Wise CFO credits customer growth for profit jump

Dive Brief:

• British fintech Wise reported £194.3 million (about $242.8 million) in gross profit for its half-year results ended Sept. 30, a nearly four-fold jump year-over-year, driven by high interest rates and a boost in its customer balance resources, the company said in unaudited results issued Nov. 14.
• The primary driver of the London-based fintech’s boost in profits is its customer growth, Wise CFO Matt Briers told sister publication CFO Dive in an interview.
• Other factors include the improved unit costs of transactions. a higher level of interest on its balances — which passes straight to profits — but “if you step back, customer growth is fundamentally underpinning it,” Briers said.

Dive Insight:

Wise reported a 30% increase in active customers to reach 7.2 million, according to the earnings report. Revenue increased by 25% to £498 million ($622.4 million), while the company also reported a 58% rise in income to £656 million ($819.8 million).

“Fundamentally, we’re just seeing very strong customer growth through the first half of the year,” Briers said. “We see customer behaviors holding up pretty well as far as the macro environment.”

Both the fintech’s customer base, the balances it’s holding and the incomes driven by those balances are continuing to grow, putting the company in strong shape for the next half of its fiscal year, Briers said. In October, Wise updated its income growth guidance for the full year to between 33% and 38%, from a previous range of 28 to 33%, according to its earnings results.

“Across the range of those growth drivers, we’ve seen pretty strong fundamentals which give us confidence for the rest of the year,” Briers said.

A banking industry veteran who has held senior positions at institutions including Capital One and Lloyds Banking Group as well as serving a stint as Google’s head of sales finance for the United Kingdom, Briers joined Wise in 2015 as its CFO, according to his LinkedIn profile.

Briers’ financial leadership has steered the company through much of its 13-year history, with the fintech founded in 2011 as cross-border money transfer service TransferWise. In May, Wise announced Briers would be resigning from the company in 2024 to make a full recovery from a cycling accident, with the finance chief planning to depart after Wise CEO and co-founder Kristo Kaarman returns from a sabbatical this December. The company’s chief technology officer, Harsh Sinha, has stepped in as CEO in the interim.

Wise is running a “comprehensive search for a new CFO and will provide an update when appropriate,” a Wise spokesperson said.

The company rebranded as Wise in 2021, and now offers three distinct products; its Wise Account product offers a multicurrency electronic money account with an attached debit card, while Wise Platform offers payment infrastructure for financial institutions, fintechs and enterprises, and its Wise Business service allows small businesses to send and receive international transactions.

As well as a bump in new customers, Wise is also experiencing a jump in the number of users tapping multiple features of its account product — 44% of its personal customers and 58% of its business customers report doing so, according to its half-year results.

That helps bolster trust among customers, and continues to positively impact Wise’s revenue and profitability, Briers said.

While it’s always important to keep a watch on trends in the macro environment, including interest rates, “we shouldn’t build a business that’s highly dependent on interest income,” Briers told CFO Dive. “Therefore, we shouldn’t really worry too much around what’s happening in the interest rate environment.”

The company occupies a unique position where it can be “somewhat independent” from a macroeconomic perspective, Briers said, with Wise occupying a very small market share in the business — Wise has currently taken about 5% of the personal market share and less than 1% of the SMB market share, Sinha said Tuesday during the call.

Given its small market share, Wise is “just focused on getting more people to switch to us from their bank to gain share in the market,” Briers said. “That’s essentially what we need.”

To continue bolstering its customer growth, Wise is focusing simply on “offering customers a better deal,” Briers said — many bank customers lack transparency about the fees they are being charged or how much they are paying for services, he said, and making that more clear can help Wise put itself into a more competitive position.