REG - Wise PLC - Wise Plc HY FY24 Unaudited Interim Results
14/11/2023 07:00
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RNS Number : 3026T Wise PLC 14 November 2023
14 November 2023
Wise plc
Unaudited interim results for the six months ended 30 September 2023
GREAT PROGRESS IN BUILDING THE NETWORK FOR THE WORLD'S MONEY;
CUSTOMER GROWTH CONTINUES TO COMPOUND AT OVER 30%
"In the first six months of this year we continued to make progress against
our mission of building the best way to move and manage the world's money. We
continued to invest in making our account features available to more people
and businesses, and we made great progress in building the network for the
world's money - having completed our integration into NPP and announcing our
collaboration with Swift. This has driven our growth and the fundamentals of
our financial performance. Our customer base grew by over 30% supporting 25%
growth in revenue, a 58% increase in Income and a 163% increase in adjusted
EBITDA for the period.
-Harsh Sinha, Chief Technology Officer and Interim Chief Executive Officer
Highlights for the six months ended 30 September 2023(( 1 (#_ftn1) ))
Our customer base is growing c.30% YoY into a huge market where we have a
small share
· Active customers increased by over 30%; in Q2 FY24 alone we
helped 7.2 million people and businesses move and manage their money around
the world
· Our customers moved £57.4 billion with us in H1 FY24, an
increase of 12% vs H1 FY23
Our customer growth continues to be word-of-mouth led; the result of a market
leading and increasingly global proposition
· Our Wise Account got better, including the introduction of our
Assets Interest feature in several European countries, and the launch of a
service for expats in China
· 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
· In H1 FY24, more than two-thirds of new customers joined through
word-of-mouth which helped us maintain a consistently low customer acquisition
cost
· Wise Platform welcomed 9 new partners, including Interactive
Brokers, Bluevine, IndusInd Bank, GMO Azora NetBank and Saudi Awwal Bank
We continue to invest in building the network for the world's money
· Instant payments delight our customers and make clear the quality
of our network; 60% of payments were instant in Q2FY24, 81% within an hour and
94% within 24 hours
· We completed the direct integration into New Payments Platform
(NPP), Australia's domestic payment system
· Wise Platform announced its collaboration with Swift, launching
Correspondent Services, enabling banks to more easily integrate into Wise's
global payment network
· We continue to invest in the operational capabilities that allow
us to build great products, efficiently onboard, service and protect our
customers, and fight financial crime
We have an increasingly profitable and highly cash generative business model,
which is underpinning the investment in our growth
· Revenue increased 25% to £498 million, as strong customer growth
and adoption of the account led to higher volumes, and fees from account
features. Income(1) increased 58% to £656 million driven by revenues, and the
interest income on customers' balances.
· Gross profit increased by 86% to £489 million, and our gross
profit margin was 75%; supported by higher interest income and lower FX costs
in the period
· Adjusted EBITDA of £241 million, equivalent to a 37% margin(2) ,
remains elevated whilst we work to share more of the benefits of higher
interest rates with customers
Outlook
· As outlined in our Q2 FY24 trading update, we expect 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
· We continue to expect Income growth of >20% (CAGR) over the
medium term
· We also continue to target an adjusted EBITDA margin at or above
20% over the medium term, and so long as interest rates remain >1%, our
adjusted EBITDA margin will remain structurally higher than our targeted (at
or above 20%) level
· However our adjusted EBITDA margin will be considerably higher
than this in FY24 given the higher interest rates and the reality that we are
unable to return interest to customers at the level we would like
Selected financial information:
Half-year ended YoY
30 September
2023 2022 Movement %
Revenue (£ million) 498.2 397.4 25%
Interest income net of customer benefits (£ million) 157.8 18.7 848%
Income (£ million)¹ 656.0 416.1 58%
Gross profit (£ million) 488.9 262.4 86%
Gross profit margin 74.5% 63.0% 11.5 pps
Profit before tax (£ million) 194.3 51.3 280%
Adjusted EBITDA (£ million) 241.1 91.6 163%
Adjusted EBITDA Margin² 36.7% 22.0% 14.7 pps
Free cash flow (FCF) (£ million) 229.1 78.0 194%
FCF conversion³ 95.0% 85.1% 9.9 pps
¹Comprises revenue and interest income net of customer benefits.
²Adjusted EBITDA as a proportion of Income.
³FCF as a proportion of Adjusted EBITDA.
Growth metrics:
FY24 FY23 YoY Movement (%)
Q1 Q2 H1* Q1 Q2 H1* Q1 Q2 H1*
Customers (thousands)¹ 6,669.9 7,231.6 - 4,997.0 5,483.8 - 33% 32% -
Personal (thousands) 6,306.8 6,846.6 - 4,710.9 5,182.2 - 34% 32% -
Business (thousands) 363.00 385.00 - 286.10 301.60 - 27% 28% -
Volume per customer (£ thousand)² 4.2 4.0 - 4.9 4.9 - (13%) (18%) -
Personal (£ thousand) 3.3 3.2 - 3.8 3.9 - (14%) (19%) -
Business (£ thousand) 20.4 19.8 - 22.2 22.9 - (8%) (14%) -
Volume (£ billion)³ 28.2 29.2 57.4 24.4 27.0 51.3 16% 8% 12%
Personal (£ billion) 20.8 21.6 42.3 18.0 20.1 38.1 15% 8% 11%
Business (£ billion) 7.4 7.6 15.0 6.3 6.9 13.2 17% 10% 13%
Revenue (£ million) 239.5 258.7 498.2 185.9 211.5 397.4 29% 22% 25%
Personal (£ million) 186.4 200.8 387.2 144.4 164.7 309.1 29% 22% 25%
Business (£ million) 53.1 57.9 111.0 41.5 46.8 88.3 28% 24% 26%
Growth metrics continued:
FY24 FY23 YoY Movement (%)
Q1 Q2 H1 Q1 Q2 H1 Q1 Q2 H1
Interest income net of customer benefits (£ million)¹ 71.4 86.4 157.8 1.2 17.5 18.7 nm⁶ nm⁶ nm⁶
Personal (£ million) 39.0 48.7 87.7 0.6 9.1 9.7 nm⁶ nm⁶ nm⁶
Business (£ million) 32.4 37.7 70.1 0.6 8.4 9.0 nm⁶ nm⁶ nm⁶
Income (£ million)² 310.9 345.1 656.0 187.1 229.0 416.1 66% 51% 58%
Personal (£ million) 225.4 249.5 474.9 145.0 173.9 318.9 55% 43% 49%
Business (£ million) 85.5 95.6 181.1 42.1 55.1 97.2 103% 74% 87%
Cross-currency revenue take rate (%)³ 0.67% 0.67% 0.67% 0.61% 0.63% 0.62% 6 bps 4 bps 5 bps
Revenue take rate (%)⁴ 0.85% 0.89% 0.87% 0.76% 0.78% 0.77% 9 bps 11 bps 10 bps
Income take rate (%)⁵ 1.10% 1.18% 1.14% 0.77% 0.85% 0.81% 33 bps 33 bps 33 bps
An update from Harsh Sinha, Chief Technology Officer and Interim CEO
Our mission is to build the best way to move and manage the world's money.
