Wise Group plc (WISE) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Wise Q3 Trading Update Analyst and Investor Call. [Operator Instructions] I must advise you that this conference is being recorded today, Wednesday, the 19th of January 2022. I would now like to hand the conference over to your speaker today, Matthew Briers. Please go ahead.

Good morning, everybody. This is Matt. I'm the CFO of Wise. Thanks, everyone, for joining. It sounds like we've got a bunch of -- quite a lot of people listening in. So what I'm going to do is, I'm going to give you an update on our Q3 results for this financial year, which is FY '22. So how did we do in October and November and December? And as you know, we kind of have been doing these quarterly updates where we talk about what have we done in the quarter? What -- I mean, from that perspective, what have we don't? And then how did our -- what happens to our volumes, our customers, our volumes and also our revenues in the quarter. So let's start with what did we do? Well, we actually continue to make kind of good, solid progress on our mission. What is our mission? Well, our mission, as you know, is to make money -- moving and managing money across the board faster, easier, cheaper and more transparent for everyone, everywhere. So what does that mean? Well, core to that is actually making it cheaper and faster to move money around the world. And in recent updates, we've spoken to you a lot about price. Over the last year, we dropped prices in around 50 of our currencies. And we're dropping quite significantly, as you've seen the take -- the customer price actually dropped from around 69 bps, 0.69% a year ago. It's around 0.6%. For customers, it's really big deal. And you've seen some of that flow through into our take rate. But actually, in the last quarter, we did make some price changes. So the biggest change is around speed, and we're really, really pleased with this. We think about speed is like what percentage of our transfers are instant. That is, if you imagine you've got your -- you've got your phone in front of you with the Wise App and you're on our Wise Account. When you press move money, send money, how fast is that available in the recipient, the person you're sending to his account. We think if it's there within 20 seconds available to you, that's pretty much instant. We actually move the percentage of our transfers around the world go instant from 40% to 45%. I mean nearly half of our transfers now are instant, which is really game changing for the customers that need to move money around the world. It reduces anxiety and stress and pretty much wows them with the experience they're getting of Wise. How did we do that? Well, a lot of [indiscernible] so lots of work on operational efficiency. We managed to speed up how can we do security checks on our customers and resolving a bunch of technical issues which actually caused these delays. For example, on payments sent to India getting a lot faster. This is hard work that we invest in now that will pay off in the feedback to most and the kind of support and loyalty our customers give us in the future. And this is actually -- it seems like this helps drive our word-of-mouth growth and helps us grow. We also have spoken in the past about our Wise Account. Wise Account is really the core to our proposition. It helps customers receive money, hold money, even start investing that money through our Assets products in the U.K. and actually obviously send money to themselves through their Wise accounts around the world. We launched this now in Malaysia with the Wise Account and the Card. And then we also launched a Wise Card in Canada and Brazil in the last quarter, which is very cool, which are things that we've done now that will hopefully kind of help us continue to grow in the future. Also, for people who want to send money to China, to their business customers too can now make payments to China from 8 currencies. Actually, Alipay users will now be able to send money to China from support Wise currency to an Alipay recipient. Now obviously, it is a big opportunity. It's going to take time. But actually, we're just slowly and steadily making it easier to move money into China. These are all things that we've invested our time, energy and resources in the last quarter, which hopefully will continue to help us grow in future. But actually, in this quarter, let's talk about what happened to our growth. And remember, what we're seeing in this quarter is really a function of the things that we have been talking to you about over the last many quarters, as we've been building the company. In the last 3 months, we saw actually a significant increase in the number of active personal and business customers. We have over 4 million personal customers active online using our Wise Account, using our money transfer service and using Wise to manage and move their money around the world. That's 11% increase quarter-on-quarter and shows actually personal customer 26% year-on-year growth. Actually, in business customers, we saw 10% increase Q-on-Q as well. So just both across personal and business, we saw good solid increase in our number of active customers. So how does that translate to volume? Well, most notably in business, for business customers, we saw an amount of money that they move increase. Actually, the average active business customer moved almost GBP 22,000 in the quarter. [ That's a ] big increase Q-on-Q. We saw 12% increase versus the previous quarter. Now part of this we think is volatility. And we have said before that actually, we'll have quarters where our customers move more, which can follow a quarter where they move less or actually can be followed by quarter where they move less. The people and businesses might have seasonality in how they move money can be driven by circumstance, but also, for example, what's happening to rates and markets. So we're cautious around expecting this GBP 22,000 to continue -- we'd rather kind of consistently look for what's happening to our businesses over time. But one thing that we are seeing is actually we've made it easier for businesses to send larger amounts over this period of time, which has helped contributing to this increase. So what does that mean for volume? Well, you can see from the numbers, the volume has actually grown to GBP 20.6 billion in this quarter, which is actually a big jump quarter-on-quarter following these trends in actives and volumes for customers. Actually, moving -- increasing volumes 38% year-on-year. It's 32% for people and actually almost 60% still for businesses. It's really strong fundamentals of continuing to grow our active customers through growing our better proposition. And as more of our customers love our product, tell their friends, recommend others and our marketing efforts grow the base. And as our product grows, our Wise Account in particular, this is what's driving our volume growth. And when you think about it, GBP 20 billion is an awful lot of money. On the one hand, it's a small portion of the actual total market. But actually, to be growing -- moving GBP 20 billion, but also growing at about almost 40% year-on-year. We feel it's quite [indiscernible]. So what happened to revenue? Well, our take rate, and we've spoken about this in the last few quarters, is 73 bps or 0.73% of the amount of conversion volumes that we moved. Now we did say that was going to decrease Q-on-Q. It did. And that's partly because the price drops we made in the previous quarter had a full quarter impact this quarter. And the reason it's declining because the conversion price was what we dropped, but actually, it's somewhat offset by good, solid momentum in our Wise Account, which actually gives us other sources of revenue, which contributes to that take rate. So overall, revenue grew 34% year-over-year to almost GBP 150 million for the quarter. So what does that mean? Well, we continue to work through this financial year and invest looking forward. Through our guidance, we shared in the note you have seen that actually we expect revenue for this year to be growing around circa 30% year-over-year versus the previous year. We're not -- we continue to expect our gross margin to come in the 65% to 67% range. And so that's what we've updated for our guidance for this financial year. Finally, we'll be head down working on our financial results and our first annual report, which is exciting for us. So the next time we speak will be when we present that to you for our full year results, which will include the Q4 results in June. So at this time, I'll hand back to Martin, love to hear any questions and hear what is on peoples' minds.

