AltFi Insights: Foreign markets boost growth for Funding Circle’s coffers

The SME focused lending platform, the largest UK P2P lender, has bucked a trend for staying in its home market and the move is proving good for its balance sheet.

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Global expansion is proving a substantial boost for the UK’s largest peer-to-peer lending platform Funding Circle. Since launching in 2010 it has expanded into the US, Germany and the Netherlands with plans to launch later this year in Canada.

Of course, the UK is still the SME lending platform’s biggest market but nearly half of Funding Circle’s revenue growth in 2018 came from its expansion into non-UK markets.

In 2018, Funding Circle’s revenue grew 50 per cent, by just over £47.4m, to £141.9m. Its non-UK revenues rose £22.m or 47 per cent of the total revenue growth. In the US revenues increased 66 per cent compared with 2017 to £37.1m Continental Europe its revenues shot up 195 per cent from £3.8m to £11.2m. 

Overall Funding Circle made a loss of £50.7m in 2018, compared to £36.3m the year before and loan originations increasing 40 per cent to £2.3bn, with a number of increased costs recorded in the year mostly specific to its IPO and increased headcount and marketing spend.

Average headcount (including contractors) rose to 1,004 in 2018 compared to 2017’s 740 number, representing a 36 per cent rise. Costs associated with staffing are the largest segment of overall expenditure at Funding Circle and these increased 44 per cent (£27.6m) during the year. This was principally driven by the 36 per cent growth in average headcount as well as increases in the average paycheck, together with growth in share-based payments of £4.2m to £8.8m.

The business floated on the London Stock Exchange in October at 440p per share, valuing the platform at £1.5bn. However, it has consistently traded below that price.