Investing.com -- Shares of Wise plc (LON:WISEa) traded 2.8% lower on Thursday after the UK-based fintech company's underlying income missed estimates.
The company reported underlying income growth of 13% year-over-year, reaching £350 million, but this fell 1% short of consensus expectations.
The miss was attributed to a combination of weaker-than-expected customer growth and foreign exchange headwinds, which weighed on the company's performance during the third quarter.
The quarterly underlying income growth also showed a modest 4% increase from the previous quarter.
For the first three quarters of the fiscal year, Wise has maintained a year-to-date growth rate of 20%, but it has now adjusted its guidance to reflect a more cautious outlook for the final quarter.
The company now expects uIncome growth to fall toward the lower end of its initial forecast of 15-20% for the full fiscal year, with the guidance range revised to £1,349-1,407 million.
This reflects a more tempered growth outlook, following a relatively strong performance through the first nine months.
Despite the overall growth in total payment volume, which was up 27% in constant currency terms, Wise's customer growth slowed to 20%, missing expectations by 3%.
Analysts had expected a more robust expansion, especially given the company's push to attract new users through increased marketing and lower take rates.
“The anticipated boost of customer growth from lower take rate and increased marketing did not come through in Personal customer growth leading to a slowing customer growth to 21% (FQ2: +24%), while higher VPC was encouraging,” said analysts at Jefferies in a note.
The company also faced challenges with its cross-currency take rate, which declined by 3 basis points sequentially to 56 basis points, slightly below consensus expectations.
This decline, alongside weaker-than-expected customer growth, led to the underperformance in uIncome, even though higher transaction volumes per customer provided some positive offset.
On the positive side, business customers saw a rebound in activity, with their TPV growing by 25% year-over-year, driven by stronger VPC, while personal customers also saw healthy growth.
Revenue from Wise's card and other fees grew by 39%, with card usage increasing among users, contributing 28% of total underlying income. This was a solid performance, but still came in 4% below analyst estimates.
Wise's Q3 results were negatively impacted by unfavorable foreign exchange movements. Excluding FX, TPV and underlying income would have been 5% and 2% higher, respectively.
Weaker-than-expected seasonal growth, particularly in new customer acquisition, also contributed to the quarter's performance.
Wise added 20% more customers this year, reaching 9 million users, mostly driven by personal accounts.
However, the quarterly increase in active customers was smaller than usual, with just 155,000 new users in the quarter, compared to the 293,000 typically added in a third quarter. Business customers also grew, but at a slower pace than expected, with a net increase of 12,000 to reach 435,000.