- Wise expects underlying revenue to increase 15-20% in fiscal 2025
- The company reinvests part of its gross profit margin in lowering prices
Wise actions fell 12 percent today after the fintech business forecast weaker revenue growth this year.
The money transfer platform expects underlying revenue to rise between 15 and 20 percent in fiscal 2025, compared with 31 percent in the 12 months ending in March.
Kristo Käärmann, co-founder and chief executive of Wise, said the company was investing in infrastructure and customer services to try to attract the “huge and underserved” cross-border payments market.
Entrepreneur: Wise was co-founded by Kristo Käärmann (pictured with his wife Kriss Soonik)
At the same time, Wise is reinvesting some of its gross profit margin into lowering prices, which it said was the “most common reason” people joined the company.
During the last financial year, the London-based group’s active customer base soared 29 per cent to 12.8 million thanks to growing demand for the Wise account.
These customers transferred £118.5 billion between countries, up 13 per cent on the previous year, and all five of Wise’s geographic segments experienced double-digit growth.
Combined with higher interest rates, this helped the company’s underlying revenue rise by 31 per cent to £1.2 billion and profits triple from £114 million to £354.6 million.
However, the company’s shares fell 15.5 per cent to 713 pence shortly after midday as investors reacted negatively to Wise’s expectations of a slowdown in revenue expansion.
Since its debut on the London Stock Exchange in July 2021, shares have fallen 11 percent despite Wise enjoying huge growth in sales and profits.
Wise, previously called TransferWise, was founded in 2011 by Estonians Kristo Käärmann and Taavet Hinrikus after both became frustrated by the high costs of transferring cash to their home country.
The company has received investments from Virgin Group tycoon Richard Branson, Paypal founder Peter Thiel, and prominent venture capital fund Andreessen Horowitz.
When it went public three years ago, Wise was valued at £8.75 billion, making it the largest technology initial public offering ever in London.
Russ Mould, chief investment officer at AJ Bell, said Wise “demonstrated the truth of the old saying that markets are inherently forward-looking as, despite posting a big rise in annual profits, a weak outlook caused shareholders to abandon the company en masse.
“If Wise was trying to inject a dose of conservatism into his forecasts to help manage market expectations, the move appears to have backfired for now.”