Fintech challenger bank Monzo announced that its losses ballooned to £115.4 million ($151 million) in 2019 — twice that of 2018.
That is despite revenues at the London-based startup doubling to £90 million ($118 million) in 2019.
Monzo said the ongoing uncertainty of the COVID-19 pandemic was a major threat to its future, but that it could raise more cash if needed.
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Fintech challenger bank Monzo announced Thursday that its revenues had doubled to £90 million ($118 million) in 2019 — but its losses ballooned to £115.4 million ($151 million), twice that of 2018.
The London-based startup attributed the losses to increased marketing spend, hiring, and more technology.
The results in its annual report cover the year to February, and do not account for Monzo’s troubles during the coronavirus pandemic. It has laid off up to 80 staff and signed a new $76 million funding round from investors at a 40% valuation drop in recent months.
“The impact of the COVID-19 pandemic poses a significant risk to the UK and global economy, and this year will be a challenging time for many businesses, including Monzo,” Monzo cofounder and president Tom Blomfield said in the report. “With this unexpected change in landscape, we’ve seen organic customer growth slow as word-of-mouth drops, and we’ll see reductions in revenues and higher credit losses.”
The pandemic was a threat to Monzo’s very existence, the company admitted. But Alwyn Jones, CFO, said Monzo had already raised cash during the pandemic, and could do so again if needed.
Investors remain bullish: One London-based VC said the revenue growth of the 12 months to February, and increased internal discipline brought on by COVID-19, will serve the business well.
The startup bank, founded in 2015, has more than 4 million customers with current accounts — it also provides saving pots, access to loans, and other financial services. It has more than 36,000 business banking clients.
Over 2019, it added 2.3 million new customers and deposits grew to more than £1 billion ($1.31 billion). Its lending business grew to £143.9 ($189 million) in 2019, from just £19 million ($25 million) in 2018. It recently relaunched paid accounts in an attempt to diversify its revenue and push towards profitability.
It has relied on the wild popularity of its “hot coral” debit cards and easy-to-use app to win new customers, rather …read more
Source:: Business Insider