Remitly Global Inc. Q1 2023 Earnings Call
Good day, and thank you for standing by welcome.
Welcome to the first quarter 20 twenty-three earnings conference call.
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<unk> Vice President Investor Relations. Please go ahead.
Thank you good afternoon, Thank you for joining us.
First quarter, 20th 23 earnings call.
Joining me on the call today.
<unk>.
<unk> Executive officer.
I'm Gonna, probably our chief financial Officer.
Our results.
My commentary are available on our earnings release presentation slides, which can be found it.
Dot com.
Please note that this call will be simultaneously.
Relations website.
Restart I'd like to remind you that we will be making forward looking statements within the meaning of the federal securities laws.
But not limited to your statements regarding future financial results management's expectations.
If they would send me the promised there's no guarantee that involve risks and uncertainties cause actual results, they're very materially.
No place undue reliance on any forward looking statements. Please refer to our earnings release.
Sworn information regarding the risk factors that may affect the results.
Forward looking statements and this conference call, including response to your questions are based on current expectations as of today.
There's no obligation to update or revised.
New developments or otherwise, except as required by law.
Fallen presentation.
GAAP financial measures.
Each of these non-GAAP natural disaster measures to the most directly comparable got matrix <unk>.
And extra earnings presentation, which are available on the iron website now I will turn the call over to Matt.
Thank you step in and thank you all for joining us to discuss our strong first quarter results in increased outlook for 2023 the.
The first quarter of this year continues the trends we saw in 2022 with strong top line growth and increasing returns.
Our digital currency at scale approach and loyal and resilient customer base has allowed us to deliver consistent and differentiated performance.
Our strategy is making customer centric investments to drive scale and reinvent the remittance experience continues to deliver strong growth and high returns.
I'll start by focusing on these vision.
To transform the lives of immigrants and their families I, providing the most trusted financial services on the planet.
This has been and will continue to be our Northstar and I'm, especially excited that like many payments businesses are scale create a sustained and continue improving customer experience.
You see this in our first quarter financial results on slide four.
We delivered $204 million in revenue, which was a 50% increase year over year, our top line results and scale efficiencies across transaction costs and marketing expenses resulted in a strong adjusted EBITDA of 5 million for the quarter.
We are raising our 2023 outlook for both revenue and adjusted EBITDA to reflect the <unk>, we have seen in the first quarter and our expectations for continued.
Progress towards our strategic priorities.
Let me first say that this wrong results like every quarter that we've reported so far is because of our customers, they're great tenacity and commitment to their families and friends back home inspired that every day it remotely our.
Our customer send money to their loved ones for largely nondiscretionary needs, such as groceries rent and school fees.
This inspiring customer base is more resilient to changes in economic condition and our commitment to serve them is foundational to them at least predictable and rapidly growing business.
The drivers of our strong results include the aforementioned resilient and predictable customer behavior are differentiated product.
Focus on high investment returns and scale, enabling us to deliver an even better customer experience.
And the first quarter quarterly active customers grew 50% year over year as you can see on five five.
We now have 4.6 million quarterly active customers, which is up from.
2.1 million two years ago, and we are significantly outpacing the overall growth in the market.
We continue to benefit from record new customer acquisition, while at the same time, increasing returns on our marketing spending with customer acquisition cost lowering by 31% on a year over year basis.
Building trust with new customers and continuing to deliver on our promises to existing customers are key drivers and active customer growth and therefore revenue growth.
Both these factors led us to increase our revenue outlook for 2023.
New geographies that we entered the past few years also continue to contribute to our current growth and.
And we expect the market we are entering this year to contribute meaningfully to growth next year and beyond finally retention remains strong as an investment in our product and customer support continued to drive a superior customer experience.
Our strategic investment priorities in 2023 remain unchanged as you can see on slide six.
Our investments in these four priorities should allow us to deliver efficient new customer growth and drive additional retention and customer loyalty in both the near and long term.
The near term focus is on driving new customer acquisition, a highly attractive unit economics, which benefits our business in the long term given the stickiness of customer behavior.
We are focused on growing our geographic footprint and improving the quality of our global network, which will help us drive efficient customer <unk>.
Enhancing our remittance product and our vision of serving our customers with complimentary new products will allow us to drive long term retention and customer engagement.
Turning to the drivers of our efficient new customer acquisition on five seven.
Our trusted brand now with millions of customers creates a positive word of mouth effect driving down customer acquisition costs year over year, increasing our number of new customers.
