Funding Circle Holdings Stock

Good morning, everyone, and thank you for joining us for our half year 2026 results. I'll start today by touching on the highlights of our first half performance before handing over to Tony to cover the financials in detail.

I'll wrap up by looking ahead at the exciting opportunity ahead of us and our confidence in our continued strong growth and profitability over the medium term. It's been another standout 6 months for Funding Circle. 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. Demand remains strong. Our multiproduct strategy is working. Today, we are a more important part of our customers' daily lives. We've continued to increase our share of wallet and attract more customers to Funding Circle.

Our 16 years of proprietary data and technology creates a competitive moat around the business, enabling a superior customer experience, and our capital-light platform is built for further scale. Our performance in the first half means that today, we're upgrading our 2026 guidance to revenue of more than GBP 255 million and PBT of more than GBP 40 million, representing a doubling of profit versus last year.

We're also announcing a further buyback of up to GBP 25 million to commence following the conclusion of our current buyback. Since March 2024, we've bought back around GBP 72 million or 18% of the issued share capital. We remain very excited about the long-term opportunity ahead of us as we power even more SMEs throughout the U.K.

To put a bit more color behind the performance, here are the key numbers from H1. 52% credit extended growth, 50% revenue growth and PBT of GBP 24 million, up 4x on what we delivered in H1 '25 and assets under management of GBP 3.3 billion. This wouldn't be possible without our talented team of Circlers. Our high-performing and diverse and inclusive culture is one that we're really proud of, and it was fantastic to be recognized by The Sunday Times as one of the U.K.'s Best Places to Work earlier this year. Thank you to the team who've worked hard to deliver such a great half for our customers and shareholders.

We're proud of the performance that we delivered in the first half. At the start of 2024, I spoke about how our U.K.-focused multiproduct strategy would drive growth and engagement. The numbers this half show that it's continuing to work whilst also delivering the foundations for future growth. Our multiproduct strategy means more frequent customer interactions, deeper relationships and a greater share of wallet. To put that into context, today, we have a customer transaction every 20 seconds, up from every 38 seconds at the end of last year and every half an hour 5 years ago. About 1/3 of our customers hold more than one product with us, enabling us to serve more of their needs.

5 years ago, this number would have been 0 as a single product term lending business, which shows how far we've come. We're also attracting new businesses to the Funding Circle ecosystem through our card product, where more than half of our customers are new to Funding Circle, giving us a chance to build long-term relationships with these customers as we become their financial partner. More products leads to more engagement, which gives us deeper insights and allows us to build even better products for our customers. That's how we're becoming the financial partner that more and more small businesses turn to first.

I'll come back to this. But first, I'll hand over to Tony, who will talk to the financials in more detail.

Thanks, Lisa, and good morning, everyone. As Lisa has just mentioned, we've had another strong 6 months. Since the first half of 2025, credit extended grew to GBP 1.7 billion, up 52%. This drove revenue to GBP 138 million, up 50% and profit before tax grew fourfold to GBP 24 million. Assets under management grew by 15% and are now at GBP 3.3 billion.

Looking at the group P&L in a little more detail. Operating expenses were GBP 99 million, up 27%, while revenue grew to GBP 138 million, up 50%. So our top line is growing roughly twice as fast as costs. Expected credit losses relating to FlexiPay and the credit card rose to GBP 15 million, driven by the near 80% growth of their balances outstanding with the credit quality in line with our expectations. I'll talk about this in more detail later.

Putting that together, profit before tax reached GBP 24 million. The chart on the right shows that our operating expenses as a percentage of revenue have fallen steadily each half over the past 2 years. As a result, our profit before tax margin has increased from 1% to 17% in the first half of 2026, demonstrating the operating leverage of the platform.

Turning to the business units and starting with term loans. It has been yet another strong performance. We grew both top and bottom line again with continued improvement in profitability. Credit extended increased 43%, driven by continued product innovation, including the full 6-month effect of the new shorter-term loan product we launched at the end of H1 last year and strong first quarter demand, which has since normalized.

Assets under management grew by 11%. That growth in credit extended fed straight through to revenue, which grew to GBP 108 million, up 43%, driven by both transaction revenues and servicing fees. We continue to maintain a strong cost discipline with growth mainly driven by variable costs, including marketing. As a result, the term loans business has delivered a profit of GBP 29 million, and the PBT margin increased from nearly 17% this time last year to over 26%.

Now to FlexiPay and the credit card. These newer products are continuing to show strong momentum. Transactions grew by 71% in the half, driven by repeat usage from existing customers, growth in new customers, the scaling of the credit card and targeted increases to credit lines based on clear insight into customer behavior. I would consider these credit line increases as a bit of a catch-up for the whole portfolio. So I wouldn't expect quite this scale of growth each half going forward.

Assets under management grew to GBP 300 million, up 78% year-on-year, which drives the growth in ECL. The transactions and assets under management growth drove revenue of GBP 30 million, up 83% from GBP 16 million a year ago. The P&L dynamics are different to term loans. We incur the upfront costs, marketing and expected credit losses when we onboard new customers. Revenue follows as those customers draw down repeatedly. In a strong growth phase, profits come later. That's the J curve we talk about.

The ECL is higher this half as we've scaled the business, but that sets us up well to achieve profitability in the near term. There is a significant opportunity ahead of us, and so we continue to focus on investing now for future profitability. To give you an illustration of the scale it has reached, 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. As I'll talk about later, it is now free cash flow breakeven, meaning it is self-sufficient before funding new lines of credit.

This chart will be familiar to you, and it's a great way to see how the book is building. It shows the outstanding balances at the end of each half with each color representing the cohort in which each business joined. What you can see is that once a business starts using FlexiPay or the credit card, it becomes an essential part of their regular cash flow management and they keep using it. Every single cohort grew this half, driven by continued engagement and the targeted credit line increases I mentioned. 90% of revenue came from pre-2026 cohorts. That repeat behavior is predictable. It's what underpins the long-term growth and profitability of this product.

Moving on to our cost base. The story here is scalability. Most of our cost growth came from variable costs, particularly marketing. We continue to spend around 30% of revenue on marketing, in line with what we said before. That's a mix of direct marketing, brand spend and broker commissions, which we only pay when the loan is actually originated. Our other operating costs also carry a variable element, for example, volume-related roles and credit check costs that scale with lending. The remainder is more fixed in nature, approximately 80% fixed, moving in line with inflation and 20% more variable.

It's worth a note on share-based payments and in particular, National Insurance. As I've mentioned before, we pay National Insurance when share awards are exercised, not when they're granted, and this is calculated on the share price at the time of exercise. Our best estimate, therefore, is the current share price. As a rough guide, every 10p increase in share price adds around GBP 300,000 in cost. With the share price where it is today compared with a couple of months ago, this means a higher charge in H2, which we'll be absorbing.

This is also a cost that goes up for the right reason because we're delivering share price growth and creating more value for our shareholders. From an overall perspective, costs are up by 27% against a revenue increase of 50%, demonstrating the operating leverage we have with continuing margin improvement. As mentioned earlier, expected credit losses are one of the upfront costs we incur on FlexiPay and the credit card.

