TIDMWISE
RNS Number : 1788D
Wise PLC
18 October 2022
Wise plc
Q2 FY23 Trading Update
18 October 2022
Strong momentum continued in Q2, supporting our improved outlook
for the year
Wise is disrupting a massive and underserved market and in the
second quarter we helped 5.5 million active customers move GBP27
billion across borders, a 50% increase on the same period last
year.
Our success is thanks to our superior products that customers
love. Our team continued to improve our products. Wise is now
available to more people and businesses, easier to use, and more
secure.
These products are powered by our infrastructure, and we
delivered more than half of our payments instantly for the second
consecutive quarter. Whilst we continue to work hard to lower
prices, the average price increased in Q2 in response to higher FX
costs.
We will continue to invest heavily in products and
infrastructure and take the lead in driving down the cost of
cross-border transfers; and at the same time we maintain a
profitable business model that is highly cash generative.
Kristo Käärmann, CEO and co-founder said:
"This quarter 5.5 million customers moved GBP27 billion with us,
50% more than in Q2 last year and for the second consecutive
quarter more than half our payments were instant. The Wise Account
and Wise Business products continue to see good levels of adoption
and this increased engagement with our product, higher volumes and
faster speeds are a result of the longer term investments that we
have been making.
We've seen extreme macroeconomic conditions persist throughout
the second quarter, and whilst unfortunately this meant we had to
raise prices slightly for some customers, we've been working hard
to limit these increases and are working to bring them back down
again."
Mission highlights for Q2 FY23
Q2 FY2023 Q2 FY2022 YoY Movement Q1 FY2023 QoQ Movement
Customer price(1) 0.64% 0.62% +2 bps 0.61% +3 bps
--------- --------- ------------ --------- ------------
Instant transfers 50% 39% +11 pps 52% -2 pps
--------- --------- ------------ --------- ------------
1. Customer price is based on a fixed basket of representative
currencies which reduces the effect from route mix and other
factors, making it a more accurate representation of our progress
in reducing the cost of international transfers over time.
We have four pillars that drive our mission: price, speed,
convenience and transparency.
Our mission is to lower prices for customers over time. During
this quarter, high levels of FX volatility led to higher costs and
as a result, the average customer price increased to 0.64% compared
to 0.61% in Q1 FY23 and 0.62% in Q2 FY22.
However, we were able to lower fees for some currency routes.
Through a new partnership, we reduced fees when sending money to
Chile and we negotiated cheaper fees for sending money to China. In
Brazil, we now use our own FX licence, which has reduced the cost
to deliver, and we've passed these savings on to our customers.
For the second consecutive quarter, we completed more than half
of our transfers instantly. Some of our payments in Brazil were
slower, but we are rectifying this by connecting directly into our
partner bank's API. After integrating with new partners, it's now
faster to send money to Japan and Chile and transfers to Hong Kong
got faster too. We're also continuing our work to speed up
financial crime checks, which once completed is expected to help
reduce delays. Overall, approximately 90% of all transfers were
completed within 24 hours and speed remains an important feature
for overall customer experience.
Improvements made to our product and controls meant transactions
are being paused less often and as a result customers contacted us
less than last quarter. We also grew our Support Team so our wait
times dropped by 50% when contacted by phone and email.
Product enhancements in the last few months have made it easier
for customers to onboard with us and have made Wise Account and
Wise Business easier and more secure to use. Below are some
examples of improvements we've made:
-- Ability to use wire transfers to send to USD, previously only
ACH payments were available; and increased transfer limits when
funded by Wise Account balance.
-- Over 200 countries and territories can now get USD SWIFT
account details, so customers can receive USD from pretty much
anywhere in the world.
-- When sending money through Alipay in China, customers can now
send directly to Alipay Wallet.
-- Ability to move money with INTERAC e-Transfer Request in Canada.
-- We've added ways to get customer ID verified faster and easier.
-- Extra security on your account with a unique communication code.
-- Improved scam prevention and scam reporting.
-- Re-designed Business dashboard making it easier to find the
features that matter most to customers.
-- Businesses can get paid directly through Wise by sharing 'payment request' links.
-- The new " International Receive " feature allows our Platform
partners to use Wise as a correspondent, leveraging our SWIFT
connection to receive funds from all over the globe, rather than
being connected to the SWIFT network themselves.
-- We expanded our partnership; adding the Swiss finance
disruptor, Yapeal, and financial wellbeing platform,
Wagestream.
On our website you can find more detail on our mission
highlights for the quarter, and our mission roadmap , which sets
out future product improvements we have planned.
