Wise quadruples profits as customer growth and higher rates boost income 🚀; FinTechs retrench as higher rates squeeze business 📉; More Americans are now saving for retirement💰
FinTech is Eating the World, 14 October
Hey Everyone,
Happy Tuesday! Today we’re looking at FinTech champion Wise which managed to quadruple profits in the first half of 2023 (a look at their crazy numbers & how they are dominating + some extra reads & deeper dives into Wise and beyond), FinTechs retrenching as higher rates squeeze business (+ a closer look at severely undervalued PayPal & Block), and more Americans that are now saving for retirement (but what’s ahead?). Let’s jump straight into the mesmerizing stuff 🌶
Wise quadruples profits as customer growth and higher rates boost income 🚀
The news 🗞️ British FinTech star Wise saw its pre-tax profits surge 280% in the first half of 2023, boosted by strong customer growth and increased interest income from higher rates 😳
ICYMI: Wise is one of the most underrated FinTechs right now 😳 [June, 2023]
Let’s take a brief look at their numbers and see why Wise is a FinTech you cannot ignore.
More on this 👉 The London-based money transfer giant reported a pre-tax profit of £194.3 million for the six months ending September 30, 2023, up from £51 million a year earlier. Damn!
Revenue rose 25% to £498 million, driven by a 32% increase in active customers to 7.2 million.
Including interest income, Wise's total income jumped 58% to £656 million. The company benefited as global central banks raised interest rates, earning £211 million just from interest on growing customer balances now totaling over £12 billion.
Volumes grew 12% to £57 billion, matching customer growth. Wise is seeing higher adoption of its multi-feature account services like foreign exchange, debit cards, and stock investments.
The crazy part? Over half of its users now utilize more than one Wise product. That brings them closer to Nubank NU 0.00%↑, a leader in owning their customers.
ICYMI: A path towards $100 billion FinTech Giant: Nubank applies for a banking license in Mexico 🇲🇽🏦 [why this is a huge step forward + a deeper dive into NU & dLocal]
Despite impressive results, Wise stock is still down 25% from its all-time high:
Maybe a good opportunity to buy?
✈️ THE TAKEAWAY
Looking ahead 👀 Following amazing results, Wise unsurprisingly upgraded its 2023/2024 income growth guidance to 33-38%, from 28-33% previously. It now expects the structurally higher interest rate environment to keep profit margins above its medium-term 20% target. And that makes absolute sense. Why they will achieve this? Well, Wise is capitalizing on demand for cheaper, faster cross-border money transfers. Because at the core of it, they have a payments network that spans over 70 banking partners and 45 countries targeting an estimated $700 billion total addressable market. Zooming out, the strong first-half performance defied weakness across payment peers and showed the resilience of Wise's customer-focused business model. More importantly, with evangelical users driving viral growth (67% of new Wise customers join through word-of-mouth), Wise looks poised to continue gaining a share in the massive cross-border payments industry. Bullish.
ICYMI: Wise & Swift join forces. It will change the game for banks 🏦🌐 [how this will change the game forever & some solid deeper dives into Wise]
Disclaimer: this isn’t investment advice and I’m a shareholder of Wise.