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. We'll follow this with some Q&A, which we'll take from the room first, then we'll also take Q&A on the live web screen. 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.
My name is Athina. I'm the founder and creative director for No Name Just People. I think that the most special thing for me about being born and raised in Colombia was that I got to really absorb and experience all of the cultural richness that we have back home. No Name Just People's mission is to foster economical and social development within indigenous and artisanal communities in Latin America, preserving the culture of all of these amazing communities. These traditions have been passing from one generation to the other for centuries, and I just believe it's really important to preserve that.
One of the biggest challenges of having your production and all of your logistical team happening overseas is we have to deal with a wire transfer from the bank, and that implies a lot of fees and also a lot of time waiting from when you actually do the transfer and people receive it. When I came across Wise, it really changed the whole way in which I handled the business. Having access to an app like Wise has made our lives so much easier. It has really become the backbone of our business. Having a platform like this is allowing people really to create job opportunities all around the world.
Thanks, Athina, welcome everyone to our second full year annual results as a public company, for the financial year 2023. Of course, we're gonna get to share the detailed numbers and financials, but it's also the time for us to check up on the progress we've made, making on our mission and what we've been shipping. Before we're going to hear from Matt going through the detailed numbers, you're going to hear from me and from our CTO, Harsh, on what we're shipping and why. Every day, we come to work at Wise to work on 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 a frustrating experience.
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 cross borders and looking for a better way to do this for people, and it's even worse for businesses. It's GBP 9 trillion. 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. 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. This then summarizes what we're solving. We're 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, this is going to transform how people in businesses think of handling their money across borders. We have created new infrastructure because the current one doesn't work. Banks are telling us that. That's what enables us to build these other two products. Now we're opening this up to our partners so that they can build their own bank accounts on top of it. It turns out, what we've been building resonates with the demand, and it's paying off. If you look over the last four 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. Clearly what we've been working on, it's resonating. It's paying off.
All that time, I think it's now the seventh 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. We have a long way to go. Let's set the scene for today. kind of talks 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. I gave you a glimpse of what the numbers of the results have been over the last four years, and Matt's gonna go deeper into that. This is clearly working. We've gone from the problem to the solution. The question is why?
What makes us a special company that is able to solve this enormous problem? Achieve our mission? I think it really boils down to two things. First of all, it's our obsession on customers. We are one of the few financial services companies that has evangelical customers. This is not by accident. I think. I'm surprised when I hear people loving their bank, but our customers do that. They tell their friends. We can't stop them telling their friends. This is because of the products and the experiences we create. We can only do this, as the second block, by creating the new infrastructure that enables this. Fundamentally, a different experience. Harsh will talk a little bit more about the second. I will cover the first. Let's go into these evangelical customers. I'll start with a number.
I love numbers. 66%. 2/3 of our customers join 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? This is because of this radically better experience that we create. 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- 10x cheaper than using your bank, and we're not hiding fees. Tell you what you're getting charged. It's actually a delightful experience when you get your business account going in less than a couple of hours. We do this by investing in three products: Wise Account for individuals, Wise Business, and the Wise Platform for banks and our enterprise partners.
I'm not going to go into everything that we covered over the last year, but I'll just give you 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%-5% interest rates, and of course, the current account pays nothing.
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 a 100% with a government guarantee, also they pay an interest close to what you'd expect from the central bank. That's slightly older data now from, I think, beginning of June, in the U.K., our customers are earning 4.112% on the pounds and a little bit less in euros.
This is just one example of how the experiences that we create, are creating evangelical customers, because now being one of the highest earning current accounts in the U.K., of course, everyone's talking about it. I'm not going to go through more of those, but I would recommend just clicking 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. Without going through this, these changes or these improvements that we're making to the Wise Account and Wise Business, they are resonating. 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. If we click into some markets like Brazil, this is the majority of customers now using Wise as an account rather than just a transfer product. Of course, this plays through to our entire base, which is then growing on the business side. It's getting more than half of the users using Wise as their business account. Why this matters from the financials 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 and bring 2x the volume just to send money customers. This does translate into our results as well.
Bringing this all together, while we started talking about this, because these are the experiences that create evangelical 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 turning faster, but the volume growing even faster. That's kind of setting the scene on the evangelical customers. Going into what's next, there's going to be the same similar investments that we're seeing bring that result over the last four years continuing. 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've talked about new features such as Assets, but there's more around spend, experiences, and some of these features are yet to be rolled out around the world. We start in the U.K. and Europe, then roll out around the world. We add to the footprint of where we operate. We're bringing Wise, not just individual features, but the entire footprint to more and more people and businesses. All of this, all of what we're shipping, is leading to more customers, more active customers. That's not just this year. Actually, the improvements that we're making today are going to bring the customers over the next four years.
The growth, the 3x customer growth that we saw over the last four years, we want that to continue because we're really only scratching the surface with what we started. Now going more deeper into the infrastructure that enables all of this, I'll hand over to Harsh. Thank you.
As Kristo said, people love Wise for a variety of reasons, but a few of them are price, speed, and convenience. It is our global infrastructure that really powers this proposition. On top of this infrastructure is what we build are these amazing experiences. The Wise Account, truly international account for people and businesses. Also Wise Platform, on top of which others, other enterprises or the banks are building on top of this infrastructure. I'll go a little bit deeper into explaining what this infrastructure can do. There's a lot more this can do, but I've kind of tried to call out a few things here.
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. That 8x- 10x cheaper than banks. Also how quickly and how efficiently we can onboard people and businesses and be compliant across such a large geography of licenses we run. 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 four countries, with more coming. Also we have a very large partner network that's very stable, which allows us to control the end-to-end experience and allows us to have lower costs consistently and control the speed on which we can move payments. To give you an example, the first direct connection, we are the first ones to get directly connected to the U.K. payment system as a non-bank. That took us about five years from working with regulators and working through getting the access and the settlement account, because this is the first time being done in the U.K. Through that, what we learned on how to do this and launch this integration and connection, it's a learned muscle. The last one that we did was in Singapore, which took us about six months.
Anybody else who has to come and go through this journey would have to follow the same process. It's not only the connections and the partner networks we have, there's 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 type of data on the other side, which 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 onboarding 1 million documents a month now on our system. We can do that very quickly with machine learning models and automated processes that we've built. All of this is because of this global data set and global view we have of data, that allows us to then move money faster for liquidity movements, to fund these transfers, to make things instant. 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 four years, we've completely moved the needle and set a new gold standard in the industry on what global border payments should look like at 55% instant.
