Okay, I think we'll get started while folks continue to shuffle in. I'm David Scharf. I cover payments and consumer finance, fintech here at Citizens, and it's a pleasure to have Remitly Global here. You know, I was involved. We were involved with the IPO about five years ago. Small little growth company, even though it had a big head start in the remittance business. You know, in just five years' time, they're within sneaking distance of being as large as Western Union, which has been an industry Goliath for decades now. It's really been a remarkable story. We've got CFO Vikas Mehta here with us.
I guess the feature of the day is we've got the new leader here, Sebastian Gunningham, who has been CEO for a grand total of about 10 days. First public appearance. I'm gonna start with you. You know, the minute the press release hit with your earnings announcing a transition, of course, within 30 seconds, what did everybody do? They googled Sebastian Gunningham.
Right.
Immediately, your profile pops up, and Amazon and Oracle and so forth. I think the first word that probably sunk into everybody's mind is, scale. You've been building a lot of big businesses. You know, as a, as a start with, and with that as kind of a foundation, what is it about Remitly specifically and the remittance industry maybe more broadly that sort of attracted you to this?
Thank you, first of all, and, I will say that Matt and the team really did do a tremendous job over the last, say, 10 years building this company from scratch and to where it is today. I'm tempted to take some credit for that, but after seven days, I really can't. A few thoughts on what attracted me to Remitly as I started to talk to Matt. I think, number one, you know, With my experience with Amazon and Oracle and Apple, this is. Payments, as you know, is a monster market.
I've always been attracted to markets where it's not a winner takes all, which means that there is plenty of space for great companies, and you can be one of many of those great companies. I think if you look at our segments, you've got this low sender segment, which is probably a $1 trillion market. You've got this high sender segment, which is probably another $1 trillion market. You've got this business segment, which is anywhere north of $10 trillion. These are markets where you know, even in the smaller segment, we have 3% or 3% or 4% market share. There's always a lot of space to grow. You wanna go to markets where if you win, the opportunity is big. You don't wanna. That's, that was, you know, checkbox number one.
Checkbox number two is, I think customers love the product. You always wanna be close to companies where, you know, there is some. The customers really love the product. I think that Remitly over the last. Matt and the team have really built an awesome product. If you see it in the, you know, all our customer base, and I've sat on calls and listened to it, and I know a lot of people that use it, this is a product that's built a lot of trust over these years, so, I think a lot to build on. Number three, the unit economics work. I've been a CEO before, and, I think I'm always looking for companies where the reality is that the bigger it gets, the more profitable it gets.
There are some companies out there that the bigger they get, the less profitable.
That's the definition of a payments company.
Right. So unit economic... We proved it. We've seen it in the results of the last, the last quarter and the dynamics of this business is that you really can keep scaling. The fourth reason... The third reason is, you know, for me personally, the timing was very good. I've got a bit of a science background. I built out all the machine learning teams at Amazon, been involved with a lot of technology. You know, it's kind of the... With AI coming, it's the perfect storm of science, engineering, and business. I don't have to repeat, but we can talk about some questions. I think the next two or three years are gonna be incredible in the transformation.
I think for me it was a very good opportunity to take a company the size of Remitly, a public company. I think there's a lot of tailwinds, I'm gonna be able to do that. Matt, you know, for those of you who knew Matt, or know Matt, you know, the founder, he's a missionary founder. I've walked the halls of the company over the last seven days. It's got a missionary feeling to it. It's great. You know, it makes work. We all work very hard. You come to work every day. There's an added kind of a energy to your step when you are in a bit of this missionary objective.
This is a very underserved, overcharged community, and the team has done a terrific job over the years, and I think we'll keep doing that.
No. Perfect. great recap. I mean, obviously, as you noted, the next two, three years, tremendous opportunity unfolding. It was the right timing for you. How do you view the next two to three months as an incoming CEO? I mean, or how do you prioritize kind of?
Yeah. Well, I think that one of the things... This team and Matt have been, you know, 15 years running the company. You do get the luxury as a new CEO to have a fresh set of eyes and quickly see bottlenecks. You know, companies are built, and there's... You know, if I go through each function in the company, you can get a two-hour history lesson on why this and why that, and it's just the way companies grow up. You start to... I have... You know, I've seen what scale looks like. I saw the decisions day after day at Amazon way back when we were making decisions that sounded crazy, but we were anticipating the massive size of the fulfillment centers, the massive size of the engineering.
