Q4 2023 Remitly Global Inc Earnings Call - Q&A
Okay.
Operator: Good day, and welcome to the Remitly fourth quarter 2023 earnings conference call. At this time, all participants are in a listen only mode.
Good day and welcome to the room at least fourth quarter 2023 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
Operator: After the speaker's presentation, there will be a question and answer session. To ask a question, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised.
Ask a question you will need to press star one one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one again please.
Operator: To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Stephan Scholstein, Vice President, Investor Relations. Please go ahead.
Please be advised today's conference is being recorded.
Now like to hand, the conference over to your Speaker today, Stefan Schulz, Vice President Investor Relations. Please go ahead.
Stephan Scholstein: Thank you. Good afternoon, and thank you for joining us for Remitly's fourth quarter 2023 earnings call. Joining me on the call today are Matt Oppenheimer, co-founder and chief executive officer of Remitly, and Hemant Munnapalli, our chief financial officer. Our results and additional management commentary are available in our earnings release and presentation slides, which can be found at ir.remitly.com. Please note that this call will be simultaneously webcast on the Investor Relations website. Before we start, I'd 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 Remitly's future financial results and management's expectations and plans. These statements are neither promises nor guarantees and involve risks and uncertainties that may cause actual results to vary materially from those presented here.
Thank you good afternoon, and thank you for joining us for them at least fourth quarter of 2023 earnings call. Joining me on the call today are Matt Oppenheimer co founder and Chief Executive Officer, appropriately and Hey, Marc <unk>, Our Chief Financial Officer, our results and additional management commentary are available in our earnings release.
The presentation slides, which can be found at IR dot dot com.
Please note that this call will be simultaneously webcast on the Investor Relations website before we start I'd like to remind you that we will be making forward looking statements within the meaning of federal securities laws.
But not limited to statements regarding <unk>.
Future financial results and management's expectations and plans. These statements many of the promises no 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.
Stephan Scholstein: 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 Remitly assumes no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law. The following presentation contains non-GAAP financial measures. For reconciliation of these non-GAAP financial measures to the most directly comparable GAAP metric, please see our earnings press release and the appendix to our earnings presentation, which are available on the IR section of our website. Now, I will turn the call over to Matt.
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 these non-GAAP financial measures to the most directly.
Operable GAAP metrics. Please see our earnings press release, and the Appendix chart presentation, which are available on IR section of our website now I will turn the call over to Matt to begin.
Matt Oppenheimer: Thank you, Stephan, and thank you all for joining us for our fourth quarter earnings call. As we look back on Remitly's performance in 2023, we have a lot to be proud of as we delivered on our commitments to our customers and shareholders. At the beginning of last year, we laid out our commitment to deliver strong growth at robust Uninex, increase return on our investments, and deliver a fast, reliable, and seamless experience for our customers. As you can see on slide 4, we delivered on these commitments in the fourth quarter and in 2023. These results reflect the progress we have made on our strategic initiatives and our commitment to our customers to deliver peace of mind as they send money across borders. Our revenue increased 39% in the fourth quarter and 44% for the full year. On a quarterly annualized basis, our scale has reached over $1 billion in revenue.
Thank you Stephanie and thank you all for joining us for our fourth quarter earnings call.
As we look back on <unk> performance in 2023, we have a lot to be proud of as we delivered on our commitments to our customers and shareholders.
At the beginning of last year, we laid out our commitment to deliver strong growth at robust unit increase.
Increased return on our investment and deliver a fast reliable and seamless experience for our customers.
As you can see on slide four we delivered on these commitments in the fourth quarter and in 2023. These results reflect the progress we have made on our strategic initiatives and our commitment to our customers to deliver peace of mind as they send money across borders.
Our revenue increased 39% in the fourth quarter and 44% for the full year.
On our fourth quarter annualized basis, our scale has reached over $1 billion of revenue.
Matt Oppenheimer: We also delivered $8 million of adjusted EBITDA in the fourth quarter and $44 million of adjusted EBITDA for the full year, well ahead of the goals we set for ourselves at the beginning of the year. We benefited from strong execution across the business, increasing scale, the non-discretionary nature of our service, and the resilience of our customers. We've expanded on our vision, as you can see on slide five. Our vision is to transform lives with trusted financial services that transcend borders. This vision encapsulates a broad view of who our customers are today and who we can serve in the future.
We also delivered $8 million of adjusted EBITDA in the fourth quarter and $44 million of adjusted EBITDA for the full year well ahead of the goals, we set for ourselves at the onset of the year.
We benefited from strong execution across the business increasing scale, the non discretionary nature of our service and the resilience of our customers.
We've expanded on our vision as you can see on slide five our vision is to transform lives with trusted financial services that transcend boarders.
Vision encapsulates a broad view of who our customers are today and who we can serve in the future.
Matt Oppenheimer: It also speaks to the unmet customer needs that we believe we are uniquely positioned to solve by delivering peace of mind to customers around the world with cross-border financial needs. Our four strategic focus areas on slide six are designed to help us deliver against this audacious vision, with customer centricity at the heart of our strategy. We believe our total addressable market is approximately $1.8 trillion, which represents the total consumer cross-border payments market. We currently have 2% of this total market, with nearly $40 billion of SEND volume in 2023. According to the UN, this market includes approximately 1 billion people around the globe who send or receive cross-border payments, including immigrants, their families, and others with cross-border financial needs.
It also speaks to the unmet customer needs that we believe we are uniquely positioned to solve by delivering peace of mind of customers around the world with cross border financial needs.
Our four strategic focus areas on slide six are designed to help us deliver against this ambitious vision with customer centricity at the heart of our strategy.
We believe our total addressable market is approximately one eight trillion, which represents the total consumer cross border payments market.
We currently have 2% of this total market with nearly $40 billion of sand volume in 2023.
Accordingly, you in this market includes approximately 1 billion people around the globe, who sent or received cross border payments, including immigrants their families and others with cross border financial needs.
Matt Oppenheimer: We remain focused on investing where we have clear advantages as a digital-first cross-border financial services company. In addition, we believe investments in our technology platform will allow us to efficiently serve more of this market over time. We are confident our strategy will allow us to drive robust growth with this very large market opportunity for many years to come. First, we aim to delight our customers with a fast, reliable, and seamless cross-border payment experience, which results in providing our millions of customers with a delightful experience. This is a key driver of improving retention, engagement, and maintaining a strong unit economy. Delivering a delightful cross-border payments experience in a trusted and reliable way to a highly diverse and global customer base is incredibly complex.
We remain focused on investing where we have clear advantages as a digital first cross border financial services company.
In addition, we believe investments in our technology platform will allow us to efficiently serve more of this market over time.
We are confident in our strategy will allow us to drive robust growth with this very large market opportunity for many years to come.
First we aim to delight, our customers with a fast reliable and seamless cross border payment experience, which results in providing our millions of customers with a delightful experience.
This is a key driver of improving retention engagement and maintaining strong unit economics.
Delivering a delightful cross border payments experience and a trusted and reliable way to a highly diverse and global customer base is incredibly complex.
Matt Oppenheimer: Our technology investments and increasing scale have resulted in significant progress across various aspects of improving the customer experience, which, as a result, has increased customer engagement on our mobile app and website and enabled market share gains. But there is still so much more to do to improve the customer experience, and we are excited about continuing our journey to reinvent international person to person payment. Second, our targeted marketing investments across both performance and brand channels have delivered new customers to our platform at very attractive unit economics. Our focus remains on maximizing lifetime value for the long term while we efficiently acquire new customers and retain a growing, large base of customers. We define lifetime value as revenue, less transaction expense, over five years, even though many customers continue to transact with us for more than five years.
Our technology investments and increasing scale have resulted in significant progress across various aspects of improving the customer experience, which as a result has increased customer engagement on our mobile app and website and enabled market share gains, but there is still so much more to do to improve the customer experience.
And we are excited about continuing our journey to reinvent international person to person payments.
Second our targeted marketing investments across both performance and brand channels have delivered new customers to our platform at very attractive unit economics.
Our focus remains on maximizing lifetime value for the long term, while we efficiently acquire new customers and retain a growing large base of customers.
We define lifetime value is revenue less transaction expense over five years, even though many customers continue to transact with us for more than five years.
Matt Oppenheimer: This long-term view of our customers provides us with many levers to enhance lifetime value, and we are experiencing LTV improvements as customers have increased their transaction activity, particularly for digital receipt options, and we have also been decreasing transaction costs. Third, we see significant opportunities to expand into more geographic markets. Our global network consists of more than 5,000 corridors, and we have plans to increase our reach to thousands of additional corridors while increasingly benefiting from diversification.
This long term view of our customers provides us with many levers to enhance long term value and we are experiencing LTV improvement as customers have increased their transaction activity.
Particularly for digital receive options and we have also been decreasing transaction costs.
Third we see significant opportunities to expand into more geographic markets.
Our global network consists of more than 5000 corridors and we have plan to increase our reach to thousands of additional corridors will increasingly benefiting from diversification.
Matt Oppenheimer: We will use the same disciplined corridor expansion strategy and our targeted approach that has served us so well today. While our customer base today is primarily customers who regularly send money home to family and friends in developing countries, we believe over time we can better serve a broader set of customers who have cross-border financial needs. Fourth, we believe there are enormous opportunities to deepen customer relationships by leveraging the unique technology platform we have built and continue to build to efficiently scale new features and products to the millions of customers we serve today and to make our offerings even more attractive to other customers that have cross-border financial needs. Now, we will turn to more details regarding each of these focus areas.
We will use the same disciplined corridor expansion strategy and our targeted approach that has served us so well to date.
While our customer base today is primarily customers, who regularly sent home to family and friends and developing countries. We believe over time, we can better serve a broader set of customers who have cross border financial needs.
Fourth we believe there are enormous opportunities to deepen customer relationships by leveraging the unique technology platform. We have built and continue to build to efficiently scale, new features and products to the millions of customers, we serve today and to make our offerings, even more attractive to other customers that have cross.
S border financial needs.
Now, let's turn to more details regarding each of these focus areas.
Matt Oppenheimer: On slide seven, you can see that in the fourth quarter, quarterly active customers increased 41% year-over-year to 5.9 million. The significant year-over-year increase in quarterly active users can be attributed to multiple factors. Increased activity due to the holiday season from a growing base of active customers who were acquired in prior periods, as well as the acquisition of a record number of new customers during this period. Customer behavior trends remain strong, and we see transaction intensity, which we define as transactions per quarterly active customer, continue to increase as the year-over-year mix of digital received transactions increased by more than 500 basis points in the fourth quarter. As we continue to deliver value for customers, we believe we can serve these digital receive customers in a way that maximizes retention and engagement while also reducing units across our pay-in and disbursement networks. In the fourth quarter, we also acquired a record number of new customers across all our SEND geographies, including the U.S., Canada, and the rest of the world. Now, let's turn to sliding.
On slide seven you can see that in the fourth quarter quarterly active customers increased 41% year over year to $5 9 million.
The significant year over year increase in quarterly active users can be attributed to multiple factors increased activity due to the holiday season from a growing base of active customers who were acquired in prior periods as well as the acquisition of a record number of new customers. During this period.
Customer behavior trends remained strong and we see transaction intensity, which we define as transactions per quarterly active customer.
<unk> to increase as the year over year mix.
Digital receive transactions increased by more than 500 basis points in the fourth quarter.
As we continue to deliver value for customers. We believe we can serve these digital receive customers in a way that maximizes retention and engagement, while also reducing unit costs across our pay and and disbursement networks.
In the fourth quarter, we also acquired a record number of new customers across all our geographies, including the U S, Canada and the rest of the world.
Now, let's turn to slide eight we talked last quarter about the complexity inherent in cross border payments experience and how our value proposition of providing a fast reliable and seamless customer experience is a key differentiator.
