Kreditech to Break Even in Cash Flow in 2020

Kreditech’s Financial Progress in 2018: A Path to Profitability

Kreditech’s 2018 financial statement highlights significant progress toward profitability, underscoring the success of its revamped strategy introduced that year. The Hamburg-based fintech reported a 76% improvement in its net financial results compared to 2017, driven by a strong emphasis on profitability, product portfolio evolution, investment in innovation, and effective cost management. A fresh capital injection from existing and new investors further enabled the company to accelerate its transformation and pursue growth opportunities.

Strategic Realignment and Business Focus

Kreditech has strategically positioned itself at the intersection of cutting-edge technology, data science, and consumer lending expertise. Operating under its consumer brands Monedo Now and Kredito24, the company offers lending services in four key markets: India, Poland, Russia, and Spain.

In 2018, Kreditech pivoted its focus toward the near-prime lending market, prioritizing installment loans, which continue to show strong demand. The installation of a new management team early in the year was instrumental in improving operational efficiency, risk management, and cost control. By year-end, the company achieved record levels of monthly installment loan issuance, signaling a successful return to growth.

“Our results for 2018 clearly show we are making excellent progress toward achieving our strategic goals,” said David Chan, Kreditech’s CEO. “Expanding into the near-prime segment has been a key focus across our major markets, and we remain committed to this direction in 2019 and beyond. Investments in core infrastructure, like obtaining an NBFC license in India, are opening exciting new opportunities for growth in high-potential markets.”

Financial Highlights and Operational Improvements

Kreditech’s Profit and Loss (P&L) statement for 2018 reflects a dramatic improvement in financial performance. Net losses were reduced by 76%, from €58.4 million in 2017 to €13.9 million in 2018, largely due to the improved profitability of sales operations and effective cost and risk management. While revenue declined by 21.4% (from €71.4 million in 2017 to €56.1 million in 2018), this was offset by a significant reduction in impairments, leading to a gross margin increase of 32.3% and a rise in the gross rate of return (from 23.0% in 2017 to 38.7% in 2018).

Kreditech issued €107.3 million in credit during 2018 across its markets, reflecting a deliberate shift from high-yield, short-term microloans toward long-term installment loans. This strategic transition is aligned with the company’s focus on sustainable growth. “By concentrating on lower-risk, longer-term products, we are building a profitable and scalable business model that generates reliable cash flow,” said Mariusz Dąbrowski, Kreditech’s CFO.

As part of this strategy, the company reduced its issuing volume by 42%, from €185.2 million in 2017 to €107.3 million in 2018, while maintaining strict control over its lending dynamics. “This reduction allowed us to smoothly transition to a new technical infrastructure,” explained Chan.

Investment in Infrastructure and Technology

Kreditech has made substantial investments in infrastructure to enhance scalability, resilience, and operational efficiency. A key achievement was the deployment of Mambu, a cloud-based banking platform, in Poland (Q1 2019) and Spain (Q3 2019). This new system provides a solid foundation for rapid feature development and cost-effective service expansion.

The company also significantly improved its portfolio quality, reducing net impairment expenses from 69% of revenue (€49 million in 2017) to 56% of revenue (€31.4 million in 2018). “This improvement is a result of increasing the share of lower-risk installment loans in our portfolio, further contributing to our strong financial results,” added Dąbrowski.

Cost Management and Operational Efficiency

Operating expenses were reduced by 55%, down to €32.3 million in 2018, enabling an 81% reduction in operating losses (from €53 million in 2017 to €10.3 million in 2018). A deeper focus on commercial engagement and streamlined processes allowed Kreditech to lower customer acquisition costs (CAC) to just €3.7 million (7% of gross revenue) compared to 30% in 2017.

Positive cash flow from lending activities increased to €26 million (up from €15.1 million in 2017), and overall cash outflows were drastically reduced—from €89.2 million in 2017 to €13.8 million in 2018. “Our improved cash trends reflect the soundness of our strategic decisions, positioning us to achieve break-even in 2020,” said Chan.

Looking Ahead: Scaling and Global Expansion

Kreditech’s mission is to become the global leader in technology-driven consumer lending and the platform of choice in the near-prime market. With over 300 employees across seven countries and strong operations in Poland, Spain, and Russia, the company’s near-term focus is on rapidly scaling its presence in India while exploring new opportunities in other major markets.

“2019 has been a period of stabilization, and we’re confident about sustainable, profitable growth across all our strategic markets,” Chan concluded.

With a solid foundation, innovative technology, and a clear focus on growth, Kreditech is well-positioned to transform consumer lending globally and lead the near-prime segment into the future.