Growth and Financial highlights
Q2 FY2023 Q2 FY2022 YoY Movement Q1 FY2023 QoQ Movement
Volume (GBP billion)(1) 27.0 18.0 50% 24.4 11%
--------- --------- ------------ --------- ------------
Revenue (GBP million) 211.5 132.8 59% 185.9 14%
--------- --------- ------------ --------- ------------
Net interest income on customer
balances (GBP million) 17.5 (0.6) 1.2
--------- --------- ------------ --------- ------------
Total income (GBP million)(2) 229.0 132.2 73% 187.1 22%
--------- --------- ------------ --------- ------------
Take rate (%)(3) 0.78% 0.74% +4 bps 0.76% +2 bps
--------- --------- ------------ --------- ------------
Total income take rate (%) 0.85% 0.74% +11 bps 0.77% +8 bps
--------- --------- ------------ --------- ------------
1. Cross-border volume only
2. Includes revenue and net interest income on customer balances
3. Revenue as a % of volume
4. Total income as a % of volume
As previously announced, we will now be presenting the
components of "total income" comprised of revenue (as previously
definand net interest income from customer balances. Our adjusted
EBITDA margin will now therefore be calculated as adjusted EBITDA
as a percentage of total income. Previously, net interest income
from customer balances and operating assets was included in EBITDA
but presented between gross profit and operating profit. A
historical income statement for H1 FY22 and FY22 on this basis is
provided in the appendix to this announcement.
5.5 million customers transacted on Wise in Q2 FY23, an increase
of 40% YoY and 10% QoQ, comprising 5.2 million personal and 300K
business customers. This increase in active customers was mostly
driven by greater adoption of the Wise Account and Wise Business
products, where customers tend to transact more frequently and use
more features. Regionally, the growth in active customers across
our established markets has been consistent, and we're seeing
strong growth in newer markets where we currently have a smaller
share.
Total cross-border volumes for Q2 FY23 were GBP27.0 billion, 50%
higher YoY and 11% higher QoQ. Personal volumes increased 49% YoY
to GBP20.1 billion and Business volumes increased 55% YoY to GBP6.9
billion. Volume growth was driven by the higher number of active
Wise Account and Wise Business customers, who typically have a
higher average volume per customer (VPC). VPC continued to increase
for both personal and business customers. The growth also reflects
to a lesser extent FX translation impacts and higher FX volatility.
On a constant currency basis(1) volume grew 43% YoY.
Revenue for Q2 FY23 was GBP211.5 million, growing 59% YoY and
14% QoQ. Revenue for the first half of FY23 was GBP397.4 million,
55% higher than the first six months of FY22.
Total income (revenue plus net interest income on customer
balances) for Q2 FY23 was GBP229.0 million, a 73% increase on last
year. This included GBP17.5 million of net interest income, and we
expect this to increase in the second half of the year given the
interest rate outlook. We will share much of this interest income
benefit with our customers, through pricing, but we will also use
some to invest in growth. Total income for H1 FY23 was GBP416.1
million, 63% higher than the same period last year.
Total income take rate, which includes net interest income, was
0.85% in the quarter. Excluding net interest income, our take rate
increased 2bps QoQ to 0.78% from 0.76% in Q1 FY23, reflecting the
impact of price rises announced in August 2022 and an increase in
the other revenue line items. Other revenue benefited from greater
uptake of customers using the Wise Account in the form of higher
debit card spend and interchange fees.
As a result of the continued strong momentum, and as outlined on
29 September 2022, our financial guidance for the year has been
upgraded. Our revised expectations are set out below:
-- Total income growth between 55-60% in FY23 and greater than
20% (CAGR) over the medium-term
-- Adjusted EBITDA margin over the medium term at or above 20% of total income
Please see the appendix for further historical financial
information.
(1) Volume is adjusted for translational exchange rates using
the average rates applied in the prior financial year.
Analyst & Investor call
A call hosted by Matthew Briers (CFO) will be available for
analysts and investors at 9:00am (UK) this morning, 18 October
2022. Pre-registration details can be found here:
https://transferwise.zoom.us/webinar/register/WN_aQXQKNtuSHe2N2epTRbdQw
Enquiries
Martyn Adlam - Head of Owner Relations
martyn.adlam@wise.com
Sana Rahman - Global Head of 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 money around the world. With Wise Account and Wise Business,
people and businesses can hold over 50 currencies, move money
between countries and spend money abroad. Large companies and banks
use Wise technology too; an entirely new cross-border payments
network that will one day power money without borders for everyone,
everywhere. However you use the platform, Wise is on a mission to
make your life easier and save you 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.
