Zilch Reaches Profitability Milestone, Signaling Potential for IPO
British fintech company Zilch achieved a major milestone by reporting its first-ever month of profit in July 2024. This achievement comes just four years after the company’s founding, making it one of the fastest-growing fintechs to reach profitability. This news has further fueled speculation about Zilch’s potential initial public offering (IPO) in the near future.
Key Takeaways:
- Zilch’s rapid path to profitability: The company reached profitability in just four years, outpacing many prominent competitors like Starling and Monzo.
- Profitability despite the challenging economic environment: Zilch achieved profitability even amidst rising interest rates, a trend that has forced other fintechs to cut costs, some even leading to their downfall.
- Aggressive growth strategy: Zilch has achieved profitability through robust growth rather than cost-cutting measures employed by other companies.
- Strong revenue performance: Zilch’s annual revenue run rate has doubled from the previous year, exceeding £100 million ($130 million).
- IPO on the horizon: Zilch’s CEO has publicly stated the company aims to go public within the next 12 to 24 months, capitalizing on the strong financial performance.
A Unique Approach to Growth and Profitability
Traditionally, many venture capital-backed fintech companies, especially those experiencing high growth, resorted to cost-cutting measures to attain profitability. However, Zilch chose a different path, embracing a growth-driven strategy to achieve this milestone. This approach has proven successful, showcasing the potential of Zilch’s business model.
"If you think of the last two and a half, three years, a lot of VC-backed companies, especially high growth fintech businesses have had to cut their way to get to profitability. And some of those have actually cut so far they went bust along the way," said Zilch CEO Philip Belamant. "It’s not been easy. And, for Zilch, we took a different approach. We looked at this and said let’s grow our way to profitability."
Strategic Board Appointment and Funding Boost
Zilch’s progress towards its IPO is further solidified with the appointment of former Aviva CEO Mark Wilson to its board as a non-executive director. Wilson brings a wealth of experience and industry expertise, which will be invaluable in guiding Zilch’s strategy and navigating the public market landscape.
"I am excited to join Zilch at this critical juncture and further help Zilch steer its path toward sustainable success as a category leader," stated Wilson.
Expanding its financial resources, Zilch secured $125 million in initial debt financing from Deutsche Bank. This deal offers the company the option to draw down up to $315 million in credit from both Deutsche Bank and other lenders. This funding is expected to drive significant sales growth in the coming years, potentially tripling Zilch’s overall sales volume.
A Competitive Landscape with Big Players
Zilch operates in a highly competitive market, with major players like Klarna and Block also vying for dominance in the buy now, pay later (BNPL) space. Klarna, which is also preparing for an IPO, recently reported a first-half profit, further demonstrating the robust growth and profitability within the BNPL sector.
Zilch’s rapid ascent to profitability and strong financial performance position it well in this competitive landscape. The company’s innovative approach and strategic moves solidify its position as a key player in the BNPL market and signal its readiness for the next phase of growth – an IPO that could usher in a new era for the company.
