Fintech
Trustly reports 51% increase in profits; The CEO says it will take at least 2 years for the IPO
Trusted CEO Johan Tjarnberg.
With confidence
“We need another year or two to really demonstrate to the market that open banking is happening, it’s here,” Tjarnberg told CNBC.
“For me, there’s so much we want to demonstrate to the market in terms of user and merchant adoption. We still need some time to execute on our existing playbook.”
Trustly is holding out for an IPO even after reporting a solid set of financials. Results shared exclusively with CNBC show the company reported revenue of $265 million in full-year 2023.
Growth accelerated significantly in the second half of the year, Trustly said, rising 27% compared to the same period in 2022. That’s because transaction volumes increased 48% over the same period.
Tjarnberg told CNBC that the company’s performance in 2023 was strongly driven by growth in its U.S. operations. Trustly merged with American rival PayWithMyBank in 2020.
“We have invested heavily in the U.S. market,” Tjarnberg said. “Four years ago we were about 20 people; now we have 500 supporting the US market.”
Tjarnberg said that, in the first quarter of this year, Trustly saw stronger growth in areas such as utilities, retail and travel, with 22% of volumes coming from these core verticals, up by 44% in 12 months.
Trustly grew operating profit 51% in full-year 2023, with adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) rising to $51 million from $33 million in 2022.
This is due to the fact that the overall value of transactions processed during 2023 increased by 79%, reaching $58 billion.
Trustly helps businesses integrate the ability to accept payments via open banking technology.
This technology allows consumers to make payments directly into a merchant’s bank account without the need for an intermediary such as a card issuer.
It provides an alternative to historic credit card programs such as MasterCard AND Visathat charge merchants high fees for transactions.
In the U.S., Tjarnberg said, Trustly is seeing increased demand from merchants “looking to reduce costs,” as high card processing fees have made them more price-conscious.
“It’s no secret that our goals and ambition are to offer a good alternative to other payment methods, including cards,” he told CNBC.
Open banking is a trend that has gained significant momentum, particularly across Europe.
This is thanks to the introduction of rules that require banks to open their customers’ account data and payment functions to third-party companies.
It has paved the way for new financial players, including fintechs, startups and technology companies. Founded in 2008, Swedish Trustly competes with the likes of GoCardless, TrueLayer, Volt, Bud and Yapily.
Trustly plans to launch a feature that allows its merchants to set up recurring payments for customers. This will be targeted at things like telecoms packages and subscription-based music streaming services.
Tjarnberg said Trustly is “optimistic” in the mobile space, particularly in the US after seeing early successes in mobile billing partnerships with the likes of AT&T and T-Mobile.
Trustly is used by over 9,000 merchants worldwide, including Facebook, Alibaba, PayPal, eBay, AT&TUnicef, Dell, Lyft, DraftKings, Wiseand eToro.
Trustly is owned by venture capital firm Nordic Capital, which has a 51.1% stake in the company. Alfven & Didrikson is the second largest supporter, with an 11.1% stake, while BlackRock holds an 8.9% stake.
Aberdeen Standard Investments and Neuberger Berman own 0.7% and 0.9% of Trustly’s shares, respectively, while others, including Trustly’s management and employees, own 27.4%.