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Revolut auditor flags concern about $576 mln of revenue in long-delayed 2021 accounts

Revolut has just published its long-awaited 2021 Financial Report. The company has officially become profitable on the net income basis. The delay of the report was due to the FSA request to conduct the audit in accordance with the highest industry standards and due to the fact that it was the first time Revolut produced a report in accordance with IFRS.

- Revolut builds its advantage on 1) its business model, 2) client expansion, and 3) product range. It is important to note that the company was able to show a 75% growth of users on paid plans as it provides a more stable cash flow. It also reported a 50% expansion in weekly active retail customers and an increase in average spending per account. Revolut managed to beat the RLC forecast of GBP620 m and reported GBP636 m (+190% YoY). That increase was due to the growth of all the products, which is important from point of view of sustainability. However, the biggest contributions were from foreign exchange, and wealth&trading. The effect of these items in 2022 is yet to be seen.

- Gross profit grew by 5x to GBP440 m and gross profit margin - by 2x from 33% to 70%. This attractive margin level was the result of the introduction of high-margin products and cost optimization. RLC's forecast was GBP405 m.

- Good improvement in operating expenses: administration expenses reached 58% of the revenue against 125% in 2020, the absolute growth of only 33%.

- EBITDA exceeded the RLC forecast of GBP2 m and was a record GBP68 m.

- Net profit reached GBP26 m.

- Balance sheet data shows that the company was in good shape with equity/total assets ratio increasing from 7.9% to 12.5% due to new equity issuance ($800 m). Total assets grew 62% to GBP8.6 bn, and loans to customers by 13.5x.

- The company had a positive cash flow from operating activity (GBP36 m) against a loss of GBP220 m a year before. That improvement was the result of net profit and absence of fair value losses on customer liabilities in respect of cryptocurrencies; cash flow from investing activity was in the negative zone due to the purchase of financial instruments (GBP 1.3 bn); cash flow from financing activity was influenced by share issuance (GBP602 m) and partial repayment of a loan (negative GBP82 m).



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