Funding Circle’s losses widen on higher IPO and marketing costs

Peer-to-peer lender Funding Circle’s annual losses increased on higher marketing costs and charges related to its recent IPO.

The company posted revenue of £141.9 million for 2018, a 55% increase year-on-year, which exceeded its 50% guidance.

But pre-tax losses widened to £50.7 million from £36.3 million as it stepped up marketing activities to support its international growth ambitions.

Funding Circle, which launched in 2010, matches lenders to small business borrowers and floated on the London Stock Exchange last September with a valuation of £1.5 billion.

The company expects to generate more than £200 million of revenue in 2019 and report lower adjusted losses.

Chief executive Samir Desai described 2018 as a “record-breaking year” for Funding Circle and said the company is focused on investing for growth and building on its market positions in the UK, US, Germany and the Netherlands.

The company plans to launch in Canada later this year.

Mr Desai added: “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% of our group revenue came from existing customers.

“Funding Circle is in a strong position financially and operationally, and we are confident of meeting our growth expectations for the year.”

Funding Circle said that it also remains “vigilant” to the increasing economic uncertainty caused by Britain’s impending departure from the European Union and is “prepared for the possible outcomes”.

The company maintained that its UK business is “not directly affected on a day-to-day operational basis” by Brexit and that it “regularly stress tests the loanbooks in each of our geographies to ensure that investor returns would remain resilient in an economic downturn”.