Wise Group plc Class A Ordinary Shares Q1 2027 Earnings Call

Welcome Wise, welcome to our Q1 FY 2027 results call. I'm Sarah Lewandowski, Head of Investor Relations, and I'm joined by our CFO, Emmanuel Thomassin. Emmanuel is going to run through our results before giving you the chance to ask questions. Before we start, we have a reminder that we'll be making forward-looking statements today, including statements regarding Wise's future performance. These statements are not guarantees and can involve risks and uncertainties and other factors that may cause actual results to differ. Please refer to our SEC filings for more information on these risk factors. All forward-looking statements made in this call are based on current expectations, assumptions, estimates, and beliefs, we undertake no obligation to update any forward-looking statement except as required by law. With that, I'll now hand over to Emmanuel.

Hello, everyone. Thank you for joining us for Q1 results call. Well, I'm pleased to present our financial results for the first quarter of the financial year 2027. We've started the year with continued growth in customers and volumes. Today, I'm going to take you through, first, our financial highlights in the quarter. Second, the drivers of our revenue growth. Third, our approach to pricing. Lastly, I'll cover guidance for the year before handing over for Q&A. Now, starting with our financial highlights for Q1 2027. During the quarter, we continued to see significant growth in our performance metrics as our customers accelerate their usage of Wise for more, and not only for cross-border transactions, but also for everyday needs. Our active customers base increased by 21% year-on-year to almost 12 million.

Our cross-border volume increased by 26% year-on-year to $69 billion, with especially strong growth in Wise Business of 39% year-on-year. Customer holdings grew by 31% year-on-year, totaling $31 billion, including $10 billion held through Wise Assets. I will now take you through what this means for revenue growth in the quarter. In Q1, we generated $350 million in cross-border revenue from customers sending or converting currency. This represent a growth of 22% year-on-year. This increase is a little lower than the 26% growth in volume, reflecting a reduction of the average take rate from 52 basis points in Q1 2026 to 50 basis points in Q1 2027. We also generate $191 million in card and other revenues from customers using the Wise Card abroad and at home, but also investing in our Assets products and addition customer activity such as domestic transactions.

This represent a year-on-year increase of 38%, with the increase mainly due to card revenue, driven by the rise in business card spending in North America and growing personal card adoption in the U.S. and APAC. Taking together, transaction revenue total for $541 million, representing a year-on-year growth of 27%. As I highlighted in our full year results just a two weeks ago, customers are also trusting Wise more and more with their money. At the end of June 2026, customers held $31 billion on the Wise Account, up 24% compared to the previous year. As we invested these funds in liquid instruments, we generated $225 million in interest income during the quarter, up 15% year-on-year.

Growth in customer balance didn't fully translate to interest income growth, as we saw a reduction in gross yield from 3.3% in Q1 2026 to 2.9% in Q1 2027 as a consequence of the central bank decisions during 2026. I just covered different layers of our customer activities, including sending and converting money and growing with Wise Assets, but also holding balance with us. Together, with revenue from using the Wise Card and other revenue streams, including the fees from Assets, this drive our net revenue growth. In Q1, we delivered GBP 714 million in net revenue, up 25% year-on-year. With an increasingly diversified revenue base, with 51% of net revenue being driven by non-cross-border activities this quarter. Moving to a reminder of our investment framework. Overall, we believe in driving growth through continuous investment.

Our investment framework is a clear evidence of this, by targeting a major term 15%-20% Income Before Tax margins, assuming we are able to pay our target interest and income back to the customers, we are able to invest in our growth and into our pricing. This, in exchange, drives more scale and operational efficiencies, providing us with additional margin for capacity for reinvestment. With our investment framework alongside our direct investments in the business, we seek to invest into sustainable reductions in our prices. We do this always in a position of strength, intentionally. This remains a long-term goal, driving down prices for customers while building a sustainable, profitable business. In our full year 2026 results, I gave details on how we expect to reduce the take rate this year. We expect to continue sharing efficiency with customers as we generate extra capacity for investments.

