A Wise Business Model $WISE
A Capital light fintech that's grown Net Income at 91% compounded
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"The best place to begin looking for the ten bagger is close to home—if you stay half alert, you can pick the spectacular performers right from your own industry. You’ll notice that one product is hot and selling out everywhere you go."
— Peter Lynch, One Up On Wall Street
Today’s piece is an exploratory introduction to a company that not only fits my criteria as a capital light indirect inflation beneficiary but is also a product I’ve been using everyday for a long time.
I’ve touched on global fintechs in the past with the likes of STNE and PAGS which have been very nice investments for me - although I currently have no exposure to those names as I’ve rolled the profits into other opportunities.
I’ve used Wise as an individual and business owner for a few years now and it has been great for both purposes. My management fees and other digital income is paid into an account with far less fees than banks here charge. The ANZ used to charge me $15 per transaction every time a payment was received from an international source regardless of the size of the transaction!
Invoicing and payments is super easy with the WISE platform and I find the ability to send/receive QR codes with the invoice details ready to go really handy.
So, to address the Peter Lynch quote above, it’s a product/service I already know and love. What about the business model?
Simply put - I love it!
Wise’s business model is built for compounding. Once a customer starts using the platform—for remittances, business transfers, or even holding balances in multiple currencies—they tend to stay. This high retention is driven by both cost savings and user experience. With every transaction, Wise earns a small fee, and as the volume of transactions per user grows over time, so does the lifetime value. Crucially, customer acquisition costs are front-loaded, while the revenue stream continues with little incremental expense.
Moreover, Wise benefits from operating leverage—its infrastructure is largely fixed, meaning that as volumes scale, revenues grow faster than costs. This is evident in how Wise has consistently expanded margins while growing
This is why I classify WISE as in indirect inflation beneficiary. Although it doesn’t hold a direct pecuniary interest in a hard asset, its top line will expand from the larger transaction sizes and volumes associated with inflation and this expansion will not require increased CAPEX nor increased OPEX.
Price action
Late 2022/23 I began the process of planting flags around the world to serve as future home bases, this is where my usage of wise really picked up and I thought “ hey, I wonder if they’re publicly listed”.
It turns out they were and I promptly got distracted and ignored investing while it was trading around the mid 5’s.
Relaxing on the beach in Playa Venao, Panamá whilst my PR application was being processed. The night before I went partying at the top of a nearby mountain with a group of lovely young ladies, ended up in the back of a 4x4 and got back to the hotel at sunrise. Simply too relaxed to focus on cheap fintech stocks at the time.
Although Wise today trades at 10.48 GBP, that’s actually still lower than it’s historic top of 10.66 which it hasn’t seen since 2021.
Yet, since then they’ve quadrupled their revenue and more than 10x’d their net income in less than 5 years outpacing the increase in CAPEX which should plateau once critical mass is achieved. The share count is practically flat over the same time period.
So, WISE is one non-commodity, non-royalty company I’ve got my eye on.
What kind of returns do I think this can deliver?
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