No. of Recommendations: 4
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
