Funding Circle shares soar on US exit plans and buyback programme

(Sharecast News) - The share price of small business credit provider Funding Circle soared on Thursday after the company announced a new share repurchase programme to bolster its share price as well as plans to offload its US arm as management attempts to rightsize the business. The stock was up 42.5% at 39.9p by 0933 GMT.

However, the shares are still down 27% over the past year even when including Thursday's gain, as losses continue to rise on the back of its investments into US expansion and its business-focused buy-now-pay-later offering FlexiPay.

The company said it is now choosing to focus on its UK businesses - comprising UK Loans and FlexiPay - and has already received "indications of interest for the US business and will update further in due course".

It is expected that the UK business will be profitable - in terms of pre-tax profit - by the second half of 2024.

Separately, the board said it would buy back £25m worth of shares after judging that the the current trading price "materially undervalues Funding Circle's business". The company said in a statement that a share repurchase "will improve balance sheet efficiency by returning excess capital to shareholders".

Total income over 2023 increased 7% to £162.2m, but adjusted EBITDA dropped to a negative £3.9m, from a profit of £9.5m in 2022, on the back of investments in the US and FlexiPay.

The UK Loans business specifically saw adjusted EBITDA swell to £21.3m from £13.8m, helped by FlexiPay transactions soaring to £234m from £59m previously.