For small businesses, access to fast and flexible finance can be critical to managing cash flow, investing for growth and navigating changing economic conditions. For lenders, however, growth only tells part of the story. The real measure of progress is whether that growth can be delivered profitably.
For Funding Circle, the first half of 2026 provided plenty of evidence that its strategy is gaining momentum.
Speaking on ADVFN’s Watch List, Tony Nicol, CFO of Funding Circle (LSE:FCH), outlined a period of strong financial and operational progress, with the company delivering significant increases in credit extended, revenue and profitability while continuing to scale its newer financial products.
Revenue up 50% as profitability accelerates
Funding Circle extended £1.7 billion of credit during the first half, representing growth of 52% year-on-year. Revenue increased by 50% to £138 million, while profit before tax rose four-fold to £24 million.
A key contributor was the company’s established term-loans business, where originations increased 43% to just over £1 billion.
Importantly, this growth is translating into stronger profitability. Term loans generated £29 million of profit during the period, compared with £13 million a year earlier, while margins increased to 26%.
For investors, this combination of higher volumes, rising revenue and improving margins is particularly encouraging because it demonstrates the operating leverage within the Funding Circle model.
As Nicol explained, the performance has been supported by strong customer demand, pent-up demand entering the year and the contribution from newer products launched during the previous year.
The strength of the first-half performance has also given management greater confidence in the outlook. Funding Circle has upgraded its full-year guidance, moving from revenue of more than £235 million and profit of more than £35 million to revenue of more than £255 million and profit of more than £40 million.
That represents a meaningful improvement in expectations and provides a clear indication of the momentum currently running through the business.
New products broaden the opportunity
While the performance of the core term-loans business remains important, perhaps one of the more interesting aspects of Funding Circle’s development is the progress being made by its newer products, including FlexiPay and its credit card offering.
Transactions across these products increased 71% to £640 million, while revenue rose an impressive 83% to £30 million.
The numbers suggest these products are increasingly becoming an important part of the wider Funding Circle proposition, helping the company address more of the day-to-day working-capital and cash-flow requirements of small businesses.
That gives Funding Circle the opportunity to move beyond a traditional lending relationship and become a more regular financial partner for its customers.
Recurring customer usage provides an attractive model
One of the most compelling elements of the FlexiPay opportunity is the recurring nature of customer usage.
Nicol highlighted that more than 90% of the revenue generated in the first half came from customers who had been onboarded in previous years.
That is an important characteristic of the model. Rather than continually relying on new customer acquisition to drive revenue, Funding Circle can build value from relationships that have already been established.
The company describes this as a “J-curve” economics model, where marketing and credit costs are incurred upfront, while the benefits of repeat customer usage develop over time.
Assets under management for the newer products reached £300 million, up from £206 million at the beginning of the year.
Perhaps even more importantly, Nicol said the business would already be profitable at around £10-12 million if it stopped growing today, while the earlier customer cohorts are already cash generative.
That provides an encouraging foundation from which to continue investing in future growth.
From recovery to profitable growth
Taken together, the first-half numbers point towards a Funding Circle business that has moved well beyond simply pursuing top-line expansion.
The company is growing credit volumes, increasing revenue, expanding margins and delivering substantially higher profitability, while simultaneously developing newer products that could broaden its relationship with small-business customers.
The progress of FlexiPay and the credit card offering could prove particularly significant over the longer term. Their recurring usage characteristics create the potential for customer relationships to become increasingly valuable as they mature.
With full-year revenue guidance now above £255 million and profit guidance above £40 million, Funding Circle enters the second half of the year with increased confidence and a growing platform from which to build.
For small businesses looking for flexible access to finance, the opportunity is clear. For Funding Circle, the first-half performance suggests the company is increasingly demonstrating that growth and profitability can go hand in hand.
For more information visit – https://corporate.fundingcircle.com
