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Hi folks,

I vaguely remembered there had been a discussion of this UK company that specializes in cross-border foreign exchange at rates much lower than what most financial institutions offer. But I can't find anything, on this board or on the non-US board or anywhere else I've looked on Shrewd. Does this ring a bell for anyone?

It's a company trading at about the same price as its IPO in 2021 (roughly £10, or 1000p, if you prefer), market cap £10b. I like it mainly because it has 1.01b shares outstanding, making all the calculations easy whether they are per share or for the entire market cap (£10b, obviously.) That and the fact that its steady price, while it has gone nowhere for 4 years, now represents 25x last 12 months earnings instead of 340 at the IPO. Its growth has slown down markedly in the last 12 months, but I think it still has a ton of room to grow as it takes share from Western Union and Moneygram who have much higher fees.

They remind me of Interactive Brokers, one of my most successful investments, with this aspect of their philosophy which they expressed a couple of years ago:

"Sustainably lowering prices for customers over the long run remains core to our mission. We charge our customers what it costs us to offer our service, plus a small margin, rather than what we can get away with. So our price, which reflects our cost to deliver payments, changes when our costs go up or down. At 0.65%, the average price remained broadly stable when compared to the previous quarter’s price.."

The 65 basis point cross-border charge they refer to, which is now more like 52 points, compares with fees charged by banks, Western Union, Moneygram etc. which are typically 3-5x as high. They also pay interest on cash in accounts in countries where they are allowed to do so, and keep 1%, transferring the rest to their customers (e.g. if overnight interest rates are 4%, they keep 1% and give 3% to the customer.) Banks charge amounts that vary according to the amount transferred, but it is often well as much as 300 basis points (3%) for small amounts (say <$1000, meaning you lose $30 on your transfer), and credit cards are typically at about the same level, i.e. about 6x higher than Wise. Paypal is even worse. So apart from retail cross-border transfers, lots of travellers have good reason to have an account, and most people have not yet heard of Wise.

Any thoughts on this as an investment or pointers to discussion elsewhere would be welcome, and if there's any interest, we could get a dedicated board opened for it.

dtb

Hello dtb -

Here is a thread on using WISE from the Living Abroad board: https://www.shrewdm.com/MB?pid=513751808&wholeThre...

This thread started in 2024. Fees were discussed, alternatives were brought up like Schwab (Rubic), Interactive Brokers (OrmontUS), and, a reduction in WISE fees for external US ACH transfers was mentioned in June 2025 (oddhack).


Here is a thread on using WISE from the Berkshire board: https://www.shrewdm.com/MB?pid=170323220&wholeThre...

This thread started in 2023. WISE fees, processes, ease of use and, satisfaction (MisterFungi) are discussed. An alternative called Moneycorp is brought up (hummingbird). A podcast and podcast transcript breaking down the WISE business was posted (MostlyQuiet).

I love companies that take highly fractured and/or opaque markets and make them easy and cheap to use. I had totally forgotten about WISE until you brought it up. Thank you for the reminder :).

Quick question: are you thinking of buying WISE.L or the ADR WIZEY?

I love companies that take highly fractured and/or opaque markets and make them easy and cheap to use. I had totally forgotten about WISE until you brought it up. Thank you for the reminder :).

Quick question: are you thinking of buying WISE.L or the ADR WIZEY?

WISE.L - small position, will probably increase, I love them too. Thanks for the pointers!

dtb

I looked at Wise a little while back and took a few notes, which I've tried to clean up (hurriedly, not very well). This is very much a first cut and may contain errors, large, small, or fatal, but I thought I'd drop the whole mess here in case it's useful to anyone as a starting point.

Wise PLC (WISE.L)

Started 2011 by a couple of Estonians as a peer-to-peer payment network. Co-founder / CEO Kristo Klaarman remains in place. Some aspects of Northern European corporate culture.

Company estimates about 11T GBP in cross-border payments annually. Mich via the legacy SWIFT network -- approximately 11,000 banks facilitating cross-border transactions. Some inefficiencies, compliance costs, hidden fees (SWIFT is now partnering with Wise). Some number of individual transactions e.g. remittances via high-friction networks (Western Union, etc.).

Wise seeks to differentiate itself by providing low cost, high speed (62% of payments are instant), high transparency; create efficiencies for customers, benefit from network effects (individual, B-to-B, and bank). Worldwide network, ~140 countries including Egypt, South Africa, Central and South America.

Barriers to entry: regulation, licensing, institutional relationships.

WISE Investor relations, reports and presentations:
​https://wise.com/owners/results-reports-presentati...
​
FY 2026 (July 2025)
Volume +25%, customer growth +17%, income +15% constant currency; take rate DOWN to 52 BPS (tradeoff between take rate and volume). NB: this appears to mark a significant deceleration from 2021-2024, when active customers grew at 29% CAGR, volumes 30% CAGR
Expanding bank partnerships
Target pretax margins in mid teens

56% of revenues from cross-border payments, 26% from interest income; 18% from card and other revenues (fast growing component)

FY2025 results presentation July 2025 (link to PDF):
https://wise.com/imaginary-v2/images/a743105a05bf5...

Important note: need to distinguish Wise's non-IFRS accounting numbers from reported IFRS.

TTM numbers:
24-26x earnings
25% profit margin*
32% operating margin*
*as reported by secondary sources; doesn't match what Wise reports in slide decks, check against reported numbers in financials
2% ROA
35% ROE
ROIC: ?? perhaps 50% with 10% cost of capital
Debt/equity 13.5%

Dual share class structure, dilution from SBC (about 1%) "offset" by repurchases-at-any-price (barf)
**FCF is misleading because of the customer funds they are holding**

Quick back of envelope comparison to Paypal:
15x trailing, 12x forward earnings
15% profit margin
19% operating margin
4.7% ROA
24% ROE
Debt/equity 60%


Competition:
Ria
Remitly
Neobanks (Revolut, etc.) -- cross-border transactions as a loss leader
Xoom, etc.

Risk factors:
Interest rate sensitivity
Geopolitical -- U.S. terror campaign against immigrants may reduce market for remittances
Stablecoins may disrupt their model to an unknown extent

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