Wise plc

Welcome WISE and welcome to our Q1 FY27 results call. I'm Sarah Lewandowski, Director of Owner Relations, and I'm joined by our CFO, Emmanuel Thomassin. Emmanuel is going to run through our results before giving you the chance to ask questions. Before we start, we have a reminder that we'll be making forward-looking statements today, including statements regarding WISE's future performance. These statements are not guarantees and can involve risks and uncertainties and other factors that may cause actual results to differ Please refer to our SEC filings for more information on these risk factors All forward-looking statements made in this call are based on current expectations, assumptions, estimates, and beliefs, and we undertake no obligation to update any forward-looking statement except as required by law. And with that, I'll now hand over to Emmanuel.

Hello, everyone. Thank you for joining us for Q1 results call. I am pleased to present our financial results for the first quarter of the financial year 2027. We start the year with continued growth in customers and volumes. Today, I am going to take you through first, our financial highlights in the quarter, second, the drivers of our revenue growth, third, our approach to pricing, and lastly, our corporate guidance for the year before handing over for Q&A. but now starting with our financial highlights for Q1 2027. During the quarter, we continue to see significant growth in our performance metrics as our customers accelerate the usage of wires for more and not only for cross-border transactions but also for everyday needs. Our active customers base increased by 21% year-on-year to almost 12 million. Our course brought a volume increase by 26% year-on-year to $69 billion with a especially strong growth in Wise business of 39% year-on-year. Customer holdings grew by 31% year-on-year, totaling $31 billion including $10 billion held through Wise assets. I will now take you through what this means for revenue growth in the quarter. In Q1, we generated $350 million in cross-border revenue from customers sending or converting currency. This represents a growth of 22% year-on-year. This increase is a little lower than the 26% growth in volume, reflecting a reduction of the average take rate from 52 basis points in Q1 26 to 50 basis points in Q1 27. We also generate $191 million in card and other revenues from customers using the Wires card abroad and at home.

We're also investing in our assets products and additional customer activities such as domestic transactions.

This represents a year-on-year increase of 38%, with an increase mainly due to card revenue, driven by the rise in business card spending in North America and growing personal card adoption in the US and APAC. Taking together, transaction revenue total for $541 million, representing a year-on-year growth of 27%. As highlighted in our full year results just a few weeks ago, customers are also trusting Wise more, and more with their money. At the end of June 26, customers held $31 billion on the Wise account, up 24% compared to the previous year. As we invested these funds in liquid instruments, we generated $225 million in interest income during the quarter, up 15% year-on-year. Growth in customer balance didn't fully translate to interest income growth as we saw a reduction in gross yield from 3.3% in Q1 26 to 2.9% in Q1 2027 as a consequence of the central bank decisions during 2026. So I just covered different layers of our customer activities, including sending and converting money and growing with WiseAsset, but also holding balance with us. Together with revenue from using the WiseCard and other revenue streams, including the fees from assets, these drive our net revenue growth. In Q1, we delivered $714 million in net revenue, up 25% year-on-year. With an increasingly diversified revenue base, with 51% of net revenue being driven by non-cross-border activities this quarter. Moving to a reminder of our investment framework. Overall, we believe in driving growth through continuous investment. Our investment framework is clear evidence of this. And by targeting a median term 15 to 20% income before tax margins, assuming we are able to pay our target interest income back to the customers, we are able to invest in our growth and into our pricing. This, in exchange, drives more scale and operational efficiencies, providing us with additional margin for capacity for reinvestment. With our investment framework alongside our direct investments in the business, we seek to invest into sustainable reductions in our prices. We do this always in a position of strength, internationally. This remains a long-term goal, driving down prices for customers while building a sustainable profitable business. In our full year 26 results, I gave details on how we expect to reduce the take rate this year. We expect to continue sharing efficiency with customers as we generate extra capacity for investments. This quarter, the take rate reduced to 50 basis points, down from 51 basis points last quarter and down from 52 basis points a year ago. As I said a few weeks ago, for 2027, and depending on the additional capacity that we can generate, we expect this to be reflected in a reduction of one to two basis points in each of the following quarters. Our investments into pricing are a core feature of our business model, which supports the long-term sustainability of our business. Finally, looking ahead, we expect to see a continuing A continuing trend of rapid growth, and we'll continue to invest to achieve this. For this year, we continue to expect net revenue growth to be around the middle of a 15-20% range on the custom currency basis. Due to the phasing of our investments into pricing, we expect this growth to be more pronounced in the first half of the year. We have seen this in Q1 with growth of 25% in net revenue year on year. And we also expect that the scheduling of our investments will drive a comparable trend in our income before tax margin. While we expect full year margins to be around the high end of the 20-25% range, we expect this to be front half weighted, delivering results slightly above this target in H1. Well, and now let's move to the Q&A session.

