• New Loan Originations: Up 66% to $170.8 million.
• Loan Book: Decreased by 2% to $757 million, but growth resumed in Q2.
• Revenue: $45 million, a 1% decline from the previous half.
• EBITDA: Positive $0.8 million, a 0.6% improvement over the prior half.
• Portfolio Yield: Increased by 69 basis points to 11.2%.
• Net Interest Margin (NIM): Increased by 42 basis points to 5.75%.
• 90-plus Arrears: Improved from 1.58% to 1.5%.
• Net Losses: Reduced to $7.2 million.
• Expected Credit Loss (ECL) Provision: $22.5 million, down from $24.5 million.
• Operating Expenses (OpEx): Increased by 6.3% to $13.9 million.
• Undrawn Funding: $168 million available, with $153 million in warehouses.
• Cash on Balance Sheet: $51.9 million, with $18 million unrestricted.

• Warning! GuruFocus has detected 9 Warning Signs with ASX:WZR.

Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Wisr Ltd (ASX:WZR) reported a 66% increase in new loan originations, reaching $170.8 million, indicating strong growth momentum.
• The company achieved EBITDA profitability of $0.8 million, showcasing improved financial performance.
• Wisr Ltd (ASX:WZR) has expanded its portfolio yield and net interest margin (NIM), enhancing revenue potential.
• The business is well-capitalized with significant free cash and undrawn warehouse capacity to support future growth.
• Automation improvements have led to 78% of loan applications being automatically approved, increasing operational efficiency.

Negative Points

• The loan book experienced a slight decrease of 2% to $757 million, reflecting a transitional phase.
• Revenue saw a slight decline of 1% due to lower average loan balances, despite improved yield.
• Operating expenses increased by 6.3% to $13.9 million, reflecting the investment needed to support growth.
• The company has not yet reached its target cost-to-income ratio, which is expected to improve with further scaling.
• Despite positive trends, the company remains exposed to macroeconomic risks such as unemployment and interest rate fluctuations.

Q & A Highlights

Q: How does the recent reduction in interest rates impact Wisr? A: Andrew Goodwin, CEO, explained that the interest rate reduction is beneficial as it indicates inflation is under control, which should positively impact consumer cost of living. The combination of lower rates and strong employment boosts consumer sentiment, leading to increased loan demand. Lower rates are generally favorable for small-cap equities, benefiting Wisr.

Q: What are the key drivers behind the 66% increase in loan origination, and do you expect this momentum to continue? A: Andrew Goodwin, CEO, attributed the growth to Wisr's small market share and recent return to growth. The secured vehicle loan (SVL) market is larger, and Wisr expects to gain more market share in this area. The company employs a multichannel distribution strategy and focuses on improving customer experience through automation, which supports sustainable growth.

Q: Can you provide insights into the growth in EBITDA and the increase in OpEx? A: Matthew Lewis, CFO, highlighted that stronger loan unit economics and improved loss performance drove EBITDA growth. Despite a 6.3% increase in OpEx, origination growth was substantial at 66%, indicating operational leverage. As the loan book grows, Wisr expects further improvements in cost-to-income ratios.

Q: Can you elaborate on the automation initiatives at Wisr? A: Andrew Goodwin, CEO, discussed the focus on technology investment during moderated growth settings. Automation of credit decisioning increased from 66% to 78%, and verification process automation rose by 134%. Wisr uses AI-driven platforms and proprietary scorecards to enhance decision-making, positioning the company well for scalable automation.

Q: What is the anticipated timeline for reaching a $1 billion loan book, and what are the plans for capital strategy? A: Matthew Lewis, CFO, stated that while no specific timeline is provided, Wisr is set up for rapid growth and expects to reach a $1 billion loan book in the relatively short term. The company is well-capitalized with no plans to raise additional capital, focusing instead on leveraging existing resources and exploring a third warehouse for funding diversification.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.