Digital Fintech Lending And AI Automation Will Open New Markets

Key Takeaways

• Digital lending focus, automation, and expanded broker partnerships drive sustained customer growth, retention, and margin improvement versus traditional banks.
  
• Investment in AI, diverse financial products, and optimized funding positions Wisr for long-term revenue growth and increased profitability.
  
• Intensifying competition, funding risks, and market shifts toward alternative credit threaten Wisr's margins, growth, and ability to sustainably differentiate in a commoditizing landscape.

Catalysts

Engages in the lending business in Australia.

• Wisr is positioned to capture outsized loan origination and loan book growth as consumer adoption of digital, fintech-driven lending outpaces traditional banks, evidenced by a 101% increase in originations FY'25 and forecasted continued double-digit growth; this is expected to materially accelerate both revenue and earnings.
  
• Increasing demand for mobile-first and transparent financial solutions, especially among younger demographics, is driving high NPS and engagement within Wisr's proprietary platform and app, supporting strong customer retention and driving down credit losses-positively impacting net margins.
  
• Significant investments in automation and AI-driven loan processing (80% of loans now auto-approved) are delivering clear scale benefits and operational leverage, driving cost-to-income ratio reductions and supporting sustained improvement in profitability and EBITDA.
  
• Expansion of distribution through the broker network (currently servicing ~50% of Australian brokers) and optimization of funding cost by adding new warehouse capacity, such as the Barclays facility, provide ample runway for growth in loan volume and ongoing margin improvement.
  
• Future-laid plans for diversification into adjacent financial products and non-lending revenue streams, combined with the company's strong brand resonance and financial wellness positioning, will expand the addressable market and support multi-year revenue and margin growth.

Wisr Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Wisr's revenue will grow by 89.7% annually over the next 3 years.
• Analysts assume that profit margins will increase from -28.1% today to 4.2% in 3 years time.
• Analysts expect earnings to reach A$7.5 million (and earnings per share of A$0.01) by about September 2028, up from A$-7.3 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting A$8.9 million in earnings, and the most bearish expecting A$6 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 25.7x on those 2028 earnings, up from -6.7x today. This future PE is greater than the current PE for the AU Consumer Finance industry at 11.5x.
• Analysts expect the number of shares outstanding to grow by 0.21% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 11.53%, as per the Simply Wall St company report.

Wisr Future Earnings Per Share Growth

Risks

• Wisr's heavy reliance on third-party warehouse funding and ABS structures exposes it to refinancing risk and potential increases in funding costs if credit markets tighten or sentiment shifts, which could compress net margins and negatively impact future earnings.
  
• Rising digital competition-both from established global fintechs and emerging local players-could increase customer acquisition costs and challenge Wisr's ability to maintain its current loan origination growth rates, directly affecting revenue and profitability over the long term.
  
• Continued commoditization of personal lending products-including through open banking and regulatory initiatives-may erode pricing power, making it more difficult for Wisr to differentiate and sustain high yields or favorable net interest margins as the market matures.
  
• Demand for traditional personal loans may stagnate or decline over time as consumers increasingly adopt alternative credit models such as "buy now, pay later" solutions, potentially reducing Wisr's core revenue pool and limiting long-term loan book growth.
  
• Despite recent automation and operational efficiency gains, Wisr's limited scale compared to large incumbents means higher relative funding and tech investment costs, which could restrict future margin expansion and slow earnings growth if operating leverage fails to keep pace with revenue increases.

Valuation

• The analysts have a consensus price target of A$0.098 for Wisr based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of A$0.13, and the most bearish reporting a price target of just A$0.07.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be A$176.2 million, earnings will come to A$7.5 million, and it would be trading on a PE ratio of 25.7x, assuming you use a discount rate of 11.5%.
• Given the current share price of A$0.03, the analyst price target of A$0.1 is 64.5% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.