IFRS 9 accounting requires us to book the future expected credit losses upfront. For performing loans, you look forward 12 months. For delinquent loans, you look at lifetime loss rates. So the blended rate we book for ECL runs higher than the historic annualized loss rate. This means that the blended rate we booked for the ECL is around 11% on a last 12-month basis, and I'd expect it to remain between 10% and 12% of the average balance outstanding. As balances have grown, the charge has grown with them. Importantly, our credit performance remains stable and the book is performing as we'd expect.

The chart on the right shows our historic net annualized loss rates, which remain around 7%. Funding Circle is a capital-light platform built for scale with a funding model that differentiates us and makes the business highly scalable. We have GBP 3.3 billion in assets under management across term loans, FlexiPay and the credit card. Around 91% of that is term loans, all of which is funded by a diverse range of investors such as asset managers and banks. The remaining funding, around 9% for FlexiPay and the credit card is funded through our renewed facility with Citi and our own balance sheet equity.

Looking at the funding in more detail. On the term loan side, institutions fund and own the loans. We originate the loans and service them on their behalf, while the credit risk sits with them. Investors like our product because it gives them access to a hard-to-reach asset class, and they can deploy funds at scale. Our credit models discriminate risk around 3x better than the bureau scores. That lets us price risk more accurately into each loan, which allows us to deliver stable, attractive returns to the funders in line with their expectations.

Appetite is strong, and we see healthy competition for the loans from new and existing investors. Behind all of this is a disciplined funding framework. We adhere to strict principles to ensure our funding remains robust and sustainable. We aim to be as diversified as possible and ensure deals are signed throughout the year. On top of our GBP 3 billion of assets under management, we have around GBP 2.4 billion of forward flow arrangements in place for future originations.

For FlexiPay and the credit card, we fund this from our own equity together with the Citi facility. We see this as an efficient use of capital. The capital cycles quickly on average around 3x a year. With a payback period of 12 to 18 months, our mature cohorts are now cash generative. We renewed our facility with Citi in April this year at GBP 320 million plus our own equity. Alongside this extra capacity, the renewal was on better terms and better pricing.

Moving on to cash. Our term loans business is highly cash generative. What's new this half is that FlexiPay itself has reached free cash flow breakeven, i.e., cash flow before funding investment growth. Free cash flow is what I look at to demonstrate whether the business units are self-sufficient at steady state. In the investing box, you can see the investment in FlexiPay lines of credit and monetization of loans. As previously discussed, we funded the shorter-term loan product we launched at the end of H1 2025, using our balance sheet while we tested and iterated it.

As planned, we sold that portfolio in January this year, recouping our GBP 26 million investment with the product now funded through forward flow like the rest of our term loans business. The GBP 30 million on the chart also includes around GBP 4 million cash inflows from co-investments. Finally, on this slide, we've returned cash through the buyback program and funded employee benefit trust for employee share awards.

This brings me on to our capital allocation framework. The chart on the left-hand side shows our deployable cash. At the end of June, we had GBP 136 million of unrestricted cash. We deduct the remaining GBP 3 million still to go on our existing share buyback program. In total, with the earlier buyback programs, we will have bought back GBP 75 million, approximately 18% of our issued share capital. We also deduct our management buffer. We hold a buffer of around GBP 45 million for operational risk events.

We're not regulated like a bank with regulatory capital, but we do hold a stress buffer for operational purposes. That leaves us with GBP 88 million of deployable cash, which has grown from the GBP 76 million we reported at the end of last year. The deployable cash position is growing, and I'd expect it to continue to do so. We approach our deployable cash in a disciplined way and focus on 4 areas: First, delivering the medium-term plan. We're strongly cash generative, allowing us to self-fund growth. Second, investing where it makes the platform stronger.

For example, co-investing alongside our funders in government-guaranteed schemes or funding the research and development of new products on our balance sheet before we onboard third-party funders. Third, future growth opportunities, whether organic or inorganic. Fourth, distributions to shareholders. On distributions more broadly, our approach is unchanged. We've been returning capital through buybacks. Today, I'm pleased to announce that we will commence a further buyback of up to GBP 25 million once the current program finishes. We continue to consider other forms of distribution, including dividends, and it's a conversation we'll continue to have at a Board level.

Finally, guidance. With a strong first half, a particularly strong first quarter and a steady start to the second half, I'm pleased to announce an upgrade to our FY '26 guidance. At this point, we now expect revenue will be greater than GBP 255 million and profit before tax will be greater than GBP 40 million. In terms of the medium-term, we're just 6 months into our plan. But with the strong performance and on the basis of the current macroeconomic conditions, we are trending towards the upper end of our FY '29 revenue guidance. We will provide a further update at the year-end.

I'll now hand back to Lisa.

Thanks, Tony. Since Funding Circle launched 16 years ago, our mission has been to back small businesses with the finance that they need to win, whether that be the cash flow they need to operate, a capital injection for growth or something else. We're proud that over that time, we've extended over GBP 18 billion in credit to over 135,000 small businesses up and down the country. When SMEs win, so too do communities and the broader economy.

Lending through Funding Circle in 2025 supported GBP 7.9 billion in GDP and 117,000 jobs. We're proud of the impact that we have, but we know there's a lot more to come, and this is the part that excites us the most. We're operating in a very large and still very underserved market. Over GBP 80 billion of SME lending is originated each year. There's another GBP 80 billion in card transactions and more than GBP 1.3 trillion in business-to-business payments.

Our market share remains small at less than 5% of the term loans market and less than 1% of the card market, leaving a significant opportunity ahead to grow our market share and support more borrowers. We'll continue to do this through our multiproduct approach, which creates a powerful flywheel effect. As we build and offer more products, we bring more customers to Funding Circle. We get more data and insights on credit experience, on usage and on customer behavior.

This enables us to strengthen our risk models and develop new product features and propositions such that we can attract more customers and serve them with better products and deliver a better customer experience for them as their trusted financial partner. So around the flywheel goes. A great example of this is shorter-term lending, where we saw increasing demand from SMEs for flexible short-term working capital products. As you see in today's results, the product has gained traction since launch.

Powering all of this and our competitive advantage is the combination of our proprietary technology and data, coupled with human expertise. We have 16 years of proprietary data, 10 billion data points. Credit models now in their ninth generation. This is what powers our 6-minute application for borrowers with more than 75% of decisions made instantly. Borrowers value the speed and ease of our tech platform so they can get back to doing what they do best, running their business.

Our models are 3x better at differentiating risk than a standard bureau score, and this is an advantage we work hard to maintain and continue to invest in as we evolve and improve our credit models. This means we can say yes to more businesses whilst delivering stable and attractive returns to our funding investors. It drives strong customer satisfaction scores from our borrowers and continued strong demand from institutional investors supporting our capital-light model.

