Q4 2024 Remitly Global Inc Earnings Call
Good day and thank you for standing by. Welcome to the Remitly fourth quarter 2024 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session.
To ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please limit yourself to one question.
Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Stephen Shulstein, Vice President of Investment Relations. Please go ahead.
Thank you very much.
Stephen Shulstein: Thank you. Good afternoon and thank you for joining us for Remitly's fourth quarter 2024 earnings call.
Speaker Change: Joining me on the call today are Matt Oppenheimer, co-founder and chief executive officer of Remitly, and Vikas Mehta, chief financial officer.
Speaker Change: Please note that this call will be simultaneously webcast on the Investor Relations website.
Speaker Change: Before we start, I'd like to remind you that we will be making forward-looking statements within the meeting of the Federal Securities Laws, including but not limited to statements regarding World Bank Day's future financial results and management's expectations and plans.
Speaker Change: These statements are neither promises nor guarantees, and involve risks and uncertainties that may cause actual results to vary materially from those presented here. You should not place undue reliance on any forward-looking statements.
Speaker Change: Please refer the earnings release and SEC filings for more information regarding the risk factors that may affect results.
Speaker Change: Any forward-looking statements made in this conference call, including responses to your questions, are based on current expectations as of today, and we readily assume no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law.
Speaker Change: The following presentation contains non-GAAP financial measures. We will reference non-GAAP operating expenses and adjusted EBITDA in this call.
Speaker Change: These metrics exclude items such as stock-based compensation, acquisition, integration, and restructuring and other costs, and foreign exchange gain or loss. Beginning in Q1 2025, we will also be excluding from adjusted EBITDA the payroll taxes related to stock-based compensation.
Speaker Change: For context, we recorded approximately $6.4 million of payroll taxes related to stock-based compensation in 2024. We plan to reflect this change on a go-forward basis and will update our historical periods for consistency.
Speaker Change: Starting this year, we will be making our Pledge 1% contribution in quarterly increments, rather than all in the third quarter, which was our prior practice.
Speaker Change: This will result in the corresponding expense being recognized in each quarter rather than in Q3 alone.
Speaker Change: For a reconciliation of non-GAAP financial measures to the most directly possible GAAP metrics, please see the earnings release and the appendix to the earnings presentation, which are available on the IR section of our website. And now I will turn the call over to Matt to begin.
Matt Oppenheimer: Thank you, Seth, and thanks everyone for joining us today. I am thrilled to share the Q4 with an exceptional quarter and we ended 2024 on a strong note, as you can see on slide 4.
Speaker Change: With record revenue and adjusted EBITDA exceeding $40 million for the second consecutive quarter, we are surpassing our own high expectations.
Speaker Change: These results demonstrate customer loyalty and increasing scale across the business.
Speaker Change: We are redefining the future of cross-border financial services. We are not merely strengthening our position, we are setting new industry standards.
Speaker Change: We have saved customers hundreds of millions of dollars by disrupting the traditional remittance industry with a digital-first approach, transparent fee structure, and customer-centric innovation.
Speaker Change: These innovations have allowed Remitley to challenge long-established players in the $2 trillion market while empowering global citizens around the globe.
Speaker Change: We serve almost 8 million quarterly active customers in over 170 countries and across more than 5,100 corridors.
Speaker Change: In 2024, our customers sent more than $50 billion to their family and friends in a much easier, reliable, and cost-effective way using Remitly.
Speaker Change: The impact will just get larger as we scale, delivering more savings and a better customer experience for our customers, while delivering durable growth and sustainable profitability for our shareholders.
and many others. Thank you. Thank you.
Speaker Change: Turning to slide five, our audacious vision to transform lives with trusted financial services that transcend borders creates significant value for our customers, communities, and shareholders.
Speaker Change: There are three building blocks to our vision that I will unpack.
First, transform lives.
Second, trusted financial services.
Third, transcending borders.
Speaker Change: Let me start with how our services help transform lives with a customer example.
Speaker Change: Jagyasa moved to the U.S. from India as a student in 2018. She wanted to send money from the U.S. to India to her parents and was looking for a convenient and fast solution.
Speaker Change: She found out about Remitly from her friends who had great experiences. Initially, she started sending small amounts for birthdays and special occasions.
Speaker Change: Over time, as she experienced seamless and fast transfers with Munipalli, she started sending larger amounts to show her gratitude and bring joy and happiness to her family.
Speaker Change: As she became more financially independent, she had the need to hold funds in both the U.S. and India, and she used Remitly to diversify her savings between those accounts.
Speaker Change: Her story is one of millions that illustrate how we improve the experience one customer at a time.
Speaker Change: We are obsessed with making every part of the customer experience as easy, reliable, and frictionless as possible.
Speaker Change: Customers prefer a digital experience where they can complete a transaction in a few clicks rather than the hassle of visiting a physical store.
Speaker Change: From the moment a customer signs in to the time the transaction is initiated and ultimate completion, our systems are built to prioritize speed, convenience, and reliability.
