Here is a snapshot of the Wisr 4Q 2023 :
Positive Financial Performance: Wisr achieved a positive operating cash flow of $2.6M and an EBTDA of $0.9M for Q4FY23. This demonstrates Wisr’s ability to translate its business activities into profitable outcomes, reflecting a successful operational strategy and financial discipline.
Strategic Growth Moderation: The company has deliberately moderated its loan origination volume to focus on profitability, leading to a 71% decrease in new loan originations compared to Q4FY22. Despite this moderation, the operating revenue was up by 39%, indicating a strong yield from the loan book which stands at $931M.
Cost Reduction Initiatives: Wisr implemented cost reduction activities in Q4FY23, including a reduction in headcount, resulting in a 21% decrease in operating expenses compared to the previous quarter. This initiative is part of Wisr's broader strategy to streamline its operations and focus on profitability.
Net Interest Margin (NIM) and Loan Unit Economics: The company is positioned for a medium-term delivery of a Net Interest Margin (NIM) of approximately 6%. This is anticipated to deliver strong profitability at scale. The current business shows a NIM of 3.75%, with a target run-rate NIM of 5.75%, indicating a strategic focus on increasing the profitability of the loan book.
Credit Loss Management: For FY23, the total net write-off figure was 1.58%, slightly over the target of 1.50% per annum. The increase in net loan write-offs was attributed to a larger loan book and seasonal trends. However, when adjusted for the lower relative loan book growth, net write-offs would be 1.27% for FY23, showing effective credit loss management under adjusted growth conditions.
Additionally, the update outlines that Wisr's dual platform strategy has maintained consistent growth, and their strong funding platform includes significant committed funding and successful ABS transactions, providing a stable foundation for future growth.
In conclusion, Wisr’s strategic focus on profitability, prudent cost management, loan book quality, NIM expansion, and customer engagement through its Financial Wellness Platform has delivered positive outcomes in FY23.
I recently caught up with Andrew Goodwin CEO:
On the factors leading to the 39% increase in revenue :
"Two key things - the loan book went from $780m to $931m v pcp, and the yield on the new loans increase 200-300bps."
On expense management and decreasing costs:
"Obviously a very hard decision to make .. we very much had to rightsize the business."
On moderating growth:
"We did grow for 25 consecutive quarters...we have responded to the macro conditions in which we find ourselves, and part of that is moderated growth...we are absolutely ready to scale back up when we take a view that conditions have stabilised."
On growth v Profit:
"I think it's a great opportunity to focus on efficiency.. It's really a chance to look in and actually say how can we do things more efficiently and more with less.. "
On bad debts:
"The loan book has performed well pleasingly in line with expectations, the key risk is unemployment. "
On product development:
"Over time I think there is scope for additional financial wellness products.."