Wise Group plc (WISE) Earnings Call Transcript & Summary

Good morning, everybody. Thank you so much for joining us for our Financial Year 2023 Full Year Results Presentation. Usual format today, we're going to have Kristo, Harsh and Matt take you through the results and key highlights for the year. And then we'll follow this with some Q&A, which we'll take from the room first. And then we'll also take Q&A on the live web stream. You can do that just by raising your hand virtually. Before we hand over to Kristo, Harsh and Matt though, I'd just like you to hear actually from one of our customers. [Presentation]

Thanks, Athena, and welcome, everyone, to our second full year annual results as a public company. So financial year 2023, of course we're going to share the detailed numbers and the financials. But it's also the time for us to check up on the progress we made on our mission and what we've been shipping. So before we're going to hear from Matt going through the detailed numbers, you're going to hear it from me and our CTO Harsh on what we're shipping and why. So every day we come to work at Wise, to work on a mission, to build the best way to move and manage the world's money because as we've talked about before, the international banking, the traditional ways of doing this is broken. It's slow, expensive and often the frustrating experience and it's not a small challenge because there's a lot of demand for it. A lot of people are hoping for better. There's about GBP 2 trillion moving across borders and looking for a better way to do this for people. And it's even worse for businesses. It's GBP 9 trillion moving across borders annually. And the experience that the small businesses are getting from their banks is usually even worse than people. So our customers and people are telling us that it's expensive to move money. There's no real banking services for their international business, and banks are saying it's impossible to build better experiences on the infrastructure that is there on the technology front. And this then summarizes what we're solving. We already made a ton of progress on making transfers fast, cheap, convenient and go around the world. We're building the Wise account, the new solution to international banking. And this is going to transform how people and businesses think of handling their money across borders. And we have created new infrastructure. Because the current one doesn't work, the banks are telling us that. And that's what enables us to build these other 2 products. And now we're opening this up to our partners so that they can build their own bank accounts on top of it. And it turns out, what we've been building resonates with the demand, and it's paying off. So if we look over the last 4 years, we've seen us triple the number of customers that are using Wise, using our products. And we've seen us quadruple the volume. So clearly, what we've been working on is resonating. It's paying off. And all that time, I think it's not the 7th year that we're operating profitably. That's one way to look at it. The other way to look at it is we're still scratching the surface. We're only serving about 5% of the total market for people and less than 1% for businesses. So we have a long way to go. And so let's set the scene for today. We kind of talked a little bit about the problem we're solving, the things that are broken, things that we're here to fix and the demand for it on the left-hand side. And I gave you a glimpse of what the numbers of the results over the last 4 years, and Matt is going to go deeper into that. So this is clearly working. We've gone from the problem to the solution. The question is why. So what makes us a special company that is able to solve this enormous problem and achieve our mission? I think it really boils down to 2 things. First of all, it's our obsession on customers. We are one of the few financial services companies that has evangelical customers. And this is not by accident. I think I'm surprised when I hear people loving their bank, but our customers do that, and they tell their friends. We can't stop them telling their friends. And this is because of the products and the experiences we create. And we can only do this as the second block by creating the new infrastructure that enables this, fundamentally a different experience. And Harsh will talk a little bit more about the second, I will cover the first. So let's go into the evangelical customers. And I'll start with a number. I love numbers. 66%, 2/3 of our customers joined because someone recommended Wise. This is an awesome stat. But the important question is, why did they recommend? Why are they recommending Wise to their friends? And this is because of this radically better experience that we create because that's what our customers are seeing -- are used to be seeing and that causes the frustration, which is now replaced with instant transfers. 55% of our transfers arrive in less than 20 seconds. 5x to 10x cheaper than using your bank and we're not hiding fees, tell you what you're getting charged. And it's actually a delightful experience when you can get your business account going in less than a couple of hours. And we do this by investing in 3 products. Wise account for individuals, Wise business and the Wise platform for banks and our enterprise partners. So I'm not going to go into everything that we covered over the last year, but I'll just give one highlight of how we think about developing these experiences. As we see the Wise account getting more traction, and we're building out the experiences our customers have, not just sending but also invoicing their customers internationally spending across borders and holding money with Wise. We realized that coming to holding money, the problems are not too dissimilar than what we see in cross-border transfers turns out that it's also quite expensive to hold money in a U.K. traditional current account when the inflation goes up. The central banks are paying 4% to 5% interest rates. And of course, the current account pays nothing. And we found a way to solve this by -- over the last couple of quarters, we launched Wise interest, which is a Wise assets product that allows our customers to hold government-guaranteed assets in the U.K. and now rolling out in Europe that beyond being 100% with a government guarantee, but also they pay the interest close to what you'd expect from the central bank. So that's slightly older data now from, I think, beginning of June. When in the U.K., our customers are earning 4.12% on the pound and a little bit less in euros. So this is just one example of how the experiences that we create are creating evangelical customers because now being one of the -- one of the highest earning current accounts in the U.K., of course, everyone is talking about it. I'm not going to go through more of those, but I would recommend just click into the quarterly mission update. This was one of the, I think, '23 highlights that we brought out and things that we shipped in the last quarter. And without going through this, these changes or these improvements that we're making to the voice count and Wise business, they are resonating because we now see about 50% of new joiners starting to use the account. It's going beyond just sending money, but using it for spending, for receiving. That's across the world. But if we click into some markets like Brazil, they -- this is a majority of customers now using Wise as an account rather than just a transfer product. And of course, this plays through to our entire base which is then going on the business side, it's even more than half of the users using Wise as their business account. And why this matters? From the financial perspective, the customers who use us for more fully, for whom we can satisfy more of their international banking needs, they do 3x more transactions than bring 2x the volume than just to send money customers. So this does translate into our results as well. But bringing this all together, why we started talking about this, because these are the experiences that create angelical customers. This is what will drive our customer growth, and the customer growth in turn drives volume. We see our customers growing 3x over the last year. We see the volume following that on businesses, it's even more. Customers growing faster, but the volume growing even faster. So that's kind of setting the scene on the evangelical customers. And going into what's next, there's going to be the same similar investments that we're seeing bring that result over the last 4 years continuing. So just to give you some examples. Matt's going to talk through some of the benefits that our customers are seeing, for example, from the heightened interest rates and interest income. We will have improved servicing and onboarding so that the Net Promoter Score can go even higher. Our customers can get more evangelical. We talked about new features such as assets, but there is more around spend, experiences and some of these features are yet to be rolled out around the world. So we start in U.K. and Europe, but then roll out around the world. And then we are to the footprint -- of where we operate. We're bringing on -- bringing Wise, not just individual features, but the entire footprint to more and more people and businesses. And all of this, all of what we're shipping is leading to more customers, more active customers. And that's not just this year. Actually, the improvements that we're making today are going to bring the customers over the next 4 years. So the growth, the 3x customer growth that we saw over the last 4 years. We want that to continue because we're really only scratching the surface with what we started. And now going more deeper into the infrastructure that enables all of this. I'll hand over to our CTO Harsh Sinha, Thank you.

