August 11, 2020

Revolut losses triple even as revenues surge

Revolut became Europe's most highly-valued fintech at $5.5bn at the start of this year, following rapid growth in 2019.

Isabel Woodford

2 min read

Nikolay Storonsky, Revolut CEO and founder

Popular London fintech Revolut recorded post-tax losses of £107.4m last year, despite strong growth in customer numbers and revenues.

The five-year-old company more than tripled its losses from 2018, which stood at £32.8m, according to the company’s annual report for 2019, published today.

This comes alongside a similar widening of losses at digital banking competitors Monzo and Starling. Monzo's pre-tax losses grew to £115.4m for 2019 while Starling recorded a loss of £53.6m.


Revolut chief executive Nikolay Storonsky said in a statement he was "pleased" with the company's progress last year.

Indeed, the fintech also posted strong revenues of £162.7m in 2019; a 180% increase from 2018, when it reported revenues of £58.2m. That falls just shy of predictions it would triple yearly revenues in 2019, targeting £180m in sales.

As such, Storonsky told the FT in May that it still expects to break even this year; prompted by investor pressure to finally focus on profitability. That would put Revolut among a small handful of profitable consumer-facing fintechs, alongside OakNorth, TransferWise and (for the most part) Klarna.

His statement today also said he was focused on "reducing our operational costs" for the year ahead.

Revolut spent heavily expanding its pre-paid cards into Singapore and the US — and ramping up hiring efforts — looking to bring on 3,500 new staff in less than 12 months.

The company's unit economics are still negative, with the average customer costing them £1.52 based on direct costs.

In total, the company has raised $917m to date, and recently became Europe's joint most highly-valued fintech.

Year ahead

The challenge for Revolut now will be to keep its swollen fixed cost base under control; not least because it's still unclear if growth into areas like the US will pay off, with downloads there looking slow.

Meanwhile, despite Revolut having diversified its revenue streams, over 60% of its income still comes from interchange fees: the 0.2% cut its takes from customers using their debit card. This is likely to leave revenues for the year ahead impacted by the lockdown.

The company has also struggled with a fast turnover of executives. It is currently appointing the chairman of its UK bank division to boost its application prospects, and is yet to fill its chief operating officer post.


Nonetheless, Revolut will benefit from Robinhood's recent decision to suspend its expansion into the UK, which could have disrupted the success of the London fintech's stock and crypto-trading platform.

The company also seems hungry to launch new revenue-making products, including Revolut Youth, a funnel for a new generation of users from the age of 13.

These products could be lucrative, with Revolut having made £39.5m from premium subscriptions and £20.5m from 'other income' like trading in 2019.

It's also promising to see that Revolut's daily active user base grew by 231% between 2019 and 2018. That means that in raw numbers, Revolut had around 1.1m daily active users at the end of last year — constituting around 10% of its entire user base.

Revolut made only fleeting mention to the impacts of coronavirus in the report.