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Great. Thanks, everyone, for joining. My name is Tianjun Huang. I'm the Payments ID Services Analyst at JPMorgan Chase Bank. I have a really timely webinar. I think Remitly has done a great job of doing a lot more investor outreach, and the product velocity has definitely stepped up. That's a big theme in payments and fintech right now. They have their first product keynote tonight as well in New York City. We are actually live and in person with the management team. We've got Matt Oppenheimer, Chairman, CEO, co-founder. I've always respected Matt a great deal. I think of Matt as a true mission-led CEO, which I think is really important in our sector. We've got Vikas Mehta, CFO, and Love Sodha as well from investor relations. Welcome. Thank you guys for doing this.
Thank you. Great to be here, and it's been great. I think you followed us since 10-plus years ago. You've known us from the very beginning. It's great to see you again.
You look the same when I had the first session, I think, with you in one of our NextGen Payment Conferences with private companies. You look the same now. Yes, it's been a while. I've learned a lot covering the sector. I've always told you that, but I have definitely learned a lot. These sessions are super helpful for us. Thank you for doing it. I know you'll cover a lot of this at the keynote tonight at 5:00 P.M. I'm sure people will tune in for that. This is hopefully a good build-up to that. I know you did this session with my friend Will a few weeks back. I'm trying not to be too redundant, but he did start, and I'm going to start with the same question.
In the second quarter, you talked about 2Q being a defining quarter and an inflection point as it relates to product innovation. I know you're going to give us more details, but I did want to just talk about, right, we put things in Excel, and we have these quick conversations, but a lot of hard work goes into it. A lot of investments have gone into it. We've seen the headcount grow and things, and now we're seeing some of the output of that. Why now? Why is now the time to come out and talk about all this product innovation at Remitly?
Yeah, absolutely. It really was a pivotal quarter for us. Obviously, in addition to the core business just continuing to do well, over the last 14 years, we've really built a purpose-built global platform for cross-border finance, not just payments. We think about the security, the compliance, reliability, a lot of the data and analytics that we have that we can leverage in AI and other areas. That foundation obviously now powers, from a payment standpoint, 170 countries. In Q2, we said, how do we take that platform and build on top of it in a broader way to accomplish our vision of transforming lives with trusted financial services that transcend borders? What that meant in Q2 in terms of what was coming to life is Remitly Business. Excited about the traction and momentum there, which we'll talk more about, I'm sure.
Remitly One, which is really going to be the focus of the event tonight and going into more depth on that. If you want to find out more about the event tonight, it's remitly.events. You can go and find out how to join that. Stablecoin integrations, Agentic AI, move from a roadmap to a reality. This foundation we've built is very sensible. We'll talk about that, I'm sure, in the conversation today, and we'll certainly talk about that tonight.
Yeah, I think we talked about this idea that Remitly spent so much time, Matt, building that trust with the users. You're doing so well in cross-border peer-to-peer. It makes sense to extend into more financial services. You said it right that the mission or the vision is transforming lives with trusted financial services that transcend borders. The question I have for you is, what is your right to win as a financial services provider? We've got a lot of companies we cover that are trying to bank their user base. Why should Remitly do the same and win?
Yeah, yeah. I'd say it's three things. The first is, you just mentioned, customer trust. We've served 8.5 million customers that rely on us to send money when it really, really matters. 93% of those transactions are delivered in less than an hour. You know, Tianjun, from covering the space over a lot of years, that is really hard to deliver and gets better every quarter. 97% are complete without customer support. That reliability and that trust really gives us the permission to do more. Trust is number one. Number two is our tech platform. Over the last several years, we've built what we call our North Star. We've built towards a more modular tech platform that internally we call our North Star architecture.
That's purpose-built to not only accelerate the velocity of delivering our global payments product, but also makes it extensible to be able to add other new products on top of it, whether that's leveraging it for our authentication systems, which we can use to roll out new products, or leveraging it to really capture the data and signal that we have on our customers across pay-in, pay-out, device, velocity, transaction velocity, FX, fraud. That is number two, the tech platform we've built is, I think, unique and very powerful. The third is, I'll talk about this again tonight, but our product ambitions have just raised because we've recognized what is possible for us to do for the 300 million individuals that live and work outside the country they're born, plus millions of small businesses, which expand our TAM by 10x.