Matt Oppenheimer: We talked last quarter about the complexity inherent in cross-border payments experiences and how our value proposition of providing a fast, reliable, and seamless customer experience is a key differentiator. Our investments in reducing complexity and eliminating all unnecessary friction in various elements of the customer remittance experience enable us to provide value to our customers, which in turn results in improved retention, increased transaction intensity, lower customer support costs, and strong word-of-mouth referrals. While we are pleased with the progress we are making in reducing unnecessary friction in our disbursement network and customer support, we continue to see opportunities to further improve the customer experience. In this context, we are focused on improving the quality of our disbursement network, which can be enhanced by direct integrations, which eliminate intermediate steps in the remittance journey.
Our investments in reducing complexity and eliminating all unnecessary friction in various elements of the customer remittance experience enables us to provide value to our customers, which in turn results in improved retention increased transaction intensity lower customer support cost and strong word of mouth.
<unk> referrals.
While we are pleased with the progress we are making in reducing unnecessary friction in our disbursement network and customer support we continue to see opportunities to further improve the customer experience.
In this context, we are focused on improving the quality of our disbursement network, which can be enhanced by direct integrations with eliminate intermediate steps in the remittance turn.
Matt Oppenheimer: This enhances our ability to deliver instant transactions for our customers, which is a key driver of loyalty and word of mouth, as speed and reliability enable us to delight our customers. Since early 2021, we have significantly increased the percentage of transactions that go via direct disbursement routes. This now includes strategic partnerships with some of the largest banks and telcos, including M-Pesa in Africa, Alipay in China, BDO in the Philippines, and Electra in Mexico.
This enhances our ability to deliver instant transactions for our customers, which is a key driver of loyalty and word of mouth effect.
As speed and reliability enable us to delight.
Our customers.
Since early 2021, we have significantly increased the percentage of transactions that go it would be a direct disbursement routes. This now includes strategic partnerships with some of the largest banks and telcos, including in peso in Africa, Alibaba in China, BDO in the Philippines and Electra in Mexico.
Matt Oppenheimer: As a result of these investments we have made to enhance the quality of our network in the fourth quarter, we were able to process more than 90% of transactions in less than one hour, even as we onboarded a record number of new customers where the risks of delays are higher. Our direct integrations also allow us to disperse funds rapidly, 24 hours a day, seven days a week, which would not be the case if we exclusively relied on intermediary payment networks. This outcome is critically important to our customers, who are often sending money for immediate needs, so a reliable and fast service is of paramount importance. Optimizing the balance between a great customer experience and preventing fraud is another area that has been a key focus for us and is very important to our customers. We have made significant investments to ensure that legitimate transactions can go through with the least amount of friction and that we are able to block fraudulent transactions more effectively and in real time. We are continuing to leverage artificial intelligence and machine learning to make risk decisions more accurately.
As a result of these investments.
We have made to enhance the quality of our network in the fourth quarter, we were able to disburse more than 90% of transactions and less than one hour even as we on boarded a record number of new customers, where the risks of delays or higher.
Direct integrations also allow us to disburse funds rapidly 24 hours a day seven days, a week, which would not be the case that we exclusively relied on intermediary payment networks.
This outcome is critically important to our customers who are often sending money for immediate needs. So a reliable and fast service is of Paramount importance.
Optimizing the balance between a great customer experience and preventing fraud is another area that has been a key focus for us.
And very important to our customers we.
We have made significant investments to ensure that legitimate transactions can go through with the least amount of friction and that we're able to block fraudulent transactions more effectively and in real time.
We are continuing to leverage artificial intelligence and machine learning to more accurately make risk decisions. These models have been getting even more precise with growing customer data.
Matt Oppenheimer: These models have been getting even more precise with growing customer data, which the models continuously adapt to. This allows us to operate more efficiently while improving the customer experience. This helped drive a decline in our non-GAAP customer support costs as a percentage of revenue by 260 basis points in the fourth quarter as compared to the prior year.
The model that continuously adapt to this allows us to operate more efficiently while improving the customer experience.
It helped drive a decline in our non-GAAP customer support cost as a percentage of revenue by 260 basis points in the fourth quarter as compared to the prior year.
Matt Oppenheimer: Our customer support experience is a key driver of product differentiation. We have made significant improvements by reducing problems in the first place and with a new self-help experience to empower customers to resolve problems quickly and efficiently. We are highly focused on reducing issues that customers face during a transaction, reducing friction related to fraud that I just discussed as one example of where we made significant progress in the fourth quarter. Secondly, we are highly focused on increasing the number of customers that can resolve issues themselves using our digital service options. As an example, we offer support in 15 languages, and after thorough testing, we are using AI to efficiently serve even more customers by translating and responding to contacts in real time. These efforts have been key drivers of more than 95% of customer transactions proceeding without a customer support contact. To make self-service a preferred method of support for customers, we recently launched a new self-help experience across both our app and web platform.
Our customer support experience is a key driver of product differentiation, we have made significant improvements by reducing problems in the first place and with the new self help experience to empower customers to resolve problems quickly and efficiently.
We are highly focused on reducing issues the customers face during a transaction reducing friction related to fraud that I. Just discussed is one example of where we made significant progress in the fourth quarter.
Secondly, we are highly focused on increasing the number of customers that can resolve issues themselves using our digital service options.
As an example, we offer supported 15 languages and after thorough testing, we're using AI to efficiently serve even more customers by translating and responding the contacts in real time. These.
These efforts have been key drivers of more than 95% of customer transactions proceeding without a customer support contact.
To make self service a preferred method of support for customers. We recently launched a new self help experience across both our app and web platforms. The.
Matt Oppenheimer: The new experience is responsive to customer needs based on aggregated insights from customer interactions and customer focus groups. Key improvements include an AI-based search that improves the precision of answers to customer questions, more clearly communicating outages and delays that could impact a specific transaction, and building customer trust by displaying available contact channels and customers' preferred language. We have seen early returns from this new self-help experience with a continued reduction in our customer contact rate. Finally, in cases where customers are unable to resolve problems on their own, we aim to provide an efficient and empathetic service that resolves issues the first time and builds peace of mind and trust for our customers.
The new experience is responsive to customer needs based on aggregated insights from customer interactions and customer focus groups.
Key improvements, including AI based search that improves precision of answers to customer questions more clearly communicating outages and delays that could impact a specific transaction building customer trust by displaying available contact channels and customers preferred language.
We have seen early returns from this new self-help experience with continued reduction in our customer contact rate.
Finally in cases, where customers are unable to resolve problems on their own.
To provide an efficient and empathetic services that resolve the issues. The first time and builds peace of mind and trust for our customers.
Matt Oppenheimer: Now, let's turn to how our highly localized and targeted marketing strategy enables us to acquire new customers at very strong unit economics on slide nine. We are focused on customer lifetime value, which again we define as revenue less transaction expense over a period of five years. We use our deep knowledge of our customer lifetime value to be intentional about how much we're willing to pay to acquire new customers, and our average payback period remains below 12 months.
Now, let's turn to how our highly localized and targeted marketing strategy enables us to acquire new customers at very strong unit economics on slide nine.
We are focused on customer lifetime value, which again, we define as revenue less transaction expense over a period of five years we.
We use our deep knowledge of our customer lifetime value to be intentional about how much we are willing to pay to acquire new customers and our average payback period remains below 12 months.
Matt Oppenheimer: This gives us very high confidence in our recent marketing investments, which are expected to deliver returns this year and beyond. We have also observed that our customers' behavior over the past many years they have been active on our platform is predictable and durable. This is why we do not optimize for marketing expenses in any given quarter but rather optimize the amount we're willing to pay for a newly acquired customer with a projected lifetime value over five years and remain confident that our efficient marketing investments are generating significant value. This is especially true as we continue to scale and drive down our unit costs, thereby increasing our LTV via lower per transaction expenses. As a result, we have been able to drive even more lifetime value on a total dollar basis.
This gives us very high confidence in our recent marketing investments, which are expected to deliver to deliver returns this year and beyond.
We have also observed that our customers' behavior over the past many years they have been active on our platform are predictable and durable.
This is why do we do not optimized for marketing expenses in any given quarter, but rather optimize the amount we're willing to pay for our newly acquired customer with the projected lifetime value over five years and remain confident that our efficient marketing investments are generating significant value.
This is especially true as we continue to scale and drive down our unit cost, thereby increasing our LTV via lower per transaction expenses. As a result, we have been able to drive even more lifetime value on a total total dollar basis.
Matt Oppenheimer: As you can see in the chart on slide 9, our revenue-less transaction expense remains very durable over time, primarily as a result of declining unit costs and resilient customer behavior. Following the first full year after we acquire a new customer, these same customers have provided on average approximately 95% of revenue, less transaction expense, for each subsequent year. This continues to validate that our marketing investments are expected to generate high returns for the long term. Our revenue, less transaction expense, grew 56% in 2023 compared with our 44% growth in revenue. We expect revenue less transaction expense to continue to grow faster than revenue in 2024, as we benefit from increasing scale across pay-in fees, disbursement fees, and fraud. Also, similar to prior years, in 2023, a significant portion of our revenue less transaction expense was contributed by customers acquired prior to 2023, further demonstrating the predictability and durability of the lifetime value of our customers.
As you can see in the chart on slide nine our revenue less transaction expense remains very durable over time.
Primarily as a result of declining unit costs and resilient customer behavior.
Following the first full year after we acquire a new customer. These same customers have provided on average approximately 95% of revenue less transaction expense for each subsequent year.
This continues to validate that our marketing investments are expected to generate high returns for the long term.
Our revenue less transaction expense grew 56% in 2023, compared with our 44% growth in revenue.
We expect revenue less transaction expense to continue to grow faster than revenue in 2024, as we benefit from increasing scale across paying fees to <unk>.
<unk> fees and fraud.
Also similar to prior years in 2023, a significant portion of our revenue less transaction expenses was contributed by customers acquired prior to 2023 further demonstrating the predictability and durability of the lifetime value of our customers.
Matt Oppenheimer: We continue to benefit from scale, a multi-year focus on brand building, creative velocity and experimentation, and optimization across marketing channels. We have high confidence in the return these investments are delivering in the aggregate, given the predictability and durability of the associated lifetime value from our customers. Turning to our third strategic pillar, on slide 10, we also see an opportunity to drive growth by expanding to additional markets and customers. While today our global network spans over 5000 corridors around the world, we have plans to increase our reach to thousands of additional corridors over time using our disciplined corridor expansion playbook.
We continue to benefit from scale, our multiyear focus on brand building creative velocity and experimentation and optimization across marketing channels.
We have high confidence in the return on these investments are delivering in the aggregate given the predictability and durability of the associated lifetime value from our customers.
Turning to our third strategic pillar on Slide 10, we also see an opportunity to drive growth by expanding to additional markets and customers. While today, our global network spanned over 5000 corridors around the world. We have plans to increase our reach to thousands of additional corridors over time, using our disciplined corridor expansion playbook.
Matt Oppenheimer: We have demonstrated our success in growing both new and existing markets. Since 2020, we have more than tripled our revenue from North America, and our revenue outside of North America has grown more than 7x to nearly $200 million in 2023. While the global market opportunity is significant for us, we are very targeted and intentional about our investments and are focused on ensuring product market fit for our customers. We expect to go about our expansion plans methodologically and by deploying our well-established playbooks and technology as we have done for many years. Now, let's turn to our fourth strategic pillar on slide 11.
We have demonstrated our success in growing both new and existing markets.
Since 2020, we have more than tripled our revenue from North America, and our revenue outside of North America has grown more than seven X to nearly $200 million in 2023.
While the global market opportunity is significant for US we are very targeted and intentional about our investments and are focused on ensuring product market fit for our customers.
