Nikolay Storonsky, founder and CEO of Revolut.
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Financial technology giant Revolut posted its first annual profit in 2021, according to financial reports released on Wednesday, as subscriptions to its paid packages and overall use of its app surged.
The company reported revenue of £636.2 million ($767.1 million) for the year, three times the previous year, and swung to a pre-tax profit of £59.1 million. In 2020, Revolut recorded a pre-tax loss of £205 million.
Miko Salovaara, Revolut’s chief financial officer, told CNBC that the results were a product of Revolut’s diversified business and diligent cost control.
“The worst possible scenario would be Revolut not being sustainable or requiring external funding,” Salovaara said. “The reality is that we don’t need external funding. We continue to invest in our business by providing products that people can rely on.”
For 2022, Revolut provided an update on trading, saying it expects revenue to have grown by more than 30% to £850m. As a private company, it is not required to share frequent quarterly reports.
Revolut’s announcement is rare positive news in a fintech market that has been plagued by mass layoffs and massive valuation cuts as investors reassess the space amid deteriorating macroeconomic conditions.
Klarna, the Swedish buy-now, pay-later fintech company, saw its valuation drop 85% to $6.7 billion last year. On Tuesday, the company reported a record loss of $1 billion in its 2022 fiscal year.
Asked about Revolut’s valuation on Wednesday, Salovaara said he couldn’t say how much the firm is worth because it hasn’t raised money since 2021, but he would find it “hard to believe that investors won’t continue to be happy with our presentation.”
However, Revolut was late to file its accounts with the UK company registry, Companies House, in time for the December 31 deadline. They were finally approved by BDO, Revolut’s auditors, last month.
Revolut is reportedly facing concerns from UK regulators about the robustness of its internal financial controls. In September, BDO’s audit of Revolut’s 2021 accounts was deemed “inadequate” by the Financial Reporting Council, which said the “risk of undetected material misstatement is unacceptably high”.
The company, which has no physical branches, offers digital banking, money transfers and cryptocurrency and stock trading through a single app. It competes with the likes of wiseMonzo and Starling.
Founded in 2015 by ex-Lehman Brothers trader Nikolai Storonsky and software developer Vlad Yatsenko, Revolut has quickly grown to become one of Europe’s largest fintech unicorns with a $33 billion valuation.
Revolut is making a strong push in overseas markets, particularly in the US, where it currently has over 500,000 customers. The firm has also opened operations in Brazil, Mexico and India. In November, Revolut announced that it had 25 million users worldwide.
Closer to home, however, the company’s growth plans have suffered some setbacks. Revolut has been seeking a UK banking license for the past two years in a bid to get more of its lending revenue.
This process was drawn out and the wait is believed to be related to the delay in publishing Revolut results. Revolut has also faced criticism for an aggressive work culture that has reportedly led to the departure of key executives in the regulatory and compliance department.
Revolut hopes to receive its UK banking license “very soon”, Salovaara said. Pressed on when the firm would eventually receive its license, he suggested it would likely happen before the end of the year.
While Revolut’s full-year 2022 results have yet to be released, one thing is clear — the firm’s crypto business has taken a sharp turn for the worse. Salovaara said that in 2021, crypto accounted for roughly a third of sales, but in 2022, this had fallen to between 5% to 10%.