Expanded Market Share Causes a 55% Profit Jump for UK Fintech, Wise
UK fintech startup, Wise has registered a 55% increase in profits in the first half of its 2025 financial year. CNBC reported that the Wise profit jump was driven by expansion of the company’s customer base and its growing market share.
On November 6, 2024, the digital payments company announced that its first-half profits stood at £217.3 million, which is £77 million more than the amount the company recorded a year ago.
Rise in Active Customers
The UK fintech profit jump came on the backdrop of a 25% rise in active customers. The company reported that overall, 11.4 million businesses and consumers use its digital payment platform.
Wise reported £591.9 million in annual revenue, which represents a 19% increase in its year-on-year revenue amounts. Following the Wise profit jump announcement, the value of its shares rose by 8% on November 6. The stock surge came right after the company entered a new partnership with the Standard Chartered bank.
“I continue to be bullish on Wise at these levels. While management lowered consensus expectations during full year results in June citing increased investments, I believe they have over provisioned the cost base as they have done in the past,” Gautam Pillai, Fintech Research Head at Peel Hunt said.
This partnership will see the British digital payments platform facilitate cross-border payments for the bank’s retail customers.
Link to Global Payment Systems
Earlier this year, fintech firm Wise released a sales warning that caused its shares to dip by 21%. In June 2024, the digital money transfer firm said it expected its year-on-year income for the 2025 fiscal year to grow by between 15% and 20%. These projections were much lower compared to the 31% growth the company had realized in the year ending March 2024.
Pillai attributed the increase in Wise profits beyond the projected amount to the company’s increasing direct linkage to the global payment systems. He further adds that lower foreign exchange costs may have enabled the company to lower the cost of its money transfer costs, which boosted its profit margins.
In October 2024, Wise recorded a 17% rise in its underlying income for quarter two of 2024. The company said it was on the way to achieving a 13% to 16% underlying profit before tax margin in the medium term, noting that it needed not make additional investments to reduce its prices in the second half of the 2024 fiscal year. When announcing its half year results, Wise said its underlying profit before tax margin for the first-half was 22%, which is above its 13% to 16% target. Wise expects its investments to bring down its product prices and reduce its profit margins to its target levels in the second half of its 2025 financial year.
Expansion Plans
In August 2024, Wise announced plans to expand its services to the Indian market. The expansion plan was part of the fintech company’s strategy to expand Wise market share and tap into India’s overseas remittances which currently stand at $32 billion.
Last week, UK’s Financial Conduct Authority (FCA) fined the Wise founder and CEO Kristo Käärmann a total of £350,000 ($453,565) for failing to notify the regulator of a £365,651 penalty he paid to HM Revenue and Customs (HMRC) in February 2021. Kaarmann had attracted the penalty after he failed to inform the tax authority of a capital gains tax liability after he sold shares worth $10 million in 2017.
