British fintech company Zilch recently disclosed that it achieved its first-ever month of profit, signaling a significant achievement for the organization as it sets its sights on a potential initial public offering. The company, which operates in the buy now, pay later space and competes with prominent players like Klarna and Block, revealed that it attained an operating profit in July 2024. This accomplishment comes within four years of Zilch’s inception, surpassing the profitability timelines of other notable consumer fintech firms.
Comparison with Competitors
Interestingly, Zilch managed to reach profitability faster than some of its key competitors. Starling and Monzo, two prominent digital banking platforms, took more than three and four years, respectively, to report their initial profits. In contrast, Revolut, another fintech startup, broke even just two years after its launch. Zilch’s ability to achieve profitability ahead of its peers highlights the company’s effective growth strategy and business model.
Zilch also disclosed that it exceeded £100 million ($130 million) in annual revenue run rate, marking a significant increase from the previous year. CEO and co-founder Philip Belamant emphasized that despite the prevailing high-interest rate environment, Zilch focused on expanding its operations rather than implementing drastic cost-cutting measures like other fintech firms. Belamant noted that several venture capital-backed companies in the high-growth fintech space had to slash expenses significantly to reach profitability, with some ultimately facing financial difficulties.
Strategic Differentiation and Board Appointment
In a statement, Belamant highlighted Zilch’s distinctive approach, stating, “We took a different approach. We looked at this and said let’s grow our way to profitability.” This strategic differentiation enabled Zilch to achieve a key financial milestone while sustaining its growth trajectory. Furthermore, the company announced the addition of former Aviva CEO Mark Wilson to its board, with Wilson expressing enthusiasm about contributing to Zilch’s journey towards sustained success as a market leader.
Zilch’s leadership team, including CEO Philip Belamant, has articulated its intention to pursue a public listing for the business within the next 12 to 24 months. Earlier this year, Zilch secured $125 million in initial debt financing from Deutsche Bank, providing the company with the flexibility to access up to $315 million in credit from various financial institutions. This financial arrangement is anticipated to support Zilch’s goal of tripling its sales volumes over the next few years, positioning the company for continued growth and expansion. Klarna, Zilch’s rival in the U.K. market, is also contemplating a stock market debut in the near future, indicating the competitive dynamics within the buy now, pay later sector.
Zilch’s achievement of profitability and revenue milestones, along with its strategic ambitions for an IPO and expansion, underscore the company’s resilience and strategic acumen in a competitive fintech landscape. By prioritizing sustainable growth and operational excellence, Zilch has positioned itself as a key player in the emerging buy now, pay later market segment, signaling promising prospects for its future growth and market positioning.