Wise plc

We'll get started. So thanks for joining everybody who's been able to make it here into offices and also those who are on Zoom. Welcome to a half yearly presentation. My name is Harsh. I've been with Wise for about eight and a half years. And in that time, I've been CTO and also I'm currently interim CEO, filling in while Krista is taking a well-deserved break. He'll be back in a few weeks. I'm also going to be joined by Matt, who you all know. He's going to talk through the financials and the numbers later in the presentation. And also I have Martin, who you all probably know. He's going to help us stay on time and manage QMA. So this is our mission, Money Without Borders. This is why I and 5,000 other wisers show up to work every day to help people and businesses manage their finances across the globe in a better way. And the problem is pretty big. It's 2 trillion pounds that move cross-border every year. for consumers and other than 9 trillion pounds that moves cross border for businesses, small and medium businesses every year. And when we talk to our customers, people tell us that accessing the finances and moving money around borders is pretty tough to do. It's slow, inconvenient and expensive. But beyond that, Overall, the international banking proposition really doesn't exist at a global scale such that you can manage your lives in different countries and different currencies. And finally, the underlying technology that has been built and the network that has been built to build products on top of to solve the cross-border problem is not really that great. It hasn't changed in decades. And hence, what we're doing about it is building the wise account. which allows consumers to move funds across borders very well and manage their finances. Wise Business, which allows businesses to embed these cross-border money movement and managing their finances into their workflows, and also building the network that manages the world's money. And we've been at it for about 13 years, and we're pretty proud of how far we've come, but we're still pretty small. We've taken about 5% of the personal market share, And we're still less than 1% of the SMB market share. So we're pretty proud how far we've come. We still have a long, long way to go. But we are building this in a fast and increasingly profitable manner. And that's how we continue to build Wise. If you look at our active customers over the last quarter, 7.2 million active customers on our platform. And also the volume over the last six months, about 57 billion pounds moved. This is more than double from three years ago. And we continue to be increasingly profitable with tripling our income and quadrupling our adjusted EBITDA. So this is a framework that we introduced in June when we did the yearly results with Chris, Tommy, and Matt. We think about WISE as a generational company. And there are four big things in building this company. First, we have a massive problem. And the problem is big for people and businesses. Second, We continue to build wise, as we've built before, in a fast growth but a profitable manner. And Matt's going to come on and talk about that. But what we believe really makes us generational is the way we invest in our customers and our products. So we believe in word-of-mouth-led growth. And we do that by building an amazing product that leads to evangelical customers and also building a network, a new way to move money and manage your finances across the world, on top of which we build these experiences for our customers. So I'm going to talk about the middle two more. Evangelical customers. So we invest in these three products. The Wise account for consumers, allowing you to manage your finances across the world. Wise business for businesses, allowing you to embed into your workflow how to move and manage your finances across the world and use international business banking proposition. And finally, Wise platform that allows non-banks and big banks who have workflows which have cross-border needs to embed Wwise into the platform. So what have we done in the last six months? For the account, we've rolled out more features in more places. So you roll out the assets product across a lot more European countries. Today, our assets under custody in this product is 1.7 billion pounds. We've also launched a new product for expats in China. If you live in China as an expat, the current products are pretty poor to enable you to move money out of China. So we've started that journey there. We've also removed charges that we used to have before in Australia for holding balances. Given we now hold balance for Australian customers, we had some interest there. So we are giving back and reducing the charges. And finally, we allow you to now send money to businesses in Brazil. These are some of the highlights. You should look at our mission update that we do regularly on a quarterly basis if you want to go deeper into more launches and releases we've done. But flushing out the wise account leads to this kind of adoption. 44% of our customers on the consumer side are now wise account customers. To give you some context, last year about a third of them were wise account customers. And then businesses, 58% are now wise account customers. And I'll give you some color on this. We've noticed that if you're a Wise account customer versus just a transfer or a send customer, you are 3x more likely to transact on Wise. And as they continue to use the features and the products that we build, it leads to our customers being more evangelical to their friends and family about Wise. 67% of our customers and new customers joining are coming from word of mouth, which leads to us having this insane growth around word-of-mouth-led growth versus spending a lot more on marketing. And these evangelical customers not only experience WISE from our own apps, but they also experience WISE from different experiences that are embedded into their own platforms, whether it's banks and non-banks. So this is the WISE platform product that we've built. And we have a diverse set of partners now across the globe, across all geographies, as you can see on the map. Actually, I'll give you one more thing. Today, we're having our Wise Connect conference in Singapore, which is an enterprise conference for banks to come and see how they learn about