Revolut investor slashes $18 billion off its valuation

In a regulatory filing, the Schroders Capital Global Innovation Trust has cut its internal valuation of its Revolut shares to £5.4 million from £10.1 million in 2021. The markdown implies a valuation of $17.7 billion, down from $33 billion the company was valued at after its last funding round, marking another dramatic markdown by a high-profile fintech startup.

Revolut faced new questions last month when its auditor revealed concerns over its long delayed 2021 accounts. BDO said it had been unable to fully verify £477 million of revenues, adding that “the risk of an undetected material misstatement was unacceptably high” due to the configuration of Revolut’s internal IT systems.

That said, other notable fintech startups such as Checkout.com and Klarna have also lowered their valuations as private tech groups are hit by a funding crunch and higher interest rates. Revolut, however, has not given any indication of reducing its own valuation, and unlike its competitors, has not been compelled to reduce its workforce or raise new funds to offset losses.

Investors sometimes make adjustments to their own valuations of privately held companies, regardless of the company’s actual performance. Schroders’s recent markdown is believed to be the second publicly announced decrease in Revolut’s valuation since its significant fundraising round in 2021, which included investments from SoftBank and Tiger Global.

Investor appetite for Fintechs has weakened due to rising interest rates and inflation. Although the impact of the widespread sell-off in public markets has not yet been broadly felt across the venture sector, the valuations of late-stage startups have already started to decline.

Revolut reported last month its first full year of profit, with its delayed accounts showing that revenues tripled in 2021 as paid subscriptions and overall usage of its app grew sharply.

The challenger bank swung into a pre-tax profit of £39.8 million ($48 million) for the year compared to a loss of £220.7 million in 2021. The London-based business yielded revenues of £636.2 million ($767.1 million), three times the £220 million it booked in 2020.

Revolut’s revenue comes from multiple sources, but overall, it was boosted by an increase of more than 50% in weekly active retail customers and a 75% increase in paid subscriptions. Meanwhile, the foreign exchange and wealth services, which includes crypto, were the biggest source of revenue. Approximately 33 percent of Revolut’s 2021 revenues came from its cryptocurrency trading business.

For 2022, the company gave a trading update saying it continued to grow at a slower pace, with revenue rising 30 percent to £850 million. As a privately held firm, Revolut is not required to share frequent quarterly reports.

Although its first annual profit was partly driven by a boom in crypto, Revolut held off on plans to launch its native crypto token, which aims to reward customers for their loyalty, as the London-based neobank is currently assessing the best time to do that.