In the first six months of FY24 we made great progress against our mission. By
continuing to improve the Wise account and make more of the features available
to more people and businesses around the world, we were able to help over 30%
more customers solve their international needs. We also continued to broaden
and deepen our global payment network which we expect to enable us to complete
more instant payments and drive lower pricing over time. And we did all of
this whilst delivering strong profitability and cash flow.
Our customer base is growing c.30% YoY into a huge market where we have a
small share
A massive problem continues to exist for people and businesses around the
world; moving and managing money internationally is still broken. It remains
expensive, slow, inconvenient and opaque. The opportunity that comes with
solving this problem is huge, and whilst we are among the largest independent
cross-border providers, we still have just a c.5% share of the personal market
and less than 1% share of the SMB market.
But we are growing fast and helping more customers every year. In fact, more
than 30% more people and businesses used Wise compared with the same period
last year. In Q2 FY24 alone, we helped 7.2 million customers solve their
international needs. This rate of active customer growth is consistent with
the rate at which we've grown over the last 3 years.
As a result, when compared to the same period last year, we've helped people
and businesses to move 12% more cross-border payments, spend 90% more using a
Wise card, and hold 33% more in balances in multi-currency accounts. And this
is driving the fundamentals of our financial performance.
Our customer growth continues to be word-of-mouth led; the result of a
market-leading and increasingly global proposition
With the Wise Account; Wise Business; and Wise Platform, we serve millions of
people, small businesses, financial institutions and enterprises all over the
world.
In the first half of the year we rolled out more of our Account features to
more customers. We introduced the "Interest" Assets feature in more European
countries; Germany, Sweden, Norway and Estonia and extended the "Stocks"
Assets feature to an additional 11 countries in Europe, giving more people
optionality on how they earn a return on the money they hold with us. We also
launched a service for expats in China to send their salaries back home.
Ongoing investment into product development adds to use cases and enhances
user experience. In Australia we removed the balance charge fee, in Canada
account holders can now receive into Wise via Interac, and now in Malaysia we
have both Apple Pay and Google Pay available.
With continued investment in features to make our customers' lives easier,
combined with low cost, fast payments, the quality of our Account speaks for
itself. We consistently see around two-thirds of new customers join us through
word-of-mouth from existing customers. This virality, which we've seen for
several years, allows us to acquire customers at a low cost.
As we've built and launched more features to help people and businesses move
and manage their money, adoption of the account has continued to increase. In
Q2 FY24, 44% of active personal customers used multiple features of the Wise
Account, up from 32% in Q2 FY23. For businesses, this adoption rate was 58%,
up from 53% in Q2 FY23. Given the higher active customer base, the greater
adoption means that we had 80% more multi feature personal customers and
around 40% more multi feature business customers, compared with Q2 FY23.
More customers using the account features has led to an increase in the
balances held with Wise too. As at 30 September 2023, customers held £12.3bn
in cash balances, 33% higher than this time last year and, separately, over
£1.7bn of funds in the 'Assets' feature(3). This growth in cash balances is
in line with growth in active customers.
In addition to the features and benefits that we offer to our customers, high
quality support drives higher customer engagement. Whilst we've added more
product features, we've also managed to improve our support contact rates (the
percentage of customers that need to contact us for help). In fact, in the
first half of the year we saw a 16% reduction in our contact rates compared to
H1 FY23 by improving our payout processing and making it easier and more
intuitive for customers to use the account for receiving money. Not only does
this ensure we delight more customers, but is also hugely valuable in terms of
operational efficiency.
Wise Platform continues to make good progress and we now work with over 70
Platform partners. So far in FY24, we have welcomed 9 new Platform partners
and they represent how Platform has evolved to now offer a range of features
that are common to our account customers. For example, we went live with two
new partners, Prospend and Parpera, our first partnerships that will provide
multi-currency accounts and digital debit cards. Amongst our new partners, we
also signed a partnership with Saudi Awwal Bank, a subsidiary of HSBC, and we
went live with IndusInd Bank in India, Bluevine investment platform in the US,
moomoo investment platform in Singapore, and GMO Azora Net Bank in Japan.
We continue to invest in building a the network for the world's money
We're building the replacement infrastructure for the world's money that is
international by default, enabling a global proposition that allows customers
to easily manage their money and make instant international payments at a low
cost.
In Q2 FY24 the average fee our customers paid on a cross-border transaction
was 0.67%, marginally higher than the fee of 0.63% in Q2 FY23, but we remain
committed to reducing these over time as we invest in our infrastructure. And
60% of all payments were completed instantly, 81% completed within an hour and
94% within 24 hours.
The question is: how do we do this? Our infrastructure is underpinned by us
building the network for the world's money - made up of a network of licences
and connections into payments systems; and in the operational capabilities
that support this, comprising our technology and operations. As set out below,
in the first half of the year we've made some great developments across these,
and we've also overcome some challenges.
In H1 FY24 we call out two key successes in improving our network of
connections and licences. First, we completed our integration into the New
Payments Platform (NPP), Australia's domestic payment system which gives us
full end-to-end control of the payment network into Australia. These are
complex integrations, and it's taken us close to three years from initial
conversations, but once fully rolled out to all of our customers, it will
enable us to provide instant payments consistently and to reduce bank and
partner fees significantly.
One of the many benefits of being directly integrated into local payments
systems is that it reduces our reliance on third parties to access payment
systems. But direct access isn't currently available to us everywhere, and
where we don't have direct access we have built an extensive network of
partners to support us. Having this network is critical, and this proved
valuable in recent months as one of our banking partnerships in the US came to
an end. We have been able to quickly commence the migration of customers to
another of our partners, and whilst this will cause some inconvenience for our
customers, the redundancy we had built into our network proved invaluable.
Our second success was the announcement of a collaboration with Swift. We call
this Correspondent Services, which will provide a new solution for banks and
other financial institutions to simply route their Swift messages to Wise and
send payments through our network without the need to fully integrate into our
API. Although it's early days, this is a fantastic opportunity to collaborate
more easily with traditional banks and to solve the cross-border needs of many
more people and businesses.
