Wise Blames IPO and Recruitment Drive for Wilting Profit

On the plus side, the fintech firm's valuation and revenue are looking healthy.

Fintech company Wise has seen a slight fall in profit due to its IPO earlier this year and rising employee costs.

In the first six months of FY22 its profit before tax was £18.8 million compared to £20 million in the same period last year.

The firm explains: “This level of profit was slightly lower than the previous year as we continue to reinvest the majority of the additional gross profit delivered in the period while also incurring exceptional costs in the completion of our direct listing.”

Wise, formerly known as TransferWise, did its London float in July, giving it an opening valuation of £8 billion. It’s currently valued at £8.16 billion.

Its employee costs increased £17.1 million or 25% to £84.8 million in the first six months of FY22 (H1 FY21: £67.7 million). Wise expanded the size of the team by 688 people or 32% over the last year, and now has 2,883 staff. It is looking to hire more than 1,000 people globally next year, from Budapest to Singapore to its new office in Austin (its third US base).

The company offers an account that enables personal and business customers to send, receive, hold, convert and spend money in various currencies.

While the profit dipped a little, elsewhere its financial results and developments were looking pretty good – and Wise heads were happy.

Kristo Käärmann, Wise’s CEO and Co-Founder, explains that the fintech firm has made “some significant strides forward in the last six months” – such as lowered costs and dropped prices, more features for businesses, and more platform partnerships (e.g., Google Pay, Sable, Shinhan Bank, Temenos and Thought Machine).

Its Wise Business account had a number of new features brought in, including the ability to attach receipts and notes to card transactions; and payment approvals and assign spending limits to accountants and team members.

In the first six months of FY22 it generated £256.3 million in revenue, a 33% increase versus £192.2 million in the same period last year.

In terms of gross profit, it produced £173.8 million, a 46% increase as compared to £119.2 million in the same period last year and equivalent to a 68% gross margin (H1 FY21: 62%). This was due to cost of sales increasing by 13% to £81.2 million from £71.8 million in H1 FY21.

Wise’s Adjusted EBITDA margin was 24% for the period (H1 FY21: 26%) which corresponds to £60.6 million of Adjusted EBITDA (H1 FY21: £50.6 million) and a 20% increase over the prior year.

Looking ahead, Wise expects annual revenue growth for FY22 to be mid-to-high 20s on a percentage basis.

Antony Peyton
Antony Peyton
Antony Peyton is the Editor of eWeek UK. He has 18 years' journalism and writing experience. His career has taken him to China, Japan and the UK - covering tech, fintech and business. Follow on Twitter @TonyFintech.
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