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Ten years after being shown off on stage at TechCrunch Disrupt in London, fintech company N26 has done just that. I mentioned First ever quarterly profit (pre-tax). The challenger bank, which has millions of customers across Europe, generated net operating income of €2.8 million during the third quarter of 2024 (or $2.9 million at current exchange rates).
This is an important milestone for the startup but also big news for the fintech industry. Challenger banks like Monzo, N26, Revolut and Starling used to be some of the most interesting startups in Europe. They raised billions in funding, expanded aggressively, and overspent to reach the next funding round.
Now it’s time to sit down and do the math. Large funding rounds are difficult to come by, and investors now often need a clear path to profitability.
The revolution is Very profitable – $428 million net profit for 2023 alone – while Monzo crossed the line with a pre-tax profit of £15.4 million for 2023 ($19.4 million). N26 follows suit.
For several years, German financial regulator BaFin has imposed a cap on new signups as a penalty to force the startup to improve its anti-money laundering processes. But it raised the cap earlier this year and that had a big impact on the company’s bottom line.
According to N26, more than 200,000 people currently open an account with it every month. Interestingly, N26 has stopped sharing the total number of users it has. Instead, the company is focusing on its 4.8 million “revenue-related” customers.
The influx of new users has led to a 40% increase in fintech revenue in 2024 compared to 2023. N26 is on track to achieve annual revenue of €440 million this year.
As a reminder, in addition to free accounts, N26 offers paid subscriptions with access to more financial services and features. The company also offers savings accounts, stock and cryptocurrency trading as well as credit products.
Now let’s see if N26 is able to stay in the black as 50% of its 2024 revenue comes from interest income from customer deposits and the company’s retail lending activities. With low interest rates in Europe, it will also be difficult to maintain this revenue source at a high level.
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