I think that ambition is raised because of the first two things I mentioned. There's amazing technology at our disposal right now. When you think about stablecoins, when you think about AI, all of that moves us towards that vision. Those three things, customer trust, a technology platform, and just raised product ambitions give us, I think, the right to win in this space in a very exciting and fun way.
OK, good. You mentioned the 8.5 million customers and the 300 million available that live outside, work outside their home country. Let's start with 8.5. How banked, or happily banked maybe is the better question, are these customers today, right? I'm just trying to understand what % of those users could potentially use some of the products that you're going to be talking about more tonight.
Yeah, yeah, it's a great question because I think even the term banked is really important to define, right? It's something we've thought a lot about over the last 14 years. Because when you think about it from a store of value standpoint, our customers link their bank account or their debit card in the U.S. context or another payment instrument in other countries. They have a store of value. What they don't have, if you talk to a lot of our customers, and I'll give you some customer examples here in a bit, is the ability to bridge credit access and creditworthiness once someone moves to a new country, the ability to hold multi-currency accounts, and think about how to manage their treasury, so to speak, their personal treasury on a global basis.
I think that's available to the most affluent on the planet, but not to our customers historically. That's where things like stablecoins, I think, can get really exciting. Just the ability to travel and be able to, and I'll talk more about this in terms of specificity tonight again, but the ability to just manage one's global financial life. That is where I think we can delineate. We're not trying to be a domestic neobank. That space is crowded. We're not trying to get into areas that I think are well served. Our customer segment, I would argue, is less well served in some of those areas. We have the unique right to win to serve them. I think over time, what that'll do is not only increase ARPU in terms of additional revenue streams, but it just deepens the relationship.
I think it'll drive increasing engagement for our customer base when you think about the next decade of Remitly innovation. Really, really excited across those fronts, as well as the outputs that it'll drive.
Right. Thinking about the outputs as an analyst, and maybe Vikas you want to chime in here, you mentioned ARPU. You mentioned engagement. How should we measure the progress and the success here in the short, mid, long term?
Yeah, no, I think it's very fresh. First of all, we are very excited about just the wallet share that we are able to address now. We are now moving into edge and spaces, including send now, pay later, or providing a store of value, as well as, of course, doubling down on our strength of the transaction side and doing that in a very meaningful way through Remitly One, which creates a deeper engagement. On one hand, we are diversifying with a lot of new monetization models from membership fees, interest income, to fees for the send now, pay later. That's one thing that we feel really good, especially as we move into the next 10 years of building new businesses. The second space we are very excited is the Remitly Business side, where we'll be able to add a whole new customer segment.
This is very, again, very edge distance. From an investment perspective, we are not adding a ton of investment to get in there and leveraging a lot of our core systems. That's the second piece that we feel very excited. Not only are we increasing our pool on the consumers, we are adding the consumer segment. As we do that, I'd say the first thing is we are expanding the TAM massively, going from $2 trillion to $20 trillion. Even the early signs we have seen are very positive across all these different businesses. Some are partners, some are very early. These are early days. As we go forward, first priority for us is to make sure that we are addressing the customer need in a very deep and a very connected way. We will continue to expand this.
I think about this as a 5 to 10-year horizon in terms of how we will scale and grow. In our, I'd say, early days, it will be much more about the product market fit.
OK, got it. Over that time horizon, we've gotten this question, so I'll ask it here. Can you just outline, we're using the term guardrails here, the guardrails around the investment in the new products that you're talking about? Could we see a change in incremental margins that we've been observing over the last year or so? Should the existing R&D that you put in so far support the new products that you're about to launch and will launch in the next 5, 10 years? We have seen headcount growth. Just curious how all of that will change or evolve, or have we seen that in the run rate to that?
I'd say that we have been very thoughtful and disciplined in how we have innovated. The core principle that we go ahead with is growth plus profitability plus investments. We want to be very balanced in our posture. That's something that you have seen even in our past quarters, where a lot of these initiatives we have been working on for quarters and years. This is not like a fresh investment, if you may. At the same time, we have been able to drive very strong performance. As you saw in the first half of the year, we grew 34% and maintained a 16% EBITDA margin, like rule of 50 both quarters, which shows that not only can we grow and drive profitability, but we can invest to build the future.
One of the things that Matt Oppenheimer said earlier is a lot of it is based on the core platform investment. The North Star architecture that we have built now enables a lot of these new businesses. To spin up the new businesses, the incremental investment is not a step change. It's incremental. If you look at a lot of our core services, whether they are managing transaction loss, whether it is the analytics on the pricing side, whether it is marketing, we are able to extend all these assets we have into our new businesses. That creates a long-term leverage and a really strong business model for us.