This is particularly true in Newark send markets were added awareness showed strong sequential increases in the first quarter compared with the fourth quarter of last year.
Our continued focus on localization optimization and elasticity testing along with continued investments and brand marketing allowed us to be even more efficient with our marketing investments.
The velocity of our marketing asset creation continues to increase and supports our goal to present, the right message to the right customer at the right time.
We continue to see strong results as we refine our approach to localization across our increasing number of corridors, which scribed relevant and builds trust and our platform.
An example of our localized approach can be seen in the digital AD on slide seven which shows localization for specific disbursement partners and language. We believe our marketing platform is difficult to replicate given the scale of the inside we have into our customers and the speed and sophistication we have in turning those inside.
Into efficient marketing investments.
Are brought in high quality Global network helps drive new customer acquisition and delivered a faster and more reliable customer experience as seen on Friday.
We know for our customers and their families and more than 170 countries and territories.
And then we discussed on our last earnings call, we added the United Arab Emirates, the second largest outbound remittance market in the world.
As I said the market in the first quarter.
Looking ahead, we have the opportunity to further expand into additional send market within the middle East Europe and Asia.
We continue to believe the scale and quality of our pay and and disbursement options, including approximately 4 billion bank accounts more than 445000 cash pickup locations and approximately 1.2 billion mobile wallet remains one of the many compelling value proposition for our customers.
As it allows our customers to send and receive funds in whatever way they prefer.
It's not only the number and breath of options that we provide the customers, but also the quality and reliability of those option that is critical to attracting and retaining customers. While also providing an efficient cost structure.
We defined network quality with a number of metrics, including speed transaction delay customer support contact right and many others, which have seen improvements as we have scaled over the past few years.
Let's walk through an example to make this more tangible.
Oftentimes when we initially enter a market we work with global Aggregators to get quick access to local disbursement methods, such as a specific bank or cash pickup location.
As our volumes increase we focus on building out direct integrations with local payment partners in order to deliver a superior customer experience and better cost structure.
Our experienced in the Philippines is a good example of how as we scaled we've been able to build these these critical direct integration.
The aggregator we work with initially had several hawks or partners to ultimately disbursed funds. The customers. These hearts result in higher costs increased error rates delays less control over the transaction lifecycle.
And an inability to clearly understand and communicate where customer funds are so.
So fast forward to today with our scale and investments in technology <unk> now has 17 direct integration into the most important remittent centers mobile wallets and banks in the Philippines alone.
This is brought down the cost of philippians, but more importantly, it has created a better customer experience.
For example, customers can check their transactions status and or amend the transaction with our customer care team and directly in our App.
If a partner have an outage or delay we can proactively update our customers on this delay via our products. So they can choose other options for cash picker, all with the same reference number and not having to contact customer support.
Finally with bank deposit options. We've added features like recipient bank account number validation, so there'll be automatically warn our customer before they submit a transaction that payment or the.
The account number of their recipient incorrectly.
All of these improvements are made possible via these correct integrations and these direct integration are only possible with scale and technology.
I'll also take years to develop and while we're proud of our current experience. We are relentless about continuing to expand our scope of direct integration across the globe to continue to bring down costs and improve the customer experience.
We are also continuing to monitor trends and receive market distribution networks and continue to optimize our network to deliver superior customer experience at robust unit economics.
This principle of scale and technology, driving down costs and improving the customer experience applied to many other areas of our customer experience, including our fraud and compliant system.
Remains companies are faced with the complex challenge of preventing fraudulent transactions, while also maintaining a friction frictionless customer experience.
One example of fraud is stopping large scale sophisticated fraud groups.
From using stolen identities and payment profiled that they've acquired elsewhere and tried to use <unk> to withdraw cash from the stolen accounts in emerging markets.
With our current scale and investments and for our technology, we have been able to create our own proprietary machine learning models leverage millions of data points that are signals, a fraudulent behavior and train our models to continue to provide more precise predictions everyday.
Additionally, if our model show that we need additional information from our customers to validate their identity. We've created a unique <unk> resolution center in our App that empowers customers to provide us with their identification answer risk related challenge questions or seamlessly give us other information that helps give our customer self service.
And easy ways to unblock their transaction.
All of this is only possible with scale and results in an improved cost structure via lower fraud loss rates improved customer support costs over time, and more instant transaction leading to higher retention.
This infrastructure then results in a seamless fast reliable entrusted front end customer experience as shown on slide nine <unk>.
Product features such as the ease of use speed platform uptime wide selection of payment and disbursement options and access to self health and life support are all critical factors in driving customer preference.
