Wise plc

Good morning, everybody. Those in the room and those joining virtually by Zoom. I'm pleased today that we'll be joined by our CEO and co-founder, Christo, who's going to talk through our mission update, progress on our mission for the first six months. And Matt, our CFO, is going to talk through financials for the first six months. We'll then move on to Q&A. So I'll start by taking Q&A in the room. And then for those that are joining us virtually, I will take questions by Zoom. Just as a reminder, if you do have a question and you're joining by Zoom, if you could just raise your hand through the Zoom function and I'll introduce you. And with that, I'd like to hand over to Krista.

Thanks, Martin. Josh, you have to wait. We still have probably about 10 minutes of me talking and then Matt as well. Welcome everyone in the room and everyone on Zoom. So before we go into a bit more detail and a bit more numbers, I just wanted to remind us why I'm here. So I'm here with my team because we were solving a really big problem for international people and businesses. It's a real thing that we're working on. We're doing it by building something completely new, restating the infrastructure and how these payments work. They power products that people and businesses love. So, it's a great thing to be working on those and doing it in a way that it's sustainable, meaning we're independent, we're funding our own growth. So, this is for me an amazing thing to be working on. Now, from the shareholders perspective, when you can read these things, you'll see that we're working on a really large opportunity. which builds on this infrastructure, massive competitive advantage, and it has an inbuilt growth engine through word of mouth. Then in the end, it's a profitable company. Just to put this into context of why we're here and why I think you're here. So how did we do in the last quarter? We had five and a half million customers use us for cross-border transfers. Our average price stayed at 0.64 and more than half of our payments are now instant. If you look at us in the context of growth, our volumes are growing 49 percent year-on-year and Our total income, which Matt will break down a bit more, has gone up 63 percent. We're staying at our 20 percent or above EBITDA margin. Now, I'm going to take you through how did we actually do in this quarter in terms of the product and how our customer experience has evolved. So a reminder again, the reason, the things that our customers care about and the things that we're solving here is that money internationally is very slow. We're making it fast. It's quite expensive to use. It's inconvenient and has lots of hidden markups and fees in there. So these are the things that we're solving on our own infrastructure. And in the context of where we are today, we're making visible progress on individuals. So up to 4% of the global volume is moving on transfer-wise. On businesses, we're still a rounding error. So we're less than a percent, we think, in small businesses. So there's a lot of work for us to do here. Going through each of these pillars one by one, we see that over the years, we've actually made really steady progress on instant. Now, half of these transfers arrive in less than 20 seconds and almost all the transfers in less than 24 hours. Last quarter, we had a drop down. You'll see some of these ups and downs. We anticipate this will be moving upwards and we can increasingly make more and more transfers instant. On fees, it's the same journey. We've managed to bring the fees down to 0.61 for the last few quarters. And then last quarter, we're up to 0.64. And then again, in the long term, we expect that our goal is to bring the fees down rather than up. But then put this into context, the banks are still somewhere at 3%. the small ups and downs on our journey have to be seen in the context as well. Now, I've always talked you through a little bit on the progress on those four things that go around building our infrastructure. So first is expansions. We're expanding globally. We're already quite a lot in. There's plenty to do. This half year, some of the bigger achievements was getting a settlement account in Reserve Bank of Australia, which leads a way for us to become a direct member of the Australian Instant Payment Scheme, which then again helps with our goal both on faster, more efficient transfers. On Japan, we actually were already pretty fast, sadly, just during the working hours. So we changed the connectivity this time around, and now we brought fast transfers to Japanese 24-7. On the regulatory front, it's quite a bit of movement on Wise Assets. So we got licenses in Singapore, started serving our customers there, and also in the EU in Estonia. So this is going to take a little while as we passport out to the rest of the On operations, we're onboarding a lot of new customers. We're going to be talking about the demand that we see for Wise and Wise account. We've been scaling up our operations teams. We added about 1,000 people there. On technology, the start for the half year is 99.7 percent uptime. Actually, for the last quarter, this was three nines. So the reliability of our platform, especially for our platform partners, is relevant and important. So now, moving on into how do our customers experience this, they use us through three products. It's either the Wise account, Wise business, or Wise platform. Just as a reminder of who are these people who use this? I hope a lot of our shareholders are also customers. But just as a reminder, so who do we see using the Wise account? There's definitely digital nomads who spend their time working in countries where they're different than employers. We have expats who move into new countries and then use the Wise Account as their first account for a little while. We see travelers and we see students who are often expats as well. So these are the few groups that we see among the Wise Account users. On Wise Business users, that's actually even more diverse because these days there are so many businesses who do international payroll and pay suppliers internationally. It's very hard to be really, really just a domestic business. And then increasingly, businesses are using Wise to invoice their customers who are probably also not in the country where they operate. So for businesses to be able to operate internationally, the Wise account really does come to life. So next, I'm going to talk a little bit through the features that we've added on the Wise account for the last six months, just to bring out the trend of development. There's a few in the US, actually. So our USD account, or the Wise account in the US, got much better connectivity into the local brokerage platforms, the financial