Key Points:
Figure Technologies lays off 90 employees ahead of IPO.
The lending business shows strong financial performance.
The company remains optimistic about future prospects.
Blockchain-powered fintech start-up Figure Technologies Inc. has made significant strides in its financial performance despite facing challenges in the crypto industry. According to documents reviewed by Bloomberg, the company recently laid off 90 employees, approximately 20% of its workforce, as it gears up for a planned initial public offering (IPO) for its lending business next year.
Figure Technologies was co-founded by Mike Cagney, the former CEO of Social Finance Inc. (SoFi), with the vision of leveraging blockchain technology to create innovative financial products. Like many other crypto-related start-ups, Figure had experienced talent loss and funding difficulties during an industry downturn.
However, the company’s financial milestones present a promising outlook. During the second quarter of the current year, Figure’s lending business achieved a record volume of $900 million. Additionally, the company reported $83.5 million in revenue in the first half of the year and generated $2.7 million in adjusted profit during the second quarter. According to a letter from Cagney to Figure investors and partners, the lending business demonstrated profitability with a more than 50% contribution margin.
Encouraged by the impressive performance, Figure is now looking to take its lending division, known as “LendCo,” public in early 2024. Cagney expressed optimism about achieving a $2.5 billion valuation for LendCo during the IPO, which would surpass the company’s last valuation of $3.2 billion in a venture-backed funding round in 2021.
Despite the positive developments, the recent layoffs raised concerns among some employees due to their timing. The meeting held to address these job cuts saw several inquiries considered too sensitive to address directly, according to documentation of the event. Approximately half of the laid-off employees were engineers.
In response to the layoffs, Senior Vice President of Engineering, Matt Conroy, sent a message on an internal Slack channel, urging remaining employees to be understanding of the company’s leadership. Conroy emphasized the bright future ahead, pointing to the strong performance during the first half of 2023 and ambitious goals for 2024. These goals include the planned IPO for LendCo and a potential IPO for their Markets business and other products.
In light of the tough market conditions earlier in the year, Figure Technologies is also seeking fresh funds to navigate through challenges. Reports suggest that the US-based fintech is actively searching for investors to raise up to $100 million. Additionally, the company is exploring the possibility of spinning off some of its businesses.
Figure Technologies employs its Provenance Blockchain to develop traditional financial services, such as lending and payments. While the company faced setbacks in previous attempts to raise funds and go public, the recent financial successes and strategic plans indicate a determined effort to thrive in the market.
Looking forward, remaining team members may be reassigned to new product groups in the coming weeks as Figure Technologies continues its journey toward growth and financial stability in the ever-evolving fintech landscape.
DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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