If you would like to ask a question, please raise your hand in the Zoom webinar. And our question is from Mohamed Mawala from Goldman Sachs. Can you hear us, Mo?

Ayodhya Geyan Yogi

Hi, can you hear me, Sarah and Emmanuel?

Hi, can you hear me? Yes.

Yes, I can hear you. Can you hear me?

Yes.

Great. Hi, Emmanuel. Hey, Sarah. Thanks for taking the question and well done on the results. I had two, if I may, Emmanuel. The first one, I know you sort of had flagged that you'd be running kind of ahead of your kind of annual guide in the first half of the year. When you look at the kind of the growth in Q1, I mean, was that sort of in line or above your expectations? And if we sort of assume this robust trend in the first half, it would suggest that even for the nine months, right, your kind of implied growth rate is kind of more to the low end of your guide for the remaining quarters. So does that suggest that maybe the landing zone is more likely kind of not at the midpoint, but more in the kind of upper half or towards the upper end and If it isn't, what are the kind of factors we should consider? And then secondly, I noticed business had a pretty strong performance. Can you also give us a sense, I know you don't always give us quarterly breakdown of platform volume, and kind of unpack the kind of drivers around the strength in business, please? Thank you.

Yeah, thank you very much, Mo. In terms of growth that we've seen in our Q1, 2027, Obviously, we are very pleased with what we see. This is in line with what we saw last year and also confirmed our strategy to invest and reinvest the efficiency in our business. We think the growth that we saw in Q1 is in line with our expectations. Concerning the full year, as you know, we expect to continue to pass The efficiency that we get also into pricing. I mean like this quarter in April we lower our take rate by one basis point. We announced three weeks ago that we will do two basis points in the second quarter followed by probably one and one in Q3 and Q4. So the first part of the year is obviously not impacted or not so much by the price reduction. while the rest of this or the second half of the year will be so on a projection we guide you or we guide the market that we will be at the middle of the range for 15 to 20 percent it's fair to say that we always take a conservative view and you know that we feel comfortable with this guidance as of today On platform, as you can imagine, we're super excited. We leverage our infrastructure. This is the best way to require customers. We don't need to require them one by one, but then we provide this infrastructure to partners. which in reverse opened the, we again then indirectly their customers using us. So we're extremely bullish. We have a nice pipeline and I'm very happy to announce that today we had 6%, roughly around 6% of our total course board of volume generated by the partners. So as also Kristo mentioned like three weeks ago, We have a nice pipeline and we're looking ahead with confidence.

Okay, that's great. Thank you, Emmanuel.

Thank you, Mo. And next we have Aditya from Bank of America.

Hi, Emmanuel. Sarah, can you hear me?

Yes, yes. Good evening or good morning.

