Funding Circle swung to an unexpected profit in the first half of 2024 and raised its guidance for the full year as the small business lender looks to boost its flagging share price.
The London-listed fintech posted a pretax profit of £0.5m for the six months, compared to a £7.4m loss in the same period last year – and a £2.5m loss in the second half of 2023.
Funding Circle said it became profitable a half year earlier than it had expected, upgrading its previous guidance to target a full-year profit for 2024, rather than just the second half of the year.
The firm added that it would begin a further share buyback of up to £25m after the conclusion of the existing £25m repurchase it announced in March.
Funding Circle’s total income for the six months jumped 32 per cent year on year to £78.9m, while revenue increased to £79.1m to £59.7m.
The lender’s interest income came in at £14.1m, up from £5.1m a year prior.
Funding Circle’s loans under management ticked down three per cent to £2.78bn, which it said was driven by continued repayment of government-backed loan schemes. It reported an increase in commercial loans to £1.46bn from £1.3bn over the six months.
Funding Circle’s shares are down 78 per cent since it listed in London at a valuation of around £1.5bn in 2018.
Losses at the group widened to £33.2m in 2023 after a push into the US and investment into its lend-now-pay-later offer Flexipay.
The firm laid out plans in March to become “simpler, leaner and profitable” while narrowing its focus on its UK business. This includes plans to cut around 120 jobs as it targets roughly £15m in annualised cost savings in 2025.
In July, Funding Circle completed the sale of its loss-making US arm to Florida-based iBusiness Funding for £33m, resulting in a £10m gain. The unit made a £10.2m loss in the first half of 2024.
The firm on Thursday reaffirmed its medium-term guidance 15 to 20 per cent revenue growth and pretax profit margins of more than 15 per cent.
“We are delivering on the plan I laid out in March to be simpler, leaner and profitable whilst continuing to show strong growth,” said Lisa Jacobs, Funding Circle’s chief executive.
She added that the firm remained “excited about the long-term growth and profitability of the business as we execute against our plan”.