the Wise platform. And we did one of these in London in May, which is a pretty big success. So over the last six months, we have added more partners. We have now more than 70 partners connected to Wise, to the Wise platform product. To call out a few here... Blue Vine is another business neobank in the U.S. that has been added. So we basically have now covered most of the business banking proposition, neobanking proposition in the U.S. They're all powering the cross-currency through WISE. We've also added new partners for new use cases like a multi-currency account usage and card issuance with Parpera and ProSpend. And then looking at non-financial services companies, Agoda was added where they're a travel platform very well known in Asia. They're using us for some of the cross-currency needs. So that's overall about imagining customers and how and where they use Wwise and how they interact with Wwise. The second part is the network that we are building. I fundamentally believe that this is the biggest differentiator in the longer run for Wwise, and this is the competitive mode we are building. So our infrastructure is what enables fast and low-cost payments. We are significantly faster on payment speeds if you compare us to banks, but also non-banks who are providing a similar service. 60% of transfers now unwise are instant, which means it goes from the source account to the destination in less than 20 seconds. But I'm also very, very proud of the numbers beyond the instant number. 81% of the transfers make it to the destination within one hour and 95% within a day. Compare that to a traditional setup where most transfers still take two to four days to show up on the other side. Talking about price, We are significantly cheaper in low cost than banks. 0.67% is our average price right now. Compare that to 3% to 4% for most banks in most markets. And in some markets, it's even higher. And it is this infrastructure that is getting increasingly difficult to replicate. So those who have heard us talk about this before, we think about our infrastructure in four parts. There's the expansions and the regulatory aspect and how we operate in every country and how we do licensing. and manage those relationships. And there's also the technology and operational aspect of how we service our customers and build our product. So I'm going to really quickly cover on both these what we've done in the last six months. So on the licensing and connectivity, we fundamentally believe in connecting directly to more and more payment systems. Direct connectivity gives us two things. It gives us those instant speeds that our customers are wowed by and really love and what makes them evangelical. And also it reduces costs drastically by removing partners, which allows us to then have a lot more leverage on volume and the scale that we are operating at. In the last six months, we have now directly integrated into Australia's payment system. So we are now the first non-bank in Australia to have direct connection to NPP, which is Australian payment system. This allows us to provide cheaper and faster payments to Australians, but also it gives us complete independence in that market going forward for Wise to operate. Where we don't have direct connections, we continue to build on a network of partners. We add redundancy in our network by having multiple partners for all the products we have in major markets. And one of the examples in this one is how in the U.S. we were able to recently shift from one partner to the other very quickly when we wanted to provide a different set of services for our customers. So Along with that, we've also been investing a lot into how we allow our partners outside WISE, say the WISE platform partners to connect to the WISE infrastructure. And some of you may have heard about the announcement we did around Swift Correspondence Services with our partnership with Swift. This basically allows banks who want to connect to the WISE infrastructure to not have to do a very heavy lift API integration, but actually make a config change and quickly make WISE their correspondent. So this allows them to then send instructions to us to enable the cross currency movements. On our operational side of stuff, we are the biggest engineering team in the world now, we believe, to be working on this problem. Over 800 engineers are focused singularly on solving the cross-border problem. Along with that, we have over 1300 operational agents who are helping our customers work through when the challenges come up or make sure that they can continue to provide a great service for our customers. Also, the global product that we have built and the data that we collect from all these customers transacting across the world allows us to build very sophisticated machine learning models to help us continue to work on fighting financial crime and also increase payment speeds such that we can continue to build a great product for our customers. I'll give you one example on this one. So as things change and the macro environment continues to change and regulatory environments change, I believe we are able to adapt and iterate faster given how much we can automate the work around servicing and operations that continue to build these machine learning models, whether it's how the sanctions routines are changing, when things change in the macro environment, or whether there's new regulations that are coming in. So this allows us to continue to adapt without throwing too many people at the problem as compared to banks. So, Overall, I want to summarize what are we building here. The problem we're working on, cross currency, money movement, and managing finances across the world, the market's very big, and we're still a small part of the overall market. And we're building this company in a fast growing and profitable way, which I'm going to ask Matt to come on and talk about soon. But reminding you, the reason why we grow and continue to grow in this way is because we build products that are really resonating with our customers, 7.2 million active in the last quarter, and continue to grow that base by word-of-mouth-led growth. And all of this is powered by the longer-term investment we're making into building one of the world's best infrastructure to manage your finances across the world. With that, give it to Matt.