Good evening. Good evening, actually. Thanks for taking my questions. Just a couple. So customer growth was quite strong, up 21%. Could you just comment on how that maybe looked like by region? Are you starting to see some of the benefits of the marketing spend you've been doing across some of those markets? and second you mentioned very strong spending on business cards in north america and growing adoption or the personal card in us and apac any color on that as well uh in terms of what's you know what's driving that and maybe is that more features or just you know part of the marketing approach as well

Thank you for your questions. But in general, we have growth across the regions. We invest in all regions, as you know, because you mentioned marketing last year. We've done campaign in all segments, almost. But we're very pleased with what we see, the evolution in APAC, but especially in America. I mentioned businesses today, which grow very nicely in terms of active customers and also volumes. that's fair to say that you know this regions is benefiting from our investments that we've done and you know we will disclose a bit more in half year in terms of region development but APAC as we mentioned before and the North America especially US are over performing In terms of APAC card revenues, this is in line with the customer activities, and I think you could expect that APAC and also Americas are performing extremely well here.

Thanks, Aditya. Thank you. Thank you. Now we have Justin Forsyth from UBS. Hi, Justin.

Sorry, that wasn't working. Good evening, Emmanuel and Sarah. Thank you so much for this. A couple questions, if I don't mind. The first one here, I just wanted to talk a little bit between the relationship between revenue growth and the IBT guidance. So both were confirmed here, and you're pointing everybody to the midpoint of the revenue guide and reiterating the high end of the IBT guide. So should we think about it as the 17 and a half, let's say the midpoint equals that call it 24, 25% IBT margin. Meaning if you were to overshoot and do say 20%, the high end of the revenue guide, how does the correlation with margins work there? Would you then invest down to the IBT margin, say with price cuts, with additional head count or something of that nature? And then second question, You flagged personal card adoption in the U.S. and that's really interesting because I feel like in the past you've flagged actually challenges to winning in card adoption in the U.S. given all of the rewards from interchange that customers can get and spend. And so I just wonder if you could elaborate a little bit more on how you're winning in the U.S. Is that expats that are spending elsewhere? Is it people that are spending in the U.S.?

domiciled people spending elsewhere on the wise card so maybe if you could just elaborate on that a little bit if you don't mind thanks yeah absolutely so yes i mean within the guidance on ibt that we give today this is assuming that we will be at the middle of the range uh for on net revenue guidance so um you know between 15 and 20 percent you mentioned like if we over perform what would be our our reaction or what would be the consequences on ibt We will first look at do we have space to reinvest at good return. We will, as mentioned, invest, not spend. So for us, we will consider to accelerate these investments. But if we don't find room to invest, then the consequence would be like it could have an impact on our IPT. But it's too early to say. I think today we feel comfortable with this guidance. and we will always first look at reinvestment because these reinvestments are paying off. We see the growth rate in all metrics and then we will continue at a search we feel like we have enough room to invest and radically to gain more market share in terms of total time that you know is really really large. In terms of card adoptions, this is correlated to our business customer growth. Clearly, in America, we see a very acceleration of these business customers. And accordingly, you have a correlation to the card spending and card revenue that we generate from this.

Got it. Emmanuel, thank you so much for that. I thought you did also say personal card adoption in the US was strong as well. Maybe I misinterpreted that and thanks again for the questions and congrats on a great quarter. Appreciate it.

No, thank you very much. I mean, this is both, but you know, like obviously business will have larger volumes and ANSI will generate more revenue per customer, if you will, if you look at the business revenue on cards.

Great. Thanks, Justin. Next question is from Chris Kennedy from William Blair. Hi, Chris.

All right. Thank you for taking the question and for the time. Historically, you've talked about or you've given some interesting statistics about the outcomes when you establish direct connections in certain countries. Can you provide any color on kind of the benefits that you're seeing from Japan or Brazil, some of your more recent direct connections relative to history?

Yeah, thank you, Chris. I mean, in general, as you know, this is core to our value proposition. This direct integration makes us so unique. This is why we get partners joining us. They're using our platform, our direct integrations. In general, the direct integration are beneficial for Our cost base, I mean, we generate efficiency with us. This is true with servicing, direct, instant payments. And, you know, we had 77% of instant payment in Q1. So we continue to increase this percentage from 75% to 77. Have the, you know, not only satisfy your customers, but also reduce the numbers of contacts that we have with the servicing. So this is a direct cost savings. with that also direct integrations we are avoiding to work with partner banks for certain countries because then you know we can provide the liquidity faster so that's have also some savings on the cost of sales so in general direct connection and there we see that with all direct connection are beneficial for efficiency. Efficiency that we can then decide to reinvest either in OPEX or in pricing.

