Good, good afternoon, everyone, and thank you for joining us for this session. We are absolutely delighted to have the co-founder and CEO of Wise, Kristo Käärmann, with us here today. Kristo, I believe it's your first time at this event, and, you know, kinda added at the last minute, so we really appreciate you making it out here. Very cool. Thank you, thank you for having me. I've been to your London events a few times, but first time in San Francisco. Exactly, so maybe I know some people may be sort of familiar with, with Wise, but it would be great to sort of level set, given you sort of set up the business, so maybe a bit of background around the kind of thought process behind why you kinda set up Wise, you know, kind of the vision for the business you sort of have, and how that vision is now kind of evolving in terms of sort of where you wanna go, you know, given, you know, the business has now kind of been much more kind of public facing as well, and as you kind of chart course for the next sort of five years. Sure. So maybe just to track back, the problem that we're solving for our customers is: How do you move money from a bank in one country to another bank in a different country that uses different currency? Usually, what you do is, you go to your bank and you ask them to make an international wire. And then you realize that your money is gonna be lost in the ether for a little while, and what arrives is gonna be, you know, 3%-5% less than what you sent away, because the bank's gonna try to check you on the exchange rates. So what people do now is they open a Wise account, and they start using Wise to facilitate this process. Which means that money arrives on the other side of the world now. 65% of our transfers, just dropping a little nugget, arrive in less than 20 seconds. So money leaving your Wells Fargo account here, arriving in someone's NAB account in Australia, less than 20 seconds. That's 65% of our transfers. Everything happens at the mid-market exchange rate, so the same thing that you see on Bloomberg or Reuters terminal, that's what you get on Wise, and we charge transparent fees that end up being 5 times, often more cheaper than what your bank would charge. So that's kind of what we got going with. We now move, so in dollars. I mean, these guys are much better with numbers, about 150 billion in the last financial year across currencies for 13 million customers. And the evolution of the product has led us to not merely serve transfers, but also international banking services, which means we're holding customer funds, we're helping them collect internationally, and we also hold balances then. Again, trying to do conversion quickly, $16 billion, roughly, in US dollars. Is that- Yeah ... roughly what you had in mind in terms of an intro of what we do? Yeah, and I think then, you know, obviously, it's been so very successful, and, you know, you've been known as, I guess, originally it was TransferWise, and TransferWise kind of evolved into Wise. So, you know, the account has kinda come into play really in the last sort of couple of years. So what was the kind of thought process around that, you know? Sure. So as I explained first, the first problem we were solving is: How do you move your money to somewhere else in the world? Whether it's between your own accounts or you're paying your suppliers. That was problem number one. We quickly realized, because our customers were asking us, "That's great, you solved this for us, but when we're collecting internationally..." So, if you're a remote worker and you're getting paid internationally, or even better, when you're a small business and you're selling or invoicing internationally, what usually happens is you give them your US account number. But if the payer is in Australia, you're selling in Australia, what happens is, they send you Australian dollars, and again, your bank, charges you on the exchange rate. So they will convert the money into US dollars. You lose about 3% of your sales. So what we started fixing is: How do we give our customers local accounts all around the world so that they can bank as a local company? And when you're a U.S. business, you could invoice in Australian dollars, you could invoice in euros, you could invoice in pounds and get paid in pounds. That led us to develop the concept of a multicurrency account. Something that, say, 10 years ago or 15 years ago, maybe if you were a large multinational, you could get from Citi or HSBC. It didn't exist for small businesses. Now it does, and it works like magic. So that's the Wise Account proposition. It really resonates with businesses who sell abroad, who have payroll internationally. On the individual side, it's all the expats, digital nomads, snowbirds, and the kind of list goes on, who split their lives between different countries, or investors who travel a lot. So then, sort of, you know, we sort of had account, and then the other evolution has been take a lot of these things and do it for what would be kind of some of your competitors who don't have the ability to sort of serve the customers at the same kind of economics you do. So that's how it gave rise to platform. So tell us a bit about kind of platform, some of the customers you have, and the problems you're solving for them. Sure. Mo, and if you allow me, I'll take a step back. So how is it possible that the mightiest banks in the world couldn't figure out how to move money as fast and as cheap as a scrappy startup launched thirteen years ago? The problem was in technology, so they are still relying on a correspondent banking model, which is effectively a chain of banks between the sender and the recipient, which