Revolut trebles gross profit in 2020 as adjusted revenues surge by 57% and customer numbers jump by 45%

• Adjusted revenues increased by 57% from £166 million in 2019, to £261m million in 2020
• Personal customers increased by 45%, from 10 million at YE 2019, to 14.5 million at YE 2020
• Gross profit increased by 215% to £123m for the year with steady improvement quarter on quarter
• Gross margin almost doubled to 49% for the year, with steady QonQ improvement to 61% in Q4
• First quarter 2021 revenue increases by more than 130% YoY, with gross profit growing more than 300% and retail users reaching 15.5m

Revolut today released its Annual Report for the year ending 31 December 2020, revealing strong financial metrics which resulted from continued customer adoption and engagement with Revolut’s products, investments in product innovation and tight cost control.

Revolut’s customer base continued to grow strongly reaching 14.5m personal customers and 500,000 Revolut Business customers by the year end, despite the decision to forgo marketing spend during the pandemic. This strong growth in personal and business customers numbers, driven by the increased diversity of our product offering and an enhanced appetite for digital financial management helped push adjusted revenue up by 57% year on year, to £261m by the year end (2019: £166m), an increase of £95m. While COVID-19 reduced payments volumes from March onwards, this was more than offset by growth in Subscriptions, Wealth & Trading and Revolut Business. Adjusted revenue in the second half of the year was 41% higher than in the first half.

The company continued its progress towards profitability as investments in product innovation helped accelerate daily use and progress towards long term profitability. Gross profits increased by 215% from £39m in 2019 to £123m in 2020. Gross margin improved by 24 percentage points from 25% in 2019 to 49% in 2020. Both measures showed strong quarter on quarter improvement with gross profit improving from £16m in Q1 to £51m in Q4 and gross margin increasing from 29% in Q1 to 61% in Q4, leading to the company achieving an adjusted operating profit in November and December of 2020.

This combination of revenue growth and improved gross margins reduced quarterly adjusted operating losses by 90%, from £55m in Q1 2020 to £6m in Q4 2020, reflecting the strengthening of core business activities. Full year adjusted operating loss increased to £122m (2019: £98m). While we controlled discretionary spending, administrative costs increased to £266m (2019, £125m), reflecting continuing investment in growth and capability throughout the business, including in our Risk, Compliance and Control functions. Total comprehensive loss for the year rose to £168m (2019, £107m) reflecting continued investment.

Subscribers to paid Metal and Premium plans increased by 51%, outpacing overall customer growth. The proportion of new customers upgrading to paid subscriptions grew from 11% to 14%. As the customer base increased and daily use grew, customer balances rose by 96% to £4.6 billion at year end (2019, £2.4b) with average deposits increasing by more than 30%. As marketing budgets are reinstated in 2021/22 core performance metrics are expected to improve further as the business enters a new phase of product driven growth.

Business account customers increased by 127% to 500,000 in the year as Revolut Business launched a new interface and mobile functionality and nine new products including acquiring, enabling businesses to accept online card payments direct to their accounts, debit cards, instant European payments, international transfers, direct debits, metal cards, rewards and discounts on services and integrations. Revolut’s acquiring product launched in 13 additional European countries as part of the Revolut Business starter pack at the start of 2021, providing businesses with an end to end solution to manage their financial needs. Revolut Business launched across the US at the start of 2021.

The company’s international expansion continued with the launch of services in the US, Australia and Japan. The focus on firmly establishing Revolut’s brand and rolling out products in the US will increase in 2021. Revolut continues to look for wider opportunities and has begun, in 2021, to build a team in India led by the Indian CEO, Paroma Chaterjee.

Commenting on the results, founder & CEO of Revolut, Nikolay Storonsky, said: “As the extraordinary circumstances of 2020 drove the trend towards digital financial management we continued to innovate for customers to make their financial lives easier and accelerate daily use. We launched 24 new retail and business products, expanded into the US, Japan and Australia and launched banking services in Lithuania, all while significantly improving our profitability. We began 2021 with a more resilient and productive business that will enhance our trajectory towards rapid growth.”

Revolut’s Chairman, Martin Gilbert, said: “Revolut entered its next phase of growth in 2020 as we broadened our global footprint, strengthened our capital base, enhanced governance and bolstered executive management. These developments continue to provide a strong platform from which to launch new products to serve our rapidly growing customer base.

Post year end events

Commenting on performance in the first quarter of 2021, Chief Financial Officer, Mikko Salovaara said: “We are pleased with the strong performance we have seen in Q1 2021 and proud of the efforts that our teams have made to deliver these results. Revenue increased by more than 130% vs Q1 2020, with growth observed in every business line, though particularly strong performance marked by our Wealth & Trading team. Gross profit grew by more than 300% vs Q1 2020, with meaningful gross margin expansion driven by our product mix and continued ownership mentality on cost control. Adjusted operating and net income margins were above 30%. We have continued to grow our retail customer base and finished the quarter serving 15.5m personal customers.”

[Please note that Q1 2021 figures are unaudited]

You can find the full report here.

1. Adjusted revenue for 2020 comprises statutory revenues of £222m and fair value gains on cryptocurrency assets above their original cost of £39m, recognised in other comprehensive income in accordance with FRS 102. The corresponding fair value movements on customer liabilities related to cryptocurrencies are included within statutory revenue, and so the revenues are adjusted accordingly for consistent presentation
2. Gross profit is defined as adjusted revenue (including revaluation gains on cryptocurrencies) less direct costs, excluding net onboarding costs. Gross margin is defined as gross profit divided by adjusted revenue (excluding onboarding income).
3. Adjusted operating loss is a non-GAAP performance measure and is defined as operating profit/loss for the period excluding equity settled share-based payments charges (which are non cash costs) and including revaluation gains on cryptocurrencies that are recognised in other comprehensive income.
   

*Cryptoassets are volatile and not regulated or protected by investor compensation schemes – value can go down or up. Trading may be subject to tax. Fees payable.

*Revolut trading is provided by Revolut Trading Limited in the UK.

*Accurate and up to date as of 22/06/2021.