Q2 2022 Remitly Global Inc Earnings Call

August 3, 2022

[music].

Yeah.

Hello, and thank you for standing by and welcome to <unk> second quarter 2022 earnings call. At this time all participants are in a listen only mode. After the speaker presentation. There will be a question and answer session to ask a question during the session you will need to be.

Star one one on your telephone please be advised that today's conference maybe recorded I would now like to hand, the conference over to your speaker today, Stefan <unk> Vice President of Investor Relations. Please go ahead.

Thank you good afternoon, and thank you for joining us for <unk> second quarter 2022 earnings call. Joining me on the call today are Matt Oppenheimer co founder and Chief Executive Officer, a permanently and harmonic juniper Howie our chief Financial Officer.

Our results and additional management commentary are available in our earnings release, and the presentation slides, which can be found at IR at <unk> Dot Com. Please note that this call will be simultaneously webcast on the Investor Relations 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, including but not limited to statements regarding <unk> future financial results and management's expectations and plans.

These statements are neither promises or 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 developments 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. 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 to discuss our strong second quarter, which is our fourth quarter as a public company in the fourth quarter in a row in which we delivered strong results that beat expectations.

To start I'd like to turn to our mission as seen on slide four to transform the lives of immigrants and their families.

Providing the most trusted financial services on the planet. We are proud of the continued progress we are making towards achieving this vision and our ability to support immigrants that do so much for their families and communities background.

To execute on this vision, let me introduce <unk> <unk>, our new CFO , who joined US last month. We are excited to welcome him to the team is experienced with scaling technology companies and global organizations, including Expedia and general Motors will be invaluable to <unk> as we execute against our vision and Montana.

His 20 plus years experience as a dynamic finance leader the strategic insight Greens will help drive our growth and deliver long term value to shareholders.

I'll begin with a brief overview of our second quarter results and then I'll discuss how our customers continue to prioritize sending money back home to their families in a volatile macroeconomic environment. I will then review the progress we are making on our growth investments and the progress we are making in driving even more efficiencies across our growth invest.

<unk> priorities to reflect the current market environment, and the increasing cost of capital.

Now, let's turn to our results for the second quarter, we delivered exceptional results in the quarter as you can see on slide five our active customer base increased by 43% year over year to more than three 4 million revenue increased 42% year over year to $157 million.

This strong growth was driven by a combination of active customer growth and repeat transactions from loyal customers. These new and repeat customers will have a significant impact on revenue for the balance of 2022 and beyond as.

As a result of this strong performance, we are increasing our revenue outlook for 2022.

Our adjusted EBIT performance in the quarter was also above expectation. This outperformance was driven by efficiencies in our marketing investments and strong active customer growth.

As a result, we are also raising the midpoint of our 2022 adjusted EBIT outlook.

I am very pleased with how our team has executed this quarter and I'm confident that we will continue to deliver on our promises to customers and shareholders.

We are gaining significant market share in remittances. The reason for this is simple as you can see on slide six we are building an enduring preference for <unk> with our obsessive focus on delivering a trusted experience and peace of mind for our customers are.

Our customers have not typically had a good experience with legacy financial services providers.

Once they use our solution and have a great experience they tend to remain loyal customers for many years to come this is evidenced by our high revenue retention rate of over 90%.

Our oldest customers have transacted with us for almost 10 years.

Our geographic footprint is expanding quickly, allowing us to serve even more customers, while our network expansion allows customers.

Lease to received funds any way they choose.

Our services fast and convenient and we are now even more localized in the languages are customers speak.

Our prices are fair and driven by many factors across corridor. It reflects the value we deliver to customers.

Combining an easy to use experience with our vast global network.

As we look around at the volatile macro environment. What we know is that remittances historically performed relatively well across economic cycles. As you can see on slide seven.

Remittances are vital to our customers and their families even as.

<unk> War and recession fears are top of mind, the world Bank estimates that remittances to low and middle income countries, our serviceable addressable market will grow 4% to $630 billion in 2022.

This compares with our projected annual revenue growth rate of 36% to 37% in 2022.

As we will continue to significantly outperform industry remittance growth. In addition to a growing overall remittance market, we benefit from customers continuing to switch to digital remittances.

During the second quarter, we did not notice a material impact on customer behavior from a rising inflation.

Or fears of a recession as remittances are not a discretionary item from a customer's point of view.

We regularly survey our customers about their intention to send money based on a variety of factors and in our most recent customer survey our customers indicated that recent economic conditions were not impacting their propensity to spend and a majority of centers indicated they expect to send the same or more money in 2022.

Versus 2021.

We have also observed a positive impact on customer behavior for customer spending from the United States as a result of the strong U S dollar.

As the strong U S. Dollar strengthened we saw some customers take advantage of the U S dollar strength.

Over the long term customer behavior tends to normalize.

We remain focused on investing in four areas as you can see on slide eight.

New customer acquisition and highly attractive unit economics growing our global geographic footprint, enhancing our remittance product technology, which we can be uniquely well with our digital first strategy and scale and finally, our vision of serving our customers with complementary new products, which is critical in creating an even more.

Valuable and enduring long term relationships with our customers.

We continue to invest across these four areas, we're maintaining our disciplined focus to ensure our investments have high long term return consistent with our history of making investments at very strong unit economics.

As the cost of capital has increased we have increased our hurdle rates around our investment priorities to this end, we were able to improve the efficiency of our marketing investments in the second quarter, while acquiring nearly as many new customers in the second quarter than in all of 2019.

Our geographic expansion is becoming more efficient as we scale, allowing us to rapidly expand in the new corridors with repeatable processes and limited financial investment.

Our remittance product investments are driving customer loyalty and will help reduce cost over time, particularly in customer support finally, our investments in complementary new products will allow us to differentiate our remittance offering develop a deeper relationship with our customers driving retention and customer stickiness.

While at the same time, allowing for additional efficiencies and customer acquisition.

Our marketing investments have historically generated robust returns as you can see on slide nine.

We use geographic and channel specific metrics and targets to optimize the customer acquisition cost of a new customer and customer lifetime value.

The ltvs are different across various acquisition channels as well as the more than 3200 corridors we serve.

We have the scale data and strategy to understand. This then we aimed to match the customer acquisition cost we are willing to pay based on the lifetime value.

Our marketing investments are consistently breakeven within one year of customer acquisition and recent cohorts have seen even higher return.

Because breakeven is within one year, adding healthy cohorts of new customers, especially in later quarters in the year will decrease company level profitability in the quarter ended the year, but will accelerate after the initial approximate one year payback period.

In Q2, we also saw opportunities to take our already strong unit economics and invest in new customer acquisition at an even higher return as you can see on slide 10.

While adding a record number of new customers in the quarter, we were able to lower customer acquisition costs by 11% sequentially.

The improved marketing efficiently was primarily driven by a disciplined focus on payback continued elasticity testing given given the changing and potentially favorable advertising environment improved brand awareness driven by scale and brand awareness marketing and an improved referral experience.