Elsewhere, our teams have been extending our network of partners across APAC
to improve payment speeds, and have been working with existing partners in the
US to enable faster payments. As an example, we've been working with JPMorgan
to enable all payouts into Chase accounts to be completed within a minute, and
elsewhere in the US we've been working with a partner to enable instant
payouts for customers whose bank is connected to the Real Time Payment (RTP)
network.
We continue to work with existing and new regulators around the world to
extend and deepen our licence footprint, and in the past months we have been
able to leverage our investment licence in Europe to allow the team to roll
out the Interest Assets product to several more European countries.
Our network of connections and licences enables us to move money around the
world, but to build great products and provide excellent service we continue
to invest in our technology and operational capabilities.
Our technology reflects the ongoing investment of c.800 engineers, and
features a single global treasury system and a machine learning powered
anti-financial crime engine - both updating in real-time. These are critical
to enabling us to grow at scale whilst making instant payments in a controlled
way.
We uplift our systems constantly, evolving as the business grows in size and
complexity. This is a critical ability when operating in an environment that
can move quickly, leading to heightened risk, such as from fast changing
sanctions lists to evolving behaviours from fraudsters.
As an example, as was reported in August 2023, we identified and self-reported
a £250 ATM withdrawal in June 2022 that had been made by an employee of a
business owned by a sanctions-designated individual. Our system caught the
transaction early, and we took immediate steps to implement changes needed to
avoid this type of transaction moving forward. Though we never want such
instances to occur, when they do, we learn from them and come out stronger.
Like all financial services companies, there is a risk that our services may
be misused for financial crime. This is especially true against a backdrop of
heightened geopolitical conflicts. To mitigate this risk, we are continuing to
invest in maintaining robust anti-financial crime systems and controls, which
allow us to spot, prevent and respond to risks quickly whenever needed. We
also work closely with our regulators and banking partners to stop potential
abuse of our services.
We shared with you last year how we had been making a significant investment
in our operational teams. This led to a large increase in headcount and
expenses last year, and continuing this investment will help us uplift our
servicing capacity.
Whilst we have more to build as we scale across the world, we believe the
global payment network that we've already created is becoming increasingly
more difficult to replicate. And it enables us to continue to offer
significantly lower prices than the alternative for many people and
businesses, and payments that are now majority instant.
We're confident in the outlook for the second half of the year and beyond
We've made great progress against our mission in the first half of this year,
and our investments continue to create the capabilities and products that are
the foundation for our customer-led growth. And it's this customer-led growth
that is driving the fundamentals of our financial performance. Active
customers have continued to compound at around 30%, and this has helped drive
a 58% increase in Income and even faster growth in our adjusted EBITDA, which
increased to £241 million (equivalent to a margin of 37%).
This gives us confidence as we look ahead to the second half of the year and
beyond, and we're very pleased to be able to signal this with our recently
upgraded Income guidance.
Our focus remains on building products that customers love and building the
network for the world's money. In doing so we'll continue to build out this
generational company which over the long term will create massive value for
customers and shareholders alike.
Harsh Sinha
A financial update from Matt, our CFO
The impact of compounding customer growth and wide adoption of the Wise
account has led to another period of strong financial performance; driving
both the top line and bottom line - supporting a 2.6x increase in adjusted
EBITDA in the period.
Income growth driven by strong customer growth and greater adoption of more
Wise Account features
In the first six months, over 30% more customers used Wise to send or convert
money internationally. Of the 7.2 million active customers in Q2 FY24, 6.8
million were personal customers (+32% YoY) and 0.4 million were business
customers (+28% YoY).
And more of those customers used multiple features of the account. In Q2 FY24,
44% of active personal customers (Q2 FY23: 32%) and 58% of active business
customers (Q2 FY23: 53%) used their Wise accounts to not just convert and send
money, but also to spend internationally with their cards, or to hold a
balance with us. This means we had 80% more people using multiple features of
the Wise Account and around 40% more businesses using multiple features of the
Wise Business product compared to the second quarter of FY23. This has become
increasingly supportive of income growth and profitability.
Our customers sent or converted £57.4 billion of volume in H1 FY24. This is a
12% increase on last year (14% increase on a constant currency basis), with
growth in volumes continuing to be driven by higher numbers of active
customers. Volume growth amongst customers that typically move less than £10k
per month has been resilient. However, macroeconomic conditions remain
uncertain, and in the first half of the year, this was one factor that has had
an impact on the level of volume growth amongst our high transaction value
customers, which resulted in a declining volume per customer, which we expect
to continue throughout FY24 and beyond. Our growth rate also reflects a
notably tough comparative period in H1 FY23, which benefited substantially
from high activity related to the strength of the USD.
Revenue from cross border transactions grew 20% to £384 million for the
period, and the take rate on cross border revenue by 5 bps to 0.67%, largely
reflecting recent price increases as we made a strong investment in building
more operational capacity to support our growth. Other revenue (predominantly
interchange income) increased by 48% to £113.8 million. This growth was
driven by higher take up and spending on the Wise card, but partly offset by
an action we took last year to remove fees for same currency transactions.
This led to a 5 bps increase in the other take rate to 0.20%. Revenue for the
period increased by 25% to £498.2 million. This represents a revenue take
rate of 0.87% (H1 FY23: 0.77%).
The higher active customer numbers and greater account adoption also led to a
33% increase in customer balances (excluding funds held in 'Assets' product)
to £12.3 billion. Through the increase in customer balances, and the higher
interest rate environment compared with H1 FY23, interest income net of the
benefits paid to customers increased to £157.8 million (H1 FY23: £18.7
million), further supporting Income, which increased 58% to £656.0 million.
H1 FY24 H1 FY23 Movement YoY
Volumes (£bn) 57.4 51.3 12%
Cross border revenue (£m) 384.4 320.5 20%
Cross border take rate (%) 0.67 0.62 5 bps
Other revenue (£m) 113.8 76.9 48%
Other take rate (%) 0.20 0.15 5 bps
Revenue (£m) 498.2 397.4 25%
Revenue take rate (%) 0.87 0.77 10 bps
Customer balances - period end (£bn) 12.3 9.2 33%
Interest income net of customer benefits (£m) 157.8 18.7 n.m.
Income (£m) 656.0 416.1 58%
Income take rate (%) 1.14 0.81 33 bps
Gross profit is growing fast and creates significant capacity to invest for
growth
Our gross profit for the period increased by 86% to £488.9 million, which led
to an 11.5 percentage point increase in the gross profit margin, to 75%. Our
variable costs (cost of sales and net credit losses on financial assets),
increased by 9%, driven by the 12% increase in cross-border volumes, partly
offset by the benefit of lower FX costs compared to H1 FY23. The majority of
the gross margin increase was driven by the higher interest rate earned on the
growing balances that our customers hold with us - and we're currently not
able to return this interest to customers at the level we aspire to.
