Wise
(WISE)
slumped
on
Thursday
after
disappointing
guidance
took
the
shine
off
a
year
of
financial
progress
and
customer
gains.
• Fair
Value
Estimate:
£5.60
• Morningstar
Rating:
2
stars
• Economic
Moat:
None
• Morningstar
Uncertainty
Rating:
High
Shares
in
the
currency
transfer
fintech
plunged
15%
to
714.50p
in
London
on
Thursday
morning,
pushing
its
market
value
to
£7.3
billion.
Wise
floated
at
£8
per
share
in
2021,
valuing
the
company
around
£8
billion.
In
the
financial
year
ended
March
31,
the
company
reported
that
revenue
jumped
24%
to
£1.05
billion
from
£846.1
million
a
year
earlier.
Pretax
profit
rose
to
£481.4
million,
more
than
triple
£146.5
million
a
year
prior.
Underlying
pretax
profit
rose
to
£241.8
million
from
£74.3
million.
Looking
ahead,
Wise
expects
15%
to
20%
annual
underlying
income
growth
for
financial
2025.
Over
the
medium
term,
Wise
expects
to
operate
to
an
underlying
pretax
margin
of
13%
to
16%.
Investors
Fret
About
2025
Profit
Broker
Jefferies
said
the
2025
guidance
for
underlying
income
was,
at
its
mid-point,
2%
below
the
consensus
of
£1.41
billion.
Worse,
Jefferies
said
the
underlying
pretax
margin
guidance
implies
pretax
profit
of
£175
to
£225
million,
19%
below
the
consensus
of
£247
million.
Wise
said
improvements
in
efficiency
were
gained
in
financial
2024
resulting
in
an
inflated
level
of
earnings,
providing
the
opportunity
to
reduce
average
cross-border
pricing
by
more
than
2
basis
points.
Adjusting
for
the
“outperformance”
in
2024
and
price
reduction
in
financial
2025,
expected
growth
would
have
otherwise
been
20%
to
25%,
Wise
said.
In
addition,
Wise
said
it
had
initiated
a
second
“re-price”
in
the
first
quarter
of
2025,
which
will
see
price
reductions
for
higher
value
transactions,
particularly
on
main
currency
routes.
“While
the
announced
guidance
is
disappointing
at
first
glance
given
the
price
reduction,
however,
we
think
the
cuts
boost
confidence
in
medium-term
growth,”
Jefferies
added.
In
the
financial
year
for
2024,
Wise
reported
a
29%
increase
in
active
customers
with
growth
across
segments
and
regions.
This
growth
in
customers
drove
a
13%
increase
in
cross-border
volumes
to
£118.5
billion,
16%
growth
on
a
constant
currency
basis,
with
double-digit
growth
across
all
five
of
geographical
segments.
Active
Personal
customers
grew
29%
to
12.2
million,
with
Personal
volumes
growing
by
14%
to
£87.2
billion.
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