Earnings Call: Q2 2022

Oct 19, 2021

Earnings release

Good day and thank you for standing by. Welcome to the Wise Q2 Trading Update Analyst and Investor Call. At this time, all participants will be in a listen only mode. There will be a presentation followed by a question and answer session. Please be advised that this conference is being recorded today, Tuesday, October 19, 2021. I would now like to hand the conference over to your speaker for the day, Mr. Matt Birs, please go ahead. Thanks very much and good morning everyone. Thanks for joining. On the call this morning, you've got me, I'm Matt Bryson, CFO of Wise And you've got Martin, Martin Adams, our Head of Owner Relations. So we're pleased to be publishing our Q2 trading update today. I'll take a couple of minutes to recap the main points from this morning's announcement, and then of course, I'll happily take any questions. So we've made great progress in the recent quarter. We've dropped prices, our speed has increased, and we've launched some new features for our customers, all of which we believe will continue to drive volume cross border volume in the future. But fundamentally, we've also become stronger as business in this time. Remember, our mission is to drive down the cost of moving money around the world, but we only do things sustainably. So in order to drop prices For our customers, we actually have to engineer and optimize away the marginal costs of moving money around the world. We've become efficient in many areas, but most notably, recently, if you've read the blogs, we've become more efficient in how we manage our FX exposures. We've got leaner. And so if you're a customer, you'd likely to have seen through or heard through the last quarter that we've dropped prices. This means, if you step back from this, this means that we can generate the same level of gross profit needed to invest in all of our future growth, Well, it's actually giving customers a lower price, which is why I think about this as a stronger business. This is at the half of our strategy and mission as it encourages more customers to join us. Price is one of the main reasons why people join and also deepens our competitive advantage for the future. So For our call today, we'll cover 2 main areas, just as we did last quarter and I probably will do in quarters to come. So first, an update on our mission and the progress we're making And then an update on some key numbers, mainly revenue and volume as we do quarterly and obviously the number of customers using Wise. So First, let's head back to our mission. Weis' mission is to make moving and managing money across borders faster, easier, Cheaper and more transparent for everyone everywhere. And our teams made great progress this quarter on price, as I mentioned, but also on speed, Our products features improved and we also made some further steps on our platform. On price, in the Q1 of this financial year, we're able to reduce pricing by 2 bps to 67 bps. And in the Q2, the one just passed, we reduced by an exceptional further 5 bps to 62 bps. It was much faster than we'd actually hoped. On speed, 40% of all transfers were delivered instantly within the quarter. That's within 20 seconds you've sent the money and it's with the recipient. That's up from 38% in Q1 and significantly up year on year. So for example, we've integrated with a payment network in India So the wired customers can send money to India and have the transfer arrive within 20 seconds. And we continue to enhance our proposition through several new features. We launched assets, which gives customers the option to switch their Wise account balance into a different asset class with the possibility of return. It's actually more useful to use the Wise account. And we've launched new features for business account holders, allowing them to set account commissions tailored to individual employees or their accountants. And finally, on our platform, we recently partnered with U. S. NeoBank Sable to give their customers faster, cheaper international money transfers directly by their app. And also, we're now still working with existing partners like Monzo to give their customers a better UX across border payments and on Juno, enabling their customers to send money direct to India, China, Europe, UK and Philippines. So as always on a quarterly basis, we'll shortly publish our full mission update blog on our website. So please do take a look and have a good read through and you'll get a much broader sense for the improvements we made for our customers over this quarter. So moving on to the financials for the quarter. 3,900,000 customers transacted on Wise in quarter 2. The number of personal customers grew 22% year on year to reach 3,700,000 and business customers grew 44% over the same period last year. 230,000 business customers are active in the quarter as we continue to broaden the appeal of our proposition. So overall, volume grew by 36% year on year to £18,000,000,000 Now the growth in the customer base continues to be the main driver behind our volume growth, but the average volume per customer was also up 10% year on year, Partly reflecting the growth of growing proportion of business customers, but also the adoption of our Wise account, which typically sees a higher average volume per customer. Revenue grew 25% year on year to reach £132,800,000 in line with our expectation. The difference between volume growing 36% and revenue by 25% is obviously explained by the take rate, which reduced fixed bps year on year and this is in part driven by a change in route mix year on year, but also due to price reductions linked to the leaner marginal costs as I mentioned earlier. Looking at the quarter on quarter movement, otherwise, I'll repeat my health warning on Q