Given the favourable FX result (which could be only a temporary benefit), we
do not expect the gross profit margin to remain this high throughout the
remainder of FY24, but we do expect that, overall, our gross profit margin
will be higher for FY24 compared to FY23.
H1 FY24 H1 FY23 Movement YoY
Income (£m) 656.0 416.1 58%
Cost of sales and expected credit losses (£m) (167.1) (153.7) 9%
Gross profit (£m) 488.9 262.4 86%
Gross profit margin (%) 74.5 63.0 11.5 pps
Expense growth in line with underlying business growth
Our gross profit allows us to fund significant investment in growing our
operational and corporate teams, and the investment in growth, such as product
development and marketing, whilst remaining highly profitable.
Administrative expenses increased by 38% in H1 FY24 to £296.5 million. Our
employee expenses grew 46% compared with H1 FY23, but 10% compared with H2
FY23. This reflects the strong hiring through last year and a slower rate of
hiring since the end of FY23. Our headcount now sits at 5,353, as at 30
September 2023, which is 4% higher than at 31 March 2023, and 24% higher than
30 September 2022.
We will continue to grow our operational teams to support our customer driven
demand for onboarding, servicing and compliance processes. And we'll grow our
product engineering teams making smart investments for long term growth.
New customer growth continues to come predominantly through referrals, or
'word of mouth', which is extremely beneficial to our customer acquisition
cost. We have also continued to invest in both established marketing
activities and new mediums. We increased spend by 5% to £19.3 million in the
first six months, and were able to acquire customers more efficiently,
particularly in Asia-Pacific and the rest of the world, such as Brazil. As a
result, we continued to grow our active customer base by over 30% whilst
maintaining an attractive return on investment.
Expenses relating to consultancy and outsourced services increased by 37% to
£39.5 million.
We have increased our usage of external vendors to support certain operational
servicing activities where this can be done at a lower cost whilst maintaining
high service quality. The increase also reflects the cost of audit and
advisory services relating to regulatory and compliance requirements as we
continue to expand our geographic coverage and build a more extensive product
for customers.
Highly profitable with limited reliance on interest income
Our approach to profitability, and what we target over the medium term, is to
take a significant proportion of the gross profit that we generate and commit
this towards investing for future growth, and doing so with very limited
reliance on income from interest rates. And we will do this whilst maintaining
an adjusted EBITDA margin at or above 20%.
Our adjusted EBITDA for the period was £241.1 million, up from £91.6 million
in H1 FY23. This is equivalent to an adjusted EBITDA margin of 37% (H1 FY23:
22%).
H1 FY24 H1 FY23 Movement YoY
Income (£m) 656.0 416.1 58%
Adjusted EBITDA (£m) 241.1 91.6 163%
Adjusted EBITDA margin (%) 36.7 22.0 14.7 pps
This higher adjusted EBITDA margin is primarily driven by interest income on
customer balances; we generated a gross yield of 3.7% in H1 FY24. Our guidance
on adjusted EBITDA margin has always been 'at or above 20%'. With our FY23
results we shared a framework outlining that we intend to use only the first
percentage point of interest yield to meet our adjusted EBITDA margin guidance
of 'at or above 20%', and that we'd aim to share 80% of the excess back with
customers. As a result, with rates at c.4%, we would expect our adjusted
EBITDA margin to be c.4 percentage points higher than our underlying guide.
The 37% adjusted EBITDA margin in H1 FY24 is much higher than this guided
level, and a function of two major drivers. First, we weren't able to share
the excess interest back with our customers at the 80% level we aspire to per
our framework, partly a function of what our licences allow us to pay out in
various regions; adjusted EBITDA margin would have been c. 29% if we had
achieved this. The remaining outperformance was largely due to lower than
expected cost of sales and administrative expenses.
Profit before tax for the period increased to £194.3 million compared with
£51.3 million in the same period last year. Earnings per share increased by
3.7x to 14.1 pence per share.
As at 30 September 2023, we held £13.3 billion of cash and highly liquid
investment grade assets, up 16% from £11.5 billion at the end of FY23. This
includes assets in respect of the £12.3 billion of customer balances, which
we hold in the form of various high quality assets. It also includes £911.1
million of Corporate cash (£671.1 million at the end of FY23), with the
increase driven by the £228.1 million of free cash flow generated by the
business (see definition in appendix). On this basis, our free cash flow
conversion rate for H1 FY24 was 95% (85% in H1 FY23).
We are well capitalised for the future and as at 30 September 2023, our Group
eligible capital of £467.5 million was significantly above the minimum
capital requirements set by our regulators around the world. This has allowed
us to continue our programme of purchasing Wise shares through the employee
benefit trust to reduce the dilutive impact of stock based compensation. As we
announced with our FY23 results, we have approvals for an additional £60
million of capital for this purpose in FY24, and as at 30 September 2023 we
have completed £29 million of share purchases.
Our outlook for FY24 and beyond
We're building a business with world class fundamentals. Our growth is
customer-led and we're growing fast to capture more of a large market. We're
investing efficiently, in the build and marketing of the Wise account and our
Wise Platform which is helping us power our growth with higher levels of
profitability.
Our outlook, and financial guidance for FY24 and over the medium term are an
outcome of what our teams have built over recent years.
With our Q2 trading update in October 2023, we upgraded our income growth
guidance for FY24 to 33-38% (previously 28-33%), reflecting the strong start
we have made to the year, and our higher interest income expectations. This is
despite us aiming to return more interest to customers and the more
challenging interest income comparative in the second half of the year.
Our medium term guidance remains unchanged:
· Income to grow at a compound annual growth rate of >20% over
the medium term
· We are targeting an adjusted EBITDA margin at or above 20% over
the medium term
Matt Briers
Principal risks and uncertainties
The principal risks and uncertainties that the Group faces for the rest of the
financial year are consistent with those previously reported in the Annual
Report and Accounts 2023. For a more detailed overview of how we manage our
risks at Wise, please refer to the 'Risk Management' section on pages 72 to 80
of the Annual Report.
Responsibility statement of the directors in respect of the interim financial
statements
The directors confirm that these condensed interim financial statements have
been prepared in accordance with UK adopted International Accounting Standard
34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct Authority and that
the interim management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
• an indication of important events that have occurred during the
first six months and their impact on the condensed set of financial
statements, and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
• material related-party transactions in the first six months and
any material changes in the related-party transactions described in the last
annual report.