Speaker Change: Customers don't have to enter their payment or recipient details every time they initiate a transaction. And not only that, they get a promised delivery date and time.
Speaker Change: In Q4, a record percentage of transactions were dispersed in less than an hour and proceeded without a customer support contact.
Speaker Change: These were just some of the ways that we dramatically innovated the customer experience in 2024, as you can see on slide six.
Speaker Change: Moving to the second building block of our vision, let me share how we create trusted financial services and drive efficiencies across our business, which allows us to deliver significant value for our customers and shareholders.
Speaker Change: With customer centricity as our core value, we work tirelessly to improve customer experience and build trust.
Speaker Change: With higher trust, customers use our services consistently, share their positive experience with others, and increase repeat behavior.
We earn trust, one customer at a time.
Speaker Change: now with over 3 million reviews and a 4.9 star rating on the iOS App Store and nearly 1 million reviews and a 4.8 star rating on the Google Play Store. These are category-leading customer ratings that create word-of-mouth for others to learn about and try remittantly.
Speaker Change: In 2024, deeper customer loyalty led to strong retention, higher frequency of transactions, driving LTV to CAC to approximately six times, and helping payback period remain well below 12 months.
Speaker Change: This was also evident in the fourth quarter, where marketing expense per quarterly active customer decreased nearly 16% year-over-year, and at the same time, we added a record number of new customers.
Speaker Change: A significant majority of 2024 revenue and Revenue Less Transaction Expense, or RLTE, was from customers who have completed their first transaction in prior years.
Speaker Change: As transaction volumes grow, economies of scale and network effects strengthen. Scale benefits every aspect from our business. We were able to secure better terms with both pay-in and pay-out partners, and source foreign exchange with more advantageous terms as we drive more volume through our network.
Speaker Change: This allows us to consistently offer better prices and a great experience.
to 6.5% in 2024.
Speaker Change: AI and machine learning models have enabled us to reduce transaction losses in the fourth quarter to the lowest transaction loss as a percentage of 10 volume in all of 2024, while also improving our customer experience.
Speaker Change: This operational excellence allows us to reinvest aggressively in growth while continuing to expand our profitability.
Speaker Change: Let me talk about the third building block of our vision, how we transcend borders with our world-class service and network.
Speaker Change: As a digital-first company, we generate valuable data and insights which allow us to expand geographically, innovate, and invest into new offerings.
Speaker Change: We apply the same customer-centric approach to these offerings as we did with our first corridor.
Speaker Change: Our Corridor Expansion Playbook, which allows us to enter new regions more efficiently as we grow, has enabled us to deliver an 80% revenue figure since 2020 in the rest of the world outside of the U.S. and Canada.
Speaker Change: As you can see on slide 7, along with rapid geographic expansion, we have increased the pay-in and pay-out options with direct integrations with key local payment partners.
Speaker Change: We now have more than 5,100 corridors, enabling us to send funds to 5 billion mobile wallets and bank accounts, and approximately 470,000 cash pickup options.
Speaker Change: Direct integrations with partners have allowed us to provide high availability, low exception rates, fast delivery, and full control of the experience. This is critically important to our customers who are often sending money for immediate needs.
Speaker Change: As an example, deeper partnerships and integrations with local payout partners, especially with mobile wallets, has enabled our strong growth in Africa-received countries. In Q4 specifically, we expanded our reach by enabling access to mobile wallets like Wave in Senegal and T-Money in Togo.
Speaker Change: Additionally, we strengthen direct partnerships with key players such as Wasa Cash and Cash Plus in Morocco and Tigo Pesa in Tanzania, allowing us to move more volume efficiently while enhancing speed and reliability.
Speaker Change: Expanding the number and quality of pay in auctions is a key part of making our product more attractive, versatile, and cost-efficient for our customers.
Speaker Change: For example, in Australia we launched Pay2, which provides an instant alternative to the existing bank account funding method that currently takes three days to process.
Speaker Change: We also launched Quarna in Germany, providing another convenient pay-in option.
Speaker Change: We continue to make progress on faster, bank-linked payments in the U.S. This provides more convenience at a lower cost, especially for customers looking to send large transactions.
Speaker Change: These direct integrations with pay-in and pay-out partners allow for faster speeds and more visibility in customer funds journey, allowing for a much more seamless customer experience and broader service selection for our customers.
Speaker Change: The ability to create seamless pay-in and pay-out experiences at scale is an enduring competitive advantage that differentiates us from other players in the space.
Speaker Change: As we look ahead to 2025, we remain steadfast in executing on our vision. We are a growth company with no shortage of growth opportunities.
Speaker Change: We will unlock value for new customer use cases, including C-fairs, micro-businesses, and high-amount senders, all of whom have distinct needs that we are uniquely positioned to serve.
Speaker Change: We conserve additional use cases with minimal incremental investment given the strength of our platform.
Speaker Change: The response thus far has been tremendous. More and more seafarers can securely send money home from the ship. Business owners can go global and have a fast and reliable option to transfer money abroad.
Speaker Change: High amount senders can transact seamlessly enabled by personalized risk assessment.
