Wise plc

Hi, good afternoon everybody. Thank you very much for joining us here today and for joining us on the call if you've joined us via Vimeo or Zoom today. So this is our first full year results presentation as a publicly listed company. So it's quite a special day for us. We have today for you a presentation of our full year results. So we've got Christo, our CEO and co-founder, who will talk you through the progress that we've made over the last 12 months on our mission. And then we've got Matt Bryars, our CFO, who will talk us through the financial performance for the last year as well. After that, what we'll do is we'll move through into a Q&A session. We'll start with questions from the room, and then we'll move over to Zoom. So when we get to that stage, if you are joining via Zoom, if you wouldn't mind just raising your hand within the Zoom app, then once we move through to that part of the Q&A, I'll introduce you. Thank you very much. Over to you, Christo.

Just checking how we are on the mics. And we're good. Thanks for coming over. Thanks everyone for joining. Before we go into the results, so this is our agenda for today, I wanted to touch on an announcement that we made to the market yesterday about my personal tax affairs and say that I will be working with, will continue working with the FCA on this issue. But unfortunately, I'm unable to comment more on this as these processes with the FCA are confidential. But now, why are we here? And not here in this room today, but more generally. I started this product called WISE some time ago, but now I'm joined with more than 3,000 people. to work out how do we make money work without borders. So how do we make it instant? How do we make it convenient? How do we make it eventually closer and closer to free to use your money across borders? And we built WISE, which is now already at scale and growing. We built infrastructure, which connects to more than 70 countries now. We built it to move money at a lower cost for people. So we're down to 0.61% that our customers have to pay for international transfers. And we built this infrastructure to move money much faster. So 49% of payments now arrive in less than 20 seconds. And that does resonate. So there's now 13 million people who have used that platform. including businesses, and their rate with a net promoter score of 71. And this translates into two-thirds, so 66% of people joining Wise do it because someone who experienced Wise has recommended them to do so. And then, looking back into the last financial year, it translates to numbers. Our customers moved 76 billion pounds of their money using Wise across different countries and currencies. And they paid us 560 million pounds in fees. And we had 22% of those as adjusted EBITDA coming to our balance sheet. Matt will talk a little bit more about the numbers, but I'll take you through what we did for our customers in the first full financial year being public. As a reminder, we started to fix the problem a long time ago now, 10 years ago, but unfortunately banks haven't gotten much better, so the experience for people in business using banks It's not hugely different than it was five, ten years ago, and it's still there to fix. In fact, two trillion pounds, roughly, people move across borders a year. And if you add small businesses, this comes to another nine trillion. And we already move quite a substantial bit of it, but it's still very small. Less than 4% of money that people move is coming through WISE, and only less than a percent for businesses. And how do the customers experience that? So what is it that they get from Wise? I already mentioned we've managed to build an infrastructure that's able to move money much faster. So 49% arrive in less than 20 seconds in less than a day. So that's a completely new experience for people. In terms of costs, we already started from a different price point than what banks are charging in hidden markups. But we've brought it down even further. In the last financial year, we've come down as far as 0.61%. And we've covered the world, so it's getting painted blue. We've brought wise to more and more countries. We've brought more features to more countries around the world. But we also globally got more efficient, which has... led us to be able to lower our own costs and pass these cost savings to customers. So that infrastructure across the world is getting stronger, cheaper to operate, and the ability to give customers more features and more scale. But we knew that customers are not here just to move money across borders. They actually need the full international banking experience. And today, we're serving it through three products. The Wise account for people, Wise business account, and then the Wise platform for banks and enterprises. So let me take you through each of those three in turn. The Wise account, people use it to hold more than 40 different currencies. They get local account numbers. So this works like a local account in 10 countries now. They get a clever debit card where they can spend without being subject to exchange rate markups. They can spend internationally. And they get the cheapest and fastest access to the Wise Transfer products through this Wise account. And in the last financial year, it has expanded. So we added Brazil. We launched Wise account for Brazilians in Brazil and in Malaysia as an example. But it's not only expanding, it's also getting better with more features. For example, in the UK we launched assets. The ability for people to hold money not just in all the world's currencies, but also invested in the world's largest companies. And we help our people to automate their financial life internationally, so here come the scheduled payments, and