Trustly Delays IPO Despite Strong Financial Performance

Trustly, the Swedish fintech startup, has announced that its initial public offering (IPO) is still a year or two away, despite a significant 51% increase in operating profit. CEO Johan Tjarnberg told CNBC that the company needs more time to demonstrate the value of its open banking technology to investors.

“We need another year or two to really show the market that open banking is here,” Tjarnberg stated. “There’s so much we want to demonstrate in terms of user and merchant adoption. We still need time to execute on our existing playbook.”

Despite holding off on an IPO, Trustly reported strong financial results, with revenues reaching $265 million for the full year 2023. Growth accelerated in the second half of the year, with a 27% increase compared to the same period in 2022 and a 48% spike in transaction volumes.

Trustly’s U.S. operations significantly contributed to this growth. The company, which merged with American firm PayWithMyBank in 2020, has expanded its U.S. team from 20 to 500 employees over the past four years. Trustly saw notable growth in sectors like utilities, retail, and travel, with these core verticals accounting for 22% of volumes, up 44% year-over-year.

In 2023, Trustly’s operating profit increased by 51%, with adjusted EBITDA rising to $51 million from $33 million in 2022. The overall transaction value processed climbed by 79% to $58 billion.

Trustly’s open banking technology allows consumers to make payments directly to a merchant’s bank account without using intermediaries like credit card issuers, providing an alternative to traditional card programs such as Visa and Mastercard. This technology has gained traction in Europe due to regulations requiring banks to open their clients’ account data and payment functionalities to third-party firms.

In the U.S., Trustly is seeing increased demand from merchants seeking to reduce costs associated with high card processing fees. “Our objective is to provide a good alternative to other payment methods, including cards,” Tjarnberg said.

Looking ahead, Trustly plans to launch a feature for recurring payments, targeting sectors like telecom and subscription-based services. The company is optimistic about its prospects in the mobile space, particularly in the U.S., following early success with mobile billing partnerships with AT&T and T-Mobile.

Trustly serves over 9,000 merchants worldwide, including major names like Facebook, Alibaba, PayPal, eBay, AT&T, Unicef, Dell, Lyft, DraftKings, Wise, and eToro. The company is majority-owned by venture capital firm Nordic Capital, which holds a 51.1% stake, with Alfven & Didrikson and BlackRock owning 11.1% and 8.9% stakes, respectively. Other stakeholders include Aberdeen Standard Investments, Neuberger Berman, and Trustly’s management and employees.

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