Speaker Change: Based on our ever-improving risk management system, we are able to raise SIN limits, further reducing customer friction.
Speaker Change: Each new corridor, use case, and service increases our TAN, differentiates us from the competition, and creates new revenue streams, driving even more growth.
Speaker Change: 2025 is going to be a big year. We are looking forward to our first $1 billion RLTE year, our first full year of GAAP net income profitability, and we will not be looking back.
Speaker Change: We have a really exciting roadmap for this year. We are making several product bets that are focused on setting us up for longer term success.
Speaker Change: As we often say here, we are just getting started, and I could not be more optimistic about the opportunities in 2025 and beyond. I am grateful to everyone who is on this journey with us. Now, over to Vikas.
Thank you, Matt, and good afternoon, everyone.
Vikas Mehta: We deliver another strong quarter and full year with both revenue and adjusted EBITDA ahead of our expectations.
Vikas Mehta: Fourth quarter revenue was $351.9 million, up 33% year-over-year, and adjusted EBITDA was $43.7 million, driving over 12% adjusted EBITDA margin.
Vikas Mehta: Full year revenue was $1.26 billion, up 34%, and adjusted EBITDA was $135 million, delivering nearly 11% adjusted EBITDA margin, as you can see on slide 9.
Vikas Mehta: We drove profitable growth with revenue more than $25 million above and adjusted EBITDA more than $50 million above the midpoint of our initial 2024 guidance.
Vikas Mehta: In the fourth quarter, active customers increased 32% year-over-year to 7.8 million.
Vikas Mehta: Driving this strong quarterly active customer growth was continued retention and once again a record number of new customers acquired in the quarter.
Vikas Mehta: Send volume per active customer increased 5.5%, a three-year high, and continued the trend we saw in the last quarter.
Vikas Mehta: This was driven by a record number of transactions per active customer.
Vikas Mehta: Send volume grew 39% to $15.4 billion and again outpaced revenue growth. Growth take rate was 2.28% in line with our expectations.
Vikas Mehta: As Matt highlighted earlier, our business continues to diversify while also delivering strong growth across geographies.
Vikas Mehta: During Q4, U.S. revenue grew 33% and rest of the world revenue grew 41% year over year.
Vikas Mehta: During the full year 2024, the rest of the world contributed nearly 24% of revenue compared to 21% in 2023.
Vikas Mehta: On the receive side, we further diversified as more than 60% of new customers acquired in the fourth quarter were sending to countries outside of Mexico, the Philippines, and India.
Vikas Mehta: Turning to our focus on driving profitable growth on slide 10.
Vikas Mehta: excluding provision of transaction losses other transaction expenses were a hundred and four point five million dollars
Vikas Mehta: We continue to see improvements relating to increasing volume, both in pay-in and disbursement partners.
Vikas Mehta: The mix of digital receipt transactions increased year-over-year by more than 350 basis points, continuing a trend that has been positive for our business and customers.
Vikas Mehta: Provision for transaction losses was 13.9 million dollars and as a percentage of send volume was nine basis points down sequentially and year-over-year.
Vikas Mehta: This was better than our expectations as we improved machine learning risk models and at the same time minimized unnecessary friction for our customers.
Vikas Mehta: As we shared last quarter, our LTE expansion is an indicator of long-term business model success.
Vikas Mehta: RLT as a percentage of revenue this quarter was 66.4%, improving sequentially and year-over-year.
Vikas Mehta: RLT dollars grew 33% to $233.5 million, reflecting market share gains and economies of scale.
Vikas Mehta: We are focused on driving long-term RLT dollars as we continue to attract new customers and scale.
Vikas Mehta: With that, let me walk you through the specific non-GAAP expense categories.
Vikas Mehta: Marketing spend was $79.3 million and decelerated to 11.1% growth year-over-year, the slowest growth since the first quarter of 2023.
Vikas Mehta: As a percentage of revenue, it was 22.5%, improving more than 440 basis points year-over-year. This improvement was a result of focus on marginal ROI on marketing spend to drive both durable growth and improving profitability.
Vikas Mehta: Marketing spend per quarterly active customer was $10.2 in Q4 and decreased 15.6% year-over-year.
Vikas Mehta: As our product experience continues to improve and differentiate, and as we build our brand globally, we expect more word-of-mouth.
Vikas Mehta: Customer support and operations expense was 21.7 million dollars and as a percentage of revenue was 6.2 percent, improving 120 basis points year over year, continuing a trend that we have seen over the past couple of years, even as we left upper comms.
Vikas Mehta: Our AI-based virtual assistant and product improvements have enabled lower agent contact rates while improving customer satisfaction rates.
Vikas Mehta: Technology and development expense was 48.1 million dollars and as a percentage of revenue improved by more than 90 basis points year over year.
Vikas Mehta: Technology investments have enabled improved customer experience and have also allowed us to rapidly innovate and serve new customer use cases.
Vikas Mehta: G&A expense was $40.7 million, and as a percentage of revenue improved, more than 270 basis points year-over-year, as we maintained rigorous discipline on hiring and non-headcount spend.