Thanks, Ash. Hey, everyone. Nice to see you all. So let me talk you through the results I always... I always think that's what we're here for every six months, some of us. So some of this you've seen already, but it's worth just pausing on. You've seen in our quarterlies how we continue to compound our customer base at around 30% year over year. And that's driving a lot of growth, but also profitability in the company. It's in volumes. That's driving our volumes. It's driving our customer balances. And it's also driving our revenue and then our income. But also what's news today, Here's the level of profitability that we see in the business. We generated £241 million of EBITDA in the period. That's a 37% EBITDA margin and some 2.6 times what we saw this time last year. Let me talk about what's driving each of these and why. It's around active customer growth, as we said a few months ago. Both people and businesses continue to compound that and grow year on year at around 30% year over year. That's actually what's happening underneath this, which is quite interesting. The increasing share of these customers are using multiple features of the accounts. So they're not just sending money, but they're doing more things, as we've said. And actually, so therefore, the number of customers that are using multiple features is growing even faster than the active base. And this is really important because this is fundamentally what's driving the financial performance of the company and will continue to do so. And there's three things in there that we need to think about. To what extent is this active customer base growing cross-border volumes? And we've seen that grow at around 12% year over year. So that's active customers driving this, and that drives our cross-revenue. But there's also two others which are really important. We have this other revenue line, which is predominantly card spend. So if those customers in the audience, you'll know you'll be able to spend on your card. So that drives interchange income and other fee income. And that's growing 90% year over year. It continues to grow really strongly as more and more customers use multiple features and use the card. And that's contributing significantly to our revenue growth. And then finally, customers are trusting us more and more as they use our account to hold balances with us. And this is in addition to the 1.7 billion that we now hold in the assets product. And that's going 33%. And with a different interest rate environment, that's driving a significant amount of interest income into our business today. So let's go through each of these. Volumes actually have compounded broadly in line with customer growth over the Over the longer term, you can see 34% CAGR over the last three years. In the last year, they've grown 12%, partly because we've lapped a very strong VPC a year and two years ago. But also we've seen there's no change in the trend is what we talked about in the last few quarters as to what's happened to VPC. We've seen that reduce over time. But still, this active customer growth is really what's driving volume growth. Then the take rate, and we define take rate as all our revenue divided through by this volume growth. has actually grown. So on cross take rate, as we've seen, we're trying to put downward pressure in the market on prices. Actually, the cross take rate stayed relatively stable. But actually, the contribution to take rate of this interchange income and other account features really driven this overall take rate up to almost 0.9% in the last quarter. And this is really driving revenue growth. Revenue is through 25% year over year in the period. Underpinned by the growth in customer base, underpinned by the volume and the trend on take rate, but also really kind of powered by the dynamics that we're seeing of adoption of the WISE account across people and businesses. And actually, this is pretty, we talk globally, we think about ourselves as a global company, but actually when you disaggregate this into the regions, you can see here that I think I've got some investors who've been here for five or six years in the audience, like it's a very different picture now, actually. Only 20% of our revenue is from customers based in the UK, actually 80% distribute around the world. And this is an incredibly diverse global customer base and company now. And actually, our growth is really being driven by all of these regions as well, which shows us that this problem really resonates everywhere we go around the world. And we're making great progress in solving it in many jurisdictions. So moving on to income, these customers, our customers are holding more and more balances with us. So this is over 30% balance growth, but this excludes the balances that customers are holding in our assets products. And over the period, we've seen changes to the interest rate environment. It's not been as stark over this last period as we saw before, somewhat stabilized, as we know. But we saw gross yields on our balances we earned of around 3.7%. What we shared before, we shared in our last results, like how do we manage our business relating to this interest income? We talked around how we wanted to share 80% of some of this interest income back with our customers. We paid our customers 50 million, 53 million pounds in the last half year. but that's only 35% of this interest income over this 1% that we keep for ourselves. So we've made progress, but it's not at the 80%. So we have a lot more net interest income than we aspired to in this framework. So you can see this come through in our overall income. Income grew 58%. As you know, this is not news for you over the period. Obviously, underpinned by this customer growth, and those multiple drivers, but also interest having an impact on that versus our revenue growth. So what happens? How does that come through to profitability? So let's start with gross profit. So we had a gross profit margin of 75% for the half year and almost £490 million of gross profit. There was a couple of things here. Yes, this increased level of net interest income would have boosted the gross profit margin, but also we saw lower costs relating to FX during the period. So that's when we make gains or losses on FX. We had a very good or lean and successful period, if you like, on this. And we also saw some scale over our operating costs. Some of these hopefully will endure, but some of these FX costs can be volatile and cyclical through the period. But fundamentally, a very healthy gross profit margin for the first half of the year. So this gross profit margin is what we use, and the gross profit is what we use to invest in our teams. And ultimately, as harsh... funds harsh, and all of these teams in building this network for the future. Our OPEX operating expenses grew almost 50% year over year, but that growth was largely driven by the hiring we did in the previous period rather than the hiring we've done in this period, if that makes sense. So actually, the period-on-period growth between the second half of last year and the first half of this year, actually, as you can see here, was only 6%. We'll continue to invest in our teams, whether it's in our product engineering teams – or into our operational teams to make sure we kind of keep up with the demand and the requirements we have around the world. But fundamentally, this shows that we do make sure that we keep these costs under control and keep an eye on scaling the business relative to how we're growing the overall customer base. But this all led to a much higher EBITDA. So we had 241 million of EBITDA, which was a 37% EBITDA margin. So fundamentally, you can see that the profit potential in the business is clear. The question is, why is this? As we shared in June, we shared this framework. We tried to lay out clearly how we're managing this new dynamic of interest income into our business. And broadly, I won't go into detail, but three things. First is, we'd use the first percentage point, only the first percentage point of this interest income to make sure we hit our at or above 20% EBITDA guidance. of the remaining interest, we'd aspire to share up to 80% of that back with our customers, which means that 20% of that would flow through to EBITDA. So that means we're not going to become dependent on interest income. And then structurally, as we see higher interest rates, we'll see higher profit margins. So what did we see? So let's go back to this 37%. This 37%, how does that compare to this at or above 20? Well, if we'd have managed to return 80% of the interest to our customers, and we remember, as I said, we returned 35%, that 37% would have been a 29%, almost a 30% EBITDA margin for the period. And then actually, if you just considered interest rates only at 1%, and we said we'll only use 1% in order to have a 20% EBITDA margin, we'd have seen a 25% EBITDA margin in the quarter. And what does this tell you? One is that you can see here that Roughly four-point contribution to EBITDA of a higher rate environment, but also this 25% shows you an underlying very healthy EBITDA margin relative to what we've guided. So fundamentals of lower costs of goods sold, some scaling on OPEX, but also just good fundamental underlying profitability in the business. And then this flows straight through. Importantly, yes, we have adjusted EBITDA, but we have bottom-line profits and EPS. Almost 200 million in profit before tax. and a significant year-on-year change, a total step change in the level of earnings per share. So what does this mean going forwards? Well, there's no change really to our guidance. As you recall, we recently upgraded our income guidance for the full year. You saw that 33% to 38%, and that's upgraded five points and really fundamentally underpinned by the strength we've seen going into the start of the year. And then our medium-term guidance is unchanged, which, as I recall, is – an income growth CAGR of above 20%. And what gives us confidence here is really supported by the opportunity in front of us, the rate at which we're compounding our customer base, and the products that those customers are using on what. And our adjusted EBITDA margin, no change to the guidance there of after above 20%. And as you know, that's fundamentally got a tailwind in a slightly higher – in a higher rate environment. Structurally, the way our products are working means that – We'll only become dependent on 1% of interest, but also with a higher interest rate, you'd see a higher profit margin, as we're seeing already flow through. So that's actually it for me. Remember, there's a couple of things. One is we've got a massive market opportunity here, and very exciting. We've said this for many years, and nothing's changing. And we're building a really fast, profitable business. But if you look under the skin and really try and understand what we're building here and spending more time with our teams, Hopefully you'll understand what special is. We really do build a product that customers love. And that's only able because we're building this network for the world's money, which is all of these financial results are just a proof point that we can continue to invest in that over the last 10 years and over the next 10. Right. That's all for me. So let's do some Q&A. So Martin's got the power with Mike.

