Good day, and thank you for standing by. Welcome to Remitly First Quarter 2024 Earnings Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Stephen Shulstein, Vice President of Investor Relations. Please go ahead.

Thank you. Good afternoon, and thank you for joining us for Remitly First Quarter 2024 Earnings Call. Joining me on the call today are Matt Oppenheimer, our Co-Founder and Chief Executive Officer of Remitly; and Hemanth Munipalli, our Chief Financial Officer. Our results and additional management commentary are available in our earnings release and presentation slides, which can be found at ir.remitly.com. Please note that this call will be simultaneously webcast on the Investor Relations website. Before we start, I'd like to remind you that we will be making forward-looking statements within the meaning of federal securities laws, including, but not limited to, statements regarding Remitly's future financial results and management's expectations and plans. These statements are neither promises nor guarantees and involve risks and uncertainties that may cause actual results to vary materially from those presented here. You should not place undue reliance on any forward-looking statements. Please refer to our earnings release and SEC filings for more information regarding the risk factors that may affect our results. Any forward-looking statements made in this conference call, including responses to your questions, are based on current expectations as of today and Remitly assumes no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law. The following presentation contains non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP metrics, please see our earnings press release and the appendix to our earnings presentation, which are available on the IR section of our website. Now I will turn the call over to Matt to begin.