Got it. Yeah, because Matt, I know you mentioned modularize, and you know a lot of the investments have gone through the rigor over the years. You spun out a lot of different things in the past, right? We're assuming that all that has gone in to support where we are today with some of these launches.
Yeah, yeah. I actually credit our, who will be speaking tonight, Ankur Sinha, who's our now Chief Product and Technology Officer. He came in as our actual first-ever CTO about three years ago, three and a half years ago. Before that, we were delivering at high velocity, but it wasn't towards the North Star architecture that made it so every single code that our engineers write gets higher ROI, so to speak, from an investment standpoint because of the progress made towards a vision of a North Star architecture. You never achieve that vision exactly, but working towards that over several years and having company-level goals around it make it so the velocity is higher, the return is higher, the reliability is higher, the security is higher. I'm really grateful for that.
I think that that's also, again, why it's a pivotal moment because we've got the foundation to be able to build and deploy product just much faster.
Yeah, it's important. I'm glad you went through that. Thank you for that. Let's talk about some of the details. I was struggling with which ones to start with. Let's do business and then talk about One and flag some of the wall if that's OK. I know a lot has been discussed around business the last couple of quarters. It's now live in the U.S. Maybe start with what you've learned so far. Where are you doubling down? Where might you slow some things down? Where are you now?
Yeah, I'd say there's been three early learnings. The first is I think we have the right segment with the right product that we're offering. We're focusing on freelancers and microbusinesses. That avoids an overbuilt kind of medium to enterprise-like product for this segment, which doesn't need an enterprise stack, but fits to our strengths: fast onboarding, low cost to serve, solid pricing because we have a low cost to serve, and reliable delivery. That's number one, right segment, right product. That's not a huge surprise because we had customers already coming to our platform trying to use it. We just hadn't automated some of the things like KYB, know your business, et cetera. It's always a positive signal when you have customers that are going through a lot of friction to use your product when it isn't even optimized for it. That has been validated.
The second is the economics are attractive. If you look at the average business spend, they're two times consumer. Repeat usage is strong. Early signals support a six times LTV versus consumer given the frequency and volume. That's number two. The economics are really attractive. Number three is given some of the product velocity, we've had some big onboarding wins in terms of automated e-KYB, real-time screening, attestation flows. That's lifting approvals and conversion. Features like bulk and recurring payments, simple reconciliation, some of the basics that this segment needs, some of those foundational features, we're now building out to make Remitly a daily tool for those businesses. The outcome is strong. It's strong early adoption, healthy early retention. I look at customers like Tony, which kind of make it real. Tony is based in the U.S. He runs a small business that manages short-term rentals in the Dominican Republic.
He heard about Remitly from one of his contractors in the DR who managed some of the repairs. Before, he was relying on wire transfers. It took days. You can imagine the fees related to that. He didn't have as many choices for how funds could be received. In terms of DR, there are very specific ways that folks like to receive money. With Remitly, he can send whatever is most convenient to his workers, cash pickup, push to card. In the DR, one of the unique things is it's one of the markets that still has door-to-door delivery. You have a courier deliver those funds to your door. Businesses like Tony's firm are relying on Remitly to pay overseas contractors and suppliers quickly. It gives them exactly the solution he needs. I'm convinced there are millions of customers like Tony out there.
We're just getting started in being able to serve that segment. Over time, I think we can actually move up market. Our ambitions are large. Just like we've been successful for the last 14 years, focus early days on a specific segment and then kind of land and expand. I think we're doing that with Remitly Business right now and really excited about what's to come.
I had a question on your, like, who you're taking share from. You kind of mentioned wire transfers. I'll ask that question together with the pricing philosophy around business. I believe it's priced similarly to the personal side. As we think about the opportunity, because it's wire transfer as a potential share donor, this question of wholesale plus versus retail minus pricing, what's your philosophy on there? Some of the wire transfer pricing is quite high, and it's a bad experience and all that good stuff. You're going at it from a very low cost still relative to that, I believe. What's your philosophy around pricing and solving that issue?