So as Kristo said, people love Wise for a variety of reasons, but a few of them are price, speed and convenience. But it is our global infrastructure that really powers this proposition. And on top of this infrastructure is what we build are these amazing experiences. So the Wise account, truly international account for people and businesses and then also Wise platform on top of which others -- other enterprises or the banks are building on the top of this infrastructure. I'll go a little bit deeper into explaining what this infrastructure can do. And there's a lot more this can do, but I've kind of tried to call out a few things here. So first of all, when I talk to bank partners, some of our competitors, things that they're wowed by or things that really blow their mind on what we can do are these things. We're 8x to 10x cheaper than banks. The speed at which we can move money across our network. And also how quickly and how efficiently we can onboard people and businesses and be compliant across such a large geography of licenses we run. So talking about cost and speed. A big part of our infrastructure and what we've built over the last 12 years is this network of direct connections to different local payment systems. Currently, we are integrated into -- directly into 4 countries with more coming. But also, we have a very large partner network that is very stable, which allows us to control the end-to-end experience that then allows us to have lower cost consistently and control the speed on which we can move payments. So I'll give you an example. The first direct connection, we were the first ones to get directly connected to the U.K. payment system as a nonbank. That took us about 5 years from working with regulators and working through getting the access and the settlement account because it is the first time being done in the U.K. And through that, what we learned and how to do this and launch this integration and connection, it's a learned muscle. And the last one that we did was in Singapore, which took us about 6 months. Anybody else who has to come and go through this journey would have to follow the same process. But then it's not only the connections and the partner network we have is another aspect of what makes us special in the way we've built the systems, which is Wise is global. The way the tech has been built, every payment every document, every data set that comes into Wise is globally viewed in one place. Compare this to banks where usually if you are in a large bank, one division of the bank does not see the tech or the data on the other side, which then does not let them make certain decisions that we can. To make payments move faster, we can make treasury decisions with our ML-based models. 50% of our money movement on treasury is predicted by machine learning. Similarly, when we are onboarding documents, we are seeing -- we're onboarding 1 million documents a month now on our system. And we can do that very quickly with machine learning models and automated processes that we've built. And all of this is because of this global data set and global view we have of the data. And that allows us to then move money faster for liquidity movements to fund these transfers to make things instant. And it's hard for competitors to keep up. Just using speed as an example, even for us a few years ago, we were about 20% instant payments. In 4 years, we've completely moved the needle and set a new gold standard in the industry on what global cross-border payments should look like at 55% instant. So money goes from source account to the destination account usable by customers, in less than 20 seconds. And as part of this, we're doing all our financial checks within those 20 seconds that are required by law. And all of these things are done because of the technology infrastructure we've built. And this is hard to replicate. People ask me like, okay, so why couldn't somebody else do this? First of all, we have about 700 engineers working in this problem. I think we are now the biggest engineering team in the world working on this one specific problem of cross-border transfers. If you go to other institutions, even banks, they have a team, but it won't be this big just on this problem. We move fast. We are moving at the speed of 250 releases per day. Most banks and the larger firms will launch their apps once in 6 months or 3 months. But then it's not just the tech, somebody would ask me, why couldn't a big tech company who has a lot of engineers and a lot of -- that can move fast do this. It's this collaboration between tech regulatory expansions and operations, which makes us infrastructure special. We maintained 69 licenses across the world. Try asking a big tech company to maintain 2, that's the difference, right? So it's not just the idea that you can just ship code. It's how do you build the regulatory framework. The example I gave of convincing regulators to give access to the local payment systems, those are all learned muscles. And anybody who else has to come and do this, they have to follow the same process. So that's why we feel this is going to be very hard to replicate and scale it because not just a tech that regulatory expansions and operations and how we serve our customers to create those wow moments. And it's not just our direct customers who come and use our apps, who are seeing the power of this infrastructure. We have over 60 Wise platform partners now who see the value we are creating and our ditching old rails and wanting to connect over our API to our infrastructure. And through the last year alone, through these integrations, we have now enabled 25 million more people to be able to access this infrastructure. These apps are now connected and if they want to use Wise, they can. Wise platform is still a small part of our overall volume that we move at Wise right now, but it's growing. And what's notable here is the logos that keep popping up every year. So now we have Tier 1 banks, which are starting to integrate into Wise. So over the last year, we have Bank Mandiri, Shinhan Bank in South Korea and last year, one bank in Japan, all integrated into Wise. But also in the U.S., we have all the major neo banks who are doing business banking also running the cross-border rails on Wise. So going back, fundamentally, one of the problems that we have is -- in this industry is that the underlying technology that is used to move money around the world and access your funds is broken. And that's why we are rebuilding the infrastructure, and we'll continue to invest in going deeper and broader. Whether we are going to bring in -- investing in bringing in Australia over the next few months, directly integrated into the Wise infrastructure or Pix in Brazil or using the data mode that we've built to move -- to fight financial crime faster and make decisions fast. As Kristo said, we're working on a massive problem, and we want to have Wise here for a long time and be a generational company. So we have the market size, and we have evangelical customers who love what we have built and are wowed by the experience they get. But these wow moments are created by the underlying infrastructure, and that's what we continue to invest in, and we have over the last 12 years, and we'll continue to, in the long term, invest in this. And we'll do it in a fast growth and profitable manner. And talking about profitability and numbers, I'll give it to Matt.