The money goes from source account to the destination account usable by customers in less than 20 seconds. As part of this, we're doing all our financial checks within those 20 seconds that are required by law. All of these things are done because of the technology infrastructure we've built. This is hard to replicate. People ask me like, "Okay, why couldn't somebody else do this?" We have about 700 engineers working 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 a speed of 2,250 releases per day.
Most banks and the larger firms will launch their apps once in six months or three months. It's not just the tech. Somebody had asked me, how can a big tech company, who has a lot of engineers and a lot of... And can move fast, do this? It's this collaboration between tech, regulatory, expansions, and operations, which makes this infrastructure special. We maintain 69 licenses across the world. Try asking a big tech company to maintain two. That's the difference, right? It's not just the idea that you can just ship code. It's how do you build the regulatory framework? Example I gave of convincing regulators to get access to the local payment systems, those are all learning muscles, and anybody who else has to come and do this, they have to follow the same rules.
That's why I feel this is going to be very hard to replicate and scale it, because it's not just the tech, but regulatory, expansions, and operations, how we serve our customers to create those wow moments. 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 are ditching old rails and wanting to connect over our API to our infrastructure. 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 a still a small part of our overall volume that we move Wise right now, but it's growing.
What's notable here is the logos that keep popping up every year. Now we have tier one banks, which are starting to integrate into Wise. Over the last year, we have Bank Mandiri, Shinhan Bank in South Korea, and last year, one bank in Japan, all integrated into Wise. Also in the U.S., we have all the major neobanks who are doing business banking, also running across border rails on Wise. 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 pretty good. That's why we are rebuilding the infrastructure, and we'll continue to invest in going deeper and broader.
Whether we are gonna invest time in bringing in Australia over the next few months, directly integrated into the Wise infrastructure or Pix in Brazil, or using the data more that we've built 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. We have the market size, and we have evangelical customers who love what we built and are wowed by the experience they get. These wow moments are created by the underlying infrastructure, and that's what we continue to invest in, and we have over the last five years, and we'll continue to, in the long term, invest in this. We'll do it in a fast growth and profitable manner.
Talking about profitability and numbers, give it to Matt.
See you all again. It's pretty amazing around, hopefully explain a bit more on why we think we've kind of got traction, the results that we've got. Let me talk a little bit around these results, topic close to my heart. If you look at our results for the for this first year, for this last year, there's obviously a set of results we can be very proud of. I think it's quite an exceptional year for a number of reasons. You can see, and we've heard a lot today around how this drives the fundamental momentum in the customer base. It's 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 grown 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 it's been quite a change this year. That's led to almost GBP 1 billion of income, which is 73% growth year-on-year. Proudly, we've always run a profitable business, and that continues to compound. We actually doubled the EBITDA in the business this year, and I'll talk a little bit on the dynamic of it. You can kind of pause there and think this is a great set of numbers. Actually, I'd like to just dig beneath that and like, what can you really take away from this as a business that we're building?
I believe we're building a business with kind of world-class fundamentals when you look at what's inside and driving these financials. Why is that? Well, first, this growth that we're seeing in our customer base, which is led by word of mouth and organic growth, which is a function of the proposition. Obviously, it's very exciting from a growth perspective. It really also impacts us financially. It hits us all the way through the P&L. It really helps us. It's followed up by the fact that we invest incredibly efficiently. When we say this, I mean, we invest in product that has an impact volume. We're very focused on the problem that we're solving and making sure everything we do has an impact. We follow that with marketing and have an incredible payback.
What's, what's emerging or what's new, that you're seeing that compounds on this, because we've always followed those first two. Now we have this Wise Account, which is really driving traction in the growth, but it actually so it's structurally supporting the growth rate. It's also structurally supporting the profitability in the business today, which also lets us continue to double down on the high growth of the future. 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. As always, it's always good at earlier results. We talk 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?
What you can see here on the left is the active customers. These are people who are active, but remember, for Wise, this means they've made a cross-border transaction in that period. That continues to compound, it's actually grown pretty fast in the last year. 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. You know, business compounding 40% customer growth leads to 40% compounding volume. This is the primary driver. It has in the past, and I'll talk through why I think that's going to continue in the future. Let's look underneath this, around what's really underpinning this growth. As I said, how does this 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. The dark green is the volume that we have from customers we had before that. What you can see, just simple off math, you can kind of see here, is actually that volume, when the number of customers that join us each year grows and they send more volume with us. When they join us, that volume sticks around. 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.
Four and a half million customers joined us in the last year. That's pretty exceptional because it grew 40% year-over-year, and this is, I think, exceptional. We're seeing very healthy momentum going into this year. 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 for next year. Over time, that's been at just over 100% across our customers. Some years it drops below, some years it goes higher. This noise is in, probably in the VPC. Over the long term, you see this dynamic, and it's this that's driven by the products we've built. As we're sticking to these fundamentals of how we build our products, gives me confidence that we can translate this going forward.
As you know, these dynamics are consistent when we've spoken to you over the last years, maybe even much longer for those of us in our spot. Yes, in the short term, we've seen some noise on VPC. If you look at VPC, which is the translation from active customers to volume, over the long term, it's been quite stable, maybe even increasing over time. Actually, if we look at this, look at this last year, we've seen that it's been quite volatile. We saw exceptional strength from USD in the summer of last year. As the macro environment shifted and the interest rate environment shifted, we've seen a reduced contribution to this VPC of larger transfers. I've hopefully signaled that, telegraphed that to you over the last month. That's not really changed now.
You know, we're a few days short of finishing this first quarter of 2024. Actually, we've seen that broadly stable, that VPC, going into the first quarter. I would manage expectations slight, marginally down, but actually broadly consistent in the noise. We just remain cautious with macro and what's to come here. 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. 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.
Why is that driven by customer growth? One is the active customers, which has driven this cross-border income. You can see 42% growth in revenue from cross-border transactions over the year. 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 and they're, you know, spending on your card, we earn exchange, or you might pay us fees for the account, for your personal business customer. Actually, it's 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. We're seeing this dynamic of people and businesses, but we're also seeing it around the world.