Love that question because it's something that I've put a lot of time and thought into actually thinking about. One of my professors at Harvard Business School was Clay Christensen, who's since passed, but was just an amazing, amazing individual. Obviously, wrote The Innovator's Dilemma. One of my favorite classes and just favorite humans. I think that when you think about wholesale, whether it's bank wire transfers or whether it's other technologies that are serving kind of SMBs and enterprise, what you see is those businesses are moving up market because you look at just The Innovator's Dilemma. It's easier to chase those very large profit pools of larger customers.
I think that's created a window of, I like your term kind of retail minus, where we have the cost, we have the focus and ability from a unit economic standpoint to serve micro businesses and freelancers because I think that segment has kind of been left in the middle. I think in some ways, from The Innovator's Dilemma standpoint, for us, those look like even higher LTV customers. We have a unique low cost to serve in terms of our unit economics. They don't need all the bells and whistles, and we don't have the overhead of large sales teams and other things like that. Perfect fit. I view us as kind of the disruptor, so to speak, in the Remitly Business space.
That's why we are focused on micro businesses and freelancers to start because I think that's the segment that is very obvious for us to be able to provide a superior product.
How do you find these users? You mentioned the Tony example of hearing it from one of the contractors. How do you find these users? How do you advertise it? How do people discover it?
If you look at our brand overall, there's a high overlap, like the contractor that we mentioned in the Tony example. I think a lot of customers are finding us organically. We're also thinking about innovative partnerships and other things that we can use to drive additional awareness or customer adoption for this segment. Organic, and we're in the process really of putting together a marketing playbook that will include both a lot of tools we use already, as well as potential partnerships for where businesses serve this kind of freelancer and microbusiness segment, but they don't have the payment capabilities. We could be a good potential channel partner for them.
OK, good. Just so on the margin side, Vikas, thinking about reading about it, there's a dedicated business support. I know there's some other reporting that you do that's distinct. We should probably talk about fraud as well. Tell us about the current margin for that business, and how do you see it in comparison to the consumer side or the retail side?
I'd say first of all, as I shared earlier and Matt added as well, a lot of what we have built is on top of our existing systems. I think that that's the biggest place of benefit for us as you think about leverage as well as expense profile. The second is, as you said, as we move more into the business segment, there will be business-specific needs, whether it is creating the workflows from a product perspective, whether it is targeted marketing, or whether it is thinking about specific levers we need to use to grow that business. As we look at that, I'd say in the early days, we are going to continue to leverage a lot using the existing systems.
Then selectively, we will keep investing so that we can, with the 10x TAM increase that we have in front of us, leverage that and drive massive growth around that. If you look at our focus on marketing, right now our focus is to go after consumers who also have a business profile. That, again, helps us to target in a more leveraged way. As we move forward, we'll continue to do that, but also selectively start targeting more business-specific customers. I'd say as we look forward over the next six months, we continue to feel that there's a lot of leverage that we can gain from the existing investments as we move into the next year and beyond. As we grow, we'll continue to drive selective investment in those areas to drive meaningful growth as well.
Is the investment also investing in potential fraud by opening up the application funnel and taking more?
Yeah, thus far we have not seen any different fraud profiles. For us, we are using the same infrastructure, and I'd say the early traction has been good. As we have said, we have thousands of customers there, but we have not seen any meaningful distinctions there. The second thing that I'd like to highlight is what Matt Oppenheimer said earlier, which is we have 6x LTV over here around the business customer versus our consumer, which gives us meaningful opportunity over the long term, which also gives us an ability to invest in marketing. Our 6x LTV is what we are looking at to make sure that that's the potential we have. It is definitely a responsibility for us to invest meaningfully, just seeing that high LTV.
Yeah. We like the approach. I think what we've learned over the last few years in payments, right, B2B is really hard. We saw Western Union get rid of their B2B business and just focus on the consumer. It does feel like you're taking a very careful and thoughtful approach to it. As you think about SAM and TAM, and a lot of this will depend on your rollout schedule for geos, how quickly can we see this expand into more territories and corridors?
Yeah. On the overall TAM, it goes from $2 trillion to $22 trillion. That doesn't include enterprise. It doesn't include a lot of the higher end of the market. So 10x, pretty amazing. To answer your question on rollout, the focus right now is, again, stay focused on that micro business segment standpoint. Focus, I think, has been short-term focus with long-term audacious goals, has been a key to our success. Expand rapidly as you think about the geographies by which we can offer that service to small businesses. We launched the U.S. in Q2, which we shared. U.K. launched in August, which we're really excited about. Canada is going to follow in Q4. From there, we'll add markets and capabilities, like some of the capabilities I mentioned, to both serve that segment better as well as move up market over time.