Over 13 million people and businesses use Wise. Today we process
on average over GBP9 billion in cross-border transactions every
month, saving customers over GBP1 billion a year.
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. Also, 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 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 QoQ YoY
FY2021 FY2021 FY2021 FY2022 FY2022 FY2022 FY2022 FY2023 FY2023 Movement Movement
Customers
(million) 3.2 3.4 3.5 3.7 3.9 4.3 4.6 5.0 5.5 10% 40%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Personal
(million) 3.0 3.2 3.3 3.4 3.7 4.1 4.3 4.7 5.2 10% 40%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Business
(million) 0.16 0.18 0.20 0.22 0.23 0.25 0.27 0.29 0.30 5% 31%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Volume per
customer (GBP
thousand) 4.2 4.4 4.4 4.5 4.6 4.7 4.7 4.9 4.9 1% 7%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Personal (GBP
thousand) 3.4 3.5 3.6 3.6 3.7 3.7 3.7 3.8 3.9 1% 6%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Business (GBP
thousand) 17.7 19.1 18.1 18.6 19.4 21.6 20.8 22.2 22.9 3% 18%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Volume (GBP
billion)(1) 13.2 15.0 15.6 16.4 18.0 20.6 21.4 24.4 27.0 11% 50%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Personal (GBP
billion) 10.4 11.5 12.0 12.4 13.5 15.1 15.9 18.0 20.1 11% 49%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Business (GBP
billion) 2.8 3.5 3.6 4.0 4.5 5.5 5.5 6.3 6.9 9% 55%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
1. Cross-border volume only
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 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 QoQ YoY
FY2021 FY2021 FY2021 FY2022 FY2022 FY2022 FY2022 FY2023 FY2023 Movement Movement
Revenue (GBP
million) 105.9 111.9 116.9 123.5 132.8 149.8 153.8 185.9 211.5 14% 59%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Personal (GBP
million) 87.0 89.8 93.7 96.9 103.4 114.7 118.3 144.4 164.7 14% 59%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Business (GBP
million) 18.9 22.1 23.2 26.6 29.4 35.1 35.5 41.5 46.8 13% 59%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Net interest
income on
customer
balances (GBP
million) 0.5 0.2 (0.6) (0.6) (0.6) (0.8) (0.8) 1.2 17.5
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Personal (GBP
million) 0.3 0.1 (0.3) (0.3) (0.3) (0.4) (0.4) 0.6 9.1
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Business (GBP
million) 0.2 0.1 (0.3) (0.3) (0.3) (0.4) (0.4) 0.6 8.4
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Total income (GBP
million)(1) 106.4 112.1 116.3 122.9 132.2 149.0 153.0 187.1 229.0 22% 73%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Personal (GBP
million) 87.3 89.9 93.4 96.6 103.1 114.3 117.9 145.0 173.8 20% 69%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Business (GBP
million) 19.1 22.2 22.9 26.3 29.1 34.7 35.1 42.1 55.2 31% 90%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Take rate (%)(2) 0.80% 0.75% 0.75% 0.75% 0.74% 0.73% 0.72% 0.76% 0.78% +2 bps +4 bps
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Total income take
rate
(%)(3) 0.80% 0.75% 0.75% 0.75% 0.74% 0.72% 0.71% 0.77% 0.85% +8 bps +11 bps
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
1. Includes revenue and net interest income on customer balances
2. Revenue as a % of volume
3. Total income as a % of volume
Note: Differences between 'total' rows and the sum of the
constituent components of personal and business are due to
rounding.
Appendix - Historical Income Statement re-presented
FY22 H122
========================================== ======= =======
Revenue 559.9 256.3
Interest income on customer balances 3.9 1.5
Interest expense on customer balances (6.7) (2.7)
Total Income 557.1 255.1
========================================== ======= =======
Cost of sales (185.8) (81.2)
Net credit losses on financial assets (2.2) (1.3)
Gross profit 369.1 172.6
========================================== ======= =======
Administrative expenses (321.4) (152.2)
Net interest income from operating assets - -
Other income 5.8 0.9
Other operating expenses (4.8) -
Operating profit 48.7 21.3
========================================== ======= =======
Finance expense (4.8) (2.5)
Profit before tax 43.9 18.8
========================================== ======= =======
Income tax expense (11.0) (6.1)
Profit for the period 32.9 12.7
========================================== ======= =======
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