Fintech company Payhawk has reported a double growth of its operating income for 2023 compared to 2022. Its revenue grew by 114% to 12.6 million euros, and the company expects to continue doubling this through this year and the next.
In a press release from the company, where actual values are missing, it points out that in 2023 it has realized a 77% growth in gross profit. This is indeed the case, as the report shows that the value reaches 9.7 million euros. However, this indicator is obtained by deducting only the costs of sales - 2.9 million from the income and is actually closer to a measure of turnover than a financial result.
If the remaining expenses of the company during the year are added - for marketing, advertising, administration, depreciation, etc., the operating result for 2023 is 33.9 million euro loss, and the net loss is 35 million euros.
For comparison, in 2022 these numbers were respectively 25 million and 8.5 million euros. If the popular metric EBITDA (earnings before interest, taxes and depreciation) is calculated on the basis of the data, the comparison will be similar - about 32 million euros for 2023 compared to slightly over 24 million euros a year earlier.
Deep pockets
In Payhawk's case, this significant loss is possible because the company is well funded with external capital. It raised 100 million euros at the beginning of 2022, when the total venture capital invested in it reached 215 million euros. Since then, the company has not raised additional funding. Towards the end of 2023 its report notes that it has another available 128 million euros cash and total assets for 148 million euros. It is also important to note that prolonged periods of losses are nothing unusual in the world of startups and dynamically growing companies.
The rate at which they burn through their available cash reserves (cash burn rate) is an important metric tracked by investors. It is usually considered alarming when the level falls below 12-18 months. In Payhawk's case, if there is no significant increase in costs, the raised resource would be enough for another 3-4 years after the end of 2023, but given the plans for expansion, hiring more people and salary growth, the horizon is getting shorter.
On the other hand, the company is counting on improving its margins as it already operates its own e-money licenses in the EU and the UK, allowing it to attract customers directly rather than using intermediaries. "This gives Payhawk greater control over its payment infrastructure and will further increase its gross profit margin by up to 10%, bringing the company closer to the level of leading software companies," the announcement says.
The financial director and co-founder of Payhawk Konstantin Dzhangozov commented that this is the company's chosen strategy. "The reason for these results is a purposeful and strategic choice to prioritize the accelerated growth of the company," he said. This is a common strategy among startups looking for the fastest possible revenue growth, financed by external capital and without much regard for loss.
Payhawk currently employs a total of 361 people. Most of them are based in Sofia - 233, followed by London and Barcelona with 32 each, Amsterdam with 20 and Paris with 17 employees. The company has employees in three more cities - Vilnius, Berlin and New York.
"Our goal for total revenue growth is over 80% for 2024 and 100% growth for 2025. The goal for employees is growth of 25 and 30% in 2024 and 2025, respectively," Dzhangozov says.
Fintech company Payhawk has reported a double growth of its operating income for 2023 compared to 2022. Its revenue grew by 114% to 12.6 million euros, and the company expects to continue doubling this through this year and the next.
In a press release from the company, where actual values are missing, it points out that in 2023 it has realized a 77% growth in gross profit. This is indeed the case, as the report shows that the value reaches 9.7 million euros. However, this indicator is obtained by deducting only the costs of sales - 2.9 million from the income and is actually closer to a measure of turnover than a financial result.
