Right. We are going to get started with the next session. We are very pleased here to have both Sebastian Gunningham and Vikas Mehta from Remitly here, CEO and CFO respectively. Thanks for joining us. Always a pleasure to have Remitly at the conference.
Thank you. And congrats on the conference.
Thank you. It's not over yet, though.
Not over yet. Very impressive.
All right. Sebastian, thanks for being here. You've been in the seat for a little over six months. You came into a business that was already compounding at a very high rate. What have you learned in the first six months? What have you changed, and where do you think you can have the most impact from here?
Yeah. Well, first, I'd say that when you join a business and you start to peel the onion, one of two things can happen. The more you peel, the less you like, or the more you peel, the more you like. I'd say that I had the luxury of joining a very solid company, being put together over many years. The moats are real around the network, the infrastructure, the compliance. Customers love the product. So there was a lot of boxes that checked right, and I think the company is really a fantastic company. I'd say that my focus since joining has been, number one is diversifying the revenue stream. We have a very good core business, but we've built this amazing network with hundreds of licenses around the world. We can distribute to almost five billion bank accounts, users of bank accounts, about one billion wallet users.
We have about 500,000 cash pickup points around the world. So diversifying the revenue on the shoulders of that network means we are focusing on higher value centers. We're focusing on Remitly Business. You saw an announcement this morning. We're now in the platform business also, which means we're using this fantastic infrastructure that we built to offer it to companies who want to pay people cross-border. Etsy has millions of sellers. We're now plugged into the Etsy ecosystem. We have a pipeline of other companies that are interested. Finally, we've launched a cards business, where we offer our customers a whole bunch of benefits in their cross-border lives with the card. So I'd say objective number one has been to start a very aggressive diversification revenue. So far, so good. We're seeing some really good signs.
Number two is, I think I've AI'd the company, and this AI journey has many angles to it. I'm AI'ing the cost side. We've seen a lot of product launches since I joined. The speed at which we're launching features. You can now email money. You can send money across the world almost as easily as sending an email. We call it Send with Link. We've launched a bunch of features for business. On the revenue side, AI has allowed us to reinvent the software factory, generating many more features. Many more features improve the product, an improved product generates revenue, and hopefully we'll see growth into the future. On the cost side, like every other company, seeing a lot of efficiencies. What five people could do, now two people can do, and on down the line.
So, you are seeing that in our bottom lines, in our expansion, in our margin expansion. Then finally, as I said, number one is diversification. Number two is the acceleration of AI across the whole company. Number three is continuing to expand this moat that we built with this distribution network around the world. We are launching new corridors, new send countries, new licenses. We just got UAE. I was in Japan a month ago. We got that license. So we continue to expand around the world as we move money across borders. So, super fantastic first six months. I like the business. I think the market is big. We have earned the right to win. So we are going to keep at this speed.
Great. A lot to cover there. I will try to keep it high level for one more before diving in. So you continue to gain share at 20%+ growth, while some of the legacy cash-oriented players in the industry clearly seeing lower levels of growth, struggling with share. How would you frame where we are in this offline-to-digital conversion cycle in the Remitly space? How much runway is left in that shift before it is simply a market growth story rather than a share shift story?
Yeah. Well, if we had met three years ago, we would already see the data points clearly that the shift from cash to digital is happening. Here we are today. Let us say the world is 50/50. It is not hard to predict that if we were sitting here three years from now, that trend is going to continue. Different countries are moving at different speeds. Remember, for us, the cash, we do not deal with cash in the send countries. We only deal with banked customers. But the receiving market receives in cash. So when you ask the impact to us is that transition. So in the send countries, a lot of customers are transitioning to digital, and we get the benefit of that. A little bit, there is some tailwinds from these tax benefits.
But I think just generally, customers are just finding it easier to deal with cash and the economics are better. On the receiving side, it is all over the map. There are some countries that are going all digital. Brazil is a very digital market for us. Mexico is probably 50/50, and it varies across the world. So we are on the right side of that trend. By being on the right side means you got all your energy in producing great digital experiences. You have got all your unit economics figured out for digital-only experiences. You have got all your compliance, you have got all your regulatory, you have got all your licenses. So, we were born digital, and we are as digital as ever now, and I think we are going to continue to benefit from that trend.