Got it. Thank you for that. And just to follow up, are the benefits in Brazil and Japan

you know in line with the other direct connections that you've had or any observations within those two markets thank you for taking the question no sure absolutely i think like um i'm not able to tell you know right now exactly the the amplitude of the savings i mean like you know as you know in the past we've seen like the cost dividend by nine times in the uk um it's too early to say right now for for this but we will give you more colors as we go through and then we can start with edge one results

Understood. Thank you.

Thanks Chris.

Now we have Sven from Barclays. Hi Sven.

Good evening. Thanks for taking the questions. Maybe first, can you comment what revenue growth was in the quarter on a constant FX basis and if there was any change in the underlying trends from where you exited the year? And then secondly, it's very encouraging to see that business active customer growth has accelerated again and now accelerated for a few quarters. Would be interested if you could share any color on how you see this developing from here. Thank you.

Sure. Well, we don't give like custom currency revenue, but what I can give you is basically the custom currency on volume. So we were at 26% as we are defined today, and the custom currency growth rate for cross-border volume would have been at 24%. So they give you a bit the direction of travel, the difference between reporting currency and custom currency. I must confess I forgot the second question.

Maybe I can quickly check. In principle, should the volume and the gap between the constant FX and reported volume growth be similar or a good proxy for what net revenue was in the quarter?

Yeah, absolutely. I mean, it's a proxy, right? I mean, like, it gives you a very good direction of, you know, the difference that you will see between custom currency and reporting currency. And on the business customer growth, because that was, I think, the second part of your question. Exactly. I think, like, what you see is there are all the investments that we've done. And here, if I may highlight one in particular, this is, you know, the benefit of having a dedicated team in servicing customers. contacting our business the business customers proactively making sure that you know not only we react to their questions but we also look at the business and provide services that they might be not aware of or functions that they they should use in their workflows so more and more you know we we see the benefits of being proactive and this the reward is the customers our businesses that are the satisfaction of the businesses and them growing the business with us Perfect, thank you.

We now have Pawan from Citi. Hi Pawan.

and Sarah, hopefully you can hear me. Thanks for taking my questions. Firstly, just on the elasticity of volumes, you reduced take very slightly this quarter and plan to continue fee cuts through the year. Could you maybe talk about the timing of when you expect to see the benefits of these? For example, have you already started seeing a benefit of the recent fee reductions within the quarter itself? And then secondly, volume per customer growth has slowed in Q1. I appreciate that VPC is more than output and there's a mixed effect there, but is anything specific to kind of call out?

Okay, so on elasticity volume, I think clearly elasticity for us is a long-term game, if I may say so. We don't expect short-term benefit from this, especially when we reduce the take rate by one basis point. But we know that on the long term, that is the reason why you or businesses or even partners are choosing to work with us the combination of the infrastructure that we provide at the very low take rate will always be like the the reason why people at the end choose to work with us that's why the law i will not expect a short-term Thank you. In terms of VPC, I will not read too much into that. This is not really due to the combination of retail, business, and partners. The VPC is less and less KPIs that we use, also because of the diversification of our revenue structure. There's also a volatility component to that.

Thanks, Pavan. Thanks. Thank you. Next, we have Hannes from Jefferies. Hi, Hannes.

Hello, good evening. Can you, I mean, appreciate the details around the take rate declines expected for this year. Can you just like a little bit help us how we should think of the moving parts from going from Q1 plus 25% growth to come to reach to the midpoint of the 15 to 20%? If I'm thinking you had quite a nice Resilient Gross Yield. That was one part of it. Then the take rate should decline. Should we expect card spend and other revenues to hold up? And thinking about the customer growth, do you think that can remain above 20%? Thank you.

