Remitly Global, Inc. (NASDAQ:RELY) Q4 2023 Earnings Conference Call February 21, 2024 5:00 PM ET
Company Participants:
- Stephen Shulstein – VP, IR
- Matt Oppenheimer – Co-Founder & CEO
- Hemanth Munipalli – CFO
Conference Call Participants:
- Tien-Tsin Huang – JPMorgan
- Allison Gelman – Barclays
- Andrew Schmidt – Citigroup
- Will Nance – Goldman Sachs
- Andrew Bauch – Wells Fargo
- Darrin Peller – Wolfe Research
- David Scharf – JMP Securities
- Marc Feldman – William Blair
Operator:
Good day, and welcome to the Remitly Fourth Quarter 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Stephen Shulstein, Vice President, Investor Relations. Please go ahead.
Stephen Shulstein: Thank you. Good afternoon and thank you for joining us for Remitly’s fourth quarter 2023 earnings call. Joining me on the call today are Matt Oppenheimer, Co-Founder and Chief Executive Officer of Remitly, and Hemanth Munipalli, our Chief Financial Officer. Our results and additional management commentary are available in our earnings release and presentation slides, which can be found at ir.remitly.com. Please note that this call will be simultaneously webcast on the Investor Relations website. Before we start, I would like to remind you that we’ll be making forward-looking statements within the meaning of federal securities laws, including but not limited to statements regarding Remitly’s future financial results and management’s expectations and plans. These statements are neither promises nor guarantees and involve risks and uncertainties that may cause actual results to vary materially from those presented here. You should not place undue reliance on any forward-looking statements. Please refer to our earnings release and SEC filings for more information regarding the risk factors that may affect our results. Any forward-looking statements made in this conference call, including response to your questions, are based on current expectations as of today and Remitly assumes no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law. The following presentation contains non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP metric, please see our earnings press release, and the appendix to our earnings presentation, which are available on the IR section of our website. Now, I will turn the call over to Matt to begin.
Matt Oppenheimer: Thank you, Stephen, and thank you all for joining us for our fourth-quarter earnings call. As we look back on Remitly’s performance in 2023, we have a lot to be proud of as we delivered on our commitments to our customers and shareholders. At the beginning of last year, we laid out our commitment to deliver strong growth at robust unit economics, increase return on our investments, and deliver a fast, reliable and seamless experience for our customers. As you can see on Slide 4, we delivered on these commitments in the fourth quarter and in 2023. These results reflect the progress we have made on our strategic initiatives and our commitment to our customers to deliver peace of mind as they send money across borders. Our revenue increased 39% in the fourth quarter and 44% for the full year. On a fourth-quarter annualized basis, our scale has reached over 1 billion of revenue. We also delivered $8 million of adjusted EBITDA in the fourth quarter and $44 million of adjusted EBITDA for the full year, well ahead of the goals we set for ourselves at the onset of the year. We benefited from strong execution across the business, increasing scale, the nondiscretionary nature of our service, and the resilience of our customers. We’ve expanded on our vision as you can see on Slide 5. Our vision is to transform lives with trusted financial services that transcend borders. This vision encapsulates a broad view of who our customers are today and who we can serve in the future. It also speaks to the unmet customer needs that we believe we are uniquely positioned to solve by delivering peace of mind to customers around the world with cross-border financial needs. Our four strategic focus areas on Slide 6 are designed to help us deliver against this audacious vision with customer-centricity at the heart of our strategy. We believe our total addressable market is approximately 1.8 trillion, which represents the total consumer cross-border payments market. We currently have 2% of this total market with nearly $40 billion of send volume in 2023. According to the UN, this market includes approximately 1 billion people around the globe who send or receive cross-border payments, including immigrants, their families, and others with cross-border financial needs. We remain focused on investing where we have clear advantages as a digital-first, cross-border financial services company. In addition, we believe investments in our technology platform will allow us to efficiently serve more of this market over time. We are confident our strategy will allow us to drive robust growth with this very large market opportunity for many years to come. First, we aim to delight our customers with a fast, reliable, and seamless cross-border payment experience which results in providing our millions of customers with a delightful experience. This is a key driver of improving retention, engagement and maintaining strong unit economics. Delivering a delightful cross-border payment experience in a trusted and reliable way to a highly diverse and global customer base is incredibly complex. Our technology investments and increasing scale have resulted in significant progress across various aspects of improving the customer experience, which as a result has increased customer engagement on our mobile app and website and enabled market share gains. But there is still so much more to do to improve the customer experience and we are excited about continuing our journey to reinvent international person-to-person payments. Second, our targeted marketing investments across both performance and brand channels have delivered new customers to our platform at very attractive unit economics. Our focus remains on maximizing lifetime value for the long term while we efficiently acquire new customers and retain a growing large base of customers. We define lifetime value as revenue-less transaction expense over five years, even though many customers continue to transact with us for more than five years. This long-term view of our customers provides us with many levers to enhance lifetime value and we are experiencing LTV improvements as customers have increased their transaction activity, particularly for digital receive options, and we have also been decreasing transaction costs. Third, we see significant opportunities to expand into more geographic markets. Our global network consists of more than 5,000 corridors and we have plans to increase our reach to thousands of additional corridors while increasingly benefiting from diversification. We will use the same disciplined corridor expansion strategy and our targeted approach that has served us so well to date. While our customer base today is primarily customers who regularly send home to family and friends in developing countries, we believe over time, we can better serve a broader set of customers who have cross-border financial needs. Fourth, we believe there are enormous opportunities to deepen customer relationships by leveraging the unique technology platform we have built and continue to build, to efficiently scale new features and products to the millions of customers we serve today, and to make our offerings even more attractive to other customers that have cross-border financial needs. Now, let’s turn to more details regarding each of these focus areas. On Slide 7, you can see that in the fourth quarter, quarterly active customers increased 41% year-over-year to 5.9 million. The significant year-over-year increase in quarterly active users can be attributed to multiple factors, increased activity due to the holiday season from a growing base of active customers who were acquired in prior periods, as well as the acquisition of a record number of new customers during this period. Customer behavior trends remain strong, and we see transaction intensity, which we define as transactions per quarterly active customer, continued to increase as the year-over-year mix of digital receive transactions increased by more than 500 basis points in the fourth quarter. As we continue to deliver value for customers, we believe we can serve these digital receive customers in a way that maximizes retention and engagement…
