Revolut’s revenue reached £3.1 billion in 2024, up 72% year-on-year, largely due to crypto trading, subscriptions, and business banking growth. Despite this success, regulatory scrutiny and customer complaints raise concerns about the company’s practices and risk management. With a potential IPO on the horizon, questions about its ability to manage volatility in crypto earnings and compliance risks loom large.
Revolut, the fintech giant based in the UK, has reported a staggering £3.1 billion in revenue for 2024, showcasing a remarkable 72% rise from the previous year. This growth has been fuelled by various factors such as subscription services, a surge in cryptocurrency trading, an expansion into business banking, and the acquisition of new global customers. However, this success comes at a critical juncture with increasing regulatory fines, customer complaints, and systemic risks lurking in the background, potentially casting a shadow over the company’s rapid rise.
Just recently, the company integrated credit cards into its offerings, aiming to become the European rival of American Express. Pursuing such a lofty goal, however, means facing intensifying scrutiny regarding compliance practices and the real-world effects on users, particularly those affected by the rapid expansion linked to crypto trading.
Diving into the numbers, Revolut’s revenue from 2024 shows a noteworthy leap to £3.1 billion (or $4.0 billion), compared to £1.8 billion in 2023. While a strong growth rate, it does fall short of the earlier 95% increase recorded between 2022 and 2023. Still, the company has maintained a robust performance over four consecutive years, achieving a pre-tax profit of £1.1 billion, up 149% from last year, while net profits hit £790 million. The net profit margin climbed from 19% to 26%, reflecting Revolut’s adept management of cost through technology.
Revolut’s success can be attributed to its diverse revenue streams. Cryptocurrency trading has been a huge contributor, with a staggering 298% year-over-year jump in wealth management revenue, which reached £506 million. Additionally, subscriptions, foreign exchange services, and business banking bolstered the financial performance. This diversification has positioned Revolut well to weather the occasional fluctuations in cryptocurrency markets, establishing it as a well-rounded financial services provider.
However, the ongoing focus on crypto trading presents significant risks to customers. Revolut’s crypto dealings, representing 32% of profits for 2024, accumulated £506 million thanks to the new Revolut X exchange. Unfortunately, this operates somewhat in a murky regulatory environment. The Financial Services Compensation Scheme (FSCS) doesn’t cover crypto assets, leaving clients like Bulgarian engineer Tzoni Raykov in a tough position after losing funds due to an unsupported transfer. Revolut’s justification rested on “standard industry practice,” starkly contrasting the guarantees typical in traditional banking.
Subscription revenues were buoyed by premium account tiers, which garnered £423 million—a solid 74% surge from the previous year—thanks to perks such as enhanced savings rates and travel insurance. Notably, the Premium and Metal plans saw a 38% rise in subscribers across Europe. Wealth management also showed significant gains with crypto trading pushing portfolio revenues up 298% to £506 million, alongside a contribution of 22% growth from traditional investment products like stocks.
Still, the crypto boom has not gone unnoticed by regulators. Operating under a Lithuanian banking license, Revolut faced a hefty €3.5 million fine due to anti-money laundering lapses with crypto transactions. The Bank of Lithuania found the firm consistently neglected to flag suspicious activities, amounting to over £1.7 million in dodgy withdrawals. Meanwhile, the UK’s FCA imposed restrictions on Revolut’s crypto promotions, limiting them to accredited investors, which could upset a revenue stream that previously contributed £168 million.
On another note, foreign exchange revenue saw a significant 58% growth to £422 million, driven by a revival in international travel and a broader market, seeing Revolut process nearly £1 trillion in transactions with a stable margin.
The business segment also showed promise, generating £460 million and managing to serve over 500,000 SMEs. This segment noted an impressive 43% growth year-on-year, surpassing last year’s achievements.
In a remarkable wave of growth, Revolut expanded its user base by 15 million in 2024, bringing the total to 52.5 million—a notable 38% leap from 2023. With the UK leading the charge, having 10 million users, other regions, like Romania, are rapidly catching up with a 28% increase. Besides the raw numbers, Revolut’s enhancement of customer value translated to users typically engaging with 4.2 products each, compared to 3.1 the year before.
Engagement strategies like rewards programs and competitive savings accounts have played a part in boosting transaction frequency and net interest income. However, even with positive growth indicators, Revolut’s expanding user base does come with its own set of challenges. For instance, there was a case where a financial watchdog found against Revolut after a user lost hundreds of thousands in a crypto scam, despite the platform having detected unusual account activity. This incident underscores potential weaknesses in its fraud prevention framework.
Amid these developments, questions loom: Is Revolut’s IPO on the horizon or further away? It’s true that despite its diversified income, a significant slice of profits still hinges on the crypto market, which is notoriously unstable. Scrutiny from regulators has ramped up lately, and as the company seeks a full banking license, compliance costs may infringe on profit margins going into 2025.
With a valuation reaching $45 billion, as Revolut eyes a potential IPO in 2026, the situation is delicate. While revenue multiples seem to align with competitors, public investors might look unfavourably at the volatility linked to crypto revenues or higher customer acquisition costs. A slump in crypto trading volume could substantially impact profits, making the coming months pivotal.
Revolut’s substantial revenue run presents a compelling case for its ambitious strategy, blending aggressive user acquisition with product depth and efficiency. Yet the underlying turbulence associated with its crypto focus raises vital concerns about the firm’s sustainability. As CEO Nik Storonsky pursues the IPO dream, the burning questions remain: Can a firm with notable regulatory issues handle vast customer assets effectively? And how many customers will have to deal with unaddressed risks before changes happen? These answers will ultimately shape whether Revolut’s narrative ends with innovation or a need for drastic reforms.
