In 2020 fintech firm Revolut saw their losses almost double, reporting a total loss of £167.8 million, despite its crypto revenues being up 34% from the previous year.
The fintech firm launched in 2015, and has since become one of the UK’s strongest fintech start-ups, launching overseas and building on its financial products which includes crypto services that currently makes up around 15-20% of its revenues.
While many banks and financial service providers have been hesitant to offer crypto, Revolut took an attitude that encouraged its users to make use of the over 40 cryptocurrencies they currently offer. Revolut even took on ‘meme coins’ such as DogeCoin earlier this month, hoping, perhaps, to broaden their services to the younger demographic who up have typically favoured the meme-based cryptocurrency.
Covid-19 forced Revolut to cut down on costs and “repurpose” staff for more profitable endeavors like crypto, stock trading and business accounts, CEO Nik Storonsky commented in a CNBC interview:
“Every single P&L [profit and loss] line is actually above Covid, some two, three, four or five times above Covid,”
The CEO of Revolut indicated that Covid impacted the company's overall profitability, describing it as a painful experience ”but overall “very positive for us because it allowed us to focus on the right product lines.”
Revolut’s Finance Chief, Mikko Salovaara, also added that the company has experienced “very strong profitability in the first quarter” of 2021.
While Revolut may have made profit from its cryptocurrency services, the fact remains that it makes most of its revenue from interchange fees that the merchant's bank account must pay whenever a customer uses a Revolut card to make a purchase The company has attempted to distance itself from being reliant on these fees, however the pandemic made this difficult for them.
Going forward Revolut has outlined its intentions to secure a UK banking license. Their strong crypto presence may however hinder this, as regulators are toughening up their measures for cryptocurrency companies and companies such as Revolut that offer crypto-services.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.