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Monzo Reports First Profit, Plans EU Expansion

This announcement follows substantial fundraising efforts by the U.K.-based neobank, which secured $430 million
June 3, 2024

Monzo, the U.K.-based neobank, has announced a major milestone in its 2024 financial results: its first full-year pre-tax profit. Alongside this financial success, Monzo is setting its sights on further growth, starting with an expansion into the broader European market via a new base in Ireland.

This news follows significant fundraising rounds for Monzo, which secured $430 million (£340M) in March and an additional $190 million last month, pushing its valuation to $5.2 billion. A substantial portion of this funding is aimed at boosting its presence in the U.S. market, a long-term goal for the company. To spearhead this effort, Monzo appointed Conor Walsh, formerly head of global product for Block’s Cash App, as the new CEO of its U.S. operations last October.

However, Monzo is not limiting its ambitions to the U.S. alone. The company is also planning to establish a new office in Dublin, Ireland, marking a strategic move to tap into markets closer to its home base. While no specific timeline has been set, this expansion represents a significant step in Monzo’s growth strategy.

Monzo first achieved profitability last March, driven by its lending product and high interest rates in the U.K. This trend continued throughout the financial year, culminating in a pre-tax profit of £15.4M. This is a remarkable turnaround from the previous year's full-year losses of £119M in 2022 and £116M in 2023. Additionally, Monzo’s revenue soared by 250% to £880M last year.

Despite these gains, Monzo's board chair Gary Hoffman cautioned about potential challenges ahead. An anticipated drop in interest rates and broader economic uncertainties could create volatility in the banking sector. Hoffman noted, “The U.K. has just emerged from a technical recession, economic growth has slowed significantly, and growth in the U.K. economy is expected to remain slow even as interest rates start to gradually come down. While these risks could impact our performance and plans, I believe that we are strongly positioned to not just withstand these potential headwinds, but actually go on to thrive in the face of them.”

Monzo’s success reflects a broader trend of positive news for neobanks. Its U.K. rival, Revolut, also reported its first full year of profitability last year. Meanwhile, Brazil's Nubank saw its valuation surge to an all-time high of $58 billion, transitioning from a $9 million net loss in 2022 to a $1 billion net profit last year.

Monzo’s customer base has grown significantly, increasing by over 2.3 million to a total of 9.7 million, including 400,000 business customers. The company projects this number to rise to 11 million in the coming year.

With its first full-year profit, robust revenue growth, and strategic expansion plans, Monzo is well-positioned to continue its upward trajectory in the competitive neobanking landscape.

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