As I said at the start, we're continuing to invest in our data and technology to deliver new products and product features for our businesses. For example, in our term loans business, we've simplified the application journey and enhanced self-serve capability. We relaunched our mobile app for FlexiPay and card customers and launched company cards. We've launched a new broker portal and upgraded our borrower portal to make it easier to interact with Funding Circle. This continued drumbeat of product innovation delivers more for our customers.

Alongside this, as I've spoken about before, we're continuing to transform our business into an AI-native business. We believe that AI will be a significant lever over the medium-term to improve our customer and Circler experience, deliver productivity improvements and open up new opportunities. We see this as a business-wide transformation, and we're taking a two-pronged approach: broad business fluency and empowerment, paired with a set of targeted strategic initiatives.

In building broad business-wide AI fluency, we continue to invest in learning and development and enablement for all our teams. More than 90% of Circlers are frequently using AI in their job, building gems, projects and agents to aid them in their work, saving time or weighting their capability across a set of tasks. One of the recent examples has been from our operations team, where we now have a Data Subject Access Request or DSAR agent, a process that used to take up to 2 days of manual work and a lot of back and forth between teams has now been reduced to minutes for our AI agent with a couple of hours of expert human review.

Running alongside the business-wide approach, we're focusing attention and investment on a small set of strategic areas where we believe there are significant opportunities in product engineering, distribution and marketing and operations. In product engineering, we're building an AI-native development process that's getting new products and features to market faster. Our AI-native engineering team saw a more than 30% improvement in speed to market in Q2, and we believe this will continue to improve.

Faster pace delivery means better and improved products for our customers, leading to upside in customer experience and further growth opportunities. In marketing and distribution, we're adjusting our approach to direct marketing as we expect more SMEs to find us via AI tools in the future. Another example is a trial we're running with an agentic funding finder to support our Marketplace team, helping them serve our customers faster. These developments alongside broader business initiatives are feeding into meaningful productivity gains with a 20% improvement in revenue per person compared with last year and just as importantly, a better experience for the businesses we back.

In conclusion, I'm really proud of what the team has achieved. It's been another standout 6 months for Funding Circle. We're delivering what we said we would, strong growth, improving profitability and real progress against our strategy. We're well positioned to continue to win in this market. With 16 years of proprietary data that cannot be replicated, 3x better risk differentiation, a technology platform that allows for fast product development, an established brand, high customer satisfaction and institutional investors that keep coming back. Our competitive advantages are deep, and we're confident they enable us to keep winning in the future.

Looking ahead, there's a significant opportunity for growth within our current product set as we meet more customer needs and increasingly become the trusted financial partner that U.K. small businesses rely on. At the same time, we're building powerful insights into our customers with a perspective on their creditworthiness and standing as a business, which provides a strong platform for growth beyond our product set of today. Thank you.

Just before we move to Q&A, I wanted to touch on this morning's announcement about my intention to step down as CEO by the end of September 2027. I joined Funding Circle 14 years ago when the business was a startup built on a simple conviction that technology could transform how small businesses access finance. Since then, we've transformed the small business lending market, extending more than GBP 18 billion in credit to more than 135,000 small businesses. I'm incredibly proud of that.

When I set out our multiproduct transformation strategy back in 2024, I committed to a simpler, leaner, higher growth, more profitable business. Today, we've upgraded our full year '26 guidance and a clear signal of our confidence. It means we'll come in significantly ahead of what we originally set out to do in March 2024 and indeed in March 2026. Given the strength of the business performance, team, foundations and our strong platform for future growth, now feels like the right time for me to start the process of handing over the reins.

I want to ensure the Board has time to find the best person to take the business forward, and I'm committed to supporting a smooth transition. We'll, of course, share more in due course. But for now, it's business as usual. I'm committed to delivering our plan, and I look forward to seeing many of you on the road show.

I'll now hand over to Sergey to open up for Q&A.

Our first question is from Rob Noble from Deutsche Bank.

Lisa, sorry to see you go. Just looking at share price, obviously, you've done a great job as CEO in your tenure. So looking forward, what sort of market share of SMEs do you think the business can get to in the long-term? And your growth keeps beating expectations. Is there any supply side limit on the business? Or is the '29 guide just looks like quite an easy hurdle as we sit here very early in your plan?

And one for Tony. So the bottom end of your revenue guidance implies quite a step down in H2. Can you give us an idea of how Q3 is actually going so far in comparison to Q2 or H1? Is there any hesitance you're seeing among the SMEs ahead of the budget or any signs from the government indeed that they're interested in ramping guarantee schemes for SMEs that could help growth going forward?

Thanks, Rob, and thanks for the kind words. Market share and how we think about the market. As I said, the market is really large, and it's still very underserved. There's about GBP 80 billion of lending to small businesses and term loans, there's a further approximately GBP 80 billion in card transactions every year and about GBP 1.3 trillion in SME B2B payments each year, so addressing that size.

We also see in other pockets where lending actually is quite underserved. In the overdraft market where we see FlexiPay as being a replacement, that market has fallen off significantly over the last 2 decades and so we see that there's a huge underserved portion there. As we look ahead, we see a big opportunity for us to continue to grow our share in that market.

It will -- as you've seen over the last few years, we continue to innovate within our product set. Within term loans, we've expanded into shorter-term loans. We continue to invest in our credit such that we can serve new segments of customers, and we'll continue to do that within our term loan space. In the card and in FlexiPay, we're obviously much earlier on our journey there. I don't see any reason why it can -- why we shouldn't have a share that's at least term loans share today, if not further.

I'll pass to Tony for the second part.

Yes. Rob, in terms of the medium-term guidance, our current guidance out there is revenue of between GBP 300 million, GBP 350 million and profit margins of low to mid-20%. We're still only 6 months in, but very confident that we are at the upper end of that revenue guidance at this point, and we'll reassess that as we get to the year-end, but very comfortable with where we are in terms of the medium-term. For the shorter term and this year, as I've mentioned, we had a particularly strong first quarter, which normalized in the second quarter, but overall, still very strong first half with revenue of GBP 138 million.

What I've done in the upgrade to the guidance right now is set a floor, and I expect our revenue in the second half to be -- overall for the year to be more than GBP 255 million. In terms of the third quarter, generally quieter summer months, very much tracking in line with our expectations and we'll wait to see how the final quarter pans out. But as you mentioned, there is an element of uncertainty with the budget -- U.K. budget and SMEs do like certainty, but we've not seen any slowdown from SMEs more generally.

[Operator Instructions] Our next question is from Edward Firth from KBW.

A couple of questions. The first one, just going back to the medium-term guidance. Could we just clarify, have you actually revisited that? Or are you just saying it's just getting easier to get to, if that makes sense? Because clearly, I mean, even if I look at the middle of it, that's like 8% growth over the next 3 years, and you delivered 15% revenue growth this year, so the first half of this year. So it feels like that's like an old number that some point you're going to have to revisit or I'm missing something massive huge slowdown coming.

So it would be good to get some clarity on what is the right interpretation we should take from that, if that makes sense. And then I have a second question, just for detail just to understand correctly, in terms of the Citigroup [indiscernible] equity that you have exposed into that business or you put into that lending [indiscernible]...