This quarter, the take rate reduced to 50 basis points, down from 51 basis points last quarter, and down from 52 basis points a year ago. As I said a few weeks ago, for 2027, depending on the additional capacity that we can generate, we expect this to be reflected in a reduction of 1-2 basis points in each of the following quarters. Our investments into pricing are a core feature of our business model, which supports the long-term stability of our business. Finally, looking ahead. We expect to see a continuing trend of rapid growth, we'll continue to invest to achieve this. For this year, we continue to expect net revenue growth to be around the middle of a 15%-20% range on the constant currency basis.

Due to the phasing of our investments into pricing, we expect this growth to be more pronounced in the first half of the year. We have seen this in Q1 with growth of 25% in net revenue year-on-year. We also expect that the scheduling of our investments will drive a comparable trend in our Income Before Tax margin. While we expect full year margins to be around the high end of the 20%-25% range, we expect this to be front half weighted, delivering results slightly above this target in H1. Now, let's move to the Q&A session.

If you would like to ask a question, please raise your hand in the Zoom webinar. Our first question is from Mohammed El-Aasar from Goldman Sachs. Can you hear us, Mo?

Are you maybe on mute?

Hi, can you hear me, Sarah and Emmanuel?

Sorry. Can you hear us?

Hi, can you hear me?

Yes. Yes, I can hear you.

Can you hear me? Yes.

Great. Hi, Emmanuel. Hey, Sarah.

Hi. Thanks for taking the question.

Well done on the results. I had two, if I may, Emmanuel. The first one, I know you sort of had flagged it, you'd be running kind of ahead of your annual guide in the first half of the year. When you look at the kind of the growth in Q1, was that sort of in line or above your expectations? If we sort of assume this robust trend in the first half, it would suggest that even for the nine months, your kind of implied growth rate is kind of more to the low end of your guide for the remaining quarters. Does that suggest that maybe the landing zone is more likely kind of not at the midpoint, but more in the kind of upper half or towards the upper end?

If it isn't, what are the kind of factors that we should consider? Secondly, I noticed Business had a pretty strong performance. Can you also give us a sense, I know you don't always give us quarterly breakdown of Platform volume, and kind of unpack the kind of drivers around the strength in Business, please? Thank you. Yeah. Thank you very much, Mo.

In terms of growth that we've seen in our Q1 2027, obviously, we are very pleased with what we see. This is in line with what we saw last year, and also confirmed our strategy to invest and reinvest the efficiency in our business. We think the growth that we saw in Q1 is in line with our expectations. Concerning the full year, as you know, we expect to continue to pass the efficiency that we get also into pricing. This quarter, in April, we lower our take rate by one basis point. We announced three weeks ago that we will do two basis points reduction in the second quarter, followed by probably one and one in Q3 and Q4.

The first part of the year is obviously not impacted, or not so much by the price reduction, while the rest of the second half of the year will be. On a projection, we guide you, or we guide the market, that we will be at the middle of the range for 15%-20%. It's fair to say that we always take a conservative view, and we feel comfortable with this guidance as of today. On Platform, as you can imagine, we're super excited. We leverage our infrastructure. This is the best way to acquire customers. We don't need to acquire them one by one, we provide this infrastructure to partners, which, in reverse, open again, indirectly, their customers are using us. We're extremely bullish. We have a nice pipeline.

I'm very happy to announce that today we're at 6%, roughly around 6% of our total cross-border volume generated by the partners. As also Crystal mentioned, three weeks ago, we have a nice pipeline, we're looking ahead with confidence.

Okay. That's great. Thank you, Emmanuel.

Thank you, Mo. Thanks, Mo.

Next we have Aditya from Bank of America. Over to you, Aditya. Hey, Emmanuel.

Sarah, can you hear me?

Yes. Good evening or good morning.

Good evening. Yeah, good evening, actually. Thanks for taking my questions. Just a couple. Customer growth was quite strong, up 21%. Could you just comment on how that maybe looked like by region? Are you starting to see some of the benefits of the marketing spend you've been doing across some of those markets? Second, you mentioned very strong spending on business cards in North America and growing adoption of the personal card in U.S. and APAC. Any color on that as well, in terms of what's driving that, and maybe is that more features or just part of the marketing push as well?