is broken in so many ways. We took a completely different approach, and we built up our own infrastructure, which connects into. We basically went on the inside that, interestingly, domestic payments are really fast. I can't say for the U.S. yet, although you're making improvements here, but most places in Europe, in Asia, moving money within a country is either free or close to free and instant. So that's solved in a country. How come when I send from Singapore to Malaysia or from London to Paris, then it's suddenly hugely expensive, hugely slow, and unreliable? So that insight led us to stitch together all of these domestic, fast, efficient networks into what we now call the Wise Platform. So that is the thing that enables those instant cross-border transfers between the U.S. and Australia or Canada and Japan, and does it at the price point that is... What we're able to charge out is less than it costs the banks to actually do these transfers. The second insight came when, actually came a few years ago, when we noticed a sudden surge in customers in Hungary, of all places. We had recently launched in Hungary, and the customer base was growing, but there was suddenly a surge, and we asked our customers, "So how did you hear about Wise? How did you end up using us?" Many of them told us that our bank recommended to use Wise. We were stunned because we weren't most friendly with banks in the first place. The story went that, apparently there's a small bank called AXA Bank in Hungary. They had a niche customer base, and the international payments wasn't their thing. They still needed to make them. When a customer went into the branch, they had to go into the branch, there was someone typing into the blue screen, all the details, and then the money would go missing for a few days, and the customer would be angry and calling them up, so they realized it cost them 10 times as much to make the payments compared to the revenue that they're getting for it, so the customer was unhappy. They made a loss, and, like, everyone was unhappy about this, but the bank managers obviously were aware about Wise. They had used Wise themselves personally, and so they told their branch staff at the counter that if someone comes in, show them how to start a Wise app and how to set up a transfer, and before the customer would walk out of the branch, the money would have arrived on the other side, so problem solved. The customer is happy, you're not losing money, and everyone can move on with their lives, so that gave us inspiration that, actually there's so many banks in the world who don't do this as their core business, and they would love if someone solved this problem for them, and we have that infrastructure. Since then, as we open this up to banks and other partners, we have accounting tools that have payments embedded now internationally, and a series of banks, from challengers to more traditional ones, who have switched their international payments onto Wise. Yeah. So maybe some examples. I mean, you've had some, you know, around the world, actually, banks or segments or regional arms of banks. Talk us through maybe a couple of examples of it, but I think more recently, the most interesting was Nubank. Who's a kind of native digital bank or neobank, who is sort of working with you on an extensive basis. I would love to get some examples. A large one. Exactly and a large one. A large one, indeed. So it's quite interesting bank. If you've ever sold to banks in your work or know others who have, you know, this is a slow process, and especially if it involves technology, and when we talk about Wise Platform to this community, we always caveat this, that, you know, we should be conscious this is going to take a while before we see the world's traditional banks switching onto Wise. But what we are seeing is, there's now sixty. About fifty or sixty banks live on the platform. Obviously, pretty much all the world's challenger banks were there very quickly in the first couple of years, because for them, implementing new technology is easy. They care for their customers a lot, and it gives them... So that's been quite interesting that for the challenger banks, they see the Wise Platform integration as an edge over their traditional competitors. So their opportunity is to bring a full stack banking service so that they can compete with their traditional competitors, and Wise is an awesome way to get a leg up on that. So that was the challenger banks, and now we're seeing the traditional banks coming online as well. Which is actually a little bit more, you'll see if you can look at the biggest names, they would be in Asia. And again, Asia being much more competitive, a bit faster moving. The second largest bank in Indonesia, called Mandiri, Shinhan Bank in South Korea, GMO in Japan, would be some of the names. And then, as you mentioned, one of the recent launches was a partnership with Nubank in Brazil, which is probably more in the challenger category, but size-wise, it's now comparable to some of the larger banks in the world. And the feature that we launched with them is an international account for their, what they call the Ultravioleta premium customer base. That went live a few months ago and has seen a really good take-up. Mm-hmm. Yeah. So I think that's just great. I mean, recently you've I mean, as you as you sort of laid these sort of foundations, there's the kind of infrastructure and the technology platform advantage you have, which is driving that kind of unit cost advantage. You decided to kind of step the foot down, the sort of accelerator further, and really ramp up with growth, but driven by kind of cuts. I think obviously