on Q trends because they can be volatile. It's worth reflecting on these given our growth in Q1 was actually flattered year on year growth in Q1 was flattered by soft comps post from COVID the year before. In Q2, we've seen active customers grow 7% Q on Q for both personal and business customers. And with business customers in this growing proportion, now 25% of volume in Q2. And this is a driver behind the increase in volume Which grew 2% Q on Q. So volume increased 10% Q on Q and revenue by 8% Q on Q. VPC continuing to steadily increase The take rate decreased slightly 1 bit compared to Q1, but the price reductions in the latter stages of Q2 kind of began to flow through into the take rate, but they only So in conclusion, we're pleased This financial year, FY 2022, started well. We've got more customers, more volume, lower prices for customers, We've maintained a very healthy and sustainable gross margin to invest in the future, which we're actively doing. And as I said at the beginning of the call, our strategy of lowering unit cost means that we can continue to generate the cash required to sustainably run and grow wise, while also giving customers a better price, encouraging more customers to join us and strengthening our position in the market. So this strategy leads to 2 things when it comes to our financial KPIs. All other things being equal, lower marginal costs and lower prices lead to lower take rates, but higher gross profit margins. Or put it another way, we've managed to engineer away our unit costs or some of our unit costs. So we have to charge our customers less to create the same Cash gross margin, which is good news for stronger business. So looking ahead, we expect the take rate to be slightly lower in H2 versus H1. The price cuts only came in midway through this quarter, but we continue to expect revenue to grow by low to mid-20s on a percentage basis for the year. And importantly, at the same time, we expect gross profit margin to be higher than we than I previously guided to, at around 65% to 67% for this financial year FY 2022. This is, of course, subject to FX costs, which can ebb and flow on a monthly basis, which is subject to them continuing to remain broadly stable at the recent levels The guidance on adjusted EBITDA margins remains unchanged as we'll continue to invest as fast as we can in our growth, Obviously, doing that sustainably in the near term. So with that, I'm happy to take any questions that anyone might have. Thank you. Ladies and gentlemen, we will now begin the question and answer First question comes from the line of James Goodman from Barclays. Please go ahead, James. Your line is now open. Yeah. Good morning, Matt. Thanks a lot for taking the questions. Just a couple for me, please. So the first one on the volume, a strong sequential increase, I think, dollars 1,600,000,000 way ahead of the last couple of quarters. And I just wondered whether you sort of got any further view there in terms of how much of that is the seasonal uplift in the business And the extent to which that's still sort of valid in the current environment versus an underlying acceleration and what that might tell us about your volume Expectations for H2. And the second question is around the gross profit margin guidance increase, which Yes. For me, it's probably a better way of looking at the net revenue really of this business. But we don't actually have the gross profit disclosure, I don't think, for Q1 and Q2. So Wondered if you could help us a bit in terms of what's happening maybe in terms of a gross profit take rate, if you divide the gross profit into the volume. And when we look at the H2 guidance, is that really the gross profit take rate being flat, I. E. Back to the first question, is it being driven by the higher volume increase? Or are you actually expecting also to be making more gross profit as a percentage of volume? That makes sense. Thank you. Thanks. Good morning. Thank you. Let me try and break these down. So the first question is, What's been driving the we did see a GBP 1,600,000,000 jump in the volumes. We have seen in the past some movements around summers and things like this. But actually, I think with the way the world is working, it would be I think all sense of seasonality is still somewhat out the window Based on what was based on certainly my small highlights have been saying. So I've said on a quarterly basis, we've seen some volatility, and we will continue to do so. But I don't think I would point to some radical Delaying acceleration in our volumes, but it just shows good if you look across the longer term, which I hope everyone is doing, it just shows good solid Progression in our customer base. And there's dynamic there's built in dynamics in there, which you're seeing with the business customers and the shift to the wide account, which is supporting like the more active customers that are moving more money through the platform. 