Fantastic. Welcome back, everybody. I am pleased and honored to have Vikas Mehta, Chief Financial Officer of Remitly, here with me on stage. Vikas, thank you so much for coming.
Appreciate it.
It's a pleasure to be here.
Maybe we'll just start with a kind of a recap. Understanding you obviously recently reported earnings, remind us of the key takeaways from Q1 and kind of how you're thinking through the rest of 2025.
Yeah. First of all, thank you for hosting us. It's a great conference, and we are off to a great start to the year. First quarter earnings were really strong. Top-line growth, 34%. EBITDA margin 16%, which is the rule of 15. We want to balance both the revenue growth along with profitability while investing in the business for long-term value creation. We felt that this quarter was a good reconfirmation of our investment thesis. A few things that we were very excited about. First of all, clearly there's an undertone of resilience that we are seeing even with the Macro Ups and Downs. Our business continues to be strong. Thanks to generally the remittances trends, they tend to be resilient. First of all, that's something that we felt really good about. The second thing is we continue to diversify across geography, diversify across customer segments.
We talked a lot about micro SMB and the traction we are seeing and the excitement that we have there, as well as diversification across products. We talked about the features around WhatsApp SAN. We talked about what we are doing to broaden the spectrum all the way from providing liquidity to ability to store and things that we'll continue to do in future. That was the diversification was the theme there. The final thing is trust, which we continue to enable our customers to feel secure on our platform. One of the trends that we have seen is high dollar senders or high amount senders, which comes through that where we are enabling higher SAN limits. Overall, great results reinforcing revenue growth, profitability, investment thesis, underlying resilience, diversification, and trust. All of them gives us a lot of confidence and a strong setup to FY 2025.
I always think of the remittance businesses intrinsically being somewhat resilient from a Macro perspective. Having said that, there's a lot of noise, a lot of headlines, and people are trying to sort of get a leading-edge view on sort of what you're seeing out there. Maybe you could just comment on underlying trends that you're seeing in the marketplace right now and maybe even dovetail into some of the political and regulatory noise that we're seeing and whether that hasn't impacted in any way, shape, or form.
Yeah. Yeah. I think one thing that we're seeing, Ramsey, is that the resilience of the underlying business is very strong. If you look at our volume growth, 41% growth, and our ability to continue to take market share. The underlying business is very strong even with the Macro. Remittance is one of those categories which is non-discretionary. You send money for things that are very basic: paying rents, paying school fees, so on and so forth. We have seen that not only in our history in the last 14 years, but if you look up World Bank reports over the last 20 years, you continue to see that trend where remittances tend to be much stickier, much stronger. That is something that gives us a lot of confidence.
The second thing, as you said, with a lot of Macro Ups and Downs, we always see that and what we can do to solidify our business is to diversify. What we did was, if you have seen over the last four years, our U.S. business used to be 75%. Now it is less than two-thirds, right? The rest of the world continues to outpace the growth of our U.S. business. The second thing, as I said, as we move up into customer segment, that continues to diversify our businesses. Overall, we feel that even though Macro has been turbulent, we continue to have strong days of remittance industry in general. On top of that, being someone who's less than 3% market share of a $2 trillion market helps us.
I want to talk about the trend and your ability to take further market share. First, I just wanted to, on the regulatory side, there was some noise about a remittance excise tax. My impression is that your customers maybe do not fall into the bucket that that might be the most impactful for. What is your commentary on how that might impact the business?
Yeah. Yeah. I'm glad you asked that question. It's top of mind for investors. A few important things there. First of all, it's early, right? The bill is still in discussion stage. We have seen that historically, discussions around remittance tax have come. In 2017, Matt, our co-founder CEO, gave a testimony why digital remittances are important for national security. We continue to believe that it's much better to have legitimate channels for remittance versus underground. We continue to believe that. The second thing I would say is that, to your point, similar to the diversification point, our business is less concentrated in the U.S. than it was. We continue to do that. That gives us a lot of confidence.
