Q3 2025 Remitly Global Inc Earnings Call

Speaker #1: Chief financial officer . Results and additional management commentary are available in the earnings release and presentation slides , which can be found at .

Speaker #1: Com . Please note that this call will be simultaneously webcast on the Investor Relations website . Before we start , I would like to remind you that we will be making forward looking statements within the meaning of the Federal securities laws , including , but not limited to , statements regarding future financial results and management's expectations and plans .

Speaker #1: These statements are neither promises nor guarantees and involve risks and uncertainties that may cause actual results to vary materially from those presented here .

Speaker #1: You should not place undue reliance on any forward-looking statements. Please refer to the earnings release and SEC filings for more information regarding the risk factors that may affect results.

Speaker #1: Any forward looking statements made in this conference call , including responses to your questions , are based on current expectations . As of today and assumes no obligation to update or revise them , whether as a result of new developments or otherwise , except as required by law .

Speaker #1: The following presentation contains non-GAAP financial measures . We will reference non-GAAP operating expenses and adjusted EBITDA in this call . These metrics exclude items such as stock based compensation , payroll taxes related to stock based compensation , or pledge 1% contribution integration , restructuring and other costs and other income and expense for reconciliation of non-GAAP financial measures to the most directly comparable GAAP metric .

Speaker #1: Please see the earnings press release and the appendix to the Earnings presentation , which are available on the IR section of our website .

Speaker #1: Now , I will turn the call over to Matt to begin . Thank you , Dave , and welcome to Remitly . Thank you to everyone joining us for our third quarter earnings call .

Speaker #1: In Q3 , we exceeded our guide , reflecting momentum from last quarter . And the early benefits of our growth initiatives . Further demonstrating the strength and durability of our business model .

Speaker #1: Remitly is a structurally advantaged financial platform built for durable growth . Revenue growth of 25% and adjusted EBITDA margins of 15% reflect our disciplined execution and focus on sustainable , profitable growth .

Speaker #1: Even as we continue to invest and expand . Today , I will focus on how our third quarter success directly validates our ambition to expand from being a leader in money movement to capturing a larger portion of the $22 trillion total addressable market .

Speaker #1: Our performance in the third quarter reflects the value of trust as the engine and competitive advantage that secures our enduring relationship with the customer .

Speaker #1: At Remitly , trust means something very specific . It is about mastering the difficulty of delivering a seamless end to end experience at a fair , customer centric price .

Speaker #1: With Near-instant delivery and the protection provided by stringent risk management . We deliver trust by mastering complexity on the inside , so we can deliver radical simplicity on the outside .

Speaker #1: The underlying mechanics behind every transaction lead to that peace of mind . We are obsessed with eliminating the customer's core anxiety . Delivery uncertainty .

Speaker #1: In the third quarter , our reliability metrics improved even further . 99.99% uptime across the app and web , and . Speed metrics that underscore the value of instant delivery .

Speaker #1: With over 94% of all transactions completed in under an hour and over 97% of transactions completed without customer support , contact our platform is built on a powerful foundation with trust at its core .

Speaker #1: We want to communicate today how that platform is extending across two main fronts new customer categories and new products . As shown on slide five .

Speaker #1: Specifically , I will share an update on our success with customer categories , including business and high amount senders . I will also provide an update on new products with an update on Remitly one , including flex and Stablecoin .

Speaker #1: Moving to slide six , Remitly business continues to scale rapidly as we execute against a large opportunity . As we highlighted in Q2 with Remitly business , we expanded our Tam more than tenfold from approximately $2 trillion to $22 trillion as we aim to serve millions of small businesses paying international contractors , vendors and employees .

Speaker #1: Following the successful launch in the US in Q2 , we expanded into the UK and Canada , marking a major step in building a global small business payments platform .

Speaker #1: Our product allows small businesses to onboard , verify and send internationally in minutes a seamless extension of the trusted experience . We've built for consumers .

Speaker #1: As we pursue a low touch , product led go to market approach for business customers designed to drive efficient , scalable growth of this important customer category , the number of total businesses using the Remitly platform grew sequentially this quarter to nearly 10,000 , and average transaction sizes are roughly twice those of our core consumer category .

Speaker #1: We've continued to strengthen our trust and kyb engine , resulting in higher approval rates and lower onboarding friction for businesses while keeping our platform secure and our customer experience world class .

Speaker #1: As a direct result of these improvements , Business Send volume has nearly doubled on the platform sequentially . To show this , let me share .

Speaker #1: Derrick Jefferson's story . A Remitly user since 2019 who recently became a Remitly business user . Derrick runs a small business who comics in the US , creating comic books that feature a superhero who protects the vulnerable .

Speaker #1: Derrick leverages three consultants in Nigeria who help him storyboard and illustrate the comic . Derrick loves Remitly because our custom business experience makes it super easy and quote to pay the team in Nigeria .