[Operator Instructions] And your first question today comes from the line of Adam Wood of Morgan Stanley.

It's Adam from Morgan Stanley. Also, congratulations on a good set of numbers. Maybe just 2 questions from me. First of all, you alluded to the volatility between quarters in terms of results. I guess a lot of investors have been asking us questions around competition in the markets. And is there any kind of correlation between the competition that you see and those volumes that you're getting in the business? So any change in the competition? And maybe particularly around some of the remittance phase, you mentioned the GBP 20 billion that you've moved this quarter. Could you maybe give us a little bit of a feeling of scale that you have versus some of those other players you have [ that's trended ], please? And then maybe just secondly, you talked about the amount that customers are spending with you and that's seeing nice increases. Could you maybe just talk a little bit around when you get the Card into business user, into personal users. I don't know whether there's kind of any anecdotal evidence on the investment products, how that increases the engagement and how that can help the rates at which customers are transacting with you?

Great. Thanks for the questions. On competition, it's interesting like that. We moved around -- it's GBP 20 billion we moved. Just to put that in context, it is a similar order of magnitude in dollars to some maybe Western Union's moving. I think you need to look at the FX and just see how it's going. It's a significant number. And it's also significantly more than some of the kind of newer remittance companies moving on a quarterly basis, although they are doing a great job and growing well. And one way to think about that is just like whilst we've grown from 0 to GBP 20 billion over the last 10 years, actually, most of that volume has come not from other remittance companies, but rather it's come from banks. And so actually, really when you asked the question, Adam, around competition, it's like how are we competing -- continuing to compete against banks. Most of our customers come from banks. They used to use their banks and now they're using Wise. And actually, we haven't seen a material change at all in what banks are doing. They're continuing to hide high prices, high spreads in their rates, not really innovating on what they're offering and where they are, they're trying to maybe integrate folks like Wise or others and trying to move that forward. But when you look at remittance, clearly, some of them have a competitive offer but that it's quite a smaller scale typically. And we do see at quite a high price point. We've not dropped our prices to react to how others are pricing. We're continuing -- we're leading on price, and we're continuing to do that by charging a fair but just price to our customers. And we think over time this combination of our scale and that strategy is going to make us extremely compelling to our customers and then obviously highly competitive in the industry over a 10-year horizon. Your question on Card and what happens. Actually, maybe the data point -- so point 2 would be when we listed, we shared what happened for our Wise Account users. And you can see for people who use the Wise Account, they tend to move maybe twice as much or significantly more volume than somebody who doesn't have the Wise Account. And it's true for people and businesses. They're much more active. And they send more volumes through us. And the Card, whilst it's a feature of the Wise Account, it kind of crystallizes the Wise Account. It's hard for people to think about having a bank account, who does not have a debit card. So actually, putting the Card in people's hands or even virtually in their wallet is quite an important step and really brings the Wise Account much more useful for our customers, whether it's people spending if and when they travel or businesses paying some of their business expenses and distributing those cards to their customers. So you can see that difference between a typical money transfer user and our Wise Account user and you can see that actually as we can get -- launch our Wise Account around the world, we have more customers that use more -- that has great utility for Wise and ultimately, this will drive our volumes.

Your next question today comes from the line of Joshua Levin of Autonomous.

This is Josh Levin from Autonomous. A follow-up question on the competitive landscape. How do you see it evolving from the perspective of tech players like Facebook and PayPal? And then the second question is an update on Mission Zero? Is Mission zero still in effect? Is it still part of the company's strategic goal?