We expect to go about our expansion plans methodologically.
And by deploying our well established playbook and technology as we have done for many years.
Now, let's turn to our fourth strategic pillar on Slide 11, we believe there is a significant opportunity to further deepen our relationship with customers.
Matt Oppenheimer: We believe there is a significant opportunity to further deepen our relationship with customers. We are excited about the opportunity to offer complementary new products built on our technology platform. This platform additionally enables us to test and learn at scale and provide our customers with features and functionality that increase engagement and remittance transaction intensity. We are structuring our technology platform to create a multiplier effect where we improve the quality of all products, including both our remittance app and complementary premium products. We are enhancing our technology platform so it can scale for even more rapid and efficient development cycles. The platform is also enabling us to leverage data, AI, and ML models, and analytical capabilities to drive an improved customer experience.
We are excited about the opportunity to offer complementary new products built on our technology platform.
This platform. Additionally, enables us to test and learn at scale and provide our customers with features and functionality that increase engagement and remittance transaction intensity we.
We are structuring our technology platform to create a multiplier effect, where we improved the quality of all products, including both our remittance app and complementary new products.
We are enhancing our technology platforms. So they can scale for even more rapid and efficient development cycles. The technology platform is also enabling us to leverage data AI and ml models and analytical capabilities to drive improved customer experiences.
Matt Oppenheimer: The improvements we have made in fraud management, customer service operations, reliability, including a 99.99% availability in the fourth quarter, higher quality represented by better and faster expansion at lower error rates, and better security and privacy posture are all directly benefits of our technology platform. To summarize, we have high-return investment opportunities over the short and long-term that will help us drive strong revenue and sustainable profit growth in a large and growing cross-border market. Given the increasing scale, we also intend to drive additional focus on improving our operational efficiencies in 2024 across the business. We plan to take a similar rigorous approach we took to driving efficiencies in transaction expense and customer service costs to other areas of the business.
The improvements we have made in fraud management customer service operations reliability, including a 90, 999% availability in the fourth quarter higher quality represented by better and faster expansion at lower error rates and better security and privacy posture are all directly the benefit of our technology.
That form.
To summarize we have high return investment opportunities over the short and long term horizon that will help us drive strong revenue and sustainable profit growth in a large and growing cross border market given the increasing scale. We also intend to drive additional focus on improving our operational efficiencies in 2024 across the business.
We plan to take a similar rigorous approach, we took to driving efficiencies in transaction expense and customer service costs to other areas of the business.
Matt Oppenheimer: By streamlining processes, increasing automation, and deploying technology solutions, we expect to continue to be able to make high-return yielding investments towards growth while also sustainably growing our profits for the long term. I could not be more excited about the opportunities ahead to achieve our vision to transform lives with trusted financial services that transcend borders. With that, I'll turn the call over to Hemant to provide more details on our financial results and our 2024 outlook. Thank you, Matt.
By streamlining processes, increasing automation and deploying technology solutions, we expect to continue to be able to make high return yielding investments towards growth. While also sustainably growing our profits for the long term.
I could not be more excited about the opportunities ahead to achieve our vision to transform live with trusted financial services that transcend boarders.
I will turn the call to him to provide more details on our financial results and our 2020 for outlook.
Hemant Munnapalli: I'm pleased with our strong results in the fourth quarter as results came in ahead of our expectations, consistent with our strong execution throughout 2023. I will start with a review of our fourth quarter financial highlights and then provide additional details on our 2024 outlook. I will discuss non-GAAP operating expenses, and I just did EBITDA in my remarks. These metrics exclude items such as stock-based compensation, the donation of the common stock in connection with our pledged 1% commitment, acquisition, integration, restructuring, and related costs, and foreign exchange gain or loss.
Thank you, Matt I'm pleased with our strong results in the fourth quarter. As a result came in ahead of our expectations consistent with our strong execution throughout 2023, I will start with a review of our fourth quarter financial highlights and then provide additional details on our 2020 for outlook.
I will discuss non-GAAP operating expenses and adjusted EBITDA in my remarks, these metrics exclude items such as stock based compensation the donation of the common stock in connection with our pledge, 1% commitment acquisition integration and restructuring and related costs and foreign exchange gain or loss reconciliations to GAAP.
Hemant Munnapalli: Reconciliations to gap results are included in the earnings release and the appendix to our earnings presentation. With that, let's turn to our fourth quarter results, beginning on slide 13 with our high-level financial performance. Quarterly active customers grew by 41% year-over-year to 5.9 million, and percent volume grew 38% year-over-year to approximately $11.1 billion, all resulting in revenue growth of 39% year-over-year to $265 million in Q4. Our GAAP net loss was $35 million in the quarter and included $36 million of stock compensation.
The votes are included in the earnings release, and the appendix to our earnings presentation.
With that let's turn to our fourth quarter results beginning on slide 13, with our high level of financial performance.
Quarterly active customers grew by 41% year over year to $5 9 million.
<unk> volume grew 38% year over year to approximately $11 1 billion all.
Resulting in revenue growth of 39% year over year to $265 million in Q4.
Our GAAP net loss was $35 million in the quarter and included $36 million of stock compensation expense.
Hemant Munnapalli: The strong growth in revenue, combined with significantly lower transaction expense as a percentage of revenue, led to adjusted EBITDA of $8.2 million in the quarter, which was above our expectations. Our adjusted EBITDA results in the quarter also reflected the targeted and high-return marketing investments that we made as planned. We fully expect to benefit from these investments in 2024 and beyond, as I will discuss later in our 2024 outlook. Now, let's turn to slide 14 for a detailed review of our performance in the fourth quarter.
The strong growth in revenue combined with significantly lower transaction expense as a percentage of revenue led to adjusted EBITDA of $8 2 million in the quarter, which was above our expectations.
Our adjusted EBITDA to develop in the quarter also reflected the targeted and high return on marketing investment.
We made as planned we fully expect to benefit from these investments in 2024 and beyond as I will discuss later in our 2024 outlook.
Now, let's turn to slide 14 for a detailed review of our performance in the fourth quarter.
Hemant Munnapalli: Let's begin with revenue, which was up 39% year-over-year in the fourth quarter on a reported basis and 37% on a constant currency basis. Our strong revenue growth was primarily driven by a 41% increase in quarterly active customers, which included a record number of new customers acquired in the quarter, high retention of existing customers, and seasonal sending patterns. We were pleased with both the year-over-year and sequential growth in quarterly active customers, which benefited from both in-period and prior marketing investments and additional customer activity due to strong seasonal demand. The record number of new customers we acquired in the quarter will drive Customer behavior in the fourth quarter remained very strong as we continue to deliver a fast, reliable, and seamless experience, and our customers remain resilient in supporting their family and friends back home.
Let's begin with revenue, which was up 39% year over year in the fourth quarter on a reported basis.
37% on a constant currency basis.
Our solid revenue growth was primarily driven by a 41% increase in <unk>.
The active customers, which includes a record number of new customers acquired in the quarter high retention of existing customers and seasonal spending patterns.
We're pleased with both the year over year and sequential growth in quarterly active customers, which benefited from both <unk> and <unk>.
Our marketing investments and additional customer activity due to strong seasonal demand.
The record number of new customers, we acquired in the quarter will drive growth in 2024 and beyond.
Customer behavior in the fourth quarter at Maine based on as we continue to deliver a fast reliable and seamless experience that our customers demand resilience in supporting their family of brands backhaul.
Hemant Munnapalli: As Matt mentioned, we continue to see a shift to digital disbursement options in certain markets, which results in smaller transaction sizes and increased transaction intensity. We view this as a positive trend given our digital first at scale positioning and our ability to effectively localize a product offering and drive down transaction expenses. Transaction expenses, the percentage of revenue, improved nearly 400 basis points year-over-year as we continue to benefit from our rapidly increasing scale, technology investments, and our direct integration strategy. Of the 400 basis point improvement and transaction expenses, approximately 200 basis points were due to improved economics with payment acceptance and disbursement partners as we demonstrate scale and are increasing value to our partners across our global payment acceptance and disbursement network. We also began to see the benefit from our recent agreements with large payment processors flow through in the fourth quarter.
As Matt mentioned, we continue to see a shift to digital disbursement options in certain markets with results and smaller transaction sizes and increased transaction identity.
We view that as a positive trend given our digital book that scale positioning and our ability to effectively localize our product offerings and drive down transaction expenses.
Transaction expense as a percentage of revenue improved nearly 400 basis points year over year as we continue to benefit from a rapidly increasing scale technology and investments in our direct integration strategy.
Of the 400 basis point improvement in transaction expense approximately 200 basis points were due to improved economics with payment acceptance and disbursement partners AGGY demonstrate scale in our increasing value to our partners across our global payment acceptance and disbursement networks.
We also began to see the benefit from our recent agreements with large payment processors flowed through in the fourth quarter.
Hemant Munnapalli: We are pleased with the speed of integration with our partners, which can be attributed to our technology platform and the strong execution of our team. We also benefited from continued improvement in our year-over-year fraud loss rates in the fourth quarter, even as we onboarded a record number of new customers. Once again, we were very pleased that our fraud loss rate continues to improve while, at the same time, our customer contact rate continues to decline. However, as we've noted before, fraud losses can be volatile, especially for new customers.
We are pleased with the speed of integration with our partners, which can be attributed to our technology platform and the strong execution of our teams.
We also benefited from continued improvement in our.
Year over year, a fraud loss rate in the fourth quarter, even as we onboard a record number of new customers.
Once again, we were very pleased that our fraud loss rate continues to improve one of the <unk> customer contact rate continues to decline.
However, as we've noted before fraud losses can be volatile, especially for new customers.
Hemant Munnapalli: However, we remain confident that we will be able to sustain improvements in fraud loss management. Turning to marketing expense, as we mentioned last quarter, we were able to take advantage of strong unit economics and make targeted incremental marketing investments in the fourth quarter, including some upper funnel investments. Marketing expense increased sequentially as planned and enabled us to acquire record new customers during a seasonally high activity quarter. While marketing expense as a percentage of revenue increased 610 basis points on a year-over-year basis, we expect the revenue and lifetime value of the new customers acquired in the fourth quarter to be predictable and durable for multiple years ahead, as Matt also discussed. In the fourth quarter, customer support and operations expenses were down 260 basis points as a percentage of revenue.
However, we remain confident that we will be able to sustain improvement in fraud loss management.
Turning to marketing expense as we mentioned last quarter, we were able to take advantage of strong unit economics, and make targeted incremental marketing investments in the fourth quarter, including some upper funnel investments.
Marketing expense increased sequentially as planned and enabled us to acquire record new customers during the seasonally higher activity quarter.
While the marketing expense as a percentage of revenue increased 610 basis points on a year over year basis, we expect the revenue and lifetime value of the new customers acquired in the fourth quarter to be predictable and durable for multiple years ahead at Matt had also discussed.
In the fourth quarter customer support and operations expenses were down 260 basis points year over year as a percentage of revenue. This was primarily driven by lower contact rates as investments and delivering a fast reliable and seamless cross border customer experience continue to pay off for our customers.
Hemant Munnapalli: This is primarily driven by lower contact rates as investments in delivering a fast, reliable, and seamless cross-border customer experience continue to pay off for our customers. This is also driven by an improving self-help experience, which allows customers to resolve many more issues across the transaction flow without contacting customer support. We've also invested in automating certain back office customer support processes, which makes our agents more efficient and more effective in resolving customer issues. In the fourth quarter, technology and development expenses increased 20 basis points Eurovia as a percentage of revenue.
This was also driven by an improving self-help experience, which allows customers to resolve many more issues across the transaction flow without contacting customer support.
<unk> also invested in automating certain back office customer support processes, which makes agents more efficient and more effective and resolving customer issues.
