Wise shares up as Q2 update shows strong growth

Investing.com -- Wise 's (LON:WISEa ) stock rose on Tuesday following its trading update. 

At 6:10 am (1010 GMT), Wise was trading 5.6% higher at £716.5.

Wise's active customer base grew by 23%, which helped drive a 20% year-on-year increase in cross-border volume to £35.2 billion. 

The company's total income for the quarter rose by 17% to £337 million, further boosted by an uptick in revenue from its card and other services.

The company also reported a reduction in Wise's cross-border take rate to 0.59%, an 8 basis points drop compared to the same quarter last year, due to a mix of pricing adjustments and product restructuring. 

While the take rate reduction reflects the company's competitive positioning, it has been offset partially by increased pricing on non-cross-border services. 

Wise remains focused on maintaining robust margins, with gross profit continuing to hover around 76%.

“For FY25, we continue to expect underlying income growth of 15-20%,” the company said in a statement. 

Wise is investing in reducing pricing, especially in cross-border payments, which is expected to affect profit margins in the second half of the fiscal year.

The trading update also mentioned Wise’s progress in expanding its infrastructure and regulatory approvals in key international markets, including India, Australia, and Brazil. 

"Increase in the mix of active customers in Brazil suggests that we should also expect to continue seeing a decline in VPC (UBSe -1% QoQ)," said analysts at UBS in a note. 

This global expansion is aimed at increasing customer adoption and enhancing Wise's services, positioning the company for long-term growth. 

Wise expects these developments to contribute to continued strong performance, though the pricing pressures may weigh on profitability in the short term.

"However, we recognise there could be further upside potential in active customer growth driven by the price drop feedback loop (i.e., increases to top of funnel customer additions), although the exact mechanism is difficult to quantify absent further colour from the company," UBS said.

Source: Investing.com