Nigerian Neobank Kuda Reports $32 Million Net Loss in 2022 Amidst 190% Revenue Surge and Rapid User Base Growth

Nigerian Neobank Kuda Reports $32 Million Net Loss in 2022 Amidst 190% Revenue Surge and Rapid User Base Growth
Image credit: Kuda

Kuda's Financial Performance: Revenue Surge and Net Loss

Nigerian neobank, Kuda, reported a net loss of $32 million in 2022 according to its latest financial report filed in the UK. This came despite a significant 190% surge in the company’s revenue for the year, increasing to $22 million from $7.7 million in 2021. The loss is primarily driven by increased staffing and operational costs.

User Base Expansion and Product Diversification

As first reported by Tech Cabal, Kuda’s user base has doubled to 4.9 million from 2.4 million in the previous year. The customer growth indicates that Kuda’s focus on product expansion, including international remittances, and aggressive market entry into the UK, Canada, Ghana, Tanzania, and Uganda has paid off.

Deposit Growth and Treasury Investments

Kuda’s deposit base more than doubled to $100 million in 2022, with business banking deposits skyrocketing 154x to nearly $15 million. This influx of funds has enabled the neobank to diversify its revenue streams beyond transaction fees and loans. Treasury investments in Nigeria generated $3.5 million in 2022, accounting for a third of interest income. Kuda is aggressively expanding this revenue stream, capitalizing on the Central Bank of Nigeria’s (CBN) rising interest rates to curb inflation.

Challenges of Balancing Growth with Profitability

Despite the positive developments, Kuda faces the challenge of balancing growth with profitability. The company’s cash reserves dwindled by nearly 50% to $33 million in 2022, and a previous attempt to raise bridge funding was unsuccessful. However, the company maintains it has sufficient funds to break even and is not seeking additional financing.

Five-Year Milestone and Commitment to Fintech Innovation

Meanwhile, Kuda on Tuesday marked its fifth anniversary by reiterating its commitment to improving Nigeria’s fintech landscape. Since its launch in 2019, Kuda has claimed it has pioneered several initiatives that address long-standing challenges in the Nigerian banking sector.

Innovative Solutions and Core Banking Developments

To enhance the reliability of financial services, Kuda developed its own core banking application, Nerve. This in-house development marked a significant departure from the reliance on third-party core banking apps, which can be prone to outages and other reliability issues. Nerve’s introduction has enabled Kuda to maintain a more consistent and dependable service for users.

Kuda's Spend+Save Feature and Nigeria's Savings Rate

Kuda also launched its Spend+Save feature, which allows customers to automatically save a part of their spending. According to the Central Bank of Nigeria (CBN), the country’s savings rate has historically been low, with many Nigerians struggling to set aside funds regularly. As of June 2024, Nigeria’s savings deposit rate stood at 6.67%, as seen in the CBN’s money market indicators.

Comments from Kuda Leadership

Reflecting on the fifth-year milestone, Babs Ogundeyi, Group CEO of Kuda Technologies, said: “Over the past five years, we have focused on solving real problems faced by Nigerian bank customers. From reducing transaction costs to making saving easier and improving access to credit, our innovations are designed to make banking more accessible and efficient for everyone.”

Initial Innovations

“Shortly after Kuda began operations in Nigeria, the fintech company introduced free transfers, which reportedly saves each customer up to 15,000 naira annually. After the monthly allocation of 25 free transfers runs out, Kuda’s fixed fee of 10 naira per transfer remains the lowest in the country. This move was made in response to the high transfer fees that have long burdened Nigerian bank customers,” the company shared in a statement released on Tuesday.