We are continuing to invest in geographic expansion and our global network as seen on slide 11.

At the end of the second quarter, we serve customers in more than 170 countries and territories around the world. We now serve more than 3200 corridor and we added approximately 900 corridor in the second quarter, a record quarterly geographic expansion for us.

We are able to do this because we haven't invested in the technology processes and compliant, allowing us to rapidly add new market with the appropriate localization around payment acceptance customer support and partner integration to attract new customers. These.

These investments have enabled us to deploy capital more efficiently and drive geographic expansion and customer acquisition.

Our speed and effectiveness and launching corridor has improved as we were able to add 13 received markets in the second quarter of this year compared to seven in the second quarter of 2021.

There remains a large opportunity to expand within our existing corridor as well as enter new corridors.

There are large markets, where we don't have a presence, including some in the middle East and Asia, We will execute our corridor expansion in the same way we built the current infrastructure by focusing on unit economics and localization at scale to ensure a differentiated value proposition for our customers.

Our disbursement options within our global network continue to grow and remains an important driver of customer loyalty.

Our growing network of banks mobile wallets and cash pickup locations.

Our customers can choose what works best for them and their recipient and the quality of our network maintained a competitive differentiator.

Our investments in product and technology continue to drive superior customer experience enabled by our intuitive mobile first interface risk and fraud management infrastructure security and customer support as you can see on slide 12.

For example in the second quarter, we enabled live support for our customers in seven additional languages. We now support 15 languages with combination of native speakers and real time translation.

This helps our customers solve problems quickly in their native language and build loyalty.

As a result of our remittance product investment we maintained a four nine star rating and the iOS App store and a four eight star ratings in the Google play store.

All of these outcomes are only achievable with scale and being a scaled digital first player allows us to make these investments and benefit from a flywheel effect of more transactions flowing through our network.

Turning to our vision for complementary new products on slide 13.

In the past few years, we scaled our business to one of the biggest and best globally rapidly, adding new corridor, reducing friction in the customer experience and winning and retaining millions of customers.

We've also talked about our strategy to add new products. In addition to remittances.

Past book has been our flagship product in this space, which showed increased engagement in Q2.

Building on lessons learned from past book, we are narrowing our focus to complementary new products to deepen the relationships with customers.

We are more convinced than ever.

The introducing complementary new products tied to our remittance product is the right strategy.

This focus will allow us to deepen the long term relationship with our customers.

We believe driving toward the relationship based value proposition with our customers will allow us to differentiate our remittance product even further.

All of this creates a significant moat around our remittance product by adding more value to our customers.

Looking ahead on slide 14, our focus will remain on serving our customers and driving long term value for our shareholders.

Our investment in a portfolio of high ROI opportunities will allow us to drive long term double digit growth and the scale to build a profitable and sustainable business as we continue to lean in on driving higher returns across our investment and opportunities to drive leverage across our expense category.

Our marketing investments it's from unit economics will continue to drive our growth in the near term and beyond.

We will see increasing returns from our investments in geographic expansion and remittance product enhancements in 2023 and beyond.

Our long term vision of complementary new products is expected to drive sustainable returns in 2024 and beyond as we will benefit from a deeper relationship with our customers.

With that I will turn the call to him to provide more details on our financial results and outlook.

Thank you, Matt I'd like to start by discussing why I joined <unk>. The core business is strong as evidenced by continued strong quarterly growth and with immense opportunities to deepen our relationship with our customers with complementary financial products and services and scale efficiency.

By executing well, we expect to deliver sustainable long term profitable growth for our shareholders. I believe remedy is just getting started and are excited about its future. I also look forward to driving continuous improvement across the finance function at <unk> and I'm excited to meet with the analysts and investor community over the coming months now let.

Turning to the details of our second quarter results.

To reiterate matts comments, our momentum continued this year and we delivered very strong second quarter results across all metrics.

This strong performance and our expectations for continued growth, even while setting more aggressive investment return thresholds enables us to raise the midpoint of our revenue and adjusted EBITDA outlook for full year 2022.

I'll begin by reviewing the drivers of our second quarter financial performance and then we will 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 in all periods.

Reconciliations to GAAP results are included in the earnings release.

Beginning on slide 16 active customers grew by 43% year over year to more than $3 4 million <unk> volume grew 40% year over year to approximately $7 billion, all resulting in revenue growth of 42% year over year to $1 $1 $57 million, which was above our expectations.

As you can see on slide 17, a number of factors drove the 43% in active customer growth, including acquiring a record number of new customers in the quarter and our high retention of existing customers, who in many cases continue to transact with us over many years.

We believe strength in the U S. Dollar helped drive some incremental new customers to <unk>. We also saw continued growth in our new customer acquisition across corridors, which helps us broaden our portfolio and create more revenue and operating leverage opportunities over time.

Our unit economics, and new customer acquisition remain highly compelling as you drive marketing efficiencies, resulting in lower CAC as Matt discussed.

Unit Economics also benefited from our increasing leverage on transaction costs, which I will detail later.

On average customers continue to send multiple transactions per month, and our pricing, which is influenced by multiple factors such as speed method of payment mix of fee and foreign exchange spreads and local competition continues to deliver value for our customers.

The consistency in our customer spending behavior once we acquire them as an active customer translates into a predictable revenue stream and minimal revenue churn.

Turning to slide 18 strong growth in active customers and high retention drove the 42% year over year revenue growth that we delivered in the quarter as we continue our multiyear track record of healthy double digit revenue growth at scale.

Turning to costs on slide 19, we continue to benefit from increasing scale and improvements in our fraud and risk systems. The benefits of this are most visible on the transaction expense line.

Transaction expense was $61 million or 39% of revenue an improvement of over 300 basis points from 42% of revenue in Q2 of last year.

Our teams have worked hard to make this happen through more direct portola integrations better terms with payment processing partners, driven by increasing scale and advanced risk and fraud management systems, which drive down transaction loss rates, while at the same time, improving the customer experience, we expect to continue to benefit from increasing scale.

An improved position on fraud losses, although we expect some variability in transaction expense from quarter to quarter.

Now, let's turn to our non-GAAP operating expenses on slide 20, which reflects the investments, we're making to allow us allow us to scale, our remittance business and execute on our long term vision of serving immigrants and their families with the most trusted financial services on the planet.

<unk> operating expenses marketing, which represented $41 million in the quarter or 40% of total operating expenses the.

The vast majority of marketing expense is related to new customer acquisition efforts. This marketing investment delivered a record number of new customers acquired at an 11% lower cap compared to the first quarter as our teams identified efficiencies and by raising our investment thresholds.

To be clear, we could have grown active customers, even more as strong unit economics, but we made the decision to drive even higher returns. We continue to monitor our marketing spend actively in light of our focus to drive higher returns, while driving strong customer growth.

Customer support and operations expense was $17 million in the second quarter or 16% of total operating expenses and was flat year over year on a percentage of revenue basis as.

As we scale, we expect to continue to benefit from increased automation and efficiencies our customer support costs are also influenced by the level of new customer adds in a quarter as new customers tend to have higher initial support contacts.

