REG - Wise PLC - Q2 Trading Update

WiseAnnouncement

15/10/2024 07:00

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RNS Number : 1429I  Wise PLC  15 October 2024

Q2 FY25 Trading Update

Investments driving continued active customer and volume growth

 

●     Progress towards our long-term aim to become the network of choice
for moving the world's money continues at pace with the number of active
customers using Wise growing by 23% YoY to 8.9m in Q2, driven primarily by
existing customers recommending Wise.

●     Continued growth in customers and Wise account adoption drove a
20% YoY increase in cross border volume (23% on a constant currency basis) to
£35.2bn, a 20% YoY increase in customer deposits and a 49% increase in card
and other revenue.

●     In Q2, we continued to reduce and restructure our cross border
pricing to sustainably drive growth. The cross border take rate for the
quarter was 59bps, an 8bps reduction YoY due to lower prices (6bps) and a
changing mix (2bps). The equivalent of 2bps of this reduction is offset at an
underlying income level by a corresponding increase in pricing on non-cross
border services as part of our restructuring of cost allocations.

●     Underlying income grew by 17% YoY to £337.0m in Q2, bringing
growth in H1 to 19%. For FY25, we continue to expect underlying income growth
of 15-20%.

●     The underlying gross profit margin remains elevated at c76% for H1
FY25. This reflects the scaling of costs of goods sold relative to volumes
while we also continue investing to support and drive growth.

●     Investments in pricing through H1 are expected to move us closer
to achieving our medium-term target underlying PBT margin range of 13-16% in
H2. We therefore do not currently anticipate making further material
investments in reduced pricing in the second half of FY25.

 

We remain focused on our mission of building the best way to move and manage
the world's money.  This will take time to fully achieve but we are pleased
with the progress made during the quarter, especially the additional
regulatory approvals we have received in key markets that will enhance our
infrastructure and coverage, and consequently drive further growth in the
years ahead.

 

Firstly, in India, we secured approvals to further unlock outward transfers,
removing a previous USD 5,000 cap. This allows us to improve our proposition
and grow our customer share in India, which is expected to help us reduce the
cost of sending to and from India over time. Secondly, in Australia, we have
been granted an Australian Financial Services Licence for Investments,
enabling us to bring our investment product 'Assets' to Australia later this
year. And finally, in Brazil, we were delighted to be given a Payments
Institutions licence, granting us access to Brazil's payment system (PIX)
which, once integrated, will be our sixth direct connection to domestic
payment systems.

 

These are important steps on our journey to building the fastest, most
cost-efficient infrastructure. In the short term, our investments drive growth
through a better proposition and sustainably lower prices, which we expect
over time to take us from moving billions to moving trillions of cross border
volume. Platform partnerships will be an important part of this journey and we
were pleased to join forces with AbbeyCross this quarter, bringing the power
of the Wise infrastructure directly to their customers via Wise Platform.

 

-Kristo Käärmann, Co-founder and Chief Executive Officer

 

                                   Q2 FY25  Q2 FY24  YoY Movement
 Cross border volume (£ billion)   35.2     29.2     20%
 Underlying income (£ million)     337.0    288.4    17%
 Cross border take rate (%)        0.59%    0.67%    -8 bps
 Instant transfers (%)             63%      60%      +3 pps

 

You can read more about our progress in our quarterly Mission Updates on
https://wise.com/p/our-mission.

 

Please see the appendix for further historical financial information.

 

 

 

 

Enquiries

Martin Adams / Lawrence Nates - Investor Relations

owners@wise.com (mailto:owners@wise.com)

 

Sana Rahman - Communications

press@wise.com

 

Brunswick Group

Charles Pretzlik / Sarah West / Nick Beswick

Wise@brunswickgroup.com

+44 (0) 20 7404 5959

 

About Wise

Wise is a global technology company, building the best way to move and manage
the world's money. With Wise Account and Wise Business, people and businesses
can hold over 40 currencies, move money between countries and spend money
abroad. Large companies and banks use Wise technology too; an entirely new
network for the world's money.

 

Co-founded by Kristo Käärmann and Taavet Hinrikus, Wise launched in 2011
under its original name TransferWise. It is one of the world's fastest growing
tech companies and is listed on the London Stock Exchange under the ticker
WISE.

 

In fiscal year 2024 Wise supported around 13 million people and businesses,
processing approximately £118bn billion in cross-border transactions, and
saving customers over £1.8 billion.

 

A glossary of terms can be found in our annual report and accounts
(https://wise.com/imaginary-v2/images/3f1628373b212ca54c1ac73c68d69b72-WISE-2024-Annual-Report-and-Accounts.pdf)
.

 

FORWARD LOOKING DISCLOSURE DISCLAIMER

This report may include forward-looking statements, which are based on current
expectations and projections about future events. These statements may
include, without limitation, any statements preceded by, followed by or
including words such as "forward looking", "guidance", "target", "believe",
"expect", "intend", "may", "anticipate", "estimate", "forecast," , "project",
"will", "can have", "likely", "should", "would", "could" and  any other words
and terms of similar meaning or the negative thereof. These forward-looking
statements are subject to risks, uncertainties and assumptions about Wise and
its subsidiaries. In light of these risks, uncertainties and assumptions, the
events in the forward-looking statements may not occur.

Past performance cannot be relied upon as a guide to future performance and
should not be taken as a representation that trends or activities underlying
past performance will continue in the future, and the statements in this
report speak only as at the date of this report. No representation or warranty
is made or will be made that any forward-looking statement will come to pass
and there can be no assurance that actual results will not differ materially
from those expressed in the forward-looking statements.

