Wise sees strong growth despite margin pressure

Leading UK fintech Wise (formerly Transferwise) delivered a strong Q1 FY26 performance in this morning’s trading update, with cross-border volumes surging 24% YoY to £41.2bn, driven by expanding customer adoption across its payments network. Active customers grew 17% to 9.8m, while customer holdings increased 31% to £22.9bn, demonstrating deepening engagement.

The success of Wise has been founded on its modern technology infrastructure and its ability to deliver significant efficiencies compared to the outdated traditional methods. By bypassing the expensive correspondent banking system, Wise connects directly to local payment systems and provides streamlined and cost-effective global transfers. However, the company's deliberate pricing strategy continues pressuring margins. The cross-border take rate declined 12 basis points YoY to 52bps, reflecting both competitive pricing and customer mix shifts toward higher volume users. This dynamic constrained underlying income growth to 11% (14% constant currency) at £362m, below the historical volume-to-revenue conversion.

Management maintains confidence in achieving medium-term guidance of 15-20% constant currency income growth, with FY26 expected at the upper end of the 13-16% profit margin target range. Strategic initiatives including European banking partnerships with Raiffeisen and UniCredit, plus the proposed US dual-listing, should help Wise capitalise on the massive cross-border payments opportunity while balancing growth investments with profitability targets.

Posted by: Marc Hardwick at 08:31

Tags: FinTech   trading update