Q4 2021 Remitly Global Inc Earnings Call
Thank you for standing by and welcome to the <unk> fourth quarter 2021 earnings Conference call. At this time, all participants are in listen only mode.
I'd now like to introduce your host for today's program Stefan So Dean Vice President Investor Relations. Please go ahead.
Good afternoon, and thank you for joining us for <unk> fourth quarter 2021 earnings call.
Joining me on the call today are Matt Oppenheimer, <unk> co founder and Chief Executive Officer a permit.
Zander Morgan, our Chief Financial Officer.
Our results and additional management commentary are available in our earnings release, which can be found on the Investor Relations Investor Relations section of the website at IR Dot <unk> Dot com.
Please note that this call will be simultaneously webcast on the Investor Relations section of the company's website.
Before we start I would like to remind you that we will be making forward looking statements within the meaning of federal securities laws.
<unk>, but not limited to statements regarding <unk> future financial results and management's expectations and plans for the business.
These statements are neither promises nor guarantees and involve risks and uncertainties that may cause actual results to vary materially from those presented here you should not place undue reliance on any forward looking statements.
Please refer to our earnings release and SEC filings for more information regarding the risk factors that may affect our results any forward looking statements made in this conference call, including responses to your questions are based on current expectations as of today and <unk> assumes no obligation to update or revise them, whether as a result of new.
<unk> or otherwise, except as required by law.
Following presentation contains non-GAAP financial measures for a reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP metric. Please see our earnings press release, which is available on the IR section of our website now I will turn the call over to Matt to begin.
Thank you Stephanie and thank you all for joining us today for our fourth quarter earnings call.
Before I begin I want to take a moment to acknowledge the FERC breaking events in eastern Europe .
We see the pain of those who are affected.
<unk>, Inc. For the lives lost and the implications of this crisis.
There's no easy way to transition now to our prepared remarks, but it is important to me that we pause and make space for acknowledgment.
In view of the situation.
With that I'll now turn to our results for Q4.
<unk> is a mission driven company focused on transforming the lives of immigrants and their families.
Regarding the most trusted financial services on the planet.
We're committed to making business in investment decisions that are rooted in customer centricity.
Performance in the fourth quarter demonstrated that our customer led approach is attracting more and more loyal customers, including a 50% increase in active customers compared to a year ago.
Additionally, we saw our approach drive full year revenue growth of 78%.
$459 million above the top end of our guidance range.
In our last call we discussed the four pillars that allow us to uniquely serve our customers and gain their trust and loyalty by delivering operational excellence and a seamless user experience. These differentiated pillars that drive customer value are our mobile centric platform, our global network of funding in disbursement partnerships.
Our localization at scale and our data driven proprietary technology stack.
I covered the FERC two pillars in our last call. So I'll begin this call with our third pillar, which is localization at scale.
We operate under the principle that remittances are global but customers are very much level.
Understanding our customers at a deep local level and delivering localization at scale remains at the center of our corporate strategy and is a critical differentiator for us in the marketplace.
Our focus on marketing pricing and offering customer service in a locally relevant way, including offering our service in 14 languages.
<unk> has consistently driven over 90% revenue retention.
Last year, we expanded our global network with more than 700, New corridor, bringing our total corridor served over 2100.
We are using the same localization playbook and these new corridor and we believe our deep cultural insights and rigorous analytics driven by more than 10 years of proprietary data provide us with a unique market advantage.
And help build customer trust as we pursue this expansion.
Additionally, unlike remittance companies that weren't broad from the very start we have a long list of geographies that we have not yet launched and we have a clear roadmap to do so providing us with predictable and ample growth opportunities for the years to come.
Pricing is also a key part of localization and has been an additional strategic differentiator for remittance.
We drove strong pricing in the fourth quarter with average revenue per active customer up 13% year over year are focused on delivering what our customers value a seamless user experience and peace of mind that their money will make it home safely at a fair price.
We aim to always provide a fair price not the lowest price.
Driven by our sophisticated and data rich pricing engine.
We delivered this by cultivating and incorporating a deep understanding of local payment and pricing norm sender and recipient expectations and global foreign exchange rates into our services for.