On behalf of the Board of directors:
Matt Briers, Director
Date: 14 November 2023
Independent review report to Wise plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Wise plc's condensed consolidated interim financial
statements (the "interim financial statements") in the Unaudited interim
results of Wise plc for the 6 month period ended 30 September 2023 (the
"period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
• the Condensed consolidated statement of financial position as at
30 September 2023;
• the Condensed consolidated statement of comprehensive income for
the period then ended;
• the Condensed consolidated statement of changes in equity for
the period then ended;
• the Condensed consolidated statement of cash flows for the
period then ended; and
• the explanatory notes to the interim financial statements.
The interim financial statements included in the Unaudited interim results of
Wise plc have been prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the Unaudited interim results
and considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Unaudited interim results, including the interim financial statements, is
the responsibility of, and has been approved by the directors. The directors
are responsible for preparing the Unaudited interim results in accordance with
the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority. In preparing the Unaudited interim
results, including the interim financial statements, the directors are
responsible for assessing the group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the group or to cease operations, or have no realistic alternative
but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the Unaudited interim results based on our review. Our
conclusion, including our Conclusions relating to going concern, is based on
procedures that are less extensive than audit procedures, as described in the
Basis for conclusion paragraph of this report. This report, including the
conclusion, has been prepared for and only for the company for the purpose of
complying with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior consent in
writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
14 November 2023
Condensed consolidated statement of comprehensive income
For the half-year ended 30 September 2023 (unaudited)
Half-year ended 30 September
2023 2022
Note £m £m
Revenue 3 498.2 397.4
Interest income on customer balances 4 211.1 22.3
Interest expense on customer balances - (3.6)
Benefits paid relating to customer balances (53.3) -
Cost of sales 5 (160.7) (148.5)
Net credit losses on financial assets 5 (6.4) (5.2)
Gross profit 488.9 262.4
Administrative expenses 5 (296.5) (214.9)
Net interest income from operating assets 7.3 0.3
Other operating income 3.9 7.2
Operating profit 203.6 55.0
Finance expense (9.3) (3.7)
Profit before tax 194.3 51.3
Income tax expense 6 (53.7) (14.0)
Profit for the period 140.6 37.3
Other comprehensive income/(loss)
Items that may be reclassified to profit or loss:
Fair value gain/(loss) on investments, net 3.7 (23.8)
Currency translation differences (1.4) 6.8
Total other comprehensive income/(loss) 2.3 (17.0)
Total comprehensive income for the period 142.9 20.3
Earnings per share
Basic, in pence 7 14.13 3.78
Diluted, in pence 7 13.39 3.61
Alternative performance measures
Income¹ 656.0 416.1
Adjusted EBITDA² 241.1 91.6
1. Income is defined as revenue plus interest income on customer balances,
less interest expense on customer balances and benefits paid relating to
customer balances.
2. Adjusted EBITDA is a non-IFRS measure comprising operating profit, less
interest income from operating assets, and added back amortisation and
depreciation, share-based payments and exceptional items. Refer to page 33 for
the reconciliation of the adjusted EBITDA to the profit for the period.
All results are derived from continuing operations.
The accompanying notes form an integral part of these condensed consolidated
financial statements.
Condensed consolidated statement of financial position
As at 30 September 2023 (unaudited)
As at 30 September As at 31 March
2023 2023
Note £m £m
Non-current assets
Deferred tax assets 104.7 113.2
Property, plant and equipment 26.2 21.1
Intangible assets 8.8 11.4
Trade and other receivables 20.8 17.9
Total non-current assets 160.5 163.6
Current assets
Current tax assets 5.5 6.7
Trade and other receivables 383.1 250.0
Short-term financial investments 8 4,314.4 3,804.5
Cash and cash equivalents 9 9,008.9 7,679.4
Total current assets 13,711.9 11,740.6
Total assets 13,872.4 11,904.2
Non-current liabilities
Trade and other payables 10 34.5 29.7
Provisions 3.0 2.7
Deferred tax liabilities 1.9 1.1
Borrowings 11 11.9 7.8
Total non-current liabilities 51.3 41.3
Current liabilities
Trade and other payables 10 12,772.5 11,022.9
Provisions 2.6 2.5
Current tax liabilities 6.6 4.0
Borrowings 11 298.8 256.6
Total current liabilities 13,080.5 11,286.0
Total liabilities 13,131.8 11,327.3
Equity
Share capital 10.2 10.2
Equity merger reserve (8.0) (8.0)
Share-based payment reserves 278.3 247.4
Own shares reserve (36.5) (10.4)
Other reserves (19.6) (23.3)
Currency translation reserve 1.8 3.2
Retained earnings 514.4 357.8
Total equity 740.6 576.9
Total liabilities and equity 13,872.4 11,904.2
The accompanying notes form an integral part of these condensed consolidated
financial statements.
Condensed consolidated statement of changes in equity
For the half-year ended 30 September 2023 (unaudited)
Note Share capital¹ ² Equity merger reserve Share-based payment reserves Own shares reserve³ Other Reserves Currency translation reserve Retained earnings Total equity
£m £m £m £m £m £m £m £m
At 1 April 2022 10.2 (8.0) 200.5 (0.4) (17.8) 0.2 224.5 409.2
Profit for the year - - - - - - 37.3 37.3
Fair value loss on investments, net - - - - (23.8) - - (23.8)
Currency translation differences - - - - - 6.8 - 6.8
Total comprehensive income for the year - - - - (23.8) 6.8 37.3 20.3
Issue of share capital - - - - - - - -
Shares acquired by ESOP Trust - - - - - - - -
Share-based compensation expense - - 25.3 - - - - 25.3
Tax on share-based compensation - - 2.4 - - - - 2.4
Employee share schemes - - (7.9) - - - 8.1 0.2
At 30 September 2022 10.2 (8.0) 220.3 (0.4) (41.6) 7.0 269.9 457.4
At 1 April 2023 10.2 (8.0) 247.4 (10.4) (23.3) 3.2 357.8 576.9
Profit for the year - - - - - - 140.6 140.6
Fair value gain on investments, net 8 - - - - 3.7 - - 3.7
Currency translation differences - - - - - (1.4) - (1.4)
Total comprehensive income for the year - - - - 3.7 (1.4) 140.6 142.9
Issue of share capital - - - - - - - -
Shares acquired by ESOP Trust - - - (31.6) - - - (31.6)
Share-based compensation expense - - 35.2 - - - - 35.2
Tax on share-based compensation - - 16.8 - - - - 16.8
Employee share schemes - - (21.1) 5.5 - - 16.0 0.4
At 30 September 2023 10.2 (8.0) 278.3 (36.5) (19.6) 1.8 514.4 740.6
The accompanying notes form an integral part of these condensed consolidated
financial statements.