2nd question, I think was maybe the second and the third, James. So the second question was gross profit. So how to think about this? We haven't disclosed Our actual results for Q1 and Q2, you're right. And then what do we expect going forward? We will be obviously giving our first half year results on the 3rd around the end of November, 30th, I think, in the diary, Well, we'll disclose this fully. Rather than disclosing on a quarterly basis our gross profit number, we're just updating our guidance for the year of where we think that will Which is obviously higher than we previously guided to. We will have a gross profit number for you In due course, obviously, but I would just take this guidance as a steer on where we think we'll come out for the full year based on what we've seen in the first Obviously, it's based on what we're seeing in the business in the first half of the year and the longer term trend. It's interesting and I think It's very healthy actually to look at this. The way you're thinking about it, James, around fundamentally like The generation of gross profit is the cash and the value generation that funds all of our future investment and ultimately Any margin that we create and the COGS or the cost of sales that sit on top of that, One way to think about that definitely is some of the friction between us and our customers through using financial intermediaries to the extent to which we engineer those away It's a great thing for everyone involved. Going forward, I think the what are we expecting on gross profit? Well, I would just we've given some guidance, which hopefully, given what people understand with our volume growth and where our take rates moved, it should give you A good steer hopefully as to how you think about that in the round going forward. Okay. Thank you. And so just to be clear, I mean, in terms of, I guess, unchanged gross revenue, gross profit up As to whether that's coming from basically a higher volume or a higher gross profit divided into volume, it sounds like it's perhaps a little bit of both that's driving that. Next question comes from the line of Adam Wood. Your line is now open. Please ask your question. Hi, good morning. Thanks for taking the question. I've also got 2, please. Maybe just first of all, on The improvements on the engineering and the technology side, obviously, this was a pretty big price drop during the quarter that I guess you probably flagged as But could you just talk a little bit around the pace of improvements that you're seeing from a technology point of view and the benefits of scale that you get? Is it possible that you're seeing accelerations here and then maybe we shouldn't see these kind of price drops as so unusual in future. So if you could just talk a little bit about Pace of engineering change and how that could play into price movements going forward? And then secondly, Could you maybe talk a little bit about what you've seen in the past in terms of the price drop starting to drive volumes in the business? And what sort of correlation do you see between price Coming down and getting extra volumes coming through from both business and consumers. Thank you. Yes. Awesome. Thanks, Adam, for the questions. So the question around momentum on engineering and tech. So the rate at which they're working on this It's somewhat relentless. But as most things in life, the rate of outcome and progress is rarely linear. So we've the teams are consistently driving now on across our infrastructure as to where can we Integrate with more partners, where can we integrate directly into payment systems and where can we negotiate away costs with scale Or even in this situation with what we've done here is where can we optimize our processes Such that we can change our products, such that we can reduce the exposure. So for example, by increasing payment speed, We reduced the time at which we would carry an exposure on a payment, which actually reduces down the potential gain or loss or hedging requirement, Which then flows through to a lower unit cost. So the momentum is not going to be linear, but you're right, Adam. This is definitely one of the bigger From a quarterly basis, the biggest shifts that we've had. And I don't think we should necessarily expect shifts like this on a good quarterly basis. The corollary to that is actually that while these shifts are driven by reducing cost of sales, somewhat in the sense of our ability to generate Gross margin is somewhat that we don't need to it's kind of almost don't need to worry about that because actually we're reducing away the COGS Whilst not really driving affecting this gross margin. So I think there will be more things to come, Adam. I hope and we need to in order to complete on our mission. But these things won't be steady and I'm afraid they won't be steady and linear, but This quarter was somewhat exceptional. On the but from a momentum perspective, we've now got more than 500 engineers working on this Across the world and all of our infrastructure. So in that sense, like we do have strong momentum, we're incredibly focused on this. So I'd expect more progress. On the price versus volume, I kind of look at this 2 ways. On the one hand, It undoubtedly does help us from a volume perspective in 2 manners. 1 is The main reason people talk about Wise or and even TransferWise as we knew it was because we're radically cheaper than our Than the alternative, which is typically banks. And that gap has remained as we continue to put pressure on price and it keeps our identity as the If you think about other tech firms that have done this, they've just continued to reinvest Their economics and their customer base to build this recognition that you can trust Wines to be the lowest cost and the lowest price and fairly priced. That's driven our word-of-mouth growth, which is still 2 thirds of our customers coming through word-of-mouth in the last year as you saw in the prospectus. But then going forward as well, if you look at this, you need to look at it on the very long term, which is 3 years ago, we were really still really charging 50 bps or 60 bps in some markets that are now in the 30s of bps. And there's no doubt that for us to be in the next if you're looking at this over the 10 years, which Or 5 or 10 or 15 years, however long people want to look. But over the long term, which is the period over which we're investing, it's clear in our minds at least that actually Building that lowest cost platform is what's really going to determine the long term success. So, if we do look at it, Jane, Adam, on the short term, it's really rather