Speaker #1: Derrick has already sent thousands of dollars across dozens of transactions in 2025 . Looking ahead , we are seeing exciting customer adoption and we remain confident that Remitly business will be a contributor to sustainable revenue growth , margin expansion and long term shareholder value as it expands our reach from individuals to the millions of entrepreneurs and small companies powering the global economy .

Speaker #1: Now on to high amount senders on slide seven . Remitly global payments platform has ably served both small and large transactions for years , but we have put additional focus on this growing category given our unique ability to serve these customers with a fast and affordable product .

Speaker #1: Throughout Q3 , we continued to expand send limits on our platform for certain US customers . Now unlocking up to $100,000 per transfer .

Speaker #1: This targeted expansion enables a larger portion of our customer base to move more significant amounts seamlessly . While maintaining our high standards for compliance .

Speaker #1: And security . To accelerate awareness and adoption , we launched marketing campaigns in key high volume send countries and in app notifications targeted to high amount senders .

Speaker #1: We also made deliberate strategic investments in pricing to attract and retain customers , sending over $1,000 per transfer within specific corridors like the US and Canada to India .

Speaker #1: These transactions led to over 40% year over year send volume growth for customers , sending more than $1,000 , an increase in mix from these customers of more than 200 basis points year over year .

Speaker #1: As we continue to remove friction , increased transparency and deliver best in class service for high amount senders , we are positioning Remitly to become the most trusted global payments platform for high value cross-border money movement , unlocking a massive under-penetrated opportunity that will continue to contribute to our growth .

Speaker #1: Now , shifting from new customer categories to new products , I'll start with an update on Remitly one on slide eight , Remitly one represents the next chapter in our product evolution from a transactional to a more long term financial relationship at our reimagined event in September , we introduced Remitly one as a bold new way for the millions of people who live their financial lives across borders to move , manage , and grow money in one trusted platform .

Speaker #1: Flax is our flexible funding solution that lets customers send now , pay later , addressing a key customer pain point timing mismatches between earnings and transfer needs , especially for those that are credit invisible .

Speaker #1: With over 100,000 active users at the end of Q3 , this product is designed to bring liquidity to our customers underserved by the broader financial system .

Speaker #1: Our proprietary data allows us to identify a valuable category among our 8.9 million customers who demonstrate consistent and responsible financial behavior , enabling us to prudently match their liquidity access with their past cross-border payments behavior .

Speaker #1: Flex provides an essential safety net for time sensitive payments like medical emergencies or tuition , as well as a deeper long term relationship with these customers .

Speaker #1: Remitly wallet , which allows direct deposit and multi-currency balances , and our digital debit card , can compatible with Apple Pay and Google Pay , have shown healthy early adoption .

Speaker #1: These products expand engagement beyond send events and are expected to diversify revenue over time through interchange . While reinforcing our core value proposition .

Speaker #1: We continue to leverage stablecoins to enable growth in cross-border finance , seeing . Potential in three main areas FX , Treasury and cash management .

Speaker #1: Improved disbursement rails and digital wallet features as shown on slide nine within our Treasury operations , we've tokenized portions of our US dollar liquidity to move funds across markets in near real time .

Speaker #1: This capability enhances our ability to fund operations globally , improves capital efficiency by reducing idle float and strengthens our FX Treasury and cash management , all while maintaining the transparency and control expected from a regulated platform .

Speaker #1: On the customer side , stablecoins enable a hybrid network that combines our already scaled fiat infrastructure with blockchain interoperability . We initially launched Usdc in the United States to rapidly build the foundational infrastructure and compliance framework for our wallet , and we have since integrated stablecoins into our payout network for disbursements and partnership with bridge , Stripe company .

Speaker #1: Recently , expanding this capability into two key volatile currency environments Nigeria and Argentina , where customers seek stability and flexibility . Looking ahead , we are focused on enabling customers to manage and hold more stable digital currency balances within a wallet .

Speaker #1: As we look ahead to 2026 , we remain deeply optimistic about our position . We have built a formidable platform that still commands only a small share of a massive and growing market , with significant upside ahead .

Speaker #1: Three key factors will drive our growth next year . First , our new customer expansion efforts continue to unlock new corridors and customer categories such as Remitly business customers extending our reach and reinforcing our global network effects .

Speaker #1: Second , our product portfolio expansion is gaining momentum as early successes with Flex and Remitly one lays the groundwork for broader offerings such as credit and multi-currency accounts for our nearly 8.9 million customers .

Speaker #1: And third , we are well positioned to benefit from a powerful shift from cash to digital remittances , aided by the one big , beautiful bill going into effect on January 1st , 2026 , which imposes a 1% tax on cash and other physical remittance instruments .

Speaker #1: But exempts digitally funded transactions . This legislation significantly amplifies the advantage of our digital first model . In closing , at Remitly , we start with a recognition that financial services do not naturally transcend borders , and we are designed to do exactly that .

Speaker #1: That is why we are built . Unlike other digital payment providers that create local market ecosystems and stitch them together . Our borderless global network is a key component of our unique competitive advantage .

