London-headquartered financial services company Revolut just posted its first annual profits and sent the world into a tizzy. The company released its annual report for 2021 and while its growth trajectory has been meteoric, this is the first time it has reached profitability. The annual report notes that the company nearly tripled its revenue between 2020 and 2021.
The financial services app reported a net profit of £26 million ($31.34 million) in 2021. What started as a low-fee money transfer service has now evolved into a major e-money institution.
Revolut’s primary business is to send, receive, and hold money, and offers accounts featuring everything from currency exchange to crypto.
The Revolut Evolution
Founded in 2015 by Nikolay Storonsky and Vlad Yatsenko, Revolut rose through the ranks, becoming an investor favorite.
In 2021, the fintech firm managed to raise $800 million at a valuation of $33 billion. The company advertised that its mission is to create a global financial superapp that offers customers superior service and security.
The company was quick to jump on the crypto bandwagon, offering cryptocurrency trading in 2017. Experts estimate that the crypto boom helped the company quickly turn a profit. Today, the group’s retail customers number over 27 million.
Revolut’s Annual Profits Boost Investor Hopes
Revolut’s annual profits are a sign that the app is successful in its strategy of challenging traditional banks.
The company reported revenues of £636.2 million ($767.1 million) for the year, three times what it made the year before.
“Our profitability in 2021 was despite the economy suffering a significant prolonged shock from global lockdowns, continued travel bans and Covid-19 effects,” said CEO Nik Storonsky. “At the same time, the accelerated shift to digital services and remote working boosted our number of customers and the amount that they used our app.”
Mikko Salovaara, Revolut’s chief financial officer, attributed the group’s profitability to diligent cost control and business diversification. “The worst possible scenario would be if Revolut wasn’t sustainable or if it were to require external funding,” Salovaara admitted. “The reality is we don’t require external funding. We continue to invest in our business providing products people can rely on.” He declined to comment on the group’s current valuation as the company had not raised funds since 2021. However, Salovaara mentioned that he would be hard pressed to believe that investors are unhappy with the fintech company’s performance.
For 2022, the fintech company expects revenues to rise by approximately 30%, reaching £850 million (over $1 billion). As it is not a publicly held company, they are not obligated to share quarterly fiscal reports.
Revolut’s profitability is the exception rather than the norm, as most firms have seen their businesses shrink as a volatile economic climate dampens profit forecasts. The app has helped people with financial panning during uncertain times, making it a favorite across borders. It has held strong, despite a majority of companies have seen their valuations go down as investors tried to play it safe and cut losses amid worsening geopolitical conditions.
The Future of Fintech
The company has been busy with expansions in the past year, and has started operations in Brazil, Mexico, India, and the US. They are looking at the potential in America, where it currently has over 500,00 clients.
Late 2022, Revolut claimed that it is attracting over 2000+ new businesses every week and is on track to becoming “a borderless economy.” The company has also set its sights on New Zealand, and told stakeholders that they will reveal more in the near future.
The press release also noted “Following the granting of a full European banking license in 2021 by the European Central Bank, Revolut rolled-out banking services to an additional 12 new countries in 2022, taking the total European countries serviced by the Revolut bank to 30.” The London-based firm will be launching new products in New Zealand, Brazil, Mexico, and India in the coming months.
The company is yet to disclose its full results for 2021, but one thing is clear – the super app is on its way to bringing in more customers and has stayed strong even in a weak economy.