1. As at 30 September 2023, Called up share capital consists of 1,024,777,252
(March 2023: 1,024,677,252) class A ordinary shares of £0.01 each and
398,889,814 (March 2023: 398,889,814) class B Ordinary shares of £0.000000001
each.
2. During the period ended 30 September 2023, the Group allotted 100,000 class
A Ordinary shares of £0.01 related to share options granted under the
Company's legacy incentive plans prior to the Company's admission to trading
on the London Stock Exchange.
3. During the period ended 30 September 2023, Wise continued the programme,
that commenced in 2023, to purchase Wise shares in the market through the
Employee Benefit Trust in order to reduce the impact of dilution from
stock-based compensation. As of 30 September 2023, a total of 4,290,879 shares
were purchased from the market at an average of £6.97 per share. Directly
attributable costs of £0.2m have been expensed to equity.
Condensed consolidated statement of cash flows
For the half-year ended 30 September 2023 (unaudited)
Half-year ended 30 September
2023 2022
Note £m £m
Cash generated from operations 12 1,630.8 1,993.8
Interest received 144.4 22.2
Interest paid (5.8) (7.8)
Corporate income tax paid (24.6) (3.4)
Net cash generated from operating activities 1,744.8 2,004.8
Cash flows from investing activities
Payments for property, plant and equipment (3.0) (1.6)
Payments for intangible assets (1.5) (3.1)
Payments for financial assets at FVOCI (5,962.2) (2,569.8)
Proceeds from sale and maturity of financial assets at FVOCI 5,540.7 1,752.0
Proceeds from sublease 0.1 0.1
Net cash used in investing activities (425.9) (822.4)
Cash flows from financing activities
Funding relating to share purchases and employee share schemes (29.4) -
Proceeds from issues of shares and other equity 0.5 0.3
Proceeds from borrowings 11 220.0 255.0
Repayments of borrowings 11 (180.0) (175.0)
Principal elements of lease payments 11 (4.5) (2.4)
Interest paid on leases 11 (0.4) (0.4)
Net cash generated from/(used in) financing activities 6.2 77.5
Net increase in cash and cash equivalents 1,325.1 1,259.9
Cash and cash equivalents at beginning of the period 9 7,679.4 6,056.3
Effects of exchange rate changes on cash and cash equivalents 4.4 425.3
Cash and cash equivalents at end of the period 9 9,008.9 7,741.5
The accompanying notes form an integral part of these condensed consolidated
financial statements.
Notes to the interim condensed consolidated financial statements
For the half-year ended 30 September 2023 (unaudited)
Note 1. Summary of significant accounting policies
1.1 General information
Wise plc (the "Company") is a public limited company and is incorporated and
domiciled in England (Registration number 13211214). These condensed financial
statements for the six months ended 30 September 2023 comprise the Company and
its subsidiaries (the "Group"). The principal activity of the Group is the
provision of cross-border money transfer services. The address of its
registered office is 6th Floor Tea Building, 56 Shoreditch High Street, London
E1 6JJ.
These condensed interim financial statements do not comprise statutory
accounts within the meaning of section 434 of the Companies Act 2006.
Statutory accounts for the year ended 31 March 2023 were approved by the board
of directors on 27 June 2023 and delivered to the Registrar of Companies. The
report of the auditors on those accounts was unqualified, did not contain an
emphasis of matter paragraph and did not contain any statement under section
498 of the Companies Act 2006.
1.2 Basis of preparation and accounting policies
These condensed consolidated interim financial statements of the Group have
been prepared in accordance with the UK-adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim report does not include all of the notes of the type normally
included in an annual financial
report. Accordingly, the condensed consolidated interim financial statements
should be read in conjunction with the Annual Report and Accounts for the year
ended 31 March 2023, which has been prepared in accordance with UK-adopted
international accounting standards and the requirements of the Companies Act
2006, and any public announcements made by Wise plc during the interim
reporting period.
The accounting policies and presentation applied by the Group are consistent
with those in the previous financial year.
Going concern
The condensed financial statements are prepared on a going concern basis as
the Directors are satisfied that the Group has the available resources to
continue in business for a period at least 12 months from approval of the
interim financial statements. In making this assessment, the Directors have
considered severe downside scenarios to stress test the viability of the
business.
These downside scenarios covered reduction in revenues, profitability, cash
position and liquidity as well as the Group's ability to meet its regulatory
capital and liquidity requirements.
The assessment indicated that the Group has sufficient liquidity to continue
its operations for a period at least 12 months from approval of the interim
financial statements and remained above its minimum regulatory capital and
liquidity requirements.
1.3 Critical accounting areas of judgement and estimation
In preparing these interim financial statements, management has made
judgements and estimates that affect the application of accounting policies
and the reported figures. Management assessed that there were no material
changes in the current period to the critical accounting estimates and
judgements, as disclosed in the 2023 Annual Report and Accounts.
Note 2. Segment information
Description of segment
The information regularly reported to the Board of Directors, who are
considered to be the Chief Operating Decision Maker, for the purposes of
resource allocation and the assessment of performance, is based wholly on the
overall activities of the Group. Based on the Group's business model, the
Group has determined that it has only one reportable segment under IFRS 8,
which is "Cross-border payment services".
The Group's revenue, assets and liabilities for this one reportable segment
can be determined by reference to the Statement of Comprehensive Income and
Statement of Financial Position. The analysis of revenue by type of customers
and geographical regions, is set out in note 3.
At the end of each period, the majority of the non-current assets were carried
by Wise Payments Ltd in the UK. Based on the location of the non-current
asset, the following geographical breakdown of non-current assets is prepared:
As at 30 September As at 31 March
2023 2023
£m £m
Non-current assets by geographical region
United Kingdom 33.0 34.8
Rest of the world 19.8 13.2
Total non-current assets 52.8 48.0
Note 3. Revenue
Half-year ended 30 September
2023 2022
£m £m
Revenue by customer type
Personal 387.2 309.1
Business 111.0 88.3
Total revenue 498.2 397.4
The revenue split by customer type, personal or business, reflects the
underlying users of Wise products. Wise Account is attributed to personal,
Wise Business to business, and Wise Platform is attributed to either,
depending on the customers of the business Wise is contracted with.
Disaggregation of revenues
In the following table revenue from contracts with customers is disaggregated
by major geographical market based on customer address:
Half-year ended 30 September
2023 2022
£m £m
Revenue by geographical region
Europe (excluding UK) 152.1 128.4
United Kingdom 96.2 81.0
North America 103.3 85.5
Asia-Pacific 102.1 73.3
Rest of the world 44.5 29.2
Total revenue 498.2 397.4
No individual customer contributed more than 10% to the total revenue.