Speaker #1: Remitly now supports more than 5300 corridors with more than 5.4 billion bank accounts in mobile wallets and over 490,000 cash pickup locations . Finally , we hope you will join us either virtually or in person at first Investor Day since our IPO on December 9th , 2025 , where we will be sharing more of our long term vision and detailed roadmap .

Speaker #1: Now , I'll hand it over to Vikas to walk through our financial and operating highlights from the quarter .

Speaker #2: Thank you , Matt , and good afternoon everyone . We delivered another strong quarter of profitable growth as shown on slide 12 . Third quarter revenue was $419.5 million , up 25% year over year .

Speaker #2: And adjusted EBITDA was $61.2 million , representing a 15% margin . Despite facing the toughest comp for the year . Result exceeded expectations , with revenue and adjusted EBITDA , both $7 million above the midpoint of our Q3 guidance .

Speaker #2: We continued our track record of GAAP profitability in Q3 , reflecting disciplined execution across the business . Now I will begin with an overview of our third quarter results and then share our outlook for the fourth quarter of 2025 , as we did last year .

Speaker #2: We will also provide some early perspective on 2026 . Let me unpack the revenue growth drivers send volume grew 35% to $19.5 billion .

Speaker #2: Supporting this strong volume growth send volume per active customers increased 11% year over year . This was driven by growth in both transactions per active and average transaction size .

Speaker #2: As we continue to win share and gain traction with higher amount centers and business customers , quarterly active customers increased 21% year over year to nearly 8.9 million , in line with expectations .

Speaker #2: Our retention levels continue to remain strong . Take rate was 2.15% , in line with expectations . Now , let me dive deeper into our revenue outperformance from a geographic and new products perspective from a sense side , US revenue grew 28% , driven by continued share gains .

Speaker #2: Rest of the world grew 20% year over year , a sequential deceleration reflecting the toughest comp of the year in Q3 . Note the rest of the world revenue grew 58% year over year in Q3 2024 .

Speaker #2: On the receive side, revenue from regions outside of India, the Philippines, and Mexico grew 31% year over year, similar to last quarter.

Speaker #2: Our Mexico receive revenue growth outpaced overall revenue growth . We are continuing to outperform in the Mexico Receive corridor , growing meaningfully faster in that corridor than the broader industry .

Speaker #2: Our outperformance showcases how our focus on localized innovation , including offering QR code based cash pickup , is driving share gains in Mexico before moving to a review of profitability , I'd like to highlight our progress with new customer categories and products .

Speaker #2: As Matt noted , we are seeing strong momentum with new customer categories . Enhancements to the business platform , and market expansion efforts drove a near doubling of business and volume sequentially in Q3 and new marketing campaigns and product enhancements targeting high amount senders resulted in 40% year over year .

Speaker #2: Volume growth for customers , sending more than $1,000 and increase in mix of more than 200 basis points . I'll focus my commentary around product momentum on flex , which continues to scale rapidly and is becoming an important driver of growth and engagement for Remitly .

Speaker #2: Flex is our flexible funding solution that lets customers send now , pay later with a no interest cash advance . Remitly one members get access to funds multiple withdrawals and repayment on their own schedule .

Speaker #2: Over 90 days . As Matt highlighted , we have over 100,000 Active Flex users at the end of Q3 . Flex revenue has also nearly doubled sequentially in Q3 , supported by three monetization levers instant funding fees from non-members , membership revenue and cross-border payment revenue .

Speaker #2: As funds are exclusively used to send money . Early results show that flex users transact more frequently , reinforcing its role in deepening customer relationships .

Speaker #2: On the cost side , flex operates with minimal incremental cost to serve and early cohort show strong repayment activity with provision for credit loss rates in line with expectations .

Speaker #2: As we continue our measured rollout . While flex is still nascent , membership cohorts have demonstrated strong unit economic progress . Importantly , notional cost of capital is considered when measuring unit economics of the flex product .

Speaker #2: Flex is designed to be capital efficient with high transaction volumes and minimal balance sheet exposure . Flex is offered primarily to existing customers with established cross-border payment .

Speaker #2: History . Giving us access to rich first party data and control over customer receivables . Balance . As a result , nearly 90% of our $20.8 million of outstanding receivables are current , which allows us to recycle capital efficiently .

Speaker #2: We expect loan balances growth to be measured . Balancing a controlled and deliberate pace of expansion , along with improving unit economics as cohorts mature , we'll continue to scale flex as a product that deepens customer engagement and expands our platform for future value added services .

Speaker #2: Turning to our focus on driving profitable growth on slide 13 , transaction expenses this quarter were $146.7 million , and as a percentage of revenue were 35% .

Speaker #2: Excluding provision for transaction losses, other transaction expenses were $121.7 million, improving 38 basis points year over year as a percentage of revenue.

Speaker #2: The mix of digital received transactions increased year over year by more than 200 basis points , continuing a trend that has been positive for our business and customers .

Speaker #2: While early days we have started leveraging stablecoins to unlock network efficiencies , provision for transaction losses was $25 million or 12.8 basis points as a percentage of sand volume .

