The UK’s oldest and largest marketplace lending outfit posted an £8.9m loss in 2015, despite nearly doubling its revenues.
Zopa has released its annual report and financial statements for 2015. The numbers are headlined by significant growth in loan disbursals and revenues, but significant expenditure throughout the year resulted in net losses of £8.9m on the year. Zopa posted a loss of £6.1m in 2014, meaning that losses were up by 45 per cent in 2015.
Loan disbursals more than doubled in 2015, coming in at £532m. Zopa crossed the £1bn mark in August last year, becoming the first UK-based marketplace lender to do so. Funding Circle and RateSetter have since echoed the feat. Zopa has now lent a cumulative total of close to £1.65bn, according to the Liberum AltFi Volume Index. The company posted revenues of £20.6m in 2015, up from £11.5 in the previous year – a 79 per cent increase.
The platform says that its mounting losses are the result of increased expenditure, which has been particularly focused on headcount, technology innovation and marketing activities. Headcount climbed from 62 to 111 over the course of 2015, with staff costs coming in at close to £7.5m, up from £3.5m in the previous year. Zopa formed a partnership with Uber to fund taxi purchases in May 2015, and launched a new car refinancing service in May 2016. The Car ReFi loans are powered by the company's “partnership API” – which is said to be key to the platform’s push into various point-of-sale channels. On the marketing front, Zopa ran its first TV ad in July 2015, introducing the colourful Professor Zopa to screens across the country.
Commenting on the 2015 results, Zopa boss Jaidev Janardana (pictured above), who became CEO in September 2015, said that 2015 “was a headline year for Zopa”, and that it had “laid the groundwork for sustainable growth”. He continued: “We invested heavily in people, technology and infrastructure to prepare Zopa for the next step in its journey toward profitability”. Janardana says that he expects Q4 2016 to be EBITDA positive and that the company is “on track” to be profitable in 2017.
The often loss-making (at least in the short-term) business model operated by marketplace lending companies has come under intense scrutiny throughout the course of 2016 – all the more so with investor demand for marketplace loans wobbling. Losses have been widening at many of the biggest marketplace lenders in the US, and the recent slowdown in loan origination within the UK market will doubtless have a knock-on effect on revenues as well.
While marketplace lenders focus on weathering the present market turmoil, many will be dependent on external investment for their operating capital. In December 2015, reports surfaced that Zopa was on the verge of raising £70m from JPMorgan – but the success of that round has never been officially corroborated.
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.