Our view is that the whole $22 trillion evolves towards modern rails. Our platform, we think, is really well suited to participate meaningfully in that transition.
OK, good. Anything else in business, or should we move on to One?
Move on to Remitly One.
Move on to one. Let's do it. Remitly One, a lot of good questions. I feel that from the investment community on this one, guys, just the membership program. Matt, you called it the foundation of a new ecosystem. Maybe elaborate on that to start. What's the pitch to consumers to sign up and pay for a membership?
Yeah, I think it is exactly the foundation for a new ecosystem. We'll go into a lot of the specificities around pricing and other elements tonight. I draw the analogy to the early days of Amazon. When you think about Amazon Prime, it added free shipping as that kind of anchor benefit and the entry point to a much, much broader ecosystem. I chuckle because everything from Prime Video to, we all know, or presumably most of us know, as Prime customers, it's amazing the number of benefits that they offer. They started with one anchor benefit that really resonated, which was free shipping. I think that Remitly One is similar. It begins with a single clear benefit and grows from there. We'll talk more about this tonight.
I think that anchor benefit is Flex, which is our short-term liquidity product that lets customers send now, pay later in moments when timing matters most. For many customers, that peace of mind is incredibly valuable. Beyond Flex, Remitly One over time is going to bring together a wide set of benefits that give customers more control, flexibility, and predictability. We'll talk about some of those other benefits today or this evening. We talked a little bit in Q2 earnings about that. All that is going to live in the same app that customers already trust and use regularly. No additional app or download is going to be required. Importantly, as we've mentioned, we've built it on top of the infrastructure we already have. Not only does it not add significant incremental cost, but the velocity of innovation to get to product market fit is just much, much faster.
We'll measure success by looking at, as we talked about, the RLTE per customer, RPU. Retention is one that I think is really important when we think about the next decade of innovation because I think this will, you think about, again, the Amazon Prime analogy. You don't think about going anywhere else. We've got such a deep relationship with Amazon given that Prime membership. I think Remitly One will be that. The only other thing that I'll add just to make it a little more real, actually, I'll come back to a customer story unless you want me to talk about that now.
No, keep your wisdom. Go.
I just think it makes it real. This is a big week for us, obviously, right? We've got Remitly One, the Remitly Reimagine event tonight. We're excited about today. We're excited about tomorrow in San Francisco. I started off the week by talking to a customer named Guadalupe. Guadalupe is a Flex customer. That's the send now, pay later. By having a Remitly One membership, she gets additional benefits. Let's just talk about Guadalupe for a minute. She moved from El Salvador to the U.S. to provide for her children back home. She has two kids back in El Salvador that she hasn't seen since she moved to the U.S. in 2022. Just think about that for a minute. It's unbelievable. She works in a couple of jobs. She sent money nearly every week to support her family since she joined us in 2022.
She moved here in 2022, if I said 2002. When unexpected expenses arose last year, she used Flex. She's since repaid successfully. For her, Flex meant that she could keep helping her family when it mattered most, and she needed to smooth some of those cash flows. I will tell you, when I was talking to Guadalupe, her loyalty and commitment and appreciation for Remitly being there when she needed it the most was incredibly powerful. Guadalupe's story is incredibly meaningful. To your point, Tianjun, about being mission-driven, Guadalupe is one of thousands of customers. It shows that I think have the real need for Remitly One type membership. It strengthens customer trust, deepens loyalty, and positions us more than just a transaction provider and being a true financial partner in people's cross-border lives. That's what we're excited about.
No, that's a good case study. It got me thinking, right? We've learned a lot covering a lot of these new neobanks and fintechs and putting time. You appreciate the liquidity needs of everyday Americans and how they can tap into that in emergency payments. Here is so close to home, right? Sending money back home to support family, of course, is critically important, tied to your mission. We've definitely learned that the liquidity needs of that everyday user is real. It's still untapped and underserved. It does seem like an opportunity. Before we talk about Flex and that part of it, I like Amazon Prime or Walmart Plus example. I was thinking about that in financial services. American Express, of course, has premium platinum products. Chase has that as well. You get certain benefits, access to ecosystem, travel. Of course, that's on the high end of the spectrum.