Speaker #2: In line with our expectations , our ongoing investments in AI driven risk models enable us to proactively mitigate fraud trends while preserving the trusted , seamless experience of our customers .

Speaker #2: Expect . As I shared in prior quarters , revenue less transaction expense or LTE expansion is an indicator of the long term business model success rate dollars grew 23.4% to $272.8 million , reflecting strong customer activity and economies of scale .

Speaker #2: As a percentage of revenue . This quarter was 65% , consistent with what we have seen in the second quarter , we are focusing on long term LTE dollar growth as we continue to attract new customers , innovate with new use cases , and scale with that .

Speaker #2: Let me walk you through the specific non expense categories on slide 14 . Marketing investments remain disciplined and growth focused . Marketing spend was $87.5 million , up 25% year over year .

Speaker #2: And at 20.8% of revenue , which is consistent with what we had in the same quarter prior year . Q3 also marked the first quarter where we began composing the marketing efficiencies achieved in the second half of 2020 for marketing spend per active customer was $9.88 , up 3% year over year , reflecting ongoing high ROI investments in growth initiatives .

Speaker #2: We continued to invest strategically behind high amount centers and business customers . Our LTV to Kak was above six x , while the payback period remained under 12 months .

Speaker #2: As a reminder , marketing investments drive returns for many years beyond our initial investment , given repeat behavior . Customer support and operations expense was $25.9 million , and as a percentage of revenue was 6.2% , improving 21 basis points year over year , continuing a trend we have seen over the past couple of years .

Speaker #2: Our AI based virtual assistant and product improvements and have enabled lower agent contact rates while maintaining strong customer satisfaction ratings . Technology and development expense was $55.4 million , and as a percentage of revenue improved by 53 basis points year over year , technology and development expenses grew 20% year over year .

Speaker #2: As we become more efficient in managing our spend while delivering robust product innovation , our technology investments continue to deliver on the metrics that matter most .

Speaker #2: As Matt shared in Q3, over 94% of transactions were disbursed in under an hour. More than 97% were completed without customer support contact, and our platform delivered 99.99% uptime.

Speaker #2: These results demonstrate the reliability and trust we are earning as we scale globally . G&A expenses was $42.8 million , improving 35 basis points as a percentage of revenue year over year , reflecting continued leverage across the business .

Speaker #2: We are also investing in AI across our organization from writing code to writing documents to reimagining our internal operations and processes for investors , that means we are building a smarter , more agile remedy , one that scales faster , serves customers better , and delivers long term shareholder value .

Speaker #2: Overall , we continue to maintain rigorous discipline on hiring in non headcount spend while investing in compliance . Geographic expansion , and AI tools .

Speaker #2: Strong revenue growth combined with efficiency and discipline led to adjusted EBITDA of $61.2 million . Once again , we delivered a positive GAAP net income quarter with $8.8 million GAAP net income , a significant improvement compared to a $1.9 million net income in the third quarter of 2024 .

Speaker #2: Stock based compensation was $40 million , and as a percentage of revenue was at 9.5% , approximately 214 basis points lower than the third quarter of 2020 .

Speaker #2: For . In Q3 , we repurchased $11.9 million of shares under our $200 million authorization , reflecting our confidence in Remedy's future and our commitment to building lasting value for both customers and shareholders .

Speaker #2: With that , I will move on to our outlook shown on slide 15 for the fourth quarter of 2025 , we expect revenue of 426 to $428 million , or 21% , to 22% growth .

Speaker #2: The majority of our revenue in 2025 comes from prior year cohorts , giving us greater visibility into the durability of our revenue growth .

Speaker #2: The expected trend in our revenue growth drivers remain consistent with recent quarters . We anticipate send volume growth to exceed revenue growth and revenue growth to outpace quarterly active customer growth , driven by the continued momentum among business and high amount centers .

Speaker #2: Send volume per active customer is expected to grow in the mid-single digits , supported by higher transaction frequency . For the full year , we expect revenue between 1.619 and $1.621 billion , reflecting a growth rate of 28% .

Speaker #2: Now, let us pivot to profitability and expense guidance, starting with transaction expenses. We expect Q4 transaction expenses as a percentage of revenue to be slightly higher than Q3.

Speaker #2: As a reminder, in Q4 of 2024, we had significantly lower transaction losses at nine basis points as a percentage of sand volume for Q4.

Speaker #2: We expect transaction losses to remain consistent with Q3 2025 . As always , these metrics may fluctuate quarter to quarter , and we remain disciplined in optimizing customer lifetime value while rigorously managing risk across our platform .

Speaker #2: Shifting to marketing , we expect marketing investments in Q4 will continue to deliver strong ROI will make these investments while prioritizing efficiency recall .

Speaker #2: We began delivering the meaningful marketing per Q2 efficiencies in the second half of 2024 . So as we lap those improvements in the second half of 2025 , we would expect marketing per Q4 to grow .

Speaker #2: By mid-single digits , especially as we support new product adoption . Putting this all together , we expect Q4 adjusted EBITDA to be between 50 and $52 million , translating to 12% margins for the full year .