Over time as we scale, we expect new customers to be a smaller proportion of active customers, which should help drive leverage and customer support costs.

In addition, our Remington product investments in ensuring a frictionless customer experience will also drive leverage and customer support costs.

As our customers will need to contact us less often.

We believe our continued investments in technology and development are critical to ensure a trusted customer experience and deepen our relationships with them. So complementary products technology and development expense was $22 million in the quarter as we've been making investments to enhance our products continued to build our platform capabilities and improved secure.

<unk>.

Our investments also allow us to localize that scale much faster as we add new corridors payment methods and disbursement options at a more rapid pace, allowing us to capture more market share.

For example in the second quarter, we were able to add approximately 900 corridors. The most we've added in a quarter our level of growth that would not have been possible without the scaling investments, we're making in our technology platform.

As we mentioned on our last call, we expect technology and development expense to increase as a percentage of revenue in 2022, compared with 2021 as you prioritize product investments new product development and corridor additions.

G&A expense was $22 million in the second quarter or 22% of total operating expenses.

This includes an investment in our human resources finance and legal teams and additional public company operating costs, which will allow us to effectively scale to support our growth initiatives.

We expect the year over year growth in G&A expense to moderate as we begin to anniversary public company costs in the fourth quarter of 2022, and we expect to see leverage in G&A later this year.

Turning to slide 21, adjusted EBITDA, which excludes stock based compensation expense was negative $5 3 million in the second quarter of 2022.

Our adjusted EBITDA performance was better than we expected primarily due to higher than expected revenue and improving returns on our customer acquisition investments.

Before turning to bottom line results I would like to summarize that our growth in a growing revenue base strong unit economics and high ROI on marketing provides a significant opportunity to accelerate scaling across other expense categories. As we head into our first anniversary as a public company and look forward to sharing additional thoughts and travel.

As we shape our profitability trajectory.

Now turning to the bottom line second quarter GAAP net loss was $38 million compared to $1 million net loss in the second quarter of 2021.

The increase in net loss was primarily due to a $30 million of incremental stock based compensation expense driven by hiring top tier talent to execute on our strategic priorities.

Additionally, we recognized a 6 million adjustment related to prior periods, we expect quarterly stock compensation expense in the remaining quarters of 2022 to be relatively consistent with the amount we recognized in the second quarter, excluding the $6 million of prior period adjustment, we recognized in the second quarter.

Turning to our balance sheet working capital at the end of the quarter was approximately $452 million unrestricted cash on our balance sheet of $430 million.

Working capital is an important liquidity metric for us and a good proxy for operating cash.

In that it removes the impact of customer funds that are included in our balance sheet within cash and cash equivalents and disbursement pre funding.

Has not yet been disbursed at the end of the period, our balance sheet provides us significant flexibility to execute on our main growth drivers.

Adding new customers at highly attractive unit economics, expanding corridor, the new geographies, enabling a world class <unk> experience and building complementary new products, where immigrants and their families.

Moving to our 2020 to outlook on slide 22, we expect revenue to be between $6 25 and $630 million.

This is a $12 $5 million increase at the midpoint from our prior outlook and implies a year over year growth rate of 36% to 37%, we're increasing our outlook to reflect the strong performance we delivered in the second quarter.

In the near and midterm, we expect increased transactions from new customers to benefit us through the rest of 2022 and beyond.

As a result of our better than expected performance in the second quarter, we are narrowing and raising the midpoint of our 2022 adjusted EBITDA outlook to be between negative $35 million and negative $30 million from our prior outlook of between negative 40 and negative $30 million.

Due to the seasonality of new customer acquisition, we expect the fourth quarter to have lower adjusted EBITDA in the third quarter with that Matt and I will open up for the call for your questions operator.

Thank you as a reminder to ask a question you will need to press star one one on your telephone please standby, while we compile the Q&A roster.

Our first question comes from Ramsey El <unk> with Barclays. You May proceed with your question.

Hey, guys. This is Allison on for Ramsey Hope all is well and welcome him on.

Just on the competitive environment.

Are you guys thinking about market share. So when you win a customer where are they coming from or really in other words. What is most common here that they were previously using brick and mortar.

Using a different digital platform or are these completely new Robert minute says some color that would be really helpful. Thanks.

Great Yeah happy to Allison and thanks for the question I think that the.

If you look at the market share that we're gaining as I mentioned in the opening remarks guiding the 36, 37% comp.

Compared to an industry growth rate of 4%, we are growing much faster than the market in terms of where that is coming from I think it's a mix of.

A lot of.

Legacy and offline players given that the majority of remittances based on our data are still sent via legacy players.

As well as digital players, where we have a superior solution and the reason I think that we're gaining that much market share strategically are structurally is because the combination of being a digital first player with scale enables us to invest more in our distribution network and invest more in our risk systems and that's more on the customer experience all of that ultimately brings less friction to customers.

And more peace of mind, which not only attract record new customers as we mentioned, but also maintain that long term relationship, which we're continuing to see.

Great that's really helpful. Thanks.

Thank you one moment for questions.

Our next question comes from Andrew Schmidt with Citi. You May proceed.

Hey, Matt Stephan welcome involved can you have you.

First question on customer acquisition costs I'm wondering if you could just elaborate about celebrity on the sustainability is good to see the step down but but.

Maybe talk about the sustainability of low levels of CAC and then over the intermediate to longer term, perhaps you could just elaborate a little more on the strategy could create.

More organic customer adds versus paid.

Any insight on those two would be helpful more organic customer adds versus paid.

Any insight on those two would be helpful. Thanks, a lot.

Yes, Thanks, Andrea I think.

If you look at the reasons why we're seeing the 11% increase in our improvement in impact sequentially. It's due to a variety of factors.

I think our team has never been stronger and when you look at our CMO that we promoted internally arena on if you look at the creative and brand execution CAC sequentially, it's due to a variety of factors.

I think our team has never been stronger and when you look at our CMO that we promoted internally arena on if you look at the creative and brand execution and velocity. If you look at the external advertising environment, that's been favorable I think for us.

And I think that ultimately we have the ability when we think about CAC. We ultimately look at it from a return on investment standpoint, and we have a very good handle around payback guardrails in how we deploy marketing dollars to make sure that we're doing in efficiently and so I see the ability to continue to certainly.

A lot of sustainability around our marketing investments and because of those variables that I mentioned, we're really excited about not only the customer acquisition costs that we're paying but the unit economics meeting lifetime value side of the equation and the payback period that we're seeing across the globe. So excited about Q2 and excited about the place that were in overall.

Very clear very helpful and then.

Mark if you don't mind, if I put you on the spot obviously, a big question, we get from investors is path and timeline to profitability and don't expect any big announcements here you will you haven't been on for too long, but maybe you could just tell us.

Framework for how you think about just investments and returns in the business and how you sort of you think about balancing profitability versus versus growth.

Color there would be helpful. Thanks, Scott Yeah.