Ed, I think your line was breaking up, but hopefully, I've got the gist of your second question. But in terms of the revenue growth, first of all, the growth 50% from the first half of last year to the first half of this year, a large part of that is driven by particularly high demand in the first quarter and by the launch of the shorter-term loan product that we launched around May time in 2025. We've had the full 6-month effect of that. Part of the driver of that growth, I wouldn't expect that to be 50% growth year-on-year.

More broadly, in terms of the medium-term plan, as I said, we're 6 months in. At this stage, confident that we're at the upper end of that. As you'd appreciate, as a Board, we do annual strategies, and we look to do that towards the back end of the year. We'll be revisiting that and looking at our medium-term plan. But as we currently stand, very comfortable with where we are at the upper end of that medium-term range as of now, and we'll provide an update when we get to year-end.

In terms of the Citi facility, I think what you were asking was how much equity have we got in the vehicle and what's our exposure to FlexiPay more generally? I think that's what you said. In terms of what we got, so we have GBP 71 million of equity in FlexiPay and the credit card. The way it works is that we have a ring-fenced bankruptcy remote SPV and the lines of credit are held in that facility along with the Citi facility and together with our own equity. Therefore, our exposure is limited to the GBP 71 million in there, not to the full value of the lines of credit.

[Operator Instructions]

I'll pick up with some questions from the webcast in the meantime. So we've got one coming in from Piers Brown at Investec, on CEO succession. Piers says congratulations to Lisa, on your very successful tenure as CEO and very best wishes for your future plans. What skill sets do you think a future CEO needs to bring to the role? And are there specific areas of expertise that would be valuable?

Thank you. Overall, this is a matter for the Board. So I probably can't comment exactly on the attributes. But I'm sure they will be looking for somebody who can build on the successful platform that the team and I have built over the last several years who can complement the strong leadership time -- leadership team that we have in place. The Board are really excited about the strategy, about the medium-term plan and continue to be very engaged and passionate about the growth of the business. I'm sure they'll bring somebody in who continue that journey.

Thanks Lisa. One for Tony. Can you please provide any additional color on the GBP 2.4 billion of forward flow announced? And how much of this comes from new funders onboarded over the past 12 months? Have you seen any negative impact in this regard from the broader issues in private credit?

In terms of the forward flow that we've got, very healthy forward flow. This was GBP 2.2 billion at the year-end. It's now GBP 2.4 billion. We've had 3 new deals signed in the year, 2 of those with existing investors and one with a new investor that was for GBP 500 million in August. A very healthy pipeline of funding from new and existing and potential investors.

In terms of the broader issues in private credit, what we've seen is, as you'd expect, more diligence being undertaken by each of these institutions, which we welcome. We also get a number of audits done by their internal audit functions, and we probably have more than 20 audits done a year, including by the British Business Bank. So very comfortable in the position we're in. If anything, we're seeing a flight to credit -- flight to quality overall.

A question from Rahim Karim at Cavendish. You've spoken to the benefits of having multiproduct capabilities. Do you expect to expand your offering further? And if so, what type of products do you think your clients might benefit from?

Thanks, Rahim. Yes, the multiproduct strategy has worked very well for us over the last several years as we've expanded from term loans into FlexiPay and card, and we see that in what we've shared today about a customer transaction every 20 seconds. As I look ahead, I think there's a huge amount of growth in the product sets that we have today. But we will, of course, continue to listen to what our customers wants and what their needs are and continue to develop the right products for them going forward. I do expect us over time to add further credit products to our suite.

We will do that in the way that we've done previously, whereby we take customer needs and customer use cases into account as well as what we see our customers actually using from other parts of the market. You'll remember that as part of our term loans business, we have Marketplace where we refer our businesses to other parties and other lenders in the market where we don't have the right product. That's great for enabling us to deliver great customer satisfaction, also gives us an indication of what other products our customers are looking at. We continue to use that as a feed as well for our new product development.

Another question from Rahim. On cash distributions, how do you think about the balance between buybacks and dividends? And what is the level of unrestricted cash that you believe to be prudent to retain above which you would consider excess?

In terms of our cash overall, very healthy cash balance at the end of June, GBP 136 million. After the existing buyback and the management buffer we hold, that's around GBP 88 million of deployable cash. I expect that cash to continue going forward because the group is cash generative. In terms of the way that we think about it, we think of different forms of distributions, be that buybacks or dividends, and it's a conversation we regularly have at the Board and we'll continue to do so in terms of excess cash.

In terms of the uses of cash that we retain, as I mentioned before, the MTP is now cash generative, and therefore, it's thrown off cash. But then we do look to hold cash for other purposes. As we demonstrated last year with the short-term loan product, we seeded that for a period of time whilst we tested and iterated that and then we onboarded a new funder for that in January this year. That tied up about GBP 26 million of cash for a period of time, and we'd look to continue to have that flexibility by retaining some levels of cash.

Thanks, Tony. A question from Chris. This is about FlexiPay. FlexiPay generated GBP 30 million of revenue but incurred a GBP 15 million ECL charge and remained GBP 4.5 million loss-making. Can you quantify the probability and credit loss performance of the mature customer cohorts and tell us more about when you expect FlexiPay to reach PBT breakeven? And potentially, I'll just add one question as well from Graham Wells, who asks when the credit card will become profit making. Take those 2 together.

Yes. Maybe I'll take the credit performance, first of all. We're seeing consistent levels of credit performance across the cohorts, the newer cohorts and the mature cohorts. In terms of profitability, if I were to look at the 6 months and then allocate that against each of the various cohorts, all cohorts apart from the H1 '26 new cohort are profitable.

When do I expect FlexiPay to reach -- FlexiPay and the credit card because I think of those 2 together because they share many resources, many costs. I expect them both to get to breakeven in the near future. I mentioned on the call earlier that if I took FlexiPay and the card as of a point in time now and stopped marketing, so basically, as is, it would be profitable to the tune of GBP 10 million already. So very much there, but looking to continue to grow it for future profitability.

Question from Piers at Investec. We talked about the strength of new business in Q1. Are there any other factors that make the first half of the year unusual in terms of the strength of lending demand? To what extent can we take the first half as being a representative base for originations in the second half and 2027?

There is some seasonality in the business. We typically see a strong first quarter and a strong final quarter and slightly normalized through the summer months. That follows holiday season very much in half terms and bank holidays. We do see that. We saw particularly strong demand in the back end of last year as there was more certainty around the budget at the time and then in the first 3 months of this year. That happened to coincide with the conflict in Iran. It's difficult to pick that apart, but we did see it normalize into Q2 and Q3. As I say, we would expect Q4 to pick up, but there is still an element of uncertainty with the U.K. budget coming up.

Another question from Piers. Are there any aspects of the upcoming budget that might have specific relevance for Funding Circle?

Our SME customers are very used to different governments and new budgets now having lived through them over the last several years and actually the average age of one of our businesses is 8 to 10 years. What we find is that, firstly, SMEs are a group of the U.K. that all politicians can get behind. They provide growth in their economies and in their communities. As such, we see it being a cross-party positive set of customers. SMEs, what they tell us mostly is that they want stability. I think the government understands that and has heard that.

