Loan FlexiPay line of credit Cashback credit card Funding Circle loans Product type Government guaranteed loans Rolling line of credit Credit card with cash back Marketplace (3 rd party loans) c.£17k credit limit £75k loan Average size & draw c.£3k draw
Slide 32: How we make money
How we make money 2024 Driver 2024 Typical yield % % of 2024 Revenue Transaction fees Originations c.6% 53% Term Loans Operating: Servicing fees¹ LuM c.1.5%p.a 27% Drawdown fees Transactions c.5.8% 10% Operating: FlexiPay Interchange fees Transactions 1.75% n/m Cash balances & base Bank interest Var
Slide 33: Illustrative - FlexiPay unit economics
Illustrative - FlexiPay unit economics Lifetime revenue Lifetime value • Upfront customer acquisition (CPA reducing over time) Cost of funding Operating • Upfront expected credit losses costs • Stable repeat usage Customer Expected credit acquisition losses • Payback period 12-18 months Compelling u
Slide 34: Smarter credit risk assessment for better lending
Smarter credit risk assessment for better lending Default rates (by quintiles) Risk Band Bureau Funding Circle Highest Risk 1 10.8% 14.4% • Compared to the UK bureau score, our model achieves 3 times greater separation 2 8.8% 8.5% between low- and high-risk borrowers differentiation differentiation
Slide 35: Share buyback programme
Share buyback programme 33.5m shares bought and cancelled, reducing share capital by 9% Shares in issue at end of quarter millions • 2x £25m share buyback programmes announced in 2024 • 33.5m shares purchased for £33.7m as of 31 December 2024 with up to £16m left to buyback • Second buyback due to c
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