Thanks for the welcome Mat I think thanks for the question certainly on top of mind I know for investors I would say that one we certainly our long term focus in terms of value creation and there's a couple of things Scott.

We are starting to do and I think we've talked about it a little bit here in terms of our increasing our thresholds aren't on our ROI.

<unk> was also very effective in this in the improved performance in Q2 as well. So there is some certain things here as we get a little bit more disciplined on how we think about investments that that will give us put us in a better place as we look forward in terms of our path to profitability from my perspective, obviously very early days and getting to understand.

Learn the business and motor share.

We did talk about we're coming.

Coming up a year in terms of our being a public company pretty soon and there is opportunity for us as we're getting towards strategic and financial planning processes to look at certain areas in the business that we can probably get more efficient or start to start looking to scale, but again early days yet top of mind for us.

We'll add more to come on that topic.

Very helpful. Thank you very much good quarter guys.

Thank you one moment for questions.

Our next question comes from David Scharf with JMP Securities You May proceed.

Great. Good afternoon, everyone. Thanks for taking my questions.

Hey, Matt.

I apologize if this is redundant.

I wanted to just dig into CAC trends, a little bit more and.

Specifically I'm looking at my notes from last quarter, and I know there was a specific comment that.

You guys were experiencing more competition and in most of the digital acquisition channels.

It was putting a little bit of pressure there and can you expand on whether or not some of the favorable <unk> trends this quarter.

Our purely sort of organic.

Or is it also a result or are you seeing some digital competitors actually step back in terms of their demand.

Okay.

Yes, Thanks, David.

Happy to go into more depth on the cash side, especially as it pertains to Q1, I think the comments and what we experienced in Q1 I think was more specific to Q1.

I think that if you look at Q2 and the general trend that we're seeing.

We are able to both as we mentioned bring down customer acquisition costs, while adding a record number of new customers. If you look as I mentioned in the opening remarks, we added as many new customers and nearly as many new customers in Q2 of 'twenty two than we did the entire year of 2019 and I think the reason for that.

<unk>.

Is a lot of variables that are within our control in terms of as I mentioned creative and brand execution rigorous focus on payback at both the channel marketing channel and geographic perspective.

I think there is some.

Advertising environment in terms of the.

The digital channels being less competitive, but I think that we know how to leverage that and how to test the elasticity.

In a way that is very effective and so that may be why we stand out compared to others in the market hard to say there obviously, but I think we're really proud of our results. We have good handle again around the return on the investments that we're making and marketing is just one of those examples and the good thing as well about new customer adds is that it also is kind of.

The leading indicator of revenue growth because you add these cohorts of new customers that then as I mentioned it may cost us more in that first year given that we have approximately a one year payback period, but when you look at the revenue growth that is in the quarters to come.

Bellwether for that so really pleased with the customer acquisition, both numbers and cost and overall unit economics in Q2.

Got it no that's very helpful. I appreciate the detail.

Just as a follow up.

Sort of interested in getting a feel for.

Sort of corridor mix and how that might impact.

Impacted growth.

Lately as well as maybe over the next few quarters and specifically.

Latam has been very strong performer.

For a lot of traditional even for all the traditional walk in players.

I know Mexico is kind of number three of your big three.

But is there any change general change in the mix.

We're remittances are going.

Among Philippines, India and Mexico.

Just as importantly, as you look at.

The name.

Nature of the customers that you most recently added.

Is there anything about their.

Likely geographics and say that might alter the mix and impact growth.

Yes, yes, thanks, David I think.

The punch line would be that there is increasing geographic mix in terms of our customer base. Both from a send perspective, meaning North America, Europe , and Asia as well as receive perspective, meaning primarily.

Asia Africa, and Latin America, and we added 900, new corridor suggest last quarter.

A lot of quarter in the context that we now turn to well over 3000 between well over 3000 corridor. So I think youre seeing that increased mix.

Which is exciting from for a whole host of reasons, but most importantly kind of sustainable long term growth because the 900 corridor as we launched last quarter.

We're not going to materially contribute to revenue this quarter next quarter, they're going to they're going to contribute to revenue in the years to come and that's just like a year or two ago. When we said the corridor and we launched at that point, we will not contribute to revenue until the quarters and years to come and we're now benefiting from those really intense.

<unk> launches and that's I think a unique part of <unk> strategy of this often I think underappreciated is this really methodological process of rolling out new corridors and planting the seeds for future revenue growth and that's how we've gotten the kind of multi year high double digit compounded growth rate is that second investment area, which is.

<unk> expansion.

Hopefully that provides some context, David what I'd say is the punch line is increasing geographic expansion and planting the seeds for multiyear double digit revenue growth.

Got it understood. Thanks, so much Matt.

Thank you one moment for questions.

Okay.

Yeah.

Our next question comes from Bob Napoli with William Blair You May proceed.

Hey, this is Noah <unk> on for Bob Napoli Congrats on a great quarter. Thank you guys for telling us a little bit more about the passbook initiative, but is there anything you can tell us about the remotely for developer initiatives.

Previously I think you gave us some sizing on it as a percent of revenue but.

Any color on that would be great where it stands today.

Yes, Greg Greg C&I and.

We continue to be excited about.

For developers.

As you know we've announced a couple of partnerships there and the crypto space, but if you look at the pipeline of companies that have a need to be able to disperse funds in emerging markets. It's a much broader pipeline in that and so excited about.

The types of companies that are interested the size and scale of a lot of those companies and excited about our unique value proposition, which includes both our disbursement network on a wide range of disbursement options as well as a lot of that fraud risk management.

FX pricing once businesses have actually looked at the complexity of remittance is again, a theme park often underappreciated the complexity, including other businesses once they get a sense of the complexity of international payments.

We're seeing good uptick there so no specific new partnerships to announce but continuing to invest in a disciplined way in that area and seeing a lot of interest from a wide range of types of companies.

Great. Thanks, Thanks for answering my question, if I could add if I can fit one more in.

I know you guys expanded into five new send markets last year throughout Europe .

Too early but you guys have any initial observations from these newly entered markets. How they are comparing to your more more stable markets that you guys are in.

Yes, I think that.

If you look at the new markets, we're continuing to rollout the same kind of corridor expansion playbook and so the punch line is they might mirror other markets that we've launched when you look at some of the early <unk>.

Active rates and other metrics that we look at to kind of estimate the lifetime value of customers and the behaviors, but given that we're in so many markets now we can look at those leading indicators and get a pretty good sense of the.

Lifetime value of customers and then the amount we're willing to pay from a customer acquisition cost.

And so it ties a bit to David's question earlier in terms of planting those seeds for future growth.

More similarities and differences and we're also just getting faster at rolling out new markets because the.

The payment acceptance the compliance experience and identity verification all of those things you start to get pattern matching and theres only so many ways to do identity verification or collect payments. So theres still some optimism optimization that needs to be done, but it gets faster with each incremental market and so that would probably be the only notable thing in those five new send markets is that.

We're getting faster given the scale that we have in the pattern matching that we can do amongst different markets.