In the fourth quarter technology, and development expenses increased 20 basis points year over year as a percentage of revenue.
Hemant Munnapalli: Our investments are primarily focused on driving a fast, reliable, and seamless experience for our customers. We have seen strong returns from these investments in the form of reducing friction to enable our active customer growth, improving fraud management with increased precision, and increasing automation and other technology solutions to lower customer support costs. In the fourth quarter, G&A expense as a percentage of revenue increased 100 basis points year over year and was negatively impacted by the timing of certain non-recurring items. We continue to be actively focused on operating more efficiently as we have been achieving scale. Our gap net loss in the quarter was $35 million compared with $19 million in the fourth quarter of 2022. Our net loss included $36 million of stock compensation expense in the fourth quarter compared with $27 million in the fourth quarter of last year.
Our investments are primarily focused on driving a fast reliable and a seamless experience for our customers.
We are seeing strong returns from these investments in the form of reducing friction to enable our active customer growth improving product management with increased proficient and increase automation and other technology solutions to lower customer support costs.
In the fourth quarter G&A expense as a percentage of revenue increased to 100 basis points year over year and was negatively impacted by the timing of certain nonrecurring items.
We continue to be actively focused on operating more efficiently as we have been achieving scale.
Our GAAP net loss in the quarter was $35 million compared with $19 million in the fourth quarter of 2022.
Our net loss included $36 million of stock compensation expense in the fourth quarter compared with $27 million in the fourth quarter of last year.
Hemant Munnapalli: We're actively focused on managing stock-based compensation expense, and we're pleased to see our year-over-year growth in stock compensation expense moderate in the fourth quarter as compared with the year-over-year growth in the third quarter. Turning to an annual view of our progress to drive sustainable long-term returns, on slide 15. We've delivered strong revenue growth, even as our scale has increased, with revenue growth accelerating in 2023 compared with 2022, as we've benefited from resilient customer behavior and acquired new customers through our high-return marketing investments, which continue to have an average payback period of less than 12 months. We're particularly pleased with our improvement in transaction expense as a percentage of revenue, which has declined approximately 700 basis points from 2021 to 2023.
We're actively focused on managing stock based compensation expense and we're pleased to see our year over year growth in stock compensation expense moderate in the fourth quarter as compared with the year over year growth in the third quarter.
Turning to an annual view of our progress to drive sustainable long term returns on slide 15.
We delivered strong revenue growth, even as our scale has increased with revenue growth accelerating in 2023, compared with 2022, as we benefited from resilient customer behavior and acquiring new customers through our high return marketing investments, which continue to have an average payback period of less than 12 months.
We're particularly pleased with our improvement in transaction expense as a percentage of revenue declined approximately 700 basis points from 2021 to 2023.
Hemant Munnapalli: This has been primarily driven by scale benefits which provide improved economics as a result of nearly $40 billion of cent volume in 2023 flowing through our pay-in and disbursement partners and a vast amount of data that have improved the precision of our fraud models. Our other operating expense performance reflects both the progress we've made in customer support as well as the continuing investments in reducing unnecessary friction for our customers, building our technology platform, and ensuring we have the right infrastructure in place to ensure we're able to scale rapidly with a strong focus on compliance. Our customer support expense as a percentage of revenue declined approximately 140 basis points from 2021 to 2023. We see opportunities ahead to drive even more leverage in our customer support. We are planning to take the same disciplined approach toward G&A expenses and other operating expenditures to drive even more productivity and efficiency this year and beyond.
This has been primarily driven by scale benefits, which provide improved economics as a result of nearly $1 $40 billion.
<unk> volume in 2023 flowing through our <unk> partners and vast amount of data that have improved the precision of our fraud models.
Our other operating expense performance reflects both the progress we have made in customer support as well as the continuing investments and reducing unnecessary friction for our customers.
Building, our technology platform and ensuring we have the right infrastructure in place to ensure we're able to scale rapidly with a strong focus on compliance.
Our customer support expense as a percentage of revenue has declined approximately <unk> 140 basis points from 2021 through 2023.
We see opportunities ahead to drive even more leverage in our customer support.
We are planning to take the same disciplined approach to our G&A expenses and other operating expenditures to drive even more productivity and efficiency through this year and beyond.
Hemant Munnapalli: We're also seeing longer-term scale benefits from our marketing investments, which are driving record customer acquisition. As our unit economics remains strong, we have continued to increase our marketing dollar investment to capture even more customer lifetime value. As Matt noted, we look at marketing investments or a longer-term horizon as the lifetime value from new customers remains predictable and durable for many years. This is why we believe taking a longer-term view of our in-period marketing investments is key to understanding our business model and the overall profit potential as we retain, on average, 95% of revenue-less transaction expenses after the first full year of active customer growth. Before I turn to our 2024 outlook, I'd like to discuss how we're building a differentiated long-term financial strategy.
We're also seeing longer term scale benefits from our marketing investments, which are driving record customer acquisition as our unit economics remain strong we are continuing to increase our marketing dollar investment to capture even more customer lifetime value at.
As Matt noted, we look at marketing investments or a longer term horizon at the lifetime value from new customers remains predictable and durable for many years.
This is why we believe taking a longer term view of our NPD marketing investments is key to understanding our business model and the overall profit potential as we retain on average 95% of revenue less transaction expenses. After the first full year active customer growth.
Before I turn to our 2024 outlook I'd like to discuss how we are building a differentiated long term connection strategy.
Hemant Munnapalli: We expect that our high quarterly active user growth, reducing transaction expenses and customer service costs, and increased focus on delivering operational efficiencies will enable us to invest in marketing and technology for high returns over the short, medium, and long-term and also sustainably growing profits. We have an exciting opportunity in a large cross-border payments market, and we believe a targeted and disciplined approach to deploying our resources and capital will generate long-term value for our shareholders. In this context, we also continue to focus on actively managing stock-based compensation and share dilution.
We expect that our high quarterly active user growth, reducing transaction expenses and customer service costs.
An increased focus on delivering operational efficiencies will enable us to invest in marketing and technology for high returns over the short medium and long term and also it sustainably growing profits.
We have an exciting opportunity and a large cross border payments market and we believe our targeted and disciplined approach to deploying our resources and capital will generate long term value for our shareholders.
In this context, we also continue to focus on actively managing stock based compensation and share dilution.
Hemant Munnapalli: Our outlook for 2024 reflects the disciplined approach we have been taking to generate long-term returns and recognizes that 2024 will be another year in a multi-year journey since our IPO to unlock significant value. As you can see on slide 16, we expect revenue to be between $1.225 billion and $1.25 billion, which reflects a strong year-over-year growth rate of 30 to 32 percent on a large active user base. This outlook reflects the confidence we have in LTV, the returns from our marketing investments, and our plans to acquire even more customers in 2024 than we acquired in 2023. Consistent with seasonal patterns, we expect first quarter sequential growth to moderate from the 10% sequential revenue growth we delivered in the fourth quarter.
Our outlook for 2024 reflects the disciplined approach we've been taking to generate long term returns and recognizing the 'twenty 'twenty four will be another year in a multiyear journey.
Our IPO to unlock significant value.
As you can see on slide 16, we expect revenue to be between one to two 5 billion <unk>, two 5 billion, which reflects strong year over year growth rate of 30% to 32% on our large active user base.
This outlook reflects the confidence we have in LTV the returns from our marketing investments and our plans to acquire even more customers. In 2024, then we acquired in 2023.
Consistent with seasonal patterns, we expect first quarter sequential growth to moderate from the 10% sequential revenue growth we delivered in the fourth quarter.
We expect adjusted EBITDA to be between 70 $590 million in 2024 and for it to ramp sequentially as we benefit from additional growth and scale efficiencies throughout the year.
Hemant Munnapalli: We expect adjusted EBITDA to be between $75-90 million in 2024 and for it to ramp sequentially as we benefit from additional growth and scale efficiencies throughout the year. However, factors like timing of marketing investments and outcomes of initiatives to improve our efficiency may impact adjusted EBITDA growth in any specific order. Our macroeconomic and FX assumptions remain relatively consistent with what we've seen in the fourth quarter of 2023, and we expect continued resilience in customer behavior across our diversified portfolio of core roles. Turning to some balance sheet highlights, at the end of the quarter, we had over $320 million of cash, and we continue to have access to a $325 million working capital facility. During the fourth quarter, we upsized our working capital facility by $75 million, which provides us with additional flexibility.
However, factors like timing of marketing investments and outcomes of initiatives to improve our efficiency may impact adjusted EBITDA growth in any specific quarter.
Our macroeconomic and FX assumptions remained relatively consistent to what we've seen in the fourth quarter of 2023, and we expect continued resilience and customer behavior across our diversified portfolio of corridors.
Turning to some balance sheet highlights at the end of the quarter, we had over $320 million of cash and we continue to have access to a $2 $25 million working capital facility.
During the fourth quarter, we upsized, our working capital facility by $75 million, which provides us with additional flexibility.
This is especially relevant during peak periods, such as holiday weekend as we have grown significantly since we have lost amended our working capital facility.
At the end of the quarter, we had $130 million outstanding on the facility, which allowed us to fund peak demand over the year end holiday weekend.
Hemant Munnapalli: This is especially relevant during peak periods, such as holiday weekends, as we have grown significantly since we last amended our working capital facility. At the end of the quarter, we had $130 million outstanding on the facility, which allowed us to fund peak demand over the year and holiday week. This balance was paid off the following week in early January.
This balance was paid off the following week in early January.
We are proud of our execution. This year as we have delivered both higher than expected revenue growth, making targeted investments for the long term and sustainably increasing adjusted EBITDA profitability. We are in a strong position to be able to make investments to sustain future growth, while also delivering efficiencies and dropped to the bottom line.
Operator: We are proud of our execution this year as we have delivered both higher-than-expected revenue growth and made targeted investments for the long term and sustainably increased adjusted EBITDA profitability. We are in a strong position to be able to make investments to sustain future growth while also delivering efficiencies that drop to the bottom line. With that, Matt and I will open up the call for your questions, operator. Thank you. At this time, we'll conduct the question and answer session. As a reminder, to ask a question, you will need to press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one one again.
With that Matt and I will open up the call for your questions operator.
Thank you at this time, we will conduct a question and answer session.
A reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
One moment for our first question.
Okay.
Our first question comes from Tien Tsin Huang with Jpmorgan. Your line is open.
Hey, good afternoon, great results here I didn't want to hone in on the comment that Youre planning to add more users and 24.
Operator: One moment for our first question. Our first question comes from Tenjin Hung with J.P. Morgan. Your line is open.
Did in 'twenty three I am curious if you can be a little bit more specific on that I mean, it looks like you're heading closer to the 500000.
Vincent (Incorrect Name): Great results here. I did want to hone in on the comment that you're planning to add more users in 24 than you did in 23. I'm curious if you can be a little bit more specific on that.
Quarter.
Trend line at this stage if you look at the fourth quarter is that a good starting point I'm. Just curious if there's any thoughts on seasonality or maybe different type of customer that might come on at different points in time.
Hemant Munnapalli: I mean, it looks like you're adding cultures at 500,000 per quarter. The trend line at this stage, if you look at the fourth quarter, is that a good starting point? I'm just curious if there are any thoughts on seasonality or maybe differences in type of customer that might come on at different points in time. Any additional color would be great.
Any additional color would be great. Thanks.
Thanks, Yeah. Thanks, Vincent for your question Yeah first of all like we're really excited about the opportunity to rehab and <unk> four in terms of when we think about our customer growth. This year I mean, why don't you got recognized 23, we've added a record customers in 2023 as well as our thanks to the resilience of the customer then and our marketing machinery to add a whole lot of <unk>.