For example, our pricing reflects local preferences around transaction fees and foreign exchange spreads, which gives us significant flexibility to dynamically and fairly priced or foreign exchange rates, depending on market conditions.
Overall, the goal of our pricing strategy is not to provide the lowest priced it is to optimize for long term cumulative revenue net of transaction expenses, the key input into lifetime value.
Now onto our fourth pillar, our data driven proprietary technology stack.
<unk> has built a range of proprietary technology systems, including our marketing platform.
Core remittance transaction engine, our risk systems, and our financial platforms. These all give <unk> a competitive advantage both from a cost and a customer experience standpoint.
Let me Leverages data and machine learning to improve our risk systems.
Corridor level unit economics, foreign exchange management pricing and many other aspects of the business while.
But I can share a specific example, each part of this proprietary technology stack and data driven approach I'll go deeper into just one today and Thats our risk systems.
Like all any transmitters remotely has the complex task of preventing bad actors from using our platform. While also protecting a seamless user experience for good customers.
Machine learning data and analytics help us automatically complete the vast majority of transactions instantly.
And as a result in 2021, we were able to significantly reduce our customer sidelined right and that is the rate at which we pause the customer's transaction to collect additional information by doing that we provided tens of thousands of customers per week, a more seamless user experience.
This is just one example of our sophisticated technology stack that ultimately drive additional loyalty to remotely while keeping our systems compliant safe and secure.
Now, let's talk about how we're driving sustainable growth for the years to come remotely really three growth drivers have been and will continue to be first reinventing the remittance experience, which allows us to acquire customers and strong unit economics second expanding remotely around the globe.
Yeah, our corridor proven corridor expansion playbook, and third investing in new products and services outside of remittances.
On the first we will continue investing in reinventing the experience for our customers, which fuel new customer acquisition at strong unit economics and high retention.
These investments are paying off.
We are winning market share with 50% active customer growth and an overall remittance market that is growing in the single digits. We.
We will continue to invest efficiently and improving the remittance customer experience to maintain this outsized growth with.
We will generate even more customer loyalty.
Our lifetime value to customer acquisition cost ratio in 2021 remained over six X over a five year period at a corridor level are data driven and proprietary marketing platform enabled us to invest the appropriate customer acquisition costs.
For the predicted lifetime value, resulting in strong unit economics, and we plan to invest at the high ROI to drive our sustainable long term growth.
Second we will continue investing in our geographic end use case expansion via our proven corridor expansion playbook and by leveraging our global network.
Our business outside the U S delivered $120 million in revenue in 2021 up from $58 million in.
In 2020.
Yet it was only 26% of total revenue in 2021 as.
As we invest in markets, we've recently launched as well as new markets we.
We can drive sustainable long term growth via these investments. We also continue to invest in building out our global disbursement network, which has expanded our total addressable market with additional use cases for example, our remittance for developers product allows us to take advantage of this network and embed remotely and more places via channel partnership.
And offering our network to other businesses.
Finally, we are investing in additional products across financial services, where we can leverage our world class mobile centric platform to solve other problems for our customer base, our customers are often misunderstood and overlooked by the financial services industry, creating a large opportunity for those.
It takes the effort to truly understand them and solve their unique problems are.
Our mobile centric platform, our scale and our data driven understanding of customers allows us to design new products that effectively meet immigrants specific needs.
We discussed passbook, our digital spending account design element in the most depth and we will continue to invest in this product. Yet. We are also investing any wide range of new services that meet immigrant unique pinpoint while we don't expect these products to contribute significantly to top line revenue. This year, we believe they will mean.
Meaning we contribute to sustainable growth and customer value in the years to come.
As we look ahead scale.
Further fuels and defend our business increasing scale as a digital first company will give us more capital and data to invest in our risk systems disbursement network pricing and core transaction engine further differentiating our product and building peace of mind with customers around the globe.
All of this improves the customer experience and creates a compelling flywheel the compounded growth for our business.
This is why we often say we are just getting started and it's never felt more like this than today.
Before I turn the call over to Suzanne I want to thank our customers and employees, who have supported us each step of the way and help deliver our strong financial results. We are incredibly excited about our expectations for high growth at scale in 2022 and beyond our customer basis.
And incredibly loyal and we are honored to be their platform of choice everything we do centers around earning and keeping their trust and that is what will drive our long term financial performance with that I'll turn the call over to Suzanne.