And the first quarter more than 90% of transactions were dispersed in less than an hour. We have successfully reduced the rate of transfers that take greater than an hour to disperse even as our volumes have grown substantially.
Additionally, we were able to maintain an uptime of $99, 93% in the first quarter, even as our volumes continue to show significant growth. This premium customer experience has built significant trust in our platform as you can see by the approximately $1 million ratings in the App store with an average of 4.9 stars and more than.
580000 ratings and the Google Playstore with an average of 4.8 stars.
This cross drives additional word of mouth benefits for new customer acquisition, while also driving strong retention for existing customers.
Turning to slide 10, or scale and high return investments in technology, but also enabled estimate critical investments and complimentary new products that we expect will deliver significant benefits to our customers who are underserved by other financial services companies, we have a deep understanding of our customers driven by years of data and analytics.
And millions of remittance transactions, which allows us to focus on specific problem facing our remittance customers. These.
These products will be targeted at our customer with the goal of driving additional revenue retention and customer acquisition benefits Ultima.
Ultimately, we expect that our complimentary new product investments will deepen and expand our remittance relationship with our customers, creating a virtuous cycle and additional competitive advantage for remit.
As we look ahead to the rest of 2023 and beyond we remain focused on delivering our vision on slide slide 11 to transform the lives of immigrants and their families by providing the most trusted financial services on the planet we.
We believe we are in a unique position to deliver long term sustainable returned as we leverage our differentiated products and our scale to improve the customer experience. The delivers peace of mind every time, they send money back home to family and friends.
With that I'll turn the call that March to provide more details on our financial results in a revised 2023 outlets.
Thank you, Matt I'm very pleased with a strong financial performance be delivered in the first quarter of begin by reviewing some high level of drivers of our financial performance.
Then discuss the priorities, we're focusing on to ensure we can deliver sustainable growth and high returns for many years to come and I'll finish with our updated outlook for 2023, and how we are building a differentiated financial profile to drive long term returns with that let's go into our first quarter results.
As a reminder, I will discuss non-GAAP operating expenses and adjusted EBITDA in my remarks. These metrics exclude items suggest stock based compensation the donation of common stock in connection with our pledge, 1% commitment transaction and integration costs related to acquisitions and foreign exchange gain or loss reconciliations to GAAP results are.
Included in the next release.
Beginning I'll slide 13, with our high level financial performance in the first quarter.
Pleased to deliver high active customer and revenue growth and adjusted EBITDA profitability quantity active customers grew by 50% year over year $246 million.
Volume grew 40% year over year to approximately $8.5 billion, all resulting in revenue growth of 50% year over year, two $240 million.
Our GAAP net loss with $28 million in the corner and included $29 million stock compensation expense recognized in the quarter. The strong growth in revenue combined with significantly lower transaction expenses as a percentage of revenue and marketing efficiency led to adjusted EBITDA, a $5.4 million in the quarter now let's go ahead.
Some of the key factors that drove our strong performance in the first quarter on slide 14, we detailed the drivers of our strong performance.
Let's begin with revenue, which was up 50% year over year in the first quarter on a recorded basis and 53% on a constant currency basis.
Strong revenue growth was driven by the scale effects that Matt discussed, including the high retention of existing customers and benefit some earliest and market expansion.
As is typical activity from returning customers contributed to a significant portion of total revenue in the first quarter, which reflects the non discretionary major reminiscences and the loyalty of our customers.
In the first quarter. We also acquired a record number of new customers, who we expect will contribute to revenue growth in future periods.
We also continue to see customers increase their preference would visit receive options and we're pleased to be able to serve them with our broad and high quality network with let's go disbursement options, including 4 billion Bank accounts and 1.2 billion mobile wallets.
Turning toward transaction expenses, which includes costs related to our pay and partners.
Partners in fraud losses.
That's an expense as a percentage of revenue improved 500 basis points year over year and is another example of how we are benefiting from scale and investments in technology.
This was primarily due to lower fraud last minutes in the first quarter.
Driven by improved algorithms, which harness are increasing amount of data and analytical sophistication do more precisely delineate between good and potentially fraudulent transactions.
Enabled us to deliver a better experience in the vast majority of our customers with legitimate transactions by lifting friction related to manual reviews.
This is a clear benefit to our customers to expand some more seamless transaction and to our cost structure. We will continue to invest in our data and analytics capabilities to manage both our fraud loss rates and provide our customers with friction less experiences.
