Revolut

Revolut is the digital banking alternative designed for your global lifestyle.

Summary

Consumers and businesses worldwide are being underserved by expensive banks with dated technology. A survey of 9,000 bank customers in nine countries revealed that 77% of customers globally are unsatisfied with their bank.

We're creating a world where money moves freely at your pace, wherever you are. Revolut is a digital banking alternative designed for a global lifestyle. You can set up a current account in 60 seconds, hold and exchange 16 currencies at the interbank exchange rate, make free international money transfers to any bank in the world and spend fee-free globally with a contactless MasterCard. In just two years, Revolut has acquired more than 750,000 customers who have transacted over $4.2 billion.

The fast-moving Fintech has also launched a business platform that enables companies to hold, exchange and transfer 25 currencies at interbank rates and issue corporate cards for global fee-free spending. 12,000 global companies and scaling start-ups.

Operations

Revolut was launched in July 2015 by ex-finance professionals who have a distinctive ambition to build the future of money beyond banking. The idea came from a common frustration with exchange rate mark-ups, foreign transaction fees and a lack of technological innovation from the big banks.

Banks charge insane fees to spend or transfer your money in a foreign currency. A typical UK bank customer is charged up to £25 to transfer $500 to a bank in the United States with an exchange rate mark-up of 3-5%. For international card payments, banks charge as much as 6% on every transaction.

Today’s hyper-connected world deserves a financial partner just as progressive. One that adapts to your needs, gives you control and constantly pushes you into new exciting spaces. Revolut is a new Global Banking Alternative that enables free international money transfers, fee-free global spending - always at the interbank exchange rate.

What is the mission of Revolut?

Their main goals are to:

1. Make banking services more convenient: Revolut aimed to simplify and streamline traditional banking processes, offering a user-friendly mobile app and various features that allowed customers to manage their finances more efficiently.

2. Offer low-cost currency exchange: Revolut's app provided users with the ability to exchange and spend money in different currencies at interbank exchange rates without additional fees.

3. Facilitate cryptocurrency trading: Revolut was one of the early fintech companies to allow users to buy, hold, and exchange cryptocurrencies through their platform.

4. Enhance financial control and budgeting: The app offered tools for tracking expenses, setting budgets, and providing insights into users' spending habits, helping them manage their finances better.

5. Provide a global presence: Revolut aimed to expand its services to various countries, offering international money transfers and borderless banking solutions to individuals and businesses worldwide.

What is the vision of Revolut?

Key components of Revolut's vision include:

1. Accessibility: Revolut wanted to make financial services accessible to everyone, regardless of their location, income level, or financial background. By offering a wide range of services and eliminating unnecessary fees, they aimed to democratize finance and provide better financial opportunities for their customers.

2. Innovation: Revolut sought to stay at the forefront of financial technology by continuously innovating and introducing new features and products. This included expanding into areas such as cryptocurrency, investment products, and business banking to cater to evolving customer demands.

3. Global Reach: The vision of Revolut was to expand its services worldwide, providing seamless and borderless financial solutions to customers in different countries. Their international money transfer capabilities and multi-currency accounts were part of this strategy.

4. Financial Control and Empowerment: Revolut's vision was centered on empowering its users to have greater control over their finances. By offering budgeting tools, spending insights, and customizable account features, they aimed to help customers make informed financial decisions and improve their financial well-being.

5. Disruption of Traditional Banking: Revolut's ultimate vision was to challenge and disrupt the traditional banking model, offering an alternative that embraced digital technologies and customer-centric solutions.

Substantial accomplishments to date

In just two years, Revolut has grown to over 750,000 active users who have transacted over $4.2 billion to date. An average of 1,700 new customers sign up every day.

As a testament to the product, Revolut’s user acquisition is primarily driven by recommendations from friends and family. For an early growth comparison, TransferWise - a well-known Fintech unicorn launched in 2011 - only processed €10 million in client funds in their first year.

This crowdfunding is part of a $66m investment round from some of Europe's most well-known Venture Capital firms including Index Ventures, Balderton Capital and Ribbit Capital. The hot Fintech startup has also regularly attracted the attention of international media, with regular coverage in the Telegraph, Times, Financial Times and CityAM.

In July 2015, Revolut’s £1m crowdfunding campaign was oversubscribed by over 10,000 would-be-investors who pledged to invest £17m, all of whom were Revolut users.

Revolut was also notably:

- Nominated alongside Pokémon Go and WeChat for ‘The Best Overall Mobile App’ award at the largest Mobile Conference in the world.

- Selected from over 1,500 European FinTech’s to be named on the ‘Fintech50 2017’ list of the hottest European startups.

- Awarded the ‘Hottest FinTech Startup’ award at the Europas 2017.

Monetisation strategy

Revolut has 3 main revenue streams: (1) MasterCard© interchange (2) consumer add-ons and (3) business accounts.

Revolut gains a cut of the revenue from the fee (interchange) paid to MasterCard© by merchants in order to process their payments.

