Company Interview / Wisr bolsters balance sheet after challenging year

Key points:

Wisr increases operating revenue by 2%, reduces after-tax loss by 38%, and expands app usage by 57%.Andrew Goodwin emphasises cost management, securing a $50M facility, and aiming for 75% growth in loan originations.Strong demand for auto and home improvement loans; hedge strategies mitigate interest rate risks.

Andrew Goodwin of Wisr discusses the company's latest financial results, highlighting a 2% rise in operating revenue to $93.8 million, a 38% reduction in after-tax losses to $8.2 million, and a limitation of EBITDA loss to $2.3 million. Amid challenging macroeconomic conditions, Wisr sees a 57% increase in monthly active users on their app and maintains a $770 million loan book.

Andrew points out that Wisr bolstered its balance sheet by securing a $50 million corporate facility with Nomura, leading to a return to growth, with Q4 showing a 7% actual growth and a 30% pro forma run rate growth. Operational expenses were down by 19%, and despite a drop in loan book size, arrears rates remain within risk appetite, signalling positive signs for customers.

The plan for FY 25 includes growing loan originations by 75% through broker networks, direct marketing, and their proprietary Wisr app. Andrew notes strong demand for auto loans and home improvement loans, driven by people investing in their assets. Hedge strategies against interest rates and a focus on headline yield would drive Wisr's solid unit economics.

Full unedited transcript below:

0:11

Let's move on now to other results. Financial services, company wise, are posting a 2% rise in operating revenue to $93.8 million, narrowing its loss after tax by 38% to 8.2 million.

0:23

It's limited its EBITDA loss to 2.3% in the year, despite what it called challenging macroeconomic conditions. Let's say monthly active users on its app jumped by 57% year on year, while its a total loan book of $770 million. And while it had a small reduction net interest margins due to the rising interest rate environment, that's well mitigated by higher yields and effective hedging strategy. Let's unpack some of those results then. Master Chief executive Andrew Goodwin joining us now. Andrew, welcome back to well thanks for joining us. All right. What are the highlights there. Just in terms of a return to growth.

1:01

Yeah. Good afternoon and thanks for having me. So really the three key highlights. Uh, number one, we bolstered our balance sheet at the end of FY 24. So he placed a new $50 million corporate facility with global financial services firm Nomura. Um, and on the back of that facility, which was six weeks before the end of the financial year, we pivoted back to growth. If we look at the actual numbers. So for Q4, in actual terms, we grew by 7%. However, if we apply the pro forma run rate post, uh, getting that new facility on board, it was actually 30% quarter on quarter growth. And we've seen that momentum continue into FY 25, which is very pleasing and is absolutely the plan. Uh, alongside that, we manage costs. Our OpEx was down 19% for the year. And as you called out, we increased revenue by 2%. So it was pleasing to see amidst a backdrop of, as you also said, challenging macro conditions. How's the loan book looking at the moment? Just in terms of those volumes you're seeing and also what's happening as far as the arrears are concerned, how are

2:01

your customers faring

2:04

Yeah. So firstly on the volume or the loan book size points, obviously we did undertake moderated volume conditions, but for FY 24, which did result in a decrease in the loan book size, that was deliberate. Uh, clearly the plan now heading into FY 25 is to grow both originations and the loan book, and we should see the economics flow through to the PNL and the broader business in terms of how the customer is holding up. Um, yeah, we're seeing positive signs there, in the sense that our 90 plus arrears and loss rates are certainly within risk appetite. Um, we did see a bit of an uptick, but really that was driven by the denominator effect, given that the loan book had come off a little bit. Um, that denominator effect sort of makes those percentages look slightly larger. But we're seeing the consumer and the borrowing customer hold up really well. Um, you know, given the conditions that are well documented in the macro economy.

2:55

So you say your objective there for FY 25 to grow loan originations by 75%. So I'm actually going to do that.

3:03

Yeah. So look we have three key distribution channels. Uh so one is through the broker network which is Australia wide. One is what we call direct marketing. So aggregators, comparison sites and so on. The third one is through our proprietary wiser app and so on that app we provide tools and products, non lending tools and products that customers can use, both loan customers and non loan customers. And at the time that those non loan customers want to take out a loan, we already have established a relationship with them. So it's really about pushing all of those three distribution channels to grow that volume. And as we said, once we turn growth back on, um, we've seen that growth start to come through and we've been continue that into FY 25. In terms of the type of loans you're seeing, can you talk us through the trends that have developed there, particularly, I guess in terms of car loans, renovations, debt consolidation?

3:55

Yeah, sure. So we have two key loan products. So one is a personal loan. And so that's a very broad definition around worthwhile purpose. And it include things like home improvements medical holiday wedding debt consolidation. Um and so actually what we've seen interestingly is a bit of an uptick in home improvement. So people are actually investing into their asset and their home and so on, which which is, you know, I think generally pretty good behavior. And then auto, our auto product is obviously, as the product name suggests, are for cars. And, you know, the market for, for the purchasing of auto is buoyant. And we are seeing strong demand in that space. Well, what are your expectations then. Because once again, there's sort of hinging on where we're at in the economic cycle, uh, the trajectory of the Australian economy, but also, of course, where those interest rates are sitting at the moment. Uh, it appears unlikely we're going to get any cut before the end of the year. Um, so how are you viewing that as we head into the next calendar year?

4:52

Yes, obviously we saw the inflation numbers come out today wasn't a bad result. Mid threes. Um, it's a matter of sort of when not if. I think when we sort of rates start coming off, I'd like to think we're at the top of the tightening cycle, um, as a minimum. But for us, I mean we hedge our exposure to, to interest rates. And so as long as our loan unit economics stack up and the loans will be right, and really how we drive that is our headline yield. And then we lock in the interest rate exposure. But having said that, I think, you know, an expanding or an easing have the right environment, generally speaking, under the conditions of the soft landing, um, is good for lending businesses like out and as you mentioned there at the top, uh, returning to growth, just thinking that in at the end of the year there. So do you feel as though you're now on trend there that that's going to pick up this year? And I guess in terms of reflection of where your share price is at, what's it going to take to turn that around?

5:44

Yeah. Look, I think there's a there's an element of earning trust back in the market. And it's actually the first time we've put guidance out to market. And so obviously putting that number around 75% plus. And I think that plus is an important point. Um, you know, our absolute intention is to return to growth and scale this business, um, to both profitability and a self-sustaining capital position. We now have the balance sheet to do it. Um, and so I think there is, as I mentioned at the start, that element of earning back that trust and hitting our guidance and putting the runs on the board at the end of what's been, you know, no question, really challenging year, but I think still a good result in the context of those challenges. And so it's I think for us to prove and I'm confident we'll be able to do it.