Thanks, Josh, for those questions. So tech, we saw Facebook make some self-experiment with some of their products. And it's been quite interesting to watch, but it seems relatively small scale. Our perception is that there's lots over the next decade. There's clearly lots of interesting technology that can come to bear to help generally payments or financial services or moving value or money around the world, and we'll keep an interesting eye on this. To date, we've not found any of that technology helping us move money faster, cheaper or easier or anybody else at this stage. Yes, it's possible to move like a coin from one platform to another. But ultimately, these are within close distance and actually getting the challenge that Wise is really solving is getting a fiat currency onto our platform and then into another customer's account instantly and typically another fiat currency, which is where the world is moving. It's kind of how commerce is moving today around the world. So we don't see -- so our focus in the near term is very much on building this infrastructure to solve these problems today. Now in the future, could that change? Like -- and could technology -- other technology players participate? Well, absolutely. And if that technology is useful and is -- makes our lives easier to move money faster and cheaper, we'll absolutely be using this technology. That's what we're seeing from the Facebook or the PayPal today is like, we're not seeing anything that we think scale anytime soon that we should necessarily be picking up, rather we're focused on like -- we feel like if you took a banking structure 10 years ago, we feel we've radically changed that to help money move much faster today. And we're already thinking like in 10 years' time what would that look like. But at the minute, like the approach we're taking in the field around integrating directly into payment systems is what makes it faster, cheaper and easier for now. On Mission Zero, it just kind of follows that point actually, which is our long-term focus is how do we continue to drive down the cost of money -- moving money around the world? And can we ever get that down to zero? That's a real challenge for us, but it's a North Star we continue to aim at. We've -- we'll continue to focus on how do we optimize the way our [ costs ]. But one thing for sure is, we're never going to achieve that unless we do it sustainably by building a healthy cash-generating business model for our shareholders. Now we're at 60 bps today as a customer price and you see our take rate is around 73 bps, but we're a long way away from 0; a long, long way away. Like can we get that down another 10 bps? That's what we're very much focused on. And over what time horizon? As I said, it's going to take us a long time. Like -- so one thing is sure is if we focus on this Mission Zero, like we feel that actually like we'd lose focus on this overall mission and the discipline and the kind of -- the discipline that we have in the business is really a function of having this mission. So you can see what does that do for strategy. You can see the things we're doing on our Wise Account. That brings in other products, other forms of revenue and fees, which help contribute to our investments that we're making. So hopefully, you can start to see how that Mission Zero can play out in a healthy economic value growth environment.

Your next question today comes from the line of Mohammed Moawalla of Goldman Sachs.

Just for me a couple. So first of all, just I know you talked about the sort of volatility in quarter-to-quarter [indiscernible], but I don't think you commented on kind of the midterm outlook. How should we think about the trajectory towards the mid-term goal given some of the kind of momentum you're seeing off the kind of price reductions, but also some of these more strategic announcements we're seeing. Is there any sense around kind of your visibility improving around that kind of longer-term trajectory, particularly with some of the kind of share gains accelerating versus banks? And then the second question was just if you could give us a sense around sort of the product road map. So obviously, sort of Wise Account. But you have the kind of investment product that what's kind of in the pipeline? And how should we start to think of the kind of contribution from sort of the outside of the direct kind of remittance-related revenues you're earning, when could that start to have a more meaningful impact?

Thanks, Mo. So we're not changing or updating on our medium-term outlook today. We're focused on what happened in this previous quarter and we do have -- to your point on volatility, like -- definitely, this quarter is a blend. We've seen really strong kind of volumes come through, supported by what we've seen with business customers and just good, solid fundamentals on active customer growth. It's too soon for us to call on and start thinking about medium-term outlook at this point. We'll update on this at a later date. But the way to think about the volatility is like there's definitely an element of that in there. We're cautious around people taking an expectation that this trend in B2C is an up for Wise. It's like -- I would look over the longer term cautiously at this point and look at some of the more fundamental trends in this. From product road map, you're right for Wise Account. It's really a big focus for us. Like in the U.K., we're all blessed with having like a pretty amazing experience on this Wise Account. We've now got the Assets product. In many countries, we don't even have the Wise Account yet. So we're very focused, as you've seen in Malaysia, Canada, Brazil this quarter and rolling that out, making that better and better in many countries around the world. And that would actually include rolling out Assets and maybe other products as well over time into this global footprint that we've already got. It's going to take time, but we know it's worthwhile because we know the impact that getting the Wise Account in people's hands has. As to your second question as to when would some of these other non-remittance, I think you mean by that non-conversion [ check ] cross-border money start contributing. Well, actually, it already is. I think around 13% or 14% of our income is already from people -- other fees that we charge on the Wise Account. And this will continue to grow over time. And as we launch more products and start contributing to our OpEx and our overheads and our ability to invest in our future growth. But hopefully, what we've seen over the last 2 or 3 years is that continues to grow, which should give you a window as to what -- and maybe to Josh's point around where does Mission Zero go? Well, actually, you've already seen us kind of sustaining a healthy level of overall take rate while having some quite significant shifts in our customer [ costs ].

