Wise shares slump on revenue warning
Money transfer group Wise saw its shares slide after it warned price cuts would dent its secondhalf revenues.
In a trading update, the company said customers used its services to transfer £18bn in the second quarter, a 36pc increase year-on-year and 10pc higher than the previous quarter.
Customer numbers, meanwhile, rose 22pc to 3.7m, while the number of businesses using the firm’s services expanded by 44pc. The company also said it had speeded up its service, with 40pc of all transfers delivered instantly, up from 38pc in the first quarter.
However, Wise said it had dropped prices ‘faster than hoped’, meaning the average transfer fee for customers had fallen to 0.62pc over the quarter from 0.7pc a year ago.
As a result, the company said it expected revenues in its second half to be ‘slightly lower’ compared to the first, although it continued to target revenue growth in the ‘low to mid’ 20pc range for the whole year.
‘We’re moving more of the world’s volume and operating at a lower cost, the benefit from which we’ve passed on to our customers, whilst maintaining a sound sustainable business model that’s investing even more for the long term’, said Wise co-founder and chief executive Kristo Kaarmann.
However, investors were less than pleased, with the shares sinking 6.9pc, or 63.8p, to 858.2p.
Wise is attempting to move on from a massive tax blunder by Kaarmann that was revealed last month. The estonian billionaire, who set up the company in 2010, was fined £365,651 by HMRC for deliberately defaulting on his taxes in the 2017-18 tax year.
The incident, which could see Kaarmann sanctioned by the Financial Conduct Authority, has also tarnished Wise’s reputation, which was seen as one of Britain’s tech success stories after its listing on the London market in July.
The FTSE 100 was barely moved, up 0.19pc, or 13.7 points, at 7217.53 while the FTSE 250 rose 0.37pc, or 85.35 points, to 23054.09.
The market seemed unsure of which way to turn, with many traders awaiting more US earnings as well as any economic data that could point towards an imminent rise in interest rates.
Meanwhile, online gambling group 888 saw red after halting its operations in the netherlands following what it said was an ‘unforeseen’ change to Dutch gambling laws. The country changed its rules at the start of october which meant gambling firms need to apply for a licence to offer online services to customers.
While 888 said it intends to apply for a licence in the coming months and expects to resume operations in the netherlands in the second half of next year, it warned the temporary stoppage will knock £7.2m off its earnings. The news was included in a trading update that showed signs the company’s revenue growth was slowing down.
For the three months to october, the company reported revenues of £166.5m, up 7pc year-onyear, although this was less than the 10pc rise recorded in the prior three-month period.
The shares were down 2.1pc, or 8.6p, at 407.4p.
RHI Magnesita, a maker of heatresistant materials for the steel industry, climbed 7.7pc, or 226p, to 3180p after inking a deal to acquire an 85pc stake in Turkish rival Sormas for £33m in cash. The firm added that it has increased prices to offset rising costs in shipping and energy, which it said will support its profitability in the fourth quarter of this year.
education outfit Pearson was one of the FTSe100’s biggest risers (up 2.5pc, or 15.6p, to 630.8p) after receiving an upgrade from analysts at Credit Suisse.
The broker upped its rating to ‘neutral’ from ‘underperform’ but cut its target price to 680p from 750p based on lower profit estimates in the longer term.