Thank you congrats again.

Thanks, Sean.

Thank you one moment for questions and as a reminder to ask a question you will need to press star one one.

Our next question comes from Mark Mcgrath with Keybanc you May proceed.

Hey, guys. This is Alex Marty Matt.

Matt It's definitely nice to speak with you and Mark nice to meet you.

Just a couple of quick ones for me.

First thinking about the kind of implied second half base.

Based on guidance can you talk about what's assumed around.

The leverage in transaction expense.

What should we kind of anticipate that benefit to be realized.

Versus what was seen in the second quarter.

Yes, thanks for the question and thanks for the welcome as well I'd say when we look at transaction expenses, we called out.

There is some level of variability around around the margin piece, we are making continued improvements on the fraud side of thing.

Technology et cetera.

Our current expectation is for the margins to be relatively at the same level.

For the balance of the year, but continued progress around how we can make improvements, but the expectation of a built in is it's mostly stable.

Great I appreciate the extra detail there and then maybe one for you.

Just around your comments about narrowing the focus on complementary products.

I apologize if I, if I missed some detail on that but would you mind just kind of expanding in terms of how you are thinking is.

Perhaps changed versus <unk>.

Last year, we're speaking about passbook.

Yes, yes, absolutely I'm happy you picked up on that.

Word complementary which was used very intentionally and I think that when you think about the broader products that we can offer our customers. The one where we believe we can add the most value and that will increase and deepen the relationship which should show up in the form of engagement and increased active customer it is.

Via complementary products to remittances and so.

As a store value aspect with passbook and that obviously, but you should expect us to.

Think about that more broadly in terms of other problems that are adjacent to remittances to deepen the relationship with the now three 4 million customers and rapidly growing remittance customers to establish that long term relationship with them and looking forward to being able to share more in the future as we launch products.

In that space.

Understood. Thank you.

Thank you one moment for questions.

Our next question comes from Ramsey El <unk> with Barclays. You May proceed.

Okay.

Your line is on mute please UN mute.

I'd now like to turn the call back to Matt Oppenheimer for closing remarks.

Great. Thanks, so much operator so.

Thank you all for the thoughtful questions and for joining today as we always do at remotely I'd like to end the call by highlighting another one of our amazing customers.

Customers name as BB BB joined <unk> in May of 2022, one of the many new customers that we just added incentive money from the UK to family in Pakistan.

Family member recommended and this is what <unk> is a family member recommended remotely to me they shared that it was a reliable way to send money back home from the comfort of your home I'd like many things about my experience using <unk> in the charges were cleared to understand I received updates every step of the way and I really appreciate it the message direct.

To me when the money was collected by the recipients I recommend remit lead to all of my friends and family. So we think BD and her family for using remotely and recommending <unk> to others and we are very excited about 2022 and beyond and look forward to sharing our progress as we continue to execute.

On our very important vision.

Sure.

Goodbye.

Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.

Goodbye.

The conference will begin shortly to raise your hand during Q&A you can dial one one.

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Hello, and thank you for standing by and welcome to <unk> second quarter 2022 earnings call. At this time all participants are in a listen only mode. After the speaker presentation there'll be a question and answer session to ask a question. During the session you will need to press star one one on your telephone please be advised that.

<unk> Conference maybe recorded I would now like to hand, the conference over to your speaker today, Stefan Scholz team Vice President of Investor Relations. Please go ahead.

Thank you good afternoon, and thank you for joining us for <unk> second quarter 2022 earnings call. Joining me on the call today are Matt Oppenheimer co founder and Chief Executive Officer, Rob <unk> and harmonic wounded, probably our chief financial Officer.

These statements are neither promises or guarantees and involve risks and uncertainties that may cause actual results to vary materially from those presented here.

Boeing presentation contains non-GAAP financial measures for a reconciliation of each of these non-GAAP financial measures. 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.

To start I'd like to turn to our mission as seen on slide four to transform the lives of immigrants and their families.

Providing the most trusted financial services on the planet. We are proud of the continued progress we are making towards achieving this and our ability to support immigrants that do so much for their families and communities background.

They will execute on this vision, let me introduce came on to <unk>, our new CFO , who joined US last month. We are excited to welcome him off to the team is experienced with scaling technology companies and global organizations, including Expedia and general Motors will be invaluable to <unk> as we execute against our vision.

<unk> has 20 plus years experience as a dynamic finance leader the strategic insight grains will help drive our growth and deliver long term value to shareholders.

I'll begin with a brief overview of our second quarter results and then I'll discuss how our customers continue to prioritize spending money back home to their families in a volatile macroeconomic environment. I will then review the progress we are making on our growth investments and the progress we are making in driving even more efficiencies across our growth in <unk>.

Government priorities to reflect the current market environment, and the increasing cost of capital.

This strong growth was driven by a combination of active customer growth and repeat transactions from loyal customers. These new and repeat customers. We will have a significant impact on revenue for the balance of 2022 and beyond.

As a result of this strong performance, we are increasing our revenue outlook for 2022.

Our adjusted EBITDA performance in the quarter was also above expectation. This outperformance was driven by efficiencies in our marketing investments and strong active customer growth.

As a result, we are also raising the midpoint of our 2022 adjusted EBIT outlook.

I am very pleased with how our team has executed this quarter and I am confident that we will continue to deliver on our promises to customers and shareholders.

Our customers have not typically had a good experience with legacy financial services providers.

Once they use our solution and have a great experience they tend to remain loyal customers for many years to come this is evidenced by our high revenue retention rate of over 90%.

Our oldest customers have transacted with us for almost 10 years.

Our geographic footprint is expanding quickly, allowing us to serve even more customers. While our network expansion allows customers, namely to received fund any way they choose.

Our service is fast and convenient and we are now even more localized in the languages are customers speak.

Our third our prices are fair and driven by many factors across corridor. It reflects the value we deliver to customers.

Binding and easy to use experience with our vast global network.

As we look around at the volatile macro environment. What we know is that remittances historically performed relatively well across economic cycles. As you can see on slide seven.

Remittances are vital to our customers and their families even as inflation or in recession fears are top of mind. The world Bank estimate the remittances to low and middle income countries, our serviceable addressable market will grow 4% to $630 billion in 2022.

This compares with our projected annual revenue growth rate of 36% to 37% in 2022.

As we will continue to significantly outperform industry remains growth. In addition to a growing overall remittance market, we benefit from customers continuing to switch to digital remittances.

During the second quarter, we did not notice a material impact on customer behavior from a rising inflation.

Or fears of a recession as remittances are not a discretionary item from a customer's point of view we.

We regularly survey our customers about their intention to send money based on a variety of factors and in our most recent customer survey our customers indicated that recent economic conditions were not impacting their propensity to send in a majority of centers indicated they expect to send the same or more money in 2022.

<unk> 2021.

We have also observed a positive impact on customer behavior for customer spending from the United States as a result of the strong U S dollar.

The strong U S. Dollar strengthened we saw some customers take advantage of the U S dollar strength.

Over the long term customer behavior tends to normalize.