Vikas Mehta: We also implemented additional automation and AI tools across functions to help drive even more efficiencies.
Vikas Mehta: Strong revenue growth combined with efficiency and discipline across all operating expense categories led to adjusted EBITDA of $43.7 million.
Vikas Mehta: Net loss this quarter was $5.7 million, a material improvement compared to a $35 million net loss in the fourth quarter of 2023.
Vikas Mehta: Stock-based compensation was $41.6 million, and as a percentage of revenue was 11.8%, approximately 180 basis points lower than the fourth quarter of 2023.
Vikas Mehta: Before moving to our FY25 outlook, I'd like to spend a couple of minutes discussing our compensation philosophy and discipline equity management. Our compensation philosophy is aligned to long-term shareholder interests.
Equity compensation is a significant portion of total compensation.
Vikas Mehta: Aligning with long-term investor interests, vesting schedules for new employees are over a four-year period and back-end loaded.
Vikas Mehta: We cap day salaries and do not provide annual cash bonuses, nor maintain non-equity incentive compensation plans.
Vikas Mehta: We encourage employees to think like owners and incentivize them to do so.
Vikas Mehta: At the same time, we are committed to a disciplined approach for managing equity compensation.
We have made significant strides in managing stock dilution.
Vikas Mehta: As you can see on slide 11, stock-based compensation as a percentage of revenue decreased from 14.5% in 2023 to 12% in 2024, a 250 basis point improvement.
Vikas Mehta: Specific actions, including disciplined hiring, giving cash in lieu of equity for new hires, and our CEO declining new equity awards for the past three years, have helped reduce stock dilution and net bond rate.
Vikas Mehta: Also, on slide 11, you can see that stock dilution declined from 8.8% in 2023 down to 6.4% in 2024, and net burn rate reduced from 5.6% in 2023 to 4.9% in 2024.
Vikas Mehta: We will be disciplined and expect the net bond rate trend to continue downward.
Vikas Mehta: These measures reflect Remitley's commitment to safeguarding shareholder value while aligning with long-term growth objectives and maintaining competitive employee incentives.
Now moving to our outlook on slide 12.
Vikas Mehta: Consistent with the last quarter, we are providing quarterly and annual guidance. This should help reduce volatility around quarterly results, especially related to seasonality.
Vikas Mehta: It's important to note that this does not assume any large macroeconomic, geopolitical, or regulatory changes.
Vikas Mehta: For the first quarter of 2025, we expect revenue of $345 to $348 million, or 28% to 29% growth.
Vikas Mehta: Customers in the first quarter are seasonally less active than the fourth quarter, as there are fewer major holidays. In addition, the first quarter of 2025 is lapping a leap year, which impacts year-over-year and sequential comparisons.
Thank you very much. Thank you. Bye bye.
Speaker Change: If we unpack the revenue growth expectations further, we expect quarterly active customers to grow in line with Q1 revenue growth. Growth in send volume for quarterly active customers is expected to increase modestly driven by higher frequency of transactions.
Speaker Change: Consistent with recent trends, we also expect send volume growth to outpace revenue growth for both Q1 and FY 2025.
Speaker Change: For the full year, we expect revenue between 1.565 and 1.58 billion dollars, reflecting a growth rate of 24 to 25 percent. This outlook reflects the confidence we have in the durable customer behavior.
Speaker Change: Shifting to our adjusted EBITDA outlook, we expect Q1 adjusted EBITDA to be between $36 and $40 million. This outlook reflects the seasonality of revenue in the first quarter that I just discussed.
and many more. Thank you. Thank you.
as we shared last quarter in FY 2025.
Speaker Change: We are lapping the benefit from key payment processing partnerships that we realized in 2024. As a result, we expect Q1 transaction expenses as a percentage of revenue to be in line with the full year 2024.
Speaker Change: Also note, transaction losses can be volatile from quarter to quarter and we remain focused on optimizing customer lifetime value.
Speaker Change: Our marketing investments in Q1 will continue to deliver strong ROI as we expect marketing expense per quarterly active customer to decline modestly on a year-over-year basis.
Speaker Change: As a reminder, our marketing investments drive returns for many years beyond our initial investment, given repeat behavior and the resilience of remittances.
Speaker Change: We expect adjusted dividend dollars to run sequentially throughout the year.
Speaker Change: As we improve adjusted EBITDA, as well as manage dilution, net burn rate, and stock-based compensation expense effectively, we expect to generate positive gas net income starting the third quarter of 2025.
Speaker Change: We also expect to deliver positive GAP-MAT income for the full year.
Speaker Change: This outlook provides us with the flexibility to make key growth investments, while at the same time delivering efficiencies across our operating expense base.
Speaker Change: Earlier, Matt shared in detail our vision. Let me briefly share one structural reason why we believe we will be successful in achieving this audacious vision.
Speaker Change: Our vision is powered by a flywheel framework, which touches every aspect of our business.
Speaker Change: Just like a physical flywheel, momentum starts slowly, but builds rapidly. Each rotation amplifies performance.