Both pay personal and business customers growing revenues at 50%. Even in the U.K., we're growing revenues almost 40% year-over-year. In some markets where we're getting great, really early traction, this is near 100%, which is quite impressive. Distributed across customers, distributed across geographies. Lots of headroom in this market to continue to grow the sum. The customers don't just send or receive money with us, they hold balances with us. This has grown, as you know, to 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 the launch of our Assets product, which means some of these balances are opting into an Assets product in places like the U.K., where you could earn a really, really good return. It's been growing around 50%-60% year-over-year. On these balances, we've been earning interest income. We earn GBP 140 million in interest on the balances we hold for customers, and GBP 72 million just in the last quarter. We returned some of that. You know, you shouldn't be surprised if we talked around how we return some of this interest to our customers, where we can. We've paid a proportion of that, an increasing proportion of that back to our customers.
If you think about that, the growth yield as we entered, exited the year, sorry, was around almost 3%. We were returning around 0.6% of that to customers. We're successful in Europe in returning balance cashback. We started that in the U.S., we've 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 our regulators to pay this interest. This net interest or this interest after these balance-related benefits comes through to income, this income grew 73% year-on-year. Pretty exceptional, because we saw this emergence for a stronger amount, change in the interest environment really drives us. Let's switch gear and think about how that tracks through down to the bottom line.
Gross profit of over GBP 600 million, consistent year-on-year growth profit margin. Actually, that meant that gross profit also grew north of 70% year-on-year. 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. This investment in product is pretty critical for us at this juncture. Kristo mentioned, Harsh mentioned all the things we've got to build and all the opportunity ahead of us, our confidence and track record in how we've made those investments, gives us confidence to keep scaling this up. We've grown those product teams this year, and we've also grown our productivity organization.
Let me talk a little bit around what do we spend the money on. 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. Why do we do this? Well, of that four and a half million, one and a half million customers came through our marketing. It's not through the word of mouth. Actually, a pretty efficient payback. Just on the paid marketing alone, we cap that historically at a 12-month payback, fully loaded payback. Very efficient. If you were to blend that across all of them, I think it's the envy of many companies trying to grow their business. We won't give up on the discipline that's helped us, kept us growing strongly over time.
We invest in our product teams, and Harsh talked about the size of the engineering team, but around that, we've got all of the product compliance, operation, and teams that really focus on building and protecting our products around the world. What is the return here? Well, the return here is actually probably the first pound that we spend. 3 million of those 4.5 million customers are coming through word of mouth. That word of mouth, as you've heard, is a function of the time we spend building these products. When those products go live, it's not just one time, like you might think 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 launching new features, new geographies, but a significant proportion of that time we spend goes into building the infrastructure, which is what enables this over time and deepens the moat around the products that we offer. We've 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. The right thing to do was to do that. 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. Actually, we see it as like, 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 in terms like where we're going to spend this. Our customers tell us this. We see this in NPS, we see this in priority, and we see this in retention. This is a good use. 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.
When you add all that up to what's happened to our context base across the year, you see it grow just over 50%, almost GBP 500 million now. That's kind of been or kind of given the employee count that I've explained, our headcount grew around 50%, and then with some salary inflation, that's the you can see the employee benefit expense across the year. What does that mean? Yeah, we've seen these costs grow pretty fast. It's a function of scaling the teams. It's been one hell of a year, candidly, on growing those teams and be able to do that. I expect now hopefully that, those hard yards are behind us and this cost going forward is not 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. I'll talk a bit more about the drivers of those. We know that that's due to the significant interest in interest income, significant increase in interest income flowing through to the bottom line. Importantly, that actual bottom line of profit before tax as well, we look at this as well and care about this as well as EBITDA, almost GBP 150 million of profit before tax. Bottom line profit for the company. Let's step back a minute again, before we dig into like, where we're going next. Building this business with world-class fundamentals.
I'll just share with you the proof point. Hopefully, you've seen that. There's customer-led growth. You've seen the viral customers. You've also seen in here 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 form this proposition, then kind of continue to fuel this customer-led growth. That's supported by best-in-class marketing payback. 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. It gives us currently, this much higher profitability, which asks the question: How do we invest that?
To for the benefit of building a much better, stronger business, and obviously in doing so, helping our customers. What do we do? How do we invest going forward? Well, it's time to double down. How have we done in the past that's going to help us in the future? Keep investing in our products and our infrastructure. The product development teams and also the marketing is really what's driving our ongoing growth. We'll do this, and this is really funded by our conversion product. 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 drop, 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. 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. Drop prices where we can and just continue to extend this model. Again, we'll not drop those prices using this interesting. We will use this interest income to power our growth and build a much better Wise Account proposition. If you're a Wise Account customer, hopefully, but definitely if you're in Europe, you already get interest income, or cash balance cash back on your product.
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. We'll use the remaining 20% will actually flow down to EBITDA, and we can talk through the implications of this. Fundamentally, when we're building a business, it's not going to be dependent on interest income. Actually, this interest income is only going to power this Wise Account proposition. How are we going to use it? I've talked about this 80/20. Let's try and make this really clear. I know there's a bunch of people in the room that are trying to go away and work out how to model this, so just bear with me.
10% will flow through to EBITDA, actually 80%, we're going to build our proposition. How's that going to work? The first 1 percentage point. Imagine we're 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. If you imagine what this does today, it avoids the need for us to charge you a subscription. We've already reduced the same currency fees We've charged in the past on making payments in and out of your account. Customers love that, rather, customers really didn't want to pay those fees. Actually, we're using interest where we can to do that. 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 the conversion. This is good for customers, great for customers. For the rest, where we've done that, which is, you know, as you can imagine, is a significant portion of the interest income. We're trying to reward customers for actually holding balances. We 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. Great rates if you're holding dollars in the U.S. 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.
We'll also, where we can't do that and where we see opportunities to offer, we may offer other incentives that you might specifically see with an account. Maybe we've started looking at cashback on card spend or other fee refunds that are discretionary and purely linked to the account, but not really building this drop OpEx extensively. We're not going to use this drop prices or fund general OpEx. The challenge we'll have is actually this is going to be really hard to do, to scale up to this extent. In the short term, more of this is going to flow through EBITDA. As you can see, we're only giving 0.6% of that 2.8% back to customers at the moment. It's actually going to give us elevated EBITDA margins whilst we scale up.
We'll do it with caution, we'll do it with discipline, and stick to these principles that are hopefully clear for you. Let's just check where this is in the numbers. As you can see, like, for those of you who've done the math on the H1 and H2, you can see that we ran a 10%-7% EBITDA margin in the second half of the year. This was really a function of these elevated EBITDA margins. If we just use 1%, 1 percentage point of the interest that we got, we'd run Effectively, the profitability of the account features would run our factor above 20%, which would equal the profitability of the conversion business. It actually brings us to a 20% margin overall.
