Solaris Reports Net Loss of €56 Million

Higher costs are weighing on Solaris’ earnings: the Berlin-based fintech company posted a net loss of €56 million last year, an increase of about 33 percent compared to 2021, the company announced Tuesday.

“The year 2022 has put Solaris to a tough test,” the statement said. Increased personnel costs and costs to process Bafin orders were the main factors here. During an audit in 2020, the financial supervisory authority identified deficiencies at Solaris, some of which were serious. As a result, it sent a special auditor to the bank and also increased the capital requirements.

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Bafin then tightened its control of Solaris at the beginning of January

Since then, the company has had to get the green light from Bafin before it can take on new customers.

“Decisive for the increased costs are investments to remedy regulatory deficiencies, such as consulting costs or additional personnel expenses in the double-digit million range,” a Solaris spokesman said.

Personnel costs at Solaris SE alone rose by about €11 million. The number of employees in the entire group, including the British competitor Contis acquired in 2021, rose from about 425 to a total of 800. Personnel costs therefore increased by a total of 75 percent to around €70 million. The company’s revenue increased by 30 percent to €130 million last year.

Solaris enables other startups to use the institute’s banking license and do their first business with it. The fintech also offers banking services to established companies, such as issuing credit cards.

Despite rising costs, the company says it continues to approach the profitability threshold – at least adjusted for one-time costs, such as for the ongoing restructuring or the consequences of the Bafin special audit, Solaris CEO Carsten Höltkemeyer told industry portal Finance Forward.

New financing round completed

In January, Höltkemeyer had already announced in an interview with Handelsblatt that the company should “demonstrate profitable growth and be in the black for the first time this year”.

Fresh capital is also expected to help. As the Berlin fintech company also announced, it was able to close a new financing round.

In total, Solaris is raising €38 million from existing investors – and, according to its own information, still comes to a valuation of €1.6 billion. The funds will be used, among other things, to improve governance and compliance.

Solaris also announced a reorganization of the board of directors. Chloé Mayenobe, the current head of organization, will leave the company at the end of the month. The position will not be filled. Instead, CEO Höltkemeyer will take over a large part of Mayenobe’s responsibilities himself.

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(Featured image by PeterDargatz via Pixabay)

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First published in Handelsblatt, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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