Crypto-friendly British App, Revolut, reported that its losses surged by over 200% in 2019 due to investment in international expansion. The report was announced by Revolut founder and CEO, Nik Storonsky. Revolut is one of the biggest fintechs in Europe and it reportedly made these huge losses despite revenue growth and new customers.
The London-based company reportedly posted a total loss of over 106 million British pounds ($139 million). That amount is up almost 33 million pounds ($43 million) in 2018. Nik outlined that the massive losses last year came despite a considerable increase in customers, CNBC reports August 11:
“We increased daily active customers by 231% and the number of paying customers grew by 139%.”
Throughout 2019, Revolut also experienced a steep surge in revenue. Revolut’s revenues in 2019 jumped 180% as reported from 58 million pounds ($76 million) in 2018 to reach around $163 million euro ($213 million).
According to the CEO, the key reasons for the increasing losses were an aggressive investment in global expansion endeavors and new product offerings. Revolut revealed its ambitious expansion plans in October 2019 unveiling its partnership with Visa to increase its services worldwide across 24 new markets. Some of the new markets include New Zealand, Russia, Singapore, Australia, Brazil, Canada, the United States, and Japan.
Revolut also launched a zero-fee stock trading feature in August 2019 targeting customers in Europe and the UK. The new feature came about in a bid to compete with brokers like Hargreaves Lansdown AJ Bell.
Revolut, a challenger bank, has been showing signs of difficulties in recent months. The company allegedly fired many employees in June 2020. That move came in as a cost-saving measure amid the health crisis. But, a new CNBC report says that Revolut’s business momentum is unaffected. The firm reportedly added three million users in 2020 despite the pandemic.
Notably, Revolut is not the only crypto-related firm that posted losses in 2019. Canaan, a Nasdaq-listed Bitcoin (BTC) mining equipment supplier, also reported a net loss of $148 million for 2019. A major cryptocurrency investment bank founded by ex-Goldman Sachs partner, Mike Novogratz, Galaxy Digital, also recorded losses last year. The bank recorded a $33 million loss in Q4 2019.
For now, many firms are still adjusting to the impact of the COVID-19 crisis. Experts believe that the crypto sector will not be hard-hit since more investors will buy into the industry aiming to diversify their portfolios.