also auto conversions, so setting up thresholds where they want money to move from one currency to another. But there's still plenty of things to do with the Wise Account, both in terms of expansion, so growing to more countries, but also growing the features out to more countries, as we'll cover a bit later. but it has already resonated. So now we see 20% of our customers are taking advantage of the Wyze account, and the share of those is growing. What's maybe even more exciting is that this Wyze account is working for them, which means that the ones who use Wyze account use it for much more. So they do two times the volume that our non-Wyze account customers do on Wyze. And now moving into businesses, just to give you some context, when people move about 8,000 pounds on Wyze in a year, average businesses move 48,000 pounds. So the use cases are usually about eight times larger. And for businesses, they get all the same features as individuals do, as people do in Wyze. But with that, they also get a few extra tools. They can give debit cards to their employees, manage their spending experience. They can connect to accounting systems directly, do batch payments, do thousands of payments at once, and manage and control their team's accesses. Again, in businesses, there's plenty more to do to make this as a as an amazing tool that it already is for businesses in many countries, but to expand it further out. And again, the biggest feature that the businesses really use here is the ability to get local account numbers in 10 currencies, which means that they can invoice as a local company in many countries around the world. And again, we see this resonate. We see that the cohorts of businesses are growing. getting larger year by year, but they're also starting to grow now in their lifetime. And put the Wise business and the Wise account together, we see that the rate at which customers hold their money at Wise is increasing at the same rate as it was last year, so about 85% year near. Moving to platform, just as a reminder, there's three types of use cases generally where a platform comes to life for our partners. So first of all, challenger banks take the advantage of bringing wise to their customers to get an edge on their traditional counterparts. Then on the traditional side, of course, they have increasingly realized, our partners have realized that It's the customer experience that is now a standard expectation that they need to be able to serve in their own apps. And we're ready to help it there by bringing the WISE infrastructure into the banks' apps. So we see very traditional banks being now able to compete with their faster-moving competitors with the new features from WISE. And also in enterprises, it was quite unusual for us maybe five years ago that we would be making payments out of our accounting tools. This is going to be increasingly a reality. And doing this internationally is now something that accounting tools offer through WISE. And if we put this onto the map, we see that WISE platform, as WISE infrastructure, is very widely distributed across the map. So covering all of this, it's still for us quite a bit to do. We're now onboarding a million customers a quarter. And it also means we're hiring a lot. Matt will go more into the numbers. We brought some 950 new people to the team in the last financial year. And with a bigger team, with this demand that we're seeing, we can keep serving even more and more customers around the world. Now with what we've done is effectively setting a new expectation. Expectation to ourselves that transfers will get faster. It will get faster to move money across borders. We're 49% instant, but we know that we can move this forward. We set the expectation that transfers will get cheaper. Managing money internationally will get cheaper over time. And we've done this sustainably. So we have been profitable for the last five years and we've built a business that will do that for many years to come. So these expectations that we're now setting for people and businesses are not going to go away and they're going to be there for us, but they're also going to be here for traditional banks, digital challengers and others who come to solve the same problem At the end of the day, people are going to gain because everyone now has to offer a much, much stronger product. And our work's kind of cut out for us. I mentioned that we're connected to more than 70 countries. We built the infrastructure that connects to more than 70 countries. That's not all the countries in the world. There's more to do by connecting to more countries. But when we go slightly deeper, we're serving customers in about 49 countries and offering the Wise account and the card in a few less, while the account numbers are only available in 10 countries. So the journey that we're looking forward to is increasing all those bars on the screen while we also increase the reach of the Wise infrastructure. But putting this all together now, we talk through the three products that we operate, or how people use Wyze through the Wyze account, Wyze Business, or increasingly through Wyze Platform, which all in all, with the fundamentals of price and speed and convenience, gives us 71 Net Promoter Score with a vast amount of our customers joining through recommendation, which then translates into us having more and more customers every year, so 24% more active people this year and 34% more active businesses this year, which then again translates into 76 billion in volume, which is growing 40% year-on-year and giving us scale to be able to invest more and more as we move into this current financial year. With that, I'm handing over to go deeper into numbers to Matt Briars. Thank you.