We remain focused on investing in four areas as you can see on slide eight.

Valuable and enduring long term relationship with our customers.

As we continue to invest across these four areas, we're maintaining our disciplined focus to ensure our investments have high long term return.

Consistent with our history of making investments at very strong unit economics.

Our geographic expansion is becoming more efficient as we scale, allowing us to rapidly expand in the new corridors with repeatable processes and limited financial investment.

While at the same time, allowing for additional efficiencies in customer acquisition.

Our marketing investments have historically generated robust returns as you can see on slide nine.

We use geographic and channel specific metrics and targets to optimize the customer acquisition cost of a new customer and customer lifetime value.

The ltvs are different across various acquisition channels as well as the more than 3200 corridors we serve.

We have the scale data and strategy to understand that.

We aim to match the customer acquisition cost we are willing to pay based on the lifetime value.

Our marketing investments are consistently breakeven within one year of customer acquisition and recent cohorts have seen even higher return.

After the initial approximate one year payback period.

In Q2, we also saw opportunities to take our already strong unit economics and invest in new customer acquisition at an even higher return as you can see on slide 10.

While adding a record number of new customers in the quarter.

We're able to lower customer acquisition costs by 11% sequentially the.

The improved marketing efficiently was primarily driven by a disciplined focus on payback continued elasticity testing, giving given the changing and potentially favorable advertising environment improved brand awareness driven by scale and brand awareness marketing and an improved referral experience.

We are continuing to invest in geographic expansion and our global network as seen on slide 11.

We are able to do this because we have invested in the technology processes and compliant, allowing us to rapidly add new market with the appropriate localization around payment acceptance customer support and partner integration to attract new customers. These investments have enabled us to deploy capital more efficiently and drive.

Geographic expansion and customer acquisition.

Our speed and effectiveness and launching corridor has improved as we were able to add 13 received markets in the second quarter of this year compared to seven in the second quarter of 2021.

There remains a large opportunity to expand within our existing corridor as well as enter new corridors.

There are large send markets, where we don't have a presence, including some in the middle East and Asia, We will execute our corridor expansion in the same way we built the current infrastructure by focusing on unit economics and localization at scale to ensure a differentiated value proposition for our customers.

Our disbursement options within our global network continue to grow and remains an important driver of customer loyalty.

Our growing network of banks mobile wallets and cash pickup locations allows our customers to choose what works best for them and their recipient and the quality of our network maintained a competitive differentiator.

For example in the second quarter, we enabled live support for our customers in seven additional languages. We now support 15 languages with combination of native speakers and real time chat translation. This helps our customers solve problems quickly in their native language and build loyalty.

As a result of our remittance product investment we maintained a four nine star rating and the iOS App store and a four eight star rating in the Google play store.

Turning to our vision for complementary new products on slide 13.

We've also talked about our strategy to add new products. In addition to remittances.

Past book has been our flagship product in this space, which showed increased engagement in Q2.

Building on lessons learned from past book, we are narrowing our focus to complementary new products to deepen our relationships with customers.

We are more convinced than ever.

That introducing complementary new products tied to our remittance product is the right strategy.

This focus will allow us to deepen the long term relationship with our customers.

We believe driving towards the relationship based value proposition with our customers will allow us to differentiate our remittance product even further.

All of this creates a significant moat around our product by adding more value to our customers.

Looking ahead on slide 14, our focus will remain on serving our customers and driving long term value for our shareholders.

Our marketing investments it's from unit economics will continue to drive our growth in the near term and beyond.

We will see increasing returns from our investments in geographic expansion and remittance product enhancements in 2023 and beyond.

Our long term vision of complementary new products is expected to drive sustainable returns in 2024 and beyond as we will benefit from a deeper relationship with our customers.

With that I will turn the call to <unk> to provide more details on our financial results and outlook.

Thank you, Matt I'd like to start by discussing why I joined <unk>.

Our business is strong as evidenced by continued strong quarterly growth and with immense opportunities to deepen our relationship with our customers with complementary financial products and services and scale efficiency.

By executing well, we expect to deliver sustainable long term profitable growth for our shareholders. I believe remedy is just getting started and are excited about its future and also look forward to driving continuous improvement across the finance function at <unk> and I'm excited to meet with the analysts and investor community over the coming months now let.

Turning to the details of our second quarter results.

To reiterate matts comments, our momentum continued this year and we delivered very strong second quarter results across all metrics.

I'll begin by reviewing the drivers of our second quarter financial performance and then we will 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 in all periods.

Reconciliation to GAAP results are included in the earnings release.

Beginning on slide 16 active customers grew by 43% year over year to more than $3 4 million setting volume grew 40% year over year to approximately $7 billion, all resulting in revenue growth of 42% year over year to $1 $157 million, which was above our expectations.

As you can see on slide 17, a number of factors drove the 42% in active customer growth, including acquiring a record number of new customers in the quarter and our high retention of existing customers, who in many cases continue to transact with us over many years.

We believe strength in the U S. Dollar helped drive some incremental new customers <unk>. We also saw continued growth in our new customer acquisition across corridors, which helps us broaden our portfolio and create more revenue and operating leverage opportunities over time.

Our unit economics, and new customer acquisition remain highly compelling as you drive marketing efficiencies, resulting in lower CAC as Matt discussed.

Unit Economics also benefited from our increasing leverage on transaction costs, which I will detail later.

On average customers continue to send multiple transactions per month, and our pricing, which is influenced by multiple factors such as speed method of payment mix of fee and foreign exchange bread and local competition continues to deliver value for customers.

The consistency in our customer spending behavior once we acquire them as an active customer translates into a predictable revenue stream and minimal revenue churn.

Turning to costs on slide 19, we continue to benefit from increasing scale and improvement in our fraud and risk systems. The benefits of this are most visible on the transaction expense line.

Transaction expense was $61 million or 39% of revenue an improvement of over 300 basis points from 42% of revenue in Q2 of last year.

Our teams have worked hard to make this happen through more direct borgata integrations better comes with payment processing partners, driven by increasing scale and advanced risk and fraud management systems, which drive down transaction loss rates, while at the same time, improving the customer experience, we expect to continue to benefit from increasing scale.

An improved position on fraud losses, although we expect some variability in transaction expense from quarter to quarter.

Now I'll turn to our non-GAAP operating expenses on slide 20, which reflects the investments, we're making to allow us allow us to scale, our remittance business and execute on our long term vision of serving immigrants and their families with the most trusted financial services on the planet.

<unk> operating expenses marketing, which represented $41 million in the quarter or 40% of total operating expenses. The vast majority of marketing expense is related to new customer acquisition efforts.

Getting investment delivered a record number of new customers acquired at an 11% lower cap compared to the first quarter as our teams identified efficiencies and by raising our investment thresholds.

To be clear, we could have grown active customers even more at strong unit economics, but we made the decision to drive even higher returns. We continue to monitor our marketing spend actively in light of our focus to drive higher returns, while driving strong customer growth.

