UK fintech payments unicorn cuts back as Covid-19 boost wears off

UK payments infrastructure financial technology firm Paddle is reducing its workforce of over 350 by 8% after a boost to its business during the Covid-19 pandemic comes to an end.

The company, which provides payments infrastructure to software-as-a-service providers, said it experienced “incredible levels of growth” during the pandemic when people and businesses began working remotely and digitally. But it said this boost to business has been replaced by new challenges, which are having the opposite effect.

Paddle founder and CEO Christian Owens said in a memo: “During Covid-19, we were the beneficiaries of the world shifting to a more remote and digital way of working. Many software companies moved to Paddle, including those who had never sold globally before, and the software companies we already worked with saw incredible levels of growth as the world adopted their products.”

The company saw transaction volumes increase more than three-and-a-half times during the period.

But Owens said the world has now changed, with high inflation and interest rates and investors holding back investments in fintech. He acknowledged the mistake of “assuming that the growth our customers saw during Covid-19 was a signal of fundamental change and that growth would be sustained largely in perpetuity”.

“This week has been a tough one at Paddle, as we said goodbye to 8% of our team,” said Owens. “Some incredibly talented folks are leaving the business this week, and I’d encourage you to hire any of them.”

During the Covid-19 pandemic, the fintech sector saw accelerated take-up of digital services to enable people to work and carry out everyday tasks digitally. This boosted the take-up of cloud-based services, as well as fintech, by businesses and consumers.

Separately, US fintech firm LendingClub this week cut its workforce by 14% as high interest rates stifle demand for its lending services.