RateSetter set to break even in first half of 2019
RATESETTER expects to break even in the first half of 2019, excluding spending on investor advertising.
The peer-to-peer lender is currently in the red, but told investors at a Q&A session that the gap is closing in line with its forecasts.
“Reaching profitability is important but this is balanced with the importance of longer-term investment (i.e. we may choose to invest more in the short-term which will repay over the longer-term),” RateSetter said in a blog post on its website, summarising points covered during the Q&A session.
RateSetter was profitable in the financial years ended 2014 and 2015, but fell into losses since then, as it has invested in scaling up the business.
The lender spreads around half of its fees over the lifetime of loans, rather than taking all its fees upfront, which means it receives less revenue initially when a loan is written.
RateSetter said that this model provides a revenue stream into the future “which reduces pressure to write new loans solely for business revenue, and also aligns our interests with those of investors”.
Investors are currently funding between £60m and £70m of loans each month and the platform is seeking to grow these figures as the number of investors increases, although it said it does not set lending targets.
RateSetter also said it is considering launching a “progressive web app” for investors, which would automatically tailor the display to the type of device being used.
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