Thank you to reiterate matts comments, we delivered a very strong Q4, which capped off a strong 2021 I'm going to structure my comments today around the high level drivers of our fourth quarter performance and will then provide more detail on our outlook for 2022.
As a reminder, I will discuss non-GAAP operating expenses and adjusted EBITDA in my remarks.
These metrics exclude noncash items, such as stock based compensation and the donation of common stock in connection with our pledge 1% commitment period.
Reconciliations to GAAP results are included in the earnings release.
Now, let's turn to our fourth quarter results.
Revenues grew 69% to $135 million above expectations, driven both by strength in active customer growth and average revenue per active customer.
<unk> customers grew by 50% year over year to $2 8 million.
And the 64% year over year to approximately $6 billion.
Our active customer growth is driven by our best in class mobile platform.
Localized customer experience and by investments in acquiring new customers at strong economics.
Five year LTV to cap for 2021 with over six times and the strength in our unit economics underpinning the investments, we're making in new customer acquisition.
As we've indicated we will be investing aggressively with a priority on driving long term profitable growth with an appropriate paybacks guardrails.
We are expanding marketing channel continuously testing product and incentive options and finding more efficient ways driving this growth.
We're seeing success, even in a market, where our customer acquisition costs have returned to more normalized levels compared with unusually low cost during the early months of Covid led many advertisers pulled out of the distillate market.
In addition to new customers are at the customer growth was also driven by strong customer retention.
Relationships, we foster with our customers the repeat nature of their spending behavior and our investments in providing easy to use mobile centric platform with a world class Disbursement network have resulted in strong revenue retention rates over 90%.
We have seen significant success in driving high engagement through personalized customer onboarding product education campaigns and lifecycle marketing.
Our investments have driven higher recurring revenue stream with high visibility and predictability.
Our average revenue per active customer increased 13% year over year to $48.
The increase was primarily driven by active customers transacting more frequently that's more than half the customers transacting multiple times a month, along with an increase in revenue per transaction.
This demonstrates the stability, we're seeing in pricing and a differentiated value we're delivering for our customers.
The strong growth.
At revenue practice, that's very proud of our year over year revenue growth of 69% in the fourth quarter.
Turning to the cost side of the P&L, but we remain focused on disciplined investments in growth, while also leveraging our increasing scale trans.
Transaction expense was $56 million or 42% of revenue.
This improved over 300 basis points from 45% of revenue in Q4 of last year due to lower fraud losses, more direct partner integrations and better terms of partners driven by increasing scale.
We expect to see a modest ongoing improvement in 2022, and this will continue to benefit from the factors I just mentioned, although we expect some variability quarter to quarter as we typically see higher slightly higher transaction costs in Q1.
Customer support and operations expense, which primarily includes people expenses related to worldwide customer support a $13 million up 71% year over year, driven primarily by transaction volume.
Best in digital and human customer support 14 languages to give our customers complete peace of mind.
Our contact centers and Central America, the Philippines, India, and Europe delivered 24 by seven O close connections to our customers home countries and languages.
Marketing expense in Q4 was $37 million up 64% year over year, driven primarily by higher direct marketing spend focused on new customer acquisition.
As I've mentioned before our marketing expenses are seasonally higher in the fourth quarter as they focus on customer acquisition during the holiday period.
Priority is driving quality, new customer growth given the high lifetime value and the high retention, we have seen across our customer cohorts.
Fully expect these investments to drive revenue growth and profitability in future quarters.
Technology and development expense was $16 million up 46% over Q4 of 2020, driven by increased headcount and personnel related expenses related to enhancing our product platform and security.
As we invest in our platform, including extending our offerings improving the user experience and driving geographic expansion, we expect technology and development expense to increase as a percentage of revenue in 2022.
G&A expense was $20 million up 121% year over year, primarily due to increased head count and human resources finance and legal additional public company operating costs and a year over year increase indirect taxes.
Turning to the bottom line Q4, GAAP net loss was $17 million compared to a $9 million net loss in the fourth quarter of 2020.
The increase in net loss was primarily due to $7 million of incremental stock based compensation expense.
Adjusted EBITDA.