Hemant Munnapalli: Yeah, thanks, Vincent, for the question. Yeah, first of all, I'm really excited about the opportunities we have in 2024. In terms of when we think about customer growth this year, I mean, one, you've got to recognize 2023. We've added record numbers of customers in 2023 as well, thanks to the resilience of the customers and our marketing machinery to add a whole lot of new customers in 2023 as well. And when we look at 2024, we think that sort of pattern will continue to hold where, based on our marketing investments, which we think are highly predictable and durable in terms of return on those, we would be expecting to add more new customers in 2024 than we did in 2023.
Customers in 23 as well.
And we look at 'twenty four we think that sort of pattern, we will continue to hold.
Based on our marketing investments, which we think are highly predictable and durable in terms of the return profile on those we would be expecting to add more new customers in.
2004 than we did in 2023 so.
So largely speaking I think we have a huge market opportunity by 2% or one eight trillion driven market. So we think that going about that.
A methodical fashion and building on sort of.
The core quarter orders that we already are in and as well as expanding in rest of the world.
Get us those growth rates.
Perfect and then my follow up just on the intensity comment.
I think you mentioned that client because of.
A higher mix of digital receive I think I wrote down the 500 bps. So is that secular or intention on your part of driving that channel and is that sustainable or is that also tying back to the benefit youre seeing on transaction expense.
Hemant Munnapalli: So, largely speaking, I think we have a huge market opportunity. We're 2% of a $1.8 trillion market. So we think that going about that in a very methodical fashion and building on sort of the core corridors that we already are in and as well as expanding in the rest of the world will get us those growth rates. Perfect. Did my follow up just on the intensity comment?
Yeah, Thanks, Tim and great questions I think.
We are good at.
Both receiving funds the way that customers want to send them to us as well as disbursing funds.
Across the globe, whether Thats bank accounts mobile wallets cash pickup door to door delivery.
And seamless and diverse ways and so I would view the increase in digital disbursement as.
Matt Oppenheimer: And I think you mentioned this client because of a higher mix of digital receive; I think I wrote down 500 bps. So is that secular or intentional on your part of driving that channel, and is that sustainable, and is that also tying back to the benefit you're seeing on transaction expenses? Yeah, thank you, Tim. And great questions.
<unk> in the sense that we have a great digital disbursement network, whether thats length of <unk> mobile wallet.
That often times carries a lower variable cost for us which is helpful and we're excited about leading the way when it comes to Batesville disbursement in several markets.
That's great. Thank you so much.
One moment our next question.
Yes.
Matt Oppenheimer: I think that, you know, we are good at both receiving funds the way that customers want to send them to us, as well as dispersing funds across the globe, whether that's bank accounts, mobile wallets, cash pickup, door-to-door delivery, in, you know, seamless and diverse ways. And so I would view the increase in digital disbursements as, you know, positive in the sense that we have a great digital disbursement network, whether that's a bank deposit or a mobile wallet. That oftentimes carries a lower variable cost for us, which is helpful. And we're excited about leading the way when it comes to digital disbursement in several markets. That's great! Thank you so much.
Our next question comes from Ramsey El <unk> with Barclays. Your line is open.
Hi, This is Allison on for Ramsey. Thank you guys. So much for taking our question.
So just in the context of marketing spend maybe could you just provide some color on.
The latest regarding your pricing strategy.
Doing any promo pricing at all are you.
So marketing strategically by corridor as you've done in the past just are there any changes to the marketing strategy beyond what you've outlined so far and anything that you'd want to highlight.
The holiday spend environment in terms of marketing spend what it looked like this quarter or a year prior.
Operator: One moment for our next question. Our next question comes from Ramsey Ellisall with Barclays. Your line is open. Hi, this is Allison on for Ramsey. Thank you guys so much for your questions. So just in the context
Yes, Thanks, Allison Greg Great question.
I think that our marketing strategy has been something that remains consistent as it has over the last decade in building the business we tend to be.
Allison: Span. The latest regarding your pricing strategy. Are you doing any promo pricing at all? Are you still marketing? by corridors as you have in the past.
Analytical data driven marketers, but we also have.
Our structural benefit as our customer base growth and our product continues to deliver in that there is word of mouth and.
Matt Oppenheimer: Strategy beyond what you've outlined so far, and anything that you want to highlight on the holiday-spend environment in terms of... and what it looked like this quarter versus a year prior. Yeah, thanks, Allison. Great, great question.
Continued just trust within the communities that we serve.
<unk> continue to grow our product and so.
Wouldn't say any large changes to our marketing strategy is continuing to execute it on a measured data driven way and Thats why were excited about the record number of new customers in Q4, as well as being able to.
Matt Oppenheimer: I think that our marketing strategy has been something that remains consistent as it has over the last, you know, decade of building the business. We tend to be data-driven marketers, but we also have a structural benefit as our customer base grows and our product continues to deliver, in that there's word of mouth and continued, you know, trust within the communities that we serve that helps continue to grow our product. And so I wouldn't say any, you know, large changes to our marketing strategies, continuing to execute them in a measured, data-driven way.
Guide to 24 in a way that both continues to grow topline, but also you get the profitability from those customers that we've added in Q4 and throughout 2023 and prior quarters being able to deliver to the bottom line in 2024 as well.
Yes, maybe just adding a little bit to what Matt said too is Q4 for us is a seasonally high quarter in terms of acquiring new customers. So we wanted to make sure that we're leaning into marketing, which we are able to do and you can see we did add record new customers in Q4. So as we look forward. We do think it makes sense for us to continue to invest in marketing and the right sort of guardrails and <unk>.
Hemant Munnapalli: And that's why we're excited about the record number of new customers in Q4, as well as being able to guide the 24 in a way that both continues to grow the top line, but also you get the profitability from those customers that we've added in Q4 and throughout 2023 and prior quarters being able to, you know, deliver to the bottom line in 2024 as well. Yeah, maybe just adding a little bit to what Matt said, too, is that Q4 for us is a seasonally high quarter in terms of acquiring new customers. So we want to make sure that we're leaning into marketing, which we're able to do. And as you can see, we did add record numbers of new customers in Q4.
Ratio is on LTV and CAC, but we see it as a high return sort of investment and so we think based on these investments threshold than what we expect for 2024 that we'll be able to add additional.
New customers in 2004 and above and beyond what we did in 2023.
Great. Thanks, so much really appreciate the time.
Our next question.
Our next question comes from Andrew Schmidt with Citigroup on markets. Your line is open.
Hey, Matt Smart Stefan Thanks for taking my questions good quarter here.
Wanted to dig in on just the <unk>.
Hemant Munnapalli: So as we look forward, we do think it makes sense for us to continue to invest in marketing and the right sort of guardrails and thresholds and LTV and CAC, but we see it as a high-return sort of investment. And so we think, based on these investment thresholds and what we expect for 2024, that we'll be able to add additional new customers in 2024 and beyond what we did in 2023. Thank you so much.
The sort of your core corridor U S, India U S to Mexico, Philippines.
You're obviously seeing good rest of world growth beyond that I think it's important part of the story, but in the quarter is where you started maybe talk a little bit about the growth trends, you're seeing and then.
What can help sustain that growth as it reach higher levels of penetration. Thanks, a lot guys.
Yes, Thanks, Andrew.
For me and I. Appreciate the question I think if you look at the overall <unk>.
Operator: One moment for the next question. Our next question comes from Andrew Schmidt with CityGlobalMarkets. Your line is open. Hey Matt, Hamad, and Stephan.
Mentioned, the three received markets, India, Philippines, and Mexico, and the Punch line is there is still <unk>.
<unk> growth opportunities and we're continuing to see growth in those three received market to both and this is important in <unk>.
Andrew Schmidt: Thanks for taking my questions. Good quarter here. I want to dig in on just the sort of your core corridors, U.S. to India, U.S. to Mexico, U.S. to Philippines, obviously seeing a good rest of world growth beyond that. I think that's an important part of the story, but in the corridors where you started, maybe talk a little about the growth trends you're seeing and then, you know, what can help sustain that growth as you reach higher levels of Thanks a lot, guys.
Markets that we've originated from.
Sure.
Many years like the U S, where we started but we also now originate across.
North America Europe.
A variety of countries, Australia, UAE et cetera, and so I think that there's large opportunities as we expand the addressable market in terms of origination country and all of this needs to be put in the backdrop that we are 2% of a $1 eight trillion dollar market and so while we might have slightly higher share in markets that we've been in for a while we're still seeing <unk>.
Matt Oppenheimer: Yeah, thanks, Andrew. Great to hear from you and appreciate the question. I think that if you look at the overall picture, you mentioned the three receiving markets, India, Philippines, and Mexico, and the punchline is that there's still, you know, significant growth opportunities, and we're continuing to see growth in those three receiving markets, both, and this is important, in markets that we've originated from over, you know, many years, like the U.S., where we started, but we also now originate across North America And so I think that there are large opportunities as we expand the addressable market in terms of origination country, and all of this needs to be put in the backdrop that we are 2% of a $1.8 trillion market, and so while we might have a slightly higher share in markets that we've been in for a while, we're still seeing healthy growth in those markets, and we still see a lot of opportunity to continue to grow.
The growth in those markets.
And we still see a lot of opportunity to continue to grow.
Maybe just adding a little bit on to what Matt said, Andrew is that when we look at the data showed a trend that we're seeing in the business so increasing shift to digital it's another sort of a tailwind as we look at even the core corridors, we have been and so whether you take U S to Philippines and the adoption of mobile wallets. As an example is one that certainly we think is benefiting sort of.
Our growth in that corridor. That's just one example.
Got it very helpful. Thank you, Matt launched and then.
Maybe the follow up just on sales and marketing.
Just discuss maybe put a finer point on what's embedded in the outlook for 2024 for marketing expense and then maybe talk about the philosophy about flexing that up in flexing. It down I know this is a longer term story.
Yes, it's important to go after the market because there are attractive unit economics, but just curious to get your thoughts on what could drive that marketing up or down SB yet progressed throughout the year. Thanks, a lot guys.
Matt Oppenheimer: Yeah, maybe just adding a little bit to what Matt said, Andrew, is that when we look at the digital trend that we're seeing in the business, so the increasing shift to digital is another sort of a tailwind as we look at even the core corridors we've been in. So, what do you take the US to the Philippines? And the adoption of mobile wallets as an example is one that certainly we think is benefiting our growth in that corridor. That's just one example.
Yes, Thanks, Andrew So first off I think just wanted to make sure that it's recognized that marketing as a lever that we can actually dial up and down and we think that it makes sense to do that within the return thresholds that we set ourselves for here and you can see that we have.
A pretty long and durable.
Extreme of sort of revenues and revenues from from the customers, we acquired from marketing investments, which exceeds the five years. So we talk about LTV from a five year old lens, but it's even longer than that so we think it's the right investment to continue to make so in terms of projections, we have factored in and <unk>.
Matt Oppenheimer: Got it. Very helpful. Thank you, Matt. And then maybe to follow up just on sales and marketing, if you could just discuss, let me put a finer point on what's embedded in the outlook for 2024 for marketing spends and then maybe talk about the philosophy about flexing that up or flexing it down.
Kris and marketing expenditures investments in 2024 versus 2023 on a broad basis and that's reflected in our guidance.
Andrew Schmidt: I know, you know, this is a longer-term story and, you know, it's important to go after the market because there are attractive economics, but I'd just curious to get your thoughts on, you know, what could drive marketing up or down as we progress throughout the year. Thanks a lot, guys. Yeah, thanks, Andrew. So first off, I think I just wanted to make sure that it's recognized that marketing is a level that we can actually dial up and down, and we think that, you know, it makes sense to do that within the return threshold. So we set ourselves here, and you can see that we have a pretty long and durable stream of revenue and revenue from the customers we acquire from marketing investments, which exceeds 5 years. So we talk about LTV from a 5 year lens, but it's, it's even longer than that.
