analyst presentation fy 2022 vfinal.pdf
Funding Circle
Congratulations!
Your offer has been accepted and funds will be in your account shortly.
Your loan:
| Loan amount | Loan term |
|---|---|
| £120,000 | 3 years |
Loan purpose
Expansion and growth.
FULL YEAR 2022 RESULTS
2 March 2023
Where small businesses get the funding they need to win
£15bn credit extended to 135,000 small businesses since 2010.
We’ve taken out three term loans with Funding Circle and had a fantastic experience. The funding really helped us grow the business and the application process is quick and easy.
— Nikola Southern, Founder, Grace & Thorn
What we do
We enable small businesses to borrow, pay and spend.
How we do it
2 bn Data points in data lake (Group)
- 3x Better risk discrimination than bureau scores
- 6 min unrivalled experience
Funding Circle is better positioned today than it has ever been
Proven resilience through change
The last few years have brought significant challenges:
- Covid-19 operating impact on small businesses
- UK and US government loan schemes led to lending spike and 'bring forward' of SME borrowing
- SME confidence below trend
- US economic environment more benign
FlexiPay: investing in exciting new growth
- Strong growth and engagement, significant market.
What this means for Funding Circle
UK Loans: more muted performance in short term
- 2022 return to commercial lending as government schemes end; prudent approach in H2
- 2023 continued prudence through expected recession, pushing back medium-term plan by a year
US Loans: continued growth trajectory
Throughout, Funding Circle has demonstrated:
- Strong credit performance with robust and attractive
- Continued investor and borrower demand
Funding Circle: Financial performance
Revenue model: almost 90% of income from fees
| FY 22 Driver | Typical yield % | % of FY 22 Total income |
|---|---|---|
| Transaction Fees | c.5% | 55% |
| Servicing Fees | c.1% | 32% |
| FlexiPay Fees | 1% | £60m per annum |
| Investment Income | Variable% | 12% |
Key financial metrics
| H121 | H221 | H122 | H222 | FY21 | FY22 | |
|---|---|---|---|---|---|---|
| Originations | 1,635 | 661 | 803 | 678 | 2,296 | 1,481 |
| Loans Under Management | 4,933 | 4,457 | 4,071 | 3,743 | 4,457 | 3,743 |
| Operating income | 94.5 | 71.0 | 66.4 | 65.0 | 165.5 | 131.4 |
| Investment income | 26.1 | 15.3 | 10.9 | 6.4 | 41.4 | 17.3 |
| Total income | 120.6 | 86.3 | 77.3 | 71.4 | 206.9 | 148.7 |
| Fair value gains | 8.1 | 20.5 | 1.5 | 3.3 | 28.6 | 4.8 |
| Net income | 128.7 | 106.8 | 78.8 | 74.7 | 235.5 | 153.5 |
| Cash | 168.1 | 224.0 | 200.7 | 177.7 | 224.0 | 177.7 |
| Net Assets | 254.1 | 288.0 | 299.3 | 284.0 | 288.0 | 284.0 |
FlexiPay solves one of our customers' biggest pain points
67% of SMEs say cashflow is their biggest issue.
- With FlexiPay, I can now buy in bulk, helping me get a discount from my supplier and increasing my margins.
— Vik Gubskis, Founder, 8 Rocks Deli & Wine
FlexiPay enables SMEs to manage their cashflow by spreading the cost of payments
- Apply online: Instant decision.
- Get an approved line of credit for business payments.
- FlexiPay: Pay supplier now and repay over 3 months with 0% interest and a flat fee.
SME B2B payments represents a major new market opportunity and our capabilities enable us to win in this space
- Cashflow is a significant SME pain point.
- SME B2B payments is a huge market opportunity.
Conclusion
- Funding Circle is better positioned today than it has ever been.
- Technology and data-driven competitive advantage continues to deliver superior borrower experience.
- Attractive and proven business model with robust loan returns.
- Executing on attractive growth opportunities over the medium term to help more small businesses.