Funding Circle (LON:FCH) reported a “standout” full-year 2025 performance, highlighting strong demand across its multi-product SME finance platform and an acceleration in profitability, according to comments from CEO Lisa Jacobs and CFO Tony Nicol on the company’s results call.
Management said the business exceeded expectations and reached its 2026 revenue guidance a year early, supported by continued product innovation, strong borrower demand, and tight cost control. The company also outlined upgraded 2026 guidance and new medium-term targets through FY 2029, while reiterating that shareholder returns remain focused on buybacks for now rather than dividends.
2025 performance: revenue ahead of plan and profit growth
Profitability improved sharply. The company reported profit before tax (PBT) of about GBP 20 million (GBP 20.3 million per the CFO), up from GBP 3.4 million in 2024, with margin expansion to “almost 10%.” Management also noted profit after tax of GBP 46 million, which it attributed mainly to the benefit of historic tax losses.
Jacobs framed the past two years as a transformation toward a “simpler, leaner, and more profitable” U.K.-focused, multi-product strategy. Over the last two years, she said active customers rose 25%, credit extended increased 90%, revenue rose 57%, and PBT swung from a GBP 10 million loss to a GBP 20 million profit.
Business mix: term loans remain profitable; FlexiPay scales through a “J-curve”
Nicol emphasized that the group’s model remains “capital-light” overall, with 93% of AUM in term loans funded by institutional partners including asset managers, banks, and insurers. FlexiPay and the credit card (reported together as “FlexiPay”) represent 7% of AUM and are funded via a Citi senior facility alongside the company’s equity.
- Term loans: Credit extended rose 16% to GBP 1.6 billion. AUM rose to GBP 2.8 billion, including legacy COVID loans at around 8% of the book. Revenue increased 17% to GBP 167 million. PBT was GBP 32 million with margins “over 19%.” Management cited early uptake of a new shorter-term loan product and said demand heightened in the final quarter.
- FlexiPay and credit card: Active users grew to nearly 20,000 customers, and transactions increased 66% to GBP 850 million. AUM ended the year at GBP 206 million, up 73%. Revenue rose 111% to GBP 36.9 million. The segment reported a GBP 11.9 million loss, which management characterized as a result of upfront marketing and expected credit loss recognition during a high-growth phase.
On credit performance, Nicol said historic net annualized loss rates on FlexiPay and the card have been around 7%. Under IFRS 9, the company books expected credit losses upfront, resulting in a blended ECL rate of around 10% to 12% of average balances outstanding. He said performance remains in line with expectations.
Costs, marketing mix, and operating leverage
Management said operating leverage was a key driver of the earnings improvement. With revenue up 28% in 2025, total costs increased 12%, according to Nicol. Marketing remained the largest variable component, and the company said it continues to spend around 30% of revenue on direct marketing and broker commissions. Excluding marketing, costs were up only 1%.
In Q&A, Nicol said the mix of marketing has shifted post-COVID and is now “more towards 60% broker and 40% direct.” He added that within direct marketing, there is “a small amount of brand” spend including Premiership Rugby sponsorship (in its fourth year) and a new sponsorship of TNT Sports. He also said around 20% of the remaining cost base is variable in areas such as sales and collections, with the balance largely inflationary, supporting further leverage.
Capital allocation: buybacks continue; dividends not yet
The company reiterated its capital allocation priorities as: delivering the strategy, investing in platform strength, considering future growth (organic or inorganic), and returning capital to shareholders. Nicol said Funding Circle has announced GBP 75 million of buybacks since March 2024 in three GBP 25 million tranches, with the third tranche ongoing, and that the company has repurchased 17% of issued share capital to date.
Asked about dividends, Nicol said the company is “not there yet” on sufficient cash-backed profits. He said net operating cash flows for term loans and FlexiPay were about GBP 6 million in 2025, which he did not view as sufficient. He added that cash generation is expected to grow and dividends will be part of board-level capital allocation discussions over the coming year.
Nicol also said the company sold GBP 26 million of R&D-funded shorter-term loans after year-end, monetizing the balance and onboarding a funding investor. After maintaining a management buffer of around GBP 40 million for operational risk, he said the company had GBP 76 million of future deployable cash after completion of the current buyback program.
Guidance and medium-term targets
Funding Circle upgraded its FY 2026 guidance to around GBP 235 million in revenue and at least GBP 35 million in PBT. For FY 2029, management set medium-term targets of GBP 300 million to GBP 350 million in revenue, with PBT margins “trending towards low to mid-20s” as operating leverage improves and FlexiPay and the card mature.
Addressing a question on why medium-term margins are not guided higher, Nicol said the outlook reflects the mix of a term loans business already near 20% margins and FlexiPay continuing through its J-curve while it grows. He added that, longer term, term loans could reach “in excess of 30%” margins, with FlexiPay continuing to follow.
Management also discussed assumptions behind the medium-term framework. Nicol said he expects term loans to represent “probably three quarters-ish” of profit in the medium term, while credit extended between term loans and FlexiPay could be “more at parity,” with overall credit extended “just over GBP 4 billion.” He said FlexiPay AUM could grow toward a “near-ish GBP 1 billion mark.”
On 2025’s strong fourth quarter, Jacobs said the company saw an increase in borrower demand and suggested some may have reflected “post-budget” pent-up demand, alongside a broader sense that SMEs had been holding back spending and were beginning to release investment.