Good to see you all again. It's pretty amazing around, hopefully explains a bit more on why we think we've kind of got the traction and the results that we've got. But let me talk a little bit about these results, a topic close to my heart. So if you look at our results for the -- for this first year this last year, there's obviously a set of results we can be very proud of. And they reflect quite an exceptional year for a number of reasons. So you can see, and we've heard a lot today around how this drives, how the fundamental momentum in the customer base is what's really driving this growth. You can see with 10 million customers, that's grown not just at 3x over the last number of years. It's growing 34% in the last year. That's led to volume growth, which has now led -- which when you combine that with the balances that customers are holding and the interest, which is quite except -- been quite a change this year, that's led to almost GBP 1 billion of income, which is 73% growth year-on-year. And very proudly, we've always run a profitable business, and that's continued to compound actually doubled the EBITDA in the business this year and I'll talk a little bit on the [indiscernible] first. So you can kind of pause there and think this is a great set of numbers. But actually, I'd like to just dig beneath that, right, what can you really take away from this as a business that we're building. I believe we're building a business with very world-class fundamentals when you look at what's inside in driving these financials. So why is that? Well, first, this growth that we're seeing in our customer base, which led by word-of-mouth and organic growth, which is a function of the proposition. Obviously, it's very exciting from a growth perspective but really also impacts us financially. It hits us all the way through the P&L as a real -- really helps us. It's followed up by the fact that we invest incredibly efficiently. And when we say this, I mean, we invest in product that has an impact or we're very focused on the problem that we're solving and making sure everything we do has an impact. And we follow up with marketing that has an incredible payback. And then what's emerging or what's new that you're seeing that compounds on this because we've always followed those first 2 is now we have this Wise account, which is really driving traction in the growth, but is actually structurally supporting the growth rate, but it's also structurally supporting the profitability in the business today which also lets us continue to double down on the growth for the future. So we're growing fast, investing and profitable. These are really important nuances for me as to how to bring this to life. Let's dig into some of this. It's always good at full year results. We talked to you on a quarterly basis. It's always good to be able to dial back and say, right, what does this look like over the long term. And what you can see here on the left is the active customers. These are people who are active and remember, for Wise this means they've made a cross-border transaction in that period. That's continued to compound and it's actually grown pretty fast in the last year. And it's this that is driving the volume that you see, this is cross-border volume on the right-hand side both for people and for businesses. Business compounding 30% customer growth leads to 40% compounding volume. This is the primary driver. It has in the past them, and I'll talk through why I think that's going to continue in the future. Now let's look underneath this around what's really underpinning this growth. As I said, how is this like customer-led growth really drive through and underpin the growth? First off, the light green that you can see here, the volume we get each year from customers that join us that year. And the dark green is the volume that we had from customers we had before that. And we can see just simple math, you can kind of see here is actually that volume when customer -- the number of customers that join us each year grows and they send more volume with us. And then when they join us, that volume sticks around. So actually, it's a really healthy business dynamic. Customers, join us, they love the experience, they tell their friends, that grows. And then they also stick around. This helps us grow. This underpins the compounding growth rate of active customers that we're going to have, and you can see that coming through volume. 4.5 million customers joined us in the last year, that's pretty exceptional because it grew 40% year-on-year. And this is, I think, exceptional, we're seeing very healthy momentum going into this year. But then this volume retention, which is, frankly, the simple math you can almost do yourself here, which is how much of the volume we had previously translates into the existing customers the next year. Over time, that's been up just over 100% across our customers. Some years, it drops below, some years, it goes higher. This noise is in -- probably in the VPC. But over the long term, you see this dynamic. And it's this -- is driven by the products we build. And we're sticking to the fundamentals of how we've got our products, give me confidence that we can translate this going forward because you know these dynamics have been consistent when we've spoken to you over the last years and maybe even much longer for those of us in as well. And yes, in the short term, we've seen some noise on VPC. So if you look at VPC, which is the translation from active customers to volume, over the long time, it's been quite stable, maybe even increasing over time. But actually, if we look at this last year, we've seen -- it's been quite volatile. We saw exceptional strength from USD in the summer of last year. And then as the macro environment shifted and the interest rate environment shifted, we've seen a reduced kind of contribution to this VPC of larger transfers, and I hopefully signaled that and telegraphed at you over the last month. That's not really changed now. And we're a few days short of finishing this first quarter of this -- of 2024. And actually, we've seen that broadly stable, that VPC going into the first quarter. I would manage expectations slightly marginally down, but actually broadly consistent in the [ notes ]. But we just remain cautious with macro and what's to come here. But if you just step back to the broader context, this is really around customer-driven growth. Over the long term, that's what's going to drive the growth of the business. Yes, there's going to be some volatility on this in the short term, but we need to look through that. So what does this mean? This customer growth has underpinned 51% revenue growth over the last year, which is an acceleration. We need to remind ourselves this. And why is that driven by customer growth? One is, it's the active customers, which has driven this cross-border income. You can see 42% growth in revenue from cross-border transactions over the year. But actually, you see other income, which is the income that we get relating to the Wise accounts, whether it's for those who've got an account in the room, spending on your card, your earnings change or you might pay us fees for the accounts, whether you're a personal business customer. So actually, as the customer growth, and as Kristo mentioned, the increasing adoption of our Wise accounts, which is actually driving the structural increase in growth in revenues over time. Remember, remind ourselves as well, growing revenues at 50% year-on-year is pretty exceptional here. And we're seeing this dynamic of people and businesses, but we're also seeing around the world. Both key personal business customers growing revenues at 50%. And even in the U.K., we're growing revenues almost 40% year-over-year. And then in some markets where we're getting great, really early traction, this is near 100% which is quite exciting, quite distributed across customers, distributed across geographies with lots of headroom in this market to continue to grow the number. And those customers don't just send or receive money with us. They hold balances with us. And this has grown, as you note, GBP 10.7 billion of customer balances we were holding at the end of March. That grew really fast in the past and actually still growing very healthily, but we should manage expectations around what that might grow going forward. The law of large numbers. And also, we've launched our assets product, which means some of these balances are opting into and assets product in places like the U.K. where you can earn a really, really good return. And we've been growing around 50% to 60% year-over-year. And on these balances, we've been earning interest income. We earned GBP 140 million of interest on the balances we hold for customers and GBP 72 million just in the last quarter. We returned some of that, and we'll talk -- you shouldn't be surprised we've talked about how we return some of this interest to our customers where we can to be paid a proportion of that, and increasing proportion back to our customers. But if you think about that, the gross yield as we exited the year, sorry, was around almost 3%, and we were returning around 0.6% of that to customers. We're successful in Europe in returning balance cash back. We started that in the U.S. but we still got work to do in some of the other markets where it's harder. And we're not -- either we can't or we're not allowed yet to pay from our regulators to pay this interest back. So this net interest or this interest after these balance related benefits come through to income and this income grew 73% year-on-year. It's pretty exceptional because we saw this emerge strong on balance, but the change in the interest environment really drove this. Well, let's switch gear and think about how that tracks through down to the bottom line. We saw gross profit of over GBP 600 million consistent year-on-year gross profit margin, actually that meant that gross profit also grew north of 70% year-on-year. And then let's think about what we do with that. It gives us our fuel for our growth. You can see here that actually the vast majority of this gross profit either goes back into investment in products and marketing or actually flows to EBITDA. And this investment in product is pretty critical for us at this juncture. Kristo mentioned and Harsh mentioned, all the things we've got to build and all the opportunity ahead of us and our confidence and track record and how we've made those investments gives us confidence to keep scaling this product. So we've grown those product teams this year. And we've also grown our servicing organization. But let me talk a little bit around on what do we spend money? So we spend money on marketing. As you see in the accounts, we spent GBP 37 million on marketing, that grew roughly 33% year-over-year. So why do we do this? Well, of that GBP 4.5 million, 1.5 million customers came through our marketing -- is not through the word of mouth, actually, a pretty efficient payback. So just on the paid marketing alone, we capped that historically at a 12-month payback, fully loaded payback. It's very efficient. I mean if you were to blend that across all of them, I would -- I think it's the envy of many companies trying to grow their business. We won't give up on this discipline. It's what's kept us growing strongly over time. We invested in our product teams and Harsh talked about the size of the engineering team. But around that, you've got all of the product compliance and teams that really focus on building and taking our products around well. And what is the return here? Well, the return here is actually probably the first pound that we spent. This -- 3 million of those 4.5 million customers are coming through word of mouth. And that word of mouth, as you've heard, is a function of the time we spent building these products. And when that -- when those products go live, it's not just one time, like you might get from marketing, you're actually getting that stream of customers from the product that you're shipping year after year after year. This is like very efficient spend on marketing -- spend on product, my apologies. That's brought you new features, new geographies, but a significant proportion of that time we spent goes into building the infrastructure, which is what enables this over time and deepens the moat around the products that we offer. And we also, this year, grown our services teams quite a lot actually. It's been a pretty amazing year in our ability to do that. Partly, we had to do that. We had to onboard 40% more customers this year. So the right thing to do is to do that. But we've also -- if you follow Kristo's mission updates, you'll see that the quality of service that we're giving our customers through the year has improved. And actually, we see is, right, if we're going to spend GBP 1, where would we put this? It's quite easy to see that actually giving customers a better onboarding experience and a higher NPS actually is pretty high payback and so like where we're going to spend it. And our customers tell us this. They -- we see this in NPS, we see this in virality and we see this in retention. This is a good use. But it's been a year of scaling those teams. Of course, we grow the functions. As we open new licenses around the world, we become larger and we invest in that footprint, it takes people, it takes controllers, it takes lawyers in order to really build that infrastructure from a company perspective, which helps us kind of scale for many years to come. So when you add all that up on what's happened to our OpEx base across the year. You've seen it grow just over 50%, almost GBP 500 million now. That's underpinned or kind of given the employee costs that I've explained. Our head count grew around 50%. And then with some salary inflation, that's the -- you can see the employee benefit expense across the year. So what does that mean? We've seen this cost go pretty fast. It's a function of scaling the teams. It's been one hell of a year, candidly, on growing those teams and to be able to do that. But I expect now we've -- hopefully, that those hard yards are behind us. And this cost growth going forward, it's going to be different. When you put this through to EBITDA and profitability, we saw a higher EBITDA margin in this year than we saw before, roughly 25%, almost GBP 240 million of EBITDA which almost doubled year-over-year. And I'll talk a bit more about the drivers of those. But we know that, that's due to the significant interest in interest income, significant increase in interest income flowing through to the bottom line. But importantly, that actual bottom line of profit before tax as well, look, we look at this as well and care about this as well as EBITDA of almost GBP 150 million of profit before tax. So bottom line profitable company. So let's step back a minute again before we dig into like where we go next. We're building this business with world class fundamentals. I just shared with you the proof points. Hopefully, you've seen the -- there's customer led growth. You've seen the viral customers, and you've also seen and hear this high retention of when customers join, they stick around and that helps us grow. We're really efficient in how we invest. This gross profit margin that we generate invests in high ROI product investments that build our infrastructure that fund this proposition and then kind of continue to fuel this customer led growth. And that's supported by best-in-class marketing payback. And now the new thing here, I would say, is this Wise account, which is structurally supporting this active customer growth, but also keeps our customers more engaged. I think gives us this -- currently there's much higher profitability which asks the question how do we invest that for both -- for the benefit of building a much better, stronger business. And obviously, in doing so, helping our customers. So what we do? How do we invest going forward? Well, it's time to double down. What have we done in the past that's going to help us in the future. We'll keep investing in our products and our infrastructure. These product development teams and also the marketing is really what's driving underlying growth. We'll do this. And this is really funded by our conversion product. So we're not going to use this incremental interest to keep doing this. We don't want to become dependent on that interest to fund these investments. We'll continue to sustainably disrupt cross-border pricing. Over the last 10 years of what we've done, this is what's really built an amazing franchise of customers that trust and recommend us, and we've done it profitably. So where we can do this, we'll continue to run our business, we'll lower prices wherever we can and actually continue to run that business -- that product at a 20% margin. We'll drop prices where we can, and this continues to extend this moat. But again, we'll not drop those prices using this interest. But we will use this interest income to power our growth and build a much better Wise cap proposition. If you're a Wise account customer, hopefully, it's definitely if you're in Europe, you already got interest income or cash balance cash back on your product. So I'll share a bit more now, but to be clear, we'll use up to 80% of this interest income to build a much better proposition for our customers. And we'll use the remaining 20%, we'll actually flow down to EBITDA. And we can talk through the implications of this. But fundamentally, when we're building a business that's not going to be dependent on interest income. And actually, this interest income is only going to power this Wise account proposition. So how are we going to use it? I've talked about this 80/20. Just to try and make this really clear, I know there's a bunch of people the room that have got to kind of go and work out how to model this. So just bear with me. 20% will flow through to EBITDA but actually 80%, we're going to build to proposition. How is that going to work? Well, the first 1 percentage point, so imagine we are running at a 3 percentage point margin. The first 1 percentage point will actually cover -- give us income that will result in a 20% margin on these account features. So if you imagine what this does today, it avoids the need for us to charge you a subscription. Well, we've already reduced the same currency fee you might need to -- we've charged in the past on making payments in and out of your account. Customers love that or rather customers really didn't want to pay those fees. It's actually using interest where we can do that. But essentially, we're trying to avoid doing that to fund OpEx. It's rather funding the profitability of those features on top of the profitability of commercial business. This is good for customers, great for customers. And then for the rest, where we've done that, which is, as you can imagine, is a significant proportion of the interest income, we'll try to reward customers for actually holding balances with us. We can do this in the EU, as you know, and we're also live in the U.S. with a product here, which is customers love and are opting into. So great rates if you're holding dollars in the U.S. And we'll try and extend this to other countries over time. We'll keep working with the U.K. and other countries around the world, but that's going to take time to scale. Well, also, where we can't do that or where we see opportunities as well. We may offer other incentives that you might typically see with an account. Maybe we've started looking at cash back on card spend or other fee refunds that are discretionary and purely linked to the account, but not really building this OpEx [ expense ]. So we're not going to use the stop prices or fund general OpEx of the company. The challenge we'll have is actually, this is going to be really hard to do to scale up to this 80%. So in the short term, more of this is going to flow to EBITDA. As you can see, we're only giving 0.6% of that 2.8 back to customers at the minute. So it's actually going to give us elevated EBITDA margins whilst we scale that. But we'll do it with caution, we'll do it with discipline and to stick to these principles that are hopefully clear for you. So let's just check where this is in the numbers. As you can see, like for those of you who've done the maths on the H1, H2, you can see that we run a 27% EBITDA margin in the second half of the year, and this was really a function of these elevated EBITDA margins. And if we just used 1 percentage point of the interest that we got, we'd run the -- effectively the profitability of the account features would run our path through above 20%, which would equal the profitability of the conversion business, which actually brings us to a 20% margin overall. So actually, we're minimizing this dependency on interest income and maximizing the use of that into our proposition, which should then maximize growth whilst also leading to a higher profitability on the bottom line. So what does that mean for guidance because all these fundamentals what we expect over the next year? Our guidance for the year on income is a 28% to 33% growth for this year. And the key driver that underpins that or gives me confidence in this is the growth in the number of active customers that we're going to see -- that we're seeing the fact, and we've seen that healthy momentum into the year. But we need to be cautious around a few things. One is what's going to happen with VPCs. This impacts the short-term dynamics, of course. These are slightly lower, as I said, as we enter the year, and definitely down on the average for last year. And we have a softer and uncertain macro outlook, I'm sure you see across your other companies that you're looking at or will cover. And then interest, we will see -- well, rates have already increased since the end of last year, and we can only look at the yield curve. And we also -- but also countering that, we hope to be able to return more and invest back more in our product proposition for our customers. So EBITDA as a result of that is likely to remain somewhat elevated through the year. And just -- it's worth just pointing to what are some of the dynamics we're going to be lapping. I'll just put this up now because we'll look at these shortly when we're thinking quarterly. For the first -- as we enter the year, we're actually at a lower VPC than we were this time last year. So we're lapping kind of a bit higher VPC dynamic. But then that's counted when we look at the overall revenue dynamic for what's happening on take rate, the actual cross-border take rate now is slightly higher than it was a year ago. So these things have different impacts, but let's look at these in the whole. And then at the moment, we've got a very relatively high kind of interest earned on our balances and maybe relatively low interest returned. And we're lapping that with basically no interest income this time last year. So income growth at the moment is very high. But that will change as we go through the year and start to maybe normalize as we get towards that. So over the long term or medium term, sorry, this is just really what's happening in the next year. It's just another data point on our road. And I know we focused on this. But it's this active customer growth that gives us confidence to effectively extend this medium-term guidance. So we set this initially when we listed in 2021 -- this medium term, actually every year, we've moved that forward, which actually gives us confidence that we're continuing investing in the product and actually able to continue to extend this rate, which we think we can compound income above 20%. And adjusted EBITDA, renewal change into structurally how we're really running the core when Harsh talks about building this network for the Wise money, how the profitability on the transaction flow around, that really doesn't change. However, when you look at these dynamics, at least over this year and beyond, whilst we're having elevated interest rates, you're likely to have elevated EBITDA margins as well. But let's step back and step back to these things, what are we seeing in our financials? Obviously, a set of results we're proud of and a pretty exceptional year. But fundamentally 3 things. It's all the way down through the results you're seeing this customer-led growth having a massive impact. And we're doing that into a huge opportunity. We're growing fast. We're really efficient in what we invest in. The investments we're making in products are thoughtful, focused and have an impact, and we're backing that up with super high-return marketing. And then this account is what's really powering our growth. And this interest dynamic is allowing us to double down on that significantly following our principles of sharing these economics with customers, but also will lead to higher profitability in the business. So on that I'm going to take back and hand back to Kristo before we take some questions.