In April 2017, Revolut launched an annual, paid Premium service which costs £6.99 per month or £72 per year. Over 10,000 customers signed up within the first two months, with droves of new customers joining every week. Other revenue streams include Revolut credit which can be accessed from the app. Revolut also promotes new game-changing start-ups in the app and gains a fee for every Revolut customer who signs up.

Revolut for Business is a subscription-based web service that enables companies to manage international payments and corporate travel. Over 12,000 FTSE 100 companies and scaling start-ups are currently being on-boarded.

Use of proceeds

The funds raised will be used in two ways: (1) International expansion and (2) product development.

Starting in 2017, the fast-growing startup will be expanding internationally, with the aim of establishing itself as the number one platform for consumers and businesses for managing their finances. Revolut intends to initially expand its services across North America and Asia.

The equity raised will be used to hire a world-class team of International Expansion Managers, paying for the infrastructure and relevant licensing required to operate across new territories and to accelerate customer acquisition globally.

Revolut will also use the funds raised to accelerate product development for its consumer and business products. Currently some of Revolut’s services are made available in the Revolut app via partnerships with licensed third-parties. The funds raised will enable Revolut to apply for licences to provide these products in-house, which should in-turn increase profit.

Financials

Financial Statement

Year	1	2	3	4	5	6
Year End Date	31/12/2018	31/12/2019	31/12/2020	31/12/2021	31/12/2022	31/12/2023
Historic/Forecast	Historic	Historic	Historic	Historic	Historic	Forecast
All Values in £000
Revenue
Growth over Prior Year
Cost of Sales
Gross Profit
Margin
Administrative Expenses
Depreciation and Amortisation Expense
Impairment Loss
Other Operating Expenses
EBITDA
Margin
Interest Expense
Interest Income
EBIT
Margin
Tax Expense
Net Income
Margin
Other Comprehensive Profit
Other Comprehensive Profit (After Tax)
Total Comprehensive Income
Margin

Balance Sheet

Year	1	2	3	4	5
Year End Date	31/12/2018	31/12/2019	31/12/2020	31/12/2021	31/12/2022
All Values in £000
Assets
Current Assets
Cash & Cash Equivalents
Financial Assets at FVOCI
Investment in Commodities at FVTPL
Trade and Other Receivables
Inventories
Current Tax Assets
Loans & Advances to Customers
Derivative Financial Assets
Total Current Assets
Non-Current Assets
Property, Equipment & Right-of-Use
Intangible Assets
Loans & Advances to Customers
Deferred Tax Assets
Total Non-Current Assets
Total Assets
Liabilities
Current Liabilities
Trade & Other Payables
Loans at Amortised Cost
Customer Liabilities
Current Tax Liabilities
Lease Liability
Derivative Financial Liabilities
Total Current Liabilities
Non-Current Liabilities
Provisions for Liabilities
Lease Liability
Deferred Tax Liabilities
Total Non-Current Liabilities
Total Liabilities
Equity
Share Capital
Share Premium
Accumulated Losses
Other Reserves
Total Equity
Total Liabilities & Equity

Cash Flow Statement

Year	1	2	3	4	5
Year End Date	31/12/2018	31/12/2019	31/12/2020	31/12/2021	31/12/2022
All Values in £000
Operating Activities
EBIT
Interest Expense
Interest Income
EBITDA (Operaitng Profit)
Amortisation of Intangible Assets
Depreciation of Tangible Assets
Impairment of Intangible Assets
Impairment of Financial Assets
Share Based Payment Expense
Fair Value Losses on Customer Liabilities in Respect of Cryptocurrencies
Increase in Provisions Net of Payments Made
Net Fair Value Losses on Derivative Financial Instruments
Operating Cash Flows BeforeChanges in Customer Balances& Hedging Arrangements &Changes in Working Capital
Working Capital Movements
Decrease in Inventories
Loans Extended to Directors
Loans Settled by Directors
Increase in Trade & other Receivables
Increase in Trade & other Payables
Operating Cash Flows BeforeChanges in Customer Balances& Hedging Arrangements
Customer Balances & Hedging Arrangements
Net Increase in E-Money in Issue
Increase in Negative Customer Balances
Decrease in Net Settlement Balances
Increase in Customer Liabilities in Respect of Cryptocurrencies
Increase in Cryptocurrencies
Increase in Customer Liabilities in Respect of Commodities
Increase in Investment in Commodities at FVTPL
Net Increase in Loans & Advances to Customers
Net Increase in Customer Deposits
Net Operating Cash Flows
Investing Activities
Purchases of Property & Equipments
Developing or Acquiring Intangible Assets
Interest Received
Purchase of Financial Assets at FVOCI
Net Investing Cash Flows
Financing Activities
Proceeds from Issue of Ordinary Shares Net of Transaction Costs
Proceeds from Exercise of Share Options
Interest Paid (Including on Lease Liabilities)
Principal Payments on Lease Liabilities
Loans Repaid
Net Financing Cash Flows
Cash & Cash Equivalents (Beginning of Year)
Effect of Exchange Rates
Net Increase in Cash & Cash Equivalents
Cash & Cash Equivalents (End of Year)

Actions

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