Great. Maybe just before we go any further, I'll get the obligatory macro question out of the way. What are you seeing in terms of activity levels in your customer base? Specifically, Vikas, I think you flagged some softer, higher value send volumes in June tied to some of the recent actions by the Indian government. Maybe just unpack what's happening there and what the range of outcomes could be.
Yeah. First of all, as you saw, our first half annual results have been outstanding. As a part of that, our high-value sender story is the one that actually helped us drive strong growth as one of the factors. What we saw in the second quarter was that with the Indian government using different programs to manage their foreign exchange volatility, they came up with schemes which created funds being moved in a different way than the usual cross-border remittance or payments. That scheme ended early. It was supposed to end end of September, but has ended end of August, which means that going forward, we'll not see impact from that, but it'll have similar to what we saw in Q2, a little bit of a headwind in the Q3 timeframe. That's, call it the detail part of it.
If you zoom out from what we can control, we have made big headways with regards to high-value sender. The first thing is, as you have seen us talk about, we have continued to raise the limits of what people can send. We started with 25,000, 50,000, 100,000. Now, more recently, in the last quarter, we talked about transactions which are north of $300,000. Beyond that, we talked about one customer who sent more than $1 million, and this was a U.S.-India transaction as well. So we are seeing great use cases from additional aspects. We are putting more concierge-type services for these high-value senders so that the experience for them is a VIP experience. Outside of that, every aspect of that transaction, we are refining it and making sure that these can go through quickly.
We are giving an additional feature we added was a wire transfer facility that has just eased things for the senders as well. So overall, very excited about what we have for the high-value sender. It's a key growth accelerator for us in the coming years. As we've said, we're just scratching the surface. We have not really targeted marketing in a big way in those use cases. As we do that, we'll continue to drive strong momentum in that space.
Yeah. All very clear. Just on the point in India, did the guidance assume three months of headwinds? It sounds like it is going to be two.
Correct.
Okay. Got it. All right. Sebastian, just coming back to the topic of AI, you framed AI around three benefits, kind of speed, trust, and cost. I think cost has been the most visible so far. You have seen pretty significant outperformance on the OpEx side. How would you frame the opportunity for AI to accelerate momentum in either revenue growth or profitability from here?
Yeah, I think that this is a journey that we are all on. I am sure you guys are on it also. I would say that the initial killer app is in the software factory, which is this amazing productivity that you can gain in building products and engineering. I think all companies are at different stage, but I will tell you internally, I do not think the week goes by without a wow moment with our engineering teams or with our product building teams. It looks like the models are going to continue to get better and better. So I anticipate we have many more wow moments ahead. So that is obviously a big tailwind in productivity and cost. The revenue side, we all have to prove the revenue piece of this. I think every CEO right now is trying to say, "Okay, I got the tailwinds of cost.
What do I see on the revenue side?" For us, as I see it right now, the speed at which we are launching these features, especially features the customers love. There is no benefit in launching speed features the customers do not like. But in the adoption of the features that we are launching, those generate more engagement. They generate more revenue. So our growth, I cannot attribute a specific piece of our growth to AI, but I am seeing it every day. I assume that over the next few years, we are going to get very good at measuring the cost of AI and the growth impact of AI. But for us, it seems quite impactful for the business right now. We launched an entire card business in less than 60 days. We have 10 million customers.
If you picture that, 10 million customers with a card that they can use to spend, that they can use for liquidity, that they can use for loyalty, that they can use for store money, that's two or three times the size of Remitly right there, just with cards. We were able to do that very fast. That's the kind of impact that AI can have. On that card business alone, we've got a very long list of great features that are going to be coming to market every week here.
Yeah. Makes sense. Related question, Vikas, is one that we get a lot post-print. You raised the full year EBITDA guide to roughly 20% margins or 21% margins, up more than 400 basis points year-over-year. You're already tracking well ahead of the pace implied by the long-term targets laid out at Investor Day. How are you thinking about the margin framework from here, given the momentum that we've seen over the last year?
I'd say that the way we look at the business is more broader than that. We think about the growth, the profitability, and the investment. We don't look at a quarterly view. We look at annual and medium-term and long-term. As we think about that, we did see a lot of benefit from a margin perspective, especially as we were very disciplined on some of the projects. Even all the projects that Sebastian mentioned, whether it was rolling out the card or doing partnerships on Remitly Business or expanding those, we have been very disciplined through that. AI was also a factor which has continued to help us. As we look forward, we'll continue to maintain that balanced growth equation or balanced equation with growth, profitability, and investment.
