Wise, a London-based FinTech and payment institution, has reported a notable 23% growth in revenue and has upgraded its income guidance. Founded by Estonian entrepreneurs Kristo Käärmann and Taavet Hinrikus in 2011, initially as TransferWise, the company is now listed on the London Stock Exchange. Wise is a kind of antithesis to London-based FinTech Revolut and focuses on product payment processing.
Fiscal Year 2023 Performance
In the fiscal year 2023, Wise demonstrated substantial growth by supporting around 10 million individuals and businesses. It processed approximately £105 billion in cross-border transactions, saving customers over £1.5 billion. The third-quarter revenues showed an increase from £225.2 million the previous year to £276.6 million.
Customer Growth and Income Increase
Wise attributes its growth to an increase in customers utilizing multiple features, with about half of all customers now using a combination of services like the Wise card and the money-sending app. The active customer base has reached 7.5 million, a 30% increase year on year.
While the majority are personal accounts, business customers have also grown to 392,000 active users, up 23% from the previous year. Wise reported a 40% year-on-year increase in income, standing at £375.1 million, prompting an upgrade in income growth guidance from the previous 33-38% range to 42-44%.
Leadership and Regulatory Scrutiny
The report comes as the first trading update since co-founder and CEO Kristo Käärmann‘s sabbatical from September to December. Despite his absence, Käärmann expressed satisfaction with the company’s progress toward its mission. However, in 2022, the Financial Conduct Authority (FCA) announced an investigation into Käärmann’s “regulatory obligations and standards” following his default on tax payments.
Market Performance and Competition
Wise, which went public in 2021 with an £8 billion valuation, has seen its shares decline by nearly 12% since its market debut. Despite this, the company’s profits tripled last year, buoyed by rising interest rates.
Wise is a kind of antithesis to Revolut and, as a regulated payment institution, focuses on product payment processing. With more than 35 million customers, Revolut is many times larger than Wise, which claims to have 7.5 million active customers. Revolut, founded by Nik Storonsky, has an extensive product offering, including crypto. However, Revolut also has problems with the regulators in the UK, who have so far refused to grant Revolut the banking license it applied for.
Preliminary Opinion
Wise‘s latest financial results and customer growth highlight its continued influence in the fintech sector. Despite facing regulatory challenges and increasing competition, the company remains a key player in the global money transfer market. Its upgraded income guidance reflects confidence in its business model and its ability to adapt to the evolving financial landscape.