with the focus on the long term that we're making this investment. And that's right. That's why we have to do this profitably and sustainably. It's very easy to do without that continuing mind. Thanks very much, Adam. Thank you. The next question comes from the line of Josh Levine from Autonomous. Please go ahead. The line is now open. Hi, good morning. I have two questions. So obviously, you've guided up quite a bit on gross margin for the year. And you've talked about how that results from lower unit costs. But how should we think about that beyond this year? I mean, can it continue to go Higher than 65% to 67%? Or at some point, I'd imagine it's capped because at some point, you do have to pay some amount of bank fees? And then the second question is, you've talked about your mission. You've used the word mission a few times today. You have this mission 0. You ultimately want to get Customers pay nothing to transfer money across borders, but given I mean given that is basically your revenue model, what does it mean for your revenue model In a world where customers pay nothing or almost nothing to transfer funds, because as you've shown this quarter, I mean, you can have price drops happen more quickly than you would have thought in a given quarter. So You could see prices dropping faster than we all thought. Josh, thanks for the questions. Very Very cool questions. So on gross margin, we're really guiding for this year. And we've guided so previously, we guided to the 62%, and now we're guiding to this other range, 65%, 67%. We're not guiding beyond that, but fundamentally, this is where we see we've managed to get our gross margins to. In the past, we have seen a dynamic where whilst we engineer away some of these costs, we also might enter new routes that have got effectively a higher marginal cost. So whilst we've kind of driven up gross margins in some routes, we've effectively accepted new routes that have got lower gross margins. But at the minute, Where we've moved to is we've seen this shift. So we're not guiding any longer term than this. Ultimately, in the very long term, just going to your second question and mission 0, one thing is, is in order to be free, we have to engineer away all of these costs at some point in the future. So that's going to take a very long time. So first is like which and then secondly, you'd obviously have to kind of scale away all of our operating costs And that's going to take even longer. However, the reason we have this Mission 0 focus is because at some point, A, we've got to work out, for example, on our lowest price routes, let's say, GBP euro or euro GBP, How can we get from, say, 35, 40 bps down to 30 bps down to 25 bps? And it's this incredibly Stretching goal of Mission 0, which brings this discipline inside the company. And without that, it would be too easy for us to relax because we're quite cheap. But actually like as an owner of the business, we hope you take confidence to the fact that It's incredible focus on and relentless focus on Mission 0 over time is what's going to really differentiate us from having the lowest You're right, if Chestnut said, well, how when do you get there? What's going to happen to the revenue model? But frankly, like we're not desperately worried about that at the minute. It's like The way we're managing it is every quarter and every year, like how do we sustainably do this such that we're growing a very healthy business that's valuable for customers And valuable for shareholders. At the point at which we we're a long way from working out how to get to We have below 30 bps in the UK or 20 bps, like let alone getting anywhere near 3. So we've got that's a problem that's quite a long way down to it. Okay. Thank you very much. Thank you. The next question comes from the line of Mohammed Moala from Goldman Sachs. Please go ahead. The line is now open. Great. Thank you. Good morning, Matt. How are you? Just a couple from me. So first of all, just coming back on this dynamic that Look, if you're going to reinvest back in the business, some of the sort of gross profit benefits, you're obviously cutting pricing. Over the medium term, when we think of just sort of the pace of volume growth, implicitly, you should sort of continue to gain market share. So can you talk us through how perhaps you expect some of the kind of volume growth benefits to come through? And secondly, just in terms of these investments, I know that at the IPO, you talked about continuing to invest in the platform, continuing to hire. You've had a kind of viral model from a marketing standpoint. But as you think of these incremental investments, are they going in those same areas? Or are they any additional areas, Which again would again point to further stimulation of growth. And I don't know internally if you have a sort of metric or how you look at Sort of every extra pound of incremental investment and how you gauge the kind of payback on that. That will be super helpful to know. And then I had One more. We've talked a lot about price cuts, but when we think of the other side of the equation on the take rate, you've obviously Moving into a lot of these other ancillary areas, could you give us an update on kind of the investment product and what are some of the economics there? And then also if you do have any updated stats on kind of how the WiseCard and kind of the interchange revenue from that is coming And how that should sort of impact the take rate in the other direction? Thank you. Very cool. Right, let me talk about What's happening? Well, how do we think about volume on the back of price investment? Are we from the investment, are we what are we investing in and how are we rationing this? And then 3rd, Talk a little bit about new products, assets and