The third, I'd say that our regulatory team, the policy teams, are really strong, and they continue to influence, and we take a proactive approach in clarifying our point of view. Overall, I feel it's early. Second, to your point, the customer profile that we have is a very different customer profile. Bank customers, the KYC has already happened. We do a second KYC. I'd say, as I mentioned in the earnings call, a lot of high-amount senders, which tend to be more financially stable, have a lot of history with the company from a payment perspective. Overall, we feel we are in a good place. Secondly, it's early days.
I also wanted to revisit something that you said a moment ago about taking share. Obviously, your volume and your revenue growth exceeds the industry by a very healthy amount. Who are you taking share from? What is the—I'm sure there are individual competitors. Are there other remittance channels? Who are you taking share from to fuel your growth?
I'd say I'll go back to our mission, which is transform lives with trusted financial services that transcend borders. Our focus is on the customer, right? We are so much focused and anchored there, and we create a trusted experience. Fortunately, as I said earlier, it is a market which is fragmented. We are only 3% out of a $2 trillion market. We do not compete with just one player. We compete with very many. There are banks who existingly do that. There are scale brick-and-mortar players who do that. There are startups in the digital space who do that. As we look at the overall landscape, we feel fortunate that, one, in this industry, we have seen that digital matters. Being able to give the customer the convenience, simplicity, speed is very important. We started as a digital company.
That's an advantage that we have always had. The focus on customer, as I said, has continued to help us serve us well. If you take the second thing that's really important in this business, it is scale. If you can reach a particular scale, let's say a billion-dollar-plus in revenue, at that point of time, you are seeing real leverage starting to kick in. If you can have both, which is if you can have growth and scale and be a digital player with unit economics that are much better than the brick-and-mortar, then you really have a competitive advantage. I'll give you one example, which is if you take companies that are billion-dollar-plus in revenue, there's no other company in this space that's growing north of 30% except for us.
That gives us that advantage, which helps us in our revenue-less transaction expense, in our marketing leverage, in our general OPEX leverage, because we have reached that scale, have the ability to work with the partner ecosystem, and continue to synergize.
I often get questions from investors along the lines of, "Wow, this is really impressive growth. What's the secret sauce? What are they doing?" Maybe you can talk a little bit about the customer value proposition and how you are kind of unlocking that customer engagement that's obviously driving above-market growth.
Yeah. I'd say it goes back to the hyper-focus on customer experience and taking every aspect of the value chain and workflow and making it really good. Internally, we are a company that focuses on OKRs, and we have metrics across each of the workflow or value chain customer experience. We have something called Transaction Defect Rate, which we rigorously look at and do product enhancements, product changes to make sure that we can take it down to completely out from the system. That reflects in some of the metrics that we shared with the street, which is if you look at this quarter we shared, we had record number of transactions that we were able to do within less than one hour in terms of end-to-end completing the transaction.
Also, the number of customer calls that we got, like 95% of our customers' transactions don't need a customer call. All those metrics really are driven because of our focus on that customer experience. That is number one. The second is in terms of just our thought process of focusing and picking priorities and sticking with that shows in that experience. If you look at our App Ratings, both on the Apple ecosystem as well as Google, they are top of the quartile decimal. Overall, I feel really good about the customer experience focus that we have. As we continue to have our flywheel move, we can take that customer experience, drive cost benefits, continue to improve the actions that the customers take, and reinforce that across the board.
It's interesting. It's very much about being very focused on precisely what your customer needs and maybe executing that much better in order to create a very seamless, remove sort of friction out of the experience. How about on the marketing and acquisition side? You've obviously been quite successful there as well. That's always a part of the story. I also get some inbound sort of questions on how is your approach to marketing? Has it evolved over time? I guess the follow-on there is sort of what are your more efficient ways to deploy those dollars today?