Speaker Change: You can see on slide 13 how the Remedy Flywheel drives durable growth and sustainable profitability.
Speaker Change: In essence, delightful customer experiences drive more customer actions. This leads to increasing volumes, which lower cost structure.
Speaker Change: We pass some of this on to customers with better prices and reinvest the rest in innovation. Innovation improves service selection, driving additional engagement, and this, along with better prices, improves customer experience, further making it a virtuous cycle.
Speaker Change: Everything we do, from improving ease of use, providing fair pricing and faster remittances, keeps the remittance flywheel spinning.
Speaker Change: We introduce you to our flywheel in our first earnings call as a public company. Thanks to the flywheel effect, since our IPO in 2021, we have more than doubled annual revenue and more than tripled our LTE dollars.
We see this flywheel framework as a long-term competitive advantage.
Speaker Change: In closing, we are pleased that we delivered both higher than expected revenue and adjusted it a bit down.
Speaker Change: We are making targeted investments for the long term to execute on our vision to transform life with trusted financial services that transcend borders.
Speaker Change: Our focus on customers and the resilience of cross-border payments through economic cycles has positioned us to deliver sustainable, long-term results.
Speaker Change: With that, Matt and I will open up the call for your questions. Operator?
Thank you very much.
Speaker Change: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again.
Please limit yourself to one question.
Please stand by while we compile the Q&A roster.
Speaker Change: And our first question comes from the line of Andrew Schmidt of Citigroup. Your line is now open.
Andrew Schmidt: Hey, Matt. Hey, Vikas. Thanks for taking my questions, Goretz, on the results and the first full year of GAP profitability here.
Speaker Change: I wanted to ask on marketing spend, so good leverage in the fourth quarter, obviously comping high levels in the prior year.
Speaker Change: But maybe going back to something you said, you commented that, obviously, organic ads should help.
Speaker Change: I caught the comment in terms of the first quarter marketing spend per quarterly active, but how should we expect that to trend for the full year? Thanks so much.
Matt Oppenheimer: Thanks, Andrew. First of all, I'd say that we are really pleased with our results, and I want to start with a big gratitude to the Remitley team for an outstanding performance.
Matt Oppenheimer: As I think about, you know, marketing specifically, I would say that, you know, we have received benefits from
all the work we have done on product improvement.
that reduce friction for our customers and drive word-of-mouth.
Matt Oppenheimer: And that goes back to the comment on, you know, improving the organic results in a way that improves our ROI. And this was clearly reflected in our results, as you saw with, you know, Q4.
Matt Oppenheimer: leveraging 440 basis points and the marketing spend per QAU declining 16% and all the while, you know, being able to drive record new customer acquisitions.
Matt Oppenheimer: So overall, the marketing ROI has been excellent because of the work on product experience as well as the great work on driving the right campaigns and lending in a way that drives ROI.
Matt Oppenheimer: Matt, anything you would add? Yeah, I'd first just agree with everything you said, Vikas. And Andrew, the only points that I'd add strategically are, one, to your point on organic, I am incredibly excited about how as a foundation
Matt Oppenheimer: Customers love using our product, and increasingly, including the customer example that I shared today, Jagessa, they found out about Remitly from someone else who loved and trusted their experience. And if you look at some of the numbers I shared around app reviews, as an example, 3 million iOS reviews.
Matt Oppenheimer: over a million or about a million Google Play reviews, so four million total at 4.9 and 4.8 stars respectively. That's four million customers that have proactively given us.
Matt Oppenheimer: a review. And you think about the inorganic of just, you know, folks in their communities talking about their great experience that they have with Remittly. That is foundational, and that is part of why our flywheel is spinning. And then the second point I'll make
Speaker Change: is we then fuel that with a very sophisticated and integrated marketing approach. And I'd like to give our marketing team and Reena on our CMO.
Speaker Change: deep gratitude for marketing campaigns that we executed in Q4. And one example of that is our.
Speaker Change: campaign in the Philippines where we partnered with everything from the Filipino channel TFC to do really great creative and really customer centric marketing combined with middle and lower funnel.
all with the same campaign, all with Align Creative.
Speaker Change: And that just fuels that flywheel even further. So excited overall about both the efficiency on growth.
Speaker Change: both the growth side and the efficiency we're seeing when it comes to marketing. And I'll add with one last point here, your question around FY25-Q1 as well as full year, I'd say that given the...
Speaker Change: strength we have seen and the focus on marginal ROI, we would expect the leverage to continue both in Q1 as well as the full year.
and many more. Thank you. Thank you.
Thank you. One moment for our next question.
Speaker Change: Our next question comes from the line of Andrew Bosch of Wells Fargo. Your line is now open.
Hey guys, it's Griffin on for Andrew.
Nice results, Sharon. Thanks for the question.
Speaker Change: Looks like volume per customer was much stronger than expected in the corner. Can you just expand on some of the drivers of that? What's driving maybe the greater transaction frequency and how we should think about where that can ultimately go from here given the modest increases you expect throughout the year?