wise accounts and the impacts that may have on take rate. Cool. So we haven't guided on our volume numbers. Essentially, when we reinvest in price like as we would when we invest our engineering and our marketing. We do that because it drives long term volume. Now We obviously expect that to have an impact and help this both helps us grow, but also gives us competitive advantage and resilience as a business. But we haven't we don't explicitly kind of give a pound for pound or a rate return on these price drops. Rather the way we think about this, as you said earlier, is like we're investing in the long term Kind of resilience, sustainability and dependability, if you like, of the business. We will that said, you have seen volumes growing healthily. And if you were to ask customers why they joined and why new customers are joining and people are active, It's really a function of the prices, but also the speed and the convenience of the product. The question is then, when we generate this gross profit, like what do we invest in? As we said In the listing, we invest that in price, but we also invest that in our products, I mean our product engineering team. And we do also invest that in marketing. I would say the mix there is relatively stable. It's not significantly different. And we certainly we're continuing to grow as fast as we can onboard the engineering teams through hiring engineers around the world and also investing in marketing across a range of channels, Which includes digital channels, but also for our platform growing sales and marketing capabilities. We're hiring engineers. And as we said earlier, with our EBITDA guidance, we're continuing to be able to hire and scale our investments Kind of consistent with managing to that level of EBITDA. You asked a really cool question, which is how do we rate govern the extra pound that we would spend in each area? And it's a little bit different. Like in marketing, we've always said that we can invest as much as we Possibly can in marketing as long as we get a healthy payback. In the past, that's been 12 months payback. We limited that up. We'll continue to review that on an ongoing basis as we get more confidence with the types of customers, especially for example business customers we're onboarding. We think about it as a payback rather than a fixed budget. So if we could spend twice as much on marketing, we absolutely would as long as we have the capital. And then in engineering, the way we would choose which engineering projects to work on would really be by the cross border volume impact, because If we can grow volume, then we're essentially really growing. Obviously, that's what customers use us for primarily. So even when we would launch new features, we think about them from the impact that they can have on our overall proposition and the extent to which they can drive volume. So we would stack frankly, Practically, what does that mean? We just sat ranked the products we'd have based on the volume made impact. And obviously, that's That is always above a sensible payback on the engineering investment. But these engineering investments tend to be much more long term and obviously have a stronger annuity effect than the marketing. And then on the price cut side, we spoke about the you asked about the new products. So there's 2 there. We'll talk about assets let's talk about the WiseCard. It's changed assets is really exciting. It's launched in the UK and We're working feverishly to try and do that elsewhere in the world, as you'd expect. And in the U. K, if you're for those of you who are using it, Please try it out. It's you'd see that we're charging around 40 bps as a charge on the assets that you would hold in that On top of the fund fee. So that should give you a sense of how the economics work in the sense that we'll earn a return based on the quantum of Assets that we hold, it's going to be small to start with. Please don't get too excited from a revenue here yet. But essentially, we're charging our customers like we would across our products like a fair price. So we think about what it costs us and what it costs us in the medium term and we're charging that plus a margin. We're quite excited to launch this product. We think it's a really useful feature. It's different from what's offered elsewhere, And it's a real enhancement for the WiseCard. On the WiseCard, we haven't disclosed numbers on the WiseCard. And you remember the Wise card is just one feature of the Wise account. We did say the Wise account continues to grow very healthy and it's Driving volume growth, as you can see in some of the metrics. And as you'd expect, obviously, the faster that growth, that will have a contributing effect To our take rate, we'll talk more about this in detail when we get through to the half year results. But there's no major change in the momentum in that side. Great. Thank you very much, Matt. Thank you. The next question comes from the line of Kim Bergcoi from Numis. Please go ahead, Kim. Your line is open. Morning. Thanks for taking my question. I had 2 and I think the first one about the gross margin, I think that's been answered. My second question is, you flagged this before and you mentioned it here again about So opening up for additional features in India. And could you give us an idea of what to expect there? It's obviously Very big market in terms of number of people there, but how significant is this? On the one hand, it's really exciting because it's the combination of we've got a lot of customers or Sorry, a lot of people wanting to be customers when they request our products in India, and it's also a massive market. So On the one hand, it's something we're investing in. But on the other hand, we need to recognize a couple of things. One