Wise: Higher Net Interest Income Yields Improved Guidance

Wise WISE reported a limited set of data points in its second-quarter trading update. The financial technology company had 22% revenue growth to GBP 259 million, supported by a 3-basis-point larger customer price at 67 basis points and 8% volume growth. Active customers on the other hand grew 32% year over year to 7.2 million. Higher interest rates benefit Wise’s account business, driving additional income from customer balances. In the second quarter of fiscal 2024, Wise earned GBP 86 million in net interest income from funds held in its accounts by its customers versus just GBP 18 million in the same period a year ago and a negligible amount in the years before 2022. Income guidance was lifted as a result of the stronger-than-anticipated net interest income performance to 33%-38% growth in fiscal 2024 from 28%-33% previously. We maintain our fair value estimate of GBX 520 per share and no moat rating.