Everyone hear me? Yep. Hey, everybody. Nice to see you all again. I actually see some of you for the first time properly. Let me talk you through quickly our financials, and then we can do some Q&A. So as Christo said, These are some key numbers that we think about. So the amount of volume that our customers move tells us how well our product's working, but it's also the main driver of our income. This 76 billion grew 40% year-on-year. I'll dive into a bit more of the drivers of this. That translates to 560 million of revenue growing 33% year-over-year. Importantly, as we spoke about at half-year, we've generated 43% growth in gross profit. And this $372 million I think about as the fuel that funds all of the investments we want to make as we think about what do we want to do over this year, five years, much longer to continue to drive the growth. How do we continue to compound what we're doing for our customers? And we've invested that over this year, as we said we would. We said after the year of 2021, which included our pandemic, we'd be investing heavily after this, and we have. But we've still maintained an EBITDA margin above 20%. And we'll talk about some of the drivers of this. And as you know, our EBITDA margin, just as EBITDA, is cash-generative. So the vast majority of that translates to cash, which obviously helps us from a company perspective. It's good cash flow and also helps us top up our balance sheet and our capital reserves. So let's go a bit deeper into each of these numbers. First, let's look at this active customer growth and how that's looked over the last year from a quarterly perspective. You can see, actually, as we finish the year, we've spoken to you, seen this in the earlier quarters, we've seen really strong growth in the active customers for people, but also businesses in the last quarters. And then if you look at what those customers are doing, The volume per customer that's come from our personal customers has recovered well after the pandemic. We saw that dip in April 2020. So year on year, we've seen some growth in this. But actually, if you look at the business customers, and I'll take you back to that slide Christo showed for the cohorts, you can see that actually this wise business account really resonates. They're using us more. And also, we have other factors happening in the world today. Clearly, businesses are using us to play their suppliers or accept money from their customers. So anything related to, we've seen an increase in this. The wise account is more useful. We get more of their cross-border flows. But actually, as well, obviously we're seeing inflation in the world. No doubt that's helping contribute to the volume per customer, which is therefore flowing through to volume. So when you put this together with the active customers, we see the volumes moving through the last quarters of the year, growing. Pretty fast. More than 30% now consistently in the growth we're seeing from people and almost 60% for businesses. So that means that across the year, we actually grew volume at 40% year over year versus 30% the year before. Yes, there was a pandemic comp in the year before. But that's almost 60% volume growth for businesses, as I said. But interestingly, if you look at this on a constant currency basis, so fixing the currency, there's many different currency dynamics in our business. But if you just look at this, actually that volume growth would have been 46% on a constant currency basis. growth dynamic we're seeing in the business. Let's track through to what does that mean through the P&L. First thing we look at here is actually what's happened to our marginal unit cost, because this governs what we charge our customers. We said at half year that we'd managed in the first half year particularly to engineer away, optimize away a bunch of these costs, whether it's what we pay our partners, how we manage our FX exposures, or our spreads. So we reduced that marginal cost of a transfer from 30 bps down to 25 bps. And that helped us in the first half of the year. I remember sitting here six months ago saying, we've managed to reduce these costs and pass that on to our customers. We did that in the first half of the year. The take rate's been relatively steady in the last six months, around 60, 61 bits, as Christa said. But actually, our overall take rate has been more stable. And why is that? That's partly because, as customers adopt the Wwise account, the other fees that we're getting are growing, partly upsetting that. So we saw a roughly three-bit drop in the take rate across this period. So then the revenue grew 33% year-over-year, £560 million. It's faster than we expected for the year. And we've seen that good momentum in the back half of the year. It's quite interesting what we show of revenue breakdown by geography. And we think of ourselves as quite a global business. Our customers are relatively global as well. Actually, if you look at the UK, where we got started first... And actually, we'd argue we've probably got the highest market share. It's still growing at 30% year on year, which is pretty encouraging, actually, if you think about it. So many of the markets have launched years after this. But actually, what this tells us is that our growth is rather driven by this rumble along of word of mouth growth. And it's continuing in the UK. So