So we have factored that in and it obviously impacts our revenue growth for this year, but certainly as we're looking at it beyond this year and looking at 25 and beyond.
These investments were making.
Yes, the only thing I'd add there Andrew is I think that as you know and therefore I. Appreciate the question in terms of we have the ability to dial up our back the amount that we spend on the marketing front because we do view it was really targeted towards new customer acquisition building that trust top of funnel with the custom.
Base that historically hard to build trust with.
But then once we built that trust, we see nice recurring long term profit and revenue streams from the customers that we serve.
And so if you think about how much we're spending to build that top of funnel trust. It is something that we can calibrate depending on the.
Hemant Munnapalli: So we think it's the right investment to continue to make. In terms of projections, we have factored in an increase in marketing expenditures and investment in 2024 versus 2023 on a broad basis, and that's reflected in our guidance. So we factored that in, and it obviously impacts our revenue growth for this year, but certainly as we're looking at it beyond this year and looking at 25 and beyond in terms of these investments we're making. Yeah, and the only thing I'd add there, Andrew, is I think, as you know, and therefore I appreciate the question in terms of we have the ability to dial up or back the amount that we spend on the marketing front because we do view But then once we've built that trust, we see nice, recurring, long-term profit and revenue streams from the customers that we serve. And so if you think about how much we're spending to build that top of the funnel trust, it is something that we can calibrate depending on the cost of capital, depending on the market environment.
The cost of capital depending on the market environment, and we've certainly taken into account.
<unk> cost of capital and there is a spirit of describing efficiencies within the business as we think about 2024, you see that in our adjusted EBITDA guidance.
As well as continuing to build an even more profitable and even larger business as we think about 2025 and beyond so we think we struck the right balance and certainly those efficiencies.
And the focus on efficiency as well as growth.
It is included in our 2020 forgot.
Got it appreciate the balanced and congrats on the good quarter guys.
Thank you.
One moment our next question.
Our next question comes from will Nance with Goldman Sachs. Your line is open.
Hey, guys.
You've taken the question today.
Yes, Matt competition remains a big focus in the market in particular in the digital mobile social I think investors' perception of global levels of churn in the digital remains both are relatively high and I think you guys have highlighted several times today. The retention that you guys have in terms of revenue whilst transaction expense from prior cohorts. So maybe you could.
Just talk a little bit about what's taken us into our customer base and what you think keeps them coming back to remotely over time in a world where there's lots of options and then I think you mentioned in some of the prepared remarks talking about future products that can address additional needs of the customer base. So how are you thinking about the interplay.
Matt Oppenheimer: And we've certainly taken into account the increased cost of capital, and there's a spirit of just driving efficiencies within the business as we think about 2024. You see that in our adjusted EBITDA guidance, as well as continuing to build an even more profitable and even larger business as we think about 2025 and beyond. So we think we've struck the right balance, and certainly those efficiencies and the focus on efficiency as well as growth are included in our 2024 guidance. I appreciate the balance, and congratulations on the good core guys. Thank you.
Those additional products.
Levels of customer retention over time.
Yes, great question and several things to unpack within that I think that the first thing to your question of why customers choose the remittance provider and why they stay with it with us is.
It really does come down to the things that ladder up to trust it.
As a customer base that might be reticent to provide a lot of their personal sensitive information and then they're trusting us with a big percentage of their hard earned money.
Operator: One moment for our next question. Our next question comes from Will Nance with Goldman Sachs. Your line is open.
To be sent back home often hundreds of thousands of miles away.
And they need that money immediately it's for things like basic lending expenses emergency medical needs and so.
Will Nance: Hey guys, I appreciate you taking the question today. Matt, competition remains a big focus in the market, particularly in the digital remittance space. And I think investors' perception of the levels of churn in the digital remittance space is relatively high. And I think you guys have highlighted several times today the tension that you guys have in terms of revenue less transaction expense from prior cohorts. So maybe you could just talk a little bit about the stickiness of your customer base, what you think keeps them coming back to Remitly over time in a world where there are lots of options.
That combined with the complexity of delivering a remittance internationally in a fast and reliable way means that trust is at a premium and so when we talk about things like speed and reliability.
That is ultimately what customers care about the most and having a fair and transparent price, which we can do given that we're a digital first provider is a component of building that trust, but it's not about just having the best price. Once you build that trust and you deliver with a great product as we've done and as we continue to do as we get more scale and can invest more.
Into our global payments platform, you see the kind of retention rates that we have shared on slide nine.
Matt Oppenheimer: And then I think you mentioned in some of the prepared remarks talking about future products that can address additional needs of the customer base. So how are you thinking about the interplay between those additional products and levels of customer retention over time? Yeah, great question and several things to unpack within that. I think that the first thing to answer your question of why customers choose a remittance provider and why they, you know, stay with it with us is, you know, it really does come down to the things that ladder up to trust. It's a customer base that might be reticent to provide a lot of their personal sensitive information, and then they're trusting us with a big percentage of their hard-earned money to be sent back home. Often, you know, hundreds of thousands of miles away, and they need that money immediately. It's for things like, you know, basic lending expenses, and emergency medical needs.
Where you can see on a cohort basis that customers come back on a very regular basis and we shared that following the first year.
Full year after we acquire new customers those same customers have on average approximately 95% of revenue left transaction expense for each subsequent year and so that is something that we really appreciate about our customers their resilience to non discretionary service.
Nature of our service and.
Something that I've seen over the last now 13 years in building this business is that.
Customers care about trusted the premium and that is what we are ultimately going to deliver.
I appreciate all that and then I think you also had some comments in the prepared remarks around turning your attention to operational efficiency.
Taken the track record you have on things like customer support and fraud and.
Looking at some of the other opex levers that you have maybe around G&A.
Matt Oppenheimer: And so that, combined with the complexity of delivering a remittance internationally in a fast and reliable way means that trust is at a premium. And so when we talk about things like speed and reliability, that is ultimately what customers care about the most. And having a fair and transparent price, which we can do, given that we're a digital first provider, is a component of building that trust, but it's not about just having the best price. Once you've built that trust, and you deliver a great product, as we have done, and as we continue to do as we get more scale and can invest more in our, you know, global payments platform, you see the kind of retention rates that And we share that following the first full year after we acquire new customers, those same customers have, on average, approximately 95% of revenue less transaction expense for each subsequent year. And so that is something that we really appreciate about our customers, their resilience, the nondiscretionary nature of our service.
Or whatever else that you guys are focused on maybe you could just kind of talk about that and I'm wondering if anything has changed in your thought process around kind of optimizing for profitability.
Kind of cutting out any pieces of it.
<unk> and Opex, while still making some of the growth related investments in sales and marketing that you guys need to grow the business.
Yes, I'll start I'll start and then I'll turn it over to him I want to talk about it from a P&L standpoint, but I think the thing that I would highlight is we're starting given some of the opex investments that we've made we are really seeing the benefit both from a P&L standpoint, you see the improvements from a cost standpoint.
See the improvements from a transaction expense standpoint, those are improvements not only in our costs, but they also represent.
That customers are contacting us.
Our product is more reliable our product is faster at 95% of customers don't have to contact customer support and we're continuing to improve that everyday and I will tell you having started this business 13 years ago. When we were sub scale will really really hard to truly differentiate and build a frictionless and seamless.
List and reliable product.
We're doing that a lot better now and we're just getting started in that effort and so we need to invest enough in the G&A side to get both the cost benefits on other aspects of the P&L as well as continuing to differentiate our product and pull away from some of the subscale competitors that really can't build a reliable product and I think thats, what youre seeing in the P&L in Q4.
Matt Oppenheimer: And something that, you know, I've seen over the last 13 years of building this business is that customers care about trust as a premium, and that is what we're ultimately going to deliver. I think you also had some comments in the prepared remarks around turning your attention to operational efficiency, taking the track record you have on things like customer support and fraud and looking at some of the other OpEx levers that you have, maybe around G&A or whatever else that you guys are focused on. Maybe you could just talk about that. I was wondering if anything has changed in your thought process around optimizing for profitability and cutting out any pieces of G&A and OpEx while still making some of the growth-related investments in sales and marketing that you guys need to grow the business. Yeah, I'll start, and then I'll turn it over to Himansh to talk about it from a P&L standpoint.
And what Youre seeing.
2024, guys from a financial standpoint in him off anything you'd add from a yes, no I think thats right I think just on the point on efficiency as well, we're now a business that Q4 annualized $1 billion plus and as you can see in our guide as well I think we've reached a point, where we have tremendous opportunity to take some of the things we've done whether you've seen any sort of improving.
Our transaction expense of reducing that.
The progress we've made on reducing our customer service costs by focusing on contacts from customers and some of the playbooks on really driving efficiencies from an operational perspective, but also using technology to drive automation in the business. We think we can apply that across other aspects of the business, whether it's G&A or other corporate areas as well.
Matt Oppenheimer: But the thing that I would highlight is that, given some of the OPEX investments that we've made, we are really seeing the benefits both from a P&L standpoint, and you see the improvements from a CS cost standpoint. You see the improvements from a transaction expense standpoint, and those are improvements not only in our costs, but they also represent that customers are contacting us less, our product is more reliable, our product is faster, 95% of customers don't have to contact customer support, and we're continuing to improve that every day. And I will tell you, having started this business 13 years ago, when we were subscale, it was really, really hard to truly differentiate and build a frictionless, seamless, and reliable product. We're doing that a lot better now, and we're just getting started in that effort.
We're looking to do that with more intentionality, given now the size of the business and being much more global in nature that we can get those efficiencies. This year. Some of that is reflected now in our in our forecast are around EBITDA, but as we also look forward beyond beyond 2024. So we're excited to go about that.
A lot of focus.
Great. Appreciate you guys, taking the questions and nice job today.
One moment for our next question.
Our next question comes from Andrew <unk> with Wells Fargo. Your line is open.
Hey, guys. Thanks for taking the question.
Following up on the comment that you made that.
Revenue growth should outpace.
Volume or volume growth in 2024, and your comments that transaction expense still has further room on the efficiencies how should we think about the magnitude of efficiencies on transaction expense versus what your expectations are for sure the top line yield side.
Hemant Munnapalli: And so we need to invest enough in the G&A side to get both the cost benefits on other aspects of the P&L, as well as continuing to differentiate our product and pull away from some of the subscale competitors that really can't build a reliable product. And I think that's what you're seeing in the P&L in Q4 and what you're seeing in our 2024 guide from a financial standpoint. And Hemant, anything to add from a financial standpoint? Yeah, no, I think that's right.
And the euro.
Yes. Thanks for the question, Andrew We think that there will be continued efficiencies here on reducing kraft transaction expense for years ago and.
We see 2024 is another year in that sort of a multiyear focus on driving down transaction expense and just to kind of level set in terms of what makes up that expense category, but in pain and payout costs. So these are economics that we have with our payer partners as well as disbursement partners and then fraud loss manage.
Hemant Munnapalli: I think just on the point of efficiency as well, I mean, we're now a business that analyzed a billion dollars plus, and as you can see in our guide, I think we've reached a point where we have tremendous opportunity to take some of the things we have done, whether you've seen in sort of improving our transaction expense or reducing that, the progress we've made on reducing our customer service costs by focusing on contacts from customers We think we can apply that across other aspects of the business, whether it's G&A or other corporate areas as well.
And on the first two in particular with close to $40 billion outstanding volume going through our platform. If you will give us tremendous opportunity for us to have the right economics with our partners, So which is largely driven by the volume and we think that with our growing scale and volume that will give us further opportunities for this year and beyond.
And on fraud losses, and we've talked about this earlier as well as its really driven around data and the amount of data we are ingesting into our AI and ml models and we see that with increasing data, we're just getting more and more precise in how we're doing adding between what's.
