Revolut Reports First-Ever Annual Profit amid Stagnating Tech Industry
The reported first-ever annual profit by Revolut follows the fintech giant’s January decision to suspend launching RevCoin.
British-Lithuanian neobank and fintech platform Revolut recently reported its first-ever annual profit due to increased user engagement. The London-based fintech giant revealed it raked in a net profit of £59.1 million for 2021. According to Revolut, its commendable performance for the given year was due to a sharp increase in its paid packages subscription. In addition, the company revealed that overall usage of its app also grew substantially in 2021.
Revolut raked in revenue of £636.2 million, or $766.9 million, in 2021, three times what the fintech giant made the previous year. Furthermore, the British neobank also added that it expects revenue to have grown more than 30% to £850 million in 2022. This development is part of Revolut’s trading update for the stated year. However, due to its status as a privately held firm, the company is also under no obligation to share frequent quarterly reports.
Revolut’s chief financial officer Mikko Salovaara touched on the company’s latest performance in a media session. Ascribing Revolut’s results to the fintech’s diversified business and diligent cost control, Salovaara also said:
“The worst possible scenario would be if Revolut wasn’t sustainable or if it were to require external funding. The reality is we don’t require external funding. We continue to invest in our business, providing products people can rely on.”
Revolut recorded a pretax loss of £205 million.
Reported Revolut First-Ever Annual Profit Welcome Relief to Troubled Fintech Space
The Revolut first-ever annual profit announcement is a welcome development to a fintech market plagued by valuation downturns. As the industry continues to suffer macroeconomic constraints, investors consider more safe-haven ventures.
The fintech industry has also seen mass downsizing as soaring inflation and valuation cuts weigh heavily. Last July, Swedish buy now, pay later (BNPL) fintech Klarna experienced a colossal 85% valuation drawdown. At the time, Klarna plunged to a relatively low $6.7 billion and was still reeling from its global May layoff scheme. The company recently posted a record loss of $1 billion in its 2022 fiscal year due to deteriorating business conditions. The last time Klarna made a full-year profit was in 2018.
In light of Klarna’s development and Revolut’s converse situation, Salovaara believes investors are pleased with Revolut’s performance. However, the fintech’s CFO could not estimate Revolut’s current value, considering it last raised cash in 2021.
Revolut, which barely made the end-of-year deadline for producing accounts to the UK company register, also faced UK regulatory concerns. Regulators questioned the robustness of the company’s internal financial controls, with Revolut’s auditors pressuring for internal control improvements.
RevCoin Launch Put on Hold
According to a January report, Revolut suspended the launch of its native digital currency, RevCoin. The fintech giant held off launching the coin to determine the full extent of the aftermath of the FTX crash. In a statement, a Revolut spokesperson explained at the time:
“We are scoping the market conditions and assessing the best time to launch RevCoin in the coming months.”
Although Revolut still intends to launch RevCoin this year, the company did not give a specific time. Instead, the spokesperson said the time specificity would depend on the neobank’s research.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.