However, as we've noted before we expect some variability in fraud last made seen any quarter, while continuing to make sustainable improvements in the long term.
We also benefited from improving terms with pain and disbursement partners as our volumes have increased as more volume flow sewer network, we're able to negotiate better terms, while also adding more direct integrate since we're discussing partners the benefits of which Matt discussed earlier.
Consistent with the fourth quarter, a key driver of our strong results in the first quarter was the efficiencies to be sustained new customer acquisition marketing as we continued our focus on delivering high returns on our marketing spend we were <unk>.
Able to take advantage of our increasing scale in brand awareness and acquired a record number of new customers in the corner.
Customer acquisition costs are CAC makes up the vast majority of marketing expense, we were able to deliver an eighth 90 basis points euro per year decline in overall marketing expense as a percentage of revenue.
<unk> declined 31% year over year and it was relatively flat sequentially as we are able to sustain our marketing efficiencies consistent with the fourth quarter improvements in CAC outside of North America, when a significant driver of the reduction in cap.
Overall, a number of factors so declines in cat, including increased benefits from localized digital marketing increased greater velocity, improving brand awareness, what amount of facts and increasing scale in our business, including outside of North America in Q1, we experienced relatively weak or advertising market compared with the first quarter.
2022.
We expect to remain dynamic and managing CAC within our investment professionals to ensure that we continue to aggressively grow our customer base you and the strong feedback received from our marketing investments. We will continue to monitor the advertising marketing trends during 2023 with the expectation and the competitive advertising market conditions would.
Start to normalize.
What would be expected sustained our cat get per cent you can continue to optimize our marketing spend we expect to moderate in your ear improvements in future quarters.
Also focused on delivering longterm scale efficiencies, while at the same time investing in our growth opportunities in the first quarter G&A expense increased 120 basis points year over year have you saw a higher expenses related to our acquisition rewire, partially offset by continued disciplined on headcount and non had gone expenses.
We are maintaining discipline in evaluating opportunities across our operating expenses and expect a moderate overall growth rates and head count this year, while continuing to make higher return yielding investments for the long term.
Technology and development expenses increased 170 basis points year over year and reflects the investments, we're making a remittance platform developing complementary new products and enabling increasing automation across various operational areas, such as customer service and back and transactional processing.
We expect to continue to invest in delivering a superior experience for our customers and are confident in the long term returns this will deliver.
Customer support and operations expense were down 50 basis points year over year as a percentage of revenue.
We expect to see improved efficiencies in customer support over time, as we continue to scale and reap the benefits from product enhancements and automation.
Our focus for 2000 2000 and beyond remains four key areas to drive sustainable Longterm returns as you can see on slide 50.
These are to continue to deliver a strong revenue growth improved transaction expense since DNR improved marketing efficiency and increased scale efficiencies and other operating expenses.
Focusing on executing across these four areas, particularly with the additional focus on efficiencies we boo.
Believe we can deliver sustainable longterm higher returns.
First we expect to consistently deliver high double digit revenue growth, even as we scale the investments, we're making our product marketing and a global network will help us drive robust growth inactive customers and sustained high retention in the first quarter. These factors help deliver 50% year over year revenue growth.
Second, we're making progress on improving our transaction expense cost structure as the increasing volume of remingtons transactions.
We believe there additional opportunities over the medium to long term to reduce costs related to both being in disbursement partners <unk> scale.
On the pay inside we are now process more than $30 billion, a volume on an annual run rate basis, enabling Additionally, efficiencies with beeman partners on the displacement side are increasing number of transactions allows us to not only negotiate better terms with this pleasant partners, but also allows for additional direct integration opt.
That are not available upscale competitors.
Finally, as the volume of data increases in our proprietary product models were able to drive down transaction investments without adding significant friction you're the customer experience has been vindicated in the past we expect some variability in transaction expense from corner to corner at some fraud costs remained inherently unpredictable, but we strongly believe that.
Robert and sustainable over the long term.
Turning to marketing efficiency marketing efficiency has been a large driver of our increasing returns on our investments at the scale. We believe our brand awareness and word of mouth will continue to increase making our marketing expenses more efficient over time.
We have benefited from a relatively weak competitive advertising market and we expect a year over year comparison going forward to normalize. However, we believe the vast majority of the recent attack efficiencies, we have delivered or sustainable and or another result of this scale benefits that Matt discussed.
We plan to continue investing in high return marketing with a focus on maintaining strong unit economics.
Turning to other operating expenses, which include technology and development customer support and G&A.
