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Remitly Global (NASDAQ: RELY)
Q3 2024 Earnings Call
Oct 30, 2024, 5:00 p.m. ET

Remitly Achieves Record Performance in Q3 2024

Key Insights from the Earnings Call

• Prepared Remarks
• Questions and Answers
• Call Participants

Highlights from Management

Operator

Hello, and welcome to Remitly’s third-quarter 2024 earnings conference call. [Operator instructions] I am pleased to introduce Stephen Shulstein, Vice President of Investor Relations.

Stephen Shulstein — Vice President, Investor Relations

Thank you for joining us today for Remitly’s third-quarter 2024 earnings call. With me are Matt Oppenheimer, our co-founder and CEO, as well as Vikas Mehta, our CFO. Results and additional commentary are available in the earnings release and presentation slides found at ir.remitly.com.

We are also webcasting this call on our Investor Relations website. Please note that we will make forward-looking statements regarding future financial results and management’s expectations. These statements involve risks and uncertainties that can cause actual results to differ significantly. Please do not place undue reliance on these forward-looking statements.

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For more information on risk factors influencing our performance, please refer to the earnings release and SEC filings. The forward-looking statements made today are based on current expectations and Remitly does not assume any obligation to update them, except as required by law. Some metrics discussed are non-GAAP financial measures, which exclude items like stock-based compensation and foreign exchange gains or losses. A reconciliation of these measures to GAAP metrics can be found in our earnings materials.

I will now turn the call over to Matt Oppenheimer.

Matt Oppenheimer — Co-Founder and Chief Executive Officer

Thank you for joining us today. We are excited to share our quarterly results. Q3 2024 was a remarkable period for us, showcasing strong performance across the board and exceeding expectations in terms of revenue and profit.

During this quarter, we acquired a record number of new customers compared to last year, with an impressive revenue growth rate of 39%. Additionally, we reported record adjusted EBITDA of $46.7 million with an adjusted EBITDA margin near 14%. This achievement places us beyond the Rule of 50, defined as the sum of revenue growth and adjusted EBITDA margin. To put that in context, our adjusted EBITDA this quarter surpassed what we earned in the whole first half of this year and all of 2023 combined. This reflects the strength of our business model.

Let me elaborate on our sustainable growth strategy. Our primary goal is growth, and we have just begun to tap into our potential. The market we address is almost $2 trillion in cross-border payments, a highly fragmented field. We have consistently gained market share since our inception, yet we are still approximately 3% penetrated.

Our send volume surged more than 40% in Q3, significantly outpacing the overall market’s growth. This fragmentation actually benefits us as we stand out as the only scaled digital player reporting over $1 billion in trailing 12-month revenue while growing at over 30%. Being a digital-first provider allows Remitly to maintain superior growth rates with improved economies of scale. The challenge is not about identifying growth opportunities but determining how to prioritize investments strategically.

We have various avenues for growth, from attracting new customers in our established regions, expanding into new corridors, to exploring adjacent markets. We are enthusiastic about serving the unmet needs of our customers, including seafarers, high-value transaction centers, and small businesses. Our growth opportunities in both new and current sending and receiving markets are substantial.

Most near-term growth will stem from the existing regions we serve, while entering new areas will present medium- to long-term growth opportunities. We will deploy the disciplined corridor expansion strategy that has been effective for us so far. Our customers are central to this discussion; we provide seamless cross-border payment services, allowing individuals to send money back home reliably.

This demographic of nearly 300 million people has unique needs that traditional financial services often overlook. We build trust by ensuring funds reach the right people promptly and transparently. For example, one of our clients, Sagrario, lives in Los Angeles and relies on Remitly to send money to Mexico, supporting her family back home. Before using our service, she faced numerous challenges.

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Remitly Revolutionizes Money Transfers: Sagrario’s Journey

Using Remitly, Sagrario transitioned from costly in-person money transfers to a faster, online method.

Initially apprehensive about online transfers, Sagrario expected her money to take days to arrive. However, after trying Remitly, she was pleasantly surprised by the options for cash pickup and bank account transfers. She shared her excitement when she realized the money was available for pickup instantly, recounting her experience with pride and confidence.