Speaker #2: We expect adjusted EBITDA to be between 234 and $236 million , representing an adjusted EBITDA margin of 15% . We expect to generate modest positive GAAP net income in the fourth quarter of 2025 as we plan to make growth enhancing investments improve .

Speaker #2: Adjusted EBITDA , as well as manage dilution , net burn rate and stock compensation expense effectively . Now , let me share some early thoughts on 2026 .

Speaker #2: There are a few puts and takes to consider at this stage , as Matt highlighted on the positive side , the federal remittance tax on cash transfers continued product innovation and early progress in new geographies should provide modest tailwind for the business .

Speaker #2: While these growth tailwinds are still in the early innings and will not be major contributors next year , they are seeing strong foundation for future growth at the same time , recent immigration headwinds in key countries such as the US and Canada could potentially weigh on new customer acquisition .

Speaker #2: Taking all these factors into account , we currently expect revenue growth to be in the high teens range for 2026 . This remains an initial view and Q4 results will be important in shaping our formal guidance for next year .

Speaker #2: As always , we remain focused on balancing growth with disciplined execution under the same profitable growth framework that has guided us in the past to summarize , in Q3 , we delivered strong results across our key financial metrics , achieving 25% revenue growth and 15% adjusted EBITDA margins .

Speaker #2: We also delivered another quarter of GAAP profitability , underscoring the strength and scalability of our model . Looking ahead , we are excited to share more about our long term business model , including the durability of our growth and margin profile at our first Investor Day in New York City on December 9th , we remain confident in the long term growth potential and disciplined in our capital allocation approach .

Speaker #2: With that , Matt and I will open up the call for your questions . Operator .

Speaker #3: Certainly , and ladies and gentlemen , as a reminder , if you do have a question at this time , please press star one one on your telephone .

Speaker #3: One moment for our first question . And our first question comes from the line of Juan from JP Morgan . Your question please .

Speaker #4: Hi . Great . Thanks so much for the update . Took a lot of notes here . Just thinking about 26 in the high teens outlook that you're initially setting here .

Speaker #4: I appreciate you called out some of the the tailwinds , but it doesn't sound like you're assuming much contribution from some of the new products or maybe the tax tailwind , you know , that kind of thing .

Speaker #4: Just want to better understand what what you've assumed or have not assumed in the in the high teens outlook . Thank you .

Speaker #2: Yeah . Thank you for the question . I'd start with FY 25 first because that sets a strong foundation for a strong FY 26 .

Speaker #2: And clearly , you know , H1 as well as Q3 were strong proof points of our execution . As you saw , Q3 revenue grew 25% .

Speaker #2: Margin at 15% . And strong , you know , performance trends across the board , whether it was , you know , send shore growth as well as send volume growth .

Speaker #2: As we look at FY 26 , you know , we still have Q4 remaining . And that sets a strong foundation . But the early view that we have right now gives us , you know , a lot of optimism .

Speaker #2: It starts with the strong foundation and the durability of remittance business in general . Beyond that , we believe that remittance tax , which will take shape starting 2026 , will be in net benefit for us .

Speaker #2: You know , again , early days and we'll see how that progresses . But behind the scenes , our marketing efforts , our execution is tailored to , you know , take share .

Speaker #2: You know , more , more and more from the physical to the digital space . Secondly , I would say the new products and customer categories , you know , early days , but we are very excited about what we are seeing across the board .

Speaker #2: Whether you look at the business . Momentum or you look at on the product side , you know , from a flex perspective overall , you know , we want to be prudent and thoughtful , especially with restrictive immigration stance .

Speaker #2: We have seen as well as just the broader macro uncertainties . And that's why sort of the early initial view , we wanted to give you to just start , you know , thinking ahead .

Speaker #2: Overall , we remain , you know , very focused on balanced growth , profitability and investments . And most importantly , we want to deliver , you know , expanding margins as we go along .

Speaker #2: So overall feel great about the setup for FY 26 .

Speaker #4: Great . And maybe I'll just follow up on that since you mentioned it , just thinking about incremental margins in the next several quarters , given what you've learned so far from from the launch of the new products and some of the initiatives ?

Speaker #4: Again , I know it's early , but just the discipline and the the safeguards that you have in place to to guide you to some level of incremental margin , any any thoughts on that ?

Speaker #4: Thank you .

Speaker #2: Yeah . I'd say that we remain very balanced . As I said , with , you know , just an overall approach where we want to , you know , deploy capital very thoughtfully to drive growth , profitability and at the same time investing in the future bets .

Speaker #2: And you've seen us execute in FY 25 very , very thoughtfully where we have invested in these big bets , but at the same time , we have continued to leverage on the big expense categories and continue to drive margin expansion .

Speaker #2: So our approach even going into FY 26 will be similar , where we want to really drive . You know , productivity gains .

Speaker #2: We want to drive efficiencies while we prioritize the important bets.

Speaker #1: And overall tension . The only other thing I'd add is when you just think about the overall both 26 and long term potential of the business .