Thanks, Matt. And I'll just very quickly kind of zoom back even further up because the investment strategy that Matt gave a good overview in the middle of this section is working. So over the last 4 years, it has worked. We're doubling down on this. So as a reminder, what's going to happen is we're investing those and all the same things that are going to drive the new customer growth over the next 3, 4, 5 years to come, which will then be driving the volume engagement and our results will be bringing the benefits. We're going to be improving the experiences, adding the new account features. We're going to be extending our footprint, and that will lead to new customers, more customers. And as a reminder, this is how it all stacks together. We're solving a large problem. We're evangelical -- we're obsessed and our customers, therefore end up being quite an evangelical about our products and what we do. And this is all enabled as a secret source by this infrastructure that we built. We replaced how the money moves now with infrastructure that Harsh took us through. And as we saw from Matt's presentation, it all turns up on our P&L and balance sheet, thanks to the thoughtful constraints that we set on ourselves in a sustainable, profitable, growing -- fast-growing business. So with that, I close here and look for questions. I think over to Martin, are you going to -- or let's do that.

Yes. Thanks, guys. We'll start by taking Q&A in the room. [Operator Instructions]

Okay. Matt, do you see the people?

I don't know everyone by name. That's my...

Great. Alastair Nolan from Morgan Stanley. Maybe 2 for you, Matt. First, can you maybe help us a little bit with how to think about the composition of income between from interest and what's coming from revenue and just kind of how to think about how that all flows through. And then just secondly, anything you can say on the outlook for pricing as you see it today.

