Funding Circle: A Doubled Profit, a £25m Buyback, and a CEO Handover
H1 revenue up 50% and guidance upgraded again — but the freshest signal is an AI-native lending machine being built for whatever comes after Lisa Jacobs.
FCH.L · Earnings Call · 2026-09-08
The headline is the upgrade; the subtext is the handover
Funding Circle's half-year 2026 was, by CEO Lisa Jacobs' own framing, "another standout 6 months." Credit extended grew 52% to £1.7bn, revenue climbed 50% to £138m, and profit before tax quadrupled to £24m, while assets under management rose 15% to £3.3bn. Management upgraded full-year guidance to revenue above £255m and PBT above £40m — effectively a doubling of profit — and announced yet another buyback of up to £25m, taking total repurchases since March 2024 to roughly £72m, or 18% of issued share capital. “We've built on the momentum of last year with strong revenue and profit growth as we've backed a record number of small businesses.” — Lisa Jacobs, Chief Executive Officer · 2026-09-08
That alone would be a respectable print. What makes it a story is that the same morning, Jacobs announced her intention to step down by the end of September 2027, launching a succession process. For a company whose entire re-rating narrative rests on a single operator's strategy, that is a genuine change in the investment case, and it explains why share price and issued share capital surface so prominently in this quarter's keyword set. Analysts wasted no time — Robert Noble opened with "Lisa, sorry to see you go" before pivoting straight to long-term market share.
The flywheel is no longer a slide; it's a P&L
The multiproduct strategy has been the company's refrain for several quarters, but this half it finally shows up in the numbers. FlexiPay and the card now hold £300m of AUM, up 78% year-on-year, driving £30m of revenue against £16m a year ago. The credit card is acquiring customers who are new to Funding Circle — more than half of card customers — which feeds the ecosystem rather than cannibalising it. The company now books a customer transaction every 20 seconds, versus every 38 seconds a year ago.
The unit economics matter more than the growth here. “If we chose to stop growing FlexiPay in the card today, i.e., no new marketing, on an annualized basis, it will be profitable right now to the tune of around GBP 10 million.” — Tony Nicol, Chief Financial Officer · 2026-09-08 That is the crux: the newer products have crossed into self-sufficiency, with FlexiPay now free-cash-flow breakeven before funding new lines. CFO Tony Nicol was also explicit that the balance-sheet exposure is bounded — “we have GBP 71 million of equity in FlexiPay and the credit card” — Tony Nicol, Chief Financial Officer · 2026-09-08 inside a ring-fenced, bankruptcy-remote SPV alongside the renewed Citi facility. The obvious risk — expected credit losses of £15m as balances ballooned — is framed as a J-curve cost of growth, with net annualised loss rates holding around 7% and the IFRS 9 blended charge booked at 10–12%.
The genuinely new theme: an AI-native business
If one thing is new for Funding Circle this quarter, it is AI — and it is not vendor boilerplate dropped into a prepared remark. Management describes a two-pronged transformation: broad fluency across the whole workforce, plus targeted strategic bets in product engineering, distribution and operations. Roughly 90% of employees now use AI frequently, and the company has gone as far as building internal tooling, including a data-subject-access-request agent that compressed a two-day manual process to minutes, and an agentic funding finder being trialled in the Marketplace team. “About 90% of Circlers using AI frequently. We're supporting them with the skills to enable them to do so.” — Lisa Jacobs, Chief Executive Officer · 2026-09-08
This is where Funding Circle converges with the broader market. Global keyword leaderboards are saturated with agentic themes — agentic enterprise, token maxing, and AI ops all rank in the market's top-75 this period — and among recent reporters, AI adoption appears across names from Braze to Asana. Funding Circle is riding that wave, but with a concrete, quantifiable claim: a 30% improvement in speed to market from its AI-native engineering team and a 20% lift in revenue per person. That is the sort of number that makes a small-cap lender's productivity story legible to generalist investors.
Cash, capital-light funding, and the private-credit contrast
The balance sheet is doing a lot of the persuading. Unrestricted cash stood at £136m at end-June, leaving £88m of deployable cash after the current buyback and a £45m operational buffer — up from £76m at year-end. On the funding side, the company has £3.3bn of AUM with roughly 91% in term loans funded by third-party institutions, plus £2.4bn of forward-flow commitments, including a fresh £500m deal signed in August. Around the same time, the company sold the shorter-term loan portfolio it had seeded on balance sheet, recouping its £26m.
There is an interesting contrast buried in the Q&A. Global price action over the past year shows direct lending market and broader private-credit names among the market's notable decliners, as investors fret about credit quality in private lending. Nicol's read is the opposite: “If anything, we're seeing a flight to credit -- flight to quality overall.” — Tony Nicol, Chief Financial Officer · 2026-09-08 More diligence and audits from institutional funders are, in his framing, a sign that a disciplined, data-rich originator gets share in a nervous market — credit models that discriminate risk "3x better than bureau scores" are the moat.
What to watch
Two things sit awkwardly. First, growth was front-loaded: a particularly strong Q1 (which management half-jokes coincided with the Iran conflict) normalised through the summer, and full-year guidance is deliberately set as a floor. Second, the medium-term revenue target of £300–350m now looks almost too easy — Edward Firth of KBW pressed exactly this — with Nicol promising a strategy refresh at year-end. The succession question hangs over all of it.
For now, though, the takeaway is clean: a capital-light, cash-generative lender that doubled profit, pulled forward an AI productivity story, and is handing investors cash — while quietly beginning the search for the person who will have to run it next.