Remitly (RELY) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics - Revenue growth accelerated to 39% year-over-year in Q3 2024, reaching $336.5 million [7][34] - Adjusted EBITDA reached a record$ 46.7 million, with an adjusted EBITDA margin of nearly 14% [8][34] - Net income for the quarter was $1.9 million, compared to a$ 35.7 million net loss in Q3 2023 [47] - Send volume grew 42% to $14.5 billion, outpacing active customer growth [36] - Gross take rate was 2.32%, consistent with expectations [37] Business Line Performance - The company acquired a record number of new customers year-over-year, with quarterly active customers increasing 35% to 7.3 million [35] - Send volume per active customer increased 5%, the highest in the last nine quarters [36] - Revenue from regions outside India, the Philippines, and Mexico increased to over 50% of total revenue [37] - The mix of digital receive transactions increased by more than 420 basis points year-over-year [39] Market Performance - The U.S. revenue grew 36% year-over-year, while Rest of World revenue growth accelerated to 58% [37] - The company serves 30 send countries and over 170 receive countries, supporting more than 5,100 corridors [23] - Sub-Saharan Africa, including markets like Nigeria, Ghana, Kenya, and Tanzania, grew 50% year-over-year in terms of quarterly active users [97] Strategic Direction and Industry Competition - The company focuses on growth through acquiring new customers, expanding to new corridors, and extending into adjacent use cases like seafarers and micro businesses [12][13] - Remitly's digital-first positioning allows it to sustainably outgrow the market, with a 3% penetration in a$ 2 trillion addressable market [10][11] - The company plans to continue disciplined corridor expansion and targeted market entry strategies [13] Management Commentary on Operating Environment and Future Outlook - Management raised both revenue and adjusted EBITDA outlook for 2024, reflecting strong Q3 performance [30] - For 2025, the company expects low- to mid-20s revenue growth, with a focus on durable revenue and customer loyalty [55] - The company is committed to driving profitable growth through financial discipline and prudent resource allocation [33][93] Other Important Information - The company introduced an AI-powered virtual assistant, resolving issues four times faster than human associates [28] - Platform availability and uptime reached 99.93% year-to-date, with a goal of 100% [24] - The company launched faster bank-linked payment methods in the U.S. and expanded Interact in Canada [26] Q&A Session Summary Question: Impact of FX tailwinds on Q3 results and Q4 outlook - FX tailwinds, particularly in U.S. corridors, contributed to Q3 performance, but the company is not assuming these tailwinds will continue in Q4 [58][59] Question: Building blocks for 2025 revenue growth guidance - The company expects continued growth in quarterly active customers and volume growth outperforming revenue, similar to 2024 trends [65][66] Question: Marketing efficiency and operating leverage - Marketing spend per quarterly active customer declined 8.5% year-over-year, driven by efficiency in lower funnel marketing and word-of-mouth [43][75] Question: Macro impacts in October, particularly in U.S.-Mexico corridor - The company has not observed significant disruptions in the U.S.-Mexico corridor and continues to take market share [78] Question: Marketing spend in Q4 and its impact on 2025 - Q4 is a seasonally high marketing investment quarter, with a focus on new customer acquisition to set up strong growth for 2025 [80][81] Question: Seasonal patterns and Q4 outlook - Q4 is expected to see a sequential increase in quarterly active customers, with send volume per customer in line with previous Q4 levels [84][85] Question: FX impact on revenue growth - FX tailwinds are difficult to quantify, but the company is not factoring them into Q4 or 2025 guidance [87][88] Question: Long-term EBITDA margin expansion - The company expects continued margin expansion due to scale and operational leverage, but specific 2025 EBITDA margin goals were not provided [90][93] Question: Capital allocation between established and emerging markets - Near-term growth will focus on existing markets, with plans to expand into new geographies and segments like microbusinesses [95][96] Question: RLTE growth and transaction expense management - The company focuses on RLTE dollars rather than percentage margins, with expectations of stability to modest increases over time [110][113] Question: Marketing expense per quarterly active customer - Marketing spend primarily drives new customer acquisition, with a focus on LTV to CAC and payback periods [105][106] Question: Performance marketing efficiency in newer corridors - The company has a playbook for marketing efficiency across all corridors, with diversification beyond core markets like India, the Philippines, and Mexico [108] Question: Long-term RLTE margin direction - The company expects stability to modest increases in RLTE margins, driven by digitization and cost management [110][113]