As you know, second half of the year is a very important time to set the foundation for next year. Clearly, marketing is an area where we'll be very focused, and we'll be looking at making the right programs and campaigns that set us up well for the next year. In addition to that, as you know, we saw some really positive transaction loss numbers in the first half. While we are very excited and optimistic, the transaction loss is an area which is volatile. As we know, keeping that 11 basis point average that we have given as a guide would be the right thing. All in all, I feel that the story is really great for us, where we have been able to drive growth along with expanded margins while we invest into the new businesses.
While being disciplined, we also know that there's no shortage of growth opportunities, and we want to invest, and we will invest.
Makes sense. All right, let's talk about the core send business, which is still the vast majority of the revenues. When you look at the core business, specifically stripping out the growth accelerators, what are the biggest drivers of durable growth from here, and how do you think about the balance between corridor expansion and share gains within the existing corridors?
Yeah, I think, well, first of all, you've got to be priced right. This is a customer that likes a good service at a good price. I'd say that the first focus to make sure we're very efficient in the service we provide and how we price it. By the service, I mean the speed, the cost, and the broadness of the network that we offer. So that are the core businesses, and that won't change. We'll be focused on that forever. The second piece that's driving the growth is we have a very good app. The stickiness of it, I don't like the word to use stickiness, but customers come back to us a lot, whatever you want to call it, the long-term value or the stickiness of the customer or the repeatability.
Our numbers are very strong, and we know when we get a customer, we can keep it. We've built the trust, we've built the network, we've built the support. So that's another key component of the core business, and that's you see it in our market share numbers. We're very personalized. We've got all these different. We treat the Mexican corridor, we treat the China corridor, we treat the Japanese corridor all very uniquely for the needs of that customer. The final one, which is a more obvious answer, is we just have to keep expanding the markets we serve. We have 5,000 corridors. We think we're halfway through the potential 10,000 corridors in the year in the world. We deal with hundreds of currencies. We launched Brazil as a send country. We launched Japan as a send country.
We continue to expand the places in the world where you can send money. Those are the three things that keep fueling the core business. So far it looks really healthy. We continue to gain share. We continue to do our customer growth. We crossed 10 million active customers last quarter. That growth seems to be solid. Customers are finding us, they're staying with us, and they're using us to send more money.
Great. Sounds like a lot of momentum. Maybe going over to the Remitly Global Card. You launched this a few weeks ago. It looks like a pretty significant step. It's a debit card, a wallet, stable coin balances, lines of credit, direct deposit. All into one product, like a really significant of the core product, which you just went through. Could you walk through what this product does for the customer? What types of demand that you're responding to with that product? Then importantly, how do you expect it to augment the growth profile of the core send business?
Yeah. Well, it's early days. The signals right now are great. As you said, I like the way you put it. It's going to be the best card on the planet for our customer who lives cross-border. We're very focused on the needs of that customer, how the card can help them, whether it be, as you say, with liquidity, short-term liquidity loans, with better rates when they're sending money, better speed, they can use it to spend, they can use it as a USDC card. As I said, we have a long list of things to do it, to inject into the card. Early days in the rollout. It's only U.S. We have all the countries in the world to get to. We're super excited about it. I think it's a construct our customers understand.
People know that you can accumulate value with cards, know how to use them. We believe we can start to build deposits into those cards, which we're already seeing. There's just a lot of wins. The way to the end of your question, it keeps the customer more engaged. The unit economics of the card are as good or better as the unit economics of the remittance business. You can picture all kinds of scenarios where the card helps the remittance business or the remittance business helps the card, and we think that flywheel can be very beneficial to us. Only upside from here. So far so good. I've been using the card for a month. It's fantastic. I think most customers will get to We have a free version, we've got a membership. We have a lot of ideas here.
By the way, you should get a card. It's good. I'll send you a note and have you start using the Remitly Global Card. It's very good.
I'll use it. I've got to find someone to send money to.
Right.
High-value senders. I think this is one of the most concrete drivers of growth among the growth accelerators. It's one where you're farther along. You've seen a lot of initial success. We talked a little bit about some of the near-term dynamics a second ago with Vikas. What is your strategy around sustaining the growth in that product longer term, and how do you think about scaling the marketing engine around that product?