there's some. This is facilitated by the efficiencies the technology platform is giving us. Explain us the thought process behind that, and why now? I think why now is not actually the right question, because we've started down on this mission many, many years ago, led by the insight that we know that on this new infrastructure, the cost of international payments is gonna come down. It's not maybe gonna come as close to the domestic ones, but it's gonna be possible to do international payments, but not so expensively, given five, 10 years. And I mean, just because from the engineering perspective, they're complex, but they're not that complex, looking at what banks are charging. So the approach that we took in terms of our own unit economics is that of, I think it was called cost- plus pricing- Mm. Famous from Costco and many others. Which means that we track our own costs, and we charge a little bit beyond what we need to spend to facilitate those transfers, and what we invest in for our development. But what that means is, over time, and we've established this setup already six, seven years ago, much before listing, is that as we make our infrastructure more efficient, we're able to bring the fees down. When we bring the fees down, we put competitive pressure on the banks, basically, or the competition. Which means that it's gonna be even harder for them... It's gonna be harder for the customers to remain with the banks, not to switch, and it's gonna be harder for the banks not to switch to Wise Platform, if you kind of work through the options available. So our strategy has always been, remove the cost, and as we remove the cost, put the price pressure on. Because eventually, this service that we can provide cross-border will be so much more efficient compared to what it was five or ten years ago. I think more recently, though, you know, some of your competitors, even if they don't really have their own platform, but they sell a broader range of, fintech capabilities, have been also trying to sort of lower their pricing, which has obviously created a bit of noise in the market. But again, this point about transparency, which you guys are very clear around with customers, and that's led to kind of speculation that is, what Wise doing, defensive versus offense, what appeared to be offensive. But can you help us understand? What I'm talking about is, you know, Revolut has been out there kind of lowering their pricing as well, but, is it sort of economically feasible for them to do that? Ultimately, this is just short-term noise and, you know, it's no different to kind of what some of the banks have been doing, but maybe it's cheaper than the bank. It's very hard for me, of course, to comment on competitors. And you're right that changing your fees is a configuration change. There's not much you need to do to do the change, but then the hard bit is to sustain that. So you're kind of making the right point, that, in the short term, that might make a difference. In the long term, the only thing that matters is what, what kind of fee structures do your costs sustain. So the really valuable work is reducing your cost base for moving the next dollar across the borders. And that's what basically geared the entire organization to do. And that's what we see in the outcomes as well. So let me maybe paint the. I know from the analytical perspective, we'd like to look at the averages. But if you look at some routes, so take a major route from U.S. to Europe or USD to euro. Years ago, when we kind of came into this pricing model, the fees were 0.5% or maybe a bit more. That was, like, very cheap compared to banks. I looked yesterday, we're now down at 0.28%, so we've almost halved the cost for our customers to move dollars to euros. And that's not a forex change, that's because we halved our cost to do that. You know, you can think of what's possible, because I'm pretty sure it's almost the same dynamic with Moore's Law If you're able to take half the cost out, you're soon gonna be able to take half the cost out again, and then maybe again. So that's probably the more exciting thing looking forward, is how much pricing pressure we can extend into this environment. Okay. I mean, you've obviously got this great product. You've got the kind of value proposition. You know, I think your model is also very viral, so you have, unlike many other competitors you have, you don't need to spend as much on marketing, but the marketing spend you do spend is got a very efficient payback. So as we think of the other side, that there's obviously the reduction in the, so the cost and the fees that you charge, you know, you've seen that there should be then an acceleration in number of kind of users you onboard. How do you sort of see that playing out as a result of the kind of initiatives you're making now? Because I think you're also stepping up the marketing spend as well. So as we think of that price and marketing spend, impact in terms of users, you know, how should we gauge that, that payback? I would think, I would encourage to look at the, especially when we look at something that is close to the products that we operate. I think the difference in pricing or the impact of pricing, you don't measure in months, you measure in years. Yes. Yeah. So when I look at and maybe to preface that, we do ask our customer. The fact that you alluded to is 70% of our customers now claim that they came because someone recommended Wise. It's not because we show them ads or did something else clever, because someone else recommended to use Wise. And that's what you call a pretty viral environment. And then when you think of how do we grow, is we grow when