Speaker #1: I think that , you know , the $22 trillion market share where we're less than 1% huge opportunities there and especially as we expand and go kind of up market as we think about higher dollar centers , as we think about small businesses , we continue to win share as there's a shift that continues from cash based remittance players to digital remittance players .

Speaker #1: And I think that will be aided by the remittance tax in 2026 . And then as we think about leverage on the bottom line and just increase velocity , I think that there's a lot of really reimagining what's possible at Remitly when it comes to leveraging tools like AI .

Speaker #1: So as we go into 26 , very excited and obviously we want to give an early view in terms of guidance . But when you think about the overall trajectory of the business , both on the top and bottom line , we're very optimistic and very excited about what's to come , and we're excited to talk more about that as well .

Speaker #1: At our Investor Day in December .

Speaker #4: Yeah . Looking forward to it . Thank you .

Speaker #3: Thank you . And our next question comes from the line of Gus Scala from Monness , Crespi , Hardt and Company . Your question please .

Speaker #5: Hey guys , thanks for taking my question . I want to go back to the incremental margin swing . You're kind of pointing towards in for Q I get that a lot of it is the marketing .

Speaker #5: Are you coming up ? Can you help us think of the magnitude of it coming from a more top funnel , spending versus maybe CPCs at bottom funnel coming up and then is that kind of high single digit incremental margin ?

Speaker #5: I'll ask it more . Point blank . Is that kind of the right bogey ? We should be thinking about in the first half ?

Speaker #5: 26. Although growth, we're thinking high teens. Thanks.

Speaker #1: Yeah I think at a strategic level , when you look at the overall just flywheel of our business in terms of I think this is true of most payments businesses , but certainly as we get more scale , the center of the flywheel that we've shared in the past , and then we'll talk about more at Investor Day , is , you know , ultimately adjusted free cash flow .

Speaker #1: And when you think about it from a overall scale and growth standpoint , the flywheel is very much spinning . And so we're able to not only be able to drive down costs both variable costs and fixed costs , but we're also able to leverage the ability to drive more to the bottom line .

Speaker #1: As we think about the investments we've made to build a brand that obviously , if you look at last quarter , 8.9 million customers used our product .

Speaker #1: But if you look at the word of mouth effects , it gives us the ability , whether it's , you know , on the variable cost component and continuing to drive leverage there on the marketing component and being able to leverage the trusted brand and user base that we have .

Speaker #1: And then obviously , as we think about just all of the investments that we're making to deliver both a fundamentally different way of completing international payments as well as a fundamentally different way to provide cross-border financial services .

Speaker #1: We're just getting a lot of leverage as we are accomplishing that . Very exciting vision . So I'll let Vikas talk about more specifically how we think about expanding margins in 26 .

Speaker #1: But the the punchline from my standpoint is the flywheel is spinning with more scale . We generated a lot of cash this year , and as we head into next year , we have a lot of levers at our disposal to both grow on the top and bottom line .

Speaker #2: Yeah . And just to follow up , I would say that Q4 , Gus , as you think about it , from a revenue perspective , the trends will be consistent with what we have seen in prior quarters and what that means is that , you know , our send volume growth will will continue to outpace revenue growth .

Speaker #2: You know , if you look from a QA perspective , especially as we mix shift into the high amount senders as well as business , you know , every QA will be driving a lot more from a QA , which means that revenue growth will be greater than QA growth .

Speaker #2: And again , you know , we feel really great about our center QA trajectory . I'll just share a few stats of what we saw this quarter .

Speaker #2: For example , we saw record cent per show . Right . Like really , really solid performance . There . And this was backed by record .

Speaker #2: You know , average transaction size growth as well as , you know , the highest average transaction size we have seen in ten quarters , in addition to that , you know , we have seen record transaction per active customer .

Speaker #2: So a lot of really good foundation there . And we continue in Q4 with a similar optimism . So the revenue trends continue to be similar .

Speaker #2: And as you know , you know , majority of our cohort revenue after first full year continues through . So we feel good that once we have a strong foundation , it just drives , you know , continuous momentum .

Speaker #2: As you look at the expense side of the house, as Matt said, we'll continue to leverage technologies from AI to stablecoin to improve.

Speaker #2: You know , call it G&A leverage as well as transaction expense improvements . And as we do that , we will be very thoughtful about very important aspect , which is investment , which builds our , you know , long term shareholder value .

Speaker #2: So it'll just be a balance . As I said . And we remain very optimistic .

Speaker #3: Thank you . As a reminder , ladies and gentlemen , we ask that you please limit yourself to one question . You may get back in the queue as time allows .

Speaker #3: Our next question comes from the line of Chris Kennedy from William Blair . Your question please .

Speaker #6: Yeah . Good afternoon . Thanks for taking the question . It seems like you've got a lot of opportunities . Can you just talk about how you balance investment going into new markets versus kind of some of the newer initiatives that you're working on ?

Speaker #1: Yeah . Thanks , Chris . Yeah , I'll take that one . I think that the you know what I said a few quarters ago , which remains more true today than ever , is we're a growth company with no shortage of growth opportunities .

