Portfolio

Wise shares plunge as income forecasts disappoint investors

By Frank Prenesti

Date: Thursday 13 Jun 2024

Wise shares plunge as income forecasts disappoint investors

(Sharecast News) - Shares in Wise plunged on Thursday as the UK banking and money transfer company said underlying income would be lower than its 2024 fiscal year.
Fiscal 2025 underlying income growth was expected to be between 20-25% - adjusting for outperformance in 2024 which led it to cut prices at the start of the current financial year - compared with 31% in the 12 months just reported.

Shares in the fintech firm were down by a fifth at one point in London trade.

"Striving to reduce prices sustainably over time is an important form of investment for Wise. In recent years we have seen more price increases than decreases as we've needed to cover growing investments in our operational capabilities and have seen certain other costs fluctuate, such as forex and product losses," Wise said.

"Entering full-year 2025 we were pleased to reduce cross-border prices by over two basis points, sustainably reinvesting gross profit margin into lower prices - the most common reason customers choose to join Wise."

The company reported underlying pre-tax profit of £248.1m for the year to March, up 226%. Reported pre-tax profits surged to £481.4m from £146.5m and income rose by a quarter to £1.05bn. Customer numbers swelled by 29% to 12.8 million.

Wise, which offers current accounts in multiple currencies that allow customers to send cash overseas for a fraction of the exorbitant fees High Street banks charge, has benefited from higher global interest rates, with interest income more than tripling over the year to £485.2m from £140.2m.

"Over the medium term we expect to operate to an underlying profit before tax margin of 13-16%," Wise said on Thursday.

"Driven by customer growth, we expect underlying income growth of 15-20% over the medium term from 2024. Full-year 2025 underlying income growth over 2024 expected to be between 15-20%."

Reporting by Frank Prenesti for Sharecast.com

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