Excluding stock based compensation expense was negative $7 million in the fourth quarter of 2021 as compared to negative $6 million in the fourth quarter of 2020.
Our adjusted EBITDA performance was above expectations as we recognized stronger than expected revenue fueled by growth in active customers and transaction frequency along with scale benefits on the transaction and technology and development expense lines.
Turning to our balance sheet working capital at the end of the quarter was <unk> <unk>.
<unk> $466 million.
Cash on our balance sheet of $403 million a.
Our balance sheet provides us significant flexibility to execute on our growth strategy.
Looking ahead to 2022, we expect revenue to be between 605 and $615 million.
It reflects a year over year growth rate of 32% to 34% and.
In 2022, and we remain focused on growing active customers through enhanced loyalty of our existing customers.
Ongoing investment and the acquisition of new customers, both existing and new corridor is the.
The normal seasonality of those trading so Q1 will show strong growth over last year.
We expect first quarter revenue will be relatively in line with fourth quarter 2021 revenue.
Covid changed the world to accelerate the conversion of advances from sending and receiving a physical location to increasingly mobile first that.
That acceleration drove customers to remotely and once these customers use remotely and experienced everything we do they typically stay with us.
As Covid hopefully receipts, we assume the rate of conversion to global slowdown, although we note that the global conversion to digital will continue and we expect that our focus on a seamless mobile customer experience and localization at scale will continue to drive preference for our product.
Turning to profitability in 2022, adjusted EBITDA is expected to be between negative 40 and negative $30 million.
Naturally we will experience a full year cost of being a public company.
But more importantly, as Matt said 2022, and Europe structure of investment in the business.
When the expected high return of investing in new customers expanding use cases and building new products. We will continue to invest our strong unit economics.
This will build long term customer and shareholder value.
With that Matt and I will open up the call for your questions operator.
Certainly ladies and gentlemen, if you have a question at this time. Please star then one on you touched on telephone. If your question has been answered and you'd like to remove yourself from the queue. Please press the pound key our first question comes from the line of Hanson.
J P. Morgan your question please.
Yeah.
Thank you so much great growth here, great to see it.
Couple of questions. If you don't mind, just thinking about the outlook.
For 'twenty, two any change in thinking around volume versus <unk> <unk>.
Expansion of its drivers to get to the 32% to 34%.
I'm curious if there's any change there.
Hey, Tien tsin, good that's good to hear from you.
So in terms of volume.
We don't.
Run the business based on volume, primarily and we do think that <unk>.
It was a driver of the outperformance in Q4, and we do think that increasing <unk>, we will continue to be a driver for it for the business going forward.
We're seeing really exciting trends in terms of more transactions per customer and really solid coke customer cohort behavior.
And so we would expect going forward to see some modest increase in <unk> in 2022 as well.
Good good I'm glad to hear that so just a quick follow up on us as Eddie mentioned.
Q1 should look a little like Q4, I guess the last couple of years I know pandemic, it's tough to read too much into it but you did see a little bit of sequential.
Revenue improvement.
First quarter versus fourth quarter, I know, we've got geopolitical things going on in FX volatility and omnicom's grading. So just trying to better understand what's what's considered here on your call out for the first quarter.
Yeah, Yeah. It is.
There's a lot of moving parts here, but Q4 is very seasonal permanently as many customers returned to send over the holidays and Conversely, Q1 does typically represent a slow season.
We still think it'll be a very strong quarter with high year over year growth and after that point revenue will continue to increase sequentially each quarter. After Q1, as we benefit from new customer acquisition, and the high retention and engagement of our existing customers.
Got you got you nice work guys. Thank you.
Yeah.
Thank you. Our next question comes from the line of Andrew Schmidt from Citi. Your question. Please.
Hey, Matt Suzanne S. Stefan Great results, you're going to see the durability of the model come through.
I just wanted to dig in a little bit on the just the sort of the enhanced engagement you've been seeing.
Is it is it more a function of newer cohorts coming on.
Transacting more and generate more <unk> is it is it.
Expansion across space as a whole just curious to get more color on just the increased engagement on the platform because it feels like that's it.
Sure.
Clearly a single sector in fourth quarter, then more significant in 2022 than we previously thought thanks a lot.
