Fintech/News/ Monzo sees losses double despite revenue bump The results, announced today, follow a turbulent few months for London's fintech darling By Isabel Woodford 30 July 2020 Credit: Tom Blomfield, cofounder, Monzo Credit: Tom Blomfield, cofounder, Monzo \Fintech UK fintech Freetrade mints millionaires out of early crowdfunding investors By Isabel Woodford 6 April 2021 Fintech/News/ Monzo sees losses double despite revenue bump The results, announced today, follow a turbulent few months for London's fintech darling By Isabel Woodford 30 July 2020 Digital bank Monzo has more than doubled its pre-tax losses in the last year, according to the company’s annual report for 2019–2020, which was published on Thursday. The fintech saw losses grow to £115.4 million; 2x the previous year, where it logged pre-tax losses of £50.7 million. This is partly fuelled by heavy investment last year — including an expansion to the US and application for a bank licence there. The report also flagged concerns about the bank’s future in light of the pandemic: “There are material uncertainties that cast significant doubt upon the Group’s ability to continue as a going concern,” it stated. “Our revenue streams have been significantly impacted by the COVID-19 pandemic and resulting macro-economic uncertainty.” Over the course of 2019, Monzo recorded £67.2m in revenue, a jump from 2018 when it brought in £19.7m. Its main source of revenue is collecting a 0.2% interchange fee from its 4.3m customers using their cards. Monzo has also ramped up its lending efforts, lending out £143.9m last year, having only lent out £19m the previous year. Nonetheless, it expects its credit losses to be as high as £20m; potentially a conservative measure but very high regardless. Meanwhile, Monzos’s customer deposit-base doubled to over £1bn, across 2.3m new customers last year. It will now be interesting to compare these figures to Monzo’s slightly older rival Revolut, which is yet to release its 2019 annual reports. For context, Revolut reported £58.2m in revenue in 2018 and a £33m operating loss. Profitability in sight? The company hasn’t gotten off to the strongest start so far this year. User downloads and usage have dived amid lockdown, and the fintech was also forced into a 40% downround; with its valuation diving to £1.25bn. Monzo and its peers are also preparing for a sustained revenue crunch, taking serious cost-cutting measures. Revolut, Monzo and N26 have all cut senior salaries, while the latter two will also furlough or reduce the working hours of over 150 employees each. “Our revenue streams have been significantly impacted by the COVID-19 pandemic and resulting macro-economic uncertainty,” Monzo wrote in its latest annual report, as well as casting doubt on its future. Meanwhile, Monzo’s launch in the US seems to have lost momentum, not least because the man they appointed to spearhead the expansion — TS Anil — is leaving his post in the US to take over the reins of the entire company as chief executive. It could also be several years before Monzo’s application for a US bank licence materialises. Still, Monzo has previously indicated it hopes to break even as early as 2022. The company recently introduced two new revenue channels, launching a business product and £5 a-month premium accounts. Its investors will now be banking on Monzo’s new chief executive veteran banker TS Anil to unite the team for a difficult year ahead. Want the best of Sifted in your inbox? Our newsletter brings you the latest, greatest stories on startup Europe. Sign up Terms of Use Related Articles UK fintech Freetrade mints millionaires out of early crowdfunding investors By Isabel Woodford Click here to read more Member Index to miss out on Wise IPO bonanza after quietly cashing in stake By Isabel Woodford and Bill Leaver Click here to read more Monzo’s CFO set to depart startup for crypto exchange By Isabel Woodford Click here to read more Why is a web browser investing in fintech? By Ryan Weeks Click here to read more Get the best of Sifted in your inbox By entering your email you agree to Sifted’s Terms of Use Sign up to \Future Proof Sifted’s weekly \Corporate Innovation roundup email By entering your email you agree to Sifted’s Terms of Use Most Read 1 \Deeptech Europe is making faster cars and better batteries than Tesla 2 Member \Startup Life Enter the era of the digital nomad 3 \Deeptech Quantum Motion unveils 9-second silicon qubit 4 Member \Startup Life Meet the fast-growing N26 ‘mafia’: the employees turned entrepreneurs 5 Member \Consumer 12 startups nibbling at Deliveroo that investors are watching closely 4 Join the conversation Subscribe newest oldest most voted Notify of new follow-up comments new replies to my comments PaulOne trick pony with a colourful card and no further innovation. Left for dust by Revolut and Starling. Poor hires and no execution. Y GStarling is targeting a different customer base which is why it’s not facing such losses – they focus more on business clients, unlike Monzo, who are heavily reliant on the mentioned interchange fees and specifically spending abroad. Revolut didn’t even have a banking licence until recently. Monzo actually introduced a great deal of innovation in the sector, including pots, youth accounts, budgeting. And they weren’t far behind Starling in introducing joint accounts. I think it’s a bit harsh to call them a one trick pony – it just didn’t work out in Covid. Mark TullyHaving a UK Banking license actually held Monzo back. They would have been far more innovative without one. Daniel McQueeneyHow old is the “veteran” banker TS Anil?
UK fintech Freetrade mints millionaires out of early crowdfunding investors By Isabel Woodford Click here to read more
Member Index to miss out on Wise IPO bonanza after quietly cashing in stake By Isabel Woodford and Bill Leaver Click here to read more