Tracking the Revolut Rocketship
After news broke in April of Revolut’s $250 million new funding round, led by DST at a $1.7 billion valuation, we analyzed Revolut’s published financials and filings to understand the company’s growth trajectory.
Revolut is a London-based fintech company. Its first product was currency transfers and it has since expanded to include physical and virtual debit cards, direct debits and partnerships offering travel insurance, phone insurance, credit, savings and cryptocurrency.
Revolut was incorporated by entrepreneur and former derivatives trader Nikolay Storonsky in London in December 2013.
In April 2015, Seedcamp became Revolut’s first outside shareholder, acquiring 12,475 Ordinary shares at a price of Eur 0.4008 each, implying a first check of Eur 5,000. At that time, Balderton Capital led a £1.5 million Seed round, investing £1 million at £3.81 per share, implying a post-money valuation, of £5.4 million. (Note: this valuation is based on issued capital as reported in filings, and does not include an option pool, which would likely increase the fully-diluted valuation by 10-15%).
The next investment took place only 6 months later, at more than double this valuation, with shares issued in October 2015 at £7.92, implying a £12 million post-money valuation. Two months later, in December, a further £1 million was invested at £13.70 per share, a 173% increase to the two months prior share price, and a £22 million valuation.
By the end of 2015, Revolut had raised approximately £3.4 million, selling 33% of the issued capital, with the founder holding 67%. The chart below shows Revolut’s cap table at year end 2015:
In May 2016, two executives exercised stock options: Vladyslav Yatsenko (co-founder and CTO) received 107,853 Ordinary shares at par value, equivalent to 6.1% of the then issued capital, and Tom Reay acquired 11,250 Ordinary shares at £0.29 per share, equivalent to 0.6% of the issued capital. Reay served as the Head of Development from September 2014 until April 2016.
In July 2016, Balderton led Revolut’s Series A, with participation from Ribbit Capital and Index Ventures, as well as previous round investors Point Nine, Venrex and Seedcamp. Adjusting for a 10:1 share split, the price of £1.68 implied a post-money valuation of £38 million. The round also included £1 million of crowdfunding raised on Crowdcube, for a 2.39% stake according to Revolut's crowdfunding page. Assuming this 2.39% is a fully diluted percentage (i.e. including option pool), it would imply a valuation of £42 million, and comparing this to the £38 million valuation based on issued capital, suggests an option pool in place of £4 million or 10%. In total, this round raised £8.5 million, and represented a 342% valuation step-up to the Seed round.
This is the Revolut cap table (based on issued capital) at year end 2016:
In July 2017, Revolut closed a Series B of $66 million led by Index Ventures, plus a further £5 million in crowdfunding, with a price per share of £8.57 implying a valuation of £250 Million.
Then in April 2018, Revolut announced it had raised a $250 million Series C round led by DST at a valuation of $1.7 Billion (£1.2 Billion).
This valuation represents an approximately 32X valuation step up from Series A and 250X compared to the Seed round. The chart below shows the progression in Revolut’s valuation from 2015 to 2018:
Next, we look at Revolut's financial and operating metrics, pulled from Craft's metrics page for Revolut here and here, respectively. This shows us that Revolut generated £120K revenue in 2015 and £2.36 million in 2016. One interesting aspect of Revolut’s profit and loss is a very high Cost of Goods Sold, which may represent financing and transaction costs of settling users foreign exchange transactions. COGS were 1,283% of Revenue in 2015 and 331% in 2016. So, Gross Profit was -£1.42 million in 2015 and -£7.8 million in 2016. In the same period, operating expense ratio improved, as in 2015 operating expenses were 225% of revenue, while in 2016, the % dropped to 71%.
Revolut’s 2017 financials will be published sometime before September 30th, 2018. It will be interesting to see what revenue growth and expense profile the company will show. During 2016, it’s valuation was in the region of 20X full year revenue, and that valuation increased over 500% in 2017 and another 400% in 2018. The Series C funding announcement included impressive growth metrics that the firm is now processing $1.8B through the platform every month (increased from $1.5Bn only 2 months prior) and is signing up 6,000 – 8,000 new customers a day. Its stated goal is to reach 100M customers within five years.
That is quite the rocketship.
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