Yeah. Thanks, Andrew good to hear from you, we didn't see more customer activity from existing customers, both old and new compared to historical patterns. So I wouldn't say, it's isolated to a certain cohort or anything like that.
And in general what we're seeing is as I mentioned more transaction frequency and I think we're benefiting.
From a few programs and we have some customer engagement programs are informed by the analytics, we're able to collect.
And then product enhancements as well the impacts loyalty and encourage repeat behavior, Matt mentioned, the one around sideline rates as one example.
We also are focused more on direct integrations as an example that has a better customer experience.
And so we're also seeing higher revenue per transaction. In addition to the transaction frequency.
Driven by pricing changes et cetera. So.
I don't think Theres, one isolated factor, but the most significant factor is that more transactions per customer.
Yes.
Very helpful. I appreciate that and then good.
See the strong unit economics illustrated in 2021, as we think about 2022.
Just maybe some comments about how youre thinking about customer acquisition costs on a like for like basis and.
Is there any have you seen any increase in competitiveness there obviously.
Little bit of informational advantage here in terms of customer acquisition, but just curious what the outlook is for for CAC heading into 2022.
Yeah, Hey, Andrew.
Good to see and appreciate the question I think that if.
If you look at our LTV to CAC ratios, which we window. It five years, even though a lot of customers end up staying with us for longer than five years.
Continues to be at that six X LTV to CAC ratio. So for every dollar we're investing we're getting $6 back in our five year window and I think that that gives us an enormous opportunity to continue to invest in the business at high ROI.
And we've seen stability around some of the overall customer acquisition cost and unit economics broadly, but we want to be aggressive there because we think.
We have approximately 1% of the overall market, we've got great unit economics, and we've got a market that's rapidly shifting digital and a clear ROI for capturing that shift and continue to grow the business in the long term.
Got it. Thank you very much Matt good results guys I appreciate the comments.
Thanks, Andrew.
Our next question comes from the line of will Nance from Goldman Sachs. Your question. Please.
Hey, guys. Good afternoon. Thanks for taking my questions I just wanted to ask on the guidance that you've seen really nice revenue momentum over the last couple of quarters and so far your guidance has worked out to be kind of conservative I just want to know if you would have outperformed your guidance over the course of the year, where would you kind of expect that.
Most likely come from is it higher ARPA is is it new products is it just better customer growth and then second how do you think about letting any outperformance flowed to the bottom line versus reinvesting in growth initiatives.
Yes, I'll start answering that and hey, I. Appreciate the question I'll start and then I'll turn it over to Susanna with any additional detail, but I think we're excited and really proud of to be guiding to $605 million to $615 million up 32% to 34% year on year, which.
As rapid revenue growth for our stage and size. It's also early in the year. So we think it's the right guidance on an annual basis, and we have high confidence in the guidance that we're providing especially when you put into context, how we think about our guidance we have over 90% revenue retention.
As I mentioned and we do a lot of rigorous forecasting at the cohort level. So we have clear visibility into Q1, as Suzanne mentioned, which is up significantly year on year.
We're confident in the guidance as we as we get later into the year in terms of the reinvestment and where outperformance could come from I think the three areas I mentioned of continuing to invest at the right unit economics, primarily on customer acquisition.
To expand geographically and then adding additional products are the three areas that we want to invest and those three areas have a portfolio of timelines of the returns and so to the extent we are adding more new customers. This year I think that that could.
That has opportunities for outsized growth.
And then similarly with geographies new products are going to be further down the road, but we like the portfolio approach. So we can drive the sustainable rapid growth for the years to come not just in 2022.
We will also appreciate all the color and then maybe if I could just ask a question on the transaction margins and just maybe some more intermediate term thoughts on bottom line, you're seeing pretty good year over year improvement in the transaction margin could you just kind of talk about the biggest couple of pieces that are driving that and how much more progress we can see.
On better transaction margins, and then more broadly on a higher level when the markets become increasingly focused on profitability in this market.
What are you guys thinking in terms of timeline towards profitability and has anything changed about the thought process around investing just given everything that's going on in the market.
Yes. So it's Alastair asked the question on transaction margins that we have seen some nice improvements in transaction margins over time and generally the factors that are contributing to that or were seeing we have more scale. So we can negotiate better rates with some of our partners for continuing to do more direct.