is it takes time, like it's not all under our control. So we're working with the regulator to find a way to launch an awesome product In India? And then I would expect, I think actually if you look back in prospectus, We show the chart that shows the rates at which markets grow and they all tend to grow at a similar rate. They start And the growth through viral growth, which you can see is like a slow and steady but ramps. So rarely do we see a market turn on and then suddenly like a massive impact on total volume. So I think if you're thinking medium term to long term, It's very exciting. Obviously, it's why we're investing our time in it. But this thing will ramp steadily as and when we're successful. I hope that helps. I'll refer back to that chart. I think they give us first steer as to like how a market would grow and what to expect. That's very clear. Thank you very much. Thank you. Next question comes from the line of Omar Kinan from Credit Suisse. Please go ahead, Omar. Good morning, Matt. Thanks for making the time. I just had 1 or 2 questions, please. So just a follow-up on the engineering and tech momentum question. I was just you did say that it was going to be quite lumpy as you would expect. I was wondering if you could just give Perhaps a bit more color around the time line for further reduction in unit costs. I guess that's Kind of the Australian infrastructure development. So it would just be interesting to kind of get a little bit of a time line around that and what else That is significant. It's in the pipeline. And then maybe just a bigger picture question. So Thanks for all the color on the mission statement. And clearly, you're focused on running the race faster Than anyone else, and that's very clear. But when you look over your shoulder, Have you detected any changes in the competitive environment in terms of whether that's The initiative from banks or what other fintechs are doing. Be interested in your thoughts on how big you think the gap is versus other fintechs. And just the last question as well. Could you give us any color on the exit rates on the customer price, please, so we can Yes. Think about what it looks like in the coming quarters. Thank you. Cool. Okay. So let me talk about the engineering and tech, what's underway. What a little bit about competition and what's coming. You mentioned speed. I think that's interesting. And then I think the question was like how to think about take rate going into the coming quarters as we exit Q2? Cool. Thanks, Ivan. So on the pipeline, it's I won't try and share a pipeline now, but actually I would say, I think we're Way more transparent here than most companies. If you go to our blog and check out the product roadmap, we actually use this to Tell our customers what's coming and also excite a bunch of engineers around what they're going to work on. If you look on the product road map, you'd probably be able to see in there some of the types of things that we're working on That's still like and you'd be able to see which of these might be driving efficiency or which ones might drive speed and which ones might open new markets. I'll take this out. I certainly wouldn't commit to saying, right, this is going to drop in a month, this is going to drop in 2 months or 3 months. You called out the integration with in Australia. That's really exciting because that essentially puts us directly on the metal like we are in the UK, Which has been transformational for us because, yes, it lowers our unit cost, also it gives us total control over our products and how we manage and move money around. So the customer experience just gets way better. But as and when these drop and these go live and we're able to disentangle the existing cost structure It's sometimes within our gifts and often not. So just on the one hand, there's plenty don't worry, there's plenty of this coming. We're able to like We're engineering and working on this and you have confidence that it will come. On the other hand, you kind of also don't need to worry because the way these sort of work is As the ones recently is that we'd move away some of these cost of sales, but actually the fundamental Kind of gross margin generation of the business is pretty intact. Now, please refer back to this I'll go back to this pipeline. It should give you a sense as to some of the things that are coming. Question then, looking over our shoulder Around these things, IXB, it's a great call out actually, it's very interesting. But then also maybe talk around what other banks are doing and what other Fintechs might be doing. I see it's really interesting. So for those that are not aware, this is a development where certain banking platforms, So how do they better connect with the world's payment systems? And Swift fundamentally has been trying to do this for a while. So the clearinghouse and Swift, I think, have been working together for 5 or 6 years trying to do this. And then, yes, there are plenty of other examples actually. Is not the only one. Like, for example, in India and Singapore are connecting to try and get our payment systems working seamlessly together. This is all like really good news, frankly. What does it do? So when it validates that these payment systems need to be connected, that's what we've spent the last 10 or 11 years doing is actually stitching together the world's payment in order to make money move around these really helpful. But just connecting 1 or 2 of these is 1, it's bloody hard. And 2, actually, like it's not the only part of the solution. If you understand our infrastructure, how Wise works, it stitched together all of these solutions. It runs effectively a ledger and a treasury platform that can move money instantly around these platforms and always know where it