more and more people recommend Wise. That's the biggest leverage we can exert. And when you think through the recommendation cycles, you'll see that the pricing strategy is not a quarterly strategy. Mm-hmm. The thing is, it's more often measured in years or probably even longer. Therefore, I wouldn't be looking for spikes, because otherwise you'd be reacting to noise. Mm-hmm. Which are positive and negative. It's still gonna be a little bit noise in the short term. Yeah. I think you'll expect to see, like, much longer term impact on these places when we do our pricing philosophy and pricing decisions. We think three, five, ten years ahead. We don't think shorter term in this- Yeah ... respect. If there's any questions from the audience, we can take a few now and then carry on after. Maybe just on sort of artificial intelligence, it's been discussed- We had one. Oh, oh, there's... I missed it. Sorry, go ahead. So I missed you. Why don't you go ahead? Yeah. So maybe just to flesh out the competition thing a bit more. Obviously, you know, people use it as a bit of... A lot of these other businesses are sort of digital wallets or digital banks, if that makes sense. So they have other revenue streams apart from FX, and then they use FX as sort of a Trojan horse to attract customer, or they'll use something else to attract customer, et cetera. I'm just wondering philosophically, how do you think about that? Because if you continue on this approach to lower your cost and lower your revenue, you'll end up owning the whole business, but it won't be a very big business. And I think you've mentioned this before. Do the other business lines start to come into play here? Do you think about that a bit more, or do you think about trying to counter them to become a more diverse business? Or do you just think you'll wait them out over a long period of time? You'll just slowly burn them out and stay very much a cross-border business the whole way. So what you're probably alluding to, and what's also starting to get visible on our financials, is we maybe, let's say five years ago, cross-border fees, cross-border transaction fees made up roughly 100% of our income. Now, again, I'm gonna be a little bit bad with numbers. I know you might know, but it's somewhere around 70%, I think. Yeah. Correct. So we do have other services that our customers use, kind of starting to add to the revenue. But the core, I think, very much remains around international activity, and that's the reason why people and businesses, increasingly businesses and banks, come to Wise is because we can do things internationally that they otherwise can't. And the real differentiator in this cross-border environment as well is scale. So the one thing that's maybe hard to grasp is this whole scale of cross-border transactions, that in the retail space, the thing is. And again, the number is roughly about four trillion, I think, four trillion a year. So if you multiply the four trillion with even a very tiny take rate, you get to very enormous numbers. So the one thing that really matters, and the thing that is going to turn out to be hugely valuable, is the volume that you command, and it's worth going down and down on the cost to be able to command larger and larger volume. That is the kind of base philosophy behind this. Any other questions? At the back. Could you just talk a little bit about blockchain? Like, do you see that as an opportunity, a risk, or a threat, or nothing? It's a bit. I think it's a bit. I wouldn't say it's nothing. I think it's a bit neutral to what we're doing. We're seeing the visions that it can somehow help the cross-border activity not really play out, because the other governments are not giving up their sovereignty on currencies or the control of currencies. The technical developments are really not that helpful because, you know, we can demonstrate that you can move money instantly and cheaply and much cheaper than blockchain across the world, across currencies. So we haven't seen really a promise to solve the problems that we're solving. But I'm sure. I'm hoping it will have a journey on its own, but I'm not sure when, if ever, they're going to overlap. Maybe on sort of AI, how do you sort of use sort of AI internally to sort of improve the kind of efficiency with regard to managing risk for the business? We've been big users of AI before it was called AI. So, but that just for the more technical explanation, we're dealing with, and the financial services sector is dealing a lot with structured data and the machine learning mechanisms, algorithms that have been around for decades. We're big users of those because we need to know exactly, we need to predict where do we need which currency, which liquidity pools. We can create a lot of efficiencies from pattern matching and these kinds of activities. The thing that's new over the last few years is unstructured language processing, and that's also gonna be helpful for us, and we're already seeing that being helpful in reading documents, understanding customer questions, leading them into the right places. So there's definitely use for the recent iterations of AI. I would say that we have already captured much of the value out of the previous eras of, well, what has already been possible on the machine learning side. Got it, so as you sort of look at the business, you know, ten years out, how does the sort of composition, the balance of the business look? Because obviously, we talked about platforms. Mm-hmm. Does that sort of eventually sort of overtake the kind of direct business cross-border business you have, and could that... You know, how big can that get? And then you've obviously