Hemant Munnapalli: So we're looking to do that with more intentionality, given now the size of the business and being much more global in nature, so we can get those efficiencies. This year, some of that's reflected in our forecast around EBITDA, but as we also look forward beyond 2024. So we're excited to go about that with a lot of focus. Great, appreciate you guys taking the questions and doing a nice job.
What's a good remingtons transaction and what could potentially be fraudulent so.
We see continued improvements there having said that I think with fraud were always watchful and there is generally some sort of volatility around it in any given quarter, but the but the broader trend in transaction expense reduction is something that we've factored in in our guidance, but we also think that mid to long term.
Operator: One moment for our next question. Our next question comes from Andrew Botch with Wells Fargo. Your line is open.
Andrew Botch: Hey, guys, thanks for taking the question. Following up on the comments that you made that, you know, net revenue growth should outpace volume or volume growth in 2024, in your comments that transaction expense still has further room for improvement. How can we think about the, the, magnitude of efficiencies on transaction expense versus, you know, what your expectations are for for the, the top line yield side in the airhead?
That will continue.
And then on the gross yield side.
Yes, so we're really looking to ensure that we're providing value to our customers and I think as Matt talked about it I think when you talk about yield you think about pricing, but it goes beyond that the trust that we're building with our customers, which is through this but the speed of the transaction the reliability of it there's multiple levers as we look at LTV.
And maximizing that for our customers. So we expect that we will continue to focus on that and that will result in a revenue growth and you can see that in our.
Hemant Munnapalli: Yeah, thanks for the question, Andrew. We think that there will be continued efficiencies here on reducing transaction expense for years to come. And, you know, we see 2024 as another year in that sort of multi-year focus on driving down transaction expense. And just to kind of level set in terms of what makes up that expense category, you've got pay-in and pay-out costs.
Guidance for this year.
And then if I could just squeeze in a follow up you mentioned discipline around stock based comp is a focus in 2024.
If you could just provide a finer point on what that should look like for our models very helpful for to calibrate the model.
Hemant Munnapalli: So these are the economics that we have with our pay-in partners, as well as our disbursement partners, and then fraud loss management. And on the first two, in particular, with, you know, close to $40 billion of SEND volume going to our platform, if you will, it's a tremendous opportunity for us to have the right economics with our partners, which is largely driven by the volume. And we think that, you know, with a growing scale and volume, that will give us further opportunities this year and beyond. And on fraud losses, and we've talked about this earlier as well, it's really driven around data and the amount of data we're ingesting into our AI and ML models. And we see that with increasing data, we're just getting more and more precise in how we're delineating between what's a good remittance transaction and what could potentially be fraudulent. So we see continued improvements there. Having said that, I think with fraud, we're always watchful, and there's generally some sort of volatility around it in any given quarter.
Yeah. So on stock based compensation is that we've been one just to step back here again, it's stock comp as an incentive comp obviously with our with our employees and we believe and incentivize our employees. This way so it remains an important incentive.
For us to drive our growth and our strategic priorities.
We have been moderating the growth on stock based comp so pointing you back to Q4 waves.
The growth year over year was was in line or a little bit lower than what we saw in Q3.
2023, so we expect to remain actively focused on not just umpqua has gone, but also in terms of shares that we issue, so that which would impact dilution, especially as we continue to improve or grow our profits and reduce our losses. We don't want to think about what that means in terms of the EPS.
Great. Thanks for taking the questions.
One moment our next question.
Our next question comes from Darrin Peller with Wolfe Research Your line is open.
Hey, guys Matt.
I heard you talking earlier, a bit about going deeper with our customer base.
Hemant Munnapalli: But the broader trend in transaction expense reduction is something that we've factored in in our guidance, but we also think that's a mid to long-term trajectory that will continue. And then the gross yield type. Yes, we're really looking to ensure that we're providing value to our customers. And I think, as Matt talked about it, I think when you talk about yield, you think about pricing, but it goes beyond that.
And I think we saw a website, suggesting a new app I think it was <unk> circle peering to offer just a different range of Moneygram money management services money transfer.
Alongside a money transfer. So there is there anything you can give us a little more reminds me of passbook I'm not sure if it's similar.
Any more on timing or what that actual reach could be and maybe geographies of what the plans really are around that would be great.
Hemant Munnapalli: The trust that we're building with our customers, which is through the speed of the transaction and the reliability of it. There are multiple levers as we look at LTV and maximizing that for our customers. So we expect that, you know, we'll continue to focus on that, and that will result in our revenue growth. And you see that in our guidance for this year. If I could just squeeze in a follow-up, you mentioned discipline around stock-based comp as a focus in 2024. If you could just provide a finer point on what that should look like for our models, it would be very helpful for calibrating the model.
Thanks, Darren yes, great to hear from you.
So as I mentioned during the opening remarks, one of the things that that that is really important to understand is the amount of investments we've been making in our technology platform and taking it from a more integrated kind of or more.
Monolith to something that is more modular in terms of API that then not only our remittance team can continue to deliver on in terms of.
Greater.
Developer efficiency improved improvements on the risk side in terms of privacy security et cetera.
But it also creates a platform for our new products teams to be able to test and iterate more more.
Hemant Munnapalli: Yeah, so on stock-based compensation, we've been, one, just to step back here again, it's stock comp is an incentive comp, obviously, with our employees, and we believe in incentivizing our employees this way, so it remains an important incentive for us to drive our growth and our strategic priorities. We have been moderating the growth on stock-based comp, so pointing you back to Q4 was at a, the growth year-over-year was in line or a little bit lower than what we saw in Q3 of 2023, so we expect to remain actively focused on, not just stock-based comp, but also in terms of shares that we issue, so that which would impact dilution, especially as we continue to improve our, grow our profits and reduce our losses, we do want to think about what that means in terms of EPS.
Effectively and quickly and so I'm glad that you noticed circle out there.
I would be a circle as one of a few but very important in targeted areas that we think we can solve broader customer pain points. When it comes to cross border financial services needs and we'll talk about them.
More publicly as they get to the point of scale that it makes sense to you, but I'm glad you noticed that because it is indicative of the kind of testing launching and.
Various products that we're very serious about adding to our customers I think we have the ability to do so.
That's exciting to hear and just maybe we could revisit quickly the strategy and your stated goals on profitability metrics. If you don't mind just.
Hemant Munnapalli: Great, thanks for taking the question. One moment for our next question. Our next question comes from Darren Peller with Wolf Research. Your line is open. Hey guys, you know Matt, I heard you talking earlier about going deeper with the customer base, and I think we saw a website suggesting a new app. I think it was Remitly Circle appearing to offer just a different range of money management services, money transfer, alongside money transfer. So if there's anything you can give us a little more, it reminds me of Passbook. I'm not sure if it's similar.
Both with and without stock comp over the next couple of years I know you obviously have shown very strong success with your LTV.
Customer adds are coming in strong as well but.
Just a reminder of what your intentions are.
Thanks, guys.
Yes. Good question Darren I think one we haven't yet talked about what it means from a long term perspective, but what's important to recognize here is one where really anchored around continued growth in the business and the opportunity that we have which is which is obviously a significant just given the size of the market and what we are today. So we will continue to make sure that we are able to drive that growth.
Matt Oppenheimer: Any more on timing or what that actual reach could be and maybe geographies and what the plans really are around that? Thanks, Aaron. Yeah, great to hear from you. So, as I mentioned during the opening remarks, one of the things that are really important to understand is the amount of investments we've been making in our technology platform and taking it from a more integrated, you know, kind of, or monolithic to something that is more modular in terms of APIs that then not only our remittance team can continue to deliver on in terms of, you know, greater developer efficiency, improved But it also creates a platform for our new product teams to be able to test and iterate more effectively and quickly.
On the on the topic of profitability, we've been on the path of what I'd say, a sustainably growing our profits and we demonstrated that last year with every quarter being profitable and.
We ended at $44 million of.
Adjusted EBITDA profitability.
We plan to continue on that trajectory and what youre kind of seeing in our guidance it's reflective.
Significantly increasing EBITDA profitability from last year to this year and as we continue to focus on being more efficient and also being able to fund pick some of those efficiencies and continue to fund.
Fund our growth.
Beyond that that four years ago.
Okay, great. Thanks.
Thanks, a lot guys.
One moment.
Our next question.
Matt Oppenheimer: And so I'm glad that, you know, the circle out there, I would consider it as one of a few, but very important and targeted areas that we think we can solve broader customer pain points when it comes to, you know, cross-border financial services needs. And we'll talk about them, you know, more publicly as they get to the point of scale that it makes sense to. But it's I'm glad you noticed it because it is indicative of the kind of testing, launching, and various products that we're very serious about adding to our customers and think we have the ability to do so. Transcripts provided by Transcription Outsourcing, LLC, both with and without StyleCom over the next couple of years. I know you obviously have shown very strong success with your LTV, and obviously, customer ads are coming in strong as well, but I mean just a reminder of what your intentions are. Yeah, good question, Darren.
Our next question comes from David Scharf with citizens JMP. Your line is open.
Hi, yes, good afternoon.
Thanks for taking my questions.
Okay.
Apologize if I heard this incorrectly.
Washington between calls but.
And did you mentioned that LTV.
As you are projecting it.
It has been increasing.
After the.
The profile of the record new customer accounts that you added in the fourth quarter should we be viewing LTV.
It's still on an upward trajectory.
Yes, so just thanks, David for the question. So when we think about LTV, we're talking about revenue less transaction expenses for a period of five years and I'll point, you to a chart that we shared which shows.
That we have that trajectory of revenue less expenses.
Growing.
And so that's one thing that just to kind of point you back to that we are increasing LTV from two dimensions. One is we're seeing important to recognize that we are seeing higher transaction intensity from our customers.
Hemant Munnapalli: I think, one, we haven't yet talked about what it means from a long-term perspective, but what's important to recognize here is that, one, we're really anchored around continued growth in the business and the opportunity that we have, which is obviously significant just given the size of the market and what we are today. So we'll continue to make sure that we are able to drive that growth. On the topic of profitability, we've been on the path of, what I'd say, sustainably growing our profits. And we demonstrated that last year with every quarter being profitable. And we ended the year at $44 million of adjusted EBITDA profitability. We plan to continue on that trajectory, which you're kind of seeing in our guidance. It's reflecting that.
A lot of that is again sort of the digital distribution options.
Which is good which we think is a good tailwind from being a digital player at scale.
But also reducing transaction expenses.
Sure for all of the types of Remington deductions that we have out there. So based on that we see LTV remains strong is actually improving based on these factors and which also gives us increased confidence around marketing investments behind it.
Got it got it so related to that.
Does the geographic mix of the business impact.
Hemant Munnapalli: It's significantly increasing EBITDA profitability from last year to this year. And as we continue to focus on being more efficient and also being able to fund, take some of those efficiencies and continue to fund our growth, we'll be on that path for years. Roger. One moment.
That transactional intensity, just the revenue component of LTV and the reason I ask.
Obviously going back a few years the company was much more heavily concentrated in USD, India used to Philippines, I think those.
Operator: One moment for our next question. Our next question comes from David Scharf with Citizens JMP. Your line is open. Yeah, good afternoon, and thanks for taking my questions. Apologize if I heard this incorrectly.
Demographic cohorts tend to have higher higher wages than maybe the industry on average probably larger send amounts on average is there any downward pressure.
Revenue per active account over time as the geography.
David Scharf: I'm going to swap in between calls. But, Kamath, did you mention that LTV, as you're projecting it, has been increasing after the profile of the record number of new customer accounts that you added in the fourth quarter? Should we be viewing LTV?
Becomes more diversified or is that just rounding error stuff.
Yes, Thanks, David I can take that one I think that.
