Funding Societies posts 84% revenue jump in 2022 as losses grow

Funding Societies co-founders Reynold Wijaya (L) and Kelvin Teo (R) / Photo credit: Funding Societies

Funding Societies generated US$36.6 million in revenue for its financial year ending December 2022, up 84% from the previous year, according to its latest audited filings obtained from VentureCap Insights.

Losses before tax at the Singapore-headquartered digital lending platform increased by 138% to US$42.7 million during the same period. The company said US$32.5 million of which were non-cash.

Frank Stevenaar, Funding Societies’ chief financial offer, told Tech in Asia that the revenue growth was “encouraging but expected,” given that most countries were still recovering from the Covid-19 pandemic in 2022.

While there were “domestic shocks” in Vietnam and Indonesia, Funding Societies’ presence in five countries across Asia kept revenue growth steady, he added.

Since it was established in 2015, Funding Societies has disbursed US$3.2 billion in loans to small and medium-sized enterprises. The company operates in Indonesia under the Modalku brand and is also present in Malaysia, Singapore, Vietnam, and Thailand.

Profitability in Q4 2024

While Funding Societies’ revenue continued to grow this year, the growth is “lower than last year” as it picks its customers and manages its risk returns, Stevenaar says.

The company diversified its revenue sources to include foreign exchange and payments after acquiring CardUp, a Singapore-based payments services provider, in December 2022. This is expected to support revenue growth in 2023.

Funding Societies is expecting to become profitable in Q4 2024.

In the five countries where it operates, the firm is “profitable” on a standalone basis before taking into account group tech and general and administrative expenses, having paid US$421,000 in income tax in 2022, according to Stevenaar.

Funding Societies had several one-off costs in 2022, including strategic investments in Indonesia’s Bank Index, the CardUp acquisition, and an ESOP buyback program.

To support its neobanking efforts, Funding Societies teamed up with used-car platform Carro to invest an undisclosed amount into Bank Index in April 2022. Funding Societies’ latest financial statement reveals that it poured US$25.3 million and holds a 9% ownership interest in the bank as of December 2022.

The statement also shows that Funding Societies paid US$28.3 million in cash and equity for a 100% stake in CardUp and upped its stake in financing firm Modalku Finansial Indonesia (previously known as Buana Sejahtera Multidana) to 80%.

As a result, the net cash flows generated from investing activities widened from -US$2.5 million to -US$32.5 million.

Rise in bad loans