Wise continues to grow with a 46% leap in gross profits

Wise, the recently floated payments and currency transfer company, listed on the London Stock Exchange, has published its half-year report which covers trading up until the 30th of September.

What were the Wise results like?

The company put a positive spin on the numbers highlighting some of the achievements made, and milestones reached by the business during the first part of its financial year.

They include a reduction in customer costs, the speeding up of transaction and transfer times, as well the launch of the Asset feature for UK customers, which we covered previously, and adding company cards for the employees of business users.

Wise has also struck up an additional 10 B2B partnerships, taking the total number of such arrangements to 30.

Customer numbers increased  +7.0% to 3.90 million and the firm transferred £34.0 billion on their behalf, a +44.0% increase in turnover over the prior period.

Gross profits at Wise grew by +46.0% to £174 million and encouragingly for investors, the gross profit margin expanded from 62.0% to 68.0%.

Those improvements didn’t filter through to the bottom line though and the adjusted EBITDA margin for the period came in at 24.0 %. – 2.0% below last years figure of 26.0%. The dip is attributed to the firm’s investment in its teams and products.

The management at Wise believes that annual revenue growth, in percentage terms, for the financial year 2022 will come in in the mid-high 20s.

How did the Wise share price react to the earnings report?

Wise’s stock price initially responded positively to the announcement, with shares trading back above the 800p price, that the company listed at back in July, in fact, they reached an intraday high of 859.40p.

However, those gains were short-lived and the stock sold off into the close. The stock price probably wasn’t helped by the news that an additional 30 million new shares are to be issued as part of the company’s employee benefits plan.

The share price has subsequently fallen back below the 800p, level to trade at 774p this morning, meaning that since listing the shares have lost just over -12.00% and are trading 370p below the all-time, high posted in September, of 1150p.

What is the market saying about Wise?

Not much is the honest answer, broker comment on the company is thin on the ground and the commentary that has surfaced has focused on Wise’s Venture Capital backer and major shareholder Chrysalis investment, which is believed to have been selling down its stake in Wise since it listed back in July.

The consensus price target for Wise is 962.50p and the stock is rated as a hold.

The lack of comments about and coverage of the business, which has a market cap of £7.70 billion, could suggest the city is snubbing Wise for choosing a low-cost direct listing rather than a lucrative (for city firms) IPO.