BREAKINGVIEWS-Revolut at $75 bln rests on Robinhood comparison

By Karen Kwok

LONDON, Nov 24 (Reuters Breakingviews) - Revolut may still be stuck in the UK banking licence waiting room, but it isn’t waiting for permission to challenge the perceptions of what a bank is. A new staff share sale values the fintech at $75 billion, 67% higher than its last mark in August 2024. That price only adds up if investors see it less as a digital lender like Brazilian-focused Nu NU.N, and more like trading and payments players Robinhood HOOD.O and Adyen ADYEN.AS.

Led by founder and CEO Nik Storonsky, Revolut has kept growing despite ongoing delays with UK regulators. Revenue jumped 72% to $4 billion in 2024, and sources familiar with the situation told Breakingviews that internal projections see it rising 45% to $5.9 billion in 2025, and $9.3 billion in 2026. If the group achieves a 27% net margin - slightly above last year’s 26% - net income could reach $1.6 billion. At Nu’s 27 times price-to-earnings 2025 multiple using Visible Alpha estimates, that would imply a $46 billion valuation.

But Revolut isn’t Nu. The latter earns 78% of its revenue from interest income, while Revolut only relies on that area for 25%. The rest comes from payment processing fees, crypto and FX trading, travel services and premium subscriptions. Its faster growth and more diversified income arguably make it more comparable to Robinhood, which earns 56% of revenue from trades, or Adyen, which focuses on payments. On a blended multiple of 47 times forward earnings - based on Nu, Robinhood and Adyen - Revolut’s $75 billion tag starts to make sense.

Still, the trading side brings risks. Retail investing is fickle: Robinhood’s transaction-based revenue surged 94% in the 2021 meme-stock boom, then dropped 41% in 2022 when volumes collapsed. Revolut’s exposure to such swings, while on a lesser scale, still matters.

Yet the company has an impressive reach. It now boasts 65 million customers globally, including in Mexico, India and the UAE, where Storonsky recently relocated. That compares to Monzo’s over 10 million users and Nu’s 127 million in Latin America. The ongoing wait for a UK banking licence obscures the fact that Revolut is already a rather different beast.

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CONTEXT NEWS

British finance group Revolut said on November 24 it had completed a secondary share offering, valuing the company at $75 billion.

Revolut said participants in the offering included investment firms Coatue and Greenoaks, venture capital firm Andreessen Horowitz, and Nvidia’s venture capital arm, among others.

At its last recorded valuation, in August 2024, Revolut fetched $45 billion.