Yeah. I'd say we have started thinking about marketing in a much more holistic way than we have ever done before. It starts with the product. We want to make sure that the product experiences are such that they create a word-of-mouth virality. That's really important for us. The second thing I'd say is that we think about it broadly from new customer acquisition as well as retention and making sure that we are creating experiences through marketing which help attract new customers but also retain them. The final thing I'd say is we are focused on technology and making sure we use the best technology. Last week, we had AI Hackathon on marketing.
That is something that we want to not just do what we have been doing, but reimagine the future and see how technology can help us in content creation, in engagement with customers to make it more meaningful, use the data, and drive better programs. The last thing on the financial piece on marketing, I'd say is we have been hyper-focused on marginal ROI that we get on marketing. We look at every single channel and try to understand where is that efficient point where we get the highest ROI, and that is where we cut off from the marketing spend. That is why we have seen a lot of marketing leverage also come through over the last few quarters.
How important is price to your customer? I ask because I think financial analysts often think that is a very, very important sort of piece of the puzzle. I would think that in terms of trust and experience, you might think, "You know what? I'm not that price-sensitive once I have a vehicle that I trust," etc. How would you respond to that? How important is price in terms of the equation of attracting and retaining customers?
Yeah. We clearly know that price is one factor, but it is not the only factor. In fact, over the years, we have realized that trust is more important than any other factor. Trust is hard to build but easy to lose. As we look at even our competitor space, we see that some incidents can really make or break that trust. We deeply care about creating a great customer experience through our infrastructure because we want to make sure that it is a 24/7 service that continues to have high SLAs. The second is even if something went wrong, we are able to quickly step in and make sure that the customer experience remains top of mind. As you think broadly, speed matters. People want to spend, send money in the same way they send text messages quickly. Second, security.
You are putting your hard-earned money into the system, and you want to make sure that you can rely on a trusted partner over here. The third thing is convenience. You want to make sure that you have multiple options to pay in, pay out, and that gives you confidence on just using that system. I would say price is one factor, not the only factor. We want to be competitive on price, but really it's the customer experience with trust.
How important in terms of the growth algorithm? I'm trying to think of the revenue generated from existing customers versus new customers that you're signing up. I guess there's two parts to the question. The first is sort of how does everything that you've said so far sort of feed into your retention strategy? Then second is in terms of the algorithm, how important is harvesting more revenues out of those existing customers versus the revenues you're generating on new sign-ups, basically?
Both are very important to create long-term value creation. As I said, we are only 3% in a $2 trillion market. There is a lot of new customer acquisition we need to continue to do. That said, if you look at the durability of our revenue, it is really high. We have shared this before where majority of our revenue, for example, in Q1, came from prior cohorts, right? Majority means I am talking 80%-90% plus, right? If you look at the other dynamic, which is once we acquire new customers and they are on our platform for more than one year, we continue to retain, again, 80%-90% plus of that revenue. From that perspective, in the, call it FY 2025, we are not dependent on new customer acquisition to drive our growth. This also gives us high confidence in our outlook.
That said, beyond 2025, 2026, 2027, 2028, we also know that new customer acquisition is important because that will continue to increase our growth levers. That is where focus is both on new customer acquisition as well as retaining existing customers. I'll just add one last point to that, which is it also matters. The specific metric is volume per customer, how much they are sending. Our focus has been shifting to broaden it to high-dollar senders or high-amount senders. That actually makes it interesting because it is not only the customer, but it is also what type of customers are we attracting.
I was going to ask about that a little bit later, but why not move it up a little bit since you brought it up? Yeah, talk about that larger ticket opportunity. Is that something, this is kind of a strange way to ask the question, but is that an opportunity that came to you, or did you go looking for it? Did you find that there were customers who were kind of moving in that direction? And then I guess how do you lean into it?
I would say that it was organic where our existing customers, if you think about the lifecycle of a customer, we talked about a customer in a prior quarter, and she came to the U.S. as a student. She would send money back to her parents as birthday gifts and things. Then she started earning, and she started sending some part of her paycheck, and then she wanted to invest. That lifecycle is such that we continue to see increase of the volume per customer for the cohort, right? Organically, at some point of time, if they face a limit and say, "Oh, I cannot send above X dollars," they reach out to us. They talk to customer call. That's how we get those signals and say, "Okay, we need to make changes." What we did is we came up with a risk-based course.