Her positive experience prompted her to tell five friends about Remitly. Since signing up in 2020, Sagrario has sent money 40 times, totaling nearly $6,000. She appreciates Remitly’s speed and the convenience of sending money without leaving her home. Our focus on speed, reliability, and excellent customer support resonates with customers like Sagrario, highlighting why many choose Remitly long-term.

Our success stems from a commitment to trust, simplicity, and convenience, all at a competitive price. Sagrario’s story exemplifies our mission to transform lives through reliable financial services that cross borders. Next, I will discuss the structural advantages our digital business possesses.

These advantages extend across marketing, technology, and our global network, leading to seamless customer experiences. One key benefit is that we improve with each transaction, call, and click. This allows us to gather valuable data on customer behavior, providing a clearer view of their needs in real-time.

This data supports innovation, enabling our product teams to enhance customer satisfaction. Our business teams conduct experiments through A/B testing, while data analysts explore customer trends and actions. Such insights fuel marketing teams to create effective campaigns, as shown on Slide 6.

Our trust in marketing investments grows from observing customer habits over ten years. Notably, most recent revenue has been generated from customers acquired in previous periods. Our strategic focus on optimizing customer lifetime value against acquisition costs keeps our average payback period below 12 months, giving us confidence in our business model. Word-of-mouth recommendations and a strong brand presence further enhance our customer base.

We strive to simplify cross-border payments—often complex due to regulations, local payment preferences, and risk management. Overcoming these challenges at a global scale enables us to serve customers in 30 sending countries, transferring money to over 170 receiving countries through 5,100 routes. Our ability to streamline these intricate processes stands as a testament to our strength.

Turning to our technology platform, we’ve built a system that supports rapid development of new services. Security and reliability are cornerstones, leading to a 99.93% platform availability this year, with aspirations for 100%. Trust is vital for cross-border payments, especially as timing is critical.

Our global network enhances customer experience, supporting over 5 billion bank accounts and mobile wallets, in addition to 470,000 cash pickup locations. Recent quarter developments included expanding Interac services in Canada and launching quicker bank-linked payment options in the U.S. These features allow customers to fund transfers from bank accounts with expedited delivery, broadening our product’s appeal.

On the disbursement front, we focus on quality direct integrations that enhance transaction speeds and customer satisfaction. Examples include partnerships with leading mobile wallets in Africa like M-PESA, MTN, and Airtel, as well as similar collaborations in Bangladesh with Nagad.

Moreover, we’ve upgraded customer support with a redesigned Remitly Health Center and introduced an AI-powered virtual assistant that resolves issues four times faster than traditional methods. This assistant, now available in Spanish and French, continues to expand its capabilities, simplifying the support process and boosting customer loyalty.

In the third quarter, we achieved the highest percentage of transactions completed in under an hour and a record number of transactions proceeding without needing customer support. Remitly app ratings reflect this success, with scores of 4.9 on Apple and 4.8 on Android, along with high Trustpilot ratings across the U.S. and beyond.

We are dedicated to becoming the best provider in every market we serve, continuously enhancing our services to build customer trust and foster growth. Our vast market potential, customer service capabilities, and structural advantages inspire confidence in the future.

As I conclude, I want to share insights regarding our outlook. For 2024, we are increasing our revenue and adjusted EBITDA expectations based on strong third-quarter performance. Although it’s early for 2025 forecasting, we are actively preparing a comprehensive plan grounded in durable revenue strategies. Our leadership team is currently setting objectives and key results for next year to streamline strategic priorities and key focus areas. I will provide further details about our growth strategies and expectations for 2025 during the next earnings call.

Our customer-centric business model creates a cycle of momentum that continuously reinforces itself, paving the way for innovative financial solutions.

Remitly Reports Strong Growth and Expanding Profit Margins

Significant Increase in Revenue and Customer Base Boosts Company Outlook

Across the globe, Remitly enables customers like Sagrario to send money home quickly and securely. As we transition to our discussion of the company’s financials, I am pleased to welcome Vikas Mehta, our new Chief Financial Officer. Vikas brings decades of experience from Fortune 500 companies, and I am already learning a lot from him.

