UK Fintech Wise Reports Increase in Profits As High Interest Rates Boost Earnings

Wise plc (LSE:WISE) has posted unaudited interim results for the six months ended September 30, 2023. Wise is a leading Fintech based in the UK but providing services globally. In the first six months of this year, Wise says that it continued “to make progress against their mission of building the best way to move and manage the world’s money.” Wise currently moves around £2 trillion annually for individuals and £9 trillion annually for business users.

Wise has continued “to invest in making their account features available to more people and businesses, and they made great progress in building the network for the world’s money – having completed their integration into NPP and announcing their collaboration with Swift.”

This has driven Wise’s growth and the fundamentals of its financial performance.

Wise’s customer base grew by more than 30%, supporting 25% growth in revenue, and a 163% increase in adjusted EBITDA for the period. During Q2, FY 24, Wise said it enabled around 7.2 million accounts to move and manage money worldwide.

The firm’s customer base is said to be growing around.30% YoY into a huge market where the company says it has a small share.

In total, Wise users moved £57.4 billion during the first half of FY 2024, which is an increase of 12% vs H1 FY 2023.

Wise reported that its customer growth continues to be driven by word-of-mouth as it boosts its global offerings.

The Wise Account recently introduced its Assets Interest feature in several European countries and launched a service for expats in China. Earlier this year, Wise announced interest-bearing accounts for its US users.

The account is adding more value “to more customers; in Q2 FY24, 44% of personal customers and 58% of business customers used multiple features of the account.”

Wise Platform also welcomed 9 new partners, “including Interactive Brokers, Bluevine, IndusInd Bank, GMO Azora NetBank, and Saudi Awwal Bank.”

For Wise’s core business of transfers and payments, 60% of payments were instant in Q2 FY24 with 81% completed within an hour and 94% within 24 hours.

They completed the direct integration into the company’s New Payments Platform (NPP), Australia’s domestic payment system. Wise Platform announced its collaboration with Swift, launching Correspondent.

Wise continues to invest in “the operational capabilities that allow them to build great products, efficiently onboard, service and protect our customers, and fight financial crime.”

Revenue increased 25% to £498 million as strong customer growth led to higher volumes and fees from account features. Income, which Wise defines as revenue and interest income net of customer benefits, increased by 58% to £656 million.

Gross profit increased by 86% to £489 million, and their gross profit margin was 75%; supported by higher interest income and lower FX costs in the period.”

As mentioned in the announcement, adjusted EBITDA of £241 million, “equivalent to a 37% margin2, remains elevated whilst we work to share more of the benefits of higher interest rates with customers Outlook.”

As outlined in their Q2 FY24 trading update, they are now reportedly “expecting Income growth for FY24 to be between 33-38% (previously 28-33%) given the strong start to the year and our higher interest income expectations.”

They continue to “expect Income growth of >20% (CAGR) over the medium term.

Shares in Wise responded positively to the earnings update.

If you are interested you may watch the Wise half year presentation here.

Presentation slides are available here.

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