TIDMWISE
RNS Number : 9560M
Wise PLC
17 January 2023
Wise plc
Q3 FY23 Trading Update
17 January 2023
Continued progress towards our mission with more customers than
ever using Wise; improved guidance for FY23
We continue to deliver on our mission to solve a massive problem
in a large underserved market and more customers than ever are
using Wise. In Q3 FY23, 5.8 million customers moved 28% more volume
with us (GBP26.4 billion) compared with Q3 FY22.
We continue to invest in building the infrastructure that powers
our products. For the third consecutive quarter, more than 50% of
our payments were completed instantly. We remain focused on
lowering cross-border fees over the long term and, although the
average customer price increased by 2bps in the quarter, we
continue to offer significantly lower rates than those offered by
the banks from which our customers join.
Our teams are making the products that people and businesses
love even more convenient, which is leading to greater adoption of
the Wise Account. Notably in Q3 FY23 we launched new initiatives so
that our customers can benefit from the higher interest rate
environment, and we made it easier for businesses to spend and get
paid.
We are highly profitable and cash generative even after we
invest significantly in our products and infrastructure for future
growth.
As a result of continued revenue growth this quarter, supported
by higher interest income in recent months, we are upgrading our
FY23 total income growth guidance to 68-72%, from 55-60%
previously.
Kristo Käärmann, CEO and co-founder said:
"Our mission is clear - to make moving and managing money
faster, easier, cheaper and more transparent for people and
businesses around the world.
As interest rates increase, our customers expect a return on the
balances they hold with us, and we intend to share much of the
benefit of higher rates with customers. This quarter we launched
'Interest' within our Assets product in the UK; a whole new way for
our customers to hold their money and earn a return. I'm also
pleased that for the third consecutive quarter, more than 50% of
cross-border payments were completed instantly.
The investments we've made to deliver a superior infrastructure
and product are resonating, and in this quarter more customers than
ever used Wise. This underpins our conviction in the outlook for
2023 and beyond."
Mission highlights for Q3 FY23
Q3 FY2023 Q3 FY2022 YoY Movement Q2 FY2023 QoQ Movement
Customer price(1) 0.66% 0.60% +6 bps 0.64% +2 bps
--------- --------- ------------ --------- ------------
Instant transfers 52% 45% +7 pps 50% +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 focus on four pillars in pursuit of our mission: price,
speed, convenience and transparency.
Core to our mission is sustainably lowering prices for customers
over time. To do this, changes in the average customer price
reflect the changes in the cost to deliver payments. But during
this quarter the average price increased to 0.66% compared to 0.64%
in Q2 FY23 and 0.60% in Q3 FY22, as previously announced price
changes, which were a result of higher FX costs, came into effect.
We were, however, able to lower fees for some currency routes,
including a 50% price reduction for sending money to Mexico and a
10% reduction for sending and converting Brazilian Reais.
Speed is fundamental to the excellent customer experience that
we aim to deliver, and for the third consecutive quarter more than
50% of our cross-border payments were completed instantly. In fact,
over 90% were completed within 24 hours. We saw improvements in
speed in a number of countries, including Mexico, Brazil and the
US.
We've continued to make it more convenient for our customers to
move and manage money internationally. In the quarter, we:
-- launched 'Interest' within our Assets product for UK customers;
-- launched a pilot programme in the UK for business customers
to earn 1% cashback on Wise debit card transactions;
-- launched a pilot programme in the EEA for cashback on balances;
-- removed fees on domestic transfers in EUR, GBP, SGD and HUF;
-- rolled out physical cards for businesses in the US,
previously only digital cards were available;
-- improved pay-ins for businesses - where they can now get paid
directly through Wise by sharing 'payment request' links and can
now pay requested links directly from a Wise balance; and
-- expanded our Platform partnerships, welcoming AvidXchange, ZA Bank and Wio.
More detail on our mission highlights for the quarter can be
found on our website, including our mission roadmap , which sets
out future product improvements we have planned.
