Revolut Hits Record US$553m Profit; Seeks US$40bn Valuation
Leading UK-based neobank Revolut has made a record pre-tax profit of £438m (US$553.1m) for the full year 2023.
The fintech attributes these record returns to strong user growth rates and rising interest-related income.
The results come as Revolut seeks a US$500m share sale at a valuation of US$40bn, up from the US$33bn valuation it hit in its 2021 fundraiser.
Indeed, these positive results should help markedly in fundraising efforts, with FY2023 revenue doubling year-on-year to £1.8bn (US$2.3bn), shattering initial forecasts.
Soaring interest income is the largest contributor here, rising to £500m (US$638m) in 2023 from £83m (US$106m) in the previous year.
Its 2023 results are a marked improvement on 2022 when Revolut made a pre-tax loss of £25.4m (US$32.4m).
Record profit the path to US$500m fundraise
In June this year, it was revealed that Revolut was seeking a US$500m share sale, including shares held by its employees.
The valuation, notwithstanding Revolut’s impressive FY2023 profits, would buck today’s trend of a fintech funding crunch – as VCs have gradually withdrawn from the post-pandemic boom of fintech investment.
Nikolay Storonsky, Founder and CEO of Revolut, is expected to cash in a multi-million dollar portion of his own shares too as part of the share sale.
Raising US$500m at a US$40bn valuation would be all the more impressive given Revolut has yet to receive its full UK banking licence.
Speaking to CNBC, Storonsky remains optimistic the neobank can secure its licence in an effort that has so far stretched over three years.
He says: “UK banking licences are being approved for smaller companies. They usually approve someone twice every year, and [they typically tend to be smaller institutions]. Of course, we are very large, so it takes extra time. Hopefully, sooner or later, we’ll get it.”
Speaking to Reuters, Revolut’s UK CEO Francesca Carlesi notes the company is “progressing well”, but adds there are “a lot of steps” in the process.
“We are by nature optimistic but you know at the same time, I really don’t think we should put any timeline to this," she concludes.
A standing issue for Revolut has been its share structure, which is inconsistent with Prudential Regulatory Authority (UK financial services regulator) rules.
Revolut has made strides to correct the noncompliance of its share structure, such as transferring its six share classes into a unified class – striking a deal with Japanese tech investor SoftBank to make it happen.
Full transparency in the nature of Revolut’s share structure would be made all the more apparent should it be listed publicly, and there have been suggestions that Revolut is seeking an Initial Public Offering (IPO).
An IPO would go some way to clear up the company’s often tardy financial reporting. While its FY2023 results were submitted ahead of the September 2024 deadline, its full-year results for 2021 and 2022 were delayed, drawing scrutiny from regulators.
While the fintech has signalled its intent to list publicly, Victor Stinga, Revolut’s Chief Financial Officer, refused to comment on an IPO timeline when speaking to Reuters.
He says: “Improving financial controls and making sure we bolster our team, being able to release these results within six months, is part of that journey [to an IPO]. So we are taking steps in making sure that our control environment trends towards the level you require as a public company.”
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