Yeah. Thank you, Harsh. And thank you, Matt. We'll open up to Q&A. We've got attendees in the room and we have attendees online. We'll start by taking Q&A in the room. So if you could raise your hands. You won't need a mic. The ceiling mic will pick you up. But if you could just say your name and the company you're from and we'll take your questions through the room and then we'll move on to Q&A online. Thank you.

Thank you. It's Mo from Goldman. Two questions. One for Matt. Just wanted to understand. some of the moving parts within the VPC, because obviously you've been onboarding a lot faster pace of new customers, which will take time to kind of ramp up. Secondly, there's root mix. And then I think there's obviously your comment around the macro. So just curious to get your perspective on the comment in the release around the VPC evolution beyond 2024 and how much of this sort of maybe some prudence versus underlying kind of mixed effects. And then second one for Harsh, you sort of touched on platforms. Can you remind us kind of how big? Thank you. Can you remind us how big platforms are today and the kind of aspiration of how big this can become as you scale? And I know we had a couple of larger banks, perhaps more in Asia, but where are the opportunities you see both in more developed markets from banks versus SaaS companies and others? Thank you.

Thanks, both. We've just given my mic as you hit, so I might just repeat the questions in case it didn't come out on the live stream. So one is, touch briefly on the VPC dynamics of now and future, and the second, harsh on platform. So on VPC, nothing's really changed here as to what we've talked about. So just as a recap, the primary driver we've seen impacting on VPC is we're seeing very strong growth and healthy growth in the number of customers that are moving less than 10,000 in the period. and actually slower growth on those moving more, larger amounts. And when we look at that, that's people moving less money for property and investments. And that trend really hasn't changed over the last year since we've been talking about this. And in the current environment, we're not inclined to call when that may change. But fundamentally, we're building a business that doesn't need it to revert. We're profitable. We're healthy. We're focused on what's driving growth. customer growth and a franchise strong around the world that, you know, will build the best product for people to do this over time. There are other factors on this, of course, like we will see faster growth. You've seen great success in places like Brazil where we see a strong customer growth. But this is not a primary driver of the change in the trend. really, as we see a really strong growth in this customer base that's moving, which is still an awful lot of money, I think that's 10,000 pounds in a period, essentially you see a mixed shift in the VPC. So until they start growing at the same rate again, we're going to see this impact on VPC, if that makes sense.

On platform, so it's still a very small part of our business, right? This is a very long game. If you think about how long it takes for a large bank to change their major integrations. This is not months or weeks or months. These are like years, right? And what we've learned so far is like the proof in the pudding is that we've started to see some banks in Asia, as you referenced, who are large banks who are now looking to integrate and they have been able to swap out their existing connections with Vice. So for us, this is a long-term game. We fundamentally believe that The network we are building is helpful for not only people using our apps, but everywhere else where they have this need for moving money across borders. And we're going to continue to invest in it. But I would say this is still years, not months or, you know, a few years in the making. And, yeah, we are having conversation with banks and large banks and institutions everywhere, but they all have their own cadence. So we look at every market. As I said, it's a pretty globally distributed business now.

Okay. Let me – Let me play kingmaker here on the questions. Okay, that's right, James. Brilliant.

Thank you very much. It's James Goodman from Barclays. I wondered first if we could talk a little bit more about the other revenue. I mean, it's becoming a really significant driver of the business. You've given a few incremental stats today, 90% card spend growth. I wondered if you could talk a bit more about how much of that is domestic spend on those cards versus cross-border that we see within the volume, because we can start to then think about, well, the interchange revenue is basically what you're deriving there. If we think about a take rate from an interchange perspective, you're driving very significant volume actually over the card now, even in comparison to the cross-border business. So a few extra data points there would be helpful. And then the second question was just around onboarding business customers in the UK and Europe. There's been a little bit of press around some capacity constraints. I mean, on the one side, very good demand, but on the other, is there any issue in terms of onboarding? And if so, when will that be resolved? Thank you.

Great. So I'll do one, you do two. Yeah, very cool. So other revenues. She's got a terrible name, this bucket. So we need to – but what this includes is predominantly interchange income, but also would include any fees that you as a customer may get charged making domestic payments. Or if you're a business, you might pay an account fee up front. Or if you're a personal customer, you might pay a fee for your card, for example. But the significant driver of this growth going forward is really the interchange income. And remember, actually, in the last year or two, we've stopped charging customers for domestic payments on this unit as well. So that's a dynamic in the growth rate here. Your question is really around then how much spend do we see in domestic? We see both spend internationally and domestically, significant amount of domestic spend. We don't split those out or the quantum, but we have said actually all of our customers spend on cards domestically, but they also move money domestically on the accounts. And that's a significant number like... And we've said before, that's at least as big as the volume that customers are moving on whilst across border. But you're right, they're spending a significant amount. It's growing fast. People are using the card way more frequently. And it is fundamentally driving engagement. It's driving usage. And then it's also driving income or revenue and bottom line. Sure, James, can you?

I have a question on... Yeah, on businesses, on onboarding. So, yeah, I mean, as I said, one of the key things that we care about is building a product experience that people are really wowed by, right? And that means having a tight SLA on being able to serve them. So when we... And sometimes these SLAs will change, like given the macro environment, sometimes regulatory changes are there, you need to do more due diligence on certain kinds of onboarding. So... What we've seen is that sometimes when we try to predict the demand that's going to come, it may be, we may be a little bit off in the prediction. And when that happens, we have a few levers to pull. One of them is if we see that as SLAs will change too much, we'd rather stop onboarding new customers so that our current customers still get a good experience versus just having people sit in queue and wait, because that's what leads to having a not evangelical product. And we don't take this lightly, so we're working very hard to get this back on. UK onboarding is back on already, but Europe is still off, and we're working hard to bring this back on. But that's basically the current standard.