Thank you.
Speaker Change: I'd say that you picked the right metric there, and if you look at our revenue growth, you know, for Q4 it grew 33%. If you dissect it further, you know, it's just a function of
Speaker Change: QAE growth, the SEND per active growth, and the growth take rate. And what we saw in Q4 was that QAE grew 32%, but most importantly, as you pointed out, we saw SEND per active growth of 5.5%. This was the highest that we have seen in the last three years.
Speaker Change: continuing a trend that we also saw in Q3. And what is really driving this trend is the quality of engagement that we are able to drive with customers.
which is increasing the frequency of transactions.
Speaker Change: For example, in this quarter, we had record number of transactions per active customers.
Speaker Change: So clearly, we feel that the strength of the platform is resonating with our customers and the simplicity, convenience, and reliability that we offer is building trust as well as loyalty.
Speaker Change: Our next question comes from the line of Ramzi Al-Assad of Barclays. Your line is now open.
Speaker Change: Hi, Alison Arthur Ramsey here. Thanks so much for taking our question tonight.
Speaker Change: So understood that the guidance for the full year doesn't include any changes in the macro or any regulatory changes. So just in that context, would you be able to share your most up-to-date view on how you guys are currently viewing the political environment when it comes to immigration specifically?
Speaker Change: Yeah, thanks, Allison. Great, great question. You know, as I zoom out over the last decade plus, our business has been really resilient through various macro, political, regulatory changes, and so
Speaker Change: That combined with our increasing diversification, our customer profile, additional use cases that I talked about on the call, all provide significant opportunities for growth and give me a lot of confidence. So, happy to unpack any of those areas for you, but we feel good about the visibility of our 2025 revenue and monitor it closely, but overall feel really confident about where we're headed.
Speaker Change: And I just add that, you know, what gives us a lot of confidence is that, as we've shared before, you know, significant majority of FY24 revenue, for example, was from prior period customers.
Speaker Change: So, the strength of the cohort gives us confidence on the durability and the strength of our guide. At the same time, as you pointed, this does not include large changes that could come in regulatory environment, macro, or geopolitical efforts.
Thank you. One moment for our next question.
Thank you.
Speaker Change: Our next question comes from the line of David Scarfe of Citizens, and the line is now open.
Speaker Change: Hi, this is Zach Atterford-David. Thank you for taking our question. I wanted to drill down a little bit into the margin piece of the business. First, I wanted to see if there is a sense of what the ceiling for the margin could be, and then also wanted to kind of get a sense of what's driving the margin guide for 25 that's below 2H24. Thank you.
and many more. Thank you. Thank you.
and many others. Thank you. Thank you.
Speaker Change: Yeah. Thanks, Zach. First of all, I'd say that I'm really pleased with the strong performance.
Speaker Change: And most importantly, the focus on growth and profitability, as you highlighted, we have seen that in spades, and if you think about just Q4, we were able to exceed our revenue guidance by 12 million and our EBITDA guidance by
Speaker Change: You know, 25 million. So overall, really very happy with the progress that we have seen on the growth plus profitability equation.
Speaker Change: highlight I'd share is that, you know, from an RLTE as a percentage of revenue, we believe that we are comping against tough comps, especially because we are lapping against big benefits we had from a partnership throughout FY24. So, you know, it would remain in line with the revenue growth, RLTE dollars growing in line with, you know, the revenue growth. Secondly, as I shared earlier, you know, we expect marketing to modestly leverage
beyond that
Speaker Change: We will continue to invest in technology and development as we make long-term product bets.
Speaker Change: CSNO, as well as GNA, are areas that we have seen a lot of leverage over the past few years and we feel we are up against tough comps there. So overall, we are really excited about the guide of, at mid-point, 190 million EBITDA, which translates to...
Speaker Change: 12% plus margin. And that's a great foundation to start with, where we are balancing growth, balancing profitability, and investing in the long term of the business.
Speaker Change: Yeah, I agree with all of that and the only strategic point I'll add is
Speaker Change: When I look at the overall, you know, just margin of potential of the business, what excites me...
Speaker Change: is, one, how much of it is in our control in terms of, you know, how much we're marketing and focusing on efficiency as well as growth.
And when I look at things like our overall
Speaker Change: One of the things in Q4 and into this year that I've been really excited by is leveraging AI, and an example of that is when I took a trip to the Philippines and, as always, do customer calls and do side-by-sides with various agents.
Speaker Change: and seeing how they are leveraging AI very actively to serve customers more efficiently, more effectively, to get the highest and best use of their unique skills and time, and to create ultimately a better customer experience is really exciting. So I think there's opportunities across the board there.
Speaker Change: and excited about overall just the potential on the expense side.
Thank you. One moment for our next question.
Rufus Holm: Our next question comes from line of Rufus Holm of BMO. Your line is now open.
Rufus Holm: Hey guys, thanks for the question. I wanted to come back to the 2025 guidance and curious if FX was a tailwind for you this quarter and I guess I'm just curious how you're thinking about FX impacting 2025.