Actually, we're minimizing this dependency on interest income and maximizing the use of that into our proposition, which should then maximize growth, while also leading to a higher profitability on the bottom line. What does that mean for guidance? All this is fundamental to what we expect over the next year. Our guidance for the year on income is a 28%-33% growth for this year. 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, that we've seen in the past. We've seen a healthy momentum this year. We need to be cautious around a few things. One is what's going to happen with VPC. 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. We have a faster and uncertain macro outlook. I'm sure you see across your other companies that you're looking at or cover. 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. But also countering that, we hope to be able to return more and invest that more in our, in our product proposition for our customers. EBITDA, as a result of that, is likely to remain somewhat elevated through the year. It's worth us just pointing to what are some of the dynamics we're going to be lacking.
I'll just put these up now, because we'll look at these shortly when we're thinking quarterly. The first, as we enter the year, we're actually at a lower VPC than we were this time last year. We're lapping up kind of a higher VPC dynamic. That's countered when we look at the overall revenue dynamic, what's happening on take rate. The actual cross-border take rate now is slightly higher than it was a year ago. These things have different impacts. Let's look at these in the whole. At the moment, we've got a very relatively high kind of interest earned on our balances and maybe relatively low interest return, and we're lapping that with basically no interest income this time last year. Income growth at the moment is very high.
That will change as we go through the year and start to maybe normalize as we get towards the. 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. I know we've focused on this, but it's this active customer growth that gives us confidence to effectively extend this medium-term guidance. We said 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 product and actually able to continue to extend this rate at which we think we can compound income above 10%. As EBITDA , renewable change is structurally how we're really running the core.
You know, when Harsh talks about building this network for the world's money, of how the profitability on the transaction side 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. Well, 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 in a pretty exceptional year. Fundamentally, three things. All the way down through the results, you're seeing this customer-led growth having a massive impact, and we're doing that into huge opportunity with our own house. We're really efficient in what we invest in. The investments we're making in product are thoughtful, focused, and have an impact, so we're backing that up with super high return marketing.
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. It also will lead to higher profitability in business. On that, magnificent thanks, and hand back to Kristo before we take some questions.
Thanks, Matt. I'll very quickly kind of zoom back even further up, because the investment strategy that Matt did over in the middle of this section is working. Over the last four years, it has worked. We're doubling down on this. As a reminder of what's going to happen, we're investing those into the same things that are going to drive the new customer growth over the next three, four, or five years, to come, which will then be driving the volume engagement and our results. We'll be bringing the benefits, we're gonna be improving the experiences, adding the new account features. We're gonna be extending our footprint, and that will lead to new customers, more customers. 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 evangelical about our products and what we do. This is all enabled, as a secret source, by this infrastructure that we've built. We replaced how the money moves now with the infrastructure that Harsh took us through. As we saw from Matt's presentation, it all turns up on our P&L and balance sheet, thanks to the social constraints that we set on ourselves in a sustainable, profitable, growing, fast-growing business. With that, close here and look for questions. I think over to Martin.
Yeah. Thanks, guys. We'll start by taking Q&A in the rooms. You raise your hands. You won't need a microphone, and you get picked up by the ceiling mics, but if you could just raise your voice, that'd be great. We'll take some Q&A on the online shortly after.
Okay. Matt, do you see the people?
I-I-
I don't know any, everyone by name. That's my.
All right. Alastair.
Great. Thank you. Alastair with Nolan from Morgan Stanley. Maybe two for you, Matt. First, can you maybe help us a little bit with how to think about the composition of income between interest and what's coming from revenue, and just kind of how to think about how that all flows through? Just secondly, anything you can say on the outlook for pricing as you see it today.
Yeah. Great. Thanks, Alastair. I'm assuming everyone on the line can hear. For the composition of income, you can see this year has changed, so that we have an increasing share from interest. Really, I think, just stepping back from this, we expect this active customer growth to continue. Our VPC, from, you know, from where we are at the end of the year, we're cautious around assuming that's going to recover and just mindful where, you know, the macro is. Track of that goes through the year. Overall, that should give us a volume dynamic, which, I'm gonna answer the second question in here. With our pricing, we haven't. Actually, pricing has gone up slightly higher to the second half of the year, across quarter pricing.
That should support, like, pretty steady revenue dynamic throughout the year. Yeah. Of course, we're gonna see continued interest income throughout the year, but actually, like, kind of set balances, you know, balances will continue to grow at a slower rate. Still this interest income will be a meaningful element of the, of the income, through this year. Through chance.
Yeah. Yeah, thanks a lot, [inaudible] so I'll go for a couple 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 increased popularity of some of these other products. I don't think we know exactly how much money is being held in those other products. I wondered if you could give us a bit of a sense of how much money you are seeing flow to things like the fixed income products and the, and the share products, and how you think that's developing through the first quarter on the account side. I'll come back with the second one then.
Yeah. We haven't guided on these funds growth, and we haven't disclosed either just how much money is flowing into our assets. What we can say is like, just because it's interest for us, got some pretty. I mean, remember, we just really only got this purely live in the U.K., and it's growing in other jurisdictions. It's actually very early to disclose that. We've seen that's become more relevant than ever in the last three or four months. I think that was going on in the world, people's trust in a product like this, as well as the ability to earn interest and get instant access to your money is pretty cool. Very early to, like, kind of report these numbers and explain that we'll come to this.
I'm sure 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. It's got many, many years to develop this product. It is having an impact on our, you know, we can see this in our balances. You know, we do see a reasonable amount of money moving from customers that either had balances, myself included, have opted into our Assets product. It's a very important product. You should definitely all try it out. Obviously new customers joining and moving straight to high base.
I think where people are is awfully in the right place and, you know, like, I do think, you know, just if you look at the incremental billions added, you know, like, you can be thoughtful on this as you look at that through this year.
The other question I had was a bit of a more general question about just the strength you're starting to see what have been seeing in some areas like the rest of the world. I wondered if you could drill into that a little bit. Is it Brazil and exactly what's causing such success there? I guess more generally, you know, I've often thought about why there's quite a developed market, you know, currency proposition primarily, but it seems like you're all the time increasing your geographic reach. If you can just comment on the evolution of the infrastructure and the customer proposition.
