Funding Circle, the small business lending platform, has raised its 2026 financial targets while unveiling a new share repurchase program and a long-term CEO succession plan. The company now expects revenue to exceed £255 million and pre-tax profit to surpass £40 million for 2026, up from previous guidance of at least £235 million and £35 million, respectively. The upgrade comes after a robust first half, but the new floor still leaves room for a significant slowdown in the second half of the year.
In the six months ended June 30, Funding Circle reported pre-tax profit of £24.1 million, a fourfold increase from £6.0 million in the same period last year. Revenue surged 50% to £138.2 million. However, the new full-year guidance implies that the company could deliver as little as £15.9 million in pre-tax profit and £116.8 million in revenue for the second half, which would represent declines of 34% and 15.5%, respectively, from the first half. At the minimum, the second-half pre-tax margin would be around 13.6%, compared with 17.4% in the first half.
This arithmetic highlights the cushion management has built into its forecast. The company noted that borrower demand normalized in the second quarter after an exceptionally strong start to the year, while newer products like FlexiPay and credit cards require significant marketing spend and upfront recognition of expected credit losses. Despite the implied slowdown, the revenue threshold has more headroom than it appears: simply repeating the first-half performance would generate £276.4 million, £21.4 million above the new minimum. Funding Circle also reiterated its ambition to reach the upper end of its £300 million to £350 million revenue range by 2029, assuming a stable economic environment.
Term Loans remain the earnings engine
The mature Term Loans business continues to drive profitability. Originations grew 43% to £1.05 billion, while revenue rose to £108.2 million and pre-tax profit jumped to £28.6 million from £12.7 million. The segment's pre-tax margin of 26.4% more than offset the £4.5 million loss in the FlexiPay and credit card division. Funding Circle also moved its shorter-term loan product off its balance sheet into its institutional platform model, generating a £31.5 million net cash receipt after transferring £105.7 million of associated borrowing to the buyer. Future originations under this arrangement will earn transaction and servicing fees rather than requiring the company to hold the loans on its books.
This capital-light approach preserves cash for FlexiPay's expansion. Unrestricted cash increased to £136.5 million from £100.9 million at year-end, and committed forward-flow funding for Term Loans stands at £2.4 billion. The platform model allows outside institutions to take on the underlying credit risk while Funding Circle earns fees.
FlexiPay growth and credit risk
FlexiPay and card transactions increased 71% to £640 million, with revenue up 83% to £30.0 million. Drawn balances reached £300 million, up from £169 million a year earlier, and active customers grew 48% to about 25,000. The segment's loss narrowed from £6.7 million to £4.5 million. However, the expected-credit-loss charge rose 81% to £15.2 million, matching revenue growth. The allowance against drawn and undrawn FlexiPay lines stood at £47.2 million at June 30, based on a blended 9.2% probability of default and an 87.4% loss given default. These accounting estimates are sensitive assumptions as the drawn book and £630.7 million of undrawn commitments expand.
Share buyback and valuation
Funding Circle also announced an additional share buyback of up to £25 million, to commence once the current program concludes. Since repurchases began in 2024, the company has bought about £72 million of shares, representing roughly 18% of issued share capital. The new authorization brings the announced total to £100 million. At a reference price of 230 pence, the company had a market value of £685.9 million, trading about 8.7% below its 52-week high of 252.03 pence. This implies a valuation of approximately 17.1 times the new minimum pre-tax profit. The buyback supports per-share growth but does not resolve the central challenge: Term Loans must continue generating high-margin, capital-light earnings while FlexiPay scales toward profitability without a deterioration in SME credit quality.
CEO succession
In a separate announcement, Funding Circle said CEO Lisa Jacobs intends to step down by September 2027. Jacobs, who joined in 2012 and became CEO in January 2022, will remain in her role while the board conducts a search for her replacement. The long timeline reduces immediate disruption but means the next chief executive will inherit a business at a critical inflection point, with a profitable core platform, rapidly growing revolving-credit products, and aggressive capital returns.