UK FinTech darling Revolut was recently valued at $75 billion (£55bn) by its September funding round and an employee share sale.
However, as it looks to a potential mega-IPO, an M&A expert has raised questions about whether the premium can be justified in a public listing.
Max Thomas is a partner at TBP Global Assets, which specialises in M&A advisory for founders and business owners.
Despite surging to 60m users and adding a diverse range of services, including business banking and cryptocurrency trading, he questioned whether Revolut’s elevated EV/revenue multiple (14.2x on $5.3bn projected 2025 revenue) is sustainable compared with peers such as NuBank (headquartered in Brazil) and SoFi (Los Angeles).
“Revolut’s recent valuation surge to $75 billion raises critical questions about its sustainability – especially as it prepares for an IPO,” said Thomas (above).
“While its projected revenue for 2025 stands at $5.3bn, this results in an elevated EV/Revenue multiple of 14.2x, significantly higher than peers like NuBank and SoFi, which average around 10.1x.
“To justify and sustain this lofty valuation, Revolut must focus on several key areas. First, increasing daily app usage is essential; making Revolut the go-to for all financial activities can enhance engagement and customer retention. Second, boosting revenue per customer is crucial.
“With an estimated revenue per customer of $101 – below the average of $155 among major neobanks – there’s substantial room for growth, particularly as Revolut aims to penetrate the US market, where competitors like SoFi achieve revenues of $284 per customer.”
However Thomas said an effective exit strategy is “paramount”.
“A successful IPO would not only provide liquidity for current investors and employees, but also set a benchmark for future growth,” he said. “For Revolut to maintain its elevated valuation post-IPO, it needs to demonstrate a robust growth trajectory, which includes regulatory compliance across different markets, particularly as it seeks banking licenses in the US and expanded EU operations.
“Ultimately, as Revolut navigates its path to an IPO, the pressure is on to deliver on its ambitious growth plans.
“The market will be closely watching to see if it can not only maintain but also expand its valuation by successfully executing its strategies for user engagement, revenue growth, and market expansion.
“The ability to achieve these targets will be critical in determining whether Revolut can justify its $75bn valuation and achieve a successful exit event.”
Former $3.5bn-valued Kronos has assets acquired by Ignota Labs