Hey, Justin Forsyth, UBS. Good morning, Harsh, Matt. Congrats on the nice quarter. A couple of questions. The predominant one here first, Harsh, I wanted to ask a little bit about Wise Correspondent or the SWIFT partnership that you announced at CYBOSS this year. I mean, clearly this could be a massive opportunity going forward, $150 trillion in flows annually going over SWIFT. I guess the first part of this is which banks are you targeting with this, i.e., understand the idea of hitting banks that maybe are not able or don't want to do an integration from a technical basis because of all the hard work they put into building their systems around SWIFT. I mean, maybe you can just talk about what is required with the integration that WISE has built from a technical integration perspective. Clearly not much, but exactly what is it and what types of banks are you targeting? Is it the large banks that have built that infrastructure out or the smaller ones, which maybe would have already been a use case under WISE platform? And then where does that show up? in the P and L and like, what is the revenue model? And then I guess Matt one for you just on the hiring cadence, clearly you mentioned it slowed down quite a bit. I guess, are you expecting that to ramp going forward and how can we think of that on a kind of more normalized basis? Thank you.

Yeah. And I can probably do the P and L bit.

Cool. All right. So yeah, I mean, we're very excited over what we've built. It's been quite a bit of like, interesting, different way to think about how to build this product and get it to our customers. You are right. A lot of the traditional larger banks, they're already connected to Swift and they partner with Swift. And this allows us to then become a viable option for them to move their flows to us if they want to use the network. And actually, this is not... designed in a vacuum. It was designed by the feedback that we got when we were talking to these banks, where they said, we love what you're doing. We see the infrastructure as powerful. But for us to do this heavy lift and shift on an API integration, which smaller banks can move faster on, it's not really feasible because it's a lot of build for us. And this was one way for them to start testing and using the network, even for maybe some routes versus moving all their flows. But this is basically, they know, like, Banks know how to change their correspondent, a SWIFT correspondent. That's very easy for them to do. So we are targeting larger banks to this and giving them one more avenue to try out the WISE platform. And then some of them may then see the value of that and do a full integration. Some of them may stay on this. And to answer your question, for smaller banks, neo-banks, or those who don't have an offering, this usually is not the offering that they would use. They probably would still do an API integration. So that's how we think about it.

Yeah, and then if this bank on board – people. They turn up in our personal number or businesses the same. Yeah, it should be. So the second question is on headcount growth. So we hired a lot of people last year, both in our product and our finance organization and other teams, but also from a number of people in our servicing teams. And that's grown slower in the last six months as we maybe somewhat consolidated. Um, but I think we should signal that we're still hiring. You'll still see lots of open roles, but we're playing pretty surgical and thoughtful around where we're hiring and where we're investing. and, uh, and as you, as you'd hope and expect as a company, we've always been profitable and disciplined around this. Uh, but I would expect us to continue to grow, especially, you know, we spoke about onboarding, you know, we need to continue to scale those teams, uh, with the right level of quality, uh, to make sure that we can, uh, We can provide that capacity over time. Thanks for the questions. Kim is the tallest hand.

Thank you. I think Kim Bergo from Deutsche Numis had a couple of questions. I think some of them have been answered. The Swift one about what that would mean. So I guess you answer that and VPC as well. Another question, so on dividends and potential dividends, you said you're not going to pay any, but obviously you had, I think, 95% cash conversion over adjusted EBITDA this time, so quite a bit of additional cash. You must have quite a bit now sitting in addition to what you need. So any sort of, what are the thoughts on that? How much, you know, how comfortable are you having that sitting there?

So thanks for the question. I I think to set a couple of bits of context on this first, it's like we've gone as somewhat of a race car from a small startup to a highly cash-generative, profitable public company in a very short period of time. And if you look at the profit before tax chart, not the EBITDA chart, the profit before tax, which is really what's driving this, has really ramped very fast. So this is not a 10-year-old phenomenon. So we're early on this journey into this. We do have a healthy level of reserves, and we started to use those, as you know, we've already started curing the stock-based comp charge. So we started buying stock already. But I think we're quite... And then if you step back on this, you can see that actually, do we have confidence that we're building a really valuable company that's got massive capacity to pay return to shareholders in the medium to long term? Absolutely, yes. Really, we're talking about when will we start now? And I think we're very early. We're still investing heavily in the business. We're still very thoughtful around strategically where are we investing our capital and our time. And we're really focused on that in the short term. And so no news right now on optimizing quarter on quarter on using the return on this cash to shareholders. You can see the investments we're making in product and engineering and marketing, super high return and scaling these and scaling the business with a super strong balance sheet is the right thing to do today and in the current environment with the opportunity ahead.

Great. Thank you. Just one additional, if I may. I remember when you IPO'd, you talked about how SME growth there or how the outlook and the prospect for SME were probably even, I think, if I remember right, sort of outstripping the personnel market. How are you thinking about that? It looks like it hasn't. Probably maybe because personnel has been very strong as well, but How are you thinking about that and what needs to be done to make that even stronger?

Thanks. I can comment on the growth rates and, Harsh, if you've got anything to add on what we're building. So I think you're absolutely right. If you'd have asked me to predict, we're very proud and happy that our personal business has accelerated and given this SMB business a real run for its money over this period of time. Our guide at the direct listing, you know, three years ago now, was not to grow at the rate we've been growing at. So very proud that the personal business continues to grow really, really strongly and healthily. And so has the business business, actually, the small business business. But it's just, you're right around the dynamics of personal. The thesis there has just not in any way changed, though. Like, the Wise account totally resonates. The market opportunity is huge. It's built on this infrastructure. But like, And we have rolled out a bunch of features for these businesses. So there's no change in strategy or thesis around this.