services apps. On global front, we're rolling out a new homepage experience. So what we're seeing is that there's a lot of, so we're hearing a lot of demand for the features that the wise account now offers, but they haven't been as easy to find. So we expect that there's even more people finding the features that are useful to them. We've started rolling out debit cards in the US. So again, we've been talking about rolling out cards in different places. around the world there's one place where we didn't serve businesses with cards yet, that was the US. We fixed that now and US businesses are getting cards. Again, on the business side where we're starting to enable our business customers to invoice their customers and get paid by cards. Our business customers use our account numbers quite a lot, so they get local account numbers in 10 different countries. So they use that to invoice their customers but sometimes they need to pay by card so we're enabling that as we go forward. All of these things that we're building for the Wise account really seem to resonate because we're seeing more and more of our customers and you'll hear about how much more customers are generally signing up to Wise, but more of them using the Wise account than merely transfer. So on the individuals, it's up to 20 percent and 30 percent and businesses up to about 50. The interesting bit here is that those who use the Wise account, they have either more use case or larger use cases, so then they end up using Wise for more volume moving through us and more transactions coming through us. So we feel that with the Wise account, we definitely created a better product or an added products for our customers that means they can get more of their things done with us. So one thing is you saw the share of the Wise Account users is growing up, but also the general amount of users is going up quite fast as well. So there's no surprise that we see the balances that customers hold with us go almost doubling year and year. or 88 percent year-on-year growth. They're split between personal and business and almost growing at the same pace. So this again is so far has looked like a really steady mix. So we talked a little bit about the Wyze business and the Wyze account. Now our customers reach us sometimes through our partners. So we have talked to you and shared a few platforms where Wyze is built into other products. And you see a lot of banks here, some challengers, some more traditional ones, and different types of platforms where these platforms get give their users the benefit of wise. This last half year, we have a few logos up of, again, you're seeing a few banks, both the challenger types and more traditionals, and also quite a lot of non-banks as payroll providers, company registration agencies, and others who make use of WISE for their customers. With that, we're kind of Talked about all the new features we're bringing out, all the new customers that we're servicing, and the capability that we're building for that is something that we measure through the user experience. The few things that are really important for us, how quick and easy it is for a new person or a business to start using Wwise. If you've tried to open an international bank account for a business, you might be spending weeks and months on it. We endeavor to get all of this done and open for you 24-7 and in 24 hours. There's still quite a bit for us to do, and also to kind of give you a view of how we're, like the standards that we keep ourselves up against. And when we say that 84% of payments arrived on time, meaning some didn't, but those that didn't, That means that they didn't arrive in 20 seconds, they arrived in 25. So there's a bit of a scene setting here. But of course, when we say customers are paying around 20 seconds, we expect it to. So it's still something to grow towards the 100 percent. Then moving on, just to put this into the context, we've added about 1,000 people to our team in the last six months and we keep hiring and adding more language support, more specialisms. So there's a lot more there to build. Now, the last thing for me is going to be just the international context. I think we showed this maybe a year ago. We've made this effort of plotting two axes. One is where we see how deep we are integrated in the local regulatory and technical infrastructure. So going from partnerships through our own licensing process to having direct connectivity to the central banks, and then what that means to the customer. So obviously, we expect this to be somewhere, the journey to be somewhere in the middle, the more better we integrate, the better features are available to our customers. We see that some of those countries at the top four, the UK, Singapore, We're already quite far ahead and then there's a lot of those countries where somewhere in the middle where the service is already pretty good, a lot of free features available, but there's a lot there to build and there's a few countries you definitely don't even see on that map yet. So just to give you the kind of way that we think about the travel here. And then just to narrate a little bit on what's happened in the last six months. We mentioned we acquired a licensed entity in India, for example, so that means we've moved the We moved a little bit on the x-axis. We haven't really moved on the y-axis yet because the customers haven't seen the benefit of that, so there's a bit more to do there. We see that Australia is a good example. We have the settlement account open, so we definitely moved on that axis. There's still work to be done to actually get into the payment system and start switching on instant transfers in both ways out of Australia. And with Singapore, maybe there's a good example in a different way. They already have a QR system that we're kind of connected to, so enabling our customers to pay with QR codes, and something that we were able to improve on the user experience side without too much effort on the integrations. So just to give you a kind of a view in our internal world of how we see our geographic expansions and deepening going on. Now to summarize what I've been talking about here. So there's these four things that we work on that try the user experience that we measure in the NPS and that does play through in the word of mouth that is 70% probably highest we've ever seen as a share. Then moving on to driving growth. So people recommend us that drives more growth, both in-person business customers, and that yields the numbers that we're seeing, both in the volumes that we transfer, the impact that we have on the movement of money, but also our year-on-year growth and financials, which Matt is going to talk us through next. Thank you so much.

