Trustly reports 51% profit growth; CEO says IPO is at least 2 years away

The chief executive of Swedish fintech startup Trustly says the company’s initial public offering is still a year or two away, even after a 51% jump in operating profit.

In an exclusive interview with CNBC, Johan Tjarnberg, CEO of Trustly, said his firm still needs time to prove to investors the value of its open banking technology before it goes public.

“We need another year or two to really demonstrate to the market that open banking is happening, and it’s here,” Tjarnberg told CNBC.

“In my opinion, there is so much we want to demonstrate to the market in terms of user and merchant adoption. We still need some time to implement our existing scheme.”

Trustly is holding off on an IPO even after posting strong financials. The results, shared exclusively with CNBC, show the company’s 2023 revenue was $265 million.

Growth accelerated significantly in the second half of the year, rising 27% compared to the same period in 2022, according to Trustly. This comes as transaction volumes grew by 48% over the same period.

Tjarnberg told CNBC that the company’s 2023 performance was largely driven by growth in its U.S. business. In 2020, Trustly merged with US competitor PayWithMyBank.

“We have invested a lot in the US market,” Tjarnberg said. “Four years ago there were about 20 of us there, now we have 500 people supporting the US market.”

Tjarnberg said that in the first quarter of this year, Trustly saw increased growth in areas such as utilities, retail and travel, with 22% of volumes coming from these core verticals, up 44% over 12 months.

Trustly increased operating profit by 51% for the full year 2023, with adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) rising to $51 million from $33 million in 2022.

This comes as the total value of transactions processed in 2023 rose 79% to $58 billion.

Trustly helps companies integrate the ability to accept payments using open banking technologies.

This technology allows consumers to make payments directly to a merchant’s bank account without the need for an intermediary such as a card issuer.

It provides an alternative to existing credit card programs such as Mastercard And Visawhich charge merchants high transaction fees.

In the US, Tjarnberg said Trustly is seeing increased demand from merchants “trying to reduce costs” as high card processing fees have made them more price-conscious.

“It’s no secret that our goals and ambitions are to create a good alternative to other payment methods, including cards,” he told CNBC.

Open banking is a trend that has gained significant momentum, especially in Europe.

This happened thanks to the introduction of rules that require banks to open their customers’ account data and payment functions to third-party firms.

This has paved the way for new entrants into the financial market, including fintechs, startups and technology companies. Founded in 2008, Swedish company Trustly competes with companies such as GoCardless, TrueLayer, Volt, Bud and Yapily.

Trustly plans to launch a feature that will allow merchants to set up recurring payments for customers. This will target things like telecom packages and subscription-based music streaming services.

Tjarnberg said Trustly is bullish on the mobile space, particularly in the US, after seeing early success in mobile billing partnerships with companies such as AT&T and T-Mobile.

Trustly is used by over 9,000 merchants worldwide, including Facebook, Alibaba, PayPal, eBay, AT&TUNICEF, Dell, Elevator, DraftKings, Wiseand eToro.

Trustly is majority owned by venture capital firm Nordic Capital, which owns 51.1% of the business. Alfven & Didrikson is the second largest backer with an 11.1% stake, while BlackRock owns 8.9%.

Aberdeen Standard Investments and Neuberger Berman own 0.7% and 0.9% of Trustly shares, respectively, while others, including Trustly management and employees, own 27.4%.