$33 billion fintech giant Revolut reports first ever annual profit

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Nikolay Storonsky, founder and CEO of Revolut.

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Financial technology giant Revolut reported its first annual profit in 2021, according to financial statements published on Wednesday, as subscriptions to its paid packages and overall use of its app grew significantly.

The company reported revenues of £636.2 million ($767.1 million) for the year, three times what they did the year before, and went to a pre-tax profit of £59.1 million. In 2020, Revolut recorded a pre-tax loss of £205 million.

Mikko Salovaara, Revolut’s chief financial officer, told CNBC that the results were the result of Revolut’s diversified business and diligent cost control.

“The worst possible scenario would be if Revolut wasn’t sustainable or needed external funding,” Salovaara said. “The truth is we don’t need external funding. We continue to invest in our business providing products that people can trust.”

For 2022, Revolut gave a trading update saying it expects revenue to grow by more than 30% to £850 million. As a private company, it is not required to share frequent quarterly reports.

Revolut’s announcement is a rare piece of positive news in a fintech market that has been plagued by mass layoffs and significant valuation cuts as investors reassess their position amid a volatile macroeconomic environment. getting worse.

Klarna, now a Swedish buyout, later a fintech payment, saw its valuation drop 85% to $6.7 billion last year. On Tuesday, the company posted a record $1 billion loss for its 2022 fiscal year.

When asked about Revolut’s valuation on Wednesday, Salovaara said he couldn’t say how much the company was worth because it hasn’t raised money since 2021, but that it would be “hard to believe investors wouldn’t continue investors happy with our performance. .”

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However, Revolut was late to file its accounts with the UK company registry, Companies House, in time for a December 31 deadline. They were last signed by BDO, Revolut’s auditors, last month.

Revolut reportedly raised concerns with UK regulators about the strength 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 was very 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 such CleverMonzo and Starling.

Founded in 2015 by former Lehman Brothers trader Nikolay Storonsky and software developer Vlad Yatsenko, Revolut has quickly become one of Europe’s largest fintech unicorns, with a valuation of $33 one billion.

Revolut has been pushing hard into overseas markets, particularly the US, where it currently has over 500,000 clients. The company has also opened operations in Brazil, Mexico and India. In November, Revolut announced that it has 25 million users worldwide.

Closer to home, however, the company’s growth plans have faced some problems. Revolut has been seeking a banking license in the UK for the past two years, in an attempt to get more of its income from lending operations.

That process has been drawn out, and the wait is believed to be related to the delay in the release of Revolut’s products. Revolut has also faced criticism over an aggressive work culture, which has reportedly led to the departure of key regulatory and compliance officers.

Revolut hopes to get a UK banking license “very soon,” Salovaara said. Pressed on when the company would finally get its license, he suggested it was likely to happen before the end of the year over.

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