Technology and development expense reflect investments, we're making an <unk> product enhancements, including risk and compliance. It also includes investments and complimentary new products and increasing automation in various operational areas. These investments are critical and driving long term customer loyalty as well as additional opportunities for <unk>.
Greece customer engagement.
In addition, our emissions products investments and sort of friction less customer experience.
Improved precession and fraud management, but also drive leverage and customer support costs over time as they are.
Customers will contact us less often.
Our G&A costs reflect the investments we've been making to ensure we have the right infrastructure to support our growth initiatives as.
<unk> scale, we expect to see longterm leverage on DNA cause as we remain disciplined on head count not had gone expenses.
Delivering all these priorities has allowed us to increase our outlook for both revenue and adjusted EBITDA in 2023 as you can see on slide 16.
Specifically, we expect revenue to be between $835 million.
$95 million, which reflects a year over year growth rate of 2437%.
And as a $15 million increase in the mid point from our prior outlook.
Increasing our revenue outlook is primarily driven by the strong trends, we have seen in the first quarter and our expectations for continued strength in new customer acquisition and the resilience of our existing customers.
Why do we expect to remain in a gap net loss position, we expect adjusted EBITDA. It can be between five and $15 million, which is a 5 million increase at the midpoint from our prior outlook. The increase in our adjusted EBITDA outlook is primarily driven by strong performance in the first quarter. The outlook also allows us to take advantage of our.
He's real quiet, even more customers you of the unit economics remained compelling.
We are planning for a macro and FX environment that remains relatively stable as to what we have seen in the first quarter of 2023.
Continued global diversification and increasing scale helps us to mitigate localized macroeconomic trends, we expect a sustained <unk> delivered over the past year and a normalizing competitive advertising market.
Finally, we expect to continue prioritizing investments in our technology and development organization and ensuring that these investments are aligned towards strategic priorities are.
Balance sheet with over $240 million of cash at slide 17 positions as strongly to deliver on our strategic priorities are cash balance at quarter end reflects approximately $60 million of cash used to fund the acquisition to rewire, which closed in January including the <unk> assumed that our primary focus on.
Capital allocation remains our organic growth priorities of new customer acquisition geographic expansion remittance product enhancements and complimentary new products.
I'd like to finish by discussing the differentiated financial profile rebuilding to deliver long term sustainable returns.
The building blocks of this profile include predictable after customer behavior, and therefore revenue profile mobile unit economics, and disciplined in managing operating expenses, including sure man competition expense and delivering higher returns on our investments.
Differentiated and disciplined financial model enabled us and sustained growth and adjusted EBITDA over the long term and deliver a strong operating income in cash flow profile in the coming years.
We believe we are in a unique position to execute on this model across various economic environment and look forward to delivering for our customers and shareholders for many years to come with that Matt and I will open up the call for your questions operator.
Thank you.
As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.
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Our first question comes from the line of Andrew Smith, which city you're line is now open.
Hey, Hey, mom came out to quarrier, thanks for taking my questions.
Wanted to start off on just just take right understand gets an output and input but strong performance. There maybe you could just dissect that a little bit and talk about weather.
That was like for like core doors are mix, just just curious what's driving at that looks like another.
Area of strength in the quarter any color that would be helpful. Thanks, a lot guys.
Okay. Thanks, and have a great question first off I, just want to reinforce great quarter I think we're pretty pleased with our results for this quarter of picked up my entertainment very strongly for us with the new person activation and if you're asking customer growth spurt of phenomenon for us in Q1 and.
And in terms of takeaway specifically as you mentioned is where we look at it mostly as an outcome of mix of both corridor mix and we have now expanded our corridors quite a bit as well as the mix of our various disbursement options, we provide to our customers and so what are we really seeing is the.
Output what that industrialized begun the eighth grade I didn't spend it to a point I picked up the last couple of quarters, but it's still operating well within the range that we've seen historically between 2% to 25%. So we continue to look at it but we're really focused on making sure we are providing real value to our customers and we are.
We're happy with with how that is correct.
Got it thank you very much for that and.
Maybe a higher level of questions for you.
I appreciate the comments on the business in terms of just the resilience that predictability and this is often this area, where I get a lot of questions, but you talk a little bit about this in your prepared remarks, maybe you could just mentioned a little bit about beyond just the resilience of the customer.
Makes the model the way you run the business more predictable and maybe some others and then as the business gets bigger does that also help predictability. It sounds like you see clearly synthetic some scale fraud models, but just would love to hear your thoughts on those topics. Thanks, a lot guys.
