First-Ever Profit For Fintech Giant Revolut, Valued At $33 Billion

According to financial records issued on Wednesday, financial technology company Revolut made its first annual profit in 2021 as both usage of its app and subscriptions to its paid packages increased significantly.

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Three times as much as the previous year's revenues, or £636.2 million ($767.1 million), were recorded by the corporation for the year, which led to a pre-tax profit of £59.1 million. Revolut reported a £205 million pre-tax loss in 2020.

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Revolut's chief financial officer, Mikko Salovaara, told Trade Algo that the company's varied business and meticulous cost control were the causes of the success.

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The worst case scenario, according to Salovaara, is for Revolut to become unsustainable or need outside assistance. "In actuality, we don't need outside funding. We keep making investments in our company so that we can continue to offer reliable items.

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Revolut provided a trading update for 2022 and stated that it anticipates revenues to have increased by more than 30% to £850 million. It is not compelled to frequently share quarterly reports because it is a privately held company.

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The announcement from Revolut is a rare instance of good news in the fintech industry, which has been beset by massive layoffs and sharp price reductions as investors reevaluate the sector in the face of deteriorating macroeconomic conditions.

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The value of Klarna, a Swedish buy-now, pay-later fintech, fell by 85% to $6.7 billion last year. The company reported a record $1 billion loss for its 2022 fiscal year on Tuesday.

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Salovaara declined to estimate Revolut's value when asked about it on Wednesday because the company hasn't solicited money since 2021, but he said it would be "impossible to suppose investors wouldn't continue to be delighted with our performance."

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Revolut did not deliver its accounts to the UK on time, nevertheless. Companies House, in time for a deadline of December 31. This month, BDO, Revolut's auditors, finally approved them.

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Revolut apparently came under scrutiny from the UK. the reliability of its own financial controls to authorities. The Financial Reporting Council deemed BDO's audit of Revolut's 2021 accounts "inadequate" in September, noting that "the risk of an undetected material misrepresentation was unacceptably high."

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The business, which has no physical locations, provides stock trading, cryptocurrency trading, and digital banking through a single app. It contends with companies like Starling, Monzo, and Wise.

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Revolut, which was founded in 2015 by former Lehman Brothers trader Nikolay Storonsky and software developer Vlad Yatsenko, has developed swiftly to rank among the largest financial unicorns in Europe, with a $33 billion valuation.

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Revolut has been actively pursuing international markets, especially the United States, where it currently has over 500,000 customers. Moreover, the company has launched operations in Brazil, Mexico, and India. Revolut said in November that it has 25 million members worldwide.

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Yet, the company's expansion aspirations have faced some local difficulties. In the UK, Revolut has been working to obtain a banking license. for the previous two years in an effort to increase the percentage of its income that comes from lending activity.

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That procedure has taken a long time, and it is thought that the wait is related to the delays in the release of Revolut's results. Meanwhile, Revolut has come under fire for having a hostile workplace culture that purportedly caused key regulatory personnel to leave.

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In order to receive its U.K. Salovaara stated that a banking license would be issued "very shortly". When questioned about when the company would eventually obtain its license, he answered that it was probably going to happen before the year ended.

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Revolut's full-year 2022 results have not yet been released, but one thing is certain: the company's cryptocurrency business significantly declined. Salovaara claimed that while cryptocurrency accounted for almost a third of sales in 2021, it only accounted for 5% to 10% of sales in 2022.