Yeah, thank you for your questions. Well, in general, we have growth across the regions. We invest in all regions, as you know, because you mentioned marketing last year, we've done campaign in all segments almost. We're very pleased with what we see the evolution in APAC, but especially in America. I mentioned businesses today, which grow very nicely, in terms of active customers and also volumes. That's fair to say that these regions is benefiting from our investments that we've done. We will disclose a bit more in half year in terms of region development, but APAC, as we mentioned before, and North America, especially U.S., are overperforming. In terms of APAC card revenues, this is in line with the customer activities, and I think you could expect that APAC and also Americas are performing extremely well here.

Thanks, Aditya. All right, thank you.

Thank you. We have Justin Forsythe from UBS. Hi, Justin. Sorry, that wasn't working.

Good evening, Emmanuel and Sarah. Thank you so much for this. A couple questions, if I don't mind. The first one here, I just want to talk a little bit between the relationship between revenue growth and the IBT guidance. Both were confirmed here, and you're pointing everybody to the midpoint of the revenue guide, and reiterating the high end of the IBT guide. Should we think about it as the 17.5, let's say, the midpoint equals that, call it 24%-25% IBT margin? Meaning, if you were to overshoot and do, say, 20%, the high end of the revenue guide, how does the correlation with margins work there? Would you then invest down to the IBT margin, say, with price cuts, with additional headcount, or something of that nature?

Second question, you flagged personal Card adoption in the U.S., and that's really interesting because I feel like in the past, you've flagged, actually, challenges to winning in Card adoption in the U.S., given all of the rewards from interchange that customers can get and spend. I just wonder if you could elaborate a little bit more on how you're winning in the U.S. Is that expats that are spending elsewhere? Is it people that are spending in the U.S.? I assume you mean U.S.-domiciled people spending elsewhere on the Wise Card. Maybe if you could just elaborate on that a little bit, if you don't mind. Thanks. Absolutely. Yes, within the guidance on IBT that we give today, this is assuming that we will be at the middle of the range for our net revenue guidance.

Between 15%-20%. You mentioned if we overperform, what will be our reaction or what will be the consequence on the IBT? We will first look at, do we have space to reinvest at good return? We will, as mentioned, invest, not spend. For us, we will consider to accelerate these investments. If we don't find room to invest, the consequence will be it could have an impact on our IBT. It's too early to say. I think today, we feel comfortable with this guidance, and we will always first look at reinvestment, because these reinvestments are paying off. We see the growth rate in all metrics, and we will continue.

As such, we feel like we have enough room to invest, and we are dedicated to gain more market share in terms of total TAM, that you know is really, really large. In terms of card adoptions, this is correlated to our business customer growth. Clearly, in America, we see a very acceleration of these business customers, and accordingly, you have a correlation to the card spending and card revenue that we generate from this.

Got it. Emmanuel, thank you so much for that.

Sure. I thought you did also say personal card adoption in the U.S. was strong as well, but maybe I misinterpreted that.

Thanks again for the questions, and congrats on a great quarter. Appreciate it. No, thank you very much.

This is both, but obviously business will have larger volumes and hence will generate more revenue per customer, if you will, if you look at the business revenue on Card.

Great. Thanks, Justin. Next question is from Cristopher Kennedy from William Blair. Hi, Chris. All right. Thank you for taking the question and for the time.

Historically, you've given some interesting statistics about the outcomes when you establish direct connections in certain countries. Can you provide any color on the benefits that you're seeing from Japan or Brazil, some of your more recent direct connections relative to history?

Yeah. Thank you, Chris. In general, as you know, this is core to our value proposition. This direct integration make us so unique. This is why we get partners joining us, that they're using our Platform, our direct integrations. In general, the direct integration are beneficial for our cost base. We generate efficiency with us. This is true with servicing. Instant payments, and we had 77% of instant payment in Q1, so we continue to increase this percentage from 75% to 77%, have not only satisfy our customers, but also reduce the numbers of contacts that we have with the servicing. So this is a direct cost savings. With that, also direct integrations, we are avoiding to work with partner banks for certain countries because then we can provide the liquidity faster. So that have also some savings on the cost of sales.

In general, direct connection, and we see that with all direct connection, are beneficial for efficiency. Efficiency that we can then decide to reinvest either in OPEX or in pricing.