Thank you, Stephen, and thank you all for joining us to discuss our strong first quarter results and our outlook for 2024. We are pleased with our results as our value proposition of delivering trust and peace of mind throughout cross-border payment security continues to resonate with our new and existing customers. You will see this in our first quarter financial results on Slide 4. Our consistent execution continued with a strong start to the year. We are pleased to deliver $269 million of revenue, a 32% increase year-over-year. Our top line results and scale efficiencies across transaction costs and operating expenses resulted in a strong adjusted EBITDA of $19 million, a more than 250% increase year-over-year and ahead of our expectations. Our digital-first positioning and increasing scale allowed us to deliver the improvements in adjusted EBITDA profitability in the quarter, demonstrating the structural profitability potential of our business while continuing to make targeted investments to deliver both long-term growth and strong returns. As a result, we are reaffirming our 2024 revenue outlook and raising our 2024 adjusted EBITDA outlook. In the first quarter, our quarterly active customers grew 36% year-over-year, as you can see on Slide 5. We now serve 6.2 million quarterly active customers, up 1.7 million from last year, and we continue to outpace the overall growth in the remittance industry and our digital peers. We also continue to benefit from record new customer acquisition due to our investments in creating a seamless customer experience, efficient performance marketing, and brand awareness across key markets. Our customers are highly resilient and have a deep sense of responsibility to support their families. This is key to understanding their predictable and durable behavior. A significant majority of our customers send money home on a regular basis to support daily living necessities. At the same time, we also see strong seasonality as many customers send more actively around key holidays and festivals, including Christmas, Mother's Day, and Ramadan, just to name a few. This seasonality of customer activity played out in the first quarter as expected, as there are fewer large sending activity drivers such as the Christmas holiday season that we see in the fourth quarter or Mother's Day and Eid al-Fitr in the second quarter of this year. This seasonality is particularly evident in the first quarter on the back of a very strong Q4 activity. We have observed this pattern for several years and see many of these customers increase their sending activity from Q2 to Q4. As expected, we have also observed an increase in recent customer activity in April, which reflects typical seasonal patterns as we remain confident in the resilient customer behavior trends that result in predictable and durable lifetime value. The trend of customer preference for digital receive options continued in the first quarter. The year-over-year mix of digital received transactions increased by nearly 500 basis points in the first quarter, which was a similar increase as Q4. As transactions sent to mobile wallets tend to be smaller and more frequent, we continue to optimize our product features and underlying cost structure to serve these customers effectively and profitably. Having a wide variety of high-quality disbursement options, including 1.2 billion mobile wallets, 4.2 billion bank accounts, 470,000 cash pickup locations, and home delivery in certain markets to serve different customer needs is a key differentiator and a driver of customer transaction activity. Turning to some additional detail in our marketing efforts, our focus for our marketing investments remains on ensuring we optimize the customer acquisition cost we are willing to pay with the lifetime value of a customer in order to drive high long-term returns. We continue to see strength in lifetime value as customer activity remains strong with increasing transactions per active, particularly related to digital transactions, and our overall unit costs continue to improve. We delivered another record number of new customers in the first quarter as our marketing investments across channels drove new customers to our platform at a highly efficient customer acquisition cost. We also benefit from word of mouth as we continue to make product improvements and drive additional customer activity in both new and existing markets. Consistent with seasonal patterns, our customer acquisition costs declined sequentially from the fourth quarter. Our marketing investments, particularly our Global 360 integrated campaigns in key markets, are resonating with new customers, which is a leading indicator of future revenue growth. Building off our momentum in the fourth quarter, we are pleased to continue our brand awareness efforts in key strategic regions worldwide, including the launch of an integrated brand campaign in the large Los Angeles market in the quarter. L.A. has a significant customer base that sends to many of our key receive markets, including Mexico and other Latin American countries. These campaigns combine traditional media and digital channels, and we are taking the successes we have had in other key markets to L.A. We believe that the disciplined and data-driven ROI-focused approach to our marketing investments is unique, and we continue to monitor for a variety of signals with our brand campaigns, such as branded search impressions alongside other metrics across the customer funnel. Taking this approach, we've seen positive results to date from our marketing campaigns. Finally, on the marketing front, we continue to find more ways to utilize AI, including generative AI across a variety of use cases in marketing. We're starting to see the benefits of generative AI in helping us generate long-form content at scale. We're exploring AI for a variety of process improvements and are actively using AI as an effective tool in translating our product and marketing efforts into many different languages, increasing the benefits of localization. Overall, we continue to have high confidence in our recent marketing investments, which are expected to deliver strong returns this year and beyond with a predictable and durable stream of revenue, less transaction expense, which we detailed in our call last quarter. This is consistent with the resilient customer behavior that we see related to cross-border transfers for primarily nondiscretionary needs, along with our ongoing focus on program optimization and our ability to continue driving down unit costs as we scale. Our focus on delivering a fast and seamless customer experience has not changed. We often get asked the question of what makes Remitly so special and unique that results in the high growth rates that we're delivering. The truth is it's a complex answer because remittances are complex, but it all comes back to the customer and continuing to earn their trust. When we analyze responses to our NPS customer surveys over the last six months, the top two drivers were fast transfers and that the experience was easy. Additionally, a large portion of comments simply say that Remitly was some version of great, such as excellent, incredible, amazing, superb, or brilliant. I want to emphasize, while qualities like fast and easy may sound like table stakes, international payments are incredibly complex, and we are uniquely reinventing international payments in a way that's magical and delightful for customers. You can see this reflected in our industry-leading growth rates and customer reviews. Let me highlight a few areas of progress in the first quarter on delivering this great experience for our customers. In order to achieve this long-term trust, we are excessively focused on reducing what we call transaction defects. These are issues related to pay in, disbursement, and risk that negatively impact the customer experience or delay the ultimate delivery of customer funds, which creates unnecessary friction and erodes trust for our customers. Reducing these defects typically results in lower customer contact rates, less back office work for our customer support teams, and ultimately, higher customer satisfaction, trust, word-of-mouth, and retention. On the pay-in side, meaning the way that we collect funds from customers, we are focused on reducing payment issues for our customers. This product work matters to our customers because it enables us to deliver faster transactions, more payment options, fewer errors, and at a lower cost to Remitly. We can also uniquely deliver these benefits with our digital-first approach at scale. We continue to and expect to add relevant payment options that provide great customer experiences. Examples of this are Bank contact in Belgium, interacting Canada, and the ability to speed up ACH transactions in the U.S., which we expect to launch later this year. To help with speed and to reduce errors, we are leveraging machine learning and dynamic routing across payment processors to drive down errors, which improves the customer experience. On the disbursement side, we continue to make progress on improving our mix of high-quality direct integrations, which increases transaction speeds, improves the customer experience, and lowers costs. These include M-PESA in Tanzania, ICICI Bank in India, and Yape Mobile Wallet in Peru. We are also providing more self-service options for customers to resolve disbursement exceptions effectively when they do happen. Finally, we are automating manual actions such as downtime routing and validation APIs that delay transactions and create unnecessary work. On the risk side, we are also focused on reducing the frequency that transaction defects are introduced to legitimate customers and improving the customer experience around resolving any risk-related issues. To achieve this, our strategy is to build robust, intelligent, and scalable systems utilizing advanced machine learning capabilities to combat bad actors effectively, ensure regulatory compliance, and streamline required customer verification experiences. As a result of our efforts, more than 90% of transactions in the first quarter were dispersed in less than an hour, and more than 95% of transactions proceeded without a customer support contact. While our primary focus on this work is to continue to build a fast and magical experience to send money internationally, thereby continuing to drive long-term retention, we have been able to deliver a significant improvement in customer support expense with leverage of 260 basis points compared with the first quarter of last year. Our global teams are focused on continually improving the experience for our customers, which is helped by our increasing scale and investments in our technology infrastructure. Our ability to execute our long-term vision of transforming lives with trusted financial services that transcend borders is driven by resilient and predictable customer behavior, our differentiated and continuously improving product, a focus on increasing investment returns and efficiency, and even more growth. With that, I'll turn the call to Hemanth, who will provide more details on our financial results and our improved 2024 outlook.