Great. Thanks, Alastair. So I'm seeing if everyone on the line can hear. So the composition of income you can see this year has changed, but we have an increasing share from interest. But really, I think -- just stepping back from this, we expect this active customer growth to continue. Our VPC, from where we are at the end of the year, we're cautious around assuming that's going to recover. I'm just mindful where the macro so where could that go through the year. But overall, that should give us the volume dynamic, which I'm going to answer your second question in here. But our pricing, we haven't -- actually, pricing has gone up slightly higher to the second half of the year on cross-bordering. So that should support like pretty steady revenue dynamic throughout the year. Yes. And then, of course, we're going to see continued interest income throughout the year. But actually, like a balances will continue to grow at a slower rate. But still, this interest income will be a meaningful element of the income through this year.

James Goodman from Barclays. I'll go for as well. Just to follow up on the account balances point. You were quite clear that we should anticipate a slightly slower development because of the law of large numbers and because of also the increasing popularity of some of these other products. I don't think we know exactly how much money has been held in those other products. So I wondered if you could give us a sense of how much money you are seeing flow to things like the fixed income product and the shared product and how you think that's developing through the first quarter on the account side. And then I'll come back with the second one there.

Yes. So we haven't guided on this balanced growth. And we haven't disclosed either just what -- how much money is flowing into assets. What we can say is like this particular this interest product has got some pretty -- because remember we just only got this serially live in the U.K. and it's growing in other jurisdictions. And actually, it's very early to disclose that. But we've seen us become more relevant than ever in the last 3 to 4 months. If you think about what's been going on in the world. People trust in a product like this as well as the ability to earn interest and get instant access to your money is pretty cool. But it's very early to like kind of report these numbers and explain that, but we'll come to this. And I'm sure Kristo would add over the coming months and quarters and years, well, that will be as much impacted by launching that in new countries and new geographies with new products over time. So it's got many years to develop this product. But it is having an impact on our -- you can -- we can see this in our balance. We do see a reasonable amount of money moving from customers that either had balances that myself included, but have opted into our assets product. It's a very awesome product, you should definitely all try it out. And then obviously, new customers joining and moving straight on to this. But our balances will continue to grow. They will continue to grow through this year, but they're going to grow off a very high base. And I think where people are is roughly in the right place like so I do think -- just if you look at the incremental billions added like you kind of be thoughtful on this as you look at that through this year.

The other question I have was a bit of a more general question about just the strength you're starting to see what we have been seeing in some areas like the rest of world. I wondered if you could drill into that a little bit. Is it Brazil and precisely what's causing such success there. And I guess, generally, I've often thought about Wise is quite a developed market to developed market currency proposition primarily, but it seems like you're all the time increasing your geographic reach. So perhaps you can just comment on the evolution of the infrastructure and the customer proposition.

I'll give the number and then a little context. But like in Aristo, Brazil is having a pretty healthy impact in there. It's not just Brazil but other markets. Whilst Brazil is having an impact today, there might be other markets that are early on that journey that -- there's a lot of fronts for this that can have an impact on this over time. But Brazil has certainly been an interesting fun success on to watch. I'll let the .

So actually, we don't see our product to be a developed market with to a developed market product. Like we actually think this problem exists for the whole world. It exists in different price points, different speeds. And it is, again, going back to the infrastructure. When we build this and launch it in a new market, there is a drastic difference in what the incumbents can provide versus what we can provide. So to give you -- talk about Brazil, like we've seen very good growth in Brazil. And Brazil is a very viral market. It's a big market. And when things work, it really works, and people tell other friends. So we see virality pretty high there. But also, we are also heavily investing. We are, as I mentioned, directly bidding to the central payment system there, which is called Pix. Forget about just cross-border. If you look at what's happened in Brazil and domestic in the last year. Pix was launched about 2 or 3 years ago, and the story there is very similar to what happened in India with UPI, where suddenly, it's just gone berserk, like everybody is giving up other payment methods and they're just using Pix because instant and is cheap. So then we tag on to that revolution and then we get access and we build on that. So just an example, it's not just -- it's like we see the problem existing everywhere. And it's just the quality of the infrastructure and the products we can build on top of it, which can really drive the growth.

Just actually for the [indiscernible] Like Kim, could you just comment to you next time. But can you just say what's your name and where you come from that we've got the benefit of those on the listening end.

Kim Bergoe from Numis. I think a question that sort of follows up on this. How much of current flows of the GBP 105 billion that you -- how much goes via your own rails and how much is using, I guess, effectively the SWIFT system. And another question maybe slightly -- you mentioned somewhere you're building that sort of new infrastructure. Is that basically sort of a replacement for the [ spice ] system that you're building -- is that the way to think about it?

You'd be rounding our less -- came I mean we have an integration. I mean, it's tight. .

Customer-facing flows, I would say, as Matt said, it's rounding error. And that's why we can build this amazing proposition where it instantly can't do the stuff otherwise at scale, at SWIFT. And yes, I mean the way we think about it is SWIFT is a great partner, don't get us wrong. But generally, I think first of all the market is big enough that there will be different solutions, but we do think by controlling the end-to-end, pay-in pay-out side and running the network the way we are and building a deep integration into every local payment system. We basically can control that full end-to-end experience, which gives us a big edge on what has existed so far. So that is basically, and that's why we talk about -- when we talk about what we're building, we believe that we're building like the new network of money around the world.

Just one caveat of correction. I think -- we end up using SWIFT as a shorthand for correspondent banking. So it's going to be really clear, the things that's not broken necessarily is not -- the thing that's broken is the corresponding banking model underneath that we're replacing so we're not quite replacing SWIFT, but the other things.

Exactly SWIFT is just a messaging system. Eventually, the money moves through correspond banking.

Martins from Investec. You've been very clear that you don't want to be sort of reliant on the interest income and the challenges in some instances of sort of returning that to customers. How important is it to you to hang on to those customer balances. So for instance, if customers became more rate conscious on the jobbing around, does Wise always need to be the best rate in town? Is it very important to you to hang on to those cash balances given the problems in some instances you have actually returning those 2...

That's a good question. I'll try and answer and I'll -- actually I'll let Harsh answer about this.

Having cash balances is a byproduct in the first place. We didn't -- we never intended to. But it's a byproduct of people using the Wise account and the specialty business is using Wise account to receive money. So you kind of need to put it somewhere. And soon they realize that having this like Athena talked about, having this international operating system, financial operating system is just so convenient, where you can take money and keep it in any whatever currencies and have the fastest way of distributing where ever you need to. So cash balance is a side effect. And then -- but it's an important side effect so people care about where they hold money and whether they're losing while they're holding money or they're gaining where they're doing it compared to the central bank rate. So it does matter for us to do it well, and it does matter for us to provide that operating system, but we're not reliant on the income received from that. And in fact, more of that, we can -- the customers can access directly through the assets product. We believe this increases the evangelical nature of the customer so much that, it's so much more valuable for them over the longer term through word of mouth through the experience that they're getting. So no, we're not reliant on it at all, but we see the benefit of customers being able to and being willing to hold their transitory cash in Wise.

Nick Anderson from Liberum. Two questions one at a time. First of all, can you just talk us through capital allocation plans? Because obviously, cash -- corporate cash and the balance sheet is growing very strongly. I noticed you picking up a bit on the share buyback to EBT, you're also still paying a lot for the RCF. So maybe up several elements said, what are the plans for that cash in terms of maybe returning to shareholders at a later date? And also, do you need to renew the RCF in 2 years?

Yes. So we have -- that's right. We are generating a healthy capital base and cash flow from the company. And we've also -- so really, we're trading 2 things here at the moment at our point in time, right? So one is we've built already and are continuing to build a really strong balance sheet for a company with healthy cash flows and very healthy liquidity. And we're very early in doing this. We're -- we've done very the past and we'll continue this. But on the flip side, we also really care about dilution for our shareholder base. So the thing we started doing was saying, well, actually, we can definitely afford to, from this cash flow, offset the dilution from our stock comp program. And that was the very this is the very first step in to this foray. So at the moment, we don't have plans to radically change that capital allocation -- but what you can see is we've got increasing capacity, as you can see over this period for those choices. And to your point on RCF, yes, I think just the rate we get on our RCF is a very modest rate over the [ sonar ] -- so actually the rates we got on that. The reason we -- actually the normal question I get, Nick is why do you still -- like why do you use an RCF and not like a bond or something like this. Actually, the rate we're seeing there is pretty efficient and pretty effective as a rate and as supported by our good supportive club of banks, which we appreciate. We'll review that over time as to whether it's replaced or whether it's a different mix but right now, it's -- we don't disclose the rates on it. It's an efficient use of cap. There's an efficient source of funding, which we use. And it's continued to scale actually. But something we'll review for both of those, we will review from time to time.