Yeah. I'll give the number, and then I'll just for a little context. Like, in that restaurant, Brazil is having a pretty healthy impact now. It's not just Brazil, there are other markets. You know, while Brazil is having an impact today, there might be other markets that are earlier on that journey that, you know, there's a lot of fronts for this that can have an impact on this over time. Brazil's certainly been an interesting fund success one to watch. I'll let Harsh take that.
Actually, we don't see our product to the developed market as to a developed market product. We actually think this problem exists in the whole world. It's just in different price points, different speeds, it is again, going back to infrastructure. When we build this and launch it in a new market, there is a drastic difference between what the incumbents can provide versus what we can provide. To give you, talk about Brazil, like, we've seen very good growth in Brazil. Brazil is a very vital market. It's a big market, and when things work, it really works, and people tell a lot of friends. We see virality coming from there, but also, we're also heavily investing. We are, as I mentioned, directly integrating 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 two or three 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's given up other payment methods, and they're just using Pix because it's instant and it's cheap. We tag on to that revolution, and then we get access, and we build that back. Just an example. Again, it's not just a... 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 success.
Just actually for the podcast, like, Kim, come to you next. Can you just say what's your name and where do you come from? Just so we've got the benefit of those on the listening in.
Yeah. 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, how much goes via your own rails and how much is using, I guess, effectively the SWIFT system? Another question, maybe, but you mentioned somewhere you're building that sort of new infrastructure. Is that basically sort of a replacement for the SWIFT system that you're building? Is that the way to think about it?
You want to say how much?
You know, I think it's a rounding error on the systems.
Yeah.
Like, I mean.
It is.
We have an integration. I mean, it's fine.
Customer-facing flows, I would say, as Matt said, it's a rounding error. That's why we can build this amazing proposition where it's instantly you can't do this stuff otherwise at scale, et cetera. Yeah, I mean, the way we think about it is, it's just a great partner, don't get us wrong. Generally, I think, first of all, the market's big enough that there'll be different solutions. We do think by controlling the end-to-end, the in, the outside, and running the network the way we are and building a deep integration into every local payment system, we basically can control the full end-to-end experience, which gives us a big edge on what has existed so far. That is basically...
That's why when we talk about what we're building, we believe that we're building like the new network for money, product.
Just one caveat of correction.
Yeah.
I think we end up using SWIFT as a shorthand for correspondent banking. Just to be really clear, the thing that's not broken necessarily is not-
Yes.
The thing that's broken is the correspondent banking model underneath that we're replacing.
Yeah.
We're not quite replacing it, but the other thing.
Exactly. SWIFT is the messaging system. Eventually, the money moves through correspondent banking.
Okay, cool.
Hi. Thank you. Mark Jones from Investec. You've been very clear that you don't want to be sort of reliant on the API, interesting, and the challenges in some instances of sort of returning back to.
Yeah
-customers. How important is it to you to hang on to those customer balances? For instance, if customers became more rate conscious, started shopping around, you know, do Wise always need to be the best rate in town? Is it very important for you to hang on to those cash balances, given the problems in some instances you have actually returning those to customers?
That's a good question. I'll try and answer it, and I'll let Harsh probably have passionate about this. The having cash balances is a by-product in the first place. We didn't, we never intended to, but it's a by-product of people using the Wise Account, and especially businesses using the Wise Account to receive money. You kind of need to put it somewhere. Soon they realize that having this, like Anita talked about, having this international operating system, financial operating system, is just so convenient, where you can take money in, keep it in any whatever currencies, and have the fastest way of distributing it wherever you need to. Cash balance is a side effect.
It's an important side effect that people care about where they hold money and whether they're losing while they're holding money or they're gaining while they're doing it, compared to the central bank rate. 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. In fact, the more of that we can, the customers can access directly through the Wise Assets product, we believe this increases the evangelical nature of the customers 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.
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.
Yeah.
Keith Anderson from Liberum. I have two questions, if I do. First of all, could you just talk us through capital allocation plans? Obviously, cash, corporate cash and balance sheets growing very strongly. I noticed you picking up a bit on the share buyback CVP. You're also still paying a lot for the RTS, so maybe there's some element that what are the plans for that cash in terms of maybe returning shareholders at a later date? Also, do you need to renew the RTS in two years?
That's right. We are generating a healthy capital base and cash flow from the company. Really, we're trading two things here at the moment, or at our point in time, right? 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. We're very early in doing this. We've done very well over the past, and we'll continue this. On the flip side, we also really care about dilution for our shareholders.
The thing we started doing was saying, "We can definitely afford to, from this cash flow, offset the dilution from our stock program." That was a very, the very first step into this, to this foray. At the moment, we don't have plans to dramatically change that capital allocation. What you can see is we've got increasing capacity, as you can see over this period, those choices. To your point on repo, I think the rate we get on the repo is a very modest rate over SONIA. The rates we get on that, the normal question I get, Nick, is why do you still, why do you use an repo and not like a bond or something like this?
Actually, the rate we're seeing there is pretty efficient, pretty effective as a rate and is supported by our, you know, good supportive club of banks, which we appreciate. We'll review that over time, whether it's replaced or whether it's a different mix. Right now, we don't disclose the rate on it, but it's an efficient use of CapEx. It's an efficient source of funding, which we use, and it's continued to scale, actually. You know, something we'll review. Both of those, we'll review from time to time.
Then the second question, if I may, is obviously, you know, core part of the commission statement, ultimately making cross-border transfers free.
Yeah.
Look at it another way, over the last five years, cross-currency take rate, you know, rates commissions, you give it a broadly stable. I guess, and volumes are up fivefold. I guess the question is, when should we start to see scaling effect to a material quantum change in that pricing dynamic?
From a scaling perspective, we have seen this on products. If you look at some of our currencies, they've definitely got cheaper over time. Although the dynamic in there, where we've added currencies that have grown at higher rates than the near mixed fact. Over time, we've seen, I think it's time horizons we're talking about today. We've definitely continued to put downward pressure on these prices over time. That path is not going to be linear, particularly if we've run the discipline of how do we charge, 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 will go down.
Actually, as you've seen in this year, like, where we know we need to grow our operational team to improve the experience, our customers really value that, and that's putting good pressure on cost. I think those are some of the dynamics, and we also have to continue to invest significantly in our growth, which we think is really valuable. I think it's, Kristo, that's a question close to your heart as well, so probably worth sharing your view on this.
