Lessons From The Wirecard Case

Taking A Closer Look At The Big Picture

A magnifying glass over a printed spreadsheet.
Digging deep into the numbers — based on Pawel Michalowski from stock.adobe.com

Is Fraud Detectable?

Last year on June 23 we were having our usual coffee break. At that time Covid rules seem to be changing daily. However, we were not discussing how long we would still be able to come into the office. Instead the business news were the chosen topic. The day before Wirecard had made headlines for reporting nearly two billion missing and their stock price had plumbed significantly.

Was this foreseeable?

There was a lot of noise around the case and various warnings were issued over the years. Unfortunately, most of the people involved had economic interests and were likely biased. An objective answer should not rely on any third party.


At a first glance the revenue numbers look perfectly. The revenue is growing exponentially. A curve any investor dares to see. However, they went even further. Between 2009 and 2017 their growth factor increased exponentially as well.

  1. Companies typically depend on external factors they do not control. Like the overall economy, the labor market, changes in regulation or a global financial crisis. Nothing is visible here.
  2. Startups grow in phases. Going to a new market or offering a novel product can restart a viral loop that leads to hyper-growth and catapults one to new heights. Compared to examples like Paypal, Facebook or LinkedIn they had a very smooth ride.


While they were growing with 20%+ each year, they were actually making money. For every single year. Furthermore, they were also able to grow their margin at the same time. This looks like perfect execution.

  1. High-potential areas like mobile-payment got a one-time investments of barely 7% of their EBITDA. That was neither enough to turn the needle nor long-term enough to lead to success as developing new products is typically a multi-year process. It looks more like a distraction than following a business opportunity.
  2. Margins normally drop during high growth phases. There is just no time to optimise for them. Instead they were able to increase them.


In their annual reports they were always predicting a single KPI for the ongoing year: the EBITDA. The following charts compares the median of the predicted range with the actually result they reported a year later.

  • For the first five years they were able to perfectly predict the EBITDA.
  • For the next five years they slightly under predicted the value but only to issue ad-hoc announcements to move the prediction a tiny bit up.


Our coffee break turned out to be one of the longest in June. But the results were just stunning:

  • They made irrational moves by pleasing investors instead of trying to grow faster.
  • They were able to perfectly predict the future over many years.

Lying is intellectually difficult.

People prefer simple settings to avoid getting caught in the complexities of live. The plan they followed was therefore relatively easy: to please investors they would emulate exponential revenue, slowly bump-up the margin and report more-and-more earnings every year.

Think deeper and start earlier to create novel solutions from scratch. Writing here from the Fintech trenches while solving the puzzle to pay.