Within payments and fintech, a lot of the services are more merchant-funded, right? Interchange is funded by merchants. These rewards get paid back. Buy now, pay later is a transactional purchase for discretionary goods, also merchant-funded. Help us compare and contrast whether it be a neobank or a fintech experience. I know it's a different use case here. There is some habituation, I think, for, hey, I can get a loan for free or very little and then have the freedom to do what I need to do versus I'm going to pay Remitly a subscription fee for access to the same, a similar service. Help us understand how this fits or is differentiated, what problem it solves versus what a neobank is trying to do, which is, I know, more transactional. Do you follow my question?
Yeah, I do. I think what you'll hear about when we talk about Remitly One tonight, first off, is the umbrella. There are different pockets of customers and segments of customers that we can serve. There's a customer like Guadalupe that might need that short-term cash flow, but by definition won't be as interested as, call it, our more affluent customers that have multi-currency and global cash flow requirements, or not global cash flow, global just treasury and money management requirements, or needing the ability to seamlessly be able to go back home and use the funds in their global multi-currency account. One thing to view Remitly One as is an umbrella with different segments of customers that will be attracted in different parts of the value prop and product offering. Again, not all that dissimilar to something like Amazon Prime. Some people love certain benefits.
Some people love other benefits. That's the way to view Remitly One overall. When you think about the model for that, I think that it goes back to our customers being underserved. When you look at the desire, and we're already seeing this, even though we're just talking about launching it today, the desire to pay that monthly membership fee for benefits that we're offering, it's because a lot of folks maybe on this call that have moved to a new country, when you think about the bridge between credit access and creditworthiness, I mean, they're credit invisible. It doesn't mean they don't have high creditworthiness. There needs to be a company like Remitly that has the data, the analytics. I call them tokens. I'll talk more about tonight. Unique tokens that we can use to be able to bridge that gap between credit access and creditworthiness.
We can uniquely do that. Customers are willing to pay for it because it's not something that some of the other send now, pay later, or other providers can do because they don't have the unique relationship and data that we have on our customers to bridge that gap. On the more affluent side, we have a global payout network of billions of bank accounts across the globe. We'll probably talk about the wallet here in a second. When you think about storing both fiat as well as stablecoins across the globe, being able to do something with those funds is something that we are incredibly good at. You might have a savings account.
If you need to get it into that local Indian bank account, or you need to actually, like Tony, be able to get funds to the recipient in cash so they can use them in the Dominican Republic, we have those unique assets. Customers are willing to pay for those benefits because it's an underserved segment that we can uniquely add value to. It always comes back to the customers. Different companies, to your point, will have a different business model. What we say, what we see is as long as you solve a customer problem in a material way, and we have the right to do that and right to do it uniquely, customers are willing to pay for that service.
Yeah. We learned that, right? It's hard to get fee-free checking, right? We've observed that some of the things you're talking about, accessing foreign bank accounts, is not available without a cost. Here you're making it available as part of subscriptions. I think it's quite genius. I'm curious to see how it plays out. I'm sure we'll learn more. That's why I asked the question because we're so conditioned to learning it one way, Matt.
Yeah.
I think we need to better understand how to unbundle all these different services and see how it might be ascribed to a user of Remitly One. Thanks for going through that. I think you touched upon a lot of the Remitly One. Maybe to drive it home, it's good to talk about Flex, if it makes sense, the pivot to Flex. It's not a secret. Short-term liquidity products are hot right now, at least in fintech. Buy now, pay later, we include in that instant loans, fair financing, all part of that. Here you're going after it with send now, pay later. How does it work? Give us a little bit more on the terms and the eligibility, the limits, and whatnot, just to start it and ground us.
That is a lot of what we will talk about tonight at the Remitly Reimagine event. I do not want to overshare before that. That is exactly what we will go into more depth on, what Flex is, how it works, what you get with a Remitly One membership, how much a Remitly One membership costs. I would say tune in tonight for a lot of details on that.
OK, yeah. You've given us some clues, but it's similar to the BNPL in spirit, short-term liquidity. Your underwriting, you've mentioned your data advantages. What's proprietary? I mean, you see a lot, but you don't necessarily see the income from a direct deposit that maybe a neobank might see, Matt. You are trusted. They're giving you a lot of their hard-earned income to send money back home, so you do see it quite a bit. Tell us more on what you can share on your underwriting advantage.