Your score will be different than mine depending on the history. That gives us confidence to say where should we lean in or where not. That's one. The second is, in general, there is regulatory requirement working with the partners to make sure we are enhancing those limits. Those are the things that we did based on customer feedback. That's one.
The second is as we saw of a new customer acquisition, we saw that a lot of more recent cohorts are the higher-amount senders, which again is contrasting to the first point because now, because of word-of-mouth and even customers checking out, "Can I do this or not?" They are seeing competitive rates for those high amounts, and they are saying, "Hey, let me just use a reliable service that already gets stuff done." We are seeing both, which is great, but it came through more as an organic way. Some of the stats that we shared are very impressive, which is the growth in volume in that category, which is $1,000 plus per transaction, grew not by 45% from a volume perspective versus our total volume growth of 41%.
We have seen the volume growth in that category outpace the volume growth for the company over the last four quarters. It is not just sort of happening this quarter. We continue to remain excited. We had our largest transaction ever in the company's history in this quarter. That was a transfer that was made from Canada to the U.S. All the things that we are doing behind the scenes are showing up in that, and we feel really excited about that trend.
Another product or another, I shouldn't say product, another opportunity that you guys have brought up is a sort of micro-business, micro-SMB. From a product perspective, is there a lot of difference between what you need to serve up to that customer versus a consumer customer that just wants to send a large dollar amount? Is there any differentiation in terms of the experience these customers receive, or?
It's very similar to the prior question where even with the high-amount senders, we saw that there were organic needs and that we needed to make changes to the platform, which were incremental and not step change. In the same way with micro-SMB, it was the same thing. We already had existing customers who were using our platform for use cases that were more freelancer or micro-SMB type use cases. They would come to us to say, "Hey, instead of doing a KYC, can we do a KYB?" They would share their list of requirements that were important for them. Clearly, they were underserved by others who were focused on SMB or higher up, and there were too many features which they did not care about. It was really that nice category right between consumer and SMB, which was more of an organic need.
They were using both for their personal purposes as well as business purposes. From a product perspective, it was, I would say, more incremental than really a step change. Instead of doing a KYC, you do a KYB. There are a few workflows that you change. Overall, it's not a big lift from the platform perspective. From a customer experience, it makes a huge difference.
Those are the best types of opportunities.
That's right. That's right.
Do you see a longer-term opportunity on the commercial side or on the B2B side? Is that something that not now maybe, but in the future you might entertain?
We are super excited about the micro-SMB. I think it's just the start for us, if you may, and very early days. The TAM in the SMB space is huge, right? Micro-SMB is our gateway into that. We want to make sure that we can take the same simplicity of experience, convenience, speed, and all those things and bring it to our business customers as well. We feel that the scale, the customer trust experience that we can bring to the table are all differentiators. We can do it in a way that the unit economics really makes sense. For those customers, it's a game changer. For us, from an economic model perspective, it becomes very lucrative.
One part of your kind of the longer-term history of the company, which I think is probably the right way to do this, obviously, is that you started with a few key outbound corridors in the U.S. and built up a great deal of scale. Since then, you've been now backfilling, going into other geographies. How important? I think investors sometimes maybe have a little bit of trouble trying to calibrate how important that is to the overall growth algorithm. Maybe give us an update on the sort of corridor expansion strategy, and then maybe also comment on how much does it matter in terms of fueling that quarter-to-quarter growth?
Geographic diversification as well as expansion is very important for us. If you go back in history, at the time of IPO, we had 1,400 corridors, and now we have north of 5,200 corridors. We have really scaled a lot. At the same time, we know that really doing a great job in terms of this expansion is equally important. We do not want to just do the expansion for the speed of it. We want to do it in a way that we can learn, can pick areas, do a great job, and then move to the next and the next. If you look back at our history, we spent our first three years just on one or two corridors, right? The scaling becomes much easier if you can perfect that. Our focus right now, as we have shared, has been in the Africa regions.