Thank you, Matt. I'm very pleased with the strong results that we delivered in the first quarter and the progress we're making on continued strong revenue growth and driving efficiencies throughout the organization. I'll begin by reviewing some high-level drivers of our financial performance. I will then discuss the priorities we're focusing on to ensure we can deliver sustainable growth and high returns for many years to come, and I'll finish with our updated outlook for 2024. With that, let's turn to our first quarter results. As a reminder, I will discuss only non-GAAP operating expenses and adjusted EBITDA in my remarks. These metrics exclude items such as stock-based compensation, the donation of common stock in connection with our Pledge 1% commitment, acquisition, integration, restructuring and other costs and foreign exchange gain or loss. Reconciliations to GAAP results are included in the earnings release. Let's begin on Slide 10 with our high-level financial performance in the quarter. We were pleased to deliver high active customer and revenue growth in what is typically a seasonally weaker quarter for customer activity. Our adjusted EBITDA profitability also improved substantially as we benefited from scale and a deliberate focus on driving efficiencies through all parts of the business. Quarterly active customers grew by 36% year-over-year to 6.2 million. Spend volume grew 34% year-over-year to approximately $11.5 billion, resulting in revenue growth of 32% year-over-year to $269 million, which was in line with our expectations. Our GAAP net loss was $21 million in the quarter and included $34 million of stock compensation expense. Strong revenue growth, combined with significantly lower transaction expense as a percentage of revenue and efficiency across operating expenses led to higher-than-expected adjusted EBITDA of $19.3 million in the quarter. Our focus for 2024 and beyond remains on four key areas to drive sustainable long-term returns, as you can see on Slide 11. These are to continue to deliver strong revenue growth, reduce transaction expenses, acquire new customers with efficient marketing and operate more efficiently. By focusing on executing across these four areas, particularly with the additional focus on efficiencies, we believe we can deliver sustainable long-term high returns. Now let's turn to some of the key factors that drove our strong performance in the first quarter. Our revenue growth was driven by the high retention of existing customers, consistent first quarter sending patterns benefits from earlier send market expansion and record new customers acquired in the quarter. As is typical, sending activity from returning customers contributed to a significant portion of total revenue in the first quarter. Importantly, first quarter is typically a seasonally less active quarter for existing customer activity as compared sequentially with the fourth quarter. It is also important to note that the first quarter of 2023 was somewhat of an anomaly for quarterly active customer growth as we recognize the addition of all newly acquired rewire customers in our quarterly active customer count in first quarter 2023, which we have now fully anniversaried. As we look ahead to the second quarter, we typically see increased customer activity from prior active customers due to more seasonal spending opportunities, and we also expect to continue acquiring even more new customers to Remitly. We expect various factors to impact year-over-year and sequential increase in quarterly active customers. These are related to the timing of holidays and gift-giving periods such as Easter, Mother's Day, and Ramadan, the increasingly diverse global customer base, timing sensitivity to foreign exchange rates, particularly at higher transaction values and quarters ending on weekends versus weekdays. Overall, we continue to observe very consistent customer behavior patterns with high retention expected to generate robust lifetime value. As a result, our lifetime value to customer acquisition cost ratios remain attractive for continued investment in marketing to acquire new customers. Turning to our transaction expenses, which include costs related to our pay-in partners, disbursement partners, and fraud losses, transaction expense as a percentage of revenue improved to 90 basis points year-over-year. This was primarily due to our increasing volumes, which allows for improving terms with our pay-in and pay-out partners, while at the same time improving our fraud precision. Approximately 200 basis points of the improvement was related to pay-in and disbursement partner cost reductions. Our continued improvement in transaction expense and overall variable cost structure allows us the optionality to make investments in improving the customer experience and the value we deliver to customers, which results in increased retention, transaction activity, and ultimately increasing the lifetime value of our customers. We're also making solid progress on delivering operational efficiencies, which has been an increased area of focus for us this year. Let's begin with our progress on customer support expenses. Customer support and operations expenses as a percentage of revenue was down 260 basis points year-over-year, consistent with the trends we've seen over the past few quarters. As Matt mentioned, we're focused on reducing unnecessary friction for our customers via our transaction defect reduction goals. As an example, we have enabled even more self-help options such as changing disbursement choices without the need to contact customer support. When self-service is not the right option, we're starting to apply technology like generative AI to make it easier and more efficient for agents to support and delight our customers. We're also applying AI in our risk systems to improve precision and to provide a more effective customer support experience either via chat, email, or phone. All of these things reduce the workload rate for our agents and help provide a more efficient and tailored experience to delight our customers. In the first quarter, general and administrative