Wise shares slump as fintech group warns of slowing income growth

  • Wise expects underlying income to rise by 15-20% in the 2025 financial year
  • The company is reinvesting some of its gross profit margin in lowering prices

Wise shares fell 12 per cent today after the fintech business forecasted weaker income growth this year.

The money transfer platform expects underlying income to rise by 15 to 20 per cent in the 2025 financial year, compared to 31 per cent in the 12 months ending March.

Kristo Käärmann, Wise’s co-founder and chief executive, said the firm was investing in infrastructure and customer services to try and attract the ‘huge, under-served’ cross-border payments market.

Entrepreneur: Wise was co-founded by Kristo Käärmann (pictured with wife Kriss Soonik)

At the same time, Wise is reinvesting some of its gross profit margin in lowering prices, which it said was the ‘most common reason’ people joined the company.

During the last fiscal year, the London-based group’s active customer base soared by 29 per cent to 12.8 million thanks to soaring demand for the Wise account.

These customers transferred £118.5billion between countries, 13 per cent up on the previous year, with all five of Wise’s geographical segments witnessing double-digit growth.

Combined with higher interest rates, this helped the company’s underlying income increase by 31 per cent to £1.2billion and profits more than triple from £114million to £354.6million.

Nonetheless, the firm’s shares slumped by 15.5 per cent to 713p just after midday as investors reacted negatively to Wise’s expectations of slowing income expansion.

Since debuting on the London Stock Exchange in July 2021, the shares have fallen by 11 per cent despite Wise enjoying enormous growth in sales and profits.

Formerly called TransferWise, Wise was started in 2011 by Estonians Kristo Käärmann and Taavet Hinrikus after the pair were frustrated with the high costs of transferring cash to their home country.

The business has received investment from Virgin Group tycoon Richard Branson, Paypal founder Peter Thiel, and noted venture capital fund Andreessen Horowitz.

When it listed three years ago, Wise was valued at £8.75billion, making it London’s largest-ever technology initial public offering.

Russ Mould, investment director at AJ Bell, said Wise ‘demonstrated the truth of the old idiom that markets are inherently forward-looking as despite posting a big increase in annual profit, a weak outlook caused shareholders to desert the company in droves.

‘If Wise was trying to inject a dose of conservatism to its forecasts to help manage market expectations, the move seems to have backfired for now.’

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