- Revolut’s losses tripled in 2019 as its user count and revenue surged.
- And we think the neobank’s investments in expansion will afford it sustainable growth beyond the immediate challenges of the pandemic.
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The UK neobank’s newly published 2019 annual report highlighted that its losses totaled £106.5 million ($139.6 million) in 2019, up from £32.9 million ($43.1 million) in 2018, Business Insider reports.
Despite incurring losses — and facing challenges presented by the coronavirus pandemic — Revolut saw impressive growth across other metrics:
- Revolut’s users nearly tripled in 2019 to 10 million, up from 3.5 million in 2018. Daily active customers grew 231%, and the number of paying customers grew by 139%, according to Revolut founder and CEO Nik Storonsky. And Revolut’s user deposits hit £2.2 billion ($2.88 billion) in 2019, up from £1 billion ($1.31 billion) at the end of 2018, while its revenues grew 180%.
- Revolut also reported maintaining that momentum in 2020 despite some pandemic-related challenges — as of the end of July, it has nearly 13 million users. In May, the neobank said it had seen a “substantial” hit to its revenue thanks to reduced card transactions amid lockdown measures. But in the earnings release, it noted that demand has increased for its other products like cryptocurrency trading.
Revolut attributed its rising losses to investments in expanding its geographic presence and product offerings, which should position the neobank for success in the long term. The neobank spent heavily in 2019 on initiatives like its March US launch and full Australia launch earlier this week. And it also invested in rolling out features including crypto, stock, and gold trading, as well as a redesigned app geared toward financial management.
While Revolut’s investments have led it to incur sizable losses, they’re likely positioning the neobank for sustained success, as they enable additional revenue streams and a diverse product suite with which it can attract more users.
Revolut’s outlook is in stark contrast to competing UK neobank Monzo, which recently expressed “significant doubt” about its ability to continue operating. Revolut says it has “adequate resources to continue in operation for the foreseeable future.” Fellow UK-based neobank Starling is similarly confident in its prospects, thanks in part to its strong business banking segment.
Monzo meanwhile has been heavily reliant on discretionary consumer spending and saw its valuation slashed in a lower-than-expected funding round in June. The next few months will be key in determining which neobanks can survive the economic uncertainty that the pandemic has inflicted on the crowded UK neobank space.
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