Yeah, absolutely. Thanks, <unk>, great to hear from you, Yeah, I think that.
What you see with the overall industry is that there is a shift to digital first players and specifically digital first layers that have scale because of the areas that I outlined in my remarks scale gives us a ton of advantages in terms of being able to drive them.
Error rates improve the customer experience dragged downcast create a more differentiated products and I think that the exciting thing about where we're at is that we're seeing that flywheel continued to spend so the more customers that are using our product more we can reinvest in things like our disbursement network like a risk systems and so that is really what's driving a lot of our overall I think outperformance and then the foundation.
<unk> is that our customers as as I mentioned and as you alluded to her.
Have the grit the resilience the tenacity to continue to support their families back home and I do think that that is a trend that has been seen specifically with remittances to low and middle income countries and that's what motivates our team every day is to serve customers.
Like our customers to be able to.
Enabled them to send money back home.
Very trusted seamless and affordable way.
Got it thank you for that Matt grabbed some great quarter guys.
Thanks Henderson.
Thank you.
Our next question comes from the lineup Ramsey Elissalde with Barclays. Your line is now open.
Hi, guys. This is alison onto Ramsey. Thanks, so much for taking my question and congrats on the corner.
And you spoke a little bit too on the lower than expected marketing expands and how that was driven by his last competitive advertising market can you just speak to the competitive dynamics in the advertising market that you're seeing today. What you think is driving less competition, there and how that could plan throughout the year.
Yes, good works analysis, and I think we've seen this now for a couple of quarters action you until last year I think when we look at the broader financial services sector.
<unk> from that sector has has been.
I'd actually made less SOA look at some of the cost of advertising have generally been more favorable either the back half of last year, we saw a bit of that in queue afforded last year as well and we've continued you'll see that in Q1.
As we look forward, we're expecting a degree of normalization when it comes to the competitive advertising market <unk> watchful of that we're really focused on making sure that we continue to focus on the things that we controlled from a marketing efficiency perspective.
We're really pleased with the first we're seeing in terms of cash include message we're sustaining.
But I also just wanted to point out is the forward not only are the competitive aspects that we continue to monitor and we expect a degree of normalization as we get to the back half of the year, we've made a fairly significant Catholic roommates so last year.
Dark.
Are into it took a whole range of those so.
We're still within our guard rails, and do et cetera about continue to have high return on the market investments and.
The only thing that I would add there is.
I think that there's a lot of benefits that were that were that are both because of our execution and just our physician over on the market specifically, what I mean by that when it comes to the marketing front and improvement in customer acquisition costs is the word of mouth effects that I mentioned, we had $4 6 million quarterly activities or is it would be much larger on an annual active basically of millions of us.
Using our platform really having a great experience in that word of mouth effect certainly helps us another benefit of scale and that flywheel that I mentioned and then the other is just our marketing approach, which I think is differentiated I think we tend to be more analytical data driven unit economic focused marketers.
And I think that that pay dividends, because we can both via our marketing team's execution and the marketing platform. We built two.
Enables us to match the customer acquisition with customer acquisition cost with the lifetime value on a bit more of it the average and scientific basis and so I think all of those things are perhaps why you are seeing outperformance. In addition to the tailwind that we've seen from a competitive advertising environment, and we feel really well positioned to be.
Able to continue to grow and continue to acquire customers. It at a really favorable return.
Thank you guys. So much that was super helpful.
Thanks Avenue.
Our next question comes from the lineup Darin pillar with Wolf Research. Your line is now open.
Hey, guys. Thanks, I think just seeing the balance between the growth in the profitability or showing as has been great. Maybe we can just give a little bit more into that in terms of the operating leverage now with the business going forward as you grow with this race yeah.
What kind of investment do you think it's going to take her let's call. It on an annual basis incremental investment would it take to have these kinds of growth rates.
Yeah I think.
Answer here getting this I mean, we I think we're starting to see really the benefits of being at scale as additional first player.
And it's starting to reflect clearly both in terms of the data we have the understanding of our customers and the cohorts, we have and as well as some of the economics, we can get from our data payout partners as well. So that's really the foundation here that we're starting to see transaction margin continue.
Continue to improve we've seen this knowing the last couple of quarters transaction are just gone up and has improved a lot of that is again driven by fraud Dr.
Talk about fraud algorithms getting better based on the data we have I just getting much more precise in terms of how we understand what's a potentially fraudulent transactions versus a legitimate transaction. So we're so why we don't we're not giving us specific margin guidance at a detailed level what you're seeing is.
