Grace Ashiru
Kuda, the Nigeria-focused neobank supported by Target Global, has experienced a significant surge in revenue, as indicated in its latest audited financial statements filed with U.K. regulators, where the startup is incorporated. The company saw an impressive 190% growth in revenue for 2022, the end period of the recent filing.
Kuda reported a revenue of $22 million (approximately £17.2 million) in 2022, a substantial increase from the $7.7 million (around £6 million) recorded in the previous year. This remarkable growth coincided with a significant rise in customer adoption, with the company’s user base expanding from 2.4 million to 4.9 million.
Kuda, headquartered in the U.K., operates a digital banking platform that enables customers to make payments, access loans, and manage their wealth. The startup functions primarily in Nigeria through its subsidiary, Kuda MFB, which holds a microfinance banking license issued by the Central Bank of Nigeria (CBN).
In the past two years, the company has concentrated on launching new products, including international remittances, and is expanding into new markets such as the U.K., Canada, Ghana, Tanzania, and Uganda.
As reported by TechCrunch earlier this year, Kuda informed investors that it anticipated a doubling of revenue and user numbers by the end of 2023. In January, the company announced it had reached 7 million users.
Kuda’s total deposits increased significantly, rising from $41 million in 2021 to $100 million in 2022. The report also noted the impressive growth of Kuda’s business banking services, with deposits from business customers skyrocketing 154 times, jumping from under $102,000 to nearly $15 million by the end of the year.
According to an anonymous source familiar with the figures, the business banking segment has continued to expand substantially since then. “We reached 100,000 businesses this year, launched POS terminals, and now provide payroll management services for businesses through Bento,” the source stated.
In the year under review, Kuda’s total assets grew by 30%, reaching $154 million. The company’s auditor reported that nearly 80% of its assets are associated with its Nigerian subsidiary.
The influx of deposits is enabling Kuda to expand its revenue streams beyond transaction fees and loan interest. In 2022, the startup generated $3.5 million from treasury investments in Nigeria, which accounted for one-third of its interest income. The company is intensifying its focus on this revenue stream as the Central Bank of Nigeria (CBN) continues to increase interest rates to combat soaring inflation.
A source familiar with the business informed TechCabal, “Kuda has lots of sticky deposits, so it began to take treasury investments seriously that year.”
By the end of 2022, Kuda allocated $42 million towards new treasury investments.
Frederic Bidet, Kuda Group’s chief financial officer, stated, “[Kuda] consistently monitors the government’s fiscal policy and will adapt accordingly.”
Despite Kuda experiencing substantial user adoption and revenue growth, its losses are continuing to increase. The company reported net losses of $32 million, more than double the amount from the previous year, driven by rising staffing costs and other operating expenses. Since its launch in 2019, Kuda has accumulated losses totaling $55 million.
According to a source familiar with the business, the Neobank invested significantly in marketing campaigns as part of its aggressive expansion strategy, including an advertisement during the World Cup. However, in an effort to reduce its burn rate, the company has cut its advertising expenses over the past year.
The pressure on Kuda’s financial resources continues to mount. Recently valued at $500 million, the fintech company has secured approximately $74 million in funding. However, it started last year with $33 million in cash, reflecting a nearly 50% decline from 2022. Kuda sought to raise $20 million in bridge funding at a flat valuation in mid-2023 but ultimately decided to abandon those efforts, as reported earlier this year.
CFO Bidet stated, “We have reduced the gap between our revenue and losses and are making good progress toward breakeven,” emphasizing that Kuda has “enough funds to reach breakeven comfortably.” He added, “We do not need to fundraise to meet our operating expenses at the moment.”