We go as fast as our unit economics allows us to, and in as Matt says, the important thing is, in many markets, we've achieved more. I think Brazil is a good example. Price had come down through 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. It's a mixed 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. Like, 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. We think we're doing it relative to competition, a pretty strong job today. And just that discipline and that focus is what going to lead the business. But we'll do it properly. Thanks. DJ?
DJ from Bank of America. Couple of questions from my guys. Firstly, on the macro dimension, can you talk about, apart from the higher value cohorts, are there any other products or customers that you geography those segments, are you maybe seeing some change in behavior, just going from that?
Yes, I was. We're going to see quarter-on-quarter movements, and we'll see that over the last quarter, and I'm sure over the coming quarters. I would encourage us to just kind of just step back from this, from what are we seeing? We're seeing more and more customers adopt, you know, obviously, there's more and more customers joining Wise every year. That's growing pretty consistently. They're sticking around, and they're using our Wise Account. 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, what volatility on a daily, quarterly basis on how much money people are moving. There's certainly enough drivers of that with macro today.
You just look in the longer run, like, this stuff is how we invest and where we focus, especially these systemic drivers of active customer growth, is where it gives us this focus. Nothing's really changed in what our customers are doing. They're doing more on the Wise Account, we'll see ups and downs. I think what we'll see by the end of the year is continued growth in the number of active customers, more using our features, and those features supporting our growth.
There's a lot of topics where you spoke about the inventory management.
Yeah.
Do you think that you're sort of keeping the OpEx growth? Because you've done, invested a lot, on, you know, the operations side of things, on the development side of things. From here on, incrementally.
Well, last year was a pretty hiring year from onboarding and hiring people. Like, it was a pretty phenomenal. Amazing we pulled it off. You know, like, we've done those jobs, we lean into that. Definitely the rate at which we're hiring going forward will bring the cost base at least. You know, ultimately, this aligns to the rate at which we grow our, you know, sustainably fund that with the rates which we're growing our volume space. Trust, you know, you can trust us to, you know, keep ahead of what we're seeing and plan very carefully and, you know, continue to run a profitable, sustainable business over time.
My name is Joshua Fresh. Just on the infrastructure side of things, so obviously you have your fintech partners, but you're also investing on that side and trying to build partnerships with different markets. You also have the Mastercard, you're building a number of partnerships. I mean, how do you sort of see that changing the competition Wise on the infra?
Yeah, I think, the key thing here is, like, are you going directly or are you going with partners? As you said, there's a lot of people who are doing partnerships, some are using PSP, 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? I think our thesis is that the more we own stuff directly and the more we have it for the longer term, we get independent from others. We control that speed, costs on the longer run. That's, that's shown for us at least, maybe even less over the last 12 years. This has been, this has come true, and that shows in the proof points we have with, like, 55% other numbers we have.
I think that's a big differentiation where we actually want to own the entire rails through to the pay in and the payouts, that's a big different strategy. One other thing I will share is, when I talk to a lot of my platform partners, right? They get this 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? We've understood, when we get on these rails, these products out, how does that impact contact rates? How do we onboard customers better? How do we build a better experience to get the document uploaded?
That translates into helping our partners build better products, which has lower contact rates. The onboarding experience, 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? We do see that, like, sometimes they'll go with somebody else, and then they'll come back to us because I don't know how to run cost waterfall. You know how to run cost waterfall, tell us. I think those learned examples of the D2C product also is helping us. On the infra play, we believe we should own full end-to-end, and I think that that's a big differentiation with this partnership. We do have bank partners where we are right now, and they're very stable ones, so that helps us.
Thank you.
Thank you. Stephen, New Street Research. Just going back to the net interest income policy, I think investors are obviously pleased to see the 20% being sort of read through to even half. At the same time, I'm curious, why not hand that back to customers by way of fees? Obviously the long-term mission is to reduce fees.
Yeah.
This would be a good opportunity for that to for that to play out that way. Just curious on that. That's the first question.
There's obviously a number of things to factor in there. Like, if we're going to offer a radically lower fee at some point in the long term of the future, like, the company that can do that successfully, and the person that doesn't, that can do that at the lowest possible unit cost, and survive with minimal oxygen, at that point. Think about taking it to its longest. If you're dependent on interest income to offset in the short term, kind of avoids the need. You know, our teams, you got in this building, maybe in London, 1,000 people, 5,000 people around the world, very religious around driving down the cost, the prices. Clearly, this topic's come up.
If we do that without reducing down the cost and sustaining a profitable business over time, it just delays. It really just delays the need to actually build a, you know, a leaner, faster machine. Actually, if you hook up to a cyclical revenue stream, actually it can be quite dangerous. It's the same as maybe raising a lot of venture 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 been very successful in helping us build.
Our principle is like, it's like, you think this, but actually, like, it's very, you know, it's actually much, much smarter and more robust from a, you know, how can we guarantee for our customers we're going to be able to do this in five years or in 10 years? Actually, to take the hard part now, which is what we've done always, and build a stronger business over the long term. We are aligned that we should add this back to the balance holders but rather than people who transfer, but people who have balances. It's the magic of how we're able to do that we'll get clearer over the next 6-12 months.
Can I just one quick follow-up as well, please? Different topic. Just on the fees and the instant payments up to 55% from 20% in the last four years. 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 two, three years as well?
Yeah, I mean, we will continue to connect to other instant payment systems as if there's quite a few of them we're still connecting to, because that's how it gave us Brazil and Australia. We can access that quite a bit right now already through some partners. Actually, there's a natural evolution right now happening in the overall ecosystem of payments. A lot of payment systems are getting upgraded. We can see that as this happen, for example, in the U.S. U.S. has been behind on instant payments for a long time. They've launched RTP, which is a better consortium of banks, private banks, a private set up with CCH, but also FedNow that's going live this year. As that gets rolled out, expectation is instantaneous will go up and more in the U.S., right?
Other markets are going to come up along the way over the next five, six, seven years, and we'll be at the table asking for need direct access, right? Again, one of the things that I tried to explain in the presentation, and if it landed, was if you're a regulator, think about if you're the U.S. Fed, right? Or if you are Singapore, market part 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? You want some competition. You don't open it to everybody, right?