And then the second question, if I may, is obviously a core part of the mission statement is about ultimately making cross-border transfers free. Then looks as another way over the last 5 years, cross-currency take rate, the best measures you give us a broadly stable. So I guess -- and volumes are up fivefold. So I guess the question is, when should we start to see scaling effects -- maybe a material quantum change in that pricing dynamic?

So from a scaling perspective, we have seen this on [indiscernible]. If you look at some of our currencies, they definitely got cheaper over time. We also -- there's a dynamic in there where we've added currencies that have grown at higher. So there's definitely a mix that. But over time, we've seen these time horizons we're talking about today. So we've definitely seen -- we continue to put downward pressure on these prices over time. But that path is not going to be linear particularly if we run the discipline of how do we charge the lowest we can rather than what we can get away with which means as we manage to scale those costs that will go down. But actually, as you've seen this year, like where we know we need to grow operational teams and improve the experience, our customers really value that, and that's put pressure on price. But I think those are some of the dynamics, and we were also supported by continuing to invest significantly in our growth, which we think is really valuable. But I think Kristo a question close to your heart as well. It's probably worth sharing your view on this.

We go as fast as the -- so we go as fast as our unit economics allows us to. And as much as -- the important thing is in many markets, we have achieved more. So in Brazil is a good example, prices have come down for multiples over the last few years. In other markets, it's gone up a little bit as our cost base has increased or we've gotten better at attributing our costs. So it's a mix story. I expect that the story is a downward trend.

I think fundamentally, like what do we know in years, people are going to want faster, cheaper alternatives than they have today. We're already radically cheaper than the banks. And our challenge is how do we just keep downward pressure on that over the long term. So kind of -- that's what people come and love us for, and we've got a commitment to doing that as well as we can, and we think we're doing relative to -- relative to the competition at a pretty strong job today and just that discipline and that focus is not going to leave the business, but we'll do it profitably.

Aditya from Bank of America. So a couple of questions from my side. Firstly, on the macro [indiscernible] that you mentioned, can you talk about are there any -- apart from the higher value cohorts? Are there any other buckets of customers in particular geographies or segments where you're maybe seeing some change in [indiscernible]. So if you could just comment on that?

Yes. So I would -- we're going to see quarter-on-quarter movements, and we'll see that over the last quarters, and I'm sure we'll see that over the coming quarters. But I would encourage us at this point, just to step back from this and what are we seeing? We're seeing more and more customers adopt. Obviously, people more and more customers joining Wise every year. That's growing pretty consistently. They're sticking around, and they're using our Wise account. And these are the structural trends that we see in our customer base that are driving this systemic compounding growth in the number of customers. We'll see, just like we all will see volatility on a daily quarterly basis on how much money people are moving and there's certainly enough drivers of that with macro today. If you just look in the longer run, like the stuff as to how we invest and how we -- where we focus actually the systemic drivers of active customer growth is where we -- what gives us this focus. Nothing has really changed in what our customers are doing as they're doing more on the Wise account. But we'll see ups and downs. But I think what we'll see by the end of the year is continued growth in the number of active customers were using our features and those features supporting our growth.

Understood. And then as a follow up on the OpEx. So you spoke about the investments you've already done going ahead. Should we think that you sort of pass the peak in the OpEx growth in the medium term because you've done, invested a lot, on your mission side of things on the development side of things. So from here around incrementally should be investment we see.

Yes. Last year was a pretty tiring year from onboarding and hiring people, like it was a pretty phenomenal -- amazing we pulled it off. But like we've done those yards and we lead into that. So definitely, the rates at which we are in going forward or growing the cost base at least -- ultimately, this alliance to the rate at which we grow sustainably fund that with the rest which are growing our -- the volume flows of the business. So that's right. And you can trust us to keep ahead of what we're seeing and plan very carefully and continue to run a profitable, sustainable, sustainable business over time.

And one maybe just last one for Harsh. On the infrastructure side of things, obviously, you have some of your other fintech competitors. Who're also investing on that side and trying to build partnerships in different markets. You also have the likes of VISA and Mastercard, who were building a number of partnerships with different players. I mean how do you sort of see that change in the competition rise on the infra side versus the [indiscernible] ?

Yes. I think -- the key thing here is like what are you going directly? Or are you going with partners' side, you said there's a lot of people who having partnerships, some are using PSPs, some are using aggregators. Eventually, the quality of your network and what you can control end-to-end is based on what you control, right? And I think our thesis is that the more we own stuff directly and the more we have it for the longer term, we get independence from others, right? And then we control that speed, cost over the longer run, right? And that's shown for us, at least the way we've invested over the last 12 years, this has been -- this has come true and that shows in the proof points we have with like 55% in other numbers we have. So I think that's a big differentiation. We actually want to own the entire rails through to the pain and the payouts. And that's a big difference in strategy. One other thing I will share is when I talk to a lot of Wise platform partners, right? And they get pitched by everybody else, too. One of the thing that's coming up now is people are realizing that actually the consumer business we run has been an asset for us. In understanding, there's more to running cross-border than just the rails also, right? So we've understood, oh, when we get on these rails, these products up, how do we -- how does that impact contract rates? How do we onboard customers better? How do we build a better experience to get the document uploaded? And that translates into helping our partners build better products, which has lower contact rates, better onboarding experiences, right? Versus if you go with some of the other players who are just B2B, they'll say, here's the rails, everything else you have to sort, right? And we do see that like sometimes they'll go with somebody else and then they'll come back to us because they see, I don't know how to run cross-border, you know how to run cross-border, tell us. I think those on examples of the B2C product also is helping us. But on the infra play, we believe we should own full end to end. And I think that's a big differentiation with partnerships. We do have bank partners where we have right now, and they are very stable ones, so that helps us.

Soomit Datta, New Street Research. The -- just going back to the net interest income policy, I think investors are obviously pleased to see the 20% being sort of fed through to EBITDA. But at the same time, I'm curious why not hand that back to customers by way of fees because obviously the long-term mission is to reduce fees? This would be a good opportunity for that to play out that way. So just curious on that, that's the first question.

There's obviously a number of things to factor in that. Like so if we're going to offer a radically lower fee at some point on the long time of the future, like the company that can do that successfully will win. It's the person that can do that at the lowest possible unit cost and survive with minimal oxygen if you like. Think about taking this to as long as if we're dependent on interest income off that fee. In the short term, kind of avoids the need. Our teams have got in this building may be in London, 1,000 people, 5,000 people around the world, pretty religious around driving down the costs, the prices for customers. And clearly, this topic come up. But if we do that, without reducing down the cost and sustaining a profitable business over time. It's just delays -- it really just delays the need to actually build a leaner, faster machine. And actually, if you hook up to a cyclical revenue stream, actually, it can be quite dangerous. It's the same as maybe raising a low debenture capital and spending it on free payments whilst you try and get yourself, you're actually building a profitable business. We took a very different path to doing this a long time ago. It's very successful in helping us build the business. So our principle is like, it's like you think this, but actually like -- it's very -- it's actually much, much smarter and more robust from a -- how can we guarantee for our customers we're going to be able to do this time of the year, 5 years or in 10 years actually to take the hard path now, which is what we've done and always and build a stronger business over the long time.

But we are aligned that we should pass this back to the balance holders. And rather than people are transferred with people have balances and it's the magical power we're able to do that, that we'll get clearer over the next 6 to 12 months.