Speaker #1: And so I think that the good news is , is that we get more efficient at a variety of different growth areas , whether that is continuing to launch and expand new markets , which will continue to do as we head into 2026 , whether it's continuing to grow in our existing markets , of which there's very large opportunities there , whether it's continuing to grow in new segments or new customer categories like business or high dollar senders .

Speaker #1: And then finally , when it comes to investing in new products to to accomplish the vision around financial services that transcend borders . And what I'd say , Chris , is , if you look over the last couple of years , we've invested in a much more extensible platform to do so .

Speaker #1: And so I mentioned something called a North Star Architecture that our , that that are technology team put together a couple of years ago .

Speaker #1: Now and then as we've been building and deploying code both in our existing core remittance business as well as new products , we've had company level goals where we have been basically driving endpoint compliance to the North Star architecture .

Speaker #1: So we've been able to deliver results for the business while making progress against this North Star architecture . And what that means is that across those areas I mentioned are , you know , existing markets , new markets , new customer categories and new products , it's just getting more efficient and more effective .

Speaker #1: And then you layer on AI as a tool , which the company is very much embracing across all aspects . And it's not as much of a either or component .

Speaker #1: It's more about where do we strategically focus within those four areas . And there's growth opportunities across all four .

Speaker #3: Thank you . And our next question comes from the line of David Scharf from Citizens Capital Markets . Your question please .

Speaker #7: Hey . Good afternoon . Thanks for taking my questions . Maybe just shifting to the new products in specifically . Flex , which it seems like has quite a bit of early momentum , you know , based on the number of number of users .

Speaker #7: That was about 100,000 . I'm wondering , can you provide us with a sense for it ? Maybe it maturity , you know what the credit profile of this product is ?

Speaker #7: You know , I think you had mentioned 90% current , which I'm interpreting as a 10% . Maybe 30 , 30 plus day delinquency rate early on as a portfolio , seasons .

Speaker #7: That's going to come down . But but I'm trying to get a sense relative to maybe other short term buy now , pay later products with sort of a 1 to 3% delinquency rate .

Speaker #7: You know , just how we ought to assess . Ultimately , you know , what the kind of risk adjusted returns are of this product .

Speaker #2: Thank you . David . Let me start . And Matt can add to that . So I'll you know , share the same excitement you did in terms of just , you know , overall momentum of the business .

Speaker #2: 100,000 plus active users revenue almost doubling sequentially , as well as , you know , just the minimal incremental cost that this business needs from just just getting to that next stage .

Speaker #2: So , so really great diversification opportunity for us as a company . And we are very excited about it . I'll just clarify a couple of things that that helps you think better with regards to the aging as well as the balances .

Speaker #2: So the first thing I'd say is that , you know , the the way the program works is send now , pay later , and there is a particular duration , whether for membership or for the non membership .

Speaker #2: And based on what we have seen from the cohorts , we are very pleased with the cohort aging of receivables . Receivables and that we have 90% current balance for members and non-members compared .

Speaker #2: And what we are particularly happy is that there is negligible balance that remains over 90 days past due , and that the charge offs have been immaterial since the program's inception .

Speaker #2: So the way it works is slightly different than what you were narrating . And , you know the charge off is call it beyond 120 days .

Speaker #2: And you know , the repayments that we have seen in that 0 to 30 , 30 to 60 , 60 to 90 have been , you know , very promising .

Speaker #2: And this , this details are available in 10-q . So you can look into more detail . There .

Speaker #1: Yeah . The only thing I'd add , David , is I think when you look at the overall flex product , it's our flexible funding solution .

Speaker #1: Obviously it's send now , pay later and Remitly one members get access to funds like multiple withdrawals repayment on their own terms and schedule .

Speaker #1: And it's adjacent to our core cross-border payments business . And you were right to call out that , you know , we now look at more than 100,000 active users as of September 30th .

Speaker #1: So we're really pleased with the progress there . And I think that the second point is providing liquidity to our customers and underwriting is complex .

Speaker #1: And so, as CEO, the way to be successful in complex areas is having the right expertise on the team, and that's critical.

Speaker #1: And it's important to note that we have decades of experience in the underwriting space, from the board level to the flex leadership to the team.

Speaker #1: Broadly , to help guide our strategic direction . There . And we can leverage a lot of proprietary data from 8.9 million customers to where we're uniquely positioned to bridge the underwriting variance between customers that move to a new country and just don't have credit history , but may have very high creditworthiness .

Speaker #1: And so we're excited about the traction there . I think we'll go into more depth at an Investor Day in December on this point , I would not impute the 10% that you mentioned to 10% losses .

Speaker #1: And I'd also keep in mind that given the the expertise that we have , given how it's adjacent to our payments can very much throttle who we let into that , and we can be very selective in terms of making sure that we're offering that to creditworthy customers .

Speaker #1: And so, a lot of levers at our disposal there, a lot of expertise. We'll go into more detail on Investor Day.

