Revolut user base grows amid auditor warnings

All-in-one FinTech platform Revolut’s first full year of profit is now being questioned.

This, as the company’s auditor BDO LLP warned that Revolut’s 2021 earnings may have been “materially misstated” according to a report on Wednesday (March 1) by the Financial Times (FT).

At the very least, the company’s user base continues to grow — from around 16 million in 2021 to over 27 million today.

The crypto boom in 2021 spurred a tripling of revenue for Revolut, generating $769 million compared to $266 million for 2020 results, helping the company reach profitability for the first time.

The company’s cryptocurrency offerings now account for less than 5% of revenue.

“In 2021, we made significant progress in achieving our ambitious targets, particularly achieving our first full year of profitability,” company chairman Martin Gilbert wrote in a statement accompanying this week’s (February 27) release of the 2021 figures.

An $800 million funding round in the summer of 2021 valued the business at $33 billion, as reported at the time by PYMTNTS.

Everything seemed to be moving up and to the right, despite the company’s failure to release its financial results on time.

But the financial results are proving to be a big problem.

According to the FT report, BDO issued a qualified opinion on Revolut’s due 2021 accounts because the design of the FinTech’s IT systems meant there was a risk that up to two-thirds of its revenue could not be fully verified.

The roughly $573 million in uncontrollable revenue includes revenue from Revolut’s currency and wealth division, which includes the platform’s crypto offerings.

“A diligent management of our balance sheet, together with improvements to financial systems, processes and controls, stand as the two priorities of the finance and treasury teams,” said Mikko Salovaara, Revolut’s CFO.

Revolut has been applying for a UK banking license since early 2021, and PYMNTS noted last year that the company was facing pressure to improve its internal financial reporting controls, after the UK’s Financial Reporting Council found the company’s audits to be deficient and at high risk of “misinformation.”

These findings proved prescient.

A UK banking license could boost Revolut’s profitability as higher interest rates make deposits more valuable, as well as help clear the way for the platform to receive licenses in other markets.

FinTech has so far received a full banking license from the European Central Bank (ECB), and is regulated by the Bank of Lithuania.

As reported by PYMNTS, the UK-based FinTech is targeting a growth target of 100 million users and is looking to Asia, particularly Japan, to help accelerate its already rapid growth, with a soft target of growing to at least 10 million users in across the Asia Pacific (APAC) region by 2025.

Revolut’s core product is an account that allows users to send, hold and receive money, combined with a payment card.