On Thursday, Funding Circle Holdings PLC announced a year-on-year loss due to a decline in business revenues and loans under management. This led to shares in the company closing 6.2% lower at 56.30 pence in London.
Funding Circle reported a decrease in business revenue to GBP131.4 million in 2022, down 21% from GBP165.5 million the previous year. This was due to a drop in transaction fees from GBP115.0 million to GBP77.5 million.
As a result of the decline in revenue, Funding Circle reported a pre-tax loss of GBP12.9 million, compared to a profit of GBP64.1 million in the previous year. Loans under management also decreased by 16% to GBP3.73 billion from GBP4.46 billion, as a result of the anticipated early repayment of loans under the UK’s Coronavirus Business Interruption Loan Scheme and the forgiveness of loans under the US Paycheck Protection Programme.
For 2023, Funding Circle anticipates total revenues, including the new FlexiPay credit offering, to be between GBP160 million and GBP170 million. The company expects the adjusted profit for interest, tax, depreciation, and amortisation to range from GBP0 million to GBP10 million for the UK and US credit operations, with FlexiPay projected to incur a loss of between GBP10 million and GBP20 million.
Funding Circle aims to achieve total revenues of at least GBP295 million by 2025, with margins of 25% to 30% and adjusted earnings before interest, tax, depreciation, and amortisation.
The company acknowledged that the credit quality in the UK has deteriorated and, in response to increasing economic uncertainty, has tightened its credit criteria and introduced interest rate increases on loans in line with the base rate.
