Revolut has released its annual report for 2020, revealing a strong customer acquisition and retention strategy and revenue growth, but also reporting increased operating costs and losses.

The fintech’s overall customer base increased by 45% from 10 million in 2019 to 14.5 million by the year’s end in 2020, in addition a 127% growth in Revolut business users to 500,000, achieved despite a reduction in marketing spend. 

Revolut has attributed the growth in both personal and business customer numbers to the ‘diversity of our product operating and an enhanced appetite for digital financial management,’ increasing revenue by £95 million to £261 million, a growth rate of 45%.

Additionally, the company has reported increased profitability, with 2020 profits rising by 215% to £123 million (2019: £39m), whilst the gross margin improved by 24 percentage points to 49% (2019: 25%).

Quarter on quarter improvement was also demonstrated – with gross profit increasing from £16 million in Q1 to £51 million in Q4, with gross margin increasing from 29% to 61% in the same time period, resulting in an adjusted operating profit in the final two months of 2020.

Nikolay Storonsky, CEO and Founder of Revolut, said: “As the extraordinary circumstances of 2020 drove the trend towards digital financial management we continued to innovate for customers to make their financial lives easier and accelerate daily use.

“We launched 24 new retail and business products, expanded into the US, Japan and Australia and launched banking services in Lithuania, all while significantly improving our profitability. We began 2021 with a more resilient and productive business that will enhance our trajectory towards rapid growth.”

Although Revolut has acknowledged that the COVID-19 pandemic did reduce payment volumes from March onwards, the firm maintains that these losses were ‘more than offset’ by growth in Subscriptions, Wealth & Trading and the Revolut Business offering.

However, the financial pressures of 2020 were still felt, as the company’s full year adjusted operating loss increased to £122 million (2019: £98m), with administrative costs rising to £266 million (2019: £125m). Meanwhile, the total comprehensive loss for the year stood at £168 million in comparison to the 2019 figure of £107 million.

The firm has identified ‘continuing investment in growth and capability throughout the business’ as the primary reason for these costs. 

“Revolut entered its next phase of growth in 2020 as we broadened our global footprint, strengthened our capital base, enhanced governance and bolstered executive management,” added Martin Gilbert, Revolut Chairman.

“These developments continue to provide a strong platform from which to launch new products to serve our rapidly growing customer base.”

For 2021, Revolut has identified continued international expansion as a core objective, having launched Revolut Business – which introduced nine new products throughout the year, such as an invoices function – in 13 European countries, and established a foothold for the division in the US market in 2020.

The firm intends to focus on developing its position and rolling out its products in the US, which it first began to target in 2019 via a partnership with Mastercard, as well as Australia and Japan. The company also intends to seek ‘wider opportunities’ in other global markets, notably aiming to build a team in India headed by regional CEO, Paroma Chaterjee.