Wise plc

Hi, good evening everyone and welcome to our Q2 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 the results before we go into Q&A. Before we start, just a reminder that we will be making some forward-looking statements today, including statements regarding WISE's future performance. These statements aren't guarantees and can involve risks and uncertainties and other factors that may cause 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 and thank you for joining us for Q2 27 result calls. I'm pleased to present our financial results for the second quarter of our financial year 2027. I'm going to focus on the number today but we've made great progress operationally with this quarter too with our ninth direct integration in Malaysia, launching the Wise account and card in Thailand, Introducing assets to New Zealand along with new platform partners. Kristo will tell you more about this progress on our half-year presentation next month, so now I go through our performance. For this quarter, we continue to drive strong growth in both active customers and volumes. And today, I'm going to take you through three main points. The first one, our financial highlights in the quarter. The second, the drivers of our revenue growth and our approach to pricing. And lastly, I'll provide an update on our expectations for the year before handing over for Q&A. But now, starting with our financial highlights for Q227. During the quarter, we continued to see solid growth in our main performance metrics, as our customers are increasingly using Wise for everyday needs, and not only for cross-border transactions. In Q2, our active customer base increased by 20% year-on-year to 12.5 million. Our course boarded volume increased by 22% year-on-year to $72 billion, with strong growth in Wise Business of 32% year-on-year. Customer holdings grew by 28% year-on-year, totaling $44 billion, including $11.5 billion held through Wise Assets. A customer spends more with their card, with card spend up 30% year-on-year to $14 billion. Firstly, looking at what it means from a cross-border revenue. So cross-border revenue is a function of the volume we deliver together with the price we charge. The cross-border volume increased by 22% year-on-year to $72 billion. We continue to see strong growth in our active personnel and business customers, driving growth in cross-border volume. Volume was particularly strong for business customers, up 32%. We did see lower growth in higher volume transactions from the US, given the slight depreciation in the dollar compared to Q1. Looking at the take rate, it has reduced from 52 basis points in Q2 2026, to 49 basis points in Q2-27. This quarter, the take rate reduced by one basis point to 49 basis points compared to 50 at the year Q1-2027. So you will notice that this overall decrease is lower at the expected two basis points I have previously shared with you. And this is partially due to the timing and partially due to the volume mix. We implemented the most recent price reduction in August, And as we mentioned just before, we saw lower high volume transactions from the US, which are typically at the lower take rate. Given cross-border volume growth of 22%, combined with the free basis points reduction year-on-year in the take rate, our cross-border revenue increased by 16% to $355 million. I will now take you through our total revenue growth in the quarter. In Q227, as I just said, we generate 355 million in cross-border revenue from customers sending or converting currency. But we also generate 206 million in cards and other revenues from customers using their card, the Wise card abroad and at home, investing in our assets product through the Wise account, and additional customers activities such as domestic transactions. This represents a year-on-year increase of 34%, with an increase mainly due to card revenue. This was driven by a rise in business card spending in the U.S., and also personal card adoption grew significantly in the U.S. and in APAC, taking together a transaction revenue total of $551 million, representing a year-on-year growth of 22%. As we have highlighted in our past calls, customers are also trusting Wise more and more with their money. At the end of September 2026, customers held $32 billion on the Wise account, up 22% compared to the previous year. As we invest this fund in liquid instruments, we generate $238 million in interest income during the quarter, up 18% year-on-year. Growth in customer balance didn't fully translate to interest income growth as we saw a reduction in gross yields from 3.1% in Q226 to 2.9% in Q227. This shift reflects central bank decisions taking place during the past year, while we have seen some central banks increasing interest rates over the recent month. Sorry. Sorry. Apologies, I have a technical issue. So yeah, sorry. So the growth balance fully transferred in interest income growth as we saw the reduction I mentioned before. And our assets under custody continue to grow extremely strong too, reaching 11.4 billion. These drive our total combined customers' assets to $44 billion, demonstrating deep and sustained customer trust. So I just convert the different layers of customer activity, including sending and converting money, spending with a wise card and growing with wise assets, and holding balance with us. Together, these drive our net revenue growth. In Q2-27, we delivered $739 million in net revenue, up 21% year-on-year, with an increasingly diversified revenue base, with 52% of net revenue being driven by non-cross-border activity this quarter. As usual, I would like to remind you of our investments framework and key areas of investments for long-term value generation. Overall, we believe in driving growth through continuous investment. Our investment framework is a clear evidence of this. By targeting medium terms 15 to 20% income before tax margins, assuming we were able to pay our target interest income back to 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 capacity for reinvestment and allowing us to return capital to shareholders as we are with our current buyback. So finally, looking ahead, I'd like to provide an update on our expectations for the rest of the year, as we expect to see a continued trend of rapid growth and we aim to continue to invest to achieve this. We have seen some increase in rates from the Fed and the ECB, and these are reflecting in our expectations. However, we do not include potential future increases in the remainder of the year. Given this for this year, we now expect that net revenue growth will be in the upper half of the 15-20% range on a constant currency basis. We continue to expect the full year 27 income before tax margin around at the top of the 2025 range. For the half year of this year, you know now that net revenue growth has been around 22% on a constant currency basis, and we expect the ABT margin to be around 23%, including one off expense equivalent to around two percentage points. This includes circa $15 million relating to the dual listing of wires. We will provide further details in our half year 27 results, including the progress we are making in unlocking transaction and efficiency and reinvesting these gains to drive future growth. And now let's move to the Q&A session.

Thanks, Emmanuel. Anyone who wants to ask a question, please raise your hand in the Zoom. We'll take the first question from Chris Kennedy at William Blair.