The Wisr Ltd (ASX: WZR) share price has surged 10.4% today after the neolender reported a 38% month on month loan growth yesterday. In its fourth quarter report, Wisr revealed it had delivered a number of growth records for the quarter, including a 50% increase in revenue compared to 3Q FY20. Despite the positive news, the Wisr share price actually edged lower yesterday before today’s early rally.
What does Wisr do?
Wisr is an online lender that originates personal loans of $5,000 to $60,000 to Australian consumers. The company brands itself as enhancing customer financial wellness through a network of products that allow for low cost customer acquisition. These include an app, a workplace financial wellness program, and a debt reduction tool. The Wisr ‘ecosystem’ has continued to attract customers throughout the coronavirus pandemic with the business performing above management expectations.
What did Wisr report?
Wisr reported record loan originations of $19.1 million in June. This was up 38% on May’s $13.8 million. The loan origination rate is now 45% above pre-COVID levels, with weekly settled loan volumes exceeding $5 million for the first time. Wisr switched to a warehouse funding model late last year which provided for an approximate tripling of average margin compared to previous loan unit economics. This delivered $2.9 million in operating revenue in 4Q FY20, a 50% increase on 3Q FY20, and a 188% increase on 4Q FY19.
At 30 June, Wisr had originated $244.9 million of loans, including $42.2 million in new loans originated in 4Q FY20. The loan book is continuing to grow in quality metrics as well as size. In 4Q FY20 the average credit score was 723 versus the Australian average of around 600. The company reports that it is strongly capitalised with $40 million in cash and liquid loan assets at 30 June 2020.
What is the outlook for Wisr?
Wisr took a prudent approach to the onset of coronavirus, tightening credit policy and reducing risk tolerance. Nonetheless, the company achieved significant loan origination growth and revenue uplift in the fourth quarter. Some 239,000 Australian have now been introduced to Wisr’s ecosystem.
CEO Anthony Nantes said, “our unique Wisr Ecosystem strategy provides us with a strong platform to scale and grow, as well as enabling us to really help our customers, which we will continue to do during these rapidly changing times.” Wisr says its agile fintech business model has the company well positioned for growth through current challenging conditions, setting the company up for a strong revenue growth trajectory over coming quarters.
At the time of writing, the Wisr share price is trading at 26.5 cents which is a 39% increase year to date.
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Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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