got all the different product offerings with Wise Account. So what does Wise look like in your kind of mind, in terms of kind of how you're looking to evolve it? I think, I think it will overtake. I really can't estimate when. But if you kind of take it forward, the experiences that we create in the user's domestic bank are pretty amazing. So if you're and this is amazing for the bank as well. In the U.K., we have a series of challengers like Monzo, for example. And the experience that you get within your own banking app, if it's the same as you get on Wise, then you have no reason to download Wise. And for us, it's. We're neutral to that. So we're seeing the volume. In both cases, it adds to our scale. We can put the scale effects to use, lower our cost base, and bring the fruits to the customer. So I do think there is definitely a future where the Wise Platform volumes could substantially overtake the direct-to-consumer base. I don't think they're going to ever go away. I think they're hugely complementary. I don't think they're fighting against each other. But the potential in the Wise Platform flows is pretty enormous. Mm-hmm. Yes, we have a question here. Is there a network advantage if, let's say, a Monzo customer sends, transfers money to a Nubank or Revolut customer? So, is there an advantage? A little bit, yes, because it's kind of within our ecosystem. We settle and clear directly with the two banks. In this example, it's not that substantial because in Brazil you have Pix, which is cheap and instant. In the U.K., you have Faster Payments, which is cheap and instant. So even if it wasn't in our ecosystem, the delta is not that big. However, we have this interesting dynamic in the U.S. where there's one bank, Stanford Federal Credit Union, that's also using Wise Platform. And when they launched, we realized that they're undercutting our prices. It's more expensive to use Wise than to use Wise and Stanford Federal Credit Union. And guess what? That's because clearing and moving money between banks in the U.S. is so expensive that it turned out to be cheaper for both of us if we're clearing directly with Stanford Federal Credit Union. And it's their benefit, so they choose what to do with that. And they choose to... They could have kept it as their revenue. They chose to give it back to their members, and that's how it actually turned out to be cheaper than Wise, which is a pretty awesome statement. There's a question at the front. I'm glad the audience is warming up. Okay. Go. Because you talked about your platform volumes in the future, and that they may overtake your consumer-facing business, consumer-facing volume directly, is there any reason to think that the margin profile or profitability of those two businesses should be drastically different, or should it be similar in terms of the volume that you handle? That's a very good question, and we have very deliberately kept them the same at the moment. Because we want ourselves to be neutral. We shouldn't really care if the customer is coming to us directly or coming through the partners. I think this takes a lot of worries away in how do you set up your commercial relationships. And, you know, some banks might want to charge more, so there's definitely cases where it's more expensive to use the platform partner and come to us. And, you know, the ones with bigger volume might come to us because it's cheaper to use. But at the end of the day, it's up to the platform partner what they charge. We are really neutral to where the volume is coming from. And just one more, if I can squeeze it in. Obviously, you're making money on the float, so to speak, or the customer balances in some countries, or you have been for a while now, and it's leading to quite a large excess cash position on your balance sheet, which you're trying to give back to consumers, but you can't give it back as fast as you're making it at the moment. Could you maybe talk about the priorities for that extra cash you've made? Is it you're gonna use it to accelerate growth, M&A, or, God forbid, you know, buybacks, et cetera, down the track at some point, or a special dividend, something like that? What you're referring to is a new metric that we recently introduced, which is what we call the underlying metrics. We decided that we took the approach that the exchange rate or the interest rate environment may change, and it would not be prudent for us to optimize our economics. Because as you remember, I said we priced for three to five years ahead, we kinda want to be insensitive to the interest rate environment. Then we decided that we're gonna split the net interest income that we earn on those balances into two parts. The first 1%, we think, is gonna be relatively more stable. That's what we consider as part of our underlying economics, so underlying profitability. And then we have this extra part, is whatever is above 1%, where we don't bring it into our economics. We try to pay it out as interest to our balance holders, but it's not possible in all countries. Which has led to us being, on the net basis, a bit more profitable than we're designed to be. So therefore, you can see this as a temporary tailwind in terms of our profitability, but we've isolated away from the underlying economics, which we're pretty deliberate and strict about on how we kind of optimize ourselves for the years to come, so the strategy on the extra parts is the same. We're looking for ways how to use it wisely and drive customer benefits back. and where we can't, we conserve it for future. Great. Thank you very much, Kristo, for the great presentation. Thanks, guys. Thanks for all the questions. Thank you, everyone.