Yeah, I think that I go back to when I started the business. I was living in Kenya, and I was working for Barclays Bank Kenya. Folks forget that in markets like Kenya, there aren't credit bureaus. At least there weren't at the time. This was 14 years ago. Guess how Barclays Bank Kenya did credit underwriting? Payroll. That was how they did it, right?
Makes sense.
I think that there's analogies. Obviously, we're talking about folks in the U.S. You could have somebody who moved from Kenya to the U.S., or you could have somebody, obviously, that moved from a variety of countries that we serve. One, they're not going to have necessarily a credit history that a business can rely on, even in the country they came from. By the way, that still exists. Even if a customer comes from the UK, it's broken how that customer who moves from the UK has to build credit in the U.S. I think it's a broad problem. Let's take the Kenyan example where it's even a bigger problem. Moves to the U.S. I view things like international payments, which are often used for daily living expenses, rent, education, things like that, a little bit akin to payroll, right?
Obviously, we're talking about the sender, not the recipient in this instance. That's exactly what we've seen. We have seen that it is a good signal for various credit underwriting purposes. We have a lot of other data on our customers as well. We're excited about some of the signals that we've seen since we launched Flex. We think, again, that gives us the unique right to win within this segment.
Yeah, I bet. No, I think you got a lot of interesting data for sure. One more question on this. Everyone on the investor side asked me to ask you, right? Will you be funding and bearing the credit risk? Will you be taking on some forward flow contracts at some point as this grows? What's the path for funding it?
Yeah, I would say that look, right now we are in very early stages of Flex. As we think about it, similar to the example Matt gave, we have a lot of history on the customers, and that gives us a lot of confidence in being able to, first of all, give the credit. Secondly, at the early stages on that as well, we have a strong balance sheet. As we move further along in the journey in Flex and as we see the product market fit, we'll absolutely assess other options to say should we fund it in a securitized way or other means. We'll also be very, very cost responsible here because we want to make sure that the cost of capital is real. We want to account that in our business model and economics.
Even though it is self-funded or funded externally, irrespective, we will keep that as a principle.
OK, good. Now we fund a little bit more. On the wallet, just to hit some of these questions up front, I know you've covered some of it, and you'll give us more. Maybe I wanted to ask you what it is versus, maybe more importantly, what it isn't. There's a lot of different wallets out there on the store value side. A lot of them have links to debit cards and reward models and things like that. Maybe start with that.
Yeah, absolutely. It is a borderless store value, and it's multi-currency, starting with fiat today and then USDC this month, so stablecoins this month. It's built inside, as I mentioned, the trusted cross-border platform that our customers already use. Where we differentiate, again, is that last mile usability. Customers can hold value, including stablecoins, but then use it through the same global payout fabric. That's the wallet. We're excited. We're just getting started. I think it's not an add-on. It's a durable node to the ecosystem that we're building.
Right. It's an important distinction. I know you announced partnerships with Bridge and Circle. Bridge has been very active in the space and getting a lot of attention. What do they bring to the table?
Yeah, Bridge unlocks our ability to do stablecoin disbursements as a payout option. In addition to the billions of bank accounts, mobile wallets, and cash pickup locations, we can disburse with Bridge and Stripe to stablecoin wallets across the globe without compromising speed, compliance, or trust. It's plugging in new rails to a platform that does that already very well. That's Bridge. Excited about that partnership.
On the Circle front, are you doing anything with their new and owned blockchain Arc, the cross-border payments initiative that they've launched? Just curious how that might play into it.
Yeah, two things with Circle and USDC. First is the ability to let customers hold a stable value, stable store value alongside fiat, especially in volatile currency markets. We'll be launching that starting in the U.S. this month and then rolling out to new countries over time. The second Circle partnership gives the treasury team 24/7 settlement to instrument and approve FX, treasury, cash management. Those are the two things with Circle, backend as well as frontend customer-facing wallets.
OK, good. I don't want to take up too much more of your time. Thanks. This is so great. Just bridging into the stablecoin discussion, just to simplify for us, I mean, is there real demand? You talked about USDC. I've heard you and Will talk about the volatility and the depreciation of certain currencies. That's really tough for some of these highly volatile FX nations. Tell us more about what's the real demand here for it.
