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Highlights:
Wise reports a 51% rise in pretax profit, reaching £292.5m for the six months to 30 September.
Active customer numbers grew by 25%, reaching 11.4 million, with customers transferring £68.4bn, a 19% increase year-on-year.
Despite increased revenues, Wise faces margin pressure from ongoing price reductions as part of its long-term growth strategy.
Wise, (LSE:WISE) the London-listed fintech specializing in money transfers, has reported a significant increase in profit for the first half of its financial year. The company posted a pretax profit of £292.5 million, marking a 51% rise compared to the same period last year. This growth was driven by a 25% surge in active customer numbers, reaching 11.4 million. Over the six months, customers transferred a total of £68.4 billion, reflecting a 19% increase from the previous year.
Fintech also saw a 19% increase in revenue, totaling £591.9 million for the period. Despite these gains, Wise experienced a five percent reduction in its cost of sales, down to £152.9 million. The company’s model, which focuses on providing low-cost, fast foreign exchange services, has continued to disrupt traditional banking, leveraging over 65 licences, more than 90 banking partners, and six direct connections to payment systems globally.
One key factor contributing to the company's profitability was a 49% increase in interest income, which reached £230.2 million. This was largely attributed to higher central bank rates and a 23% rise in average customer balances. However, as Wise is not a licensed bank in the UK, it is unable to pay direct interest to British users, although it aims to return 80% of its interest income to customers.
Despite these positive results, Wise acknowledged that its ongoing investments in infrastructure to reduce pricing would likely lead to a decrease in its profit margin in the second half of the year. The company has already seen its margin drop to 22% from its earlier projection range of 13% to 16%. Wise's leadership emphasized that these moves are intended to bolster long-term growth, improving speed, cost-efficiency, and convenience for its customers. The results also mark the first earnings release under Emmanuel Thomassin, Wise's new chief financial officer, who joined the company in October from Delivery Hero.