And I have just one quick follow-up as well, please. different topic. Just on the speeds and the instant payments up to 55% from 20% in the last 4 years. So super impressive. Where does that go from here? What are the kind of things you need to move that on? And how can that kind of drive the business over the next 2, 3 years as well?

Yes. I mean we will continue to connect to other entertainment systems as there's quite a few of them, we're still connecting to. Example I gave was Brazil and Australia, we can access that quite a bit right now already through some partners. But then actually, there's a natural evolution right now happening in the overall ecosystem of payments, like a lot of payment systems are getting upgraded. So we can see that as this happened, like, for example, in the U.S. So U.S. has been behind on instant payments for a long time. They've launched RTP, which is built by the consortium of banks -- private banks or private setup with TCH, but also Fed now that's going live this year. So as that gets rolled out, the expectation in the payments would go up even more in the U.S., right? So other markets are going to come up along the way over the next 5, 6, 7 years, and we'll be at the table asking for, we need direct access, right? And again, one of the things that I tried to explain in the presentation, I don't know if it landed was, if you're a regulator, think about if you're the U.S. Fed, right? Or if you are Singapore, Monetary Authority of Singapore, you control the payment system and access to it. And you don't want -- your job is to make sure there's financial stability and low risk in the payment system, right? But you want some competition, but they don't open it to everybody, right? So then when they say, let's add some -- banks have access to help some other people in there. Usually, they look around the world to say who else has done this, and usually, we are standing there raising a hand and we usually get access. That's kind of like this question that I guess asked like, why can a new person raise a lot of money and just get access and do the same things. That's where they look at experience also. But this is where we see -- I mean I can totally see the numbers going very -- over the 5, 6, 7 years, closer, another 10%, 15%. And then it gets hard like the 80-20 rule gets much, much harder.

Martin, we have questions in the room. How are you getting in for the folks online?

Yes. Thanks, Matt. We'll take some questions online. So we're going to start with -- first question from Justin Forsythe, Credit Suisse. Justin, over to you.

Guys, can you hear me? .

Yes, we got you.

A couple for me as well, if you don't mind. First one for Kristo. So I think we've had a little bit about the kind of alternative rails. But I want to ask a question a little bit in a different way. So I think in the past, you've mentioned that you would potentially leverage different rails on the back end if they prove to be cheaper, faster, et cetera. Just kind of interested and maybe this is a question for Harsh as well, like in the case, let's say, blockchain became that, how would that work mechanically, meaning do you have the setup to be able to nimbly move to another rail in the back end? That would be my first question. The second question was for Matt, I just was wondering if you might be able to parse through a little bit the kind of the drop-through slide that you were showing with interest income. So I think what you were talking about is how you're going to spend the proceeds were a little bit different. Can you just walk through because it seems like some of the stuff that was tagged for spending with interest income. Some of that would be COGS related some of the interest and payouts and benefits, but also some of that would be OpEx related. So is there going to be a way, I guess, to evaluate whether those numbers are being hit or not? And does that just mean that the core business is going to do 20% EBITDA margins as we've kind of asked in the past?

Okay. So why don't you talk about the...

Okay. So on the blockchain and alternative methods of moving money. So yes, I think we definitely are nimble enough and fast enough that if this actually came to a place where it was cheaper to use another technology, whether it's using specific crypto or coin to move money and move ownership of funds across borders or if there was some other way we could use [indiscernible], we could easily integrate that into our system. I mean actually, if this were to come to fruition, it first of all, has to be cheaper, much cheaper than what we're running today, moving from Fiat to Fiat, and that's what we've seen is not really happening yet. But if it were to happen, practically, it would be just adding another asset class to Wise account for consumer. And then you will be able to transfer that ownership to anybody else. So it's pretty standard stuff we could do. But right now, it's actually much cheaper to do what we're doing and much faster, and we control that to end-to-end experience. And from a regulatory perspective also, it is actually less hassles, by the way.

So let me answer the question on use of interest. So as we said, there's a few principles here that we first apply. One is like how do we avoid becoming overly dependent on that as a business? And the second is how do we use this as the other questions are asked, like really power this account, but it also drives the structural profitability. So how are we going to use that? First is we're trying -- the first actually 1 percentage point that we're using, as you can see, is actually making the Wise account features at this 20% margin that's similar to what we've always had in this cross-border business. So that's -- and we don't expect that to increase. So if you think about that, that covers basically kind of the marginal costs. We will -- we have income on the account, [indiscernible] account, but just top that up to make sure we get over this 20% margin. And then the rest of it will be used purely for -- primarily for account-based incentives or however we want to talk about it. So ideally, we can pay interest or it's cash back in Europe, it's the same thing on balances. In the U.S., we can pay interest. In the U.K., we'll have to try some other things, around expenses. We've already started things like cash back and these will be like discretionary incentives relating to the account activity rather than funding significant levels of OpEx, which we become dependent on while subsidizing cross-border pricing. This is quite an important distinction. And so to the earlier question, like it's very tempting to do one, but actually, it's very important that we stay disciplined and stick it out as we've outlined. We'll kind of split this out for you so that you can understand what's happening because some of these might turn up as contra revenues that have just contra interest. But actually, we expect -- so a few things, we expect to limit that 1 percentage point and then we'll work towards the 80%. It's going to take us time to get there as well because we're going to be quite thoughtful in what we're going to do with scaling where we can pay interest or operationalizing other ways to offer rewards on the account as Kristo said.

Got it. Real quick follow-up there, Matt. The 1% -- sorry, that's a percentage of gross interest income or could you just get quickly walk through what that was?

Exactly right. So that's 1 percentage point. So if we have -- if we're running 2.8%, I believe, at the end of the year in the quarter, the first 1 percentage point, so 1% and 1.8% left. rather than 1% of the gross interest. So what it practically means is this like rates at 1% would mean our Wise account features are actually running a very healthy profitability, like -- so and rates were -- which helps us avoid customers paying a fee or reduced levels of fees or reduced level of accounting charges on accounts. And this is at a rate that is very low. I mean, historically, over the long term, where rates are and my rates are expected to be. This is a very low level of dependency in our view. That's worth taking because it gives customers a great experience and really interested some of the uppers with the accounts.

Thanks, Justin. Next question comes from the line of Hannes Leitner, Jefferies.

I have a couple of questions. So on Slide 44, you state that this extension of the onboarded services. Basically, you onboarded 4.5 million customers growing at 40% year-over-year. Given you stated that you have at the moment, 10 million active customer, could we think that 5.5 million of those customer -- existing customer and the other one come on new? Maybe you can talk to that a little bit about those moving parts. . The second question is on VPC. You talked about basically the current trading trends are slightly lower. Could you disintegrated between personal and business. And then just thinking over the long term, you want to expand into new geographies. You referenced we have a nice video around Colombian users. Average monthly income is around $1,000 in Colombia. In Brazil, it's closer to $2,000. So how should we think that how that translate into VPC going forward? And then maybe I have a follow-up.

Okay. I got the first one. So -- and I might just get Martin to repeat some of the questions. So on the first question, like, yes, we did have a really healthy number of customers joining us last year. And then when customers join us, they use us, and then some of them come back every month, some of them come back every year, some on them come back less frequently. But -- so actually, we talk about the people -- that's the number of people who made their first ever transaction during the year. The active customer base is those that are -- includes those and those that are continuing to repeat. And you see we have this 6 million even on a quarterly basis. So they're slightly different currency. But fundamentally, what it tells us is that cohort, if you go back to the volume chart I showed you, I think it was the same chart actually, Slide 44, if I remember has. It showed that actually this -- the volume that we're getting from new customers over time has continued to grow. And those customers stick around. So basically, that just continues to grow through this volume retention, this dynamic over time. The number we share with you shows you the dynamic of those cohorts continuing to grow over time, it just gives us -- the contribution to growth. I think the second question was around like the trends of VPCs. So we'll talk more in a couple of weeks when we talk about our Q1 numbers. But broadly, the dynamic and it's too soon to close the quarter around, we're not there yet. But there's some ups and downs dynamics across geographies and segments. But broadly, we've seen this VPC. Rough -- I would look at it as roughly stable maybe slightly down quarter-on-quarter, but we'll share more on that dynamic in the coming months, in the coming weeks. But broadly, I think we need to remind ourselves of the longer-term trends of active customer growth. And then there's another question for -- I think that was the second question. I was -- was that a third?