When they say, "Let's add some banks, let's have some other people in there," usually they look around the world to say, "Who else has done this?" Usually we are standing there, raising a hand, and we usually get access. That's kind of like this question that I get asked, like, why can a new person raise a lot of money and just get access and do the same thing? That's where they look for experience also. This is where we see. I mean, I think I can totally see the numbers going very, you know, over the five, six, seven years, closer to another 10%, interest, and then it gets hard, like, the 20 cool gets much, much harder.
Martyn, I have a question for the room. How's, you getting things for the folks online?
Yeah. Thanks, Matt. We'll take some questions online now. We're going to start with first question from Justin Forsythe at Credit Suisse. Justin, over to you.
Hey, guys, can you hear me?
Yeah, we got you. All right.
Hey, good morning, everybody. Thank you so much. A couple from me as well, if you don't mind. First one for Kristo. I think we've hit a little bit about the kind of alternative rails, but I want to ask a question a little bit in a different way. 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, you know, 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 drop-through slide that you were showing with interest income. I think what you were talking about is how you were going to spend the proceeds. We're a little bit different. Can you just walk through? 'Cause it seems like some of the stuff that was tagged for spending with interest income, some of that would be cause related, some of the interest and payouts and benefits, but also some of that would be CapEx related. Is there going to be a way to evaluate whether those numbers are being hit or not? Does that just mean that the core business is going to do 20% EBITDA margins as we've asked in the past?
Thank you.
Yeah. All right. Cool. Okay. We're going to talk about.
Yeah. Okay. I'll on the blockchain and alternative methods of moving money. Yes, I think we definitely are nimble enough and fast enough that if it actually came to a place where it was cheaper to use another technology, whether it's using a specific crypto or coin to move money and move ownership of funds across borders, or if there was some other way we could use blockchain, 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 are running today, moving from fiat to fiat, and that's what we've seen is not really happening yet.
If it were to happen, you know, practically, it would be just adding another asset class to Wise Account for consumer, and then you'd be able to transfer that ownership to anybody else. It's pretty standard stuff you can do. Right now it's actually much cheaper to do what we're doing, and much faster, and we control the end-to-end experience. From a regulatory perspective, also, it is actually less hassles.
Cool. Let me answer the question on use of interest. As we said, there's a few principles here that we first apply. One is, like, how do we avoid becoming overly dependent on this as a business? Secondly, how do we use this to say, the other questions you asked, like, can we power this account, but it also drives the structural profitability. How are we gonna use that? First is we'll try and pay the first actually one percentage point that we're using, as you can see, is actually making the Wise Account features that are 20% margin. That's similar to what we've always had in this cross-border business. That and we don't expect that to increase.
If you think about that basically covers the marginal costs. We have income on the account, the revenue on the account, let's top that up to make sure we get over this 20% margin. The rest of it will be used purely for, primarily for account-based incentives or however we want to talk about this, right? 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 will have to try some other things around incentives. We've already started things like cash back and whatnot, but these will be like discretionary incentives relating to the account activity rather than funding significant levels of OpEx, which we become dependent on or cross-border and cross-border pricing.
This is quite an important distinction, to, as 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 to you so that you can understand what's happening, because some of these might turn up as contra revenues that are just contra interest. Actually, we expect a few things. We expect to limit us to 1 percentage point, we'll work towards the 30%. It's gonna take us time to get there as well, because we're gonna be quite thoughtful in what we're gonna do, you know, with scaling where we can pay interest or operationalizing other ways to offer rewards on the accounts.
Kristo said that.
Got it. Real quick follow-up there, Matt. The 1%, sorry, that's a percentage of gross interest income? Or could you just quickly walk through what that was?
Exactly right. Exactly right. That's 1 percentage point. You know, if we have, if we're running, you know, we were running 2.8%, I believe, at the end of, end of the year in the quarter. First 1 percentage point, so 1% or 1.8 less rather than 1% of the gross interest. What this practically means is like, you know, rates at 1% would mean our Wise Account features are actually running at a very healthy profitability. Like, and a great square, which helps us avoid customers paying a fee, or, you know, reduce levels of fees or reduce level of account charges on the account. And this is at a rate that is very low.
I mean, historically, over long term, you know, where rates are and where rates are expected to be, this is a very low level of dependency in our view. It's worth taking because it gives us, it gives the customers a great experience and really addresses some of their bank accounts with the account.
All right. 1% of balances. All right. Thank you so much, guys. Really appreciate it.
Thanks for the question.
Thanks, Justin. Next question comes from the line of Hannes Leitner, Jefferies.
Good morning, Hannes.
Morning, morning, everyone. Thank you for letting me on. I have a couple of questions. On slide 44, you state that this extension of the onboarded services, basically you onboarded 4.5 million customer 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 are existing customer and the other one come on new? Maybe you can talk 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 disintegrate that between personal and business? Just thinking, over the long term, you want to expand into new geographies. You referenced with a nice video around Colombian users.
Average monthly income is around $1,000 in Colombia. In Brazil, it's closer to $2,000. How should we think that, how that translate into VPC going forward? Maybe I have a thoughts follow-up.
Okay. I'm work on the first one.
Thank you.
I might just get Martyn to repeat the second question. On the first question, like, yes, we did have a really healthy number of customers joining us last year. When customers join us, they use us, and then some of them come back every month, some of them come back every year, some of them come back less frequently. 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, you know, includes those and those that are continuing to repeat. You see we have this GBP 6 million even on a quarterly basis. A slightly different currency.
Fundamentally, what it tells us is that cohorts, you know, if you go back to the volume chart I showed you, I think it's the same chart actually. Slide 44, if I remember that. It shows that actually the volume that we're getting from new customers over time has continued to grow, and those customers stick around. Basically, that just continues to grow through this volume retention dynamic over time. The number we showed you shows you the dynamic of those cohorts continuing to grow over time, which just gives us just the six contribution to growth. I think the second question was around the trends of VPC. We'll talk more in a couple of weeks when we talk about our QR numbers.
Broadly, the dynamic, and it's too soon to close the quarter now, we're not there yet. There's some up and down dynamics across geographies, down trends, broadly, we've seen this VPC drop. You know, I would look at it as roughly scale, it maybe one, you know, maybe slightly down quarter-on-quarter. We'll share more on that dynamic in the coming months, in the coming weeks. Broadly, I think we need to just remind ourselves of the longer term trends of active customer growth there. Then there's another question for.
I think that was the second question.
Yeah, that was. Was that not the first?
Yeah, the final one. No, there was a second part of the,
Yeah, what the.
The VPC question is the customers in different jurisdictions, in different countries, and what the impact is on the VPC.
