Thursday 7 March 2019 11:22 am

Funding Circle shares rise despite widening losses on IPO costs

Shares in peer-to-peer lender Funding Circle jumped as much as five per cent this morning despite widening losses following the fintech firm’s initial public offering (IPO) last year.

The figures

Funding Circle fell to a £51.6m operating loss in 2018, 40 per cent up from a loss of £36.9m the previous year.

Read more: Funding Circle beats revenue growth forecasts three months on from IPO

Total operating costs increased 47 per cent to £193.5m in the year, driven by costs related to its October IPO.

Revenue, excluding property, rose 55 per cent to £141.9m, beating the 50 per cent guidance stated when the firm went public.

Shareholders suffered a loss per share of 18.2p, though free cashflow rose to £42m, up from £35.7m the year before.

The total dividend fell to a 0.5p loss per share after Funding Circle's valuation crashed from 440p on its debut to 345p at the end of the year. 

Why it’s interesting

Funding Circle's shares stood 2.3 per cent higher after this morning’s surge to 358.9p, as the firm saw loans under management grow by 55 per cent in 2018.

However, the company is still below its IPO target price of 440p. The fintech giant made a disappointing debut on the London Stock Exchange in October last year, with shares falling as much as 24 per cent below its initial price target.

Funding Circle aims to increase its global market share “substantially” over the medium term and plans to enter the Canadian market this year.

In the UK, net lending to small and medium sized enterprises (SMEs) was £725m beat out high street banks, which collectively loaned small businesses just £515m.

What Funding Circle said

Chief executive and co-founder Samir Desai said: “2018 was another record-breaking year for Funding Circle.

“The business delivered against the guidance set out at the time of our IPO and it is especially pleasing to report revenue growth of 55 per cent with revenue of £141.9m.

Read more: Aston Martin and Funding Circle shares continue to fall after IPOs

“Our focus has always been on delivering an exceptional customer experience to both borrowers and investors, leading to strong and consistent repeat behaviour, and I am proud that, in 2018, 43 per cent of our Group revenue came from existing customers,” he added.

“As we look ahead to the rest of 2019, we remain focused on continuing our strategy of investing for growth and building on our number one market positions across the UK, US, Germany and the Netherlands.”