Wise’s annual profits before tax have increased by 234 percent to £146.5 Million, a 36-fold increase.
The increase in global interest rates has boosted the revenue of the money transfer industry from £3.9 to £140.2 millions for the year ending March.
Wise has warned shareholders that they expect their profit margins to exceed the normal 20 percent target for the current year.
The shares of the company, which was formerly called TransferWise, rose by a fifth yesterday after the market opened and closed at 611 1/2p up 16.3 percent, or 86p.
Wise has reported ten million active customers in the last year. This is an increase of 4.5 millions. Two thirds of these newcomers were attracted through word-of-mouth. The balances of customers increased by 57% to PS10.7billion. Wise is rewarding customers with their balances. They have returned £18.4million to them in cashback or other benefits that are similar to interest.
As it is not licensed as a deposit-taker, it is not permitted to pay interest on balances. It has however launched a “Assets”, where customers have the option to opt-in and earn around 4.7 percent on their balances. Matt Briers said that the 46-year-old chief financial officer’s ultimate goal was to share 80 percent of interest incomes with customers through incentives and interest payments, where permitted.
The company has warned that the decrease in average volume per client, which alarmed investors, has continued into the new fiscal year. The average deal size increased in the first half last year, as customers transferred money to pay for real estate or to benefit from the strong dollar. The volume per customer in the first months of this year was “very slightly” lower.
The company was founded by Kristo Kármann and Taavet Hnrikus in 2011. They process billions of pounds worth of cross-border transactions each month for both individuals and businesses. Briers describes the business as having an “evangelical” customer base. The company was listed in London 2021 for 800p per share. It is now valued at PS6.4 billion. The reason it isn’t in the FTSE 100 is because its share structure gives Kaarmann disproportionate power.
Regulators are investigating Kaarmann’s suitability to lead a financial institution, after HM Revenue & Customs declared him a deliberately tax defaulter in September 2021. He was fined PS366,000 after he failed to pay a tax bill on time. Briers stated that there had been no updates on the Financial Conduct Authority investigation: “If we had any news, then we would share it.” They are running a procedure. They are taking their time.”
Kaarmann will soon take three months of sabbatical in order to spend more quality time with his family. Briers, on the other hand, is planning to leave next year so that he can focus on recovering from a serious cycling accident.
In the past year, the number of personal clients at the company increased by 35 percent to 9,4 million. The number of business clients increased by 27 percent to 520,000. Alex Short, a Davy analyst, said that the results exceeded expectations. The 24.7 percent profit margin for the fiscal year beat consensus estimates of 23.8%. He said that the company’s forecast for income growth in 2024 of between 28 and 33 percent was above expectations of 27.2 percent.
Kaarmann told BBC that he didn’t regret his decision to list in London. The City is worried that innovative companies seeking to flotations prefer other financial centres such as New York.