Financials revealed: British startup darlings by numbers

Tl;dr: A summary of British startup financials

Billion dollar valuations, monster fund-raises and stellar growth are terms increasingly attached to startups in the UK. But what do the financials of these companies actually look like supporting these numbers?

Fortunately, and fairly uniquely, companies in the UK need to file their accounts with Companies House, and if you know where to look you can have a gander too. Unfortunately you can’t do the same thing in the US.

We’re going to dig into Britain’s top startups including Transferwise, Huddle and Shazam.

Audit exemption for private limited companies (AKA no numbers)

One quirk of company filings is an exemption of small companies to share their goodies. These are severely abridged filings with not much value, but the lack of data can say something in itself; you only get the exemption if you are a small company.

If you’re a small company, under section 477 of the Companies Act 2006 you can get an ‘audit exemption’, a ‘477 exemption’ as I call it.

How do you get a 477 exemption? Prior to 2012 you had to qualify for two factors, post 2012, another was added (employees) and a company meeting 2 out of 3 of these exemptions qualify. You can read about it here. These are:

• an annual turnover of no more than £6.5 million
• assets worth no more than £3.26 million
• 50 or fewer employees on average

Since unicorn startups tend to have lots of staff and a lot of cash (assets), if a company has an exemption it means their revenue is less than £6.5 million!

Transferwise

TransferWise is an money transfer service allowing private individuals & businesses to send money abroad without hidden charges.

Transferwise is a darling of the fintech space, becoming one of the first companies outside the US to receive investment from a16z. In total they have raised $90.37m, the last Series-C round being $58m.

Despite the massive amount of cash raised, the financials supporting the billion $ valuation don’t seem to be there!

Transferwise has a 477 exemption. Looking at the accounts for year ended 31 March 2015, Transferwise has £45.5m cash on hand, which is one fail on exemptions. The implication being, on average they had less than 50 staff and they did less than £6.5m in revenue!

The last fundraise was on January 25, 2015, to which these accounts applied to. The valuation is close to a billion dollars, or around £700m. Let’s guess they are doing £5m in revenue, so the valuation is around 140x revenue! Not bad 😉

From Linkedin there are presently 364 staff, so they have no doubt been on a hiring spree, but the cool thing, even if revenue doesn’t past £6.5 next year, they aren’t going to get the staff exemption. We can have a look at their numbers next year.

Worldremit

WorldRemit is an online money transfer business enabling migrants and expats to send money using a variety of payment options.

Founded in 2010, Worldremit has raised $147.66m in total, the last round being a $100m Series-B led by Technology Crossover Ventures at a $500m valuation in February 2015. One of the largest S-B rounds in Europe to date. Their last account was filed for 31 December 2014.

The takeaways are:

• Turnover increased 174% to £15.2m from £5.5m
• Cost of sales tripled from £2.5m to £7m and admin expenses quadrupled from £4.9m to £18.1m
• Losses before taxes were £10m down from £2m the year before
• A section 408 exemption allows them to exempt themselves from presenting their P&L and some other details

Lyst

Lyst offers a personalized fashion marketplace where users can create a customized shopping feed of products.

Lyst has raised a total of $60.52m since being founded in 2010. Their last round being a $40m Series-C. Their last filing was 31 March 2015 and they changed their year end from December (So these numbers are for 15 months).

Key takeaways:

• GMV increased from £16m to £50m in 2014
• Revenue quadrupled to £3.9m (£1m)
• Admin expenses are £10m (£2.9m) or which staff costs were £3.6m (£1.4m)
• Losses are £5.8m (£1.8m)
• They had 48 staff (22), 7 in management, 19 in engineering and 22 in marketing and ops

Huddle

Huddle is an enterprise content collaboration company that builds network for secure cross-organization collaboration in the cloud.

Huddle has long been one of the more successful British startups founded way back in 2006. They raised $89.2m in total with the last round being late 2014 when they raised $51m led by UK VC Zouk Capital.

Their financials are filed till year end 31 December, 2014. The 2015 numbers will be out around July 2016. Fortunately, Huddle actually makes some revenue and has no exemption, but interestingly no profit yet!

So what are the takeaways:

• Annual revenue growth was 110%, but comparing 12 months to 8 months (presume a change of year end)
• Revenue in 2014 was £9.65m with a cost of sales of £2.2m
• Majority of sales come from the UK and there is strong upsell
• Admin costs are £13m, which as a % of revenue is improving over the previous year
• There is around £12.8m of venture debt from SVB, and annual interest payments of £118k
• Their loss before tax was £5.9m up from £6.6 over an 8m period
• The highest paid director is paid £205k a year

Hailo

Hailo is an easy-to-use free smartphone app that allows passengers to get a taxi or licensed car quicker.

Hailo has raised $100.6m with the last round being $50m Series-C in Jan 2014. There are some fairly details numbers available.

The main takeaways are:

• They shut down their US operations to focus on Europe. The cost of shutdown was £11.8m
• Gross market value (GMV) was £101m in 2014, up from £81m in 2013
• Revenue is only £7.9m (£5.7m) which implies off their GMV is around 8%
• Almost all their revenue comes from the UK and Ireland, and Ireland is almost as much. Following discontinuation of US (Not sure about Canada) they will only be operating in Spain too which is only £390k. They have a Japanese company registered, but it’s not making any money, so maybe they haven’t launched it but planned on doing so
• Admin expenses are £15.9m (£15.4) which staff costs are £7.3m (£7.1)
• Gross profit margin improved significantly from 59% to 71%
• Losses continue fairly consistently at £10m per year
• There are 158 staff
• The highest paid director is paid £250k

Swiftkey

SwiftKey upgrades your smartphone keyboard making it faster & easier to type. Featured in Apple & Google Play’s ‘best apps of 2014’ lists.

