Revolut’s Record Profits Lead to Potential London Listing

Revolut, a leading fintech company headed by Nik Storonsky, has shown a notable shift in its attitude towards a potential listing on the London stock market following its record-breaking profits in 2023. The company reported an impressive profit of £438 million for the year, a stark contrast to the £25 million loss it recorded the previous year. Revenues also surged from $1.1 billion to $2.2 billion. This remarkable growth was largely driven by the addition of nearly 12 million new customers, bringing Revolut’s total customer base to 45 million.

Several factors contributed to this profitability, including the influx of new customers, higher interest rates, and the continued growth of high-margin revenue streams. One of the standout figures from the report was Revolut’s interest income, which jumped to £500 million in 2023 from £83 million the previous year. Additionally, subscription revenue increased by 53 percent to $303 million, while card and interchange revenues rose by 59 percent to $605 million.

In an interview with the Financial Times, Revolut chair Martin Gilbert expressed support for upcoming changes to UK stock market listing rules. He highlighted the regulators' efforts to create a more favorable environment for founder-led companies like Revolut, making it possible for them to list in the UK. Gilbert's comments are particularly noteworthy as they contrast with Storonsky's earlier criticisms of the UK as a challenging place to run a business. Storonsky had previously stated that if Revolut were to go public, it would choose the US over the UK.

The Financial Conduct Authority (FCA) in the UK is actively working to make the London stock market more appealing for companies considering an initial public offering (IPO). One of the proposed changes includes merging the "premium" listing category with the less onerous "standard" listing on the London Stock Exchange. This move aims to reduce the regulatory burden on companies and encourage more listings in the UK, addressing the concerning decline in UK IPOs.

Reflecting on the company's impressive financial performance, Storonsky emphasized Revolut’s ongoing mission to deliver superior products and customer experiences globally. He highlighted the value created for new customer segments and markets, underscoring the company’s dedication to redefining the financial services landscape. Storonsky also reaffirmed Revolut’s commitment to securing a UK banking license and expanding the Revolut app to new markets worldwide. Despite achieving 45 million global retail customers by mid-2024, Storonsky is confident in Revolut’s potential for exponential growth in the coming years.

Revolut’s future, including its potential UK stock market listing, hinges on multiple factors, such as regulatory developments and the outcome of its UK banking license application. The company’s impressive financial performance and expanding customer base position it for continued success, but the evolving regulatory landscape will play a crucial role in shaping its strategic decisions.

The significant growth in profits and revenues underscores Revolut’s successful business model and its ability to attract and retain a large customer base. The increase in interest income and other high-margin revenue streams highlights the company’s effective monetization strategies. Subscription and card revenues also demonstrate the diverse revenue sources contributing to Revolut’s financial health.

Revolut’s positive financial results come at a time when the UK is making concerted efforts to improve its attractiveness as a destination for stock market listings. The FCA’s proposed regulatory changes are designed to create a more favorable environment for companies considering an IPO in the UK. By merging the premium and standard listing categories, the FCA aims to reduce the regulatory burden and make it easier for companies to list on the London Stock Exchange.

Martin Gilbert’s remarks reflect a more open attitude towards the UK listing, signaling a potential shift in Revolut’s strategic approach. This newfound openness to listing in the UK is significant, given Storonsky’s previous criticisms and preference for a US listing. Gilbert’s cautious optimism about the regulatory changes suggests that Revolut is closely monitoring the evolving landscape and remains flexible in its strategic planning.

The ongoing application for a UK banking license is another critical aspect of Revolut’s future plans. Securing this license would enhance Revolut’s credibility and enable it to offer a broader range of financial services to its UK customers. The banking license would also align with Revolut’s mission to provide comprehensive financial solutions and improve customer experiences.

Revolut’s commitment to global expansion is evident in its strategy to bring the app to new markets and customer segments. The company’s ability to adapt its offerings to meet diverse customer needs across different regions is a key factor in its growth. As Revolut continues to expand its footprint, it will need to navigate various regulatory environments and tailor its products to suit local market conditions.

In conclusion, Revolut’s record profits and revenue growth in 2023 reflect its successful business strategies and robust customer acquisition efforts. The company’s softened stance on a potential London stock market listing, combined with its ongoing UK banking license application, indicates a more flexible and adaptive approach to future growth. As the UK implements regulatory changes to attract more listings, Revolut’s strategic decisions will be influenced by the evolving market conditions and regulatory environment. With its impressive financial performance and commitment to innovation, Revolut is well-positioned for continued success and expansion in the global financial services industry.