The amount of money Wise sends across borders fell in the fourth quarter, sending shares in the London-based fintech down sharply on Tuesday morning.
Wise said that the value of cross-border transfers fell to 26.4bn in the final three months of 2022, its first decline in more than a year and 2 per cent down on the last quarter.
The fintech’s shares dropped more than 6 per cent in mid-morning trading.
Wise said the average amount that personal customers transferred fell to £3,500, the lowest level in two years and blamed the drop on higher than usual volume earlier in the year.
The company said that customers had brought forward money transfers in the first half of the year due to fears of currency volatility and rising inflation.
“Volatility in the currency markets has definitely been a tail wind in the last couple of quarters,” said Matthew Briers, Wise’s chief financial officer, adding that the negative impact on volume “could last a quarter [or] it could last longer than this”.
Despite the falling remittance volumes, rising interest rates and higher prices boosted total revenue for the quarter, leading Wise to upgrade its guidance for the year.
A rise in how much Wise charges to send money, which the company said stemmed from higher foreign exchange costs, contributed to the 80 per cent increase in total revenue to £268.7mn.
The average price for customers to send money was 0.66 per cent in the quarter, a 6 basis point increase year on year. It is the second quarter in which Wise has raised prices since 2020.
“Obviously our goal is to try and reduce prices, but we will only do this when it is sustainable in the long run,” said Briers.
Net interest income on customer balances rose to £43.5mn in the quarter boosted by higher interest rates, compared with a loss of just under £1mn a year earlier.
Wise expects that total revenue — made up of transfer revenues and net interest income — will grow between 68 per cent and 72 per cent this year, compared with the 55 and 60 per cent it predicted previously. It also expects an increase in its adjusted ebitda margin of 22 per cent in the first half of the year.
Its medium-term goals remain unchanged, however, including revenue growth of 20 per cent.
Analysts at Numis remained upbeat on the outlook for Wise, stating that they “see no reason why revenue growth should not remain above 20 per cent also in the coming years as the group continues to take market share from the banks”. The volume of transfers per customer were closer to long-term trends, they added.
The fintech is seeking to move on from several scandals over the past year. In June, the UK’s Financial Conduct Authority launched an investigation into chief executive Kristo Käärmann over deliberately defaulting on tax payments.
In August, its subsidiary was fined by the United Arab Emirates’ financial regulator over failures in its anti-money laundering controls.
Wise’s share price has fallen more than 10 per cent over the past year, part of a sell-off among fintechs hit by falling consumer sentiment and investor wariness in a rising rate environment. Shares in online remittance service Remitly fell 18 per cent over the same period, while the value of PayPal dropped more than 50 per cent.