But really, what we see is that they continue to be resilient. The book is performing very well. Actually, we see SMEs really focused on their continued growth, continued working capital needs throughout all these periods of uncertainty. We have jewelry businesses and one who I met earlier this year, who recently had a burglary, which was a bigger challenge for them or a chocolate manufacturer who is challenging with the cocoa price increases. Therefore, some of the differences in government have less of an impact than we might sometimes think.

Related to that, a question from Gary Greenwood at Shore Capital. Have you seen any change in customer sentiment or behavior post Andy Burnham becoming Prime Minister? And related to that, any current areas of concern within your customer demographic?

No. I mean, to a certain extent, it's a little bit too early to tell, but demand has continued to be good into the second half of the year, and we've not seen any noticeable change in sentiment. The top 2 things that our businesses talk about as their pain point continues to be supplier payments and the economy. On the supplier payments front, this again comes back to the cash flow challenges that small businesses face and is part of the reason why we expanded our product set to include cash flow products and really making sure that we're serving those working capital needs through FlexiPay and through the credit card.

Another question from Gary about marketing spend. How did the marketing spend split between the 2 business lines in the first half? How should we think about this going forward?

We don't split the marketing between the 2 because some of the marketing works for both products. We think of marketing as a whole. Overall, marketing spend continues to be around 30% of revenue. That said, we do see a bit of a split within the channels that we market, so the direct marketing and the broker marketing through the broker commissions. We're seeing a bit more marketing or a bit more flow coming through broker than direct. It's probably about a 60-40 split as it currently is.

A question from Angel Gavieiro at AG Strategy and Partners about AI. Could you elaborate more about the degree of AI adoption achieved so far, both in terms of what's going well and what could go better? And what are the specific targets in this regard going forward?

Yes. As I said in the presentation, we're focused on a couple of different areas. One is our broad-based fluency and enablement for the whole team. Then the second is targeted strategic investment. In the broad-based, we're finding really strong usage across our team, about 90% of Circlers using AI frequently. We're supporting them with the skills to enable them to do so. We're seeing them create really good use cases to support with their day-to-day productivity, but also to bring really good tools for the whole -- for their broader teams to work through.

I mentioned one of those, in the presentation, our data subject access request agent. We've also got teams who are building these for agent call coaching. We've got teams who are building their own dashboards in order to get data out to be able to see it in real time. A huge number of different use cases, which is adding to individuals productivities. In the specific areas where we're strategically investing, we're seeing really good wins in terms of, again, productivity and customer experience.

In product engineering, as I said, we have seen our teams who are working in an AI-native way, deliver products to market 30% faster. We think there's a lot more room for that to grow. I'm really encouraged by what we're seeing across the business. I think it continues to be something we see as being a valuable lever over the medium-term to drive productivity, to drive customer experience benefits. That all comes down to a 20% improvement in productivity from AI and other related initiatives over the last year.

That's all the questions that we have coming through today on the webcast and on the phones. I'll just hand to Lisa, if you want to say anything to wrap.

Thank you for your time today for joining the call. The business is in a great position. We're really excited about the future, and we look forward to seeing many of you on the road show.

Good morning, and thank you for joining us today for our full year 2025 results. I'm going to start today's presentation with an overview of our performance in 2025. I'll then hand over to our CFO, Tony Nicol, who will walk you through the numbers before I outline the exciting opportunity ahead of us, our differentiators and why I'm confident we'll continue to deliver strong growth and profitability over the medium term. Today, our business is in the strongest position it has ever been, but I still believe we're just getting started. I'm excited about the value we will continue to create for our customers and our shareholders in the years to come.

We delivered a standout performance in 2025. We exceeded our expectations and hit our 2026 revenue guidance a year early. We continue to see strong demand for our products. We're operating in large addressable markets. And in 2025, we supported more SMEs than ever before. Our focused strategy is reaping rewards as we deepen our engagement with SMEs, increase our share of wallet and attract more customers into the Funding Circle ecosystem. 15 years of proprietary data and technology remains the foundation of our competitive advantage, allowing us to deliver a superior customer experience with a capital-light platform model built for scale.

We're confident in the strength and scalability of our platform. And this is reflected in the attractive new medium-term targets we're setting today as we become an even more meaningful part of our customers' lives. We're looking forward to fueling even more SMEs throughout the U.K., as this is core to our mission. We're here to build a place where small businesses get the finance they need to win with the U.K.'s leading online SME finance platform, having extended over GBP 17 billion to over 125,000 businesses.

We support businesses across their financial needs: to borrow for the longer term with our loans; to pay later, managing their cash flow with FlexiPay; and to spend and be rewarded through our credit card. Our impact is significant. In 2025 alone, our lending supported over 117,000 jobs and contributed GBP 7.9 billion to GDP. To put that into context, every GBP 1 million of lending through our platform contributes GBP 2.7 million to GDP, 39 jobs and GBP 700,000 in tax revenue. When SMEs like Bath-based Chalk on Chalk featured on our front page win, the whole country benefits, and this is what drives our team of Circlers every single day.

2025 was a standout year in terms of our financial performance. Revenue grew 28% to GBP 204 million, delivering our 2026 revenue guidance a year early. This revenue growth was underpinned by strong volume growth. Credit extended across our products grew to GBP 2.5 billion, up 29% year-on-year. And assets under management grew to GBP 3 billion as our commercial loan growth outpaced the repayments of legacy COVID loans. This volume growth was driven by two main factors: continued product innovation, developing new products and enriching existing ones and strong borrower demand. PBT reached GBP 20 million, up from GBP 3 million in 2024, showing the operating leverage of the business. Profit after tax hit GBP 46 million, thanks in main part to historic tax losses, delivering strong earnings per share.

Two years ago, in 2024, I spoke about our plan to become a simpler, leaner and more profitable business. The charts here show we've delivered against that transformation. In 2024, we simplified the business and focused on our multiproduct strategy in the U.K. market. In 2025, we continued our focused delivery against our plan. These charts show that journey of consistent, disciplined growth.

In the last 2 years, active customers are up 25%. Credit extended is up 90%, and revenue is up 57%. PBT has swung from a loss of GBP 10 million to GBP 20 million in profit. These charts show the material change in the U.K. business. And if you were to look at this from a group perspective, the profit swing is even more significant.

Alongside, over the last 2 years, we've continued to distribute capital to shareholders by way of share buybacks. Since March 2024, we've bought back 17% of our issued share capital, with the program ongoing. I'm proud of how the team have executed against our plan, and in particular, how it has primed the business for further revenue and profit growth.

A core part of this plan has been evolving our business into a multiproduct platform, serving more of our customers' needs. We've been successful in diversifying our products. In H2 last year, 50% of our credit extended came from outside our core term loan products. This is driving increased frequency of interaction, deepening our share of wallet whilst also attracting new customers to the Funding Circle ecosystem.

