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Wise shares soar as revenues jump by a third

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·Business reporter
·3-min read
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Wise shares soar as revenues jump by a third. Photo: Wise
Wise, which listed on the London Stock Exchange in July this year, specialises in cross-border transfers and is one of Britain's most well-known fintech unicorns, a company worth more than $1bn (£750m). Photo: Wise

Shares in fintech company Wise (WISE.L) surged as much as 8% on Tuesday as it revealed a 33% jump in revenues in the first half of its financial year.

The money transfer firm, which was formerly known as TransferWise, saw revenues come in at £256.3m ($342.3m), driven by higher customer numbers who were attracted in part by lower prices.

Wise, which listed on the London Stock Exchange (LSEG.L) in July this year, specialises in cross-border transfers and is one of Britain's most well-known fintech unicorns — a company worth more than $1bn (£750m).

Its customer base grew to 3.9 million in the second quarter, an increase of 23% compared to a year earlier, and it transferred more than £34bn for its customers in the six month period. This was up 44% from a year ago.

The company added that its payments also became faster during the second quarter, with 40% of all transfers delivered instantly during the period.

Shares in Wise climbed as much as 8% on Tuesday on the back of the news. Chart: Yahoo Finance
Shares in Wise climbed as much as 8% on Tuesday on the back of the news. Chart: Yahoo Finance

However, pre-tax profit fell slightly compared to the period before, down from £20m to £18.8m. It warned that growth was likely to be lower in the second half and expects growth for the full-year to be around 20% to 25% due to price cuts and reduced volumes.

The company's adjusted EBITDA margin, a key measure of profitability, stood at 24% — 2.7 percentage points lower than last year due to planned product investment, it said.

It also expects its take rate — the percentage of money being transferred over its platform that it books as revenue — to be slightly lower in the second half, with a gross margin of around 65% to 67% for the full year.

Read more: UK fintech Wise offers index investing to customers

“We're on a mission to make moving and managing money across borders faster, easier, cheaper and more transparent for everyone, everywhere. Each quarter we strive to make progress on this mission,” Kristo Kärmann, co-founder and chief executive officer, said.

“Over the first half of this year we've improved our products and engineered away substantial points of friction in the payments process, enabling us to sustainably lower prices while continuing to invest in growing the business for the long term.

“So a virtuous circle of investment continues, and our service gets faster, better and cheaper than ever for our personal and business customers.”

Wise made its market debut on the London Stock Exchange via a direct listing rather than selling shares at a set price in advance.

This meant that the opening price was determined in an open auction on the date of admission to the exchange. In direct listings, companies sell shares directly to the public without getting help from intermediaries.

Read more: Fintech Wise could be 'major coup' for London Stock Exchange

This happens when firms can not afford underwriting, do not want share dilution, or are avoiding lockup periods, a less-expensive option than an IPO, according to Investopedia.

The method was pioneered by Spotify (SPOT), which used a direct listing to join the New York Stock Exchange (^AMZI) in 2018. However, it is rarely seen on this side of the Atlantic.

Last month, Taavet Hinrikus sold a £81.5m stake in the firm, priced at 815p per share, representing a 4% discount to the closing price in the previous session.

The Estonian expat sold around 10 million Class A shares in the company through an accelerated bookbuilding process. The move came in a bid to finance his growing pool of startup investments.

Hinrikus’ private investment firm still holds on to its 54 million class B shares.

Watch: What are SPACs?

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