Revolut recorded pre-tax losses of £207m last year, with the $5.5bn London fintech having ploughed money into new products and a US launch in the midst of the pandemic.
Nearly a third of Revolut's adjusted revenues came from its trading platform, which allows users to buy stocks and cryptocurrencies. The trading boom also lured in new users, helping grow Revolut's customer base by 45% to 14.5m last year, up from 10m at the close of 2019.
Revolut closed a $500m fundraise in February 2020, just weeks before the lockdown took hold in Europe, allowing it to secure a healthy treasury.
The fintech said its main investment was in personnel and software — particularly to bolster its risk and compliance measures. It ended last year with over 2k staff.
It also very tentatively kickstarted its credit products in Lithuania and Poland, with its lending facility standing at £1.4m at the end of the year.
Meanwhile, its total deposit base grew to £4.6bn, meaning the average user now stores £306 in their Revolut wallets.
Always look on the bright side
The pandemic clearly took its toll on Revolut. Revenue growth of 34% is a dramatic slowdown from the 180% revenue climb it recorded between 2018 and 2019. User growth of 45% was also a drop from the 200% boost in user acquisition it recorded in 2019.
Meanwhile, its monthly burn rate sat at £17.3m on average.
But in an interview with Sifted, new CFO Mikko Salovaara argued that the company was doing better than the raw numbers suggested.
“That loss for financial year is not really what I think is reflective of the business itself," he said, pointing instead to the “adjusted” loss metric of £122m and describing it as the amount "invested into the business."
The adjusted figure factors in alternative accounting rules around its crypto holdings, and the non-cash equity that's being paid out to subsidise employees' salaries.
Overall, Salovaara argued that Revolut had performed well in a difficult year.
“We really improved the efficiency of the business," he said, noting that the UK and Ireland were its most lucrative markets.
Last year, Revolut's gross profit stood at £70m, equating to a gross earning of £4.66 per customer. This reflects how much it earns for each product it sells, and is calculated by subtracting direct costs from revenue.
In particular, Revolut made progress in the final quarter of 2020. Losses dipped to just £16m across the last three months, while November and December individually recorded a small profit, according to the company (in line with forecasts from last May).
That puts Revolut in a similar camp to Starling, one of its peers, which announced it had had its first 'profitable month' in November.
Salovaara also stressed that Revolut was now on track to record an annual profit across 2021, reporting revenue growth of 130% in the first quarter.
As such, the need for a fresh fundraise is still being debated, he added. That's despite costs continuing to grow and the potential need for regulatory capital if its banking application is approved.
A bank at least?
But the company may struggle to balance these ambitions with its cryptocurrency indulgence, which has raised eyebrows among regulators.
Indeed, TSB — a top UK bank — is reported to be banning the purchase of crypto over "fraud fears".
Meanwhile, cryptocurrency trading made up 10-15% of Revolut's revenues last year, according to Salovaara, making it an important part of its topline.
Check out the 2019 financials for Monzo, Revolut and Starling here.