Vikas Mehta — Chief Financial Officer

Thank you, Matt, and good afternoon, everyone. We’ve had a strong quarter marked by impressive growth and improved profitability. During the third quarter, revenue hit $336.5 million, climbing 39% compared to the previous year, while adjusted EBITDA reached $46.7 million, leading to an adjusted EBITDA margin of nearly 14%. Our results surpassed expectations across both revenue and profit levels.

Let’s break down the details. Revenue is driven by active customers, average send volume, and gross take rate, which measures the revenue against the send volume. Active customers rose by 35% year over year to 7.3 million, thanks to strong customer retention and record new customer acquisition this quarter.

As Matt mentioned earlier, our focus on attracting new customers is crucial. We also saw a 42% increase in send volume, reaching $14.5 billion, outpacing the growth in active customers due to more frequent transactions. The send volume per active customer rose 5%, marking the highest level in nine quarters. Additionally, a stronger U.S. dollar contributed to increased sending activity in some corridors.

In line with our expectations, the gross take rate stood at 2.32%. Geographic expansion has been a key growth driver, allowing us to broaden our market footprint significantly. Revenue from the U.S. grew 36% year over year, and revenue from other regions surged by 58% year over year. Notably, revenue from markets outside of India, the Philippines, and Mexico now represents over 50% of our total revenue.

Focusing on profitable growth, our transaction expenses reached $115.6 million, accounting for 34.3% of revenue, an improvement of over 110 basis points year on year. Excluding transaction loss provisions, other transaction expenses were $98.9 million, reflecting a nearly 240 basis point improvement, mainly due to enhanced scale with payment and disbursement partners. Digital transactions in our revenue mix grew by over 420 basis points compared to last year.

Transaction losses increased to $16.6 million, but as a percentage of send volume, they slightly decreased to 11.5 basis points, aligning with our previous expectations. We recognize the volatility in transaction losses and remain committed to optimizing customer lifetime value. Additionally, revenue less transaction expense (RLTE) increased by 42% to $221 million, outpacing overall revenue growth, which indicates long-term business success.

Looking at non-GAAP expense categories, marketing expenses reached $70.3 million, accounting for 20.9% of revenue, which is an improvement of over 260 basis points year on year. We aim to build long-lasting customer relationships, and our marketing spend per customer dropped by 8.5% to $9.61, benefiting from improved marketing efficiency and heightened brand awareness.

Customer support and operations expenses totaled $21.5 million, comprising 6.4% of revenue, reflecting a continued improvement. Our AI-based virtual assistant has effectively reduced agent contact rates. We also invested $46.6 million in technology and development, showing over 130 basis point improvement as a share of revenue. Additionally, G&A expenses were $35.7 million, improving more than 250 basis points year over year due to disciplined hiring and non-headcount expenditures.

With effective cost management and a focus on revenue growth, we achieved an adjusted EBITDA of $46.7 million. This quarter, we reported a net income of $1.9 million, a significant turnaround compared to a net loss of $35.7 million during the same period last year. The net income figure included $39.3 million in stock-based compensation, approximately 11.7% of revenue, which has decreased over the past four quarters, indicating a focus on managing growth rates and compensation structure.

To address volatility, we will be providing quarterly guidance moving forward. Looking ahead, we anticipate typical seasonal patterns in Q4 due to the holiday season, which will drive a slight increase in active customers compared to Q3. FX tailwinds that boosted demand in Q3 are expected to moderate. We project Q4 revenue to range between $338 million and $342 million, translating to a growth rate between 28% and 29%. Consequently, we are raising our full-year revenue guidance to between $1.25 billion and $1.254 billion.

In summary, our revenue expectations for the second half of 2024 have significantly improved since last quarter. As we continue to invest strategically in marketing during Q4, we anticipate future growth will be robust.

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Strong Q3 Performance Signals Positive Outlook for 2025

With targeted brand campaigns and strategic planning, we are poised for robust growth in 2025. We anticipate transaction losses in Q4 to align with the levels seen in the previous two quarters, estimating adjusted EBITDA between $17 million and $21 million. Notably, our adjusted EBITDA expectations for the latter half of the year exceed our prior forecasts, prompting us to raise our overall annual adjusted EBITDA outlook by $15 million; it now ranges from $108 million to $112 million.