Note 4. Interest income on customer balances
Half-year ended 30 September
2023 2022
£m £m
Interest income
Interest income from cash at banks 66.7 7.6
Interest income from investments in MMFs and listed bonds 144.4 14.7
Total interest income 211.1 22.3
Note 5. Cost of sales and administrative expenses
Breakdown of expenses by nature:
Half-year ended 30 September
2023 2022
£m £m
Cost of sales
Banking and customer related fees 125.7 103.3
Net foreign exchange loss and other product costs 35.0 45.2
Total cost of sales 160.7 148.5
Net credit losses on financial assets
Amounts charged to credit losses on financial assets 6.4 5.2
Total net credit losses 6.4 5.2
Expected credit losses are presented as net credit losses within gross profit
and subsequent recoveries of amounts previously written off are credited
against the same line item.
Subsequent recoveries of amounts previously written off are negligible in both
current and prior reporting period.
Half-year ended 30 September
2023 2022
£m £m
Administrative expenses
Employee benefit expenses 184.7 126.5
Marketing 19.3 18.3
Technology and development 23.9 19.3
Consultancy and outsourced services 39.5 28.9
Other administrative expenses 20.9 13.8
Depreciation and amortisation 9.7 10.8
Less: Capitalisation of staff costs (1.5) (2.7)
Total administrative expenses 296.5 214.9
Note 6. Tax
Half-year ended 30 September
2023 2022
£m £m
Current income tax for the period 35.4 18.0
Deferred tax charge/(credit) for the period* 18.3 (4.0)
Total tax expense for the period 53.7 14.0
* The deferred tax charge for the period predominately relates to utilisation
of losses.
Income tax expense for the current half-year period is calculated representing
the best estimate of the annual effective tax rate expected for the full year
by geographical unit applied to the pre-tax income of the six month period,
which is then adjusted for tax on exceptional items.
The effective tax rate for the half-year ended 30 September 2023 is 28%
(half-year ended 30 September 2022: 27%). The rate remains above the UK rate
due to overseas profits taxed at higher overseas tax rates.
Note 7. Earnings per share
Half-year ended 30 September
2023 2022
£m £m
Profit for the period (£m) 140.6 37.3
Weighted average number of ordinary shares for basic EPS (in millions of 995.1 986.2
shares)
Plus the effect of dilution from Share options (in millions of shares) 54.9 46.5
Weighted average number of ordinary shares adjusted for the effect of dilution 1,050.0 1,032.7
(in millions of shares)
Basic EPS, in pence 14.13 3.78
Diluted EPS, in pence 13.39 3.61
Note 8. Financial assets at fair value through other comprehensive income
Short-term financial investments are recognised as debt investments at FVOCI
and comprise the following investments in listed bonds:
As at 30 September As at 31 March
2023 2023
£m £m
Short-term financial investments - level 1
Listed bonds 4,314.4 3,804.5
Total short-term financial investments 4,314.4 3,804.5
During the period, the following gains/(losses) were recognised in other
comprehensive income:
As at 30 September
2023 2022
£m £m
Debt investments at FVOCI
Fair value gain/(losses) recognised in other comprehensive income 4.9 (27.1)
Tax on listed bonds (1.2) 3.3
Total fair value gain/(losses) in other comprehensive income 3.7 (23.8)
Note 9. Cash and cash equivalents
As at 30 September As at 31 March
2023 2023
£m £m
Cash and cash equivalents
Cash at banks, in hand and in transit between Group bank accounts 5,339.8 4,827.8
Cash in transit to customers* 227.5 182.0
Investment into money market funds 3,441.6 2,669.6
Total cash and cash equivalents 9,008.9 7,679.4
* Cash in transit to customers represents cash that has been paid out from the
Group bank accounts but has not been delivered to the bank account of the
beneficiary.
Of the £9,008.9m (31 March 2023: £7,679.4m) cash and cash equivalents at the
period end, £911.1m (31 March 2023: £671.1m) is considered the corporate
cash balance, which is not related to customer funds that are held in Wise
accounts or collected from customers as part of the money transfer settlement
process.
Customer funds are subject to various regulatory safeguarding compliance
requirements. Such requirements may vary across the different jurisdictions in
which the Group operates.
As at 30 September 2023, the Group held £4,231.9m (2022: £3,832.9m) of
customer funds as cash in segregated, safeguarding bank accounts at investment
grade banking institutions. The remainder of safeguarded customer deposits
were held across highly liquid global money market funds (MMFs), treasury
bonds and investment grade corporate papers.
Note 10. Trade and other payables
As at 30 September As at 31 March
2023 2023
£m £m
Non-current trade and other payables
Accounts payable and accrued expenses 6.3 4.6
Other payables 28.2 25.1
Total non-current trade and other payables 34.5 29.7
Current trade and other payables
Outstanding money transmission liabilities* 247.4 191.3
Wise Accounts 12,256.2 10,676.4
Accounts payable 5.2 8.2
Accrued expenses 65.1 52.2
Deferred revenue 11.6 8.0
Payables to payment processors 104.2 53.6
Other taxes 20.1 11.1
Other payables 62.7 22.1
Total current trade and other payables 12,772.5 11,022.9
* Money transmission liabilities represent transfers that have not yet been
paid out or delivered to a recipient
Trade and other payables are unsecured unless otherwise indicated; due to the
short-term nature of current payables, their carrying values approximate their
fair value.
Note 11. Borrowings
As at 30 September As at 31 March
2023 2023
£m £m
Current
Revolving credit facility 293.0 249.9
Lease liabilities 5.8 6.7
Total current borrowings 298.8 256.6
Non-current
Lease liabilities 11.9 7.8
Total non-current borrowings 11.9 7.8
Total borrowings 310.7 264.4
Current and non-current borrowings include principal, interest and capitalised
transaction costs.
Debt movement reconciliation:
Revolving credit facility Lease liabilities Total
£m £m £m
As at 1 April 2023 249.9 14.5 264.4
Cash flows:
Proceeds 220.0 - 220.0
Repayments (180.0) (4.5) (184.5)
Interest expense paid (5.6) (0.4) (6.0)
Non-cash flows:
New leases - 7.6 7.6
Interest expense 8.7 0.4 9.1
Foreign currency translation differences - 0.1 0.1
As at 30 September 2023 293.0 17.7 310.7
The Group retains its access to a £300.0m multi-currency debt facility with
HSBC Innovation Banking, Citibank N.A., JP Morgan Chase Bank N.A., National
Westminster Bank plc, Barclays Bank plc, Goldman Sachs Lending Partners LLC
and Morgan Stanley Senior Funding. The currency denomination, maturity date,
interest rate, covenant and security terms of the RCF remain consistent with
that disclosed in the Annual Report and Accounts 2023. The Group has complied
with the financial covenants throughout the reporting period. The undrawn
amount of the facility as at 30 September 2023 is £10.0m (31 March 2023:
£50.0m).