Your next question today comes from the line of James Goodman of Barclays.

Yes. On the sequential volume increase, which, as you've alluded to, is extremely strong, I think the strongest ever rather than when you bounced back from COVID. As it relates to the increase that you've put through for the full year revenue guide, I mean -- the way I'm looking at it, you need to have quite a meaningful sequential decrease in volume into the fourth quarter to bring the full year revenue growth down to the 30%. So you've spoken a bit about volatility. I'm just wondering whether you really think that's sort of realistic or maybe I'm not being sort of sensible with other assumptions there around pricing or something else. And the second question is just on the gross profit and outlook for the year. Clearly, you had a very strong first half above the range that you've got for the full year. I wondered if you could remind us a little bit the reasons why you think that's going to sort of tick down still in the second half and whether the upside you've seen in revenue is supporting perhaps the higher end of that gross profit range at the very least and for the full year.

James, thanks for the question. So yes, I would -- the -- I do track carefully when we see a big jump in our -- in things like volume per customer. There is -- we do see volatility, especially on a monthly basis in our business. And here, we've seen pretty solid performance across a couple of months that is driven on a quarterly basis through this quarter. I'm just cautious around setting any expectations that we see this continued core strong [indiscernible]. Actually, like at the start of the last quarter, we had this kind of volume, and the next quarter with -- I think our expectations are that's a very healthy quarter. And from what we're seeing going into the quarter and what we know from certain seasonality of what happens in January and February, which can be [ softness ] as we've seen in previous years, like actually we just -- this gives us the reason to [ focus ]. And you're right, James, it's fundamentally around how much money people move in. We're not signaling anything radical that's going to shift on our pay growth. So really, like -- we think like continuing to tick up our incremental customers and volume on a steady average incremental quarter-over-quarter is a good sensible way to look at this. If we ended up with this growth year-over-year on big picture, I think we need to look over the long term and look over longer periods and see these good underlying fundamentals in the business. On gross profit, yes. So just as a reminder, we had 68% gross profit margin for the first half of the year, and we've guided to 65 to 67. So it is pretty straightforward to do the math and people say what does that mean for the second half of the year. Now the reason we had 68 was when we dropped prices, we did it because we cannot because we have to. And the reason we can drop price is because we might engineer a way to save costs. And what we did in the first half is we engineered a way much of our trading efforts and spread costs. Now conservatively, what we do is we don't drop the prices until we're confident that we're seeing that over a period of time. But over that period of time, we've been generating high gross margins in that first half of the year. So then we dropped prices going into the second half of the year, which has given us -- well, okay, so like that gross margin would therefore come down to the target level. And that gives us full year guidance. And we're still very happy with that. We've dropped those prices and see very stable economics and we're still generating that very healthy gross margin, which we are investing and investing heavily in our growth.

Your next question today comes from the line of Omar Keenan of Credit Suisse.

It's Omar Keenan from Credit Suisse. Nice to see how the speed and convenience for customers is improving. Can I ask a question on the active customer growth, which was obviously very strong. Can you talk about marketing spend and virality? How much is driven by word of mouth? And is the increase we've seen, is that driven by word of mouth that is over and above the 67% number that you gave? And then just secondly, is there any more color that you can give around upcoming development to the infrastructure or entrance into new markets?

On the upcoming development to our infrastructure, I'd like to direct you to our product road map, which we do publish. I've had a look at this and so this will hopefully paint a picture of what we're planning to build over the coming years. We actually do this to hopefully -- we share this with our customers, but also people who'd be joining Wise and share what we'll be building. The way to think about that is it's going to be a function of how do we roll out our Wise Accounts around the world and add features and make that more convenient to use. And then underlying infrastructure is just really what helps drive price and speed. So there's lots of small things to build or improve, which eats away this -- think about 55% of transfers, Omar, which are not instant. We've got quite a clear understanding of what drives that 55%. And there's a lot of things to integrate -- disintegrate maybe in order to drive that up over time. So hopefully, that road map will give you a clear picture. That's going to be around rolling out Wise Account, building our platform as much easier to use for platform customers. and then building the underlying structures on it. On your first question, what's been driving up the customer growth. What our CMO and the team has done an awesome job in the last quarters continuing to grow our spend but actually doing it at a healthy [indiscernible]. So I won't talk here around how much that's grown or how much was spent. I'll do that in our results when we show those numbers. But that said, 2/3 of our customers historically have come through word of mouth. That's pure word of mouth referrals, but also our referral program. I really wouldn't guide on that in any way, changed. Actually, this growth has therefore come from people recommending Wise, but also like we've had 4 million active personal customers in the last quarter. But we've seen an increase in the percentage of our overall customer base. You think of the -- I think it's over 11 million or 12 million customers that have used Wise now, an increase in the percentages that are active in that quarter, which is a function of this. You saw people got an increased need for Wise, but then also a function of the word of mouth continued on and bringing new customers into our products. But I don't think there's been a material change in the virality. And what I'm saying is that it's still very high. It's still very healthy and that still we're a company that builds an awesome product and having an awesome product means that 2/3 of our customers that join us come through word of mouth. So we don't actually have to spend significant sums of money on marketing.