Looking ahead to 2025, our strong customer loyalty and unique products provide us with confidence in our revenue forecasts. Historical trends indicate a revenue growth rate in the low to mid-20s percentage for the coming year. While we have experienced favorable currency exchange rates in 2024, we are not counting on these to continue into 2025. The fourth quarter is crucial in determining our formal guidance for next year. Our impressive revenue growth and improvement in adjusted EBITDA this quarter reflect the diligent efforts of our team in pursuing growth while managing costs effectively.

As we aim to revolutionize financial services that cross borders, we are now open for your questions. Operator?

Questions & Answers:

Operator

Thank you. [Operator instructions] Our first question comes from Andrew Schmidt with Citi.

Andrew Schmidt — Analyst

Hello, Matt, and welcome, Vikas. It’s great to have you both here. The results for Q3 are impressive—could you elaborate on any specific factors, besides currency fluctuations, that contributed to this robust performance? It seems unusually strong.

Also, as for Q4, it appears you’re taking a cautious approach regarding continued momentum. Your insights on that would be appreciated. Thanks.

Vikas Mehta — Chief Financial Officer

Thank you, Andrew. We are truly thrilled with the outstanding results we achieved in Q3, as they surpassed both our internal and external expectations.

We reached record levels of new customers, with volumes increasing by 42%, the highest growth we’ve seen in eight quarters. Additionally, the average send volume grew by 5%, marking the best performance in nine quarters. We indeed benefited from favorable exchange rates, particularly in the U.S. corridors. As we look towards Q4, it’s important to note that while these tailwinds may persist, we are deliberately cautious and not including them in our earnings outlook. This quarter is critical for setting the stage for a strong 2025, and we aim to finish the year strong, which is our primary focus heading into Q4.

Moreover, we have started Q4 positively and are tracking according to plan.

Matt Oppenheimer — Co-Founder and Chief Executive Officer

Exactly, and I want to extend a warm welcome to Vikas, who has already added great value to our team. It’s worth noting that Q3’s impressive 39% revenue growth indicates the strength of our product and its market position. While word-of-mouth marketing plays a role, the underlying success comes from our high-quality product, which continues to outpace the market. This trend is reflected in both Q3 and the beginning of Q4. I’m looking forward to discussing our plans for 2025, aiming to sustain this momentum through what we internally refer to as the “flywheel effect.” Returning customers, like Sagrario, illustrate the product’s superiority and the loyalty it fosters.

Operator

Thank you. The next question comes from Andrew Bauch with Wells Fargo.

Andrew Bauch — Analyst

Hi, and thank you for taking my question. Would you mind sharing more details about the assumptions behind your 2025 guidance? The low- to mid-20s growth rate is helpful, but I’d like to understand the key factors informing that outlook, especially given the anticipated easing of certain tailwinds.

Vikas Mehta — Chief Financial Officer

Absolutely, Andrew. This early outlook for 2025 takes into account various factors. It’s important to highlight that we have fostered strong customer retention after their first full year on our platform, which supports our upcoming projections. In 2024, we experienced favorable foreign exchange trends that we are not currently expecting to persist in 2025. We believe our sequential growth in active customers will continue into the new year. Additionally, the volume growth is likely to outpace revenue, similar to trends we observed in the current year. Ultimately, we are intensely focused on Q4 as it lays the foundation for a successful 2025, which we will detail further in our formal guides next quarter.

Matt Oppenheimer — Co-Founder and Chief Executive Officer

This morning, I reviewed some of our ambitious objectives for 2025, and I’m filled with excitement. The groundwork we’ve established in 2024 will enable us to improve our product and enhance our marketing efficiency. Reflecting on our journey, from generating just over $250 million in revenue in 2020 to over $1.25 billion this year, it’s clear that our growth trajectory is promising as we look forward to 2025 and beyond.

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Company Seeks to Capture $3.3 Trillion Market by 2030

Company Leaders Excited About Future Growth Opportunities

In a recent dialogue with analysts, executives expressed their enthusiasm for the vast financial landscape ahead, projected to be worth $3.3 trillion by 2030. The management highlighted their advantageous position to lead in transforming cross-border financial services, aiming to improve customer experiences worldwide.