Speaker Change: And then maybe also asking about the EBITDA margin in a slightly different way. I'm just curious to hear your thoughts on whether this sort of 150 bits of annual expansion, is that a good pace for margin expansion over the medium term? Thanks.
Speaker Change: Yeah, thank you. Great question. As I think about FX, you know, I'll just start with Q4 first, and that will help set the foundation for the 2025 guide. So, in Q4, we saw...
Speaker Change: You know, both tailwinds as well as headwinds from FX perspective, which were essentially offsetting each other. We saw strength in USD, which helped the U.S. corridors. On the other hand, we saw, you know, both Canadian dollar as well as the rest of world currencies.
Speaker Change: being weaker which was a headwind and you know overall it was offsetting so really there was no
Speaker Change: no net effect of that. That again goes back to what Matt shared earlier, which is the power of diversification as well as the power of portfolio that we have.
So as we think about FY 2025 guide.
Speaker Change: And, of course, we'll keep you updated over the course of the year when we see any, you know, material movements that become part of the growth trajectory.
Speaker Change: And on your second question on the EBITDA margin, I'd say that, you know, just going back to Matt's commentary, as we think about the overall size and shape of the market, we are less than 3 percent.
of a $2 trillion market, and we see massive opportunities.
Speaker Change: And as Matt said earlier, there's no shortage of, you know, projects that we can sign up for. So with that set up, we want to make sure that we are investing wisely, both in marketing as well as tech and dev, to set us up for long-term success.
and many more. Thank you. Thank you.
Thank you. One moment for our next question.
Speaker Change: Our next question comes from the line of Chris Kennedy of William Blair. Your line is now open.
Chris Kennedy: Good afternoon. Thanks for taking the question and great results. Can you just give a little bit more color on the micro business opportunity? What's the current landscape today and how do you leverage your platform to capture that opportunity? Thank you.
and many more. Thank you. Thank you.
Chris Kennedy: and many more. Thank you. Thank you. Thank you. Thank you.
Chris Kennedy: Yeah, thanks, Chris. It's always great to hear from you, and I'm glad that you asked about that. I think that the extensibility of the platform that we've built really excites me, and I mentioned Seafarers, I mentioned...
Chris Kennedy: reducing friction for high dollar senders and then, as you mentioned, micro-businesses, not small, medium, large businesses. That's a well-served segment. But when you look at our cost to serve micro-businesses and the unique platform we've built, I think there's an opportunity there. And there's one story that I'll kind of weave in, which is a customer, Mary,
Chris Kennedy: just to give you a sense of the type of customers that we serve. Mary is a self-employed bookkeeping professional who was born and raised in the Philippines. She moved to California in 2001.
Chris Kennedy: And with a background in accounting and a CPA license, Mary now runs her own bookkeeping company and specializes in helping US-based small businesses to manage their records. And so to scale her operations, she built a team of 10 contractors in the Philippines.
Chris Kennedy: who she trains and pays using Remitly. And she was drawn to Remitly because of the efficiency and effectiveness of our platform. And she shared with us, I built my own team in the Philippines. I went there, train them, their extension of my own hands. And she went on to talk about how Remitly has been a great solution for her.
Speaker Change: and she signed up in 2017, but we've adapted and improved the product to be able to serve customers like Mary more effectively and I think there's a lot more customers out there like her. So it's one example of how I think there's a lot of extensibility in our platform with micro, micro businesses.
Chris Kennedy: and we're excited about growing that opportunity in 25 and beyond.
and many more. Thank you. Thank you.
Thank you. One moment for our next question.
and many others. Thank you. Thank you.
and many more. Thank you. Thank you.
Darren Peller: Our next question comes from the line of Darren Peller of Wolf Research. Your line is now open.
Hey, thanks guys, and nice job on the quarter.
Darren Peller: gross margins. And I think you mentioned it would, from an op, from a gross margin leverage standpoint, it would be about similar at 25. In other words, it'll grow in line with revenues, I guess. And so I'm just curious, you know, why we couldn't see, expect to see a little bit more than that, just in the context of
Darren Peller: You know better risk management AI you guys have done a great job on that so forth. So what could drive upside to that?
Matt Oppenheimer: Thanks, Aaron. Yeah, I'll start with the first question and then I'll turn it over to Vikas for the second. And I'm glad you asked. I think that, you know, I unpacked our vision in my pre-prepared remarks, but it really is around transforming lives with trusted financial services that transcend borders.
Matt Oppenheimer: and it's that intersection of customers' need to live an international life when it comes to their financial services needs.
Matt Oppenheimer: That's where I think that we can win and add other features and
Speaker Change: I remain optimistic about that. I think that the platform that we've built, and I credit Ankur Sinha, who is our Chief Product and Technology Officer, who over the last couple of years, he and then obviously our engineering team, has really worked on platformizing our platform. And that enables us to roll out innovative new features and address new customers' use cases.
Speaker Change: in a much more efficient and effective way. And so we're gonna remain disciplined and thoughtful.
