Wise: Fintech’s shares pop as swelling customer base boosts profit
Wise has posted a surge in profit as the money transfer fintech benefited from a swelling customer base and made investments to reduce prices.
The London-listed firm reported a pretax profit of £292.5m for the six months to 30 September, up 51 per cent from £194.3m during the same period last year.
The news sent Wise’s share price as much as 8.1 per cent higher in early trading on Wednesday to its highest level since June.
Wise’s profit was driven up by its active customer numbers jumping 25 per cent to 11.4m. Its customers moved £68.4bn with the fintech over the six months, 19 per cent higher than a year earlier.
The firm offers current accounts and allows customers to send cash overseas, for which it earns a small fee on each transaction.
Its revenue increased 19 per cent to £591.9m in the six months, while the firm’s cost of sales dropped five per cent to £152.9m.
Wise has positioned itself as a disruptor of slow and costly foreign exchange services in banking. It has more than 65 licences, over 90 banking partners worldwide, and six direct connections to payment systems.
The firm touted its “limited reliance” on interest income during the six months, which came in 49 per cent higher at £230.2m thanks to higher central bank rates and 23 per cent growth in average customer balances.
Wise said it would aim to return 80 per cent of its interest income to customers. However, as the firm is not a licenced bank in the UK, it is not able to directly pay interest to British users.
The results come shortly after Wise’s billionaire chief executive, Kristo Käärmann, was fined £350,000 by the Financial Conduct Authority (FCA) last week for failing to tell the regulator about significant tax issues stemming from a 2017 share sale.
Käärmann, who the FCA cleared to continue in his job, co-founded the firm in 2011 and took it public on the London Stock Exchange a decade later.
Fee cuts hit income
Wise’s stock price has dipped three per cent so far this year. In June, its shares suffered their biggest intraday drop ever after warning of a slowdown in income growth for its 2025 financial year due to a slew of price reductions.
The firm reiterated its outlook on Wednesday, including a pretax profit margin of between 13 per cent and 16 per cent in the second half of the financial year.
Its margin was above that range at 22 per cent in the first half, but Wise said its investments to reduce pricing would take the number down.
“Over the last six months, we’ve made important steps in the enhancement of our infrastructure, which are going to contribute to further improvements to speed and unit cost over time,” Käärmann said.
“Wise will become increasingly faster, cheaper and more convenient – an ideal infrastructure partner via Wise Platform.
“To make this vision a reality, now is the time to invest in long term growth.”
The earnings are the first for new chief financial officer Emmanuel Thomassin, who joined Wise in October after being poached from Berlin-based online order platform Delivery Hero.