Operator

One moment please for our next question. Our next question comes from the line of Ramsey El-Assal with Barclays.

Ramsey El-Assal — Barclays — Analyst

Hi. Thank you for taking my question. Your quarterly results are impressive. I would like to know more about your operating leverage, particularly regarding your marketing spending, which appeared to be more effective than expected. Can you explain the efficiencies you’re seeing and whether you anticipate these trends will continue into the next quarter and beyond?

Matt Oppenheimer — Co-Founder and Chief Executive Officer

Thanks for your question, Ramsey. I’m also pleased with our marketing performance. Our product’s continued success plays a crucial role in this. For instance, Sagrario used our service and subsequently referred five friends. Since becoming a customer in 2020, she remains with us as part of a growing community of over 7 million users. Our marketing investments are yielding record new customer additions.

Looking at trends, we expect a decrease in marketing expenditure as our product and brand gain traction. We have a scientific approach to measuring marketing dollars, focusing on customer acquisition costs and lifetime value. The strength of our brand, built mostly through exceptional service and word-of-mouth, adds value. Vikas, would you like to add anything?

Vikas Mehta — Chief Financial Officer

Yes, I’d like to complement Matt’s remarks. We have benefitted from product enhancements that minimize friction and boost referrals. Notably, our recent expansion targeting seafarers in Europe, the UK, Australia, and Singapore showed remarkable customer acquisition growth, with 70% coming through organic channels in Q3.

Operator

One moment please for our next question. Our next question comes from the line of Will Nance with Goldman Sachs.

William Nance — Analyst

Hi, everyone. Thank you for your responses. It’s great to see such strong results. One of your competitors mentioned some macroeconomic impacts in October, primarily concerning foreign exchange (FX) fluctuations and disruptions in Central America. I was hoping to verify if you’ve noticed any similar patterns in your business.

Matt Oppenheimer — Co-Founder and Chief Executive Officer

Thank you, Will. Overall, Q4 is shaping up positively, especially in our Mexican operations. We are gaining market share and outperforming the competition. Customer metrics remain strong, with a year-over-year increase in transaction volume.

William Nance — Analyst

That’s reassuring. Regarding future marketing efforts, last year saw a significant uptick in quarterly spending during Q4. We’ve observed spending around $70 million since. Do you anticipate maintaining that level for next year, and how should we approach this expected increase?

Vikas Mehta — Chief Financial Officer

Thanks for that insight, Will. Yes, Q4 presents a major opportunity for customer acquisition during the holiday season. We’re highly focused on maximizing our marketing return on investment. For Q4, we expect year-over-year growth in marketing spend to moderate but anticipate a sequential increase in spending. Overall, marketing efficiency should reflect last quarter’s trends, with an emphasis on optimizing returns as we aim for larger market share with our existing 3% presence.

Operator

Our next question comes from the line of Tien-Tsin Huang with J.P. Morgan.

Tien-Tsin Huang — J.P. Morgan — Analyst

Hi, good afternoon, and congratulations on the results. For the fourth quarter outlook, you mentioned seasonal factors and a projected decline in take rates. Could you help clarify how this quarter might differ from previous years and why your outlook seems conservative?

Vikas Mehta — Chief Financial Officer

Thanks for the question, Tien-Tsin. To clarify our expectations for Q4: while we foresee an increase in quarterly active customers compared to Q3, we also anticipate stable transaction volumes per customer similar to last year’s levels. Our strategy is aimed at embracing growth cautiously, acknowledging Q4 is typically a significant period due to holiday-related transactions.

Analyzing Q4 Projections and Long-Term Growth for Digital Payments Business

In recent discussions about the upcoming fourth quarter, executives have indicated some softer trends in the gross take rate. This metric, while important, is affected by various factors beyond price optimization, such as transaction size and foreign exchange (FX) rates. Despite these challenges, the company remains optimistic about its performance, which aligns with previous quarters.

Overall, the company expresses enthusiasm for its current trajectory. As previously mentioned, the fourth quarter has started strong and is meeting expectations.