That's quite interesting. So if I can just ask a clarifying question. So what you're suggesting is that the quarterly actives are going up next to the annual actives?

I didn't say that. I said I'm not sure. I'm not that sure. Basically, the quarterly actives is the 4.1 million of active personal or 4.3 million overall active. The number of our customers that have used, that were active in this quarter. And so essentially, like that's a function of 2 things. Like the number of new customers we're bringing in, plus the number of our existing -- number of our customers that are actually active in that quarter. And when they're active, we think about them as moving money across borders. And they could spend on that card domestically. But actually, this is around people who have made a cross-border transaction.

Your next question today comes from the line of Patrick Basiewicz.

Patrick Basiewicz from finnCap. Can you hear me?

Loud and clear.

Perfect. Fantastic results. I've got 3 questions, if I may. So the first question, can you -- maybe you could give us a bit of a sense of how much of the incremental volume or revenues for that matter in this quarter, obviously, for the matter came from your sort of legacy corridors within Europe? And how much of it came from, let's say, newer corridors, such as India, for example? And the second question is about sort of the take rate dynamics versus -- vis-a-vis your sort of what you charge to your customers. So you basically had a 2 basis point improvement in what you charge to customers, but we saw a decline in take rates by 1 bp or so, both on the business and the personal segments. So obviously, I assume this is due to a mix effect. I can probably understand what the mix effects are within the personal space, but maybe can you give us an idea of how you are improving sort of the mix within the business segments? And the last question is really about the development of your value -- volume per customer. So in the personal space, we more or less have kind of 3.7, 3.6 level where things have sort of settled down. In the business segment, we have seen over the last few quarters a relatively slow but steady increase in what you're moving per customer. Can you maybe give us an idea of how far do you think this can or will go? Or maybe put it another way, within the sort of the cohorts that you see, have you seen a natural limit of how much a business customer has moved maximum in a given year or quarter? And maybe give us some indication of what that number could be?

Patrick, thanks for your questions. Let me try and go one by one. So let me repeat the question for the listeners and make sure they understood. So where did the incremental assets come from is the question? They did come from legacy -- volume come from legacy or actually new corridor -- legacy European. I would actually say that if you look at our volumes that we moved around the world, we moved actually kind of truly balanced volumes, whether it's from the U.K., from the rest of Europe or -- Europe, or course. Nowhere else, certainly. And then places like the U.S. U.S. is significant volume. So I wouldn't call the U.K., Europe legacy versus U.S. U.S. is a solid corridor that we've been growing over time. And we actually saw growth even in the U.K., like just healthy growth in our volumes. But importantly, like we've seen this across other markets, including, for example, the U.S. And this is maybe seasonal, but also maybe the way we've evolved our products, whether it's the price, whether it's the ability for customers to onboard, the speed, the ability for customers to send larger payments. We've seen that across geographies. But I wouldn't say that this volume growth is a function of legacy markets growing slowly and is all coming from new routes. Actually, we're still seeing this volume growth driven by our core routes, which like these regions of the U.S., U.K., Europe and places like Asia Pacific. So we're a long way of running out of steam in any of our routes, and we certainly wouldn't be thinking about the legacy yet. So we've got a long way to go to grow volumes in the U.K. and Europe. That said, we do see routes where we're starting to see some growth. And -- like we plant seeds and plant flags in these markets. And over time, as you've seen, I think in our perspective, you see these routes will grow, whether this is India or other routes, but they'll take time. The second question is what happened with take rate. So the way I'll put that is it's pretty helpful, Patrick. So we have dropped our customer price. But actually, we didn't see that flow through take rate. So take rate is a function of the price we charge our customers, but also -- the conversion, but also the income that we're earning from other products like our card interchange, fees on the Wise Account, et cetera. So really, like there is some mix effect, but it's not too acute at the minute, but rather it's a function of those 2 things. One is what's happening to our balances like cross-border revenue and other revenue. And then there's inevitably a mix effect of personal and business customers. So the take rate from business customers is largely the function of [indiscernible] as you said. But is that -- as the volumes from business customers on the lower pay grade is growing faster, it will have a [ deflationary ] impact on the blended take rate. So that's good news. It means we're growing volumes very fast to business customers with a healthy gross margin into a massive market. The third one was how big could VPCs for our business customers get? The thing to think about is both personal and business customers -- the average business customer, which -- think about the volume per average customer doesn't really exist, right. So you've got some very small customers, you've got some medium-sized customer and you've got some large customers. If you look at what's happened to our products over the last 1, 3, maybe 5 years, it moved from businesses. It's moved from a product where customers can actually in the start would only send one payment at a time. So actually a much more sophisticated model and it's getting better and better over time. And what that means is, yes, it's way better for small customers, even micro businesses, even sole contractors. But actually, it starts to get unlocked use cases for large businesses. So rather than -- yes, we're making it easier for our existing business customers to send money and hopefully, we capture a greater share of cross-borders leads, but actually will start becoming useful for larger businesses over time. So to answer your question of how big could this go? We've got customers -- business -- small business customers that are sending, obviously, multiples of this [ 21,600 ] on a quarterly basis. So there are customers out there, and there are segments of customers that move a lot more. So really how far can it go is a function, Patrick, how well can we start to address those larger customers? And how much have shown up? I'm not going to put a cap on it, but I would obviously also create some caution as to be careful around assuming that we're going to see this like 12% Q-on-Q jump every quarter, if you like. It maybe our business customers are moving more than 20,000. It's wonderful. It's hopefully a good sign of how useful the product's been.

