Finance
Zilch posts first profit and appoints ex-Aviva CEO to board
Zilch CEO Phil Belamant.
Zilch
British financial technology firm Zilch on Tuesday reported its first-ever month of profit, marking a key milestone for the company as it looks toward an eventual initial public offering.
In a trading update, Zilch, which competes with the likes of Klarna and Block in the buy now, pay later space, said that it made an operating profit in July 2024, hitting profitability within four years of its founding date — faster than other major consumer fintechs that have also managed to break even.
Competitors Starling and Monzo, meanwhile, took more than three and four years to make their first profit, respectively. Others have managed to hit profitability faster. Digital banking startup Revolut, for example, broke even for the first time just two years after its launch.
Zilch also said it topped £100 million ($130 million) in annual revenue run rate, doubling from the run rate it reported last year.
Philip Belamant, Zilch’s CEO and co-founder, told CNBC Tuesday that, despite the current high-interest rate environment, the firm was able to hit profitability by growing its business rather than cutting back like other fintechs have done.
“If you think of the last two and a half, three years, a lot of VC-backed companies, especially high growth fintech businesses have had to cut their way to get to profitability. And some of those have actually cut so far they went bust along the way,” Belamant told CNBC’s “Squawk Box Europe.”
“It’s not been easy. And, for Zilch, we took a different approach. We looked at this and said let’s grow our way to profitability,” Belamant added.
Separately Tuesday, Zilch announced the appointment of former Aviva CEO Mark Wilson to its board. Wilson, who was made a non-executive director, said he was “excited” to join the firm at a critical juncture and “further help Zilch steer its path toward sustainable success as a category leader.”
Zilch’s CEO Belamant told CNBC in June that he wants to list the business publicly in the next 12 to 24 months. That same month, the company announced that it had raised $125 million of initial debt financing from Deutsche Bank.
That deal, which gives Zilch the option to draw down up to $315 million of credit from both Deutsche Bank and other banks, is expected to help the company triple its overall sales volumes in the next couple of years, according to the firm.
Klarna, which Zilch competes with in the U.K., is also planning a stock market flotation in the medium term, with its CEO Sebastian Siemiatkowski having previously told CNBC it wouldn’t be “impossible” for the firm to list as soon as this year.
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They say you get better as you get older. This might just be true for 401(k) plans in 2025 for those striding into their golden years. Planning for retirement just got a significant boost for Americans aged 60 to 63, thanks to provisions in the SECURE Act 2.0.
Beginning in 2025, individuals in this age group will be eligible for something called a “super catch-up” contribution limit for employer-sponsored retirement plans, including 401(k)s. This exciting change, recently clarified by the IRS, provides a unique opportunity to accelerate your retirement savings during those crucial pre-retirement years.
The basics: Catch-up contributions
Catch-up contributions allow individuals aged 50 and older to save extra money for retirement beyond the standard contribution limits. For 2024, the catch-up contribution limit was $7,500, on top of the $22,500 annual contribution cap for 401(k)s and similar plans. These additional contributions are designed to help older workers close any retirement savings gaps they may have accumulated over the years.
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Introducing the super catch-up
Under the SECURE Act 2.0, individuals aged 60, 61, 62, and 63 can contribute even more to their retirement accounts starting in 2025. The new “super catch-up” limit will be the greater of $10,000 or 150% of the regular catch-up contribution limit for the given year, adjusted annually for inflation. At 64, you go to the regular catch-up.
401(k)s just got a little better for those who are aged 60-63, thanks to new catch-up provisions. (Reuters)
For example, if the regular catch-up contribution in 2025 remains at $7,500, the super catch-up limit would increase to $11,250 (150% of $7,500). If the $10,000 floor is adjusted for inflation, it could rise even higher, allowing individuals to add substantially more to their retirement savings.
Why is this important?
This enhancement comes at a pivotal time for many individuals. Those in their early 60s often find themselves at the peak of their earning potential, with more disposable income available for saving. At the same time, they are rapidly approaching retirement and may feel pressure to bolster their nest eggs. The super catch-up offers a golden opportunity to bridge any shortfalls and strengthen their financial security.
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Additionally, this provision aligns with the reality that many Americans are living longer. Increasing retirement savings can help ensure a more comfortable and secure retirement in the face of rising healthcare costs, inflation, and other financial challenges.
Key considerations
To take full advantage of the super catch-up, it’s essential to plan strategically:
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- Evaluate Your Budget: Ensure you have the financial flexibility to maximize contributions. Cutting unnecessary expenses or reallocating resources may be necessary.
- Consult a Financial Advisor: Professional guidance can help optimize your savings strategy, factoring in tax implications and long-term goals. One good place to start is at Exit Wealth to learn more about this technique.
- Understand Tax Implications: Contributions to traditional 401(k)s are tax-deferred, reducing your taxable income now but subject to taxes during retirement withdrawals. Consider how this fits into your overall tax strategy and whether the regular 401(k) or the Roth 401(k) make more sense for your situation.
- Stay Informed: Keep an eye on annual IRS updates regarding contribution limits and inflation adjustments.
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The super catch-up offers a golden opportunity to bridge any shortfalls and strengthen their financial security.
A new era of retirement savings
The super catch-up contribution is a testament to the growing focus on enhancing retirement readiness for Americans. By leveraging this opportunity, individuals aged 60 to 63 can significantly boost their retirement savings, potentially lower their overall tax liability, and provide greater peace of mind as they transition into their golden years.
If you’re approaching this age bracket, now is the time to review your retirement strategy and prepare to make the most of this exciting new provision. Retirement is a journey, and with the super catch-up, you can ensure yours is as secure and fulfilling as possible.
Ted Jenkin is president of Exit Stage Left Advisors and partner at Exit Wealth.
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