Revolut: Delayed accounts reveal first full year of profit as banking licence ‘imminent’
Revolut said its UK banking licence was “imminent” today as the firm revealed it had spent its first full year in profit in 2021, in a much-delayed set of accounts.
The London-based digital banking fintech, which was due to file its accounts in September 2022 and missed an extended deadline of the end of the year, said it had generated a £26.3m profit in 2021.
The results today showed revenues in 2022 surged over 30 per cent to more than £850m. However, Revolut is yet to reveal whether it has managed to maintain its profitability amid soaring costs and a wider economic slump last year.
Speaking with City A.M. this morning, chief financial officer Mikko Salovaara said the firm’s long awaited UK banking licence was also “imminent” and would be granted in the “very near term”.
Revolut applied for its full license in early 2021 and the hunt for full authorisation has proved a speed bump to its growth in the past two years. In an interview with Morning Wire last year, Storonsky criticised the pace of regulators and said the UK was slow compared to competitor markets.
Revolut, which was previously the UK’s most valuable private firm, has been on a drive to expand its products beyond its core banking and foreign exchange offer and achieve so-called ‘super app’ status with a spread of different financial products.
The firm said that the expansion had boosted the bottom line in 2021, with revenue nearly tripling to £636m on the back of a boom in usage of its payments, subscriptions, business accounts, and wealth products.
Co-founder and chief Nik Storonsky said the results numbers the firm can “accelerate customer growth, at scale, and grow revenue across all our product lines”.
City veteran and chairman of Revolut, Martin Gilbert, said the first full year in the black was a “significant milestone for the company”.
“This strong financial performance shows Revolut has efficiently moved from the ‘start-up’ business that is only focused on growth, to the ‘scale-up’ looking to grow profitably,” he added.
Revolut said it has also widened its margins in the year due to an increased share of revenue from higher margin products. The firm’s gross margin increased from 33 per cent in 2020 to 70 per cent for 2021, while operating expenses only increased by 37 per cent. However, rising prices in the past 12 months are likely to have put those under pressure.
Customer deposit balances also grew to £7.4bn as of December 2021, up from £4.6bn in 2020.
The release of Revolut’s numbers were shrouded by a note from its auditor that said it was unable to independently verify three-quarters of the £636m of revenue the firm reported due to revamp of its internal IT systems.
BDO said the financial statements gave a “true and fair view of the state of the group” but warned that some information may be “materially misstated”. A senior City auditor told Morning Wire that while the statement did not mean there was an error, BDO “have not been able to confirm there isn’t”.
“This is a highly unusual position for a financial services business to be in and something Revolut need to address urgently,” the person said. Revolut said the issues with its system have been resolved and its total revenue figures is not in doubt.
Revolut has continued an aggressive growth push in the past 12 months but soaring costs have put growing tech and fintech firms under strain. Revolut said it had bucked the wave of layoffs that has hit the sector, however, and increased its headcount to more than 6,000.
Staffing troubles have also plagued the firm. Revolut was hit by an exodus from its top UK compliance and regulatory teams last year, City A.M. revealed, in a major setback to its licensing push.