is at what point in time, so it can predict when these money is going to be paying out. And that has all of the other UI around this and infrastructure, for example, compliance infrastructure that helps you manage and understand Where the money is coming from, where the money is going? So we definitely need to be able to switch these payment systems together. We've made great progress on that and we're continuing to do that. Part of what IXP is doing on the one hand, it totally validates that that's an important thing to do. If IXP works, That's great. We definitely use it. Of course, we expect to have access to this. But we also know how long and hard these things are doing. This is Fundamentally, putting together technology that already exists. So we'll see only time will tell us to how Efficient that is and how easy that is to integrate into. So we'll keep an eye on it. Hopefully, we'll participate, But it's certainly not silver bullet that we see, but something that might help us over time. So the question is then what is everyone else doing? So think about banks and let's think about FinTech. On FinTech side, We haven't seen anything radically shift over time. Like we haven't seen we continue to see some good fintechs making progress In their domains? And that's great. We need kind of world needs all the help it can get and payments and making banking easier for people. But nothing radically changed there. We've seen on the other bank side, remember 80% 3 quarters roughly of our customers are coming from banks. Sort of that, I mean, obviously, the rate at which banks can improve is quite interesting. We got quite hopeful. I think Santander announced a couple of years ago that PagoFX would launch and they'd offer a similar or maybe a competitor to us. Unfortunately, they've shut It's a shame. We're quite excited to see banks start to like Pete with each other on this and start to raise awareness of this problem, but I think this just demonstrates it's pretty hard for them to make this work. And I think they were charging a reasonably healthy Rates FX are rates on that as well. HSBC have tried to make some progress on this. It's unclear how that's worked. So generally, we haven't seen anything really change from the bank's perspective. And they got their hands full. So generally across that competition, I don't see any transformational change on the infrastructure perspective, like if things are changing, it should help us. And then on banks and Fintechs like this, nothing really changed in the Fintech world, but actually on the banks like a few things that we've seen have maybe slowed down a little bit. I hope that answers that question. And then thirdly, like just practically like take rate going into Q3, we haven't guided on this And I won't right now. But the way maybe a way to look at this is, we you've seen what happened between Q1 and Q2. Obviously, these price changes happened through Q2 and some of the announcements towards the end of August September. So that can give you a sense, You don't need to get too creative to work out like what might happen in the coming quarters for the overall take rate. That's lovely. Thank you. Thank you, Matt. Thanks, Alan. Thank you. The next question comes from the line of Richard Watts from Jupiter. Please go ahead, Richard. Yes. Hi, Matt, and well done on a strong trading update. Two questions for me. So firstly, coming back to the gross margin guidance And the revenue guidance, it seems to suggest a $20,000,000 to $30,000,000 uplift in gross profit for the year. I just wondered just in terms of the amount of cost increase that needs to absorb that kind of number feels pretty significant. So can you just talk a little bit more around that? And then the second question is around the Google Pay relationship. And can you just give an update on that as well, please? So on Google Pay, I won't share anything specific. Yes, we continue to work with them and make progress. And this is obviously, it's an awesome partner to work with and we'll invest in that relationship. I think it's too soon to give any sense of concerns or progress. It's definitely something that we see as we've been successful so far, And we'll continue to work with them on. Remember, we started relatively narrow alongside Western Union only moving currencies from 1 from the U. S. Up to markets like Yes, Indian Simple. And like any partnership, hopefully, we want to try and grow that over time. On gross margin, you're right actually, the one said. So we have guided to a high number from a percentage basis. But we are we have success. Our goal is to generate healthy Kind of fundamental economics in our products, which may be pointing to gross margin is pretty sensible way to look at this. But then invest as fast and heavily as we can in the future. And so we do we don't have any change to our adjusted EBITDA outlook. We're hiring across our engineering, across all of our teams to improve the service we can give our customers, Making sure we scale the business. When I say the business, I mean, the kind of support and overhead functions to kind of scale our business around the world. Obviously hiring in our product engineering teams to build products now that we can release in the future and that will drive volume growth beyond that. So I don't see any change to the overall guidance we've given On the adjusted EBITDA, fundamentally, I think the things to take away from this is like the fundamentals of the business of What we're growing, how we're growing and we're leaner but still generating the same ability to invest. These have improved and It's on us now to be investing that for future growth. Thanks. Thanks for taking the question. Yes. Thanks, Mark. Our next question comes from the line of Patrick