Wise’s investors keep faith with fintech mission

Real-U.S. dollar exchange rates are seen in Rio de Janeiro, Brazil, June 8, 2018. REUTERS/Ricardo Moraes

LONDON, Nov 30 (Reuters Breakingviews) – Investors in 8.3 billion pound financial technology group Wise (WISEa.L) are keeping faith with founder Kristo Käärmann’s mission. The London-based money-changing app’s shares jumped by 11% on Tuesday after the company raised its revenue-growth target to between 25% and 30% for the financial year ending next March. Previously, Käärmann expected the top line to rise by around 20% to 25%.

Higher growth validates the Estonian billionaire’s decision to drop prices for its currency exchange services. In the first half of the financial year its revenue as a proportion of payments volumes processed was 0.75%, compared with 0.81% a year earlier. Rather than hurting revenue, that price cut seems to be attracting more customers. Wise is valued at about 53 times the next calendar year’s EBITDA, using the median Refinitiv estimate. Of its listed peers, only sector darlings Adyen (ADYEN.AS) and Square (SQ.N) trade at a higher multiple. Pleasing both customers and investors may get harder with time, but for now Käärmann is managing the tradeoff with aplomb. (By Liam Proud)

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Editing by George Hay and Oliver Taslic