Speaker Change: but we're excited about the opportunity to deepen relationships with our existing customer.
Speaker Change: and leverage the platform, whether that is adding additional services to our existing customers.
Speaker Change: and continuing to explore adjacencies all the way from helping them transact to store currencies.
Speaker Change: to creating additional liquidity in a unique way, as well as adding new customers types. I mentioned microbusinesses, seafarers, and I think all of that's a reflection of the platform we've built and I'm excited about what's to come there.
Speaker Change: Yeah, and let me follow up on your second question, which was around the, you know, RLTE as a percentage of revenue. So, the first thing I'd say is that, you know,
Speaker Change: Just from a technical perspective, we are lapping against a partnership that we signed in.
Speaker Change: fourth quarter of FY23. So for most of last year, we had the benefit coming through that. So again, you know, that's already in the base. The second thing I'd say is, as we think about
Speaker Change: Just the operational efficiencies of the business. We see some step changes happening over time, where if you just go back to FY22, you know, this was 60%. We were 60% RLTE as a percentage of revenue. From there we moved to 65%.
Speaker Change: And then, you know, for 24, we came in at 66. So clearly, you know, we have made a lot of progress in terms of driving efficiencies. The last thing I would say here is that we are always very cognizant of how much we want to pass it back to our customers and how much we want to drive to the bottom line. This goes back to, you know, creating trust, creating, you know, a better pricing model and making sure that, you know, we are.
winning with trust over here.
Thank you. One moment for our next question.
Speaker Change: Our next question comes from the line of Alex Margraf of GABCM. Your line is now open.
Alex Margraf: Hey, thanks for taking my question. Maybe Vikas, just one on the 25 revenue outlook.
Speaker Change: I think modestly better than what you had guided to on a preliminary basis last call.
Speaker Change: I think gross ads or net ads or quarterly actives were pretty similar to how you had talked about them for the fourth quarter. So just maybe get your thoughts on the delta there between the updated 25 outlook and what you had shared last call.
Speaker Change: and if you could just fold some growth ad expectations, retention expectations for 25 into that, that'd be helpful. Thank you.
Speaker Change: Thanks, Alex. That's a great question. Let me unpack that a little bit. So let me just start with the top line. So from a revenue total perspective, as we guided,
Speaker Change: We are expecting 1.565 to 1.58 billion, which approximately comes to at midpoint 24.4% growth.
Speaker Change: A key aspect I want to share is, in terms of the shape of the year, we think that the growth will be moderating each quarter sequentially. So, starting our FY21 Q1 guide, where we shared at midpoint 28.8% growth, ending the year with around that 24.4% guide. So, that's one important factor.
Speaker Change: quarterly active user times the growth take rate. I'd say that in Q1 and beyond, we'll see similar trends to what we have seen in Q4. Those trends have been, first of all, QAU growth in line with revenue growth.
Speaker Change: Secondly, from a send per QAU perspective, which I answered earlier, we remain very optimistic and we feel there'll be modest increase there, driven by increasing frequency of transactions. And finally, from a take rate perspective, continued volume growth, outpacing revenue growth. So that trend, we feel, will endure through the year.
Speaker Change: because I wanted to help you understand and the other analysts appreciate how we think behind the scenes, which is with regards to your question on the quarterly active users. One of the aspects.
is, you know, we strongly believe that NetEdge
Speaker Change: The way they are calculated is not a good metric, especially on a quarterly basis. And the reason is that there's a lot of noise due to spending patterns, which may not align with how these are measured. So we definitely focus on QAUs, but looking at NetEd is, I'd say, misleading.
you know, success factor for us.
Speaker Change: remains RLTE dollars, where we continue to focus on the expansion and growth of that. So overall, you know, very confident about, you know, the setup that we have for FY25. You know, we are off to a good start. And, you know, as Matt says, we are just getting started. So very excited.
Speaker Change: Thank you. This concludes the question and answer session. I would now like to turn it to Matt Oppenheimer for closing remarks.
Matt Oppenheimer: Great. Thanks, operator. And just a few thank yous first to all of the analysts for your thoughtful questions. We genuinely really appreciate them. All the investors on the line, we appreciate you being on this journey with us.
Matt Oppenheimer: And then I want to thank the Remitley team, thousands of folks around the globe who are working tirelessly to deliver on our vision.
Matt Oppenheimer: and to deliver the exceptional results that we had in Q4 as well as starting off 2025 on a really strong start. Heartfelt thank you from me. Lastly, thanks to Vikas for the amazing partnership.
Matt Oppenheimer: But most importantly, I want to thank our customers, and I'll thank Jagatha specifically who said this about her experience with Remitly. She said, I haven't used anything apart from Remitly. It's very intuitive, no flux.
And so we thank her for her loyalty since 2018.
Matt Oppenheimer: and for trusting Remitly to get money home to her family and friends reliably and seamlessly.
Matt Oppenheimer: We are excited about the opportunities ahead and look forward to sharing our progress as we continue to execute on our vision of transforming lives with trusted financial services that transcend borders.
Matt Oppenheimer: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Goodbye