Wealthsimple Turns Profitable After 10 Years

As Wealthsimple celebrates its tenth anniversary, the Canadian financial platform has revealed for the first time that it is profitable, reporting substantial growth in both revenue and assets.

Originally launched as a robo-advisor, Wealthsimple has steadily expanded its product lineup over the years, adding trading, banking-style services and other financial products designed to compete with established banks and brokerages.

Today the company offers a broad suite of services — from commission-free trading to tax services and, most recently, mortgages — and says it now manages more than $50 billion in client assets, roughly double the amount it held a year earlier.

“That growth benefits the business because it creates a more diversified, resilient revenue mix and deeper client relationships,” said CEO Michael Katchen in an interview.

Wealthsimple reports Q2 revenue up 88% year-over-year

The private company, in which Power Corp. of Canada and related entities hold a controlling interest, reported second-quarter revenue of $129 million — an 88% increase from the same period last year. Wealthsimple now serves more than three million customers across its platform.

Management says the business has been profitable since the second quarter of the prior year, although executives declined to disclose precise profit figures. Skeptics long questioned whether a low-fee model could be profitable at scale; Katchen says the company’s recent results demonstrate that it can.

“The important thing is that we’ve proven our business model can be profitable,” Katchen said.

Growing pains: layoffs and strategic refocus

Wealthsimple’s expansion has included difficult decisions. In 2022 the company reduced its workforce by about 13% as markets tightened. It also scaled back international ambitions, exiting the U.S. market after selling its U.S. book of business to Betterment in 2021 and divesting its Wealthsimple for Advisors business to Purpose Advisor Solutions to concentrate on Canadian consumers.

Valuation has also moderated from peak levels. Power Corp., which reported a 55.1% undiluted equity interest in Wealthsimple as of June 30, estimated the fair value of its holding at $1.5 billion, down from $2.1 billion in 2021.

Despite those shifts, Wealthsimple has continued to grow assets across its core areas — wealth management, trading and brokerage services, and banking. The expansion of banking features last year contributed roughly $20 billion in net deposits, reflecting stronger consumer adoption of its deposit and payments offerings.

“We’ve been excited about offering a more complete set of products to our customers,” Katchen said.

Expanding products: mortgages, credit and insurance

Wealthsimple has continued to diversify its product set. After acquiring SimpleTax in 2019 and integrating tax services, the company launched a mortgage offering earlier this year and plans to roll out additional credit products and insurance solutions.

These moves are part of a long-term strategy to position Wealthsimple as a full-service alternative to traditional financial institutions, with an ambition to grow assets under administration to more than a trillion dollars. While Katchen initially targeted that milestone within 15 years of the company’s founding, he now projects the goal will be reached within 20 years.

“We’re not done yet,” he said. “We’ve got a long way to go.”

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