Philip Belamant, Co-Founder & CEO at Zilch: Focusing on efficiency for 1 year made growth explode

Sebastian Johnson (0:00)

Hello, and welcome back to Scaling Europe show. I'm Seb Johnson. Today on the show, Philip, CEO, founder of Zilch, one of Europe's most exciting fintechs that has just released some very exciting results. Phil, what can you tell us what's going on?

Philip Belamant (0:13)

Yeah, brilliant to be here. I'm excited to have this conversation. Well, what's going on is obviously, so we posted our latest financials, and of course, for the market, it's exciting to see where the company is at. Of course, these numbers are already like six, seven months old for us, so we've already well moved on. But we're excited to share how we performed last year. Effectively, the last financial year was one of those efficiency years for us as a business. It was all about laying the foundations to really build what we needed to roll forward and grow a business at substantial scale that's not just going to be in one market, but starting to move international as well. We had to do a number of major projects. We obviously invested a huge amount in the brand, and the brand built for the company, sponsorships and partnerships like Arsenal, etc. It was really a year of efficiencies, renegotiating with partners, making sure we had the team in place for all of the expansion that we want to go and pursue. In spite of all of that, we were still able to grow revenue roughly 40 percent year over year.

But that's teeing up for what's to come. What we're more excited about is of course the current year we're in, and we're already more than halfway through this year, and we're back to growing more than 60 percent year over year and profitably. That's really what's exciting is we're really starting to see all of this compound now.

Of course, really excited about the numbers for last year, but more interested in the efficiencies that were built and the foundations that we laid, so that we can deliver the amazing growth we're seeing in this current year.

Sebastian Johnson (1:57)

Amazing. Let's talk about two of those things.

Since the end of last financial year, you're now, what did you say, 60 percent growth again? I think I saw $300 million of ARR profitable on an adjusted basis for two quarters. Can we talk about what's driving that return to bigger growth? I mean, you grow for 35, 40 percent last year. You're now increased growth, which is actually quite unusual for a company as it scales and matures. So number one, what has driven that return to higher growth?

Philip Belamant (2:28)

It's a combination of all of these things. So the first is, we don't just focus necessarily on top line.

We, of course, very focused on margins of GP, and then, of course, bottom line. In this market, I think you have to be myopically focused on how you're scaling profitably.

So we've introduced a number of things. Firstly, a lot of efficiencies. How do we fund all this activity, the working capital of the business, and the cost of all of that? Then on top of that, we've been launching a variety of new products for consumers. So really what we've been spending a lot of time on is looking at open banking data of our customers, not what are they doing with us, but more importantly, what are they doing outside of Zilch? So what are all of the use cases that we find that customers are spending their time on, and this is how we building the product roadmap. Okay, so we see people are paying rent without us. That's interesting. Maybe we should look at that. We see people are paying bills in some cases without Zilch. Maybe we can help people with this, and so on and so on and so forth, and this is how we build the product roadmap. So if you go backwards and you look just about a year and a half ago, we really had a pair of a six-week product and a pay now product with rewards and really awesome, interesting product set, but we wanted to expand that rapidly, and that's what we've been doing. So we introduced a pair of a three-month product, we introduced pay monthly, which is up to 12 months, and that's opened a variety of use cases for our customers, travel, holidays, electronics, white goods, as well as obviously the non-discretionary purchasing that we see. And so what's driving this is really the implementation and distribution of new products, which really come at a fraction of a cost to us, and shipping that to our customers, and solving more use cases for our customers, which in turn grows the utilization in ARPUs. So if we look at our ARPU, which is our average revenue per customer, what we're seeing is around in the last financial year, 152 pounds of ARPU. If you look in the current financial year we're in, we're already at 162 pounds of ARPU. So it just shows you how customers are using our product for more and more and more of their daily lives. And so this is the acceleration and this is what's driving the growth. And so what that means for us is of course, Zilch is actually quite a predictable business. This is what's really exciting about our business is a lot of growth comes from rolling products to our current back book of customers, our customer base. And we have a really good handle on how customers take up these products and how they utilize these products. And so it's really interesting is that we can look forward one to two years with really good certainty. We already know what 80 percent of that year is going to look like today.