Your next question today comes from the line of Aditya Buddhavarapu of Bank of America.

Can you hear me?

Loud and clear.

This is Aditya from Bank of America. Just to follow up, and I think some of the previous questions around on the business side. I mean you announced quite a few partnerships sort of in the second half of last year, like [indiscernible]. So I'm just wondering, I mean, when do you sort of see those partnerships sort of coming into effect and when you actually start, I guess, to see the benefit from that? And maybe already seen some of that in the third quarter? So just to get a sense of how we should think about the upside from that? That's the first one. Second, again, on the business side. I mean, can you talk about the competitive landscape there as well? I mean I know there's a few players like Currencycloud, which recently got acquired by Visa. There is Payoneer [indiscernible] and few others. So can you talk about what you're seeing there in terms of, again, what the competitors are doing? And then finally, I know in terms of your -- the customer cash balances, you tend to keep that in the bank accounts or some very low yield bonds. I mean is there anything to think about sort of the sensitivity there in terms of interest income if there's like an increase in interest rates. So yes, that's those 3 for me.

Thanks for the questions. On partnerships, we continue to build our partnerships team and our product and kind of got good engagement with a range of partners over time. When we spoke at our listing, we talked around this being roughly 2% of our volumes. So we're not disclosing this -- breaking this idea. I think it's still something very much for the long term rather than the short term. I would say that the growth that we're seeing has really been the contribution from the core products which you can use, but they seem to still as you said, certainly not legacy and still driving the growth over the short to medium term. So we'll talk -- we have had some successes with partnerships to do things. These partners continue to integrate us. And just to be clear, actually the volume from partnerships within the bank, with personal customers, that volume would play through into our personal volumes and with their business customers at the bank or their business customers and accounting platform may trade into our business volumes. The vast majority of our business volume that you see is actually small to medium businesses using it directly through our products. On the competitive landscape, I think you mean is share from our platform is it's like few banks or other [indiscernible] partners integrating Wise.

Exactly. The other players giving APIs for business customers, yes.

That's right. And that's a good, healthy competitive landscape there, whether -- with the people that you mentioned. And we continue to build our proposition in this state. So one thing we care deeply about here is -- and the people -- the reason that people contact us for our -- to try and use our platform is they might already see their customers using Wise. And that's quite compelling -- so for example, if you're banking, you're looking at what's happening to your income from cross-border payments. You might say, well, it's reduced quite a lot because actually a bunch of our customers are now using Wise directly. So it's a very helpful discussion we can have with the bank to say, well, how can we help you bring those customers back on to your bank platform? And how do you -- let's say, let's talk actually about Bank of America, given your -- how can you help Bank of America. Instead of customers coming on to Wise, like how do we help you get the customers back on your platform, say business is nothing if there are no customers. So actually, that's a very healthy discussion that we can have with these partners, which some of the other comparable companies can't because like they don't have that direct-to-consumer proposition as strongly as we do. Now we need to build our platform product such that -- like it works very well. So I hope we're doing that, and we've had successful integrations, but that's going to take time to continue to develop over time. There's no doubt about it. Like this is -- I see the competition and I see the companies sort of being invested in here. What it tells us is that banks in the future are going to be using a variety of payment providers or other providers to execute their operating model. They're not going to be building everything in-house. It's clearly a direction of travel, which banks are going to be increasingly considering using other providers, maybe Wise to do this in the future. So the question then is how do we build the best products, which -- over the next 5 to 10 years, which means that we're the first choice for these partners. You had question on cash balances. Yes, interesting. We do actually invest -- so we have our balances around -- they were around GBP 5 billion in the last set of results, which is money that our customers -- maybe some people are actually holding in their Wise Account. And our job there for our customers is to keep it safe, which means safeguarding the money. I mean, keeping it available so that it's instantly available for our customers and our customers to really earn a yield on that, to really rather manage the risk for our customers, and we'll not put the company at risk either. So we do invest some of that in bonds, and they're typically government bonds and relatively short tenor as well. So what we do there is then once we have those bonds and if the interest rates go down, we wouldn't earn income from them. If the interest rates go up, we might. But actually, that income is relatively small. And I wouldn't set expectations that that's going to contribute to our business model. Actually, pre-COVID, we were very happy when the interest rate dropped to 0 that we hadn't built a business model that depended on interest income from those balances because suddenly that would have gone away. Rather, we focused on how do we manage the risk, get the product that's available for our customers. And if we do start to earn some interest income, then that's fine. But we shouldn't build a business, which depends on that.