Yeah, I can share a few thoughts, but Ashwin feel free to add. Overall, the HVS business is in its very early innings. We have really not gone in a more deliberate way thus far. As we are now maturing our product with increased send limits, our next step will be to create more focused marketing campaigns, as well as going after specific use cases. The other aspect is also geographic. We have seen lot of our HVS are naturally in the, call it, domain where the incomes are higher. This is where it has created some concentration of corridors. Our next step there would be creating more diversification, similar to what we did in core over the last 15 years. As we drive that diversification, the revenue will be more, I'd say, stable and durable, along with the growth trajectory.
Finally, I'd say that internally, we have created more focused teams on these use cases, which has created a dedicated focus on reducing the friction for these customers. To your point, HVS, as we call it, is farthest along across the growth accelerators. Again, we see huge opportunity in this space, especially as we add more marketing muscle to it.
Yeah, I think when you spend 10 years creating this network to move a dollar in one second anywhere in the world, it turns out that you can move a dollar or you can move a trillion dollars once you've built the infrastructure. For us, this is just expanding our market TAM by mostly customers finding us so far. We'll get to the point where we start to market to customers. But right now, we're just getting this inbound of people that are just sending a lot more money using this awesome network that we've built. So, it's a tailwind for the business. We think it's a big market. The quality of our network has just opened up this new TAM for us.
Yeah. All right. Let's maybe move to the next growth accelerator, which is Remitly Business. How has your level of confidence in this growth accelerator evolved? What evidence are you seeing that you might be able to devote greater resources to this? I'm sure the Etsy announcement will maybe play into that.
Yeah. Well, the business is I look at the numbers every day. It's hitting its stride. You have to get the product. There's so many use cases for small businesses, whether they're paying freelancers, whether people are requesting to be paid in different parts of the world to businesses in the U.K. or U.S. We have this platform business that we've just launched with Etsy. So there's multiple sides to the business, to Remitly Business. Again, standing on the shoulders of this broad cross-border network that we've built. We're out there. Again, early days, very strong signals. We're seeing week-on-week growth. I look at the numbers, and so far, so good. We have a lot of features that we continue to This is also, it has a component that's a bit of a partnership business.
The Etsy, when you plug into these big e-commerce networks or gig-type companies that have all these employees that are moving money around the world, Remitly Business is not only a consumer for small proprietors or small businesses, it also ends up being a partnership-type business. We are building out all the pieces, and seems like very large market, larger than the consumer market. We believe we are going to get our fair share of that market, and I think it is going to have a meaningful impact on our revenue, too.
It will. One of the best parts about partnerships like this is that the business model is really good. All of a sudden, we get access to new customers. There is no CAC, right? There is no customer acquisition cost. That is a big game changer for us. Secondly, it is one-to-many. We work very hard to create a partnership like this, and then all of a sudden, it step changes in the equation. From a business model perspective also, partnerships like this are excellent to the business.
I think maybe we can double-click a little bit on the Etsy partnership. It is a really interesting announcement. Can you talk about who do you view as the customer in this relationship? Is it the marketplace or is it the end customer or the small business selling on that marketplace? There are other competitors in this market. What is Remitly's right to compete in that market versus some of the incumbents?
Yeah, it is a good question. Both the marketplace, Etsy is a customer, of course, as is the merchant who is using Remitly to move money or get paid around the world. The completeness of our network, there are a few competitors. I think that we have as good a network as anybody. I think we have an excellent service for these merchants. I think it is one of many models that we can have in business. I think millions of sellers now have access to move money with Remitly, and I think we are going to win our fair share of this market.
Great. Then finally, on the receiver strategy. I know this one's a little bit more nascent, more experimental. Scaling two-sided networks and payments is notoriously difficult. Could you help us dream the dream on what success would look like here three to five years out if it plays out?
Success would look like we have 10 million customers that send money, send $100 billion to 30 million or so customers in 170 countries. That's the picture of Remitly. I think success would look like if all those customers had a Remitly account on both sides. Once that happens, if you're receiving money in Argentina and you have a Remitly account, you can still distribute that money through the network that we've put in place, whether you want cash or you want to go to bank account. Once all those pairs are put in place with a Remitly account, we have a lot of optionality on speed, on price, on services, on extra offerings. I'm not going to disclose, but there was one of our partners at one country said, "We receive a lot of money from Remitly.
