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1. Company Snapshot

1.a. Company Description

Funding Circle Holdings plc, together with its subsidiaries, provides online lending platforms in the United Kingdom, the United States, and internationally.The company offers small business loans, recovery loan schemes, and business finance solutions to small and medium enterprises.It also provides flexipay and flexipay card solutions.


The company acts as a special purpose bankruptcy remote entity that issues loan payment dependent debt securities to accredited investors.Funding Circle Holdings plc was incorporated in 2010 and is based in London, the United Kingdom.

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1.b. Last Insights on FCH

Funding Circle Holdings plc faced challenges due to the UK market's downturn, triggered by weak trade data from China, which impacted global economic sentiment. Despite this, the company's growth prospects are notable, with high insider ownership indicating internal confidence. Recent market conditions have been turbulent, with the FTSE 100 and FTSE 250 indices experiencing declines. A focus on growth stocks with strong internal alignment may appeal to investors. No recent earnings release or share buyback information is available to assess their impact.

1.c. Company Highlights

2. Funding Circle's H1 2025 Earnings: Strong Growth and Strategic Progress

The company reported a 17% revenue growth to £92.3 million and a 12-fold profit before tax (PBT) growth to £6 million. Earnings per share (EPS) was not explicitly mentioned, but the significant PBT growth indicates a substantial improvement in profitability. The term loans segment contributed £12.7 million PBT, with a 38% YoY growth. According to Lisa Jacobs, "our risk models leverage AI to differentiate risk 3x more effectively than bureau scores." The P/E Ratio is 61.26, indicating high expectations for future growth. The P/S Ratio is 2.33, suggesting that the stock price is relatively high compared to sales.

Publication Date: Sep -07

📋 Highlights
  • Revenue Growth:: First-half revenue increased by 17% to £92.3 million, driven by term loan expansion and product diversification.
  • Profitability Surge:: Profit before tax (PBT) jumped to £6 million, with term loans contributing £12.7 million PBT (38% YoY growth).
  • Product Expansion:: FlexiPay revenue doubled, supporting 270,000 transactions (£1 billion in volume) since its launch.
  • Customer Base Growth:: 70% of FlexiPay customers were new, while term loans retained 70% existing customer retention.

Financial Performance

The company's financial performance was strong, driven by the growth in term loans and the expansion of FlexiPay. Revenue from FlexiPay doubled, with 270,000 transactions totaling £1 billion since launch. The company's cash reserves stood at £115 million, supporting £75 million in share buybacks since March 2024. The ROE is 3.86%, indicating a relatively low return on equity. The Net Debt / EBITDA ratio is -14.46, indicating a healthy debt position.

Strategic Progress

The company is making strategic progress in scaling cash flow products, including FlexiPay and credit cards. The term loans segment operates in an £80 billion underserved market, with opportunities for growth. The company is leveraging AI to enhance efficiency and improve risk modeling. With a strong funding pipeline and a robust capital position, the company is well-positioned to achieve its 2026 guidance of >£200 million revenue and >£30 million PBT.

Valuation

The company's valuation metrics indicate high expectations for future growth. The P/E Ratio is 61.26, and the EV/EBITDA ratio is 54.6. The P/B Ratio is 2.43, suggesting that the stock price is relatively high compared to book value. The Dividend Yield is 0.0%, indicating that the company does not pay a dividend.

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.10%)

6. Segments

Loans

Expected Growth: 7%

Funding Circle Holdings plc's 7% loan growth is driven by increasing adoption of online lending platforms, rising demand for SME financing, and expansion into new markets. Additionally, the company's strategic partnerships, improved credit scoring models, and competitive interest rates have contributed to its growth momentum.

FlexiPay

Expected Growth: 9%

FlexiPay's 9% growth is driven by increasing adoption of digital payment solutions, rising e-commerce sales, and growing demand for flexible payment options among consumers. Additionally, Funding Circle's expansion into new markets, strategic partnerships, and investments in technology infrastructure have contributed to the growth.

7. Detailed Products

Business Loans

Funding Circle provides unsecured business loans to small businesses, allowing them to access capital to grow their business, refinance debt, or cover operational expenses.

Line of Credit

Funding Circle offers a flexible line of credit that allows businesses to borrow and repay funds as needed, with interest only charged on the outstanding balance.

Invoice Financing

Funding Circle provides invoice financing solutions that allow businesses to receive immediate payment on outstanding invoices, improving cash flow and reducing the risk of bad debt.

Term Loans

Funding Circle offers term loans with fixed interest rates and repayment terms, providing businesses with a predictable and stable source of funding.

8. Funding Circle Holdings plc's Porter Forces

Forces Ranking

Threat Of Substitutes

Funding Circle Holdings plc operates in a niche market, providing a unique platform for small businesses to access funding. While there are some substitutes available, such as traditional banks and other fintech companies, the company's platform and business model are differentiated, reducing the threat of substitutes.

Bargaining Power Of Customers

Funding Circle Holdings plc's customers are small businesses, which typically have limited bargaining power. The company's platform provides a valuable service to these businesses, and they are likely to continue using the platform due to the benefits it provides.

Bargaining Power Of Suppliers

Funding Circle Holdings plc's suppliers are primarily investors who provide funding for the loans. The company has a diversified investor base, which reduces the bargaining power of individual suppliers. Additionally, the company's platform provides a valuable service to investors, making it unlikely that they would exert significant bargaining power.

Threat Of New Entrants

While there are some barriers to entry in the fintech industry, new entrants could potentially disrupt Funding Circle Holdings plc's business. However, the company's established brand and platform, as well as its regulatory approvals, provide some protection against new entrants.

Intensity Of Rivalry

The fintech industry is highly competitive, with many established players and new entrants vying for market share. Funding Circle Holdings plc operates in a niche market, but still faces intense competition from other fintech companies and traditional banks.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 20.62%
Debt Cost 3.95%
Equity Weight 79.38%
Equity Cost 8.35%
WACC 7.44%
Leverage 25.97%

11. Quality Control: Funding Circle Holdings plc passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Resurs Holding

A-Score: 5.4/10

Value: 5.5

Growth: 5.2

Quality: 3.9

Yield: 5.0

Momentum: 9.0

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
MutuiOnline

A-Score: 4.8/10

Value: 3.5

Growth: 8.3

Quality: 5.8

Yield: 0.6

Momentum: 6.5

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
Intrum

A-Score: 4.4/10

Value: 9.1

Growth: 2.1

Quality: 2.8

Yield: 5.0

Momentum: 7.5

Volatility: 0.0

1-Year Total Return ->

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Stock-Card
Grenke

A-Score: 4.0/10

Value: 7.1

Growth: 5.7

Quality: 3.5

Yield: 3.8

Momentum: 1.0

Volatility: 2.7

1-Year Total Return ->

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Stock-Card
Funding Circle

A-Score: 2.9/10

Value: 4.8

Growth: 2.1

Quality: 6.7

Yield: 0.0

Momentum: 2.5

Volatility: 1.3

1-Year Total Return ->

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Stock-Card
Hypoport

A-Score: 2.3/10

Value: 2.3

Growth: 4.4

Quality: 4.2

Yield: 0.0

Momentum: 1.0

Volatility: 1.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

1.25$

Current Price

1.25$

Potential

-0.00%

Expected Cash-Flows