So there was -- the second part of the .

It was the...

The VPC question is the customers in different jurisdictions in different countries. And what the impact is on the VPC.

So we do have a different mix of customers joining us every time. But actually, the impact on -- there might be an impact on VPC of this, but like the primary impacts we've spoken about is that over the last quarters of different payment volumes, that's the dominating impact we've seen. These customers -- we're launching this customer around the world, but the problem is the same. There's problems of fast -- slow, expensive payments. These customers move volumes for us, and they get a great deal. So actually, the economics of all these -- the economics of all these customers that we're launching and the way we price are all profitable. We don't subsidize across routes. So actually, it's pretty healthy profitability wherever we're growing.

And also to keep in mind I'm glad you referenced Athena, I think she's a business customer in the United States actually. So the reason why she can run her business in Wise is that we reach all -- or many, many corners of the world. And that's why it's worth expanding the infrastructure into maybe lower GDP economies.

Okay. Great. And then just a quick follow-up on personnel expenses and then basically related on the job hiring, the whole personnel expenses quite increased substantially in the hiring. This year, I think, 1,700 people. Can you maybe give us a little bit of the idea where you need to grow the head count base to have the business set up then for consistent operational leverage going forward?

Yes. Maybe I can start, and then Matt can add. So yes, we have invested quite a bit over the last year, mainly driven by continuing to invest in our operational and servicing teams because we have a lot of demand coming in from this customer growth that we are seeing already. And we want to make sure they have a great experience if they need to call us, if they need to onboard and have issues in documents and submitting. So we have invested in that. And also in product engineering, like my organization, a lot of that is like continue to build and opportunistically invest in these different longer-term projects that we've done, for example, investing in Australia and others that we are doing, which requires us to have boots on the ground to basically do the direct integrations. But we expect -- this last year was a lot of investment, and we onboarded a lot of people, as Matt said before. we're hoping through the next year and onwards, this trend will be slower. We've done a lot of investing last year.

Yes. I mean we've given our -- you've taken our guidance -- you've seen our -- we're committed to running this profitably. So that should tell you we'll manage our cost base as we need to and with just that you'd expect. So we can talk more about this in 6 months. .

Thanks. Next question comes from Josh Levin at Autonomous. Josh, over to you.

Can you hear me? 2 quick questions. So it looks like the other fee take rate, other fees divided by volume looks like that was around 15 basis points in 1H last year, then it increased to 17 basis points in 2H. Can you talk about what's driving the increase in the other fee take rate and where that '17 might be headed to? And then separately, in today's press release, you talked about direct connections to 4 payment systems. I think that number used to be 5 or 6 in previous presentations. If that's correct, can you just explain what's going on there?

It's basically -- it's been 4, so I don't know if that was different. But in Europe, actually, we have a lot of access to. We basically have U.K., Europe, Singapore and Hungary, and then we are very close to launching in Australia. That will be the 5th, that's directly connected.

Right. So we've got permission to integrate into Australia, we're just in the process of doing...

Or maybe it was press releases like what we got the permission, maybe that's what you read, I'm not sure.

Yes, there's not gone backwards, Josh. That's a good thing. But I'm hoping to get it going forward, which is good. So the first question is what's happened to other take rate? Well, the first thing on this is the -- like actually, our cross take rate is actually, we almost set this because we set a price, and it reflects the price set on the volume. The other take rate is actually the -- it's not priced this way per say. So this reflects the interchange we got on cards, fees, we may get on domestic volume, actually not on cross-border volume. So I think the take rate is an outcome, if you like. And what you're seeing there is the absolute pounds millions of revenues growing year-on-year. And the reason for that is it's just usage of the accounts connected. You see that in the balances as well -- is continuing to grow. So the question is where is that? Like, so how many pounds of fee income on the account will we get per pound of volume like it has been increasing. It's actually -- that's despite us actually starting to give things like same currency payments free. They still managed to go up. But I would just keep taking that into consideration as we go forward. Like it's been increasing. We expect it to continue to increase but at a steady rate going forward. But underlying it really reflects the account adoption, customer growth, and that's what flows through to driving the revenues.

And the last question of the day comes from Mohammed Moawalla at Goldman Sachs.

Great. Matt, Kristo, Harsh. I had 2. Firstly, Matt, you talked a lot about kind of driving the kind of the volume, but also kind of adding added product services. So as you think about sort of that existing customer business, could you help us kind of decompose the kind of the margin structure on existing customer versus sort of new customer? And as you build that kind of lifetime value kind of how that sort of margin on existing customer or kind of revolves. And as we think about kind of the long term sort of shape of Wise's margin, I know you've sort of given us a current guidance in the kind of low 20s, but how should we think of the shape of how that margin can evolve given these dynamics? And then the second question, and maybe for Kristo and Harsh is on the platform business. I increasingly hear more and more, you guys talk about this business, how this contributes kind of the vast majority of your medium to long-term revenue, has there been specific kind of catalysts? I know you had the platform event that kind of give you kind of that increased confidence? And how should we think of some of the kind of partner additions? I know you've made some good additions in Asia, but how should that sort of evolve and when does this become a kind of meaningful driver around the growth rate?

Let me answer the question first. So think about our unit customer economics, actually, as you can see from the payback -- on our payback, on our marketing, what you can learn from this is that actually, if we didn't -- for customers before we spend the marketing money, they're actually very profitable in the first year. So we're not -- we don't wait for them to pay back over time. And we do that quite a -- it's because we've got very healthy economics on the first transfers that they're offering -- that they're running on Wise. Yes, we have an onboarding cost upfront. But actually, that -- even that is paid back relatively quickly, typically, the most onboarded pretty automatically very, very quickly. So there's not like a -- in the underlying economics of the customers, they're very good from the early days. Yes, we spend marketing money up front. Yes, we spent onboarding money upfront, but this is structurally very, very profitable early on. The question on long-term or medium-term margins is like fundamental as to how we run the -- all the payment volume and the infrastructure is this at or above 20% margin. What we're seeing that's new is how does this interest dynamic track through to margins. And whilst, as you can see, whilst we have higher interest rates, the 20% will flow through, will track through to higher EBITDA margins over time. So maybe those interest rates are not permanently high. But while we run in this model, which we're going on that journey, and we expect that through this year. Definitely, in this near term it's going to track through to higher EBITDA margins. 5 years ago, I just think about this. 5 years ago, like we were really focused on cross-border and predicting 5 years in the future, what our margin structure is going to be. I know it's a hard thing. But what we do know is that -- we're going to keep moving more and more money for people, more, more money for more and more people and businesses around well. And we're going to do that with an underlying very profitable business, and that will keep us growth for the long term.

And on the Wise platform, I think there's -- there's no specific catalyst. I think there's 2 groups that Harsh mentioned, which were -- we see more traditional banks, especially starting in Asia. I guess they're slightly faster moving. So for banks, it's always a change is hard and slow. So see, the Asian banks actually go faster, the Shinhan Bank, the Mandiri, et cetera. And we see the U.S. challenger bank -- generally challenger banks go faster as well in the Wise platform adoption. I think one of the catalysts, I just wanted to add to that is as the kind of the years go by, banks do see their customers using Wise. . And for them, it's increasingly valuable to bring these customers back to their own platform, which is their own apps, which is what we're supporting with Wise platform. So the logic for our bank partners a lot is they see their customers using getting benefit of Wise and they would rather -- much rather. And we would much rather than have that in their own apps.

So, I think that's it. So thanks all for -- especially those who come to see us in the office side. It makes it really special for us having you in. Just like a -- hopefully get to know each other better. Thanks for all the questions online. An exceptional year with lots to learn, and we're quite excited about the future. So thanks very much.