As I look at Remitly, I think we've got a really good path to scale, and I can see the bottlenecks in engineering and product. By the way, the company operates very well, but you get kind of a fresh view. I think in the first 30 days or 60 days, you just get to reposition some of the pieces. You get to tweak how the company's gonna operate at scale. You know, in fintech, the product is the business. The customer only talks to your product. Like in the case of Remitly, it's an app. They don't talk to me, they don't talk to. The, how good and how much you can iterate on that product and how great you make that experience is the business.
Everything behind that is what you have to get better and faster. As I say, I've got a lot of views on how AI is gonna impact this in the first 30 or 40 days. We're gonna have already a lot of wins on the AI side. I think, from what I've seen, it's when you come to a company, one of two things can happen. You start to peel the onion, and the more you peel, the worse it gets. Option two is the more you peel, the better it gets. Categorically with Remitly after this short tenure, the more I peel the onion, the better it gets as far as the upside and the growth opportunity.
Got it. That's a good, good analogy. You know what? Why, why don't we pivot for a second to Vikash? You know, it was what? I think it was two weeks ago.
Mm-hmm.
Two weeks ago you reported. Reported, provided guidance, stock traded up, I think, 26% the next day. Clearly, investors digested some good news and good outlook. You know, I'm wondering if I'm an investor new to the story, listening to this presentation for the first time, you know, no need to repeat all those headline numbers, but looking beyond the headline numbers, you know, what KPIs either, A, you think investors really ought to be keying in on or alternatively do you think might be misinterpreted, might be a little misleading? If you can provide some color on that to kinda help somebody new to the story really think about what makes this business click.
Yeah. First of all, again, thank you for having us here. You know, the earnings coincided with Sebastian's announcement, so the reaction had a lot of different news baked in. If you look at our story, you know, I'd start with a simple framework of growth, profitability and investments. If you take each of these, each of these are super exciting for us. Again, we ended the year with almost 30% revenue growth. You know, we had records in terms of just the send per quarterly active user, the growth thereof. We, you know, had massive growth in the very high amount senders, which were essentially doubling. A lot of growth levers packed into our story.
Even as we look forward, that growth trajectory continues, especially as we look at our customer categories we are going after. Sebastian talked about a couple, low amount senders, high amount senders, businesses and receivers. I'd say they are at different stages of their evolution, but as you look at, call it the high amount senders, businesses and receivers, a lot of pent-up growth over there. The growth story is very strong for us. If you look at what we have delivered from a profitability perspective, we have continued to drive leverage over the last three to four years in a very, very systematic way. We ended the year with 17% EBITDA margin last year and every single expense line item leveraged.
As we look forward, you know, our ability to continue to scale and leverage is very strong. The AI tailwinds, the bonus we get from that will be an added benefit there. Really a very good unit economics model, and we are exceptionally data-driven where we can continue to find opportunities to drive leverage. The last part is investments. If you look at the size of market that we operate in, we have less than 5% market share in the core market. If you go beyond that, we are opening a market that is 10 times bigger with Remitly business, and we are just scratching the surface. If you go beyond that and think about, call it our 9 million active users on the... For every sender there are multiple receivers, and we have not even tapped into that.
We open that up, that's a two to three times opportunity compared to the sender. Overall, I'd say the growth, profitability and investment thesis we have is really balanced. You know, across each of those, we are firing on all cylinders.
Got it. Let's talk about growth a bit and not the secular growth of digital remittance and obviously the footprint growth that the company has experienced. In December's Investor Day, your first one, I mean, a big portion of the focus and presentation was on new products, particularly the Flex product, sort of a short duration lending product. Can you talk about, you know, which of the new products are expected to drive the most growth, maybe some of the early experiences with that, some of the early challenges?
I'd say that again, going back to the framework of the focus on customer and just being very obsessed about driving that, if you look at every single, you know, customer category, we see massive growth opportunities. The low amount senders, for example, you know, while we are doing really well there, we feel there are a lot of different growth levers. One of them is just offline to online and winning, continuing to win share. The remittance tax is a clear catalyst there. The other one is send now, pay later, which you highlighted. There's a clear gap for the low amount senders, sometimes between, you know, their creditworthiness and the credit availability. The second is sometimes the timing of when they get their paychecks versus when they need to spend is different.