Operator

Thank you. Please hold while we take the next question. Our next question comes from David Scharf with Citizens JMP.

David Scharf — Analyst

Good afternoon, and thanks for the responses so far. I have one question regarding FX impact. Can you provide an estimate of how foreign exchange has influenced revenue growth this year? This information would help clarify what might not be included for next year.

Vikas Mehta — Chief Financial Officer

This is Vikas responding. Quantifying the FX impact is challenging, as it fluctuates significantly. Positive trends often align with the strengthening U.S. dollar, providing direction but lacking a precise figure. It’s important to note that many factors influence revenue, including seasonal fluctuations and specific events that drive volume. Consequently, we maintain a cautious outlook for quarterly projections and do not incorporate FX into forecasts since it can act as both a tailwind and a headwind. Our focus is on ensuring a seamless experience for our customers.

Operator

Our next question comes from Rufus Hone with BMO Capital Markets.

Rufus Hone — Analyst

Thanks. It’s great to see the GAAP profitability this quarter. I’m curious about your long-term projections for EBITDA margins. How do you view the prospects for margin improvements in 2025 and beyond?

Matt Oppenheimer — Co-Founder and Chief Executive Officer

Thank you, Rufus. The ability to scale our digital payments business is impressive. With increased scale come various efficiencies across our financial aspects, such as transaction costs and marketing. After nearly 14 years in this business, I can attest to the impact that scale has on our P&L. We’re pleased with our first profitable quarter in Q3 and optimistic about the growth this flywheel effect will create for our margins in the future.

Vikas Mehta — Chief Financial Officer

I echo Matt’s sentiments. We’re a growth-oriented company operating in a vast market with significant room for expansion. Our recent results reflect prudent investments aimed at driving long-term shareholder value, as demonstrated by our 14% EBITDA margin this quarter.

Operator

Next, we have Cris Kennedy from William Blair.

Cris Kennedy — Analyst

Thanks for taking my question. You appear to have numerous growth opportunities. How do you decide on capital allocation across established markets, emerging markets, and new geographical areas?

Matt Oppenheimer — Co-Founder and Chief Executive Officer

I’m glad you raised this. Our focus is not necessarily on identifying growth but on strategically allocating resources. We see robust opportunities in existing markets, where we have a small share in an expanding sector. This familiar ground allows us to outperform market growth trends. We are also expanding into new regions, notably recent successes in places like the UAE and sub-Saharan Africa, where quarterly active users increased by 50% year over year. This growth affirms the positive momentum from both established and new markets.

Operator

Finally, we will hear from Darrin Peller with Wolfe Research.

Darrin Peller — Analyst

Hi, everyone. Congratulations on a strong quarter. Could you comment on the significant difference between the Q3 performance and the expected Q4 growth rate? Was the Q3 beat an indication of future flexibility in your forecasts?

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Understanding Financial Growth: Insights from Company Executives

Vikas Mehta — Chief Financial Officer

Thanks for your question, Darrin. I’ll first address your points, then let Matt elaborate further. When thinking about our EBITDA guidance and the adjustments we’ve made, keep in mind that we’ve increased our forecast by $15 million, which is a significant jump compared to past adjustments. This reflects our strong growth and notable margin expansion that we achieved in Q3.
We have several growth opportunities on the horizon and are committed to investing in innovation and marketing. As you pointed out, Q4 is essential for us, and we want to maintain flexibility to attract a greater number of high-value customers, positioning us well for FY25. That said, fluctuations in foreign exchange may impact revenue, so we believe retaining caution is prudent. Overall, our business model is robust, and we feel confident about expanding margins due to our economies of scale.

Matt Oppenheimer — Co-Founder and Chief Executive Officer

Thanks, Vikas. To build on Darrin’s comments about transaction expenses, it’s important to note that we’ve been closely monitoring the RLTE metric. Although there may be variability from quarter to quarter, the long-term trends show we have a unique capacity to reduce transaction costs due to our scale and the efficiencies offered by digital payment methods.
We also need to balance capturing costs as a business while ensuring our customers benefit from these digital advancements. Managing transaction expenses will provide us with opportunities to promote growth in RLTE, which correlates closely with customer lifetime value, rather than focusing solely on revenue.

