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N26 mulls acquisition despite net losses tripling in 2019 – FinTech Futures

N26 is mulling its first ever acquisition, despite losses climbing 310% to €216.9 million in 2019.

The German challenger bank, which hit the seven million customers mark last week, told CNBC of its plans to buy a company.

N26’s failed UK expansion cost it a total of €26.9 million

“We have started to look — and we are still looking — opportunistically at some interesting targets,” Maximilian Tayenthal, N26′s co-CEO, tells CNBC.

He mentions trading and Know Your Customer (KYC) firms as potential targets. As well as fintech players “in our space that have a good customer base”.

Whilst nothing is “super concrete”, Tayenthal says the Berlin-based fintech is eyeing up “a good number of players”.

Net losses tripled in 2019

The same week, N26 revealed a snippet of its financials to Dusseldorf-based paper Handelsblatt. The $3.5 billion-valued fintech said its operating losses tripled in 2019. These include its now-closed UK operations, and its US launch.

CEO, Valentin Stalf, explains the loss increase to Handelsblatt: “We have tripled our team to 1,500 employees.” He adds: “We invested around €165 million in our European core markets in 2019.”

Alongside these expansion movements, the challenger also launched into the US in 2019 – where it cut employees last year by 10%. It also launched in the UK, where it ceased operations last February.

In all, its failed UK expansion cost N26 a total of €26.9 million.

Sales up 232%, European losses closing

Despite these gaping losses in 2019, N26’s sales that year were up 232%, more than doubling from €43.6 million to €100 million.

N26 earns revenue off interchange fees and premium accounts – much like UK challenger Monzo’s main income streams.

In 2020, N26 onboarded some two million customers, down from three million net new customers in 2019. Whilst this might seem like negative, slow growth, the challenger has deliberately slowed down net-new customer growth.

Having released new price levels for its premium account, as well as introducing a new trading feature, the fintech wants to focus on generating more revenue from each customer it already has.

Stalf also told Handelsblatt that the challenger had managed to reduce its European losses to around €110 million, down from €165 million in 2019. But the fintech is yet to release its 2020 financial results.

Profitability “in sight”

With losses, at least in its core markets, down last year, Stalf suggested to Handelsblatt that profitability was “in sight” for the end of this year.

“Our goal is to continue moving towards the overall profitability of the company in 2021 and 2022.”

According to Bloomberg reports, N26 is already on the lookout for investors to bump up its financing this year.

So far, the company has raised $782.8 million from investors including Tencent and Allianz.

Once the German fintech is making a profit, it plans to go public. “We can be so far advanced in 2022 that we are considering going public – but that does not mean that we will go public next year,” Stalf tells Handelsblatt.

Earlier last week, N26 appointed Jan Kemper as its new chief financial officer (CFO). Kemper served eight years as Zalando’s CFO and grew the start-up to a market valuation of €11 billion.

He took the German ASOS public back in 2014, which is likely why N26 has hired him.

Read next: N26 lands Zalando’s former financial chief as CFO




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