Even a lot of the partnerships that we had, both in terms of the payout side as well as just the vendor ecosystem there, we were able to create a lot of presence there. We launched services in Burkina Faso, Mali, as well as Nigeria. These were new additions which are really important. Clearly, there is a nice mix where we want to expand, but then we want to perfect that, and then we want to take that playbook and continue to expand. Overall, very excited. This also reflects in our geographic diversification. If you look at our receive corridors, our top three corridors that receive are the Philippines, India, and Mexico. Now, the rest of them are north of 50% of our revenue, right? The growth in the rest of them is north of 50% compared to our 34% revenue growth.
Clearly, the diversification is helping us diversify our revenue both on the send side as well as receive side.
Okay. When you do enter that new market, what does it mean? Or not what does it mean, but what are the steps that you need to take in order to kind of ramp the business there? Is it marketing investment? Is it partnerships? What does it entail to basically get that market really producing over time?
Yeah. It's a playbook. And we have done that playbook not one time, 10 times, but 5,200 times. We know the playbook really well. That playbook is an all-round playbook, which first of all starts with the customer. Every local market is different. We have to really understand what are the nuances there, both from the payment ecosystem, customer behavior, and the kind of network or infrastructure that we need there. A lot of, like I'd say, 80/20, 80% of our past experiences become very helpful where we can bring a lot of that infrastructure, the expertise that we have. Then 20% is super important that is customized local, whether it is compliance, whether it is marketing or licensing, etc., that we bring to the table. That mix has helped us.
That's the reason why we have to be thoughtful in the expansion rather than just try to go hit a number because doing it right is more important. We also spend time thinking about the initial ramp versus the scaling of those. Initially, we want to really focus on product experiences and making sure that customers feel very satisfied with the service. Beyond that, then we start pushing marketing to really start scaling that.
To what degree does FX volatility matter for you guys quarter to quarter?
It's a great question. I would say that there are two parts to that. One is more of the financial one, which is what's the constant currency versus the reported. The other is more the behavior. The first one is easy because of the U.S. business that we have. It's only the rest of the world currencies that skew things. If you look at the most recent quarter, our revenue growth was 34% from a reported perspective. If you take the constant currency, it was 36%, right? It was actually headwind for us, and constant currency was better. Within that, if you take rest of world, our revenue grew 41%, but it would have been 45%. Overall, our strength of the business was good, and it was just light-handed, which we can always call out.
The other one is more complex, which is the behavioral change. This is where there are price points at which customers feel that it's a deal for them or it's attractive for them, and they want to do that. What we have seen is that just because of our global diversification, the puts and takes are such that it offsets each other. For example, over the last quarter, we have seen some weakness in the U.S. dollar, but that has meant strength in Euro, GBP, Canadian dollar. With that, you see the revenue there being stronger. It is hard to parse out. It is more heuristics for us and pattern matching over time. Our U.S. business was very strong. It continues to grow really strong. I'd say the diversification offsets and overall becomes a natural hedge for us.
It's interesting. It's not necessarily the dollar's strong, the dollar's weak. It really depends on the other side of that trade, depending on what the other currency on the other end.
That's correct.
That's fantastic. We only have a brief moment left. Maybe really quickly, M&A. Is there any way to accelerate the strategy with M&A? It seems like a fragmented industry, or are you guys sort of like hard to find that asset that really fits with our culture?
Yeah. I'd say two things. First of all, from a capital allocation perspective, we are very prudent. We think about our strong growth driven by organic technology is really good. We have a very strong technology team which continues to support that innovation charter. The second thing is, I'd say our bar on M&A is very high. We have done it before. We bought Rewire, and it's a great asset. We'll not shy away, but we'll keep a high bar.
Fantastic. Vikas, what a great pleasure. Thank you.
Same here. Thank you.
Appreciate it.
Thank you.