Your next question today comes from the line of Fredrik Windrup of Boldhaven.

It's Fredrik from Boldhaven. I have 2 questions, please. The first one is on the noncross-border revenues, the ancillary revenues. If we go back pre-listing, those revenue streams were about 3% of total revenues. Now you're saying it's 13% to 14%. They're growing very fast, particularly in connection with the account and debit cards as far as I understand it. Could you maybe talk a little bit about the growth drivers of that going forward? And in particular, talk a little bit about the attachment rates of both the Wise Account and debit cards between personal and business, please? That's the first question, and then I have one more.

Okay. So yes, you're right. The -- this is going fast and the way to look at that in our last results as well as you can see what's happening to our balances, our balances which I just answered there through these discussion continue to grow. I think we'll tell you like the growth in the adoption of the Wise Account. And we don't split this up. But ultimately, we see customers in our Wise Account generating -- moving a lot of volume. And actually, that's driving a lot of our volume growth as well, which is why the Wise Account is important to us. It's the fundamental driver of our business today and it defines our product really for our customers. So what are the drivers of that growth? More and more people using the Wise Account. More customers joining us to use the Wise Account. More of our existing customers transitioning to use the Wise Account. And then using that account to spend on their card, make domestic payments. We have significant volumes of domestic payments, which in many markets we charge for. And then also, if they recharge an account fee to some businesses, we charge an account fee to some people and we also charge people for things like taking money out of ATM, et cetera. This is, Fredrik, what's driving that growth. It's like -- it's kind of linked, if you like, to the growth of the Wise Account, which you can start to see in the balance growth and this other income growth. The attach rate question. I don't have any news here. If you look back at the listing, you can start to see that more than 20% of our personal customers were using the Wise Account. But actually, over half of our business customers are using the Wise Account on a quarterly basis. That means -- and this is where it's really useful. Our businesses are the first to tell, hang on a second, send money [indiscernible] bank that receive money from my customers. So I need to move money around my business as I've got accounts or entities around the world. Actually, our product has really moved over this time from being a transfer business to essentially an international banking solution for these businesses. That's what they're doing on our products. They're holding money. They're receiving money. They're sending money. And more businesses are using us for that and just using us for a pure money transfer. So really, that's how to think of us as a product for our Wise product. And really, remember, it was one of the changes I know you can transfer to Wise. So Fred, I hope that gives you a flavor as to what's driving the other revenues, what's driving our balances. Ultimately, it's Wise Account. And when you see us roll that out into Brazil or in Canada or Malaysia, it tells you that actually there's more of this -- this is what's helping driving our growth now, but also will help us in the future as well.

That's very helpful. Just a quick follow-up before I jump onto the other one. But -- how many debit cards are you -- have you issued now, particularly after the launch in Brazil, Canada, Malaysia? And are there any early data points that you can share from those 3 launches, please?

We haven't shared the data points on these or the total numbers like -- so I won't show those now. This type -- we launched these with our customers. The way we launch the product is, we have people in the market already asking for the product. So we'll [indiscernible] with these customers, and that it will be after that. But the business will slowly grow. We're not -- we don't do big bang marketing in new markets. We rather let this product build. And that's what we've done in all of our markets. So I don't have any numbers for you today. Sorry, Fred. But hopefully over time, we'll start to get benefits from it.

Appreciate that, Matt. So just trying to sneak in this follow-up really to Patrick's question on the business, VPC. As you think about growth in business going forward and in particular, how you're addressing perhaps slightly larger business customers that have more needs, how do we think about the marketing spend and the intensity of going after that type of customers? Is this still 2/3 viral or do you need to perhaps invest a little bit more or beef up your enterprise sales solution or function rather internally to go after that type of customer?

It's a bit of both, actually. So we will be spending more money on our -- on marketing across our base, but we'll be doing it at a healthy payback. In the past, this has been around 12 months. As we look at the economics of our business customers, we see actually that they send more, they stick around longer. So actually, the lifetime value of their customers is disproportionately higher than we're seeing in our personal customers, which means we can invest more in marketing, whether it's pure marketing or other forms of sales behind them. And we'll be developing that over time. But we'll do that in combination with our product growth. Today, our business marketing challenge is really one of mass marketing to small business -- small and medium-sized businesses. But as -- you're right to call out that as our product is evolving, we're starting to see much bigger customers start to use us. These are not large corporates. These are just larger -- these are medium, not small businesses. Our marketing approach and our sales approach will evolve over time. But you can trust that we do that as a healthy -- as we've done in the last 10 years, maintaining healthy economics. We're not -- we're still investing at a sensible ROI. We've got a couple of minutes left, so I'm guessing 1 or 2 questions.

Okay. Your next question today comes from the line of Kim Bergoe of Numis.

I think they have been answered. There's lots of, lots of questions. But if I could just follow up, I had a question on sort of competition and market. I think you answered the competition bit. But just sort of the near-term outlook, I guess, Q4 for the market, what is sort of driving the ups and downs? I mean, what should we expect, obviously, with Omicron sort of impacting towards the end of this year and going into next. Does that have an impact? So that I think is what I got left.