We'd like you to offer our customers a pre-approved loan on the send side." By the time the receiver gets the money in this country through this bank, the bank had pre-approved the loan. Why? Because we know the sender. They knew the receiver. Once you establish those pairs, there's a lot of optionality that you have in the business. That's how we're thinking about it. I think there's a lot of positives to it for both the customer, for Remitly, for our network. As you said, early days, really nice signals. We'll see where it goes.
Great. All right. Vikas, I want to tap you in here on pricing and the philosophy around pricing. Take rate has drifted lower on a reported basis over time. I think you've said that's almost entirely due to mix, high value sender scaling, business customers, digital payout mix. So two parts. How should investors think about the underlying pricing trends, net of these mix dynamics? Second, how do you expect headline take rate and transaction margins to trend over time?
I'd say we think slightly differently, compared to how you framed the question. The way we think about it is in two aspects. One is what does it mean for the customer, and second is how do we think internally about the financials. From the customer, we think about the value that is delivered to the customer, which is across the trust, experience, as well as providing a fair as well as transparent pricing. As we think about that, we rigorously manage all these different measures to make sure that the customer gets a great experience and overall value. As far as the second point with regards to take rate, which is, again, we don't talk about take rate internally as much. We think about free cash flow and more at a customer level, gross margin dollars.
The goal is to expand gross margin dollars, and grow that on a continuous basis. If you go further into that, I would say that the important thing is if we can do the right things with regards to the value to the customer, we can drive gross margin dollar growth, especially if we are driving continuous scale benefits across the partner ecosystem with transaction expense, with transaction loss, we touched upon that earlier, as well as the overall customer support. Overall, it's a broader equation for us with regards to value, as well as thinking about gross margin dollars.
Makes sense. Sebastian, you picked up several regulatory license recently, U.A.E., U.K., you mentioned Japan at the top of the conversation. Can you talk about the priorities from a regulatory and licensing perspective, and maybe call out where you see the biggest opportunities where licenses are the big unlock?
Well, on the regulatory side, the opportunity is you have to be perfect, basically. Moving money around the world is highly regulated, and Remitly, from day one, was built from the bottom up, even the tech, to make sure that we are world-class. You don't get to participate in this business if you're not world-class in this area. We've had a very good playbook of getting licenses, managing them. We have 100-plus licenses around the world. We have a long list to still keep going. We've got plans for two or three years. These licenses take a long time. The application process is complex. It's a differentiator for us. We're very good at it. We keep working at it.
I think once you get the license, then you have got to get the product, then you have got to start your marketing engine, then you have got to get the customers, you have got to build the trust. Market by market is different. If you look at U.A.E., the major corridors are India, Bangladesh, Pakistan. You have got to get that right. You have got to get how the customers pay into the process right. Some of these economies are cash first, so you have got to go to places where they are depositing their cash and then onboard it onto Remitly. So we know how to do this. We continue to expand it. I think it is going to be part of our growth story. It is a real differentiator for anybody wanting to move money across borders.
Yeah. We are almost out of time, but maybe one final question here on capital allocation. You generated $130 million of free cash flow in the quarter. You stepped up buybacks meaningfully. The share count actually declined sequentially in Q1 this year for the first time. How are you thinking about capital allocation framework holistically, including thoughts on the potential to see more M&A over time?
Yeah, I can start. I would say that, again, very balanced capital allocation approach. The first most important use of cash for us is our organic growth. We have talked about it a lot during the last 30 minutes, but no shortage of growth opportunities in the core, continue to expand markets. Beyond that, growth accelerators are all running on full cylinder. Second best use of cash is buybacks. Again, we will be very opportunistic and take the benefit of any dislocation in pricing. Those would be the two. There is a very high bar for inorganic. At the same time, we are always going to be looking around to find the best opportunities, but the bar is very high.
Got it. Makes sense. In the last couple seconds here, Sebastian, Vikas, any final closing remarks?
No. Thank you for the invitation. We're very optimistic, and I think we have a real nice growth opportunity in the years ahead. It's a very large TAM. We have a lot of good ideas, and I'm super optimistic about the trajectory that we're on.
That's great. Well, we can leave it there. Thanks for joining us today.
Thank you. Thank you so much.