Kuda, the Target Global-backed challenger bank, tripled revenue to $22 million in 2022

Kuda, the Nigeria-focused neobank backed by Target Global, tripled its revenue, according to its latest audited financial statements filed with U.K. regulators where the startup is incorporated. The company’s revenue grew by 190% in 2022, the end date of the recent filing.

Kuda posted revenue of $22 million (~£17.2 million) in 2022, up from $7.7 million (~£6 million) in the previous year, as customer adoption soared. The company doubled its users from 2.4 million to 4.9 million.

Headquartered in the U.K., Kuda operates a digital banking platform that allows customers to make payments, access loans, and manage their wealth. The startup operates in Nigeria, its primary market, through a subsidiary, Kuda MFB, which holds a microfinance banking license from the Central Bank of Nigeria (CBN).

Over the last two years, the company has focused on launching new products, such as international remittances, and is expanding to new markets, including the U.K., Canada, Ghana, Tanzania, and Uganda.

According to a report by TechCrunch earlier this year, Kuda told investors it expected revenue and user numbers to double by the end of 2023. In January, the company announced that it had reached 7 million users.

Kuda’s total deposits more than doubled from $41 million in 2021 to $100 million in 2022. The report also highlighted Kuda’s growing business banking services as deposits from business customers jumped 154x from less than $102,000 to nearly $15 million at the end of the year.

The business banking segment has grown significantly since then, according to one person familiar with the numbers who asked to remain anonymous so they could speak freely.

“We hit 100,000 businesses this year, launched POS terminals, and [now offer businesses payroll management services through Bento],” the person said.

Kuda’s total assets rose 30% to $154 million in the year under review. Almost 80% of its assets are tied to its Nigerian subsidiary, according to a report by the company’s auditor.

The inflow of deposits is helping Kuda diversify its revenue streams beyond transaction fees and interest on loans. In 2022, the startup earned $3.5 million from treasury investments in Nigeria, representing a third of its interest income, and the company is doubling down on this revenue stream as the CBN continues to raise interest rates to control runaway inflation.

“[Kuda] has lots of sticky deposits so [it] started taking treasury seriously that year,” a source close to the business told TechCabal.

At the end of 2022, Kuda spent $42 million on new treasury investments.

“[Kuda] consistently monitors the government’s fiscal policy and [will] adapt accordingly,” said Frederic Bidet, Kuda Group’s chief financial officer.

Although Kuda is seeing significant user adoption and revenue growth, its losses continue to grow. The business posted net losses of $32 million, more than double the previous amount a year before, thanks to higher staffing costs and other operating expenses. The report shows that Kuda has now accumulated $55 million in losses since its launch in 2019.

One person familiar with the business said the Neobank spent heavily on marketing campaigns as it aggressively expanded, including a World Cup advertisement. However, the business has slashed its advertising spend over the last year to reduce its burn.

Yet the pressure on Kuda’s financial resources remains. Last valued at $500 million, fintech has raised around $74 million, but it had $33 million in cash at the start of last year, a nearly 50% decline from 2022. Kuda attempted to raise bridge funding of $20 million at a flat valuation in mid-2023 but later abandoned those efforts, according to a report earlier this year.

“We have reduced the gap [between our revenue and losses] and are making good progress towards breakeven,” CFO Bidet said, insisting that Kuda has “enough funds to reach breakeven comfortably.”

“We do not need to fundraise to meet our operating expenses at the moment.”

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