Nutmeg spends £3 for every £1 of revenue

Nutmeg spends £3 for every £1 of revenue

The most recent set of results from robo-advice firm Nutmeg has shown the business spent just under £3 acquiring each new £1 of revenue in the year to the end of December 2018. 

The latest accounts for the firm, filed last week, showed the firm had assets under administration of £1.5bn and had increased its revenue by £2.6m to £7.1m.

But doing so it spent £7.6m on marketing, equating to £2.92 for each new pound of revenue. Nutmeg's revenue comes from the fees clients pay to access its services. 

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The company lost £18m during the year.

Mark Polson, principal at consultancy firm the Lang Cat, said it will take a “lot” of years for the revenue to turn into profit, given the company’s current revenue margin is 0.48 per cent, and average client pot size is around £25,000.

The company had just over 60,000 clients at the end of 2018. 

In its results statement, Nutmeg chief executive Martin Stead wrote: “2018 was another successful year in Nutmeg's transition from start-up to scale-up, with strong progress towards our objective to be the most trusted and fastest growing digital wealth manager in the world, and continuing to deliver on our mission to democratise wealth management and empower generations of investors. “

The chief executive added that “it is not part of the company’s plan” to be profitable yet.

Nutmeg raised £45m in new funding from investors, including banking group Goldman Sachs and Convoy, a financial advice business in Hong Kong, in its latest funding round.