We do have a different mix of customers joining us over time. Actually, the impact on. Yeah, that, there might be an impact on VPC of this, but, like, the primary impacts we've spoken about is that over the last quarters is different payment volumes. That's the dominating impact we've seen. You know, these customers we, you know, we're launching this customer around the world, but the problem's the same. There's problems with fast, slow, expensive payments. These customers move volume through us, and they get a great deal. Like, actually, the economics of all these customers that we're launching and the way we price, they're all profitable. We don't subsidize across routes. Actually, it's pretty healthy profitability wherever we're growing.
Also to keep in mind, I'm glad you referenced Anita. I think she's a business customer in the United States, actually. The reason why she can run her business in Wise is that we reach all or many corners in of the world, and that's why it's worth expanding the infrastructure into maybe lower GDP economies.
Great. Just a quick follow-up on personal expenses, and then basically related on the job hiring. The whole personal expense is quite increased substantially into 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 headcount base to have the business set up then for consistent operational leverage going forward?
Maybe I can start and then Matt can add. Yes, we have invested quite a bit over the last year, mainly driven by, you know, continuing to invest in our operational servicing teams, because we have a lot of demand coming in from this customer growth that we are seeing already. We want to make sure they have a great experience if they need to call us, if they need to onboard and have issues and business system, we have invested in that. Also in product engineering, like, you know, my organization. A lot of that is like continue to build and opportunistically invest in these different long and term projects that we've done. For example, investing in Australia and others that we're doing, which requires us to have feet on the ground to basically do the correct integrations.
We know that 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 similar. We've done a lot of investing last year.
Yeah, exactly. I mean, we've Taken our guidance to you've seen our, you know, we've committed to running this profitably, so that should tell you know, we'll manage our cost base if we need to, and just success. We can talk more about this in six months.
Thank you.
Thanks, Hannes. Next question comes from Josh Levin, for Autonomous. Josh, over to you.
Hi, Josh.
Hi, can you hear me?
Got you.
Great. Two quick questions. It looks like the other fee take rate, other fees divided by volumes, 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? Separately, in today's press release, you talked about direct connections to four payment systems. I think that number used to be five or six in previous presentations. If that's correct, can you just explain what's going on there? Thank you.
It's basically been four, so I don't know if that was in Europe, actually, we have a lot of access to it, kind of. You know, we basically.
... U.K., Europe, Singapore and Hungary, and then we are very close to launching in Australia. That will be the fifth strategy then.
Exactly. We've got permission to enter into Australia. We're just in the process of doing it.
Maybe it was press releases that maybe you got the permission, maybe that's what you read, pretty much.
Yes. It's not gone backwards, Josh. We haven't yet gone for, which is good. The first question is what's happened to this other take rate? The first thing on this is Like, actually, our cross take rate is actually, we almost set this because we set a price, and it reflects the price we set on the volume. This other take rate is actually the, it's not priced this way, per se. This reflects the interchange we may get on cards, the fees we may get on domestic volume, actually, not on domestic, on cross-border volume. Actually, the take rate is an outcome, if you like. What you're seeing there is the absolute pound millions of revenues growing year-over-year. The reason for that is it's just usage of the accounts connected.
You see that in the balances as well. It's continuing to grow. The question is, where is that? Like, so how many GBP 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 for free. It still managed to go up, but I would just take that into consideration as we go forward. Like, it's been increasing. We expect it to continue to increase, but you know, but at a steady rate going forward.
Thank you.
Underlying, it really reflects the account function for growth, and that's what factors are mostly driving the revenues.
Thanks.
Thanks, Josh.
Thanks, Josh. The last question of the day comes from Mohammed Moawalla at Goldman Sachs.
Oh, hi. Thanks.
Great. Hi, Matt, Kristo, Harsh. I had to, firstly, Matt, you talked a lot about kind of driving, you know, the kind of the volume, but also kind of adding added services. As you think about sort of that existing customer business, could you help us kind of decompose the kind of the margin structure on, you know, existing customer versus a new customer? As you build that kind of lifetime value, kind of how that sort of margin on existing customer kind of evolves.
As we think about kind of the long-term sort of shape of Wise's margin, I know you've sort of given us current guidance in the kind of, you know, low 20s, but how should we think of the shape of how that margin can evolve given these dynamics? 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 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? Thank you.
Let me answer the question first. If you 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, you know, the customers, before we spend the marketing money, they're actually very profitable in the first year. We're not going to wait for them to pay back over time. And we do that by the, you know, 'cause we've got very healthy economics from the first transfers that they're offering, that they're running on Wise. Yes, we have an onboarding cost up front, but actually, even that is paid back relatively quickly. Typically, you know, the most from onboarded pretty automatically, very quickly. So it's not like a.
The underlying e-commerce customers, they're very good from the early days. Yes, we spend marketing money up front. Yes, we spend onboarding money up front, but this is structurally very profitable early on. As the question on long-term or medium-term margins is, like, fundamental to how we run the... All the payment volume and the infrastructure is at or above 20% margins. What we're seeing that's new is how does this interest dynamic track through to margins? 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. Maybe those interest rates are not permanently high.
Whilst we run with this model, which we're going on that journey and we expect that through this year, definitely in this interim, it's gonna track through to higher EBITDA margins. Just think about this. five years ago, like, we were really focused on cross-border and predicting five years in the future what our margin structure is gonna be. I know it's a hard thing, but what we do know is that we're gonna keep moving, more and more money for people, more and more money for more and more people and businesses around the world. We're gonna do that with a underlying, very profitable, business, and that will keep us growing for long term.
On the Wise Platform, I think there's no specific catalyst. I mean, there's two groups that Harsh mentioned, which were, we're seeing more traditional banks, especially starting in Asia. I guess they're slightly faster moving. For banks, it's always a change is hard and slow. We see the Asian banks actually go faster, the Shinhan Bank, Mandiri, et cetera. We see the U.S., the challenger banks, and 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 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.
The logic for our bank partners, the lot is, you know, they see the customers using, getting benefit of Wise, and they would rather, much rather, and we would much rather them have that in their own apps.
I think.
Thank you.
I think that's it. Thanks all for... Especially those who've come to the office, it makes it really special for us, having you in. It does, hopefully get to know each other better. Thanks for all the questions online. An exceptional year with lots to learn, we're quite excited about the future. Thanks very much. Thanks, everyone.
Thank you.