In 2021, our customer transacted with us roughly once every 30 minutes. And today, we have a customer transaction every 38 seconds. Nearly 70% of our FlexiPay revenue comes from our existing term loan customers as we deepen engagement and capture a larger share of our customers' total financing needs. At the same time, we're attracting new audiences to the Funding Circle ecosystem. 50% of our card customers are new to Funding Circle. This multiproduct approach is creating a powerful flywheel effect. More products lead to more engagement, which gives us deeper insights, allowing us to build even better products for the future.

The macroeconomic backdrop in 2025 has again been mixed. Yet again, we've seen flat GDP, low consumer confidence, business insolvencies ahead of their historic trend and rising unemployment. Despite this, our business continues to deliver. Our credit models have proved their effectiveness through the cycle, delivering consistent returns to funders of 5% above their cost of capital.

We have a strong and trusted brand and provide the ability for investors to deploy funds at scale into an attractive asset class. Demand has remained strong, with a 29% year-on-year increase in credit extended. When I speak to our customers, I'm always reminded of their resilience, agility and optimism, whether that's a chocolate manufacturer diversifying into broader confectionery or a beauty salon making the most of the boom in aesthetics to grow their business.

I'll now pass to Tony for the financials.

Thanks, Lisa, and good morning, everyone. As Lisa said, we've had a great year, and this is reflected in our financial performance. Group revenue grew to GBP 204 million, an increase of 28% on 2024, delivering our '26 revenue guidance a year ahead of expectations. We continue to keep costs tightly controlled. And operating expense growth was due to variable costs, predominantly marketing, where we continue to spend about 30% of our revenue on direct marketing and broker commissions. Excluding marketing, costs were up only 1%. This means that much of the revenue growth flows straight through to profit.

Unlike the term loans business, we book expected credit losses on FlexiPay and the credit card, as we fund those from our own balance sheet. This ECL has increased with growth in assets under management and as a percentage of average balances is in line with our expectations. Reflecting the revenue performance and operating leverage, we delivered profit before tax of GBP 20.3 million, with margin expansion to almost 10%, significantly up on 2024 profit of GBP 3.4 million.

Corporation tax isn't something we've talked about before, but important to mention now. With historic losses brought forward, we'll see a cash benefit from using these losses, and our effective cash tax rate will be around 10% over the next 4 to 5 years until those losses are used up.

We have a capital-light funding model that is built for scaling our business. In total, we have GBP 3 billion in assets under management, covering term loans, FlexiPay and the credit card. 93% of these balances are term loans provided by a diverse range of funders, being asset managers, banks and insurers. FlexiPay and the credit card are funded with a senior facility with Citi alongside our own equity and represents 7% of assets under management.

The term loans business grew both top and bottom line with continued improvement in profitability. This performance exceeded our expectations, reflecting good early uptake of our new shorter-term loan product. And in the final quarter of the year, we saw heightened demand across our product range. Loan volumes are increasing as we serve more borrowers, and credit extended grew 16% year-on-year to GBP 1.6 billion.

Assets under management grew for the first time since COVID and is now at GBP 2.8 billion. This still includes a small amount of legacy COVID loans at around 8% of the loan book. The commercial loan book is now growing faster than the paydown of these legacy COVID loans. Revenues grew 17% to GBP 167 million, mirroring the growth in credit extended. The cost base remains tightly controlled, with growth driven by variable costs, mainly marketing. This is driving operating leverage, with more than 50% of the revenue growth dropping to bottom line profit, resulting in profit before tax of GBP 32 million and margins of over 19%.

As mentioned, we fund term loans through institutions who own the loans. They like our product, as it gives them access to a hard-to-reach asset class, and they can deploy funds at scale. With the data we've built up over 15 years, we have credit models that are able to discriminate risk 3x better than the credit bureau scores. This means we can better price that risk into the loan interest rates we offer. This is incredibly important, as it allows us to deliver stable and attractive annualized net returns to our funders, which have consistently remained around 5% above their cost of capital. This, in turn, creates strong demand from institutions to fund future originations.

We signed 5 new deals during the year and have over GBP 2 billion of future funding in place, including the funders we onboarded for shorter-term loans earlier this year. We have a long pipeline of potential funders interested in funding.

I continue to be really impressed with the strong momentum we're seeing in FlexiPay and the credit card. For reporting purposes, we combined the 2 products and collectively refer to them as FlexiPay. The number of active users grew to nearly 20,000 customers who are spending on a daily, weekly or monthly basis, and transactions grew by 66% to 815 million. This is a combination of ongoing improvements in functionality, such as the launch of multiple cards, driving more repeat usage from existing customers, as well as onboarding new customers.

Assets under management at the end of 2025 was GBP 206 million, which represented 73% growth on the prior year. This resulted in revenue growth of 111% to GBP 36.9 million. The dynamics of FlexiPay are different to term loans, as we incur upfront costs from marketing and expected credit losses when we onboard new customers. So as the business scales, the profit profile is like a J-curve. This means that in a strong growth phase, profits come later, and that is why the loss for the year was GBP 11.9 million. If we chose to stop growing FlexiPay today, it would be profitable right now. But there's lots to go after in terms of growth, and we are choosing to invest now in the future opportunity.

As I've said before, what's great about these products is their repeat nature, which gives more certainty to future revenues. Once a business starts using FlexiPay, it becomes an essential part of their cash flow management toolkit, and the ongoing balances are remarkably stable. The chart on this slide shows the outstanding balances at the end of each half year period by the cohort in which the business joined FlexiPay or the card.

What excites me is that growth isn't just coming from new customers, it's being driven by continued engagement from our existing ones. Over 80% of revenue came from customers onboarded in 2024 or earlier. This predictable repeat behavior is what gives us so much confidence in the long-term growth and profitability of this product.

FlexiPay and the credit card are funded by our own equity, and we see this as an efficient use of capital. On the left-hand chart, you can see the capital cycles quickly, on average, 3x to 4x a year. We have a GBP 240 million facility with Citi, which gives us capacity for ongoing growth and the ability to upsize this in the future.

The credit performance on FlexiPay and the card continues to remain very much in line with our expectations. And on the chart on the left, you can see the historic net annualized loss rates around 7%. IFRS 9 requires us to book upfront, the future expected credit losses. As you'd expect, as assets under management have grown, so has the charge. For performing loans, you look forward 12 months for expected loss rates. And for delinquent loans, you look at lifetime loss rates. This means that the blended rate we book for ECL is around 10% to 12% of the average balance outstanding, which is higher than just the annualized historic loss rate of around 7%.

We continue to deliver good operating leverage. In a year where revenues grew by 28%, our costs only increased by 12%. On the left-hand side, the bar chart shows the breakdown. Cost growth came from variable-based marketing costs, which have remained around 30% of revenue, in line with expectations. The variable marketing costs arise from direct marketing and brand spend, including our Prem Rugby sponsorship, now in its fourth year, and our new sponsorship of TNT Sports. We also pay broker commissions to financial brokers for introducing borrowers. Importantly, we only pay this if a loan is originated.

