In FY2022 (ending March 2022), the first financial year since its direct listing (in July 2021), Wise’s business continued to grow well, in terms of its financial and operating performances.
Here’s a summary of its key metrics, followed by some comments on its overall performance, including its capital allocation, future optionalities, and some not positive points to take note of.
Total volume grew 40% to GBP 76 billion, driven by both growth in number of customers (24%) and average volume per customer (13%).
Total customers grew 24% to 7.4 million customers, with business customers growing faster (at 34% to 0.4 million) than personal customers (24% to 7.0 million).
Revenue grew 33% to GBP 560 million, with business revenue growing faster at 59% to GBP 127 million (contributing to 23% of total revenue), and personal revenue growing at 27%.
This translates to an overall take rate of 0.73%, slightly lower than the 0.77% the financial year before, driven by lower cross-currency take rate (due to lower average price charged), offset by higher other fees (with customers adopting more of Wise’s other services).
Although the overall take rate dropped, the cost of sales as a % of volume dropped too, from 0.30% in FY2021 to 0.25% in FY2022 (mainly driven by decreases in bank & partner fees, and net credit losses on financial assets).
Thus, gross profit grew very well at 43% (to GBP 372 million), faster than both volume growth (40%) and revenue growth (33%). This is an indicator that Wise could drop its price over time, while growing sustainably (at the gross profit level per volume).
Wise reinvested the gross profit aggressively, with the administrative expenses growing by 48% (with marketing investment growing 30%). Part of the increase was due to a change in the accounting for capitalisation of staff costs, where much less staff costs were capitalised, leading to higher expensed staff costs. Adjusting for this, i.e. assuming no staff costs are capitalised at all in both years, the total administrative expenses grew slower, by 38% (slower than the 43% gross profit growth).
Reported profit grew 6.5%, from GBP 31 million to GBP 33 million.
Adjusting for…
For the remaining points of this article about Wise FY2022 Earnings, check them out at our Multibagger Research Series (linked below).
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For our summary analysis of the company, check out the video below.
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