Wise, the UK-based fintech leader in international money transfers, has reported a pre-tax profit decline of 8% for its latest financial year, falling to $660m (approximately £500m). Despite a notable increase in revenue, which rose by nearly a fifth to $2.5bn, the company's profitability was significantly impacted by escalating operating expenses.
The surge in revenue was underpinned by a 21% expansion of its customer base to reach 19 million users. However, this positive top-line performance was heavily offset by a sharp rise in operating costs, which increased by almost 40% to $1.9bn, outpacing revenue growth by a factor of two.
Transaction expenses, linked to the expanding customer base, increased by 36% to $514m, while investment in technology jumped 38% to $434m as Wise enhanced its engineering staff and cloud infrastructure. Marketing and sales costs also surged by 62% to $172m, reflecting efforts to attract and retain customers in a competitive market.
A significant portion of the increased expenditure was directly linked to Wise's strategic shift to a primary US listing on the Nasdaq stock exchange. The company spent $473.4m on share repurchases ahead of its May debut, primarily for its Employee Share Trust to acquire 35.9 million shares from the open market and mitigate shareholder dilution from historical share options before the transition.
The establishment of a new Jersey entity as its ultimate parent company to facilitate this listing change also contributed to a 40% increase in general and administrative costs over the last 12 months, reaching $382m. The decision to shift its primary listing was positioned by Wise as a pathway to potential inclusion in major US indices.
The move has been seen as a blow to London's financial centre, with Wise having previously been considered a potential candidate for blue-chip status on the London Stock Exchange. In addition to these financial developments, Wise is facing scrutiny over a fraud investigation initiated by Belgian prosecutors last year, examining whether it failed to comply with anti-money laundering (AML) laws and channelled illicit proceeds amounting to approximately €500m (£432m) through its accounts.