Speaker #1: But we're really excited about having 100,000 active users and really excited about the unit economics and overall creditworthiness that we're seeing of our customer base.

Speaker #3: Thank you . And our next question comes from the line of Zhou Deng from KeyBanc Capital Markets . Your question please .

Speaker #8: Hi . This is Sally on for Alex . Thank you for taking my question . And could you talk a little about a little bit about the economics of remittance business and how we compare to the high dollar centers ?

Speaker #8: As an example , thank you .

Speaker #1: Great . Okay . I think the question was related to Remitly business and how that compares to high dollar centers . And so I'm happy to to go into that .

Speaker #1: I think that , you know , the interesting thing that I've mentioned , but just to to reinforce is the fact that our product is very much extensible .

Speaker #1: So we , we started the business serving kind of lower income , lower average transaction size customers . And in order to do that , getting the unit economics , getting the variable cost down , getting the speed and reliability right is foundational .

Speaker #1: And so if you think about it from a classic innovator's dilemma standpoint , moving up market is easier for us . And so we have done that with both high dollar senders and with our remitly business product .

Speaker #1: But our structural advantage is on the lower end where we start in terms of micro-businesses, in particular, because they have not been served by traditional financial institutions.

Speaker #1: And if you look in Q3, we continued to strengthen our KYC, our Know Your Business engine, resulting in higher approval rates.

Speaker #1: We also refined our risk and business verification checks to lower friction , and we've seen great customer momentum so far . The number of total businesses have grown sequentially to nearly 10,000 now active on the platform .

Speaker #1: And in terms of your question , how it compares to our other high dollar senders and other individual P2P remittance transactions , the average transaction sizes are roughly twice those of our core consumer category .

Speaker #1: So business send volume has nearly doubled on the platform sequentially . We also rolled out new markets to the UK and Canada , specifically , and we are really excited about what's to come in the business space .

Speaker #1: And as we say remotely , we're just getting started . And certainly are in the business space .

Speaker #3: Thank you. And our next question comes from the line of Zachary Gunn from Ft. Partners. Your question, please.

Speaker #4: Hey there . Thanks for taking the question . So .

Speaker #9: I just want to go back to the guide a little bit for Q and the 26 commentary you're talking about , traction with new products and business .

Speaker #9: But on a net dollar basis , you're implying in for Q , you're going to have the lowest dollar amount since I think one Q 24 similarly , 26 implies a large step down in the amount of incremental dollars .

Speaker #9: So what is decelerating or not performing ? That's causing the drag ? And then similarly , I just want to ask them to take rate quickly because I understand it's being impacted by business .

Speaker #9: And larger volume customers coming on . But maybe could you just comment on how much of the take rate compression this quarter was customer mix ?

Speaker #9: First , any impact from pricing , investments or anything else ? Thanks .

Speaker #2: Hey, Zach. I'll take that, and I'll start in the reverse order. Let me start with the second part of your question.

Speaker #2: And then then move to the first . You know , look , if you if you think about the take rate part of your question , I would go back to what we have shared over the last , you know , call it four quarters , which is , you know , our , our North Star metric is the long term .

Speaker #2: Our or revenue less transaction expense dollars . And that's a much better indicator of our business . And the reason is , you know , to some extent , all the things you mentioned like take rate is impacted by a lot of different factors from transaction size to corridors to pay in , pay out types to customer segment mix and especially , as you may have seen , we have made a few important bets over here with Remitly business with the high amount senders .

Speaker #2: And even as Matt was saying, the Innovator's Dilemma point, we have been able to be aggressive as we think about high-amount senders.

Speaker #2: That's an area where , as we mentioned , we have been more , you know , experimental , where we have made price investments and there's nothing we have to lose over there because it's a new , new market for us .

Speaker #2: So overall , we feel that , you know , long term , right ? Dollars is a much better metric . And that's where , you know , as you pointed , even though our , you know , gross take rate went down our year over year dollars grew over 23% .

Speaker #2: Moving to your other question with regards to Q4 and FY 26 , I'd say a couple of additional comments in addition to what we had shared earlier , the first one , I'd say is that , you know , H2 and we've talked about it before .

Speaker #2: Also , in in general , it is a much tougher comp . And if you look at Q3 , Q4 last year , we had very strong revenue growth and that that is a tough comp to go against .

Speaker #2: So , so that's , you know , one reason , the second is if you look at EBITDA and expense side of the guide for Q4 , Q4 is an important quarter .

Speaker #2: This is where we'll be making important marketing investments and setting up for a strong FY 26 . Again , we'll be measured . We'll be disciplined , but hopefully that gives you some additional context .

Speaker #3: Thank you . This does conclude the question and answer session of today's program . I'd like to hand the program back to Matt for Oppenheimer for any further remarks .

Speaker #1: Great . Thank you . Thanks , everybody . And I'll just close with a couple comments . One , really looking forward to outlining our broader vision and telling you more about the progress in the business at our Investor Day in December .

Speaker #1: And then the second, as always, is that we always circle back to a customer story at the end. That's why we do what we do.