Hemant Munnapalli: It's still on an upward trajectory. Yeah, so just thanks, David, for the question. So when we think about LTV, we're talking about, you know, revenue plus transaction expenses for a period of five years. And, you know, we'll point you to a chart that we shared, which shows that we have that trajectory of revenue, less expenses, growing. And so that's one thing that, you know, just to kind of point you back to that. We are increasing LTV in two dimensions.
The headline is that we have a pretty diversified portfolio at this point and so while there are various while there are variables depending on the geography.
It's not that there is a.
Macro shifts debated impacting especially the LTV side of the equation.
You might have as an example.
Lower profit per transaction and a specific corridor, but you would make up for it with with with.
Hemant Munnapalli: One is that we're seeing higher transaction intensity from our customers. A lot of that is, again, sort of the digital distribution options, which is good, which we think is a good tailwind from being a digital player at scale, but also reducing transaction expenses for all of the types of remittance options that we have out there. So based on that, we see, you know, LTV remains strong. It's actually improving based on these factors, and that also gives us increased confidence around marketing investments behind it. Got it, got it.
Active rates in terms of number of transactions that customer sent and we monitor that on a very day average basis, and we continue to see consistency in that a lot of changes over the past.
Several quarters on that front.
And in addition to geography, you look at.
How how funds are collected how funds are dispersed throughout the Abbott transaction sizes that will that will also vary within a specific country or corridor. As an example, and we feel very good about the trends that we're seeing including trends towards things like digital disbursement, which can actually improve the revenue.
Matt Oppenheimer: So related to that, the geographic mix of the Impact, that transactional intensity, just the revenue component of LTV. And the reason I asked: obviously, going back a few years, the company was much more heavily concentrated in U.S. to India, U.S. to Philippines, and I think those demographic cohorts tend to have higher wages than maybe the industry on average, probably larger send amounts on average. Is there any downward pressure on revenue per active account over time as the geography becomes more diversified, or is that just rounding errors? Yeah, David. I can take that one.
Less transaction expense.
Which is what the ultimate input is into LTV.
Because the cost of disbursing funds are lower and so overall trends remained stable excited about the direction from an LTV standpoint, and why you might see some regional or even within region variances, we havent yet diversified portfolio at this point and that continues to have that stability.
Great very helpful. Thanks, so much.
Matt Oppenheimer: I think that the headline is that we have a pretty diversified portfolio at this point. And so, while there are various, while there are variables, depending on the geography, it's not that there's a macro shift that is impacting, especially the LTV side of the equation. You might have, as an example, lower profit per transaction in a specific corridor, but you'd make up for it with, you know, active rates in terms of the number of transactions that customers send.
Our next question.
Our next question comes from Marc Feldman with William Blair. Your line is open.
Hey, guys. Thanks for taking the question, it's great to see the marketing investments, resulting in a record number of new customer adds and then also just depreciate the LTV and retention number you gave but is there a way to frame the ramp up of LTV LTV from these new customers that you acquired in Q4, I guess in fall of 2023.
Matt Oppenheimer: And we monitor that on a very de-averaged basis. And we continue to see consistency, not a lot of changes over the past, you know, several quarters on that front. And in addition to geography, you look at how funds are collected, how funds are dispersed, and what the average transaction size is.
As we look into 2024, I know you gave that 95% retention number for second year, but yes.
First year of growth I guess.
Yes, Thanks, Marc for the question. So we would see is generally a fairly a relatively quick ramp from that point I mean, obviously Q4 and when you think about Q4 is really December is generally that sort of the high activity month, given holidays and we look at Q1, you would generally have.
Matt Oppenheimer: That'll also vary within a specific country or corridor, as an example. And we feel very good about the trends that we're seeing, including trends toward things like digital disbursement, which can actually improve revenue less transaction expense, which is what the ultimate input is into LTV because the cost of dispersing funds is lower. And so overall trends remain stable, and we are excited about the direction from an LTV standpoint. And while you might see some regional or even within-region variances, we have a good diversified portfolio at this point. And that continues to have that stability. Great. Very helpful, Matt. Thanks so much.
Janet <unk> being lower in terms of activity just across the board and it's not just <unk>, but it is an industry wide remittance phenomenon.
We will start seeing pick up of all of that in March and so we do think that in a relatively short period of time, we should be able to see increased activity from.
From the new customers that were acquired.
And that model holds and so there is some seasonality in terms of <unk>.
When we see more.
Customer activity than others, but generally speaking as we progressed through the year.
Q2, Q3, Q4 generally is more seasonal high quarter from <unk> perspective, yes, and the only the only quick thing I would add on that front is I think.
Operator: One moment for our next question. Our next question comes from Mark Feldman with William Blair. Your line is open.
We shared again slide nine very intentionally is a new chart to kind of give you a sense.
Mark Feldman: Hey guys, thanks for taking the question. It's great to see the marketing investments resulting in a record number of new customer ads, and I also just appreciate the LTV retention number you gave. But is there a way to frame the ramp-up of LTV from these new customers that you acquired in Q4 and, I guess, in all of 2023? As we look into 2024, I know you gave that 95% retention number for the second year, but just the first year of growth, I guess. Yeah, thanks, Mark, for the question. So we would see it's generally a fairly, relatively quick ramp from that point. I mean, obviously Q4, and when you think about Q4, it's really December is generally the sort of high activity month, given holidays.
How how resilient and durable.
Our customer base is and you can see that a lot of that from a cohort basis, even as you project out to 2024.
Is because of the predictability and resilience that we kind of go into 24 with.
Given how we can kind of model out the existing cohorts and then it's about.
Growth has been about how do we continue to add new cohorts and new customers and build that top of funnel trust, while continuing to deliver a delightful and superb experience with our existing base and not only continues to get better.
Great. Thanks for that and then I guess one more.
Still early but I guess any update on the efforts and the UAE.
Hemant Munnapalli: And when we look at Q1, you generally have Jan and Feb being lower in terms of activities across the board, and it's not just a remitly thing, but it's an industry-wide remittance phenomenon. And so we'll start seeing a pick-up of all of that in March. And so we do think that in a relatively short period of time, we should be able to see increased activity from new customers that have been acquired, and that model holds. And so there's some seasonality in terms of when we see more customer activity than others. But generally speaking, as we progress through the year, Q2, Q3, and then Q4 generally are more of a seasonal high quarter from a relative perspective.
When can we start to see material contribution from our market.
Yes.
On that I guess, what's the typical just remind us will take about timeline for ramping a new sand marketing.
UAE tracking against that thank you.
Yes.
Yes. Thanks. Good question, Yes, we focused on the UAE, because it's a big market.
And I would say that we continue to be excited and bullish and that largely on track.
What is important to recognize going back to the 2% of a $1 eight trillion Tam and that we've launched over 3000 corridor since our IPO. There is a lot of opportunity to continue to grow in the markets that we're in and so I would view markets like the UAE as planting the seeds for future quarters in <unk>.
Hemant Munnapalli: Yeah, the only quick thing I'd add on that front is that I think that we shared slide 9 again very intentionally as a new chart to kind of give you a sense of how resilient and durable our customer base is. And you can see that a lot of that from a cohort basis, even as you project out to 2024, is because of the predictability and resilience that we kind of go into 24 with given how we can kind of model out the existing cohorts. And then it's about our growth. How do we continue to add new cohorts and new customers and build that top funnel trust while continuing to deliver a delightful and superb experience to our existing base? And that only continues to get better.
Years of compounding growth with no shortage of option in the coming quarters for us to grow not only there but in a lot of the markets that we've been in for the past several quarters or years, so really excited about the market opportunity and potential out there.
Great. Thanks for taking my questions.
Thank you that concludes the question and answer session. At this time I would like to turn the call back to Matt Oppenheimer for closing remarks.
Matt Oppenheimer: Great, thanks for that. And then, still early, but I guess, you know, any update on the efforts in the UAE? And, you know, when can we start to see material contributions from the market?
Great. Thanks, so much and.
Thanks, everyone for the thoughtful questions as we always do remotely I'd like to end the call by highlighting another one of our customers Alexandra and before I go into her story I just have to say that one of the unique aspects of this business is our incredible customers and their resilience their tenacity and the reason that they send money home being <unk>.
Matt Oppenheimer: And then just on that, I guess, you know, what's the typical timeline for a ramp up in the new SEND market and how's the UAE tracking against that? Thank you. Yeah, thanks. Good question.
Second non discretionary service and that is something that makes it really unique something that I am incredibly grateful for as CEO to get our service ticket to serve our customers every day and I know, it's something that motivates. The <unk> team every single day. So Alexandra is one of millions of customers that are using our platform and she sends money from Spain to her family and <unk>.
Matt Oppenheimer: Yeah, you know, we focus on the UAE because it's a big market, and I would say that we continue to be excited and bullish and that it's, you know, largely on track. What is important to recognize, going back to the 2% of a $1.8 trillion fan, and that we've launched, I think it's over 3,000 corridors since our IPO, there's a lot of opportunity to continue to grow in the markets that we're in. And so I would view markets like the UAE as planting the seeds for future quarters and years of compounding growth with no shortage of options in the coming quarters for us to grow, not only there but in a lot of the markets that we've been in for the past several quarters or years.
EMEA and Alexandra was one of our many new customers. We added last year and reflects the increasing diversity of our corridor portfolio and Alexander commented Amazing. It worked as it described it was reliable and quick I am very happy I tried it we think Alexandra for her loyalty to remit Lee Andrew recognition of the reliability and.
Speed of our service thanks, everybody for joining us I. Appreciate your support we're excited about the opportunities ahead and look forward to sharing more of our progress in 2024.
Matt Oppenheimer: So really excited about the market opportunity and potential out there. Great, thanks for taking my questions. Thank you. That concludes the question and answer session. At this time, I would like to turn the call back to Matt Oppheimer for closing remarks. Great, thanks so much and thanks everyone for the thoughtful questions.
Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
Okay.
[music].
Okay.
Yes.
Okay.
Okay.
[music].
Okay.
Okay.
Okay.
[music].
Yes.
Yes.
Matt Oppenheimer: As we always do at Remitly, I'd like to end the call just by highlighting another one of our customers, Alexandra. But before I go into her story, I just have to say that one of the unique aspects of this business is our incredible customers and their resilience, their tenacity, and the reason that they send money home, being such a non-discretionary service. And that is something that makes Remitly unique, something that I am incredibly grateful for as CEO to get to serve our customers every day. And I know it's something that motivates the Remitly team every single day. So Alexandra is one of millions of customers that use our platform, and she sends money from Spain to her family in Colombia. And she was one of the many new customers we added last year, which reflects the increasing diversity of our Cordover portfolio. And Alexandra commented, amazing, it worked as it described, it was reliable and quick. I'm very happy I tried it.
Okay.
Yes.
Yes.
Okay.
[music].
Okay.
Yes.
Yes.
Okay.
Yes.
Okay.
Sure.
Okay.
[music].
Sure.
Okay.
Yes.
Yes.
[music].
Okay.
Yes.
Jim.
[music].
Okay.
[music].
Yes.
Okay.
Okay.
[music].
Sure.
[music].
Okay.
[music].
Yes.
Yes.
Okay.
Okay.
Yes.
Matt Oppenheimer: We thank Alexandra for her loyalty to Remitly and her recognition of the reliability and speed of our service. Thanks everybody for joining us. I appreciate your support. We are excited about the opportunities ahead and look forward to sharing more of our progress in 2024. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect, www.remitly.com, In the name of the Father, and of the Son, and of the Holy Spirit. Amen. In the name of the Father, and of the Son, and of the Holy Spirit. Amen. Amen.
[music].
Okay.
Okay.
Yes.
Okay.
[music].
Okay.
Okay.
Yes.
Okay.
Okay.
Yes.
Okay.
Yes.
Yes.
[music].