We want to solve that problem ultimately to drive more cross-border payments volume, right? It's a means to an end, and this is where, you know, we have seen very good early signals, revenue doubling quarter-over-quarter, you know, more than 100,000, you know, users using it very quickly. Early signals are really strong. Similarly across all the different... I'll not go because your question was specific to the Send now, pay later, but Remitly for Business is an equal part, you know, strong new business category, and we have seen a lot of good traction there. As we look at the, call it, new growth contribution, a lot of those new products as well as customer categories play into that.
The early momentum we have seen both with the Send now, pay later, as well as Remitly Business has been very strong.
Got it. Just quickly, before I move to the next question, can you define what a business is in Remitly for Business? Even the term small business...
Yeah.
You know, can mean a lot of different things. It could mean a million-dollar asset-backed SBA loan, or it could mean a, you know, merchant cash advance of $2,000.
Yeah.
What exactly is that small business?
A good question because there's a large layering of what a small business means. You have all these different use cases. You have, you know, an owner of a restaurant who's doing design, you know, is hiring design people in some other part of the world or some small company that's using three engineers in Mexico or something. You have these solopreneurs, as we call them, where, you know, they are doing work in some part of the world for a U.S. company or a European company and invoicing them. The general thing that really it's kind of fun to see all the use cases because it's a big world out there and there's a lot of use cases.
We do keep to the big S in SMB. you know, we're not... we think that's a very large market.
Mm-hmm.
It's a very messy market. It's not really well-served. You know, if you and I started a business and we had two or three people around the world, it's kind of a pain to get the money to them. You know, we're trying to stop on this massive infrastructure we've built to get the money fast at a low cost and with a very trusted way. It's a good question. We don't have a scientific answer for that, but I'll say it's the SMB market with a big S. It's a very large market and a very messy market from what we see with a lot of opportunities.
Got it. Maybe we need a new acronym.
Maybe we need a new acronym, yeah.
Very, very, very small business.
Yeah.
Maybe VSMB is gonna come out of this session.
You are right because when you say business, you could say, well, the company that's moving $1 trillion every year, that I don't think that's... That probably won't be our target market to begin with.
Got it. Yeah.
We'll leave that to the banks, like yourself.
Okay.
Fabulous job there.
Tell you what, I wanna first kind of address. Well, I don't know if an elephant in the room is the right way to categorize this next question, but obviously, the remittance industry has been operating in the last 12, 14 months under sort of an unprecedented in the U.S., you know, immigration kind of actions and policies. Because I mean, can you speak to recent results?
Mm.
Whether there's a way to even articulate whether the business has been affected or impacted and then longer term, even if there is a change in policy going forward.
Mm.
New administration or just any kind of change in policy, whether, behavioral changes...
Mm.
May be permanent that could impact the business.
Yeah. I think that's a great question. I'd say that 12 months back, I was thinking a lot about that question and how it would, you know, have any impacts on the business. Over the last 12 months, we have seen the resilience of our customer. It's a, it's a non-discretionary spend, and we see that really coming and playing into our business model. The second is diversification. We've continued to diversify and the growth has been strong. Even if you take, you know, corridors like U.S.-Mexico, we have talked a lot about that every single quarter. We have seen the growth to be really robust, like really robust. That tells us that the underlying fundamentals of the business are great.
We are able to win share in a market that's, you know, competitive, where we have, a low share and, you know, our product is resonating with the customer. Overall, at this point, with sort of last year behind us.
Mm-hmm.
I feel very confident looking forward in terms of just the resilience of the business, the stability of our growth, and confidence in the outlook that we have.
Got it. Just as a reminder, I guess, you know, just by virtue of the fact that you're all digital send, you have to be banked, you have to have a mechanism to fund the transaction. It's ultimately a larger income on average consumer.
It is a legal immigrant.
Within the immigrant population.
That's right.
A pure walk-in business than Western Union might have. Might be less susceptible to certain-
That's absolutely right.
Actions. Got it.
Plus, I would say that with the 1% remittance tax, it becomes a nice-
Right.
Catalyst right now, that can drive the shift from offline to online.
Mm.
We are incredibly excited.
Got it. You referenced U.S. to Mexico, but maybe a question for you, Sebastian, and I don't even know if this is a top-tier question for you as you know, came into the company. As you think about just the map, the global map, I mean, the company is expanded tremendously over five years to where it really has a global footprint. There's more... Obviously, Middle East is an emerging area of investment. Are there any markets or corridors or regions that immediately caught your eye as sort of being underserved and sort of early targets for investment?