Integrations with which both have a better customer experience and our lower cost and then the more data we have to feed into our loss models the more accurate those models.
As well, which is one of the other transaction expenses.
So we would expect to continue to see some modest improvements in transaction margins.
Over time, as well, which is good to see that leverage in the business model.
Yes, I can take the question around profitability well I think.
One of the things that I really appreciate about our business is the leverage that we have already started to see in it and you can look at that if you look again at our even our marketing line item for 2021 as a percentage of the amount that we're actually spending on an adjusted EBITDA basis.
We're investing in growth because we see the kind of <unk> LTV to CAC ratios that we mentioned we're investing in growth in the other two areas, new geos and new products.
Because of the size of the market and because.
We want to deliver long term growth such that when we.
Eventually think about profitability down the road, it's a much larger business.
Has higher absolute profitability and so I think the timelines for that depend on those three investments that we make and how the arc of those investments go but the leverage that we've already been able to produce in the business the inherent profitability that exists within remittances and the kind of 20% long term adjusted EBITDA guidance does not change. It's just about the investments, we're making again for the <unk>.
Long term.
Got it I appreciate all the color. Thanks for taking my questions guys and nice results.
Thanks, a lot.
Thank you. Our next question comes from the line of Bob Napoli from William Blair. Your question. Please. Thank you very much for taking the question.
Nice quarter.
That's what the guide was pretty good to start the year, but.
Any.
Color you can give on the <unk>.
You called out the LTV to CAC ratio, but the marketing cost per cost per account.
Cost of adding accounts are you.
What kind of.
Changes are you seeing there are.
You are still obviously comfortable you went through unit economics quite a bit but are you seeing any.
Changes in the unit economics or the cost per account.
Thanks, Bob good to hear from you. So in terms of tap in general you know we have talked previously about during Covid tap was it unusually low levels and it has has recovered Q4, we do see some seasonality in <unk> as well just a more competitive advertising landscape during the holidays.
Typically.
I would say despite that obviously our unit economics remain remained very strong at over six times LTV to CAC.
And so we feel confident that we should definitely continue to invest in marketing and drive.
Can drive new customer growth as well.
Thank you and then any.
Can you give any color on.
Any business do you have around Russia, Ukraine or are you affect at all by the.
Some of the payment systems, there are changes in swift or or anything.
Like that and I just had one short follow up.
Thanks, Bob.
The question I think first and foremost as I mentioned at the outset, just our thoughts are with.
The individuals whose lives are being significantly disrupted right now and also supporting our employees and customers across Europe , especially but really around the globe.
So thats first and foremost and foundational it should go without saying from a strictly business perspective, we have minimal exposure to the region, Russia, Belarus, Ukraine are not material they are less than.
<unk>.
1% far less than 1% of active customers and so we've disabled transactions connected to Russia, and Belarus, and we continue to serve customers in Ukraine, but its a negligible part of our business.
And most importantly, we're just thinking about those in the region that are affected and our team employees demand families or other connections to the region.
Understood and I appreciate that and then just quickly any update on <unk> for developers.
I guess youre, making there are any.
The strategic thoughts.
Yeah, absolutely Bob.
So we mainly for developers, which most folks know is our <unk> offering.
Gives businesses the opportunity to disperse through our network of billions of bank accounts hundreds of millions of mobile wallets and hundreds of thousands of cash pickup locations across the globe.
<unk>.
We.
Have have continued to rollout new customers, we have a strong pipeline. There. The one you may have read about is our coinbase partnership that we launched.
And we're excited about continuing to partner with innovators in the space to capture new use cases and to expand the Tam that we can serve and what I would say at a strategic level is we've talked about and you've seen some of the crypto players, which is a great way for us to innovate and stay close to what's happening in this space, but we have a really strong pipeline.
Other non crypto players as well and when we have competed in rfps and other elements I think that our network has has really differ.
Differentiated given how strong we built it for our customers and how much of a need there are other businesses to disperse funds in emerging markets and the wide range of ways that I mentioned.
Great. Thank you Matt. Thank you Susanne I appreciate it.
Thanks, Bob.
Thank you.
Question comes from the line of Ramsey El <unk> from Barclays. Your question. Please.
