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Fintech profitability - why scale matters

I analysed the profitability of 25 private fintech companies and the key findings are:

- Average EBITDA Margin of -162% (Median -104%);

- Just 4 companies of the benchmark are profitable (Trading 212, Oak North, Revolut and Starling);

- Strong correlation between revenues and profitability. With the exclusion of Monzo, the top 4 companies for revenues have the best EBITDA margins;

- 14 companies have an EBITDA margin of over -100%;

- the 25 companies have accumulated losses for £2.2bn. Just Oak North and Trading 212 have accumulated profits since the start of their operations;

- On average, the benchmark generate £0.3 Revenues of every £1m received from the investors;

- The best companies for profitability are the first bunch of fintech players, founded in 2013 and 2014. It is possible that in the next 2/3 years the companies crated in the years 2015-2016 will improve their profitability and achieve break-even, but just if the annual revenues will reach around £100m.

Source: Companies House and Annual Reports


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