According to the improvement.
And will continue to focus on efficiencies across across the business with us.
DNA, whether it's also making sure I, so we look at product and technology investments.
Allocating the capital.
In the right places and delivering high return so net net we expect to continue to improve in the mid long term.
<unk> margin profile, whether it's a debatable level or at the EBITDA level, but for this year. This is our first.
Getting to getting into a profitability and we're really pleased raised our guidance EBITDA.
By five minute purchases.
It was great to see thanks, Matt just very quick follow up I mean from a competitive landscape stay up quite obviously, we're all getting the question or what other what what a large competitors doing a price and frankly also visa plus some dynamics around just different incremental check that can be all sorts or <unk>.
Alternatives to provide cross border. So maybe it was a quick latest thoughts on competition and the the industry overall thanks.
Thanks again guys.
Yeah, absolutely down and yet I appreciate that question I think that the.
The first few overall industry. If you look at it is still very fragmented. So the largest later I believe that is 15% market share and so I think given some of the trends around digital given some of the trends that.
That are delivering our results I would expect to continue to see consolidation.
Given some of the scale advantages that I mentioned and so that's a continuation of that trend that we've seen over the last several years and orders and we're really excited to be entered well positioned place not only from a scale standpoint, but from a digital first approach standpoint pendant gives us a differentiated products. So that's one number one and I think that the.
The second point in terms of short term pricing changes overall anything that's changed on the short term horizon. The answer there is no I think that we continue to have service that you see in the results today customers.
Really value not only because of the.
Fair price that we charge, but because of the peace of mind and trust that we offer to customers that only continues to get better with the scale that I mentioned, improving a variety of aspects of our products and systems that ultimate yourself issues of our customers they value that peace of mind and their ability to go to a trusted product more than anything else.
Yeah, certainly doesn't look like it's impacting you guys. Thanks.
Yeah.
I just.
Thank you.
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Our next question comes from the line of Chris Kennedy with William Blair. Your line is open.
Good afternoon, and thanks for taking the question you guys have expanded into several new countries and markets over the last.
18 months, a coupla years can you just talk about how some of those newer core doors are going and are we really seeing it in the numbers yet.
Yeah, Thanks, Chris the way the way that I think about it.
<unk> expansion is when I go back.
Approximately five years, and we started expanding to various markets in Europe , we're planting the seeds for the kind of growth that we're now seeing in those markets and it doesn't necessarily take five years, but I. Just go back because you can see how fast some of our international business and rest of oil business is growing which is quite remarkable so that is because.
Cause of the seeds that we planted those countries that we launched.
Year 235 years ago, and that's the way I think about the markets that we just launched UAE. We've mentioned in the past very excited about that market given the size and scale an opportunity.
We just launched it and we're rolling out the playbook that we rolled out across a variety of other countries, whether that's Y-you, Australia you name it and so I would expect that.
Meaningfully this year, but if you think about the quarters in years to come.
<unk> in other markets that we're launching now will continue the kind of sustained predictable.
Fast growth rates that we delivered today laughter.
Great and then just following the shutdown the passbook give us an update on some of the additional services that you're focused on adding to the platform. Thank you.
Yeah. Thanks, Chris yet, we we believe that we have a significant long term opportunity in both offering our network and infrastructure to other businesses.
And in developing complementary new products for our customers, so, but I didn't share a lot of additional details on that today you can expect additional details in the future and we're really excited about what's to come there.
Understood. Thank you.
Thank you.
Our next question comes from the lineup Nance with Goldman Sachs. Your line is now open.
Hey, guys nice job another great quarter I appreciate you taking the questions.
Wanted to follow up on some of the commentary that you had around the improving efficiency on transaction margins and I was wondering if you could kind of maybe double click on that and and give us a sense for how much more optimization in your existing networks. There are to continue to reduce costs.
<unk> for instance.
Sure. Some stat, you can give us on.
For <unk> for acts of the top plan corridor, we've seen plenty per cent reduction in transaction costs and we'll get the same thing on the rest of the corridor. Just anything you can kind of tell us to give us a sense for where we are in that journey of optimizing the cost of some of the existing volume you've got on the platform.
Yeah. Thanks, a lot for the question I think.
Unfortunately, I think I will be giving you a lot of staff specifically on it but I can give you a bit more color.
I think what we've seen in the last couple of quarters, and maybe a little bit to the back half of last year.
Two four we saw a transaction Martin improved a lot of that is attributed to our fraud, Los expenses coming down as we deploy some of the newer models, there and we're able to differentiate between sort of the potentially fraudulent transactions and identify what this quarter as well I think that particular effect suggests improving our models.
