Britain's Revolut surges to record profit as it seeks $40 billion valuation

FILE PHOTO: An illustration picture shows a Revolut bank card in London, Britain September 4, 2019. REUTERS/Kevin Coombs/File Photo

By Elizabeth Howcroft and Utkarsh Shetti

LONDON (Reuters) -British fintech company Revolut made a record pretax profit of 438 million pounds ($553.81 million) in 2023 on strong user growth and soaring interest-related income, it said on Tuesday, as it looks to cement its place as Europe's most valuable startup.

The results, filed ahead of a September deadline, were the first to be published on time in three years, after Revolut had delayed publication of both its 2021 and 2022 accounts.

The company has faced problems with its financial reporting previously, drawing scrutiny from regulators, but is hoping Tuesday's numbers are a step forward.

Revolut has signalled its aim to list publicly but the company's interim chief financial officer Victor Stinga declined to comment on any timeline for an IPO.

"Improving financial controls and making sure we bolster our team, being able to release these results within six months, is part of that journey. So we are taking steps in making sure that our control environment trends towards the level you require as a public company," Stinga told Reuters.

The company's revenue almost doubled to a forecast-beating 1.8 billion pounds in 2023, helped by interest income that soared to 500 million pounds from 83 million pounds in 2022, according to its annual report. Revolut made a pretax loss of 25.4 million pounds in 2022 after a pretax profit of 40 million pounds in 2021.

The growth comes at an opportune time, with the company seeking a more than $40 billion valuation in a $500 million share sale, up from the $33 billion valuation hit in a 2021 fund raise.

Revolut has applied for a UK banking licence but three years on is still awaiting approval.

UK CEO Francesca Carlesi told Reuters that Revolut’s banking licence application was "progressing well" but that 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 said.

In an interview with CNBC, Revolut CEO Nikolay Storonsky said the company was feeling confident about its chances of being granted a UK licence.

Revolut is "continuing to work closely" with UK regulators on its UK bank licence application, the annual report said.

Founded in 2015, Revolut is one of a handful of fintech companies to have emerged in Britain over the past decade, offering financial services without having physical branches. It has 45 million customers globally, with customer numbers increasing by nearly 45% last year.

Britain's fintech industry has faced a funding crunch in recent years as investors have become more sceptical of sky-high pandemic-era valuations and put pressure on companies to become profitable.

When Revolut's 2021 accounts were finally published in March 2023, auditor BDO said it was unable to independently verify three quarters of the 636 million pounds of revenue.

Revolut's customer loan book grew to more than 500 million pounds in 2023, up from 204 million the previous year, its latest report said.

($1 = 0.7909 pounds)

(Reporting by Elizabeth Howcroft in London and Utkarsh Shetti in BengaluruEditing by Alan Barona, Tommy Reggiori Wilkes, David Goodman and Susan Fenton)