think about the market size. They get comfort and the sheer opportunity that's there in the UK, but also even more so maybe in some of the other markets. Got a lot of runway. So that revenue, as I said, translated into 372 million of gross profit. Gross profit margin increased 62% to 66. But this 372 is, OK, so what do we do? Where do we invest this? And as we've said before, we invest this in three areas. We've spoken about price. Where can we drive price investments sustainably over the long term? Second, where do we invest in marketing? And third, where do we invest in our products? Because all of these drive more volume, all of these drive more scale, and then drive more capacity to keep investing. And we did invest. You can see that actually, as we said, our OPEX during the pandemic grew more slowly. And we've invested through the back half of last year. And we've seen our costs grow. Some areas grew roughly in line with our volume. Some grew faster. Some related also to us becoming a public company is the reality of carrying more costs. Let's go into some of each of these areas. actually grew our team to almost 3,400 wisens by the end of the year. So end of the year to the end of the year was around 40% growth in the number of people. This was in our engineering and product teams, but it was also in our operational teams and in our functional teams as well. And all of these are important for our growth. Clearly, products is what we build, but actually operations are critical to actually serving that demand that we create. And as we hire finance people, people in the legal team around the world, that helps us open up licenses and helps us build businesses for the future as well. We've always talked in the past how we're very prudent with our return on marketing investment. We invest typically at a 12-month payback. Amazingly, we've kept that payback period and still grown the spend on marketing by 30% over the last year. What does that mean? Well, yes, we're getting more customers through marketing. But actually, as we said, we're onboarding a million customers in a quarter now. But still two-thirds of those are coming from word of mouth. So that means whilst we've grown our marketing spend, we're still getting the word of mouth growth. So our overall economics are still very compelling. It's a very low cost of acquisition as a business. And then partly we saw this at mid-year, and it hasn't really changed. If you look at our expenses, and I'm sure you'll look in detail through the reports, you'll see that the overall expense growth was higher. That's because when you add in the effects of capitalization, this pushes that rate of growth up. And I'll talk shortly around what that does as well to our EBITDA margin. So our adjusted EBITDA was above, we look at our above 20%, we hit 22%. We said 26% a year ago was an example of what happens when we slow down our cost growth. That's what happens to this margin. We said we'd have foot to the floor investing in our future, which is what we've done. So we had a 22% EBITDA margin, adjusted EBITDA margin for the full year. Let's look at that a little in detail around this capitalization change. If you look at that growth of 12%, and then if you were to add back the capitalization, so this is a capitalization of our expenditure into our engineering, for example. And then look at what that number would be growing. That number of the underlying EBITDA is growing in line with our revenue. So actually, the fundamental underlying profitability of the business is growing very healthily, as you can see. So to summarize... We're moving 76 billion pounds. It's quite hard to look at direct comparables, but I challenge people to find another standalone mover of money in the world that's moving more money than this. We've grown at 40% year over year. So if you think about roughly 25 to 30 billion we've added in the last year, there are not many standalone money movers that move that amount. So we're adding the quantum of volume that we're moving is actually significant. We're doing that profitably without having to invest and burn significant cash. And we're generating this $372 million of gross profit, which is funding all of the investments that we are making, which are going to pay off, as you know, in the long term, because what we're seeing today are the investments that we've been making in the past. We have a very healthy EBITDA margin, and we remain a cash-generating business. We've run the business this way for the last five years, very proud of that, and there's no need to change. We're very focused on driving growth sustainably with our business model, and this is a long game we're playing with Wise. So let's look going forwards. What does that mean? Well, next year we've seen really good momentum going into the last quarters. Expect revenue to grow between 30% and 35% in the next year. And if you look at the medium term, we still believe above 20% growth in the medium term is expected. And then we'll continue to invest. So we need to grow this volume. We've got a long way to go. Many trillions of volume moves not unwise today. And we found a way to invest sustainably, so we'll keep investing with an actor above 20% adjusted EBITDA margin as we go forwards. So with that note... I'll pause, I'll hand back to Christo, and then we'll take some questions.