Their accounts are till 31 December 2014. They have raised $22m in total with the last round being $17.5m in 2013 led by Index Ventures. As you will have read they have now been acquired by Microsoft for $250m in cash. A huge win for a British startup.

Key takeaways are:

• Revenue decreased as they adopted a freemium strategy, from £9.9m in 2013 to £8.4 in 2014
• Revenue is dispersed, with £1.8m coming from EU and £6.6m from the rest of the world as would be expected
• Operating costs increased due to building out infrastructure to support their distribution network and customer base, increasing from £8.1 to £12.9m. They spend £2.9m a year on r&d and salary costs are £9.7m
• For once a startup turned a profit in 2013, making £103k then taking a loss in 2014 of £5.3m
• They have 140 staff, 94 of which are in product development, 18 in ops and 28 in sales, marketing and product management
• Highest paid director is £152k

Funding Circle

Funding Circle is the world’s leading online marketplace for business loans, matching businesses who want to borrow with investors.

Raised $273.24m in total, with the last round being a monster $150m (£98.7m) Series-E. Their accounts are for 31 December, 2014.

Key takeaways are:

• Growth in revenue has been strong at 145%, from £5.35m to £13.1m in 2014
• Admin expenses ballooned, tripling from £9.4m to £29.6m, with operating losses quadrupling from £5.2 to £19.6m due to “a significant investment in staff, technology and marketing.” Staff costs were £11.2m up from £4m
• Losses for the year are £17.3 (£5.6m) and “Further losses are expected during 2015.”
• They operate in the UK and the US with the majority of revenue coming from the UK. £11.8m from the UK and £1.3 from the US
• Series-A investment came with a cumulative 8% dividend
• The highest paid director was paid £165k
• They had 182 staff, up from 75 in 2013. 50 staff are in IT, 7 in finance and 125 in ops and admin

Secret Escapes

Secret Escapes is an exclusive members-only travel club offering discounted rates on luxury hand-picked hotels and holidays in the UK.

Secret Escapes, a British startup founded in 2011 have raised $72.86m in total for their flash sales model, with last round being a $60m Series-C. Their accounts were last filed till 31 December 2014.

Key takeaways:

• Total transaction value was £111m up from £66m in 2013, £25 in 2012 and ££2m in 2011
• Turnover was £20.4m (£11.6, £3.6, £257k)
• £19.4m of the revenue is commission with £1m from digital marketing
• 74% of revenue comes from UK members (97% in 2013), which is a large international diversification
• Mailing list size at year end was 11.2m (5.5, 2.4, 467k)
• They acquired a number of small companies
• The loss for 2014 was £14.9m, up from £3.5m
• They anticipate becoming cash positive in 2014 in the UK
• They appear to have a methodological method to test new markets by acquiring local members and “exposing them to limited supply”
• The highest paid director was paid £226k

Skyscanner

Skyscanner have raised in exccess of $197.2m (Don’t think all funding disclosed on crunchbase) in total. The last filing is up to 31 December 2014.

The key details are:

• Revenue was £92.9m in 2014 (£65.8m) up 41%, with cost of sales of £21.4m (£14.7m)
• Turnover mainly came from Europe, with UK and Ireland being meaningful. £44.3m from Europe, £25.1m in UK and Ire and the rest of the world £23.5m
• Admin expenses are £60.7m (£33.4m)
• PBT was £10.4 (£17.1m)- yay, profit!
• They made 3 small tech acquisitions around mobile application development and travel management software
• They have started diversifying revenue from flight metasearch to hotel and car hire products which are now 6% of revenue
• They opened 9 offices and a fifth data centre (now focused on cloud going forward)
• They employed 492 people at a cost of £27.65m
• The highest paid director got £175k, actually less than 2013 when someone got £206k!

Zopa

Zopa offers peer-to-peer loans with low rates, flexible terms, and no early repayment fees.

Founded in 2005, Zopa took a longer term view to building their business, raising a total of $56.3m to date to drive growth. Their last filing was to 31 December 2014.

Key takeaways:

• Revenue doubled in 2014 to £11.4m from £5.4m
• Their cost of sales is roughly half at £6.2m (£2.8m)
• Distribution costs are fairly punchy, doubling to £4.1 from £2m
• Admin expenses are £6.8m (£4m) of which £3m (£1.9m) are staff costs
• Operating losses were £5.6m (£2.6m)
• They have 62 staff, up from 40. 22 are in sales and distribution and 40 in admin

Farfetch

Farfetch brings together independent fashion boutiques to provide a wide selection of elegant brands and styles.

Farfetch, founded in 2008 has raised $194.5m to date. Their last filing was for 31 December 2014.

Key takeaways:

• Total transaction value grew to £178m from £91m. £18m came from the UK, 32m from EU and 128m from the rest of world
• Revenue was £48.5m (£23.3m) with cost of sales £21m (£10m)
• Gross transaction value grew 95%
• Admin expenses are £35.7m (£20m) of which £14m (£8m) are staff costs
• They had 121 staff with 51 in marketing and 8 in tech
• There were meaningful FX losses of £3.9m (£264k)
• Loss before tax was £4.1m, an improvement over a loss of £6.7m
• 7m visits each month, 311 boutiques and 95k SKU
• Revenue grew 108%
• Note, the ultimate parent company is on the Isle of Man and the consolidated accounts are filed there. These numbers could be slightly off.

Other

• Yplan – Partially exempted
• Citymapper – Exempted
• Darktrace – funny, partially exempted accounts. May have moved to US?
• Hassle – Exempted

Looking for something interesting to read?

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• Why I want a pitch deck before a pitch
• Why you are making a financial model for your fundraise is wrong
• What’s your startup valuation is the wrong question. Here’s why and what the better approach is