Revolut Revenue Growth: 57% Increase in 2020

Revolut's 2020 Financial Performance

Revolut, a fintech startup, has recently released its financial results and is disseminating information to the media. The company’s revenue for 2020 totaled $361 million (£261 million), representing a substantial 57% increase when contrasted with the $229 million (£166 million) revenue recorded in 2019.

Cryptocurrency Asset Impact

Notably, these revenue figures incorporate fair value gains derived from cryptocurrency assets, indicating that Revolut maintained a holding of crypto assets on its balance sheet during a portion of the year. $54 million (£39 million) was realized in fair value gains from these cryptocurrency assets.

Update: It is important to note that these crypto assets were held until July 27, 2020. Currently, Revolut operates as an agent facilitating crypto transactions and no longer retains crypto assets on its balance sheet.

Profitability and Losses

The company achieved a gross profit of $170 million (£123 million) throughout the last year. However, Revolut continues to report operating losses, with the first quarter of 2020 being particularly challenging, experiencing an adjusted operating loss of $76 million (£55 million).

The total non-adjusted operating loss for 2020 amounted to $277 million (£200.6 million). A significant portion of this loss can be attributed to administrative expenses, common among rapidly growing tech companies.

With a workforce of 2,200 employees, the company incurred $367 million (£266 million) in administrative costs. However, positive trends are emerging, as illustrated below:

Industry Trends and Customer Base

These developments align with broader industry trends, as many fintech startups prioritized profitability and margin improvement throughout 2020. By the close of 2020, Revolut served 14.5 million individual customers and 500,000 businesses utilizing Revolut Business.

Founder and CEO Nikolay Storonsky stated, “As the extraordinary circumstances of 2020 drove the trend towards digital financial management we continued to innovate for customers to make their financial lives easier and accelerate daily use. We launched 24 new retail and business products, expanded into the US, Japan and Australia and launched banking services in Lithuania, all while significantly improving our profitability.” He further added, “We began 2021 with a more resilient and productive business that will enhance our trajectory towards rapid growth.”

Significant Growth in Q1 2021

A comparison of Q1 2020 and Q1 2021 reveals substantial improvements for the fintech firm. Revenue increased by 130% year-over-year, and gross profit experienced a 300% growth between the same periods.

Diversification of Revenue Streams

Revolut has been actively launching new products to broaden its revenue sources. The company is evolving into a comprehensive financial super app, offering services such as current accounts, debit cards, trading platforms, insurance products, premium subscriptions, and cryptocurrency trading, among others.

Key Revenue Components

Interchange revenue generated from card transactions constitutes a significant portion of the company’s income. In 2020, cards and interchange transactions yielded $131 million (£95 million) in revenue. This revenue is derived from fees paid by card schemes (Visa or Mastercard) to Revolut for each card purchase.

Foreign exchange services and wealth management contributed $111 million (£80 million) to the company’s revenue. Additionally, subscription services, including Revolut Plus, Revolut Premium, and Revolut Metal, generated $104 million (£75 million) in revenue.

These three areas represent robust revenue pillars, each contributing approximately one-third of the company’s total revenue.

Geographic Revenue Distribution

Despite its international expansion, the U.K. remains Revolut’s largest market. In 2020, 88.4% of the company’s (non-adjusted) revenue originated from its U.K. operations. The European Economic Area (excluding the U.K.) accounted for 10.2% of revenue, while the U.S., Japan, Australia, and other markets contributed negligibly.

Funding and Future Prospects

In 2020, Revolut secured a substantial funding round – a $500 million Series D round, which was later extended to $580 million. An initial public offering (IPO) within the next 12 months is a distinct possibility.