N26 Group has reported its first quarterly profit as growth in customer numbers accelerates “strongly.”
Since the lift of its growth restrictions by BaFin in June of this year, N26 has claims that it has accelerated its growth momentum.
The European digital bank reports organic increases in customer demand continue to drive accelerated “top-line growth, as monthly sign-ups exceed 200,000.”
N26 also mentioned that in line with this increasing dynamic, N26 is set to grow its revenue by around “40% in 2024 to approximately 440 million euros.”
After breaking even on a monthly basis in June 2024, the company has posted its first quarterly profit, with a net operating “income of 2.8 million euros for the third quarter of 2024.”
N26 Group officially shared its first growth update and financial forecast since welcoming the lifting of its growth restriction by Germany’s financial markets regulator BaFin in June 2024.
The company announced its first quarterly profit, marking an important milestone in its trajectory, and “confirmed its financial forecast for 2023.”
Reflecting increases in demand for its portfolio of digital banking products, N26 has registered a more than “110% uptake in average monthly customer sign ups between fiscal 2023 and October 2024, with more than 200,000 customers currently signing up to N26 per month.”
N26 is positioned for top-line growth this year, with revenue set to increase by around “40% to approximately 440 million euros for fiscal 2024 (FY-23: 313.5 million euros).”
This growth has been mostly organic, with “73% of new customers in 2024 acquired via Word of Mouth (FY-23: 77%).”
As a result, customer acquisition costs remain low. N26 expects to “reach 4.8 million revenue-relevant customers by the end of 2024, up from 4.2 million at the close of 2023, with continued growth in customer numbers expected throughout 2025.”
Since posting its first monthly profit in June this year ahead of schedule, N26 has maintained a positive “net operating income for each subsequent month, resulting in a third-quarter net operating income of 2.8 million euros.”
Adjusted for a one-off balance sheet optimization in the fourth quarter of 2024, the company projects “a positive net operating income for the full year.”
Including this optimization, N26 expects a net “operating income of around -20 million euros for fiscal 2024, with net loss projected to be slightly higher.”
The optimization measure is intended to “align N26’s treasury portfolio with anticipated changes in the macro environment, which will unlock resources to boost future income.”
Last year, N26 posted -78.3 million euros in “net operating income and -102.4 million euros in net income, in line with its guidance.”
This was a marked improvement from 2022, when the company had “posted -169.3 million euros in net operating income and -213.4 million euros in net income, after investing significantly into compliance and the human and technical infrastructure to combat financial crime.”
Since early 2024, N26 has introduced a suite of major updates across its “core product pillars spending, saving, investment, and credit.”
N26 customers throughout Europe can build their wealth by investing in equities “with N26 Stocks and ETFs, trade cryptocurrencies through N26 Crypto, manage shared finances together with N26 Joint Accounts, and benefit from competitive interest rates via N26 Instant Savings – all within a single app designed for seamless daily financial management.”
This focus on enabling customers to manage all aspects of their financial lives within N26 has “boosted the company’s customer activity metrics in 2024.”
The annual transaction volume for N26 customers is projected to “increase by 23% in 2024, to around 140 billion euros (FY-23: +16% to 113.9 billion euros), with each revenue-relevant customer on track to make more than 29,000 euros in transactions with N26 on average in 2024.”
Customer activity directly contributes to higher revenues “per customer, driving both profitability and top-line growth.”
N26 intends to further expand on this momentum, with plans to “build on its investment offering.”
N26 also intends to offer digital banking for businesses in the foreseeable future.
By providing customers with more reasons to bank with N26, the company has, for the first time, surpassed “10 billion euros in customer deposits in the third quarter of 2024.”
As a fully-licensed digital bank, N26 leverages this development to “expand its treasury and retail lending activities.”
The firm expects interest revenues to account for around “50% of its total revenue in 2024. In 2023, interest revenues contributed 40% to the company’s revenue, in line with expectations.”
Valentin Stalf, Co-Founder and CEO of N26 said that they are pleased to be able to satisfy the “significant demand for their digital banking products again in full.”
Arnd Schwierholz, Chief Financial Officer of N26 said that their first quarterly profit underscores their dedication to “delivering sustainable and profitable growth.”
As covered, N26 is Europe’s digital bank with a full German banking license.
It offers mobile banking to customers in 24 markets across Europe.
N26 processes more than 140bn EUR in transactions a year and “currently has a 1,500-strong team of more than 80 nationalities.”
The firm is based in Berlin, with offices in cities across Europe, including Vienna, Paris, Milan and Barcelona.
Founded by Valentin Stalf and Maximilian Tayenthal in 2013, N26 has raised close to US$ 1.8 billion.