Presentation of financial
information
Wise plc ("Wise") today announces a
change in the presentation of its financial information to present
the underlying financial performance of Wise. This will provide a
clearer presentation of Wise's core business performance and longer
term growth trajectory.
The change in presentation will be
reflected in our FY2024 results to be published on Thursday 13 June
2024. To aid comparability with prior periods, historical financial
information reflecting the new presentation is provided below in
Appendix 1.
This change of reporting consists
of:
1. A presentation of and
focus on 'underlying' financial performance, which excludes net
interest income above the first 1% gross interest yield.
2. The lead earnings
metric in our reporting will be "underlying profit before
tax". To date the lead earnings metric has been "Adjusted
EBITDA".
'Underlying' Basis of
Reporting
The growing popularity of the Wise
Account has brought with it a significant growth in customer
deposits (£13.3bn as at the end of FY2024) which, since interest
rates began rising in FY2023, resulted in Wise receiving
substantial amounts of interest income with almost half a billion
pounds received in FY2024.
In 2023 we created a framework to
ensure that this substantial, cyclical source of income was used
fairly, sustainably and to the greatest effect for the company and
our customers. The intention of the framework is that the first 1%
of yield received will contribute to the costs of running the Wise
Account, with an ambition to share the remainder as follows: 20%
flows to profit before tax and the remaining 80% we aim to return
to Wise Account customers.
However, to date, sharing all 80%
with customers has not been possible. This is mainly due to a
combination of customers holding balances in currencies which do
not currently qualify for interest and customers holding balances
in certain jurisdictions (such as the UK) where Wise is currently
unable to return interest to customers under the terms of its
regulatory licences and permissions.
In Q4 FY2024, of this 80%, almost
half (35%) was returned to customers, with the rest (45%) remaining
with Wise. The continuing retention of interest intended for
customers under our framework has historically inflated margins to
exceptional levels and we believe risks obscuring underlying
performance trends over time.
Therefore, to provide a clearer
presentation of Wise's performance and longer term growth
trajectory, going forward we will present additional Alternative
Profit Measures. This will consist of showing Wise's income
statement, through to profit before tax, on an underlying basis,
which excludes net interest income beyond the first 1%
yield.
From underlying profit before tax, we
will then report the adjustment needed to reconcile to our reported
profit before tax. This consists of:
1. Interest income above
the first 1% yield.
2. Benefits paid
relating to customer balances.
Change in focus from Adjusted
EBITDA to Underlying Profit Before Tax
At Wise we believe in aligning the
interests of Wisers (our employees) with those of our owners such
that both can benefit from the value we create for customers
through our infrastructure and products over the long term. All
Wisers are therefore eligible to receive stock-based
compensation.
At the time of our listing in 2021,
stock-based compensation was satisfied through the issuance of new
shares and we therefore elected to remove this non-cash expense
from our chosen lead metric for earnings ('Adjusted
EBITDA').
Our strong cash generation and
capital position has allowed us to initiate a programme of
purchasing Wise shares through our Employee Benefit Trust to reduce
the dilutive impact of stock-based compensation. Given the
purchasing of stock is currently a cash expense, it no longer
requires an adjustment of earnings for this item. We retain the
option to issue shares as needed for stock-based compensation or
other purposes.
Stock-based compensation has
consistently been the largest item in the adjustment from our IFRS
profit before tax to Adjusted EBITDA.
Therefore the Adjusted EBITDA measure
of earnings has, in our view, become less useful in understanding
the performance of the underlying business and as a result our
reporting going forward will focus to a greater extent on
'underlying profit before tax' and its representation as a margin
of underlying income.
To support this transition we will
continue to provide the Adjusted EBITDA metric as previously
reported, as well as Adjusted EBITDA on an underlying basis in our
reporting for a short period of time to support this
transition.
FY2024 Results
Wise will release FY2024 results
along with expectations for FY2025 and the medium term on this
revised basis of reporting on Thursday 13 June 2024. The stock
exchange release will be shared at 07:00 BST, followed by a
presentation and Q&A at 09:30 UK time. We welcome registrations
for in-person attendance using this https://forms.gle/6x2cUKSgmY61xKzv7
or joining the live stream using this
https://vimeo.com/event/4289959.
Enquiries
Martin Adams / Lawrence Nates -
Investor Relations
owners@wise.com
Sana Rahman -
Communications
press@wise.com
Brunswick Group
Charles Pretzlik / Sarah West / Nick
Beswick
Wise@brunswickgroup.com
+44 (0) 20 7404 5959
About Wise
Wise is a global technology company,
building the best way to move and manage the world's money. With
Wise Account and Wise Business, people and businesses can hold over
40 currencies, move money between countries and spend money abroad.
Large companies and banks use Wise technology too; an entirely new
network for the world's money.
Co-founded by Kristo Käärmann and
Taavet Hinrikus, Wise launched in 2011 under its original name
TransferWise. It is one of the world's fastest growing tech
companies and is listed on the London Stock Exchange under the
ticker WISE.
In fiscal year 2023, Wise supported
around 10 million people and businesses, processing approximately
£105 billion in cross-border transactions, and saving customers
over £1.5 billion.