Yeah, I mean, as Matt said, I think the space is still very big. And we haven't even seen somebody suddenly pop up and take more of the market share per se. So I think there is still a lot more room to grow. The thesis still remains the same. And we continue to add features which make the wise business proposition more relevant. So I think it's just a timing thing.

100%. Please.

Nick Anderson at Librem. Could we just kind of, or could you talk a bit more about the tension between kind of price and cost? Because obviously in the first half, costs came in much lower than I think not just our expectations, but your expectations as well. Price, if you look at cross-currency take rate, is still kind of not going down. And obviously the original mission is that heading to zero. And again, you also look at that other side you showed, which almost showed like the normalized, if that's the right word, EBITDA margin will be maybe 25%. So the question is, Are we going to see price come down to get a margin back to 20 percent or just above 20 percent? Or has the wise model fundamentally changed given cross-border payments of what? Only about half of total income now, very roughly. Thank you.

So there's no real change to the thesis and model around cross-border payments. Clearly, our source of income has diversified. We're still still managing to this to the same margin structure. And. You're right to call out – actually, I'm glad I was on this page where we had this underlying margin of 25%. It tells us basically we're really five points ahead of where we expected, and that's down to a few things. There is an element of – so we had a lower cost of goods sold. I talked about currency costs, and you saw a scale half year on half year better, for example, in our credit losses. So we saw an improvement in performance on a bunch of – on a bunch of metrics, and also our OPEX. So we're at a point now where we would look at that normally and say, well, do we have the confidence to reduce prices? Or do we think some of these costs might come back? And we're conservative. So we're very thoughtful on this. So we will, if we believe there is a long-term drop in our unit cost, we'd look at that from a price perspective. But we've also seen some of these costs come back. So What we do see is we're managing to at or above 20%, and you can see that actually we're performing quite well ahead of this. But if we get the confidence that over the long term we've solved FX or we've scaled these costs, we drop prices. That's part of the challenge is we can drop prices instantly, but it takes us a few months to put them back up because we have to give notice periods. So we're very cautious in yo-yoing with our customers.

I would also urge you to look at our mission updates. We have dropped prices in certain routes. So when you look at 0.67, it's actually the blended price. take rate and build price across. But if you look at mission updates, there are many routes we dropped prices on in the last six months.

Exactly right. And then the other is we have invested in our operational teams over the last year. And that's come through. The SLAs have improved quite significantly. And you still see the word of mouth. So we know that actually the lowest cost service is great, but not if the customers are not getting a great service. So we'll continue to strike that balance. And ultimately, net promoter score is a function of price, but also from speed. and the convenience and the ease of use of the product. So we'll always make sure we invest in giving our customers the right service. Thanks, Nick.

Thank you. Gautam Pillai from Peel Hunt. My question is on the infrastructure and the network you're building. And we talked about SIFT, and you also connected into Australia's NPP. Is the product readily available for the customers right now? And also, What does it mean from a bank and partner fee standpoint from a Cox question? Does it lower the Cox? And then to follow up on the EBITDA margin point you just mentioned, so, yes, FX volatility is something which you can't predict, and that will move up Cox up and down. But banks and partner fees are stuff which is probably more in your control as you build the network. So does it mean that the gross margins over time should trend upwards or trend at the same level which you are seeing right now?

I'll answer that second.

Do you want to answer that? Yeah. So – Taking the infrastructure investments. So Australia, we've actually been live for a while. But now what it's done is the product gets better. Now we are the bare metal hitting NPP directly. And the fundamental thing here is we have basically got to the place where the price and the speed in Australia is the best it can be. And also that is we hold our own future in Australia. There's no other things now anymore. We're directly regulated and also we're connected directly. So the product's been available for a while, but now it's a much solid product. For Swift Correspondent Services, yes, we launched it. Now we are getting some inbounds from banks, but it's still early days. So we'll see how those integrations go, but we're pretty excited about it. And then, you know, we continue to invest in the network. Wherever we can, we'll go deeper more and more. And there are a bunch of threads open on this. We just basically parallelized this, and some of them will come over the next few years.

It has a big change on the relevant part of the cost. So part of our COGS are cost of goods sold, our bank fees. And actually it has a total step change, as we saw in the U.K. years ago, in the cost of moving money in and out of the payment system. And that can get passed back to Australian customers as and when that – I mean, they're pretty much live now. So once we move that through the pricing logic. But it's only part of the cost. So that will pass through as a cost reduction and hopefully a price drop for those customers without impacting the gross profit margin. The question then on gross profit margin is, yes, we've seen a higher margin. partly because of which contributed to the higher EBITDA margin, partly because of this effect. So I'd expect some of that to soften back over the cycle. But I still would expect an elevated gross profit margin through the rest of the year. Got one at the back there. Hey. Hey, Ditya.

Hey, morning, Harsh. Matt. Didn't mean to hide in the back here. Just curious, A few questions from my side. So firstly, just going back to your licenses and infrastructure, I think you made some operational changes in the U.S. You mentioned changing a partner. Where are you in the process of getting direct connections to the payment system in the U.S.? How difficult is that? Second, you mentioned, you know, domestic spending on the cards increasing quite a bit. Can you talk about actually what's driving that? Is it SME or businesses versus personal, any specific use cases? And then finally, just given the recent sanctions issue and what you mentioned on onboarding, do you think you're at the right level where you need to be in terms of your agents or your fin crime staff, given the volumes you're seeing on the platform today? And, of course, there's probably some automation you can do. If you could just talk about your thoughts around that as well.