Yeah, I think that the world's a big place. I think demand will vary depending on the country, but there's absolutely demand to hold a more stable currency in a variety of countries around the world, not all, but a variety of countries. People obviously think about things like Argentina, Zimbabwe, that are known as hyperinflation. I actually like to use the Turkey example. In the last few years, if you own Turkish lira, if you held the Turkish lira, it has devalued by 80%. I just think we lose concept of what that looks like, especially sitting in the U.S., of how foundational it is to hold a more stable value and a more stable store value and currency because we haven't lived through that kind of inflation, at least in recent memory. I always go back to the customer.
There is absolutely a customer problem to be solved when it comes to storing a more stable currency in more volatile countries and currencies around the globe. With our payout network, we think we have the ability to offer those kind of savings accounts across the globe over time and then give customers the ability to move from savings into local bank accounts, cash pickup, mobile wallets, ways that customers can then use those funds, but they can rest easy and with more peace of mind that their currency is not being devalued at the rates that I mentioned in countries like Turkey.
Yeah, no, that definitely makes sense. I mean, I feel like the craze of stablecoins has calmed down since the summer, for sure. I think Will has talked about that. The one thing I've said to investors for a while, Matt, is that you've been very smart on this subject. I mean, you worked with Libra from the very beginning. I think you were one of the first to partner with them when Libra got off the ground. You're aware. I'm sure you've learned a lot. You're talking to all these different disruptors. This evolution to get here, what would you say is maybe underappreciated about what you've learned and why it's net positive for Remitly and not net negative, which some of the skeptics might argue?
Yeah, I'd say two things. One is regulation matters a lot and will vary depending on the country. That'll be really interesting to follow how that plays out. That's one of our core competitive advantages. Since day one, one of our first few hires was our Global Compliance Officer. He used to run compliance for Amazon payments. That's foundational for us. One is regulation, which I think we're well suited to help navigate on a global basis. The second is I don't buy the thesis that stablecoins will completely replace local currencies. I think they'll be part of an ecosystem. They'll be part of multi-currency accounts. Both because of how commerce is done in most countries and because of governments wanting to have their own fiat currency in most countries, not all. Some markets are already dollarized.
I think the vast majority of countries, there will be a demand to hold a stablecoin and stable currency to the extent governments will allow it. The second thing, you have to be able to do something with that currency in local fiat currency or even exchange between various stablecoins. That's where we excel, whether that's the billions of bank accounts and mobile wallets, cash pickup locations, going from crypto to crypto, crypto to fiat. To the extent there's savings that solve that pain point on a global basis, which I think there will be in stablecoins, being able to use those stablecoins in a way that is fungible and valuable and fast, that's where we can add value. Those are the two things. Regulation, being able to use the funds, we're good at both those things.
Good. Anything else we want to hit on stablecoins? That was fantastic.
We're almost out of time, probably over time, actually. Let's make sure we hit something on Agentic AI quickly, just the cost versus revenue opportunity and how you see that, examples. If you could also just talk about WhatsApp and what might come behind that and how that's been taken so far by users. Ask it all together.
If the question is revenue versus cost, I was going to say both. Revenue is what I'm even more excited about. We're obviously grabbing a lot of efficiencies as well. Specifically, I think we can use Agentic AI to meet customers where they're at. The WhatsApp product that we launched, we took our virtual assistant that we had built internally to do customer support. We added additional use cases, and we're plugging it into platforms like WhatsApp, creating great opportunities for users to come and interact and build trust with Remitly in a really seamless, low friction way. It also can power personalization, which helps build trust, intent prediction, dynamic onboarding, which I think from a revenue standpoint, the reason we're 3% of the market is because our business, the foundational thing is trust.
I think that we can use Agentic AI in some of those ways to broaden access, increase conversion, and improve growth. Really excited about it.
On the WhatsApp side, what's the latest there? Is there more potential messenger partnerships that you see that could build from that?
Yeah, it's both. We've integrated into WhatsApp, so that is live and showing early traction. We're leveraging that same virtual agent to be able to plug it into other messaging platforms that you can imagine will be coming soon.
OK, so it's on the coming.
Yeah.
OK, I know we're out of time. We talked about a lot of different things. Thank you, of course, for the time. You've said many times here in other forums, just getting started. Product velocity, like I said, is really important for the sector now. Can we expect a regular cadence of product updates from the company, starting with this keynote tonight?
Yes, that ties to the pivotal kind of moment for us. Yes, very excited about tonight and very excited about what's to come.
OK, good. Thank you guys for the time. I will be there and eager to see what you unveil. I appreciate you guys spending the time that you do.
Thank you.
Thank you.
Good to see you guys. Thank you.