Nigeria-focused neobank backed by Target Global, Kuda bank saw its revenue double in 2022, according to the latest audited financial statements filed with U.K. regulators, where the startup is incorporated.
The company reported a 190% increase in revenue, reaching $22 million (£17.2 million), up from $7.7 million (£6 million) in 2021, driven by a surge in customer adoption.
Kuda, which operates a digital banking platform allowing customers to make payments, access loans, and manage their wealth, doubled its user base from 2.4 million to 4.9 million in 2022. Headquartered in the U.K., Kuda’s primary market is Nigeria, where it operates through its subsidiary, Kuda MFB, which holds a microfinance banking license from the Central Bank of Nigeria.
In the past two years, Kuda has focused on rolling out new products, such as international remittances, and expanding into new markets, including the U.K., Canada, Ghana, Tanzania, and Uganda. According to a report by TechCrunch earlier this year, Kuda informed investors that it anticipated both revenue and user numbers to double by the end of 2023. In January, the company announced it had reached 7 million users.
Kuda’s total deposits more than doubled, from $41 million in 2021 to $100 million in 2022. The neobank’s business banking services saw significant growth, with deposits from business customers skyrocketing 154 times, from less than $102,000 to nearly $15 million by the end of the year.
“We hit 100,000 businesses this year, launched POS terminals, and now offer payroll management services through Bento,” said a source familiar with the company’s operations, who requested anonymity.
Kuda’s total assets rose 30% to $154 million in 2022, with nearly 80% of its assets tied to its Nigerian subsidiary, according to the company’s auditor. The influx of deposits has allowed Kuda to diversify its revenue streams beyond transaction fees and loan interest. In 2022, Kuda earned $3.5 million from treasury investments in Nigeria, accounting for a third of its interest income, as the company capitalized on rising interest rates set by the CBN to control inflation.
“Kuda has lots of sticky deposits, so it started taking treasury seriously that year,” a source close to the business told TechCabal. By the end of 2022, Kuda had invested $42 million in new treasury investments.
Despite strong user adoption and revenue growth, Kuda’s losses continued to deepen. The company reported net losses of $32 million in 2022, more than double the previous year’s losses, due to increased staffing costs and other operational expenses. Since its launch in 2019, Kuda has accumulated $55 million in losses.
A source familiar with the business indicated that Kuda spent heavily on marketing during its aggressive expansion, including a World Cup advertisement. However, the company has since reduced its advertising budget in an effort to curb its cash burn.
Nevertheless, the pressure on Kuda’s financial resources remains. The fintech, last valued at $500 million, has raised approximately $74 million in total funding, but its cash reserves fell nearly 50% to $33 million at the start of last year. Kuda attempted to raise $20 million in bridge funding at a flat valuation in mid-2023 but later abandoned those efforts.
“We have reduced the gap between our revenue and losses and are making good progress towards breakeven,” said Frederic Bidet, Kuda Group’s Chief Financial Officer. Bidet insisted that Kuda has “enough funds to reach breakeven comfortably” and does not need to raise additional funds to cover its operating expenses at this time.