Hi, Thanks for taking my questions. This evening.
You mentioned some dynamics around pricing and I was just wondering if you guys could give me some some more kind of commentary on your pricing strategy in terms of the mix between taking specific actions as opposed to just benefiting from favorable geographic mix and I guess has anything changed in terms of us thinking about pricing as it more meaningful.
Recurring input to your to your growth algorithm.
I'm happy to start with that Ramsey.
Overall, as we mentioned our pricing trends have been favorable.
<unk> average revenue per user was up 13% year over year and the other context is the take rates have been very stable above above 2% over the past seven quarters. So we feel good about about our pricing and the reason why we feel good is because of the fact that we know why customers choose us and continue to come back to.
With that 90 plus percent revenue retention and that's because of the peace of mind, we deliver the seamless user experience, that's only getting better and better with our scale and so we have seen strong pricing.
As I mentioned earlier, we're not always the best price, we provide a fair price and customers come to us because of the peace of mind and reliability and great service that we provide.
Okay.
And then maybe as a follow up here could you comment a little bit on passbook.
And you sounded pretty confident about it being kind of a longer term driver I'm just kind of curious sort of where you are in the sort of rollout and development of the product.
Sort of like what gives you confidence about its long term prospects.
Yes, absolutely ramzi. Thanks for the question. So the way I think about the long term vision of where we're headed.
Is really around improving the lives of immigrants and their families by providing the most trusted financial services on the planet and.
As we've talked about as I mentioned, I think that our customers who are primarily immigrants who are often underserved.
The financial services products and so pass book is what we've talked about the most in the past and I think past book is foundational for building broader financial services for immigrants and having that direct deposit account is critical it's foundational.
<unk>.
The way to think about our longer term vision of what we're doing is yes, we're continuing to invest in that product, but we're also investing in multiple customer centered investments around solving broader financial services pinpoints that we see that our customers have and so when you go through that portfolio of investments additional products is the one thats the furthest off as is.
With new businesses, and new products, but we're as confident and as excited about offering broad financial services to our customers with passport being an important part of that given the direct deposit the DDA account being at the center of a lot of customers financial services.
Got it sounds like an important future building block I appreciate your commentary thanks.
Thanks Randy.
Thank you. Our next question comes from the line of David Scharf from JMP Securities. Your question. Please.
Hi, good afternoon.
Thanks for taking my questions pretty much all been.
Addressed at this point, but.
I did want to follow up on one aspect of.
Kind of the <unk> outlook, and how we ought to think about.
The core drivers.
Near term of the revenue guidance and specifically it sounded like frequency.
It was kind of the biggest contributor.
And I would imagine there is probably a practical ceiling on how often somebody sends money.
Single user.
Can you.
Can you also shed light on whether or not.
Corridor mix, particularly among the big three.
Has an impact or how that would impact it going forward as the big three sort of decline as a part of the overall mix. It also weather just given the.
<unk> margin.
Operating leverage inherently associated with just the higher.
Volume per spend.
And whether we should be thinking about an impact of inflation in the U S is impacting.
Revenue per transaction as well.
Why don't I why don't you take the initial parts of and then I can talk about inflation at the end.
Great.
Thanks for the question so in terms of <unk>.
Youre right.
The primary driver is our active customer spending more transactions.
And a few things that.
Product product enhancements and marketing programs that are actions, we've taken to drive that loyalty and engagement.
In terms of most of our active customers are transacting at least two times a month.
So thats something that we have seen in the past.
Frequently maybe after a payday or something along those lines and really reinforces that it is a recurring need and they are supporting their families back.
<unk> on an ongoing basis in terms of the question does this corridor mix impact that.
Much.
Yes, there probably are some differences across corridors, but off the top of my head, it's not significant enough necessarily to call out.
We are continuing to diversify away from our top three corridor, which sure you asked to Philippines, or we started and then Mexico and India, Although some of the largest remittance corridor in the world.
<unk>.
I think our view is generally quite strong across across corridors and so I don't think theres anything specific to call out in terms of corridor mix impacting that that metric in particular.
Got it thanks Susanna and.
Oh go ahead.
No no I'm, sorry, Matthew we're going to do.
Discuss whether or not inflation is something we should be paying attention to what the price and currency.
