Revolut stays in the red despite cost cutting

Banking app Revolut nearly doubled its losses last year, despite ending the year with two months in the black.

Chief executive Nikolay Storonsky said that a drive to cut costs had allowed the business to make an adjusted operating profit in November and December, compared with a £55 million loss in the first three months of the year.

Part of the cost-cutting had come from automating internal security controls, stopping all marketing and pausing hiring at the beginning of the pandemic.

Discretionary costs fell by 17% between the first and fourth quarter of the year.

The company’s wage bill more than doubled over the year to £115 million as it continues to add new customers at rapid speed. Around 4.5 million retail customers joined Revolut in 2020, bringing its total to 14.5 million.

It increased its business customer base by 127% to around 500,000.

Together these additions helped push up revenue by more than a third, to £222 million.

Yet the bank was unable to prevent its pre-tax loss rising to £208 million – nearly as much as the revenue it made.

“Every year is challenging but 2020 was both our most challenging and one in which we accelerated our aim to diversify our revenue and increase daily use services for our customers,” said Mr Storonsky.

“We ended the year more resilient and productive than we started and on a continued rapid growth trajectory.”

The business launched in the US, Japan and Australia during 2020 and launched two dozen new products.

Mr Storonsky said: “Despite the disruption of the pandemic across the world and of Brexit preparations in Europe, we made progress in 2020, ending the year with two months of profitability, almost five million additional retail customers and having doubled full-year gross margins over 2019.”