Growth Rate (y/y)
Note: Revenue, profit, and growth rate as per publicly available data.
Revolut generated about $1 billion in revenue or £850M in 2022, up about 30% from 2021.
Revolut previously grew 189% between 2020 and 2021, from £220M to £636M, on the back of an explosion in crypto and fintechs during COVID.
In addition, Revolut's gross margin improved from 33% to 70% from 2020 to 2021.
Revolut is present in 36+ countries with 27M retail and 500,000+ business customers, making it the largest neobank in Europe.
Note: Revolut's top 5 countries by users
Revolut has 4 primary revenue streams:
- Cards and interchange revenue when customers use their debit cards for purchases
- Subscription fees from paid plans that unlock more benefits for business and retail customers
- Forex revenue charged as a markup or a fee when customers make foreign currency transactions
- Wealth comprises revenue from cryptocurrency, commodities, trading, and savings products
Revolut generates more than three-fourths of its income from cards and interchange, and paid subscription plans. In 2020, while the interchange revenue’s growth was slow, it was partially offset by the ~100% YoY growth in subscription revenue.
Note: Valuations, revenue, and growth rates as per publicly available data. Size of the bubble indicates valuation. Horizontal axis is on log scale for visual clarity.
Revolut has raised $1.72B from investors such as SoftBank, Tiger Global, Point Nine Capital, and Balderton Capital. It was last valued at $33B, making it the largest privately held fintech in Europe. Its valuation to revenue multiple of 65x is much higher compared to the other European neobanks such as N26 (38.6x), Monzo (24x), and Starling Bank (14.5x). Publicly traded fintechs in the US have lost significant value as their median valuation/revenue multiple has decreased to 7.7x. Even privately held fintechs raising new rounds are doing so at substantial discounts. For instance, Klarna raised a new round at an 85% discount to its earlier valuation of $45B, and Stripe recently reduced its valuation by 30%. In this context, Revolut appears to be more richly valued compared to its peer neobanks and other fintechs.
Revolut is building a destination for a user’s all financial needs, like the Chinese super apps WeChat and AliPay, by expanding globally and adding more features to its original forex card proposition. Unlike its competitors, Revolut opted not to apply for a banking license early, making it faster and cheaper to grow with less regulatory pressure. Revolut releases new features rapidly, such as metal cards, cryptocurrency, stock trading, travel insurance, bill splitting, and a consumer-friendly mobile banking experience. It is also branching out geographically in an Uber-like manner to 36 countries, including the US, Australia, Singapore, and India while localizing and translating its app to conform to different regulatory and customer contexts.
As Revolut grows, it is eating up more financial transactions for more customers and monetizing them through transaction fees. At £95.4M, its interchange revenue exceeds its competitors, such as Monzo and Starling Bank. The expansion comes at a cost, and its operating costs grew 2x in 2020 to £266M, but due to its large customer base, Revolut’s per-customer operating cost is the lowest among UK neobanks.
Its rapid product velocity also helps it upgrade more customers to paid tiers as its subscription revenue grew 5.5X to £75.2M in just two years. Revolut is more efficient in upgrading users to paid plans, with per-user subscription revenue being the highest among the large neobanks in Europe. It offers three retail plans at monthly fees of £2.99, £6.99, and £12.99, and three business banking plans at £25, £100, and custom pricing for large customers. Revolut’s sales and BD headcount driving the paid subscription push grew over 150% in the last 12 months, reaching one-fourth of its workforce, much higher than other neobanks. It also launched a new paid tier at £2.99 per month, the cheapest plan among all European neobanks.
Revolut found an initial product-market fit by offering a prepaid forex card with lower transaction fees than the legacy banks, making it popular with young digitally-native travelers. Later Revolut bolted on more products that this demographic found useful to offer them more than just a forex card.
Revolut has a banking license for the EU and offers different products in different countries depending on its banking license and local regulations. Its products can be categorized into retail banking and business banking.
Retail banking has everyday banking products, investments, and travel & forex.
- Everyday banking: P2P Payments, debit cards, budgeting, financial planning, junior accounts, subscription management, and bill splitting.
- Investments: Crypto, stock and commodities trading, and interest-bearing saving accounts.
- Travel & forex: International remittances, currency exchange, and hotel booking.
Business banking has cards and accounts, payments, treasury, and SaaS.
- Cards and accounts: Employee debit cards, virtual cards, multi-currency accounts.
- Payments: Send and receive payments in multiple currencies, payment links, and payment gateway.
- Treasury: Fx forwards and crypto trading for businesses.
- SaaS: Business spend management, digital invoicing, and integration with apps like Xero, QuickBooks, and Sage.
Revolut is the largest neobank in Europe with 20M customers, compared to 7M of N26, 5.8M of Monzo, and 2M of Starling Bank. While Monzo positions itself as the everyday bank for everyone, Starling focuses on B2B banking and selling BaaS to fintech, and Revolut and N26 have focused on geographic expansion. Revolut offers more features than its competitors, such as crypto, stock trading, and a lower-priced plan.
Even though Revolut is larger than its neobank peers in Europe, it’s not the largest bank in the key markets. The UK, France, and Germany account for over half of the total banking market in Europe by asset size, and Revolut is not the leading neobank in any of them. Another challenge for Revolut is that, unlike its peers, Revolut operates as an e-money company, which means it can’t offer checking accounts or state-insured deposits. Most importantly, it impacts its business banking product as it cannot offer loans or working capital advances to SMBs, one of their key business needs.
Another challenge for Revolut is that customers use it as their secondary account and traditional banks for primary accounts. This reflects in its average customer deposit of £317, compared to £15,900 for Lloyds and £25,000 for Natwest.
Revolut’s TAM expansion approach is to continue to expand to more geographies and cover more financial transactions for its customers. It aims to be present in 90 countries in 2022, entering new countries by offering a forex app that’s core to its origin and then ramping up its services. However, it considers getting banking licenses in the UK and the US as the critical drivers for future growth.
It has started offering credit products such as personal loans in select markets, making it more valuable for its users. It is also launching features beyond core banking, such as ‘Stays,’ which allows users to book travel accommodations within Revolut’s app for cashbacks, and Shopper, a Honey-like browser extension to find and automatically apply discount codes while shopping.
US and UK expansion
Expansion in the US and UK is critical for Revolut's growth. It has 4.8M users in the UK but can't offer a wholesome banking experience without a license. Its crypto trading feature hasn't found favor with the UK's regulators and is considered one of the key hurdles in getting the license. In the US, it has 300,000 users to whom it offers banking products through Metropolitan Commercial bank and Sutton bank. However, the US has numerous incumbent neobanks such as Chime, Dave, and Varo, and the regulatory landscape is very different from the UK or EU. Revolut’s first US CEO quit in 2021, and its competitor N26 already exited the US due to slow growth and high cash burn. In this context, it is challenging to foresee Revolut gaining a significant market share in the US.
Revolut seems to be adding new features and geographies without a clear roadmap toward achieving growth or profitability. For instance, its Stays feature competes with Airbnb rather than Natwest or N26 and is not a core financial feature. On the other hand, BNPL, a core financial feature offered by Monzo, is not yet part of its app. Its new geographies are unrelated to each other with vastly different regulatory landscapes. Revolut will need to burn a lot of cash/spend money on acquisition to build its operations in these countries. This can lead to an Uber-type situation of stretching too thin geographically and exiting many markets.
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