# Full Year 2024 # Results --- Strong operational and financial progress Executed against plan to be a simpler, leaner and profitable business • Sold US business: gain on sale of £10m • Restructured UK business: annualised benefit of ~£15m Strong growth with profit ahead of expectations • 23% revenue growth to £160m • Credit extended of £1.9bn (+47% YoY), with Term Loan growth of 33% • PBT of £3.4m ahead of market expectations, with Term Loan PBT of £19m Attractive go forward business with healthy revenue and profit growth • Medium-term guidance unchanged: Group revenue growth of ~15-20% CAGR (2023-2026) and PBT margins >15%, equivalent to at least £200m revenue and at least £30m PBT in 2026 --- # 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 A customer # >25% >70% transaction every Credit extended from new 2024 FlexiPay revenue from cashflow products Term Loan customers **92 seconds** --- We provide a superior customer experience powered by data and technology Proprietary data sources AI powered risk models Versatile, modular platform design 6 min Application time 3x Better risk discrimination Scaling in 2024 77% Instant decisions Better risk discrimination than bureau scores 3x growth Monthly active mobile app users 79 Customer NPS ~20% Engineering productivity improvement --- Continued SME demand for finance with robust and attractive returns despite a challenging backdrop for UK SMEs Good performance and proven resilience through the cycle GDP and consumer confidence low Insolvencies remain above historic trend Robust and attractive loan returns ~5% Sources: OECD Consumer Confidence Index; ONS GDP monthly estimate December 2024; Insolvency Service January 2025 Annualised term loan returns (above swap rate) Continuing investor demand YoY growth in Funding Circle credit extended --- 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 # 2024 Strategic Highlights --- ## 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 targeted cost actions Origination PBT # +33% growth 13.3% margins ### Att Pynta --- Pay later and spend: Solving SMEs biggest pain point with FlexiPay and Cashback Credit Card Large addressable market £1.3trn SME B2B payments £80bn+ of SMEs say that late payments from customers are a problem¹ 1 Simply Business SME Insights, 2023. n=1,070 Pay later FlexiPay Line of Credit FlexiPay Line of Credit Flexible line of credit for managing short term cash flow by e.g. paying bills or supplier invoices using bank transfer or card Average line: ~£17,000 Payments over 1,3,6,9,12 months Cashback credit card for everyday business spending Launched in H2 2024 Average credit limit: ~£17,000 Spend Cashback Credit Card --- Pay later and spend: strong growth driven by new and existing customers FlexiPay transactions volumes ~66,000 in 2024 FlexiPay & Cashback credit card end of month balances by half year cohort, £m1 1. End of month balances by half year cohort are grouped by the half year of first transaction, includes balances from bank transfers, card payments and Cashback credit card 2. FlexiPay account is active when there is an outstanding balance on the account in the last month --- # Financial Performance --- 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% | | PBT pre exceptionals | Margin>12% | 13.3% | Loss similar to 2023 of(£16.2m) | (£15.6m) | Full Year Positive1 | £3.4m | --- Simplified, profitable business Continuing Group financial performance | £m | 2024 | 2023 | Change | | --- | --- | --- | --- | | Total income | 161.7 | 129.7 | 25% | | Fair value gains | 4.2 | 3.1 | 35% | | Cost of funds | (5.8) | (2.7) | 115% | | Revenue2 | 160.1 | 130.1 | 23% | | Operating expenses (excl. ECL) | (148.1) | (135.5) | 9% | | Expected credit losses(ECL) | (8.6) | (4.5) | 91% | | Profit/(loss) before tax pre exceptionals | 3.4 | (9.9) | 134% | | Exceptional items | (2.6) | - | - | | Profit/(loss) before tax | 0.8 | (9.9) | 108% | | £m | 2024 | 2023 | Change | | --- | --- | --- | --- | | Unrestricted cash | 150.5 | 169.6 | (11%) | | Net asset value | 216.5 | 246.8 | (12%) | ¹ US business sold on 1 July 2024 for gain on sale of £10m with results presented as discontinued operations 2Net income, as presented in the profit and loss, is defined as “Revenue” 1 Focus on continuing business excluding exceptional costs • Revenue increase of 23% with continued growth in both Term Loans and FlexiPay • Operating cost growth (excl. ECL) of 9%, driven by variable marketing costs • Expected credit losses increased in line with growth in FlexiPay balances • Significant move to profit, demonstrating operating leverage • Healthy balance sheet and cash position with movement principally due to share buyback of £33.7m (9% of share capital) --- Term Loans PBT margins >13% Strong growth, PBT ~triples, demonstrating operating leverage; £m Originations Loans under 1,2 Management Growth of 33% driven by commercial loans and govt guarantee schemes 2 Revenue Operational leverage demonstrated with cost growth of only 5% Threefold growth in PBT with margins above 13% ¹ Commercial LuM 2023 £1,396m, 2024 £1,971m. Legacy Covid schemes LuM 2023 £1,457m, 2024 £743m ² The legacy “other” business segment (Continental Europe) is immaterial and has been included in the Term Loans segment in 2024. Prior period comparatives have not been restated --- Strong FlexiPay revenue growth Growth and costs in line with expectations; £m Ongoing momentum in transactions growth Grew strongly, in line with transactions Anticipated j-curve with cost growth from up-front costs for expected credit loss provision and marketing and from staff-related costs --- Focused cost management Revenue increase of 23% versus 9% operating expenses increase Operating expenses (excl. ECL) £m Marketing costs grew (+23%) • Variable based marketing costs remain ~30% of revenue 1Data and processing, IT, depreciation & amortization, and other costs Non-marketing costs held broadly flat (+4%) • Share-based payment costs (“SBP”) increased due to higher national insurance costs linked to share price performance • Salary costs reduced (-2%) driven by 2024 restructuring, offset by inflationary pay rises and absorbing costs previously allocated to the US business 1 • Other costs increased by 5% --- 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 achieved in H2 24 • Cost base now re-shaped for go forward business Absorption of Group costs allocated to US --- Capital efficient model built for scale Using the right funding for the right product; strong investor demand • Funding Circle equity, with senior Citi facility • Revenue model: Drawdown fees and interchange fees --- 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 Annualised net returns by cohort after servicing fees and bad debt £2.1bn Future funding in place --- Robust levels of net assets and cash Term Loans and FlexiPay collectively cash generative • Term Loans and FlexiPay collectively cash generative and covers investment in FlexiPay lines of credit --- Capital Allocation Framework Available cash Capital allocation framework --- 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 | | --- | --- | --- | | Revenue | 15-20% CAGR 2023 to 2026 | At least £200m | | PBT Margin | >15% | At least £30m | Constructive & Co. --- # Looking Ahead/Wrap up --- Looking ahead Strategic priorities focused on profitable, customer-led growth Get to Yes Expand our audience Deliver a seamless end to end customer lifetime experience Scale our products --- # 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 --- # Appendices --- Borrow Term Loan Loan for long term investment purposes to support business growth • Six months to six years • Funding Circle loans; Government guaranteed loans and marketplace (third party loans) Loan for long term investment purposes to support business growth or long term cashflow management • £10,000 to £750,000 Pay later FlexiPay line of credit Spend Cashback credit card FlexiPay line of credit Flexible line of credit for paying bills, supplier invoices and managing short term cashflow using bank transfer or card • Repay over 1, 3, 6, 9 or 12 months • Flat fee on each transaction • Credit limit of £1,000 to £250,000 Cashback credit card for everyday business spending • Credit Card with cashback • Credit limit of £1,000 to £250,000 --- | | Borrow Term Loan | Pay later FlexiPay line of credit | Spend Cashback credit card | | --- | --- | --- | --- | | Product type | Funding Circle loans Government guaranteed loans Marketplace (3rd party loans) | Rolling line of credit | Credit card with cash back | | Average size & draw | £75k loan c.5 year term | c.17k credit limit c.3k draw per transaction Paid back over 1-12 months | c.17k credit limit | | Funding | Forward flow from institutional investors | Funding Circle with senior banking facility | Funding Circle with senior banking facility | | How our products make money | Transaction fee (c.6% on originations) Servicing fee (c.1.5% p.a on LuM) | Drawdown fee (varying on transactions) | Interchange fee (1.75% on transaction) Interest income (on credit levels) | ---