$33 billion fintech giant Revolut reports first-ever annual profit

Financial technology giant Revolut reported its first ever annual profit in 2021, according to financial statements released on Wednesday, as subscriptions to paid packages and overall usage of the app surged.

The company reported revenue of 636.2 million pounds ($767.1 million) for the year, three times what it earned the year before, and rose to a pre-tax profit of 59.1 million pounds. In 2020, Revolut recorded a pre-tax loss of £205m.

Mikko Salovaara, CFO of Revolut, told CNBC that the results were a product of Revolut’s diversified operations and persistent cost control.

“The worst possible scenario would be if Revolut was not sustainable or if it would require external funding,” Salovaara said. “The reality is we don’t need external funding. We continue to invest in our business and provide products people can trust.”

For 2022, Revolut gave a trading update saying it expects revenues to have increased by more than 30% to £850m. As a privately held company, it is not required to share frequent quarterly reports.

Revolut’s announcement is a rare bit of positive news in a fintech market that has been plagued by mass layoffs and massive write-downs as investors reassess the space amid worsening macroeconomic conditions.

Klarna, the Swedish buy-now-pay-later fintech, saw its valuation plunge 85% to $6.7 billion last year. On Tuesday, the firm posted a record loss of $1 billion in fiscal 2022.

Asked about Revolut’s valuation on Wednesday, Salovaara said he couldn’t say how much the firm was worth since it hasn’t raised money since 2021, but he would be “hard pressed to believe that investors will not continue to be happy with our results . . .

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

Revolut is said to have faced concerns from UK regulators over the robustness of its internal financial controls. In September, BDO’s audit of Revolut’s 2021 financial statements was deemed “inadequate” by the Financial Reporting Council, which said “the risk of an undetected material misstatement was 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 former Lehman Brothers trader Nikolay Storonsky and software developer Vlad Yatsenko, Revolut has quickly grown to become one of Europe’s largest fintech unicorns, valued at $33 billion.

Revolut has pushed hard into overseas markets, particularly 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 has 25 million users worldwide.

Closer to home, however, the company’s growth plans have suffered some setbacks. Revolut has been applying for a banking license in the UK for the past two years, in an attempt to derive more of its revenue from lending activity.

That process has been long, and it is believed that the waiting time is in connection with the delays in the publication of Revolut’s results. Revolut has also faced criticism for an aggressive work culture, which has reportedly led to the departure of key regulators and compliance executives.

Revolut hopes to get its UK banking license “very soon,” Salovaara said. Pressed on when the firm would eventually secure its license, he suggested it would likely happen before the year is out.

While Revolut’s full-year results for 2022 have yet to be released, one thing is clear – the firm’s crypto business deteriorated sharply. Salovaara said that in 2021 crypto accounted for about a third of sales, but by 2022 this had fallen to between 5% and 10%.