Well-financed Volt reports strong growth with good unit economics

Volt, a well-financed open banking payments vendor with global ambitions, reported a strong increase in revenue for 2023. Although the business, like many of its competitors, is still a long way from profitability, the unit economics from early deals look very promising.

Revenue more than doubled in 2023 to £12.9m. Volt is based in London but the vast majority of sales came from EU where it has opened offices in Krakow and Berlin. The Krakow team looks after its Polish PI licence which supplements Volt’s existing UK EMI authorisation. The business is also active in Brazil and Australia. 

In total, Volt processed £0.62bn in 2023 from 8.8m transactions. Revenue per transaction rose slightly to £1.46 equivalent to a take rate of 2.1%. This is premium pricing and well ahead of the typical c.20-25p for open banking transactions reported by Jeremy Light in recent industry commentary. Volt’s ATV was up 7% to £70.4. 

Volt is evolving its product offer and now supplements payment initiation with pay-outs and provision of bank-lite products such as virtual IBANs. If you want to see Volt’s payment flow, donate a few euros to UNICEF. The checkout is elegant and even includes a prompt to steer shoppers away from cards towards open banking.

Key merchant customers include Farfetch for the UK, Germany and Netherlands but Volt has also been active negotiating key distribution partnerships. These promise significant volume if/when open banking payments become mainstream. Partners include leading ISVs such as Shopify and merchant acquirers such as Worldline.

Volt is self-styled network of networks and pays fees to 3^rd parties for access to their API aggregation services. It also must pay its banking-as-a-service vendor for the provision of virtual accounts. These costs held steady at an average of 16p/transaction, well below Volt’s selling price.

Gross margin of £1.30 per transaction is impressive and led to gross profit more than doubling to £11.5m.

Administrative expenses rose much less quickly than revenue, growing 14% to £23.2m including £8.5m of employee expense. Staff numbers rose from 118 to 202 (of which 90 were contractors). The staff are good value, costing just £42K each.

Volt’s operating loss narrowed from £16.9m to £11.7m. Accumulated losses were £31m at year end.

Volt took $60m new funding in 2023 taking the total fundraise to $90m and finished the year with £38m cash in the bank. This is enough for three years at the current burn rate. If volumes increase as expected and Volt can maintain its premium pricing, the business should be one of the winners in this sector.