Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Remitly Global Inc (RELY, Financial) reported a 31% year-over-year increase in revenue, reaching $306 million for Q2 2024.
- The company saw a 36% increase in quarterly active customers, now serving approximately 6.9 million.
- Adjusted EBITDA for the quarter was $25 million, benefiting from strong top-line growth and scale efficiencies.
- More than 90% of transactions were dispersed in less than an hour, and customer support contacts declined significantly.
- The launch of an AI-powered virtual assistant has improved customer satisfaction and reduced customer support contact rates.
Negative Points
- Transaction expenses as a percentage of revenue increased by 90 basis points year-over-year due to higher-than-expected fraud losses.
- The upcoming third quarter is expected to be seasonally weaker from a customer activity perspective.
- GAAP net loss for the quarter was $12.1 million, although this was an improvement of 36% year-over-year.
- The CFO, Hemanth Munipalli, announced his departure, which could lead to transitional challenges.
- Despite improvements, the company still faces volatility in fraud losses, which can impact financial performance.
Q & A Highlights
Q: Hemanth, all the best to you as you move back to India here. I did want to start maybe if you don't mind just asking on the big growth in customers, which was nice to see. I'm curious if that growth, the big growth is related to the increase in fraud and why you're confident the increase in fraud is temporary?
A: Yeah. Thanks, Tien-Tsin, for the wishes as well. No, it's not related actually. We are really pleased with the growth of our customers in Q2. Some of that was the seasonality we talked about both on existing customers. We also had record new customers in the quarter. On the fraud point, very different, we saw it in certain corridors, it was very temporary in nature, something we saw towards the last -- later part of the quarter and we were quickly able to fix it. So levels have been normalized and well within our thresholds at this point. So unrelated largely to the record growth of our customers.
Q: Just looking at the take rate, I know there's a lot of complexity to the take rate, but I'll ask it anyway. It was down sequentially in year on year. I think it's typically up second quarter over the first quarter. So why the change in pattern there?
A: Yeah. Thanks Tien-Tsin. So as we mentioned, and I appreciate your caveat in the question, we don't manage the business to take rate given that it's impacted by average transaction size, geo mix shift, continuous pricing optimization, pay-in, payout method mix. So take rate is more of an output in that respect. We manage more to revenue per transaction, profit per transaction, LTV. And when you look at it from that lens, its business is usual in Q2. No major shifts in competitive pricing. It wasn't due to any sort of pricing pressure. Ultimately, as we mentioned in the past, our business comes down to that trusted and reliable product. And part of that trust is providing a fairly priced product, but not the best. And if you look at some of the other metrics around the trusted product that we're delivering, the improvements on the CS front, some of the virtual AI assistant features that we've rolled out, I think there are further proof points that our product and some of the elements around the seamlessness and the trusted nature of it are what is actually driving the kind of growth from a revenue and retention standpoint. So really pleased with the quarter.
Q: If I could dig into the EBITDA outlook in the back half, I know, Hemanth, you addressed this a little bit in terms of the EBITDA margin -- or EBITDA dollars being balanced in the third and the fourth quarter and creating some optionality for new customer adds in the back half. It just seems like we’re lapping some pretty significant upticks in marketing expense in the fourth quarter, which does leave you guys a good position, either A, drop some of that to the bottom line; or B, acquire a significant number of customers that will set you up pretty well for FY 2025. Maybe -- I know it all comes back to LTV to CAC and unit economics decisions. So maybe can you just walk us through the thought process there and how you’re setting things up at this point. Thanks a lot.
A: Yeah. Thanks, Andrew. And I think like we’ve had in prior years as well, I think, we wanted to make sure that as we look at sort of the back half, particularly in Q4, which is a seasonally high quarter, particularly to acquire new customers, we retain optionality in terms of being able to deploy our marketing to acquire customers if we look forward to 2025 and beyond. Again, we’re really focused on unit economics and the LTV CAC ratios, and we continue to do that. So that’s some of the thinking that as we looked at sort of the EBITDA guide for the balance of the year and particularly as you look at sort of the margin for Q4.
Q: Maybe just a larger related question, maybe you can talk longer term in terms of your confidence to scale sales and marketing based on what you’ve been seeing in the market, the elasticity testing, word of mouth referrals stepping up, and other things you have going on. Maybe just talk about how that confidence may have evolved over time, given what you’ve seen more recently. Thanks a lot.
A: Yeah. Thanks for the question, Andrew. I think that when you look at the scalability of our marketing, I think, that we’re feeling more confident than ever on that front, and we’re excited about the record number of new customers and the efficiency that we’re getting. And I think that’s a reflection of the fact that we have trusted brand. As you alluded to in your question, the word of mouth, continues to improve. And our unit economics continue to be well below our 12-month payback target. And so, what that means to us is that we have a lot of optionality in terms of how much we spend to grow versus how much we let flow to the bottom line. And we’re well positioned from a marketing standpoint. And then more broadly to build on your first question that Hemanth also answered, our business is just getting a lot of scale and leverage, and it’s in a special place in that respect and that we grew 31% year on year from a revenue standpoint. But you look at our confident, adjusted EBITDA guide, and the overall leverage we’re getting in everything from customer support costs to a variety of aspects of the P&L. And I think it’s a reminder that scale matters in payments businesses, both to deliver a differentiated and quality customer experience and to be able to continue to get leverage and profitability as a business.
Q: So just thinking through the ongoing momentum you’re seeing in new adds, Matt, I want to go back to this seafarer product that you spoke about, which does seem like a nice opportunity to capture new customers. So how big of a lift is it to get these types of specialized products off the ground from an investment standpoint? And how easy is it to replicate this type of product to other groups? So is that something that we could see in the product pipeline going forward? Thanks.
A: Thanks, Allison. Yes, great question and great to hear from you. We’re excited about the seafarers’ product, and I think it’s indicative. We’ve talked about some of the technology investments we’ve made in our platform, but those technology investments have enabled us to more nimbly and efficiently adjust our product to be able to serve multiple audiences. Seafarers is a prime example of that. We also talked about high dollar senders, but you could apply that to a wide range of different types of customer profiles and different geographies. I think that we’re getting faster and better at doing that, and the result is continued growth in the numbers that you’ve seen from a volume and revenue standpoint.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