Growth and financial highlights
Q3 FY2023 Q3 FY2022 YoY Movement Q2 FY2023 QoQ Movement
Volume (GBP billion)(1) 26.4 20.6 28% 27.0 (2%)
--------- --------- ------------ --------- ------------
Revenue (GBP million) 225.2 149.8 50% 211.5 6%
--------- --------- ------------ --------- ------------
Net interest income on customer
balances (GBP million) 43.5 (0.8) nm 17.5 148%
--------- --------- ------------ --------- ------------
Total income (GBP million)(2) 268.7 149.0 80% 229.0 17%
--------- --------- ------------ --------- ------------
Take rate (%)(3) 0.85% 0.73% +12 bps 0.78% +7 bps
--------- --------- ------------ --------- ------------
Total income take rate (%) 1.02% 0.72% +30 bps 0.85% +17 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
5. Not measurable
5.8 million customers transacted with Wise in Q3 FY23, an
increase of 33% YoY and 6% QoQ, comprising 5.5 million personal
(+34% YoY) and 320K business customers (+26% YoY). This increase in
active customers continues to be driven by strong new customer
growth.
Total cross border volumes were GBP26.4 billion in Q3 FY23, 28%
higher than in the same period last year. Personal customers moved
GBP19.0 billion, a 26% increase compared with last year, reflecting
the continued strong growth in active customers. Business volumes
of GBP7.4 billion were 35% higher YoY as we see businesses growing
in size and transacting more often with us, leading to a higher
VPC. On a constant currency basis ([1]) , total volumes grew 23%
YoY.
Compared with Q2 FY23, total volumes were 2% lower. Whilst VPC
for business customers continued to increase QoQ, personal VPC was
down 10%, primarily due to lower levels of activity in the
high-volume cohorts of personal customers. This is consistent with
the pull-forward we saw in Q1 and Q2 FY23 among these cohorts,
which we believe was supported by higher FX volatility and strength
in the USD. Volume among the more populous, smaller-volume cohort
(<GBP10k), continued to grow QoQ.
Revenue for Q3 FY23 was GBP225.2 million, up 50% YoY and 6% QoQ.
Our take rate increased 7 bps QoQ to 0.85% from 0.78% driven by a
higher cross-currency take rate, which reflects the full impact of
previously announced price increases coming into effect in the
quarter, and a change in the overall mix of routes used by
customers in the period. Revenue was also supported by higher other
revenues, which has benefited from greater adoption of the Wise
Account, notably in the form of higher debit card spend and
interchange fees.
Total income, inclusive of net interest income, for Q3 FY23 was
GBP268.7 million, an 80% increase on last year and the total income
take rate increased 30 bps to 1.02%. Net interest income of GBP43.5
million was 148% higher than in Q2 FY23 due to higher rates on
invested assets and continued growth in customer balances. We've
made good progress in beginning to share this benefit with
customers, but there is still work to do to scale up these
initiatives in all of our regions, and so until these are fully
operational we expect a higher proportion of this net interest
income to flow to EBITDA in the short-term.
As a result of the continued growth in revenue this quarter,
supported by the increase in net interest income, we are upgrading
our FY23 total income guidance and now expect this to grow 68-72%,
compared with 55-60% previously. With a higher proportion of the
net interest income to flow to EBITDA in the short-term, we expect
our adjusted EBITDA margin for the second half of FY23 to be higher
than the 22% in the first half of FY23. Our medium-term guidance
for total income and adjusted EBITDA margin remains unchanged.
Summary of forward looking guidance:
-- Total income growth expected to be between 68-72% in FY23 and
greater than 20% (CAGR) over the medium-term;
-- Adjusted EBITDA margin for H2 FY23 expected to be higher than the 22% margin in H1 FY23; and
-- Adjusted EBITDA margin at or above 20% over the medium-term.
Intention to reduce dilution from stock-based compensation
Stock-based compensation forms a core component of how we reward
and incentivise Wisers, aligning their interests with those of our
shareholders. We have historically issued new shares to satisfy
stock-based compensation and this is likely to continue in the near
to medium-term.
Wise is profitable and highly cash generative, whilst also
making significant investment into future growth. As at 31 December
2022, we had GBP315 million of eligible group capital, which
remains significantly in excess of our regulatory capital
requirements.
Given our strong capital position we plan to reduce the impact
of dilution from stock-based compensation. The intention is for the
Employee Benefit Trust to acquire up to an initial GBP10 million of
Wise shares in the market for this purpose over the remainder of
FY23. We will continue to assess our plans beyond FY23.
Please see the appendix for further historical financial
information.