So we had three questions. We were like, where are we with direct connections, particularly in the U.S.? Secondly was... Domestic card. Yeah, what's driving the card spend? And then third, come back to, like, where are we from our capacity? Let me answer the second one, and then maybe you do the – so just on our card spend, what's driving that? It is domestic and personal – domestic and international usage. Domestic is a significant chunk of that, but so is international. Really, it's the primary driver of that. If you look back at that chart, remember, if the share of active customers or the number of active customers that are using multiple features, it's just the swell of more and more customers using a card. rather than the spend on a cart per se increasing. So whilst we continue to see a growth in the active customers and a high proportion of those using the account, this is going to grow. It's a good proxy for that other account, other revenue income growth. What are they doing? Well, kind of what you'd expect people using it is that everyday spend domestically or internationally and similar to what you'd expect for businesses, like nothing really too spiky.

Cool. So on the U.S., yeah, I mean, The regulation in the U.S. is that you have to be a bank to get direct access, so that obviously is not the case for us. So we work with partners. We're also in active conversations and have been for a while with regulators there to see what is the overall regulatory environment and what their conversations there are. What is the charter under which fintechs should be regulated? And with that, would we get access? So we are pushing for that. And some of this is taking the learnings from other markets and also working with the regulators there to see how the value of that creation was helpful in the other markets. So for the foreseeable future, we still have to work with partners there. So hopefully that answers your question. And on FinCrime stuff, so, yeah, I mean, the overall investment in the programs that we have, like we continue to invest more and more. I think the edge we have is given we've built this global infrastructure and global network, we can really apply a lot more technology and machine learning models to help scale our detection of different patterns and also help our agents spend time on the right things versus having a lot of false positives. So we are making the investments. We continue to make more investments. I think the reality is the macro environment also has been changing a lot over the last year, year and a half. So those things, it's not just something that we are dealing with, even the banks and bigger banks are also dealing with, whether it's changes to sanctions regimes and other things. But we are continuing to invest. And as Matt said, even from a servicing perspective, we've added more heads there.

Great. Great. So any more questions?

So we'll now move to, we've got a few Q&A online.

Okay. So Martin, I'll read these out online.

Thanks. Yep. So first question comes from the line of Josh Levin at Autonomous.

Hi, Josh. Hi, good morning. Excuse me. First question. So Bloomberg reported this morning that Wise has spoken to UK regulators about the challenges of returning interest income to UK customers because it's not a bank. Is there any possibility here that U.K. regulators might allow non-banks, such as Wise, to pay interest income directly to customers? Is that a possibility?

It's within the realms of the possible, Josh, but I think with having sympathy and empathy for our regulator, there's a lot of complexity to work through in doing that, and there's good reasons why they wouldn't and hopefully good reasons why they would. So we definitely would – we'd love to reward our customers with interest. But it's a complex issue to work through with our regulators. So I wouldn't predict this is going to change anytime soon. But we'll work with the regulator side by side to try and talk about this over time.

And just one follow-up question on other fee income. I think you mentioned that it's predominantly interchange and the spend volume is at least as big as the cross-border volume. So the take rate on the other fee income is about 20 bps already in the cross-border volume. So my My question is, with interchange caps of 20 to 30 bits in Europe, do we see a slowdown in other fee take rate going forward? I mean, ask differently. If a customer was to use all the non-money transfer products that Wise offers, would that take rate be in the 25 to 30 basis point range?

If all customers would be using. So, I mean, this take rate comes from around 40% of the customers, personal customers that are using the account and around 50% to 60% of the business customers. So clearly if all of our customers use the account, you see a stronger contribution to the take rate from other. Would it be double? If you do the rough maths on that, I think, Josh, that's what you're looking to do. So clearly this take rate comes from only a small proportion of the customers that are using multiple, or 40% to 60% of the customers that are using the multiple. the multiple features on the account.

Thank you.

Thanks, Josh.

Thanks, Josh. The next question comes from Sumit Datta at Newstreet Research.

Hi, good morning. Hi there, guys. Good morning. Thanks very much for the call. Just to go back to the issue of deposit remuneration, Slide 38 I thought was kind of very interesting in terms of the margin profile. Do you mind just giving us a quick update? We just touched on the UK in terms of regulators and problems of returning cash. Could you give a quick update on where we are on the rest of the world? Just in the context of that benefit being paid to depositors actually falling in the first half of the year, just interested, you know, where that picture is around the world. I think we know where we are in the UK. And I guess ultimately, what is a realistic timeframe for you to think about moving towards this 80% target in terms of cash return?

Thanks for the question. So let me try and keep this simple. Think about it as four parts of the world. You've got the UK, Europe, the US, and then kind of everything else. And there are similar proportions. In the UK, we don't return interest, but we do have the assets products. And you can see the take up of that is really healthy. So for customers that really want to earn interest, they can. They can get a return on the assets products. In Europe, we can actually pay cash back to our customers. It's like interest, but it's cash back. In the U.S., we have a product for their dollars. So if you're a U.S.-based customer, you can actually hold your dollars in an account. And we'll look at rolling that out for their pounds and their euros as well soon. That's what we're really working hard on.

Yep.

And then everywhere else in the world, there's a combination of either it's not possible, like places like Australia, or actually the markets are small and we haven't really got to them yet. We've really been focused on what do we do in the U.K., Europe, and in the U.S. So your question is a great one, which is like, well, that sounds hard. Like where's this, you know, as I said, we'd like to get to 80%. We're currently at around 35%. It's like what's the rate at which, because I understand for our modeling the business projections, I need to understand this. It's going to take us time and a long time to get there. to make a lot of progress. We did say that we would consider other things other than just pure interest, but we'll be thoughtful not to just drop prices or not become too dependent on this. So I would predict definitely through the coming quarters some progress, but slower progress on this. I wouldn't expect this to radically shift any time soon.