Yes. I hesitate to call the short-term impact of something like Omicron. The COVID impact [indiscernible] is not so many people not needing to move money across borders. I think it was just a total lack of confidence in the way the world is going to work in March and April 2020. So we're seeing much less disruption from Omicron than we saw from the first wave. And -- but we have seen volatility. If people have got sudden confidence -- volatility in markets, we can see that flow through into our product. So this is why we've seen volatility generally in the world like in the last quarter, and I would assume that our results have been a little bit volatile. I think the challenge we've all got -- and the important thing is to really look longer time rather than just a next quarter. Like do you see good fundamentals in our business, that's giving us confidence to keep investing in what we're doing over the medium term? The answer is yes, right? So we're seeing just more and more customers, even in the most mature markets, continue to use us and adopt us and transition to us. Seeing our proposition grow, that actually -- for example, in businesses moving more and more money through us over time. Yes, this is a very high quarter, but the general trend has been steady growth in the VPC and businesses. And we're managing to drive down prices, make our product radically faster, while still maintaining a healthy take rate and very healthy set of economics. So I think if you just take a step back and think about these 3 fundamentals and being able to do this while moving over GBP 20 billion in a quarter, I think that shows like this is kind of pretty strong fundamentals to our business for its medium term. And the things you've had us roll out, whether it's our Wise Account in Brazil, Canada or Malaysia, these are still big markets, where we're having an impact from building a much better product and it's around those market that gives us confidence over the medium term, not just the next quarter. These things that I've not zeroed back to next quarter. It's rather like, hopefully, if you think about, okay, over this medium term, we'll continue to solve quite a big problem.

Our final question today comes from the line of Gregoire Hermann of AlphaValue.

Can you hear me?

Loud and clear.

This is Gregoire Hermann from AlphaValue. Just 2 very quick ones, and the second one is actually maybe you already answered. On Brazil, Canada and Malaysia, could you please say how you've improved in the direct connection to local payment system? I think if we look at the metrics you've provided in your prospectus, the more you go into the direct local connection, the more you're able to propose your own products and have a better control over the pricing and over the cost. So how have you improved on these markets -- on these countries? And the second one, on the account card products, how much does this represent of your amazing growth during this quarter? Would you say that at the moment, your growth is more driven by incremental clients or also the rollout of new products like account and cards?

So let me answer the second one first, while it's fresh in my head. So actually, it's a bit of both, but what we're seeing is that the strong driver of growth in our business is just the adoption of our products and our products that we're rolling out is our Wise Account. So our Wise Account, people are still moving money from -- if you wanted to send money to -- certainly U.K. to the U.S. or vice versa, you can now do it through the Wise Account. It's easier, it's more convenient. We're seeing people adopt that product at a faster rate, which is driving our growth, but it's also driving how they think of Wise and how they use Wise in their daily lives. I'm not going to share a proportion of the growth. But actually, the fact you can tell in our product road map, we're rolling out this Wise Account around the world because we know it works. And we know that in future, like having these customers have this tool, this money moving machine and the management machine for them is what's really important. To your first question, what's changed really in these markets? In some instances, it would be improving our infrastructure. But actually here, when we launched the Wise Account, it typically comes about through a couple of things. It can be as a result of directly impacting into payment system and that allows us to issue account numbers. That can also come about through partnering with somebody locally that would help us issue those account numbers. But fundamentally as well, it typically comes from being accessed to a license as well. If you remember, when we talked about our infrastructure, it's a function of technology, it's a function of our integration, [indiscernible] regulation and operations. And actually, the regulatory piece is quite important because actually offering our Wise Account typically means that we move from being just a money transition provider to actually in the U.K. to be money provider and slightly different in different jurisdictions around the world. Actually getting that license is quite a challenge. And that's what the team's been working. Just think about Brazil. Take years, and that's why the team has been working really hard on Brazil and kudos for the team for obtaining that. And once you got a license, then we can turn on a Wise Account and transform one product. So actually -- to answer your question, like building Wise, it's like a combination of all of those 4 things. So we hope that we can continue then in Malaysia to integrate into our directly into payment system at some point in the future. But that is step-by-step with the regulatory bodies in the part of the new country [indiscernible].

There are no further questions at this time. Please continue.

Well, I don't have any questions either, but I would just say thanks very much for your time. We've -- hopefully, you understand that the growth that we're seeing now is just -- things we're investing in now are going to help our growth over the medium term. And hopefully, you can see in our results what we've been investing in in the past 2, 3, 4 years is really what's kind of turning up in our results today. So that gives us confidence to keep investing in our growth and hopefully gives you confidence to keep investing in that with us. So thanks for your time. We'll speak again in June when we have our full year financial results, which is great. And we'll obviously have an update on -- exactly on people, on that front. So thanks for your questions. Hope you have a good day and speak to you again soon. Bye-bye.

That does conclude our conference for today. Thank you all for participating.