Non-marketing costs, which are more fixed based in nature, only increased by 1%. As you can see from the chart on the right, our cost-to-income ratio has improved steadily since the beginning of 2023. And we expect this to continue to do so, given the operating leverage in term loans and FlexiPay coming out of its J-curve.

We approach capital in a disciplined way to drive long-term value to shareholders. To remind you how we think about capital usage, we focus on 4 areas: firstly, delivering the medium-term plan and strategy; secondly, investing where it makes our platform stronger; thirdly, we consider future growth, whether that is organic or inorganic; and lastly, distributions to shareholders. We've announced GBP 75 million worth of buybacks since March 2024 in 3 GBP 25 million tranches, with the third tranche ongoing. To date, we've bought back 17% of our share capital. We'll also consider other forms of distributions, such as dividends, once we're generating sufficient levels of cash-backed profits. We aren't there yet, but we're certainly getting closer to that point.

To show you this framework in practice, we have a healthy cash position, and the left-hand chart shows how cash has been deployed during the year. Under Delivering, you can see term loans converting its profits into cash and our funding of FlexiPay. Under Investing, you can see the R&D investment in the shorter-term loans where we used our balance sheet to fund whilst we tested, iterated and seasoned the loans. And under Distributing, we bought back shares through our buyback programs and an employee benefit trust purchasing.

On the right-hand side, you can see how we think about the future deployment of cash, including the remaining purchasing on the current buyback program and selling and monetizing the R&D. As we announced last month, I'm pleased to say we sold those loans post year-end, monetizing the GBP 26 million and onboarding a funding investor. Finally, as we've talked about before, we hold a management buffer of around GBP 40 million for operational risk events. This leaves GBP 76 million of future deployable cash, up from GBP 60 million at the half year.

And now let's move on to guidance. Over the last 2 years, we've grown both top line and bottom line rapidly with revenue of GBP 204 million, whilst we've seen a GBP 30 million profit swing from 2023, where we recorded a GBP 10 million loss for the U.K. entity to GBP 20 million profit in 2025. We've therefore upgraded our FY '26 guidance to circa GBP 235 million in revenue and at least GBP 35 million in PBT. In the medium term for FY '29, as we deliver against our strategy, we are targeting continued top line and profit margin growth with a revenue range of GBP 300 million to GBP 350 million and PBT margins trending towards low to mid-20s as we see improved operating leverage and FlexiPay and the credit card reaching a more mature state.

Overall, I'm really pleased with the progress made this year and the momentum we've established as a profitable group. Now I'd like to hand back to Lisa.

Thanks, Tony. Looking ahead, we remain resolutely focused on our mission: to build a place where small businesses get the finance they need to win. We operate in a large underserved market with over GBP 80 billion of loans outstanding, over GBP 80 billion of SME card transactions every year and over GBP 1.3 trillion of SME B2B payments.

We're solving an important problem for our customers. More than 2/3 of small businesses say cash flow management is their biggest pain point, and over 50% of SMEs report being rejected by traditional lenders, creating a significant opportunity. Everything we do is powered by the combination of our proprietary technology and data and how we combine that with human expertise. This is the moat around the business, and we'll continue to invest in retaining this advantage.

We have 15 years of proprietary data, which has produced over 10 billion data points, from business financials to loans taken, transactions made and loans repaid. These data points feed our AI-powered models, now in their ninth generation. Our SMEs are on average, 5 to 7 people businesses. They value speed and ease so they can get back to doing what they do best, running their businesses.

Thanks to our data, our technology and our dedicated account managers, we provide them with a fast and seamless journey. Our customers complete their applications in as little as 6 minutes. 73% of them get an instant decision, and they can have money in their accounts in 24 hours. Our models are 3x better at discriminating risk than a standard bureau score, which means we can say yes to more businesses while still delivering stable and attractive returns to our funding investors. This drives strong customer satisfaction scores, with NPS of 79 and Trustpilot score of 4.6.

We aren't standing still. We're continuing to build, develop and release new features. Our technology and data stack enables us to be quick to market as we launch new products and new features, enriching our products and continually improving our customer experience. This slide shows a snapshot of some of those. In our term loans business, we launched a new shorter term loan product at the end of H1 to meet new use cases and serve new credit segments. We've rolled out enhanced self-service capabilities whilst expanding our credit product availability through Marketplace, where we refer businesses to third-party lenders where they have more suitable products available. Within Marketplace, we're focused on covering a set of core product verticals as we continue to increase our breadth of providers to better serve our customers' needs. This breadth of product range adds to our ability to deepen our customer relationships.

In FlexiPay, following the beta launch of our credit card at the end of 2024, we've continued to iterate and improve our products. These feature enhancements drive increased usage as we've expanded the use cases and usefulness of our products. In 2025, these included accounting integrations, multiple company cards. And Apple Pay and Google Pay were launched earlier this year. We will continue to develop at pace through 2026 and beyond, building and iterating much-loved products.

Alongside this, we're actively embedding Gen AI applications across our business. We see AI as a significant lever over the medium term to improve our customer and Circler experience, increase productivity and open up new opportunities. In 2025, we launched our mission to make Funding Circle AI native. What we mean by that is that AI is an integrated part of how we work and think, augmenting our human expertise to deliver better customer and business outcomes, with our team becoming experts in when and where to deploy AI.

We're making good progress against this goal. More than 90% of Circlers are using AI frequently, benefiting from our AI fluency program. We have a number of Gen AI applications deployed across the business. For example, in our collections team, our agent coaching tool has more than doubled our call review capacity whilst also delivering improved call quality. We're now adapting and rolling this tool out across other parts of the business. In product engineering, we've seen increases in engineering velocity as we've enabled more sophisticated AI tools to aid in software development. Nearly 1/3 of our code is now AI-authored. These initiatives, alongside broader business initiatives, have led to business-wide productivity gains. In 2025, we saw a nearly 20% improvement in productivity.

We've delivered well over the last few years. And as we've touched on throughout this presentation, we're well positioned to continue to win in this market. The starting point is our data. We deliver strong risk discrimination as our continued data accumulation drives further model sophistication and accuracy, enabling us to open new credit segments and launch new products. And as I talked about before, our technology platform allows for fast product development and new feature launches. Thanks to our technology, data and commitment to our customers, we deliver great outcomes for them with a loan customer NPS of 79, a Trustpilot score of 4.6. And our strong brand reputation drives a consideration amongst our target market of 75%.

On the other side of our capital-light platform, we've delivered consistent and robust loan returns to our long-standing institutional funders, and we maintain a deep pipeline of potential new investors. We've diversified and expanded our product suite beyond our core term loan offering, with nearly half of our credit extended in 2025 coming from other products. Today, we offer over 10 different credit products to our customers when we also take into account our Marketplace offering. This product range enables us to deepen our relationship with our customers as well as attracting new customers.

Finally, we have a strong and engaged team. Our mission-led culture has always been a high point of the Funding Circle business. And in 2025, we were pleased to have reached a record engagement score of 74%. Our team has received individual and collective recognition in the industry with 11 awards, including the NACFB Unsecured Lender of the Year for the seventh year running.

