RATESETTER’s annual report has been released, confirming that the ‘big three’ peer-to-peer lender narrowed its losses in the last financial year, while revenues ticked down slightly.
But what else does it reveal? We pull out four key takeaways from the report.
1. Profitability is predicted in 18 months
Earlier this month, RateSetter’s chief executive Rhydian Lewis said that the peer-to-peer lending platform was “within touching distance of profitability”, and the annual report forecasts that the firm will swing into the black in April 2021.
In the 12 months ending March 2019, the company’s losses narrowed to £4.2m from £27.5m the previous year. Lewis said in the annual report that the reduction in losses was down to an expanding customer base and core revenue and the simplification of the company’s overall business.
In 2018, the platform had 44,441 active investors, but over the space of a year, this community grew by 26 per cent, meaning that by 31 March 2019 there were 55,800 people actively using the platform’s services.
2. Gross profit and revenue were down slightly
The platform’s overall revenue dipped slightly year-on-year from £34.34m to £33m. However, revenue from core operations rose to £29.6m, up from £25.5m the previous year.
Gross profits were also down from £19.08m in 2018 to £18.9m in 2019 as a result of the lower revenue – although cost savings of more than £1m year-on-year prevented the losses from being too great.
3. The provision fund is growing
We already knew that RateSetter had a total of £39m in its provision fund, but the financial report told us that £12.8m of this total was added in the 12 months ending 31 March 2019. During the previous 12-month period, just £10.2m was added. These figures underline RateSetter’s ongoing commitment to maintaining a well-funded provision fund as its investor base grows.
4. There are fewer employees
This is a surprising statistic as it comes at a time when most other P2P platforms are scaling up and increasing their headcount. However, RateSetter went from a staff of 233 in 2018, to 213 in 2019. Lewis wrote that the platform spent the 12 months between March 2018 and March 2019 “simplifying” its operations and noted that although there were on average 20 fewer jobs at the company, it had actually expanded the team at its growing Leicester office.
According to the financial report, seven of those jobs were cut from the IT department, three from central functions, and 10 from the operational side of the business.