expense as a percentage of revenue decreased by 70 basis points year-over-year as we benefited from continued discipline on hiring non-head count expenses and other efficiencies. A portion of the improvement in G&A expenses benefited from some favorable timing and indirect tax reduction totaling about $2 million that we do not expect to reoccur. We view our marketing and technology and development expenses as key investments that provide returns over both the near, medium, and long term. Our marketing investments have a payback period of less than 12 months and provide a long stream of revenue less transaction expense from resilient customer activity. Our technology investments have both near-term returns, as you can see in our progress reducing transaction and customer support costs, and expected medium- to long-term returns as we invest in our platform to further deepen customer relationships. Our marketing expense was $64 million in the first quarter, which was a sequential decline of about $7 million from the fourth quarter and in line with our expectations. This reflects the typical seasonality of declining customer acquisition costs sequentially as the opportunity to acquire new customers is generally lower in the first quarter. Given our data-driven approach, we are also uniquely able to manage lifetime value to customer acquisition cost ratios to the return thresholds that we desire, including taking into account the cost of capital on our higher return thresholds. We will focus on this balance to ensure that we are delivering high long-term returns relative to our cost of capital. Technology and development expenses were $44 million in the first quarter. The primary areas of investment included our remittance platform, driving transaction defects down, deepening customer relationships, and enabling increasing automation across various operational areas, such as customer service and back-end transactional processing. We expect moderating growth in our technology and development expenses as we scale over the medium term. Before we turn to our updated outlook for 2024, I'd like to discuss our balance sheet and perspectives on cash flow. At the end of the quarter, we had $286 million of cash and access to a $325 million credit facility. At the end of the quarter, we had $150 million outstanding on the credit facility. This balance was paid off the next business day on April 1, consistent with our prior practice of using the credit facility to fund short-term spikes in customer demand, especially over holidays or weekends. As we have been improving adjusted EBITDA, we have seen corresponding improvements in our cash flow performance when we adjust for the timing of customer fund flows. Turning to our stock compensation expense. In the quarter, our stock compensation expense of $34 million grew 17% on a year-over-year basis. This is a significant deceleration from the prior quarter's growth rates and reflects our focus on moderating our head count growth rates. However, we expect stock compensation expense dollars to increase sequentially as a result of our annual performance reviews and RSU grant cycles. On a full-year basis, we expect stock compensation expenses to grow slower than revenue. We're also focused on managing the number of shares issued, and we have been taking various measures to reduce share dilution for increasing long-term returns to our shareholders. As a result of our strong performance in the first quarter, we are updating our outlook for 2024. Specifically, we expect revenue to be between $1.225 billion and $1.25 billion, which reflects a year-over-year growth rate of 30% to 32% and is consistent with our prior outlook and reflects the strong performance in the first quarter and in line with our expectations. We remain confident in both the resilience and seasonal cadence of customer activity and the outlook for new customer acquisition in the rest of 2024. As a result, we are reaffirming our full-year revenue outlook. We also expect second-half revenue growth rates to be improved versus the first-half revenue growth rate, especially as we lap exceptionally strong growth rates in the first half of 2023. As a result, we expect the revenue growth rate in Q2 to be at the lower end of the annual guidance growth rate range of 30% to 32%. As a reminder, revenue growth rates in any given quarter can be impacted by volatility in foreign exchange rates, new customer acquisition timing, and seasonal customer activity, even if underlying customer behavior and spending patterns remain largely consistent with historical trends. While we expect to remain in a GAAP net loss position, we expect adjusted EBITDA to be between $85 million and $95 million, which is a $7.5 million increase at the midpoint from our prior outlook. The increase in our adjusted EBITDA outlook is primarily driven by a strong performance in the first quarter, ahead of our expectations and our increased confidence in driving operational efficiencies for the rest of the year. Consistent with our commentary on our 2024 revenue outlook, we expect adjusted EBITDA year-over-year growth to be higher in the back half of the year compared with the first half adjusted EBITDA growth. As a reminder, we delivered an exceptional second quarter last year, and the year-over-year comparisons get improved as we enter the back half of this year. The outlook also allows us to take advantage of opportunities to acquire even more customers if the unit economics remain compelling, and we continue to be highly targeted in deploying our marketing investments. We're planning for a macroeconomic and foreign exchange environment that remains consistent with what we've seen in the first quarter of 2024. Our continued global diversification, resilient customer base, and increasing scale help us to mitigate localized macroeconomic or foreign exchange trends. Overall, we are pleased with the solid start to the year, and our business remains robust and resilient as we serve customers that have a recurring need to send money home. With that, Matt and I will open up the call for your questions. Operator.