Got it. Thank you for that. Just to follow up, are the benefits in Brazil and Japan in line with the other direct connections that you've had, or any observations within those two markets? Thank you for taking the question.

No, sure. Absolutely. I think I'm not able to tell you right now exactly the amplitude of the savings. As you know, in the past, we've seen the cost divided by nine times in the U.K. It's too early to say right now for this, but we will give you more colors as we go through, and then we can start with H1 results.

Great. Understood. Thank you. Thanks, Chris.

Thanks, Chris. Now we have Sven from Barclays. Hi, Sven. Good evening. Thanks for taking the questions.

Maybe first, can you comment what revenue growth was in the quarter on a constant FX basis, and if there was any change in the underlying trends from where you exited the year? Then, secondly, it's very encouraging to see that business active customer growth has accelerated again, and now accelerated for a few quarters. Would be interested if you could share any color on how you see this developing from here. Thank you. Sure. Well, we don't give constant currency revenue, but what I can give you is basically the constant currency on volume.

We were at 26% as we are defined today, and the constant currency growth rate for cross-border volume would have been at 24%. They give you a bit the direction of travel, the difference between reporting currency and constant currency. I must confess, I forgot the second question. If someone can help? Yeah.

Maybe I can quickly check.

Oh. In principle, should the volume and the gap between the constant FX and reported volume growth be similar or, yeah, a good proxy for what net revenue was in the quarter?

Yeah, absolutely. It's a proxy, right? It gives you a very good direction of the difference that you will see between constant currency and reporting currency. Now on the business customer growth, because that was, I think, the second part of your question.

Exactly. I think what you see is they're all investments that we've done in here.

If I may highlight one in particular, this is the benefit of having a dedicated team in servicing, contacting the business customers proactively, and making sure that not only we react to their questions, but we also look at the business and provide services that they might be not aware of or functions that they should use in their workflows. More and more we see the benefits of being proactive, and the reward is the satisfaction of the businesses, and them grow the business with us.

Perfect. Thank you. Thanks, Sven.

We now have Pavan from Citi. Hi, Pavan. Hi, Manuel and Sarah.

Hopefully you can hear me. Thanks for taking my questions. Firstly, just on the elasticity of volumes, you reduced AP very slightly this quarter and plan to continue fee cuts through the year. Could you maybe talk about the timing of when you expect to see the benefits of these? For example, have you already started seeing a benefit of the recent fee reductions within the quarter itself? Secondly, volume per customer growth has slowed in Q1. Appreciate that VPC is more of an output and there's a mix effect there, but is there anything specific to kind of call out?

On elasticity volume, I think, clearly elasticity for us is a long-term game, if I may say so. We don't expect short-term benefit from this, especially when we reduce the take rate by one basis point. We know that on the long term, that is the reason why you or businesses or even partners are choosing to work with us. The combination of the infrastructure that we provide at the very low take rate will always be the reason why people at the end choose to work with us. That's why I will not expect a short-term positive impact or in terms of getting customers before because of their price reduction. This is a long-term game, and this is for us, part of our core of the mission.

We want to continue to reduce the take rate because we know that at the end, again, this is the reason why our customers use us. In terms of VPC, I will not read too much into that. This is not really due to the combination of retail, business, and partners. The VPC is less and less a KPI that we use also because of the diversification of our revenue structure. Yeah, indeed, there's also a volatility component to that.

Thanks, Pavan. Thanks. Thanks, Pavan.

Thank you. Next we have Hannes from Jefferies. Hi, Hannes. Hello, good evening.

I appreciate the details around the take rate declines expected for this year. Can you just a little bit help us how we should think of the moving parts from going from Q1 +25% growth to come to reach to the midpoint of the 15%-20%? If I'm thinking you had quite a nice, resilient gross yield, that was one part of it, then the take rate should decline. Should we expect card spend and other revenues to hold up? Thinking about the customer growth, do you think that can remain above 20%? Thank you. Well, thank you, Hannes.