Note 12. Cash generated from operating activities
2023 2022
£m £m
Cash generated from operations
Profit for the period 140.6 37.3
Adjustments for:
Depreciation and amortisation 9.7 10.8
Non-cash share-based payments expense 35.1 25.3
Foreign currency exchange differences 2.5 (76.6)
Current tax expense 53.7 14.0
Interest income and expenses (209.3) (15.3)
Effect of other non-monetary transactions 0.3 -
Changes in operating assets and liabilities:
Increase in prepayments and receivables (41.7) (46.6)
Increase in trade and other payables 24.2 18.1
Increase in receivables from customers and payment processors (80.2) (31.7)
Increase in liabilities to customers, payment processors and deferred revenue 145.8 48.8
Increase in Wise accounts 1,550.1 2,008.9
Cash generated from operations 1,630.8 1,993.0
Note 13. Transaction with related parties
There have been no material changes to the nature or size of related party
transactions since 31 March 2023.
Note 14. Events occurring after the reporting period
No post balance events have occurred since 30 September 2023.
Alternative performance measures
The alternative performance measures ("APMs") used by the Group remain
consistent with those disclosed in the Annual Report and Accounts 2023, unless
otherwise noted, and should be viewed as supplemental to, but not as a
substitute for, measures presented in the financial statements which are
prepared in accordance with IFRS.
Income
Half-year ended 30 September
2023 2022
£m £m
Revenue 498.2 397.4
Interest income on customer balances 211.1 22.3
Interest expense on customer balances - (3.6)
Benefits paid relating to customer balances (53.3) -
Income 656.0 416.1
Adjusted EBITDA and free cash flow ("FCF") reconciles to profit for the period
as follows:
Half-year ended 30 September
2023 2022
£m £m
Profit for the period 140.6 37.3
Adjusted for:
Income tax expense 53.7 14.0
Finance expense 9.3 3.7
Net interest income from operating assets* (7.3) (0.3)
Depreciation and amortisation 9.7 10.8
Share-based payment compensation expense 35.1 26.1
Adjusted EBITDA 241.1 91.6
Income 656.0 416.1
Adjusted EBITDA margin 36.7% 22.0%
Corporate cash working capital change excluding collaterals (1.2) (4.8)
Adjustment for exceptional and pass-through items in the working capital (1.8) (1.3)
Payments for lease liabilities (4.5) (2.8)
Capitalised expenditure - Property, plant and equipment (3.0) (1.6)
Capitalised expenditure - Intangible assets (1.5) (3.1)
Free cash flow (FCF) 229.1 78.0
FCF conversion (FCF as a % of Adjusted EBITDA) 95.0% 85.1%
*As the amount has now become material, the APM for Adjusted EBITDA has been
updated to remove the interest income that the Group earns from its corporate
investments.
Corporate cash
The tables below show a non-IFRS view of the "Corporate cash" metric that is
used by the Group management as a Key Performance Indicator in assessment of
the Group's ability to generate cash and maintain liquidity. Corporate cash
represents cash and cash equivalents that are not considered customer related
balances.
Information presented in the tables below is based on the Group's internal
reporting principles and might differ from the similar information provided in
IFRS disclosures:
Half-year ended 30 September
2023 2022
£m £m
Operating Cashflow
Net Profit 140.6 37.3
Adjustments for non-cash transactions:
…Interest income net of customer benefits (157.8) (22.3)
...Current tax expense 53.7 14.0
...Non-cash share-based payments expense 35.1 25.3
…Depreciation and amortisation 9.7 10.8
...Effect of other non-monetary transactions 4.0 (32.5)
Change in corporate working capital (including collaterals) 22.2 (24.5)
Cash generated from operations: 107.5 8.1
Receipt of interest 144.4 13.7
Unwind portion of bond premium/discount 67.5 (2.5)
Benefits paid to customers (50.9) -
Payment of income tax and interest charges (30.4) (11.1)
Net corporate cash generated from operating activities 238.1 8.2
Payments for property, plant and equipment (3.0) (1.6)
Payments for intangible assets (1.5) (3.1)
Proceeds from sublease 0.1 0.1
Net corporate cash used in investing activities (4.4) (4.6)
Funding of share purchases by Employee Benefit Trust (29.4) -
Proceeds from issues of shares and other equity 0.5 0.3
Proceeds from borrowings 220.0 255.0
Repayment of borrowings (180.0) (175.0)
Principal elements of lease payments (4.5) (2.4)
Interest paid on leases (0.4) (0.4)
Net corporate cash from financing activities 6.2 77.5
Total increase / (decrease) in corporate cash 239.9 81.1
Corporate cash at beginning of period 671.1 357.8
Effect of exchange rate differences on corporate cash 0.1 28.4
Corporate cash at end of period 911.1 467.3
Half-year ended 30 September
2023 2022
£m £m
Breakdown of corporate and customer cash
Cash and cash equivalents and short-term financial investments 13,323.3 9,823.0
Receivables from customers and payment processors 252.1 127.6
Adjustments for:
Outstanding money transmission liabilities and other customer payables (408.1) (249.5)
Wise customer accounts (12,256.2) (9,233.8)
Corporate cash at end of the period 911.1 467.3
Results presentation
A presentation of the half-year results will be held at 9.30am GMT Tuesday, 14
November 2023 at Wise's London offices in Shoreditch: The Tea Bldg, 56
Shoreditch High St, London E1 6JJ
Participants can register for the event here
(https://transferwise.zoom.us/webinar/register/WN_I5h6T17XS8GyfpuOZXdgXA#/registration)
or can view the webcast via this link. (https://vimeo.com/event/3825718) A
replay of the webcast will be made available after on the Wise website:
https://wise.com/owners/
Enquiries
Martyn Adlam - Head of Investor Relations
martyn.adlam@wise.com
Sana Rahman - Global Head of Communications
press@wise.com
Brunswick Group
Charles Pretzlik / Sarah West / Nick Beswick / Daniel Holgersson
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 2023, Wise supported around 10 million people and businesses,
processing approximately £105 billion in cross-border transactions, and
saving customers over £1.5 billion.
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 "target", "believe", "expect", "aim", "intend", "may",
"anticipate", "estimate", "forecast," "plan", "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.
(( 1 (#_ftnref1) )) All data is for the six months ended 30 September 2023,
and comparisons provided are H1 FY24 vs H1 FY23, unless otherwise stated
(2) Income and Adjusted EBITDA are alternative performance measures (APM)
which are non-IFRS measures. See page 33 for more information and
reconciliation to IFRS
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