Yeah. Well, you know, obviously, we've built a massive disbursement network for cross-border payments. I don't know the details, but I just heard somebody that tell me this morning that, you know, one of our comparative friends has something like 20,000 corridors, while we've got 5,000. Clearly, there's a lot of upside. We know how to open corridors. We've done it fast and furious for many years, and we're continuing to do so. I have my favorite picks of what I know that we could certainly do. I think what jumps out is certainly the UAE and Saudi into, you know, Bangladesh and Pakistan and India. Those are all very fast-growing corridors. Those are countries that have, you know, 60% to 70% of the population is migrant. There are other corridors across Africa.
Latin America, I know very well. There's even corridors intra-Latin America. For us, it's all upside. We, you know, we know how to do this. It's, you know, it's part of our moat, I'd say. We're gonna continue to grow our corridors. I don't have a favorite child right now. I have my opinions, but the data shows that there's, you know, we have a lot of markets still to address.
Yeah. Clearly. I guess, listen, this is a technology conference, so I would be obligated to ask about thoughts on stablecoins, either as a currency or as a technology. Maybe it's one or the other or both. As you know, come into this year.
Yeah.
You noted the unique timing of early stages of AI development, you know, appeal to you. Any thoughts about digital currency at this point?
For us, stablecoins, you know, we've spent many years... The customers care about three things. They care about the cost of sending money, they care about the speed of sending money, and they care about the trust of sending money. We, over all these corridors, have worked very hard on all those three, and cost, of course, being probably the main, one of the main decision factors. I think stablecoins, it's not a one size fits all. I think there's some corridors where stablecoins are gonna be a big tailwind in cost for us because you do use a different rail. In other places, you know, like India, the US to India is a big corridor for us. Stablecoins is not, as of right now, is not gonna play in India.
The second piece is that there's a lot of customer sets who live in volatile currencies who want the money to arrive in stablecoins. For us, I think it's one more tool set in our, in our, you know, in our spectrum of things that we can use. Our cost structure, I think, is world-class already. If stablecoins can help lower that cost structure even more in some, in some corridors, we're gonna jump in, and we already are using it. You know, the, as I said, it's not a one size fits all. I think we're very excited about the places where it can help us. The customer will decide how to do it.
I mean, the honest truth, if you're trying to make a decision on stablecoin, the customers are gonna decide if it works for them, and we're gonna decide if the cost works for us.
Yeah.
We'll see how that plays out.
Just as a follow-up to that, you know, Should investors be looking at the broad stablecoin discussion more as a cost beneficiary, reducing settlement costs and so forth, a back-end beneficiary for Remitly, or because they tend to focus more on what does it mean for the consumer and could it disintermediate other things? Is it, do you view it more, you know, do you weight the cost back-end settlement functions as maybe because?
I can jump in.
Okay.
I'd say that, listen, early days right now.
Yeah.
We see potential on reducing the pre-funding needs, you know, managing working capital. We see you know, faster settlements. On the other hand, the liquidity pools are very shallow at this point of time. In the practical sense, we have not seen the benefit accrue thus far. That doesn't mean that it will not. We continue to sort of hone our skills there and see the benefits in some, you know, narrow pockets right now.
Got it. You know, just to close, Sebastian, I, you know, you've talked about what attracted you to the company and some of the early priorities. Would you care to venture on how you define either success in three to five years or what sort of vision you have for Remitly three to five years from now?
Well, we've set, we've outlined the medium-term financial goals, and I think we're very optimistic about executing to that plan. I'm looking beyond that. I think that with the markets that we're in, the technology that we have and some of the differentiators, I think we can grow our way into many other different segments. As I said, we, you know, we have these four big customer segments, which are these people that send small amounts of money, people that send large amounts of money, businesses, and then the receivers. We've got a long list of ideas of how to help those customers in their financial life. Because the event of sending money from A to B is an event where a lot of other things are going on in your life.
Whether it be cards or whether it be the short-term lending idea, whether it be wallets on either side, we have, I believe that we can go grow way beyond remittances. I don't like to use the word platform, but in terms of solve a lot more opportunities for that segment of the population. I think, you know, I came to Remitly to make it, to keep growing it, to make it a very large company. I think we're just getting started. I think it's a, as I say, it's a tremendous, it's a tremendous market that we're in. We've got a, you know, Matt and the team built a great starting point. I'm gonna stand on those shoulders. I think we can deliver a very, a very profitable and very large company.
Wonderful. Well, we're out of time, but wanna thank the both of you. This has been terrific.
Awesome.
All right.
Thank you, David.
Thank you very much.