Customer support and operations expense was $17 million in the second quarter or 16% of total operating expenses and was flat year over year on a percentage of revenue basis.

Over time as we scale, we expect new customers to be a smaller proportion of active customers, which should help drive leverage and customer support costs.

In addition, our <unk> product investments in ensuring a frictionless customer experience will also drive leverage and customer support costs.

As our customers will need to contact us less often.

We believe our continued investments in technology and development are critical to ensure access to customer experience and deepen our relationships with them. So complementary products technology and development expense was $22 million in the quarter as we've been making investments to enhance our products continue to build our platform capabilities and improved secure.

<unk>.

Our investments also allow us to localize that scale much faster as we add new corridors payment methods and disbursement options at a more rapid pace, allowing us to capture more market share for.

G&A expense was $22 million in the second quarter up 22% of global operating expenses.

This includes an investment in our human resources finance and legal teams and additional public company operating costs, which will allow us to effectively scale to support our growth initiatives.

We expect the year over year growth in G&A expense to moderate as we begin to anniversary public company costs in the fourth quarter of 2022, and we expect to see leverage in G&A later this year.

Turning to slide 21, adjusted EBITDA, which excludes stock based compensation expense was negative $5 3 million in the second quarter of 2022, our adjusted EBITDA performance was better than we expected primarily due to higher than expected revenue and improving returns on our customer acquisition investments.

Before turning to bottom line results I would like to summarize that are growing and growing revenue base strong unit economics and high ROI on marketing provides a significant opportunity to accelerate scaling across other expense categories. As we head into our first anniversary as a public company I look forward to sharing additional thoughts and travel.

As we shape our profitability trajectory.

Now turning to the bottom line second quarter GAAP net loss was $38 million compared to $1 million net loss in the second quarter of 2021.

The increase in net loss was primarily due to a $30 million of incremental stock based compensation expense driven by hiring top tier talent to execute on our strategic priorities.

Turning to our balance sheet working capital at the end of the quarter was approximately $452 million in restricted cash on our balance sheet of $430 million.

Working capital is an important liquidity metric for us and a good proxy for operating cash.

In that it removes the impact of customer funds that are included in our balance sheet within cash and cash equivalents and disbursement pre funding.

Has not yet been disbursed at the end of the period, our balance sheet provides us significant flexibility to execute on our main growth drivers.

Adding new customers at highly attractive unit economics, expanding corridor, and new geographies, enabling a world class remedy this experience and building complementary new products, where immigrants and their families.

Moving to our 2020 to outlook on slide 22, we expect revenue to be between $6 25 and $630 million.

Disney is a $12 $5 million increase at the midpoint from our prior outlook and implies a year over year growth rate of 36.

To 37%, we're increasing our outlook to reflect the strong performance we delivered in the second quarter.

In the near and midterm, we expect increased transactions from new customers to benefit us through the rest of 2022 and beyond.

Thank you.

As a reminder to ask a question you will need to press star one one on your telephone please standby, while we compile the Q&A roster.

Our first question comes from Ramsey El <unk> with Barclays. You May proceed with your question.

Hey, guys. This is Allison on for Ramsey Hope all is well and welcome him on.

Just on the competitive environment. How do you are you guys thinking about market share. So when you win a customer where are they coming from or really in other words. What is most common here that they were previously using brick and mortar where they using a different digital platform or are these completely new Robert minute says some color that would be really helpful. Thanks.

Great Yeah happy to Allison and thanks for the question.

I think that the.

If you look at the market share that we're gaining as I mentioned in the opening remarks guiding the 36, 37%.

Compared to an industry growth rate of 4%, we are growing much faster than the market in terms of where that is coming from I think it's a mix of a lot of.

Legacy and offline players given that the majority of remittances based on our data are still sent via legacy players.

And more peace of mind, which not only attract record new customers as we mentioned, but also maintain that long term relationship, which we're continuing to see.

Sure.

Great that's really helpful. Thanks.

Thank you one moment for questions.

Our next question comes from Andrew Schmidt with Citi. You May proceed.

Hey, Matt Stephan welcome HELOC could have Jan.

First question on customer acquisition costs I'm wondering if you could just elaborate about celebrity on the sustainability is good to see the step down but but.

Maybe talk about the sustainability of low levels of <unk> and then over the intermediate to longer term, perhaps you could just elaborate a little more on the strategy could create.

Our organic customer adds versus paid.

Any insight on those two would be helpful more organic customer adds versus paid.

Any insight on those two would be helpful. Thanks, a lot.

Yes, Thanks, Andrea I think if you look at the reasons why we're seeing the 11% increase in our improvement in impact sequentially. It's due to a variety of factors.

I think our team has never been stronger and when you look at our CMO that we promoted internally arena.

If you look at the creative and brand execution CAC sequentially, it's due to a variety of factors.

I think our team has never been stronger when you look at our CMO that we promoted internally read on if you look at the creative and brand execution and velocity.

If you look at the external advertising environment, that's been favorable I think for us.

A lot of sustainability around our marketing investment and because of those variables that I mentioned, we're really excited about not only customer acquisition costs that we're paying but the unit economics meeting lifetime value side of the equation and the payback period that we're seeing across the globe. So excited about Q2 and excited about the place that were in overall.

Very clear.

Helpful and then.

And if you don't mind, if I put you on the spot obviously, a big question, we get from investors is path and timeline to profitability and don't expect any big announcements here, even though you haven't been on for too long, but maybe you could just tell us.

The framework for how you think about just investments and returns in the business.

And how you sort of think about balancing profitability versus <unk>.

Versus growth any color there would be helpful. Thanks, Scott Yeah. Thanks for the welcome Mat I think thanks for the question certainly on top of mind I know for investors I would say that one we certainly our long term focus in terms of value creation and there's a couple of things that we are starting to do anything we talked about it a little bit here in terms of our increasing our thresholds aren't on our ROI.

<unk>, which was also reflected in this in the improved performance in Q2 as well. So there is certain things here as we get a little bit more disciplined on how we think about investments that that will give us put us in a better place as we look forward.

Our path to profitability from my perspective, obviously, very early days and getting to understand and learn the business and motor share.

We did talk about.

Coming up a year in terms of our being a public company pretty soon and there is opportunity for us as we are getting towards strategic and financial planning processes to look at certain areas in the business that we can probably get more efficient at overstock start looking to scale, but again early.

Early days, yet top of mind for Forex, and we'll add more to come on that topic.

Very helpful. Thank you very much good quarter guys.

Thank you one moment for questions.

Our next question comes from David Scharf with JMP Securities You May proceed.

Great. Good afternoon, everyone. Thanks for taking my questions.

Hey, Matt.

I apologize if this is redundant.

I wanted to just dig into CAC trends, a little bit more and.

Specifically I'm looking at my notes from last quarter, and I know there was a specific comment that.

You guys were experiencing more competition and in most of the digital acquisition channels.

It was putting a little bit of pressure there and.

Can you expand on whether or not some of the favorable <unk> trends this quarter.

Our purely sort of organic.

