An annual report is a detailed look at what a company’s been doing and how that’s affected it’s finances over the past financial year.
They’re usually written for the company’s shareholders and investors, and reviewed by auditors and the board. They’re also submitted to Companies House, who publish it on their website.
We want to make sure everyone that uses Monzo can access our annual reports easily too. So, like we’ve done the last two years, we’re sharing our annual report for the financial year that ended in February 2019.
Our CEO Tom has also written a review, that gives a good summary of the challenges we’ve come across and the progress we’ve made between February 2018-2019.
Chief Executive’s review
Remarking on how much has changed seems to have become something of a habit in Monzo annual reports. In that sense, the last 12 months have been no different – the pace of change remains staggering.
We’ve just passed 2 million total users, and we’re adding more than 200,000 new accounts every month, helped by a successful TV ad campaign. A year ago, we added 60,000 a month. Net Promoter Score remains steadily at about +80, and we’ve won multiple awards for our customer service.
We’ve grown revenue considerably: we’ve just crossed £40m of annual run-rate revenue (based on May 2019 revenue), but there’s still plenty of work to do to get to profitability. Around 30% of active users deposit at least £1,000 per month (our definition of ‘salaried’), up from 13% a year ago.
Per-user contribution margin (revenue minus variable costs including expected credit losses) is a key metric that we’ve worked to improve over the last couple of years. It tells you whether each active customer using Monzo generates more incremental revenue than they create in cost. Annual per-customer contribution margin is now +£4 as at May 2019, up from -£15 a year ago, and -£65 in 2017. The longer customers are with us, the more profitable they become, and salaried users contribute +£30 – mainly driven by the money we make when people use their Monzo cards.
Hitting short-term financial metrics is important, but value is created over the long-term. We’re gaining customers faster than any other UK bank, at a cost that’s an order of magnitude cheaper. Our total cost to run an account is also an order of magnitude cheaper than high-street banks.
Engagement, retention and customer service remain industry-leading. We still need to make more revenue to become profitable as a business, but we’re showing good progress on that front.
I’m glad to say that we have a Board of Directors and a set of shareholders who are aligned with that long-term approach. We’ve added more than £200m of additional capital in the last 12 months from world-class investors, along with 36,000 customer crowd investors. That money will go towards sustaining our growth, building new revenue-generating features and helping us expand outside of the UK – our next stop is the United States, where we’re launching with a partner bank similar to how we started in the UK.
As we grow, we need to make sure we have strong governance, risk management and compliance in place. As a regulated bank, it’s crucial that we’re in control of the risks we face, otherwise we risk losing the trust of our customers. This is an objective we don’t take lightly. In the last 12 months, we’ve added 4 new C-level executives and a new Chair of our Board. Our control functions (Risk, Compliance, Financial Crime, Finance and Legal) will grow to more than 200 people by the end of the year.
Our vision for Monzo is the same as the first day we started: we’re trying to build a hub for all of your money. The one place that lets you see and control everything financial in your life. We can already see this starting to develop with our savings marketplace, offering interest rates well above those available at the high street banks. We expect to see those rates continue to improve for customers as more partners come on board, and we’re aiming to add simple investing products and pension management over time, giving customers a view of their assets too.
On the borrowing side, we’re offering Monzo customers overdrafts and loans, and we’re trialling mortgage switching through a broker. In future, we’d like to do more to demystify credit scores, and let people keep track of all of their borrowing in Monzo.
Finally, we’re working to simplify insurance and utility bills, helping customers get a great deal without the hassle of switching every 12 months. These products won’t all be on our balance sheet, but they will be accessible through the Monzo app. In future, Monzo should be the first place a customer goes with any questions about their money.
At Monzo, our mission is to make money work for everyone. Key to that mission is long-term sustainability. That means generating sustainable profits, but also playing our part in society. It means contributing where we can. It means building the kind of bank we’d be proud to call our own. This year we launched our first big community campaign, focused on removing barriers to banking, and we also partnered with The Big Issue to let sellers make more out of each sale.
I can’t wait to see what we achieve in the rest of 2019 and beyond.
Tom Blomfield
Chief Executive Officer
25 June 2019