And it comes from the line of Andrew Schmidt with Citi Global.

I want to dig into the first quarter performance a little bit. I understand that there's normal seasonality there, but historically, you guys have done a great job of delivering upside expectations. So I'm wondering if maybe you could elaborate if there was anything else as normal seasonality that surprised you? It sounds like customer behavior was pretty consistent, but would love to peel back the layers here to better understand if anything played out differently versus your initial expectations?

Yes, so, thanks, Andrew, for the question. Really excited. I think we've had a really strong start to the year. Q1 was well within our expectations. We expected obviously seasonal patterns are known to us historically. So nothing different in Q1 than we've seen in some of the other quarters as well. So very consistent and just to reinforce the customer behavior patterns have been as well as super consistent. We've seen increased engagement, transaction intensity, all these patterns that we track our activity rates and so on with our customers, very consistent. We had record new customer acquisition as well. So we've seen a lot of consistent patterns in Q1, and we continue to be excited about the year.

Yes, Andrew, the only thing I'd add is having built this business over the last ten-plus years, there is seasonality to the business and Q1 has less seasonal activity, as I mentioned in the opening remarks, just due to fewer holidays. But if you look at the overall performance of our cohorts, if you look at the fundamentals of our business, things are looking very strong. So excited about the rest of the year and excited about the fact that out of the gate, we grew 32% year-on-year for a business that now trailing 12 months is at over $1 billion in annual revenue. Those two metrics in combination, along with the improvement in adjusted EBITDA, gives us a great start to the year that we're really proud of.