Wise expressly disclaims any obligation or undertaking to update, review or
revise any forward-looking statements contained in this report and disclaims
any obligation to update its view of any risks or uncertainties described
herein or to publicly announce the results of any revisions to the
forward-looking statements made in this report, whether as a result of new
information, future developments or otherwise, except as required by law.

Appendix - Historical Financials

 

 Quarterly                           Q2 FY2023  Q3 FY2023  Q4 FY2023  Q1 FY2024  Q2 FY2024  Q3 FY2024  Q4 FY2024  Q1 FY2025  Q2 FY2025  QoQ        Q YoY

                                                                                                                                        Movement   Movement
 Active Customers (thousand)         5,484      5,793      6,125      6,670      7,232      7,512      7,911      8,374      8,892      6%         23%
 Personal (thousand)                 5,182      5,475      5,784      6,307      6,847      7,120      7,517      7,962      8,469      6%         24%
 Business (thousand)                 302        319        340        363        385        392        395        412        423        3%         10%

 Cross border Volume (£ billion)¹    27.0       26.4       26.7       28.2       29.2       30.6       30.6       33.2       35.2       6%         20%
 Personal (£ billion)                20.1       19.0       19.5       20.8       21.6       22.3       22.6       24.5       26.1       6%         21%
 Business (£ billion)                6.9        7.4        7.3        7.4        7.6        8.3        8.0        8.7        9.1        4%         19%

 Customer balances (£ billion)       9.2        10.1       10.7       11.5       12.3       12.9       13.3       14.1       14.7       4%         20%
 Personal (£ billion)                4.9        5.4        5.8        6.5        7.0        7.5        7.9        8.5        9.0        7%         29%
 Business (£ billion)                4.3        4.7        4.9        5.0        5.3        5.4        5.4        5.6        5.7        0%         8%

 Cross border revenue (£ million)    171.0      181.3      177.7      187.9      196.5      206.2      204.6      211.2      207.9      (2%)       6%
 Personal (£ million)                135.9      141.5      139.7      149.0      154.7      161.2      161.0      167.1      167.2      0%         8%
 Business (£ million)                35.1       39.8       38.0       38.9       41.8       45.0       43.6       44.1       40.7       (8%)       (3%)

 

1.         Cross border volume only. On a constant currency basis,
cross border volume for Wise, its Personal segment and its Business segment
grew 7%, 8%, 6% respectively versus the prior quarter, and 23%, 23%, 21%
compared to the same quarter in the previous year.

 

Note: Differences between 'total' rows and the sum of the constituent
components of Personal and Business are due to rounding.

 

 

 

 

 

 

 

 

 

Appendix - Historical Financials (continued)

 

 Quarterly                                                   Q2 FY2023  Q3 FY2023  Q4 FY2023  Q1 FY2024  Q2 FY2024  Q3 FY2024  Q4 FY2024  Q1 FY2025  Q2 FY2025  QoQ        Q YoY

                                                                                                                                                                Movement   Movement
 Card and other revenue (£ million)                          40.5       43.9       45.8       51.6       62.2       70.4       72.6       80.0       92.8       16%        49%
 Personal (£ million)                                        28.9       32.2       33.7       37.4       46.1       51.9       54.0       59.6       70.5       18%        53%
 Business (£ million)                                        11.6       11.7       12.1       14.2       16.1       18.5       18.6       20.4       22.3       10%        39%

 Underlying interest income (first 1pct yield) (£ million)   -          24.2       25.4       27.4       29.7       31.3       32.3       34.2       36.3       6%         22%
 Personal (£ million)                                        -          13.0       13.7       15.2       16.9       18.0       19.0       20.4       22.1       8%         31%
 Business (£ million)                                        -          11.2       11.7       12.2       12.8       13.3       13.3       13.8       14.2       3%         11%

 Underlying income (£ million)                               210.6      249.4      248.8      266.9      288.4      307.9      309.5      325.4      337.0      4%         17%
 Personal (£ million)                                        164.3      186.7      187.0      201.6      217.7      231.1      234.0      247.1      259.8      5%         19%
 Business (£ million)                                        46.3       62.7       61.8       65.3       70.7       76.8       75.5       78.3       77.2       (1%)       9%

 Interest income (above the first 1pct yield) (£ million)    18.4       22.2       46.1       68.3       85.7       100.9      109.6      114.3      115.9      2%         35%
 Personal (£ million)                                        9.6        11.9       25.0       37.9       48.7       58.0       64.3       68.0       70.4       4%         45%
 Business (£ million)                                        8.8        10.3       21.1       30.4       37.0       42.9       45.3       46.3       45.5       (1%)       23%

 Benefits paid relating to customer balances (£ million)     -          (2.9)      (15.5)     (24.3)     (29.0)     (33.7)     (37.9)     (41.3)     (43.5)     5%         50%
 Personal (£ million)                                        -          (1.7)      (9.0)      (14.1)     (16.9)     (19.1)     (22.6)     (24.8)     (26.5)     7%         57%
 Business (£ million)                                        -          (1.2)      (6.5)      (10.2)     (12.1)     (14.6)     (15.3)     (16.5)     (17.0)     3%         40%

 Cross border take rate (%)                                  0.63%      0.69%      0.67%      0.67%      0.67%      0.67%      0.67%      0.64%      0.59%      -5 bps     -8 bps

 

Note: Differences between 'total' rows and the sum of the constituent
components of Personal and Business are due to rounding.

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