In general, as you said, the take rate reduction will take part in Q2 with 2 basis points and then 1 basis point, most probably in Q3 and Q4. As I said, the vast majority still today or majority of our revenues is coming from cross-border volume. The impact on pricing will be perceived on our revenue, on the net revenue. That's why when we are forecast for the rest of the year, we think that the pricing impact will be on the growth rate, and that's why we guide between the 15%-20%. Yeah, that's basically the philosophy behind it.

Maybe you can comment on the other parts, like customer growth.

Oh, yeah. In terms of customer growth, I think you've seen that we still have a very high KPIs. We're very happy with the customer growth, especially in business. This is in line with what we saw last year. As we continue to invest in OPEX, in marketing, and increase the quality of our service, we expect basically this customer growth to continue. Hopefully, we're very happy with the return that we get in terms of customer growth, especially in business that we saw in Q1.

Thank you. Thanks. Thanks, Hannes.

We have Craig McDowell now from J.P. Morgan. Hi, Craig. Hi. Good evening, Sarah.

Good evening, Emmanuel. Thanks for this.

Good evening, Craig. I just want to pick up on a point Pavan made on VPC, and in particular on personal VPC.

I know a year or two ago you were talking about very deliberately targeting price reductions to generate higher VPC customers. It feels like that's run its course. Should we be thinking about stable VPC on the personal side of the business going forward? Even a decline if you're moving into perhaps APAC regions, perhaps? If you could comment on that would be helpful. The second question, just a brief tactical one. Any kind of benefit that we should sort of discount in the Q1 or maybe even Q2 performance just from World Cup? Presumably quite a lot of activity happening in the U.S. that you may well be benefiting from. Anything to comment there would be helpful. Thank you. I start with the benefit of the World Cup.

I think it's not that significant in our Q1 results. I will more looking at events that happened, more geographic or political events. I mentioned briefly the 26% cross-border volume growth, compared to last year, where we did have some political decisions around Liberation Day and so on and so forth. I don't think that we have a massive benefit from the World Cup compared to the entire business. In terms of VPC, indeed, the VPC per customers might be different from region to region, depending on the GDP of the countries or the region itself. Depending on where the volume will grow, we will see maybe VPC declining in a specific region. Overall, I think VPC is not the metrics that we use for the reasons that I explained before.

The customer mix make it very difficult to use this as a real KPI to measure the business. We prefer to look at the deposits of our customers, which is a very strong sign of the trust that they have in Wise, them growing their money. I think that's a very strong KPI. This is true for retail, this is true for businesses as well.

Understood. Thank you. Thank you, Craig.

Thanks, Craig. Now we have Alex from BNP. Can you hear us, Alex?

Can you hear me? Yes.

Yes. Hi, Alex. Hi. Good evening.

Thanks for doing this. Just 2 questions. One is slightly technical, but just thinking of a share buyback program that you talked about a few weeks ago. Just curious if this has started already, and if you're buying back shares on the U.K. line or the U.S. line, how we should think of a cadence of a share buyback. That'd be my first question. Second question, because you alluded to it just now, Emmanuel, sort of customer deposit growth, which was quite healthy in the quarter. I think on the per customer basis, it slowed down a little bit. How should we think about that, sort of customer deposits on a per customer basis slowing down? Is it a function of, say, a fiscal Q1 that might be a bit travel heavy with people who might have lower current balances in their accounts?

Just curious how to think of that.

Thank you very much, Alex. In terms of buyback, we are in the execution mode. We do have, for the full year, the approval of our regulators, we are executing on this. Our aim is not to have any impact on the trading, in terms of volume that we will buy per month, nor on which market we'll buy. We aim to buy on both London market and New York market. We don't want to have any impact on liquidity or on the share price. That's a kind of philosophy. We will use, for example, ADTV as a metric. We will look at what is the average, and we will put a threshold so that we make sure that we don't influence the trading. We are in full execution mode, and that will last for the next 12 months.

In terms of customer deposit, and the growth of it, I will not read too much into it at this moment. We say this is a snapshot. I think I would like to wait until we have a 6-month view in the year to give you more detail and to comment a little bit more.

Got it. Thank you. Thank you, Alex.

Thanks, Alex. We don't have any more questions. Thank you everyone for joining us. Thank you for all your questions.

Thank you everyone for your support. Have a good evening. Thank you.