Bashwitz from FinCap. Please go ahead. Patrick, the line is now open. Hi, there. Thanks for taking my questions. I've got maybe 2 or 3 Because one of them might have just explained. So the first one, I'm looking at your take rates between your business and your personal Business lines. There was a relatively, let's say, sharp decline in the take rate in the business segment. Maybe can you give us a bit of understanding how does the price reduction works between the 2 business segments. The second question, sorry, I'm going to maybe a little is good with you a little bit. Recently, Rapid has been on a bit of a marketing campaign and kind of showing the Payments Business Payment Solutions, number of people. And like I had a chat with them, they really stressed that the Key differentiator in that segment is ability to automate payments. It's about connectivity to ERP, CRM, accounting system, KYC systems and so forth and so forth. Can you maybe give us a bit of a color how are you thinking about That area of the business payments. And the third question, which might have been answered, I was kind of asking about OpEx, so the basic cost below the COGS, right? And you sort of mentioned that you were expecting to the margins to be more or less the same despite the sort of really good bump in the gross profit Margin, is that correct? Thanks. Thanks for the questions. The take rate between personal business is actually we fundamentally at the transactional level, we charge businesses pretty much the same as we charge people. We try not to discriminate between any customer or have subsidy between any customer and another. What you see on businesses, I mean, A couple of things. One is you see different route mix slightly, which would drive this difference. And then a few other differences in maybe the average transaction size, which might drive these differences. But we don't actively say, oh, we can get away charging people slightly higher than businesses. We fundamentally charge fairly across all of these differences. And then from a difference of a quarter on quarter movement, It's likely down to just the exposure of businesses to RootNet rather than we haven't done anything differentially to businesses versus what we've done for people. On Rapid, that's pretty true actually. So and they're right, which is the way we think about our platform is Yes. For larger businesses and for people, like we think about like Over time, so far in our journey, people have been coming to Wise, opening an account and using our platform directly through the app or through our website. In the future, we're working out like that will continue to happen, but also how do we take Wise to where the money is frankly, make it easier and more convenient. So Some of you, if you want to use Wise through your own bank, it's going to be much more convenient for you subject to that app being convenient than necessarily opening up another account. Just like it is for small businesses that are quite happy to use us directly. Maybe they're a single person or only a couple of people in the business. As businesses get larger, they clearly have finance teams. They have accounting platforms. And it's much more convenient for them to actually For much larger businesses to be able to interact directly through. So for example, we integrated with Xero. It's through Xero. Now you have Pay with Wise, which essentially helps you instruct payments directly from the accounting platform. And this is a way for us to reach different Much a different set of small businesses and then maybe large businesses as well. So you're right they're right in this approach and that like In order to reach customers, you can do it directly, but also indirectly through partners. And our partners might be banks, they might be accounting partners, platforms, they might be Accounts payable software and the focus on our platform in the long term and in the future is to work out how do we take WAVs as a platform to these types of customers. As we disclosed, it's still a small proportion of our volume. It's growing healthily. But it's the focus for how do we make Wise as a platform and Bring our infrastructure to where the money is. The third question you had was on OpEx. So This is right. So we are continuing to grow our OpEx as we expected from a pound and a dollar basis. But we still expect roughly the same EBITDA margin as we guided to before. So Yes. I have to work through numbers yourselves on CEVA. But what we have this EBITDA margin as a sustainable margin, which generates enough Cash and capital for us to run the business and have us a healthy balance sheet. We're a growth business and we're trying to think about We think about ourselves from how we're growing and investing for the next 10 years whilst making sure we generate have a robust sustainable business in the short term. So we don't plan on increasing that over time in the near term. It's rather like it gives us a governing factor for much we can invest in our growth? And we've been successful so far and continue to invest in our growth, which reflects no change to that EBITDA Sorry, was that one other? Just wanted to say thank you very, very useful answers. Thanks very much everyone. Any more questions, Martin? No further question at this time. Please continue, sir, and do your closing remarks. Okay. Well, I think I hopefully covered it all. This is our quarterly update. We're we actually got our full results In at the end of November. So we'll talk more then, but I there's nothing to be anything different on volumes and revenues, obviously. So hopefully that Gives us the flavor and but I look forward to speaking to you soon. And thanks for your questions and no doubt catch up With some of you shortly. Thanks very much.