Well, thank you, Hannes. In general, as you said, the take rate reduction will take part in Q2 with two basis points and then one basis point Most probably in Q3 and Q4. As I said, the vast majority still today, or majority of our revenues is coming from cross-border volumes. So the impact on pricing will be perceived on our revenue, on the net revenue. And that's why when we forecast for the rest of the year, we think that the pricing impact will be on the growth rate and that's why we got like between the 15 to 20 percent. Yeah, that's basically the philosophy behind it.

Maybe you can comment on the other parts, like customer growth.

Oh yeah, so in terms of customer growth, I think you've seen that we still have very high KPIs. We're very happy with the customer growth, especially in business. This is in line with what we saw last year. As we continue to invest in OPEX, in marketing, and Thank you. Thanks. Thanks, Hannes. We have Craig McDowell now from JP Morgan. Hi, Craig.

Hi, good evening Sarah, good evening Emmanuel, thanks for this. I just want to pick up on a point Pavan made on VPC and in particular on personal VPC. I know a year or two ago you were talking about very deliberately targeting price reductions to generate higher VPC customers. It feels like that's run its course. Should we be thinking about stable VPC on the personal side of the business rather Thank you.

Well, I start with the benefit of the World Cup. I think it's not that significant in our Q1 results. We're more looking at events that happened, more geographic or political events. I mentioned briefly the 26% cross-border volume growth compared to last year, where we did have some political decisions around Liberation Day and so on and so forth. I don't think that we have a massive benefit from the World Cup compared to the entire business. In terms of VPC, indeed, I mean like the VPC per customers might be different from region to region, you know, depending on the GDP of the countries or the region itself. That's, you know, depending on where the volume will grow we will see maybe VPC declining in a specific region but overall I think like you know VPC is not the metrics that we use for the reasons that you know I explained before the customer mix make it very very difficult to to use this as a real KPI to measure the business we prefer to look at the you know the the deposits of our customers which is a very strong sign of the trust that they have in Wise and them growing their money. I think that's a very strong KPIs. This is true for retail, but this is true for businesses as well. Understood. Thank you. Thank you, Greg.

Thanks, Craig. Now we have Alex from BNP. Can you hear us, Alex?

Can you hear me? Yes. Hi, Alex. Hi, good evening. Thanks for doing this. Yeah, just a couple of questions. One is slightly technical, but just thinking of a share buyback program that you talked about a few weeks ago, just curious if this has started already. And if you're buying back shares on the UK line or the US line, how would you think of a cadence of a share buyback? So that'd be my first question. Second question, because you alluded to it just now, Emmanuel, sort of customer deposit growth, which was quite healthy in the quarter. I think on the per-customer basis, it slowed down a little bit. How should we think about that, sort of customer deposit on a per-customer basis slowing down? Is it the function of, say, a fiscal Q1 that might be a bit travel-heavy with people who might have Lower current balances in their accounts. Just curious how to think of that.

Thank you very much, Alex. In terms of buyback, we are in execution mode. We do have for the full year the approval of our regulators, so we are executing on this. Our aim is not to have any impact on the trading, so in terms of volume that we will buy per month, Nor on which market we will buy. So we aim to buy on both London market and New York market. We don't want to have any impact on liquidity or on the share price. That's a kind of philosophy we will use for example ADTV as a metrics like We will look at what is the average and we will put a threshold so that we make sure that we don't influence the trading. But we are in full execution mode and that will last for the next 12 months. In terms of customer deposit and the growth of it, I will not read too much into it at this moment. I will say this is a snapshot. I think I would like to wait until we have a six-month view in the year to give you more detail and to comment a little bit more. Got it. Thank you. Thank you, Alex.

Thanks, Alex. We don't have any more questions. So thank you, everyone, for joining us. Thank you for all your questions.

Thank you, everyone, for your support. Have a good evening.

Thank you.