The SME lender lent more than ever last year and increased revenue but also saw cash reserves fall.
It’s no secret that Funding Circle had a tough year in 2019. The publically listed company was ejected from the FTSE 250 after it’s share price continued to fall throughout the year alongside the broader marketplace industry facing a number of new regulatory hurdles
Late last month, however, its shares did bounce back somewhat, rising nearly 100 per cent in just three trading sessions, following speculation the SME lender could see a slice of the Government’s £330bn stimulus package and play a role in the eventual recovery of the UK economy.
Despite this, it lent a record £1.6bn to small businesses through its platform in 2019.
Following this rollercoaster year, AltFi took a look through Funding Circle’s annual report for 2019 - released last week - to see if there was anything we’d missed.
In fact, in the last quarter of 2019 “net lending to small businesses through Funding Circle was higher than the major UK banks combined.”
Currently, the company has £3.7bn of loans under management, a 19 per cent increase of £600m from the previous year.
Despite lending more, Funding Circle has reduced its net credit risk exposure from £351.4m in 2018 to £282.4m in 2019.
The amount of cash that Funding Circle has decreased considerably over the past year.
At the end of 2018, the publically listed company had £333m in cash and cash equivalents compared to just £164.5m by 31 December 2019.
Funding Circle said that £117.7m of the £166.4m decrease was “due to the introduction of the new investor products” in which the company has injected a sizeable chunk of its capital.
Similarly operating costs jumped by almost a third to over £252m in 2019 from just under £193m in 2018.
Funding Circle has continued to grow its employee base, going from 1,054 (including 50 contractors) in 2018 to 1,165 (including 110 contractors) in 2019.
The company’s headcount is rising but more slowly than in previous years—between 2018 and 2019 the number of employees grew by roughly 10 per cent, whereas between 2017 and 2018 the number increased by more than a third from 740 employees to 1,054.
In 2019 Funding Circle spent £96.9m on employee costs, which equates to an average salary of just over £83k, which is less than the previous year’s average of £84.5k, a decrease of about 1.5 per cent.
Rather, CFO Sean Glithero, who recently announced he was stepping down this year, has the highest salary—Glithero earns £300k per year compared to Desai’s £210k.
Funding Circle did confirm this was the case because of differing long-term incentives but, declined to provide an official comment.
Also included in the annual report was the gender breakdown of the company’s employees for the first time.
The company’s board was still above average despite being 80 per cent male and 20 per cent female, which is slightly below the average of 22 per cent.
Revenue for the small business lender topped £167.4m in 2019, an 18 per cent increase on 2018 (£141.9m).
Funding Circle upped its marketing spend by just under £10m from £57.8m in 2018 to £66.6m in 2019, this increase is broadly in line with the increase in revenue.
Despite the 15 per cent increase in money spent on marketing, overall it’s actually a slight decrease proportionally of Funding Circle’s total revenue (from 41 per cent to 40 per cent in 2019).