Nium’s revenue growth meets its match in rising costs

In the heady days of 2021, the fintech world seemed to operate on a simple, if gravity-defying, logic: transaction volume was everything, and profitability was a problem for another day. For Nium, a Singapore-based payments firm backed by heavyweights like Temasek and GIC, that “other day” is arriving with a cold, regulatory-filing-induced splash.

Latest results for the year ending December 2024 show a company running faster just to stay in the same place. Revenue rose by 13.3% to S$167.2m (US$124m), a respectable showing by most measures. Yet net losses narrowed by only a sliver—from S$88.6m in 2023 to S$88.1m. In the competitive world of cross-border payments, it seems that scaling a network is a ruinously expensive business.

The culprit behind this stubborn red ink is the soaring cost of financial infrastructure. Total expenses climbed to S$267.8m, driven largely by processing charges which surged 77% to S$87.8m. These are the structural costs of moving money across multiple borders and regulatory jurisdictions. For firms like Nium, which provide the “plumbing” for banks and other fintechs, volume is a double-edged sword: the more money flows through their pipes, the more they must pay to keep those pipes open.

To its credit, Nium has found the discipline that many of its peers still lack. Discretionary spending was slashed ruthlessly:

• Employee compensation fell from S$114.1m to S$97.1m.
• Advertising and promotion costs were hacked by two-thirds, down to S$5.1m.
• Travel and administrative expenses also trended downwards.

Yet even this corporate asceticism was not enough to offset the rising tide of operational costs.

The broader market has noticed. In June 2024, Nium raised US$50m in a “down round” led by the Brunei Investment Agency. Its valuation now sits at US$1.4bn—a 37% drop from its 2021 peak. This valuation reset is a hallmark of the new era of fintech, where investors no longer subsidize growth at any cost.

The company has also had to face reality regarding its public ambitions. A planned US listing, originally slated for mid-2025, has been pushed back to late 2026. Prajit Nanu, Nium’s founder and chief executive, cited the need to “build revenue scale” and strengthen leadership—code for proving to public investors that the business can eventually pay for itself. To that end, the appointment of Andre Mancl, a former Credit Suisse banker, as chief financial officer suggests a shift from exuberant expansion to rigorous corporate planning.

Strategy, however, remains expansive. Nium continues to collect regulatory licenses like stamps, with new approvals in Japan, India, and New Zealand. Most significantly, it received authorization to operate as a payment institution in Brazil—a market Mr Nanu calls a “critical node”. With Latin American clients already accounting for 18% of transactions, the firm is betting that a deeper regulatory footprint will eventually yield the margins it so desperately needs.

With S$100m in cash still on the books and a focus on acquiring smaller, real-time payment startups, Nium is far from a spent force. But as equity declines and liabilities creep up, the company is learning a hard lesson in economic physics: in the world of global payments, it is far easier to build a network than it is to profit from one.