No, it's a great growth rate. That's fair. Maybe to dig into marketing expense just a little bit. So I understand, again, the seasonality in the first quarter, but it's a little bit lower versus our expectations. Has the strategy around performance marketing changed at all? Were you able to deploy as much marketing as you wanted to in the quarter given CAC levels? And then as we think about the full year, understand that there's some scale in the back half potentially with marketing expense. How should we expect at least what you're thinking about right now marketing expense trends?

Again, I think when we look at marketing, the whole quarter was very much in line with our expectations. Same applies to marketing. To your point, we did sequentially reduce marketing expense as we expected and planned, and we're able to acquire record new customers in the quarter as well. So we look at unit economics very closely, and I think that's one of our competencies that we've built over the years. When we look at lifetime values of our customers, we look at cost of acquisition, and we look at those ratios, very consistent across the board. We've seen, again, on the LTV front, consistent behavior from our customers. So that gives us continued conviction that the investments we're making in marketing makes a lot of sense for us when we think about payback and these investments have less than 12 months payback as we called out in the prepared remarks as well. In terms of trends, similar to what we called out last quarter, we do think that as we get to the back half of the year, some of the growth rates in marketing will decelerate in the back half of the year, which is also reflected in our guidance for the year. So no change in our strategies around marketing investment, excited about the customers we're acquiring and the paybacks that we're seeing.

And it comes from Ramsey El-Assal with Barclays.

This is Allison on for Ramsey. So it seems like customer acquisition is a key focus here. You have some really interesting marketing initiatives in the works. Do you think you could give some updated thoughts on where you're seeing new users come from? How that was apparent as shown in today's results? Just where are you taking share from when you're acquiring a customer? Is it a customer who's brand new to remittances? Are they coming from a digital channel or brick-and-mortar? Just some updated thoughts here on what your general view is would be really helpful.

If you look at where our customers are coming from, it's a diverse set of competitors in a very fragmented market, where we currently represent only 2% of the total market. Most customers vary by market, but a significant portion are not new immigrants, considering there are over 250 million immigrants living and working outside their country of birth. This presents substantial growth opportunities within our customer base, along with various marketing possibilities related to Andrew's question. We have plenty of high-return marketing channels to invest in, and we're experiencing positive outcomes from these efforts. Our product continues to improve daily in terms of reliability and speed, which is generating a word-of-mouth effect that we're excited about. Although net additions are lower in Q1 due to seasonal retention factors, the record number of new customers is promising for the remainder of the year.

And from Will Nance with Goldman Sachs.

I wanted to ask about maybe some of the interplay between the revenue yield on volume and the transaction costs that you mentioned, just knowing you guys have very dynamic pricing. It seems like there's been a lot of shifts just in terms of the rates of digital versus in-person disbursement. I'm just wondering if there's anything to be aware of as we think about continued reduction in transaction costs and how that interacts with gross revenue when you see these shifts to either lower-cost payment methods or you gain scale. Are you passing on any of the benefits of transaction costs to customers? If we see benefits to transaction costs, should we also expect the gross take rate to come down?

There's a lot in there to unpack. But maybe just beginning with underpinning it around lifetime value, we really focus on making sure that we're improving, growing the lifetime value with our customers, and that's where the real value is. We look at, obviously, customer behavior trends, which we talked about. I think you called out the digital trend there as well. We've seen improved mix towards digital transactions, which again, is a 500 basis points this quarter, similar to last quarter. As a digital-first player now at significant scale globally, we're excited about that trend. When you asked about take rate, there are other mix factors. We're obviously in multiple geographies, etc. And when we see our overall take rate with an average, we continue to remain in a band that we're comfortable with. It's in the 2% to 2.5% range, very much close to what we had sequentially last quarter as well. So no real changes. There are obviously some underpinning mix shifts that we've called out, particularly in the digital trend. We continue to improve. Transaction costs are decreasing. We think that having more direct connections will reduce friction in the entire process, which helps us reduce transaction costs.

I think the punchline answer to the take rate question is mix