Yeah, I think the only thing to add to that is, like, we continue to roll out the assets product across the world, and that makes my change. And, like, if customers want returns in an area where they think that they cannot, then they can move their funds over.

Exactly, exactly. And customers are opting in, both in the U.K. You can see the numbers, but similar in the U.S. Like, it's been really popular. So customers that want to earn interest are definitely able to do so, which is great from a relationship and a retention perspective. Thanks for the question. Thank you.

Thanks, Sumit. Next question comes from the line of Hannes Leitner at Jefferies.

Hi, Hannes. Hi. Hi. Good morning, everyone. Thanks for letting me on. I have a couple of questions as well. The first one is on customer growth in the first half. It was, again, very strong. Could you help us on the new onboarded customers share within that? And then I think on geographies, you mentioned already Brazil being strong. Then the second one is just a follow-up on that UK onboarding of new businesses. Can you talk us what caused that influx of new onboarded customers requests? And then how does this compare to last year and then maybe before pandemic? And the last thing is on hiring. It has been, again, strong. Can you maybe give us a little bit of a feeling how you think about hiring and how does this relate to volume growth and to revenue gains?

So let me cover the first one in the mix of new questions. So we haven't split out on a quarterly or half-yearly basis the number of customers that are first users in the quarter or the period versus we did share that we have around 5 million customers or more joining on an annualized basis. So there's a meaningful share still of our growth is coming from, if you think about what's driving our customer growth, it's very solid cohort performance of our existing base. When customers join, they tend to stick around. And then we top that up. We grow with acquiring new customers primarily through word of mouth on top of this. We haven't split out what split of our actives are new versus prior period. But if you think about it purely from an active customer, we have very strong cohort behavior. And then we're obviously growing as a function of bringing more and more customers on board. Sorry, I'm just going to clarify the second question again.

It was on the onboarding in the UK and Europe and what caused that spike. And then also if it's a spike, how did it compare to last year and then maybe pre-pandemic levels?

Yeah, Hannes, so, I mean, I wouldn't want to say that it was a big spike suddenly of, like, businesses rushing to onboard into Wise. I think it's a mixture of things. So one is generally we have to predict every quarter, like how much servicing needs we'll have and staff the teams in that way. So some of the times that prediction can be off. So that was part of it and we are hiring more people. But then the other bit here is also business onboarding generally is much more manual. So if you think about it today, like you as a customer, if you're onboarding into any product, you can pull out your passport ID and do automated verification. But business verification, depending on what kind of business you are, if you are a very structured company, we have to go all the way up to the root ultimate beneficiary owner. That requires a lot of work, right? So when we have to slow down onboarding, we'd rather slow down businesses than consumers because then we could onboard a lot more consumers and still drive growth. So that's the choices we have to make. And eventually it is a bit of like, you know, how we predict our volume going forward and, like, where are the things that we, moving pieces that we have around staffing our teams, and also, you know, what kind of profiles are coming in to onboard into WISE. If more complex business come on, then we might have to, like, do a lot more diligence. But going back to the key point here is we want to keep a certain level of service for those who are onboarding and have a great experience. Hence, we decided to pull the labor on this. And then we're looking to open it up as quickly as we can.

Thanks, Alice.

Thank you. And then the hiring? Yes. So I think I covered this earlier, which is we hired very strongly through the previous financial year. And we've continued hiring through this year. But doing this at, I would say, somewhat consolidation of the hiring we've done in the past, but also mindful that we are still trying to build this capacity, as Haas mentioned, in our operational teams. Now, there's a strong focus on automating, a strong focus on scaling, but also making sure that we – and it's also a strong focus that we don't overinvest and hold too much capacity. So we will continue hiring over the next year, particularly in our operational teams, but it's at a metered rate that kind of, you know, we obviously keep a focus on profitability and customer service. Thank you.

Thanks, Hannes. We have one final question, which I'll read out because it's coming through the chat. Cool. It's from Alex Four at BNP Paribas. Are you able to give a sense of the size of your sales force for WISE platform and how that's grown and how that might grow over the future?

Offline, maybe we can return to that. It's an order of magnitude. It's grown, definitely, and we've – We've definitely grown that in multiple jurisdictions. It's pretty cool. So just to hijack the question a little bit, if I may, it's pretty cool that we ran the first banking conference in Shoreditch six to nine months ago. Also, we branded it with Wise Connect. So we had a lot of the world's banks or the cash managers, transaction banking folks come to London and talk about Wise platform products and their challenges. We're doing the same this week in Singapore. And the reason I say this is Yes, we've grown the sales team from a few to many tens of people. But we've got the caliber in the teams now that's really driving progress and engagement with newer banks, tech firms, but also larger banks, not just in the U.K., not in Europe, but in Singapore, all across Asia Pacific, where you can see we've made great progress in onboarding established banks, and obviously also in the U.S. And on the other side of the world, in Australia, Harsh's slide earlier, So you can get back with the number. But the key thing is we're scaling it at a rate that with any product, you need to grow the sales team at the rate that the product's ready as well. And there's always this – it's easy to get that wrong, but we've been very thoughtful in scaling it at the right pace.

We have no more questions.

That's great. Thank you all for coming. It's a real honor to have people turn up, actually. And thanks to the teams as well in Wise who've – We're just the last few yards of the mile here. So thanks, everyone, directly and indirectly, who's been driving these results. It's a phenomenal achievement. Thank you very much.

Thank you.