In conclusion, 2025 has been a really strong year for Funding Circle. We've delivered against our plan with a strong set of financials, outperforming expectations and hitting our revenue target ahead of schedule. We have continued to innovate across the business with new products and new features, evolving our value proposition to borrowers to become a broad business finance provider. Our competitive advantages are deep, and we're confident they enable us to keep winning in the future. Looking ahead, there is a significant opportunity for growth with our current product set. In other words, we have the team, the products and the technology to deliver the attractive medium-term financial goals that Tony spoke about.

We'll drive strong customer-led top line growth and increase profits as we scale our products. Our term loans business is now delivering a 19% margin. We'll continue to improve on that and see FlexiPay come through the investment J-curve to profitability. We'll deliver the revenue and profit growth while building the foundations for our next phase for long-term growth, which includes leveraging AI across our business and continuing to invest in our product and technology capabilities.

We are increasingly becoming our customers' trusted financial partner. We're building powerful insights into our customers with a perspective on their creditworthiness and standing as a business. And this provides a strong growth platform beyond our product set of today. As I said at the start, this business is in the strongest position it's ever been, but we're just getting started. I'm excited about the value we will continue to create for our customers and our shareholders in the years to come.

Thank you. Tony and I would now be very happy to take your questions.

[Operator Instructions] The first question today comes from the line of Robert Noble from Deutsche Bank.

I just wanted to ask on that comment you made, Tony, on the dividends when we have sufficient levels of cash-backed profit, and you're not there yet. What is the timing and expectation around dividends and buyback and deploying to shareholders in the next year to 2 years? I guess, linked to that is kind of how do you expect the cash position to evolve? You have GBP 75 million after the buyback and the loan sale. Obviously, you've got -- you're guiding to GBP 35 million in PBT, that's a DTA benefit. So presumably, you'll have quite a lot more cash by the end of the year. So why not guide to a dividend for this year?

Rob, thanks for the question. So in terms of sufficient levels of cash-backed profits, for 2025, the capital allocation slide shows where the cash generation has been. And for term loans and FlexiPay's operating cash flows, the net is about GBP 6 million. So as it currently stands, I would say that is not sufficient.

You're correct that as we go through this year and beyond, that cash generation is going to be growing. And that's why it's -- right now, we're not there, but we are certainly moving towards that. So it will be part of our capital allocation conversations at Board over the coming year. But at this point, we're not there for dividends.

The cash position evolving overall, as I say, we expect to continue to generate cash. We've got GBP 76 million of future deployable after we complete the ongoing buyback program. So as that concludes, we will consider our capital allocation at that point.

We have no further questions coming from phone lines, so handing over to [ Abby ] to take questions from webcast now.

Thank you. And we've got one question coming through on the webcast from Paul at TCM Wealth. And he says, "Margins aren't guided to expand as much as I would expect. What's holding back the margin in the medium term?"

So in the medium term, we've guided to low mid-20s. The medium term is a mix of the term loans business that is already at nearly 20% margins and FlexiPay working through the J-curve. I would say for the medium term, there will always be a slight lag on FlexiPay because we expect it to continue to grow. So margins will follow. I would say long term, you've got term loans will be in excess of 30% margins, FlexiPay continues to follow. So yes, I think over the next 3 to 4 years, we're looking at the low to mid-20s, but that's not where it will finish or continue to grow beyond that.

Another question from James. Can you tell us any more about why your performance in Q4 was so strong? Was this related to the government budget?

Thanks, James. We did see in Q4, as Tony mentioned, an increase in borrower demand. I think there is a portion of it that is related to a post-budget pent-up demand. But I think actually more broadly, when I speak to SMEs, there has been a period of time for several years now where people have held back from some of that spending, and there is actually a sense of a bit of release there and a bit more consumer spending ticking up with some of the businesses that I speak to.

We're also continuing internally to make changes, continuing to make ourselves more efficient and serving a better proposition for our businesses as we've done through the course of last year with things like a sales team refocus and serving different sets of businesses in different ways, incorporating the broader marketplace offering that we've spoken about before.

Thank you. A question coming through from Rahim on the webcast. Can I ask what medium-term loan book growth you are assuming across the 2 products? What are the assumptions you make about yields and fees in coming to your medium-term guidance?

So in terms of the medium term, the split between term loans and FlexiPay and the card, we still see the majority of the profit being in term loans. So from a profit perspective, I would expect term loans to be probably 3/4-ish of the profit. And as I said earlier, it's because you've got the J-curve of FlexiPay continue to grow.

So in terms of actual credit extended, it's more at parity. So I'd expect there to be fairly similar levels, probably around the -- sort of just over GBP 4 billion overall. So I mean, overall, I would expect there to be continued growth between the 2 products, but the P&L dynamic will be slightly different to the credit extended dynamic. I'd expect continued growth in both of them from balances outstanding. So the assets under management as we now refer to them, with FlexiPay getting to sort of near-ish GBP 1 billion mark, so continued growth there.

Thank you. A question from [ Piers ] at Investec. Could you talk about the full year '26 expense outlook, particularly whether we should anticipate marketing expenses to scale 1 for 1, in line with volumes? And are you able to disclose how much of the marketing expense is broker commissions versus direct marketing?

So in terms of the cost base growth for next year, we've talked about this before, that we expect to spend around 30% of revenue on marketing, and we've continued to do that. The split of that marketing between direct channels and broker is probably more towards 60% broker now and 40% direct. And within direct, that includes a small amount of brand that we do with Prem Rugby and TNT. That has been a shift, I think -- since post-COVID, there's been a shift towards broker, and we've seen that continue.

In terms of the overall cost base, we've got the variable marketing costs. I would then say about 20% of the remaining cost base is more variable in nature, and that's to do with areas like the sales teams, the collections teams that would flex with business growth. The rest of the cost base is more inflationary. And that's why we continue to see that strong operating leverage coming through.

Thank you. And we had a follow-up question from Paul at TCM Wealth. What are pre-provision FlexiPay margins running at today?

So pre-provision margins, I think the way I think of this is less about what the margins are today and more that if we stopped growing, it is profitable already. So the way to think of it is, yes, we're booking upfront costs, but it's not just the provision that we're booking upfront, it's also the marketing costs booked upfront. And therefore, on a steady state, it's profitable already, but we wouldn't just look at one cost that's upfront without thinking about the marketing as well.

So I think it's on the right trajectory. Paybacks on individual cohorts continue to be around the 12% to 18%. But as I mentioned earlier, we are continuing to grow it. It is loss-making as it stands, but that's intentional in that we're investing now for the future profitability. And that if we didn't grow and didn't spend on the marketing right now, it would be profitable in its own right.

Thanks. That's all the questions that we have got coming through on the webcast today, and so I'll hand back to Lisa to close.

Thank you all for joining us this morning. As I said at the start, 2025 was a standout year, but we're also confident and excited about our growth in revenue and profit to come in the years ahead. So very much looking forward to seeing many of you on the road show.