Exactly yes, we have not seen an impact on from inflation on our customer base is the punch line and I think that if you look historically, our customer base is incredibly resilient and we've seen them.
Have during economic recessions during various geopolitical even natural disasters at times customers and increase the amount that they sent.
And our customers it's important to keep in mind, our typically sending money home to their families and a few hundred dollars does an incredibly long way and it's very high on their kind of use of funds and so.
With that context.
Again, we're not seeing any impact from inflation, it's something that we'll obviously continue to watch closely but we feel good and quite frankly inspired and honored to get to serve a customer base that prioritizes.
Sending money home, regardless of the economic conditions, given how far those funds go to their families dotcom.
And this one proof point to kind of follow up on that average spend per active customer increased to over $2100 and in Q4. So that was the year over year and quarter over quarter. So obviously, our customers are continuing to prioritize.
Ending money home.
This is somewhat uncertain time as well.
Alright.
Great. That's all I have thank you and congrats on a terrific end of the year.
Thank you.
Our next question comes from the line of Alex and Mark Graf from Keith.
Keybanc capital markets. Your question please.
Yes, hi, everyone. Thanks for taking the question just a couple of quick ones.
Maybe first I appreciate all the commentary around transaction margin expectations.
Just anything to note around the quarterly cadence of Opex in 'twenty, two or thinking about how to kind of.
<unk> quarterly EBITDA margins I appreciate the color there.
And then just to kind of follow up on the coin base partnership.
Should we think about the kind of revenue model in commercial terms is.
Similar to other partnerships you have.
Announce with crypto companies with respect to R. R.
Sure I'll, let Suzanne and take the EBITDA question, and then I'll talk about climate.
So just in terms of.
Good to see.
On your question around EBITDA.
<unk> seasonality.
Our investments are front loaded in the year 2022, So we would expect EBITDA to be lowest in Q1, and then generally improved during.
During Q2, and Q3, and then Q4, we will see some impact on marketing expense due to the typical new customer seasonality in Q4.
But we would expect Q1 to.
To be the lowest of the year in terms of other seasonality on other.
Line items or just in general marketing expense I've talked about before and just mentioned Q4 is typically higher than one other it's a non-GAAP item, but in Q3, we will make our pledge, 1% stock donation, which is part of G&A cap costs.
So that will be an impact in Q3 in terms of.
Not so much on EBITDA, but on the net loss in Q3.
Yeah. Thanks, Susanna and then on broader RFT kind of unit economics, the way that we think about it is in the business model is a mix of of fee and foreign exchange generally it depends on the specific partner and I can't talk about coinbase, specifically, obviously, but what we like about that business is the fact that from a profitability.
Ability perspective.
It's very advantageous to us and their strategic benefits to more transactions flowing through our system because it gives us more leverage with our partners the ability to invest more in our network, which helps both our remittance consumer business as well as the overall RFP offerings, so mix of fee and foreign exchange generally with a nice profit.
Ability profile on a unit economic basis.
For that business.
Great. Thank you.
Hello, Thank you.
Our next question is a follow up from the line of Tien Tsin Huang from Jpmorgan. Your question. Please.
Have your phone on mute.
We're not hearing anything.
Yes.
That does conclude our question and answer session today I'd like to hand, the program back to Matt Oppenheimer CEO for any further remarks.
Great. Thanks, so much and thanks, everyone for the for the thoughtful questions and as we do it remotely I'd like to end the meeting by highlighting another of our amazing customers and those customers named as MELA. She first started using <unk> in 2013, so well over the five years that we mentioned earlier.
To send money from the U S to her loved ones in the Philippines.
And here are her words about remotely I am the mother of four children, a wife and 11 grandmother Im working abroad to help my family augment the income that we have I work hard because I want my children study get their degree and be able to work and stand on their own two feet. It is tough to be away from my family work as hard as well, but I am thankful for my.
Children, who studied well finish their studies and now they are happy working on their own I think remit Lee for being there for me and making it easy to send money to my country. So we think Mueller and we thank the millions of customers that continue to use our platform.
And we thank all of you for being on the call and being part of the <unk> journey. We are excited about 2022, and we are looking forward to continuing to share our progress as we continue to work to accomplish our mission.
Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.
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