Finance app Revolut Ltd. made its first annual profit in 2021 after nearly tripling its revenue, according to delayed accounts published Wednesday. Revenue growth slowed to about 30% last year.
(Bloomberg) — Finance app Revolut Ltd. made its first annual profit in 2021 after nearly tripling its revenue, according to delayed accounts published Wednesday. Revenue growth slowed to about 30% last year.
The London-based business said pretax profit of £39.8 million ($48 million) in 2021 compared to a loss of £220.7 million a year earlier, with revenue jumping to £636 million. The firm said its biggest source of revenue was foreign exchange and wealth, partly driven by a boom in crypto that’s since gone into reverse. Gross margins increased to 70% from 33%.
Revolut continued to grow at a slower pace in 2022, with revenue rising to about £850 million, according to a statement.
“We have achieved our first full year of profit and shown that we can accelerate customer growth, at scale, and grow revenue across all of our product lines,” said Nikolay Storonsky, Revolut’s 38-year-old chief executive officer.
The 2021 accounts were delayed for months and marked overdue since December amid a Financial Reporting Council review of audit quality. While auditors at BDO signed off the accounts, they said “we were unable to satisfy ourselves” about the completeness of some of Revolut’s revenue data.
“We’ve been growing super fast. We’ve been expanding into a tonne of regions, and we just had a bit more growth than frankly we had anticipated or built for in terms of some of the IT infrastructure and systems that we had,” Chief Financial Officer Mikko Salovaara said in an interview with Bloomberg.
“We fully remediated the problems that we had, and it’s not going to happen again,” he said.
Crypto Downturn
Crypto services were less than 10% of Revolut’s revenue last year, down from as much as 35% at the height of the boom, Salovaara said. Now, the firm’s growth is driven more by increased payments volumes, subscriptions, foreign exchange and business products, he added.
The company is “nearly there” with gaining its UK banking license, according to Salovaara. The firm requested the license, which would allow it to take deposits and issue loans, in January 2021.
Revolut, which was valued at $33 billion in a funding round in 2021, is one of Europe’s largest startups with backers including SoftBank Group Corp.’s Vision Fund 2 and Tiger Global Management. About 27 million customers globally use the platform for payments, trading and other wealth services.
Storonsky said in July that Revolut was profitable and had enough funding for two years, allowing it to sidestep a gruelling period for fintech fundraising that’s seen rivals such as Klarna cut billions of dollars from their market value.
The firm currently makes most of its money in Europe and plans to expand in new markets including New Zealand, Brazil, Mexico and India. It more than doubled its headcount in 2021 and employed 4,655 people.
Salovaara said Revolut would continue to spend on marketing and new products this year, supported by its profitability and a “boon” from rising interest rates.
Other Insights
- Revolut launched in 2015 as a prepaid card offering cheap foreign-exchange fees, with Storonsky — a former derivatives trader at Credit Suisse Group AG and Lehman Brothers — handing out freebies at railway stations. Now it operates in business, crypto, and buy now, pay later products.
- In November, Revolut announced a new instant messaging function, as part of its attempts to become Europe’s answer to China’s lifestyle “superapp” WeChat.
- Total pay for directors rose to £3.7 million, up from £580,000. Most of this was share-based payments.
–With assistance from Katherine Griffiths.
(Updated with CFO comments, auditor comments from fifth paragraph.)
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