Revolut reported midweek that it had its first profitable year in 2021 since its founding. All this is due to the fact that the number of paying users has increased exponentially, and the use of the application has become more popular.
The annual income of the British company reached 636.2 million pounds in 2021, which represents a threefold increase compared to the previous year. Revolut then recorded a pre-tax profit of £59.1m, of which £26.3m was net profit. In contrast, they made a pre-tax loss of £205m in 2020.
In 2022, sales revenue increased by more than 30 percent, so that Revolut reached 850 million pounds.
Mikko Salovara, Chief Financial Officer of Revolut, explained the results through diversification of business branches and effective cost control. In his assessment, he said that there was no need for external financing. The number of weekly active resident customers increased by more than 50 percent, increasing average spend per user by 10 percent, and the number of people using paid packages increased by 75 percent. According to the crash, a third of the revenue came from cryptocurrency trading, according to reports hwsw.hu.
Many irregularities have been detected
After the report was made public, the company’s auditor asked to speak immediately. According to BDO LLP, all is not well with the report. According to their claim, 75 percent of all revenues in 2021 cannot be fully independently verified, as they can be linked to cryptocurrency and foreign exchange transactions, so
Company revenue may differ significantly from actual data.
Revolut also had problems meeting deadlines. Originally, it was supposed to submit its 2021 report by September 2022, then extended it until December, but it wasn’t ready by then.
The acting authorities previously found that the 2020 report was also full of incorrect data, so the auditor requested the company to make corrections as soon as possible.
What will happen to the banking license application?
Revolut’s CFO defended himself by saying that the company’s IT systems could not keep up with the rate of growth. Therefore, the auditor had to use other methods of determining income. Concerns were raised that audit procedures failed to secure adequate safeguards for more than $477 million in revenue from subscriptions, cards, foreign exchange and wealth management activities. Mikko Saluvara could not say what the company is worth, as it has not raised money since 2021.
Revolut has more than half a million customers in the United States. The company has also appeared in Brazil, Mexico, and India, and last November it had a user base of 25 million.
The current scandal is also unpleasant for the company as it has been lobbying for so long to be recognized as a UK bank.
Hundreds of thousands of Hungarians may be affected
In Hungary, Revolut continues to operate as a cross-border institution, and has not been granted a local banking license, although the Central Bank has consistently advocated this for customer safety.
In their announcement last year, they highlighted that the financial institution already had the opportunity to carry out lending and deposit collection activities in Hungary, as it had obtained a license to do so in another EU member state, Lithuania.
The global financial institution has hundreds of thousands of clients in Hungary.
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