Or is it also a result or are you seeing some digital competitors actually step back in terms of their demand.

Okay.

Yes, Thanks, David.

Happy to go into more depth on the cash side, especially as it pertains to Q1 I think the comment than what we experienced in Q1 I think was more specific to Q1.

I think that if you look at Q2 and the general trend that we're seeing.

We are able to both as we mentioned bring down customer acquisition costs, while adding a record number of new customers.

As I mentioned in the opening remarks, we added as many new customers and nearly as many new customers in Q2 of 'twenty two than we did the entire year of 2019 and I think the reason for that.

Is a lot of variables that are within our control in terms of as I mentioned creative and brand execution rigorous focus on payback at both the channel marketing channel and geographic perspective.

There are some.

Advertising environment in terms of the.

Digital channels being less competitive, but I think that we know how to leverage that and how to test the elasticity.

In a way that is very effective and so that may be why we stand out compared to others in the market hard to say there obviously, but I think we're really proud of our results. We have good handle again around the return on the investments that we're making in marketing is just one of those examples and the good thing as well about new customer adds is that it also is kind of.

In the quarters to come it's a good bellwether for that so really pleased with the customer acquisition, both numbers and cost and overall unit economics in Q2.

Got it no that's very helpful. I appreciate the detail and maybe just as a follow up.

Sort of interested in getting a feel for sort.

Corridor mix and how that might impact.

Packet growth.

Lately as well as maybe over the next few quarters and specifically.

Latam has been very strong performer.

For a lot of traditional even for all the traditional walk in players.

I know Mexico is kind of number three of your big three.

But is there any change general change in the mix.

We're remittances are going.

Among Philippines, India, and Mexico, and also just as importantly, as you look at the.

Yes.

Nature of the customers that you. Most recently added is there anything about there.

Akeley, geographics that might alter the mix and impact growth.

Yes, yes, thanks, David I think.

Asia Africa, and Latin America, and we added 900, new corridor just last quarter.

A lot of corridor in the context that we now turn to well over 3000 between well over 3000 corridor. So I think youre seeing that increased mix.

Which is exciting from for a whole host of reasons, but most importantly kind of sustainable long term growth because the 900 corridor as we launched last quarter.

They are not going to materially contribute to revenue this quarter next quarter, they're going to they're going to contribute to revenue in the years to come and that's just like a year or two ago. When we said the corridor that we launched at that point, we will not contribute to revenue until the quarters and years to come and we're now benefiting from those really.

<unk> launches and that's I think a unique part of <unk> strategy. That's often I think underappreciated is this really methodological process of rolling out new corridors and planting the seeds for future revenue growth and that's how we've gotten the kind of multi year high double digit compounded growth rate is that second investment area, which is.

Geographic expansion so.

Hopefully that provides some context, David what I'd say is the punch line is increasing geographic expansion and planting the seeds for multiyear double digit revenue growth.

Got it understood. Thanks, so much Matt.

Thank you one moment for questions.

Our next question comes from Bob Napoli with William Blair You May proceed.

I think you gave us some sizing on it as a percent of revenue, but any color on that would be great where it stands today.

Yes, great great C&I and we.

We are we continue to be excited about.

For developers.

We're seeing good uptick there so no specific new partnerships to announce but continuing to invest in a disciplined way in that area and seeing a lot of interest.

<unk> range of types of companies.

Great. Thanks, Thanks for answering my question, if I could add if I can fit one more in.

I know you guys expanded into five new send markets last year throughout Europe .

It'd be too early but you guys have any initial observations from these newly entered markets and how they're comparing to your more more stable markets that you guys are in.

Yes, I think that.

Asking rates and other metrics that we look at to kind of estimate the lifetime value of customers and the behaviors, but given that we're in so many markets now we can look at those leading indicators and get a pretty good sense of the <unk>.

Last time value of customers and then the amount we're willing to pay from a customer acquisition cost.

And so it ties a bit to David's question earlier in terms of planting those seeds for future growth.

More similarities and differences and we're also just getting faster at rolling out new markets because the.

We're getting faster given the scale that we have in the pattern matching that we can do amongst different markets.

Thank you congrats again.

Okay.

Thanks, a lot.

Thank you one moment for questions and as a reminder to ask a question you will need to press star one one.

Our next question comes from Mark Mcgrath with Keybanc you May proceed.

Hey, guys. This is Alex Mark Matt.

It's definitely nice to speak with you and Mark nice to meet you.

Just a couple of quick ones for me.

First thinking about the kind of implied second half.

Based on guidance can you talk about what's assumed around.

The leverage in transaction expense.

What should we kind of anticipate that benefit to be realized.

Versus what was seen in the second quarter.

Yes, thanks for the question and thanks for the welcome as well I'd say when we look at transaction expenses, we called out.

There is some level of variability around around the margin piece that we are making continued improvements on the <unk> side of thing using technology et cetera.

Our current expectation is for the margins to be relatively at the same level.

For the balance of the year, but continued progress around how we can make improvements, but the expectation that we built in is it's mostly stable.

Great I appreciate the extra detail there and then maybe one for you.

Just around your comments about narrowing the focus on complementary products.

I apologize if I missed some detail on that but would you mind just kind of expanding in terms of how you are thinking is.

Perhaps changed versus <unk>.

Last year, we're just thinking about passbook.

Yes, yes, absolutely I'm happy you picked up on the on the.

Word complementary which was used very intentionally and I think that when you say.

About the.

Broader products that we can offer our customers the ones, where we believe we can add the most value and that will increase and deepen the relationship which should show up in the form of engagement and increased active customer right.

Is via complementary products to remittances and so.

Theres a store value aspect with passbook and that obviously, but you should expect us to think.

Think about that more broadly in terms of other problems that are adjacent to remittances to deepen the relationship with the now $3 4 million customers and rapidly growing remittance customers to establish that long term relationship with them and looking forward to being able to share more in the future as we launch products in that.

Great.

Sure.

Understood. Thank you.

Thank you one moment for questions.

Our next question comes from Ramsey El <unk> with Barclays. You May proceed.

Okay.

Your line is on mute please UN mute.

I would now like to turn the call back to Matt Oppenheimer for closing remarks.

Great. Thanks, so much operator, and thank you all for the thoughtful questions and for joining today as we always do at remotely I'd like to end the call by highlighting another one of our amazing customers.

Customers named as BB BB joined remotely in May of 2022, one of the many new customers that we just added and send money from the UK to family in Pakistan a family member recommended and this is what <unk> said is a family member recommended remotely to me they shared that it was a reliable way to send money back home from the comfort.

Of your home I'd like many things about my experience using <unk> in the charges were clear to understand I received updates every step of the way and I really appreciate it the message directly to me when the money was collected by the recipients I recommend remit lead to all of my friends and family. So we think bebe and her family.

For using <unk> and recommending remotely to others and we are very excited about 2022 and beyond and look forward to sharing our progress as we continue to execute on our very important vision.

Goodbye.

Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.

Q2 2022 Remitly Global Inc Earnings Call

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