Operator

Our next question comes from Alex Markgraff representing KBCM.

Alex Markgraff — Analyst

Thanks for taking my question. Vikas, could you explain why the marketing expense per quarterly active customer is a significant metric? Specifically, how do you allocate that spending between attracting new customers and retaining existing ones?

Vikas Mehta — Chief Financial Officer

Thanks for your question, Alex. We focus on marketing efficiency because, over the years, we’ve gathered extensive data that informs our strategies and optimizes our reach. Performance marketing plays a vital role in adding new customers, while higher-level brand spending positively influences engagement for both new and existing customers.
By measuring marketing expense per quarterly active customer, we effectively evaluate efficiency regarding adoption and engagement. Behind the scenes, metrics like LTV to CAC ratios and payback periods are also crucial for optimizing our marketing channels. Overall, while our marketing investment largely targets new acquisitions, enhancing brand visibility is essential for maximizing customer engagement.

Operator

The next question comes from Gus Gala with MCH and Company.

Gustavo Gala — Analyst

Hi, Matt and Vikas. As your operations expand, especially now that 50% of your core business comes from non-India markets like the Philippines and Mexico, are you observing improved efficiency in performance marketing for these areas? Additionally, how do you compare RLTE growth and contribution margins from these newer markets to your traditional markets?

Matt Oppenheimer — Co-Founder and Chief Executive Officer

Gus, our marketing strategies have rolled out widely and are performing efficiently across all corridors, including the newer markets beyond the three mentioned. We continue to enhance our marketing playbook, which is resulting in positive outcomes visible in our financial performance.

Operator

Next, we have a question from Zachary Gunn with FT Partners.

Zachary Gunn — Analyst

Hi, and thank you for your insights. I’m particularly interested in your thoughts on RLTE dollars. While there’s a general expectation of margins decreasing over time due to pricing pressures, you have mentioned strategies to manage transaction costs effectively. How should we view the long-term trajectory of your margins in light of these factors? I have a follow-up question afterward.

Matt Oppenheimer — Co-Founder and Chief Executive Officer

I appreciate your question, Zachary. As previously noted, our main focus remains on RLTE dollar growth. Despite expectations of margin compression in the industry, we are confident in our ability to manage transaction costs. Recent legislative efforts, such as the Affordable Remittance Act, will improve access to lower-cost payment channels, resulting in reduced pay-in costs and facilitating lower transaction expenses moving forward.

“`

Remitly Discusses Future Growth and Customer Satisfaction in Recent Call

Key Financial Strategies and Market Positioning

During the call, executives emphasized the importance of determining how much financial burden to shift to customers versus how much to retain within the company’s margins. They highlighted that greater scale allows Remitly to leverage lower costs effectively. The focus remains on analyzing the cumulative RLTE (Retention over Lifetime Transactions) dollars, prioritizing dollar amounts rather than just percentages. While the company anticipates a stable to slight increase in RLTE over time, they also expect some fluctuations from quarter to quarter as they continue optimizing their approach.

Customer Experience at the Heart of Operations

Management believes that RLTE is ultimately correlated to LTV (Lifetime Value). They express confidence in their ability to affect this through both customer engagement and pricing strategies. Customer satisfaction is a central theme, as demonstrated in a quote from a long-term user, Sagrario, who praised Remitly for making money transfers easier and mentioned the favorable exchange rates.

Closing Remarks Reflecting Optimism

Matt Oppenheimer — Co-Founder and Chief Executive Officer

Oppenheimer concluded the call by thanking participants for their inquiries. He reiterated the company’s commitment to customer service and highlighted Sagrario’s feedback as a testament to their mission since 2020. He expressed enthusiasm for the company’s vision of providing trusted financial services that bridge international gaps. He expressed gratitude towards all attendees for their continued support.

Operator

[Operator signoff]

Meet the Call Participants

Several key individuals contributed to the call, including:

Stephen Shulstein — Vice President, Investor Relations

Matt Oppenheimer — Co-Founder and Chief Executive Officer

Vikas Mehta — Chief Financial Officer

Analysts from various institutions also participated in the discussion.

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