June 22, 2021: -British fintech start-up Revolut saw slower revenues and mounting losses last year as the coronavirus pandemic hit payment volumes. However, an increase in the value of cryptocurrencies gave the company a big boost.
Revolut generated £222.1 million in 2020, up 34% from the £166 million revenue it made in the previous year. However, the company said adjusted revenues, a metric it uses to account for revaluation of intangible assets such as crypto, came in at £261 million, up 57% year-on-year.
The growth of the revenue was much slower in the previous year compared to the time when the company reported an almost threefold upgrade in sales in 2019. According to a Sky News report, revolut was privately valued at $5.5 billion and is seeking a valuation of above $10 billion in its next fundraising round.
An increase in the value of cryptocurrencies, which Revolut supports through its trading features, resulted in a £38.7 million windfall for the firm. However, this wasn’t shown on the income statement of Revolt due to a change in reporting, Mikko Salovaara, Revolut’s chief financial officer, said.
Bitcoin, the world’s most significant digital coin, almost quadrupled in value over last year and rallied to an all-time high close to $65,000 in April 2021, but it’s hugely fallen since and was the last trading at around $33,000.
Revolut reported an annual loss of £167.8 million, higher than the £106.7 million lost in 2019. But it reported adjusted operating losses, including crypto revaluation income but excluding share-based payments, of £122 million, a raise from the £98.4 million loss in its last year.
Revolut said gross profit, excluding onboarding costs, tripled year on year to £123 million. The gross profit margin of the company increased to 49% in 2020 from 25% a year earlier. By the fourth quarter of the year 2020, Revolut says its gross margin exceeded 60%, resulting in an adjusted operating profit in November and December.
“It’s a translation into numbers of the excellent performance that we’ve seen in the year 2020 and is ultimately a validation of the business model and the strategy we have set out,” Salovaara said.
Covid-19 forced Revolut to cut down on costs and “repurpose” staff for more profitable endeavors like crypto, stock trading, and business accounts, CEO Nik Storonsky told CNBC.
Revolut has been pushing aggressively into overseas markets like the U.S. and Asia. The firm applied for a U.S. banking license earlier this year. The company is also investing heavily closer to home. It already has an EU banking license but submitted its application for a British banking license in January in a bid to expand lending activity.