Analyst & Investor call
A call hosted by Matthew Briers (CFO) will be available for
analysts and investors at 9:00am (UK) this morning, 17 January
2023. Pre-registration details can be found here :
https://transferwise.zoom.us/webinar/register/WN_Bfjjjx6_QNuUqzG6uVp8NQ
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 / Daniel
Holgersson
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 15 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 "forward
looking", "guidance", "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.
Appendix - Historical Financials
Quarterly Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 QoQ YoY
FY2021 FY2021 FY2022 FY2022 FY2022 FY2022 FY2023 FY2023 FY2023 Movement Movement
Customers
(million) 3.4 3.5 3.7 3.9 4.3 4.6 5.0 5.5 5.8 6% 33%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Personal
(million) 3.2 3.3 3.4 3.7 4.1 4.3 4.7 5.2 5.5 6% 34%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Business
(million) 0.18 0.20 0.22 0.23 0.25 0.27 0.29 0.30 0.32 6% 26%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Volume per
customer (GBP
thousand ) 4.4 4.4 4.5 4.6 4.7 4.7 4.9 4.9 4.6 (7%) (4%)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Personal (GBP
thousand) 3.5 3.6 3.6 3.7 3.7 3.7 3.8 3.9 3.5 (10%) (6%)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Business (GBP
thousand) 19.1 18.1 18.6 19.4 21.6 20.8 22.2 22.9 23.2 1% 7%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Volume (GBP
billion)(1) 15.0 15.6 16.4 18.0 20.6 21.4 24.4 27.0 26.4 (2%) 28%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Personal (GBP
billion) 11.5 12.0 12.4 13.5 15.1 15.9 18.0 20.1 19.0 (5%) 26%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Business (GBP
billion)(2) 3.5 3.6 4.0 4.5 5.5 5.6 6.3 6.9 7.4 7% 35%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
1. Cross-border volume only
2. Q4 FY2022 business volumes have been restated to GBP5.6
billion from GBP5.5 billion due to a correction to the rounding
applied from the previously reported number. Total volumes remain
unchanged at GBP21.4 billion
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 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 QoQ YoY
FY2021 FY2021 FY2022 FY2022 FY2022 FY2022 FY2023 FY2023 FY2023 Movement Movement
Revenue (GBP
million) 111.9 116.9 123.5 132.8 149.8 153.8 185.9 211.5 225.2 6% 50%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Personal (GBP
million) 89.8 93.7 96.9 103.4 114.7 118.3 144.4 164.7 173.9 6% 52%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Business (GBP
million) 22.1 23.2 26.6 29.4 35.1 35.5 41.5 46.8 51.3 10% 46%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Net interest
income on
customer
balances (GBP
million) 0.2 (0.6) (0.6) (0.6) (0.8) (0.8) 1.2 17.5 43.5 148% nm
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Personal (GBP
million) 0.1 (0.3) (0.3) (0.3) (0.4) (0.4) 0.6 9.1 23.2 154% nm
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Business (GBP
million) 0.1 (0.3) (0.3) (0.3) (0.4) (0.4) 0.6 8.4 20.3 143% nm
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Total income (GBP
million)(1) 112.1 116.3 122.9 132.2 149.0 153.0 187.1 229.0 268.7 17% 80%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Personal (GBP
million) 89.9 93.4 96.6 103.1 114.3 117.9 145.0 173.8 197.1 13% 72%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Business (GBP
million) 22.2 22.9 26.3 29.1 34.7 35.1 42.1 55.2 71.6 30% 106%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Take rate (%)(2) 0.75% 0.75% 0.75% 0.74% 0.73% 0.72% 0.76% 0.78% 0.85% +7 bps +12 bps
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Total income take
rate
(%)(3) 0.75% 0.75% 0.75% 0.74% 0.72% 0.71% 0.77% 0.85% 1.02% +17 bps +30 bps
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- --------
1. Includes revenue and net interest income on customer balances
2. Revenue as a % of volume
3. Total income as a % of volume
4. "nm" indicates not measurable
Note: Differences between 'total' rows and the sum of the
constituent components of personal and business are due to
rounding.
([1]) On a constant currency basis, volume is converted to GBP
using the average rates of the prior financial year.
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END
TSTEAKFXFANDEEA
(END) Dow Jones Newswires
January 17, 2023 02:00 ET (07:00 GMT)
Wise (LSE:WISE)
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