Revolut's new accounts reveal the huge pay day coming to some employees
As we noted here last week, even comparatively mid-ranking employees who spent modest amounts of time working for Revolut stand to become very rich if the app-based bank succeeds in achieving its desired valuation of $40bn in a coming share sale.
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Today's newly released 2023 Revolut Annual Report is intended to prepare the ground for that valuation, share sale, and the hopeful attainment of a UK banking licence. It reveals that Revolut made a pre-tax profit of £438m in 2023, up from a loss of £25mn the previous year, and that revenues almost doubled to £1.8bn. As such, Revolut's desired valuation as a multiple of revenues is even greater than that achieved by Preqin in its sale to BlackRock.
What's most notable from today's report, though, is the generous terms under which Revolut has, in the past at least, issued stock to employees.
Revolut isn't commenting on the current or past valuation of its shares, but multiple insiders say that as recently as 2019 it was offering shares to employees for just £10 and that if the $40bn valuation is achieved, those shares will each be worth over $660 (£522).
Today's report reveals that Revolut's Employee Benefit Trust, which holds shares to issue to employees, holds a mix of shares priced at £8.48 and...£0.27, so it can presumably afford to be generous.
The chart below also shows the exercise price for options issued by Revolut in the past. In 2023, there were nearly 1.5m share-based option payments outstanding to employees, with a weighted average exercise price of less than 50p. If Revolut succeeds in achieving a valuation per share of £522, holders of those options stand to become very rich.
Source: Revolut
Unfortunately, as the chart also shows, these kinds of generous options are no longer being issued by Revolut. However, the bank issued a further £45m in share-based payments to all its staff in 2023
Today's report says Revolut's shares have the following vesting schedules: "(i) a four-year vesting schedule with 25% vesting on each anniversary; (ii) a two-year vesting schedule with 50% upfront and 25% vesting annually over the subsequent two years; and (iii) a two-year vesting schedule where 1/24th vests each month."
Employees are required to remain in employment with the Group until the vesting period has elapsed; otherwise, the awards lapse. Options given to employees expire after ten years whereas RSUs expire after seven years. Hopefully Revolut will have an IPO before that time is up.
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