Consistently and as we scale get more and more data on our customers I think we will continue to see some benefits there again, given this potential all way for some volatility.
In that in any given a quarter, but fraud fries on that project right on the pay and Npl's site. I think we are to a degree in the earliest stages of getting the right <unk>.
Margin that economics, there, we've gotten an upscale now and and go actively looking at how we can improve.
Our network economics.
<unk> example of Philippians, where we now have 70 indirect integrations and when you say something like that and apply that across some of the other newer car goes as well as we continue to expand internationally.
We do see in the mid long term that we will see continued benefits from a transaction marketing perspective. So those are some of the big drivers.
That we see towards the middle longterm too from a margin implemented respectively.
Got it Super helpful.
Sounds exciting.
As a follow up question you guys talked about you see this market.
Consolidated over time, yeah, there's been a lot of focus on this and prior calls on the scale benefits that you guys have like how do you think about using that scale as potentially being a consolidator in this market. So for instance.
Sure there are pretty solid synergies that you could realize from taking a subscale provider putting them over your over your network like does that something that you think is on the cards and.
Time.
Yeah. Thanks, a lot I can take that one yet historically, we found that organic growth and internal billed to achieve those that scale that I mentioned as the best opportunities.
But we continuously review all opportunities as they become available we have a high bar for any M&A transactions and remained disciplined on deploying capital well. We are focused on is transforming this industry and really.
Cheating those benefits of scale, which as we often say internally recently it really feels like you are just getting started in that effort.
I appreciate you taking the question.
Angela.
Thank you.
Our next question comes from the lineup Matthew O'neill was F. T partners. Your line is now open.
Yeah, Hi, Thank you so much for taking my question I wanted to just dig in a little bit more on some of the new send market openings. You guys mentioned I think the latest big Big market. You Open was you AE with the office and you buy I was just wondering in particular in the middle East It's a fairly.
The unique market globally for remittances do the informal channels and just wondering have.
There are many unique like challenges are learning after entering the market I know it's early days, but are you are you looking at it.
With the more excited outlook to entering further middle East markets.
And or any any other challenges to call out in that region. Thus far.
Yeah, Yeah. Thanks for the question I can take that one I think that.
The we're very excited about the UAE as as I mentioned earlier, the second largest outbound remittance market in the world and so big opportunity and you are right that extend market.
Does have a different customer profile different payment acceptance different compliance requirements different.
K Y C know your customer and identity verification processes, and I think that we've proven now.
Across 170 that combination send and receive markets, but 170 countries that we now sir.
Is that we're good at going in doing that optimization and scaling that business and so I would say that that applies to the way. They are definitely unique elements of that market there definitely unique complexities.
I think that it's good that we now have a portfolio of other countries that we've expanded to to draw from in terms of that experienced in pattern matching from other countries that we're in and so excited about what's to come there and excited that we've got this labor that you've ruled out now across a lot of different countries that we've proven that works well.
Thanks, So much that I did have one quick follow up for a month, if there's time, which is simplistically on the top line the guidance increase the midpoint I believe was about 15 million.
<unk> and the the bead versus consensus was all the more than half that in a quarter any anything in particular as we think about the the rest of the year, where the outperformance comes from or just kind of broad based nothing in particular to call out.
Yeah.
Thanks for the question I know of nothing nothing in particular, I think we are continuing to execute strongly and it's really been a trend around that already pleased with the growth of our active customers as.
As well as record new customer acquisitions that we've been seeing that now for most students.
Quarter. So we expect to continue and that and next directory to the rest of the year.
Understood I'll hop back in thanks, so much.
Thank you thanks.
Thank you. That's the final question I would now like to turn the call back to Matt Oppenheimer for closing remarks.
Sounds great. Thank you so much.
Awesome well. Thank you everybody for your thoughtful questions and as we often do it remotely like to end the call by highlighting another one of our amazing customers whose name is also.
<unk> joined mentally last year and send money from Sweden to family in the Philippines and off commented a quick and easy way to send money and always using it we take off for his loyalty and consistent use of recently to send money home to his loveland and thank you everybody for joining us and we appreciate your support.
We are excited about the opportunities ahead and look forward to sharing our progress as we continue to execute on our vision of transforming lives of immigrants and their families by providing the most trusted financial services on the planet.
This concludes today's conference call. Thank you for participating.
Disconnect.
Goodbye.
Mmm.
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Okay.
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