So what do we see? So we're moving an awful lot of money now. We've done 50 billion pounds and that's growing, as Chris has said, around 50% year over year. That's generating actually 63% year on year growth in income, over 400 million pounds. And that's actually pretty profitable, at a 22% EBITDA margin, highly profitable, 92 million pounds of EBITDA, and that EBITDA is growing fast. And all of that's flowing through, it's a real bottom line profitable tax. And as you know, the way we run our businesses, it's high quality earnings, it's highly cash generated too. But just to step back and put that in context before we go into the details on this, you know, the environment we're in, we're still growing fast, we've still got huge demand from our customer base, whether they're people, businesses to move money around the world. Actually, we're translating that into transparent fees, which we translate into income for us. And we're still highly profitable despite actually investing significant amounts in our growth. And I'll go into more detail as to how much of that gross profit we generate is actually translating through into investment, which we're making for future growth into our business. And that's in the context of a really challenging economic environment. We're a profitable cash-generative business that's resilient through the good times and the challenging times. And that's intentional as to how we've built our company. So we're really proud of these results, but let's click in as to what they actually mean. So our active customer base has grown. Our personal customer base has actually accelerated to growing over 40% year-on-year. We're seeing still strong growth in our business customer base. Those customers are moving more money through us. People moving 6%, 7% more versus last year. But actually, business is moving quite a bit more. Now, some of this is moving. as Christo mentioned, more customers using the Wise account and those customers will use this more. Some of this is root mix, but also some of this is undoubtedly inflation throwing through, particularly in the businesses we think where, for example, you can imagine some of those examples Christo showed where businesses are paying their suppliers and those costs are going up. That's translated into volume growth of almost 50%. On a currency adjusted, worth calling out around 44%, but both business and personal volume growth growing really strongly. But just step back and think about that 50 billion or 100 billion annual run rate. That puts us well ahead of, I think, nearly any other money mover around the world. So it's probably the largest standalone money mover growing really fast as well, which is quite, just to frame this in context. Describe here our take rate. We've always talked around our cross currency take rate than our other take rate, but we now also have this interest income that gives our total income take rate. You can see that's gone up. We see Christo mentioned what's happened on cross currency prices. We see more and more customers use our wise accounts. And then we're also seeing some of this interest flow through into our total income take rate. So overall, what that means is our revenue is growing around 55% year over year. And that's growing all across all regions. In fact, pretty amazing how even when you look at the UK, this has grown very healthily still, despite actually, as we called out before, having a really high share of the market, but really just shows that still huge demand, even in our most mature markets, or the markets have been operating the longest to continue growing. And people and businesses are actually holding 9 billion of balances with us. As Christo mentioned, that's really adoption of the wise account rather than the average balance is growing. People finding use for the product, storing their, and trusting us with their money. So I thought I'd provide a little bit clearer around where do these balances sit and how do we hold these. You can see we have a mix of currencies. That doesn't purely driven by the mix of customers, but actually, for example, if you're a customer in the UK, you might hold as many dollars with us as you hold pounds, just like if you're a customer in the US. But overall, it means you've got a fairly even mix across pounds, euros, and dollars. A lot of people try and help understand what is the rate that we're earning on these. Half of that is still held in cash in banks, so in high credit quality banks who we partner with to help us run our infrastructure. But then another half of it's held in government bonds or in money market funds, which are highly liquid. Our job is to keep this safe and secure and available for our customers. This means that actually we often ask around what the yield is we see on these balances. And just in September, because obviously rates changed and also shifted our balance mix over this period of time, we're seeing around just over 1% yield on these assets. So you compare that to what the average rates would be. You can see we don't earn interest on all the balances, but we're earning interest on a fair sum of this. So the question is, what are we going to do with that? I think we've been clear and there's no new surprises today, but just to reiterate that. The first thing is many of our customers will have the opportunity to earn interest and we want to be able to pay interest. We're not always able to, but we're looking at ways as to how we can do that. Second is actually our account and the account that people use and value, where they're holding this, can have costs of running that, which we can help cover with some of this interest income rather than necessarily conversion fees or other ways. So some of this interest we'll use to cover the costs of that. And then also where we can invest, we always will, So some of this can help us continue to grow. And then across all these costs, any costs that this would cover are clearly will continue to earn a margin, as we always will and always have done on these costs. The primary is our thesis, and there'll be different answers in different regions, but this is how we're thinking about moving into this. So let's step back. So overall income growing around 63% year over year, 416 million, supported by the early stages of that interest income that started to come through in this half year. So these numbers you're familiar with, let's just go through some of the margin stats then. So we generated a 63% gross profit margin across the half year, which means a $262 million of gross profit. And we've always said and been clear on what do we do? What is our business model or our investing model? You know that we invest for growth. So that's the gross profit generated from our product. And we reinvest a bunch of that into marketing, which helps us bring more customers, brings more volume. We invest in product and the features. We've given you examples of sustaining that development in our infrastructure and our products, which drives volume. And then also we will, where we can, lower price where that's possible, or also we'll maintain our price or increase our price in order to make sure we can sustain this flywheel. So today I just wanted to give you a bit more color as to what some of this balance might look like, because we've always talked around our expenses. If you look at that gross profit, that 262 million, where's it go? So I've kind of given a split here of three. A lot of that, you know, you can see, At least a third of that is going into flows to EBITDA, adjusted EBITDA. Actually, a third of that, the other two thirds, is split roughly between covering the cost of running the company. Think about our operational teams of everything from customer services, verifying customers, but also cost of running finance or our other corporate functions and the offices we're sitting in. Versus on the other side, actually, a third of that is investing in our growth in the future. And that's not really changed over time. So much so that actually, if you think about, it's kind of an interesting fact here, but if you look at the cumulative amounts of money that we've spent in product development since the very early days, the first engineer. They spent around 350 million pounds. That's all time spent on this. Then if you look at the 525 is twice the current, it's not a guidance to the years. It's twice the last six months gross profit. Actually, it's quite a nice return. You think about spending one period and what do you get back in the next period? And the reason I show you this is to highlight the discipline that we have. When you see a third of that gross profit going into investment and growth, those principles really haven't changed around, let's invest in things that our customers want and need that will help them move more volume. It's a pretty healthy return on investment that we see on this spending. It gives us huge confidence to keep investing in that third, which when you look at that pie chart, it's around where we're investing. That also includes marketing spend. So actually, if you look at that, just media spend alone, we've grown around 40%. And we've always said we have less than nine months payback on that. And that is literally the return on that media spend relative to the customers that it brings in. Actually, if you look at the blend across all of our customers, it's radically lower at three months. But actually, if you look at the returns across the period, I know there's a lot of pressure on returns on marketing pressures on our media, but actually our returns got better over the last six months. Actually, we've seen payback improve consistently over the last year. And let's just remember that actually 70% of our customers that join us do so without this media spot. They're coming through word of mouth. They're coming off the back of that cumulative investment of 350 million pounds in our product, which is only getting bigger and appropriately so given the opportunity that we've got ahead of us. If you look at total expenses, this is the full stack of expenses. This is growing just over 40% year over year. Clearly, we're investing heavily in our teams and employee benefit expenses, investing in marketing, and then some other things in there as well. And we did have some one-offs in this time last year relating to the listing. And transparently, if you look at the expenses that sit between gross profit and EBITDA, there's growing around 57%. This shows that the slightly slower growth in some of the costs that sit below that, whether it's the amortization or the or the stock-based comp charges. So 40% expense growth relative to the 60% income growth. So at EBITDA, we said that we're investing. We're generating a very healthy gross profit. We're investing heavily in our future growth and maintaining an EBITDA at or above 20%, and that's 22% for the half year up on the 20% we saw in the last period. So this is very, very, very intentional and reflects the balance of growth and profitability that we're managing of a highly profitable business growing really fast. It's also cash generated. So if you look at the strict definition we've got of cash flow, we generated 78 million pounds of free cash flow. But if you adjust for some of the working capital adjustments, we always have working capital movements in and out of collateral, for example, for these periods. Actually, this underlying free cash flow is really growing in line with the income and the profits that we're generating. So it's a very, very healthy cash dynamics in the business today. The bottom line profitable, like a lot of companies will use EBITDA, we do, it's a good comparison and we think it's helpful for our business. But just to give you the confidence, we see really fast growth in the bottom line profit before tax that we're seeing, all the 50 million pounds for the period. So to summarize, we're moving a lot of money now, moving more than 50 billion pounds in six months. And that's still growing really fast, like the incremental billions of we're adding year over year is significant. That's translating to very healthy income growth, but also from a profitability perspective. Both the gross margin, we're investing an awful lot of money in our future growth and still managing a very healthy 22% EBITDA margin. And that's generating bottom line profits and cash generation. So pretty excited now to think about the context for this. We've got very healthy business and very resilient and continuing to invest in the future. Thanks very much. So I'm going to hand back to – so one more thing. No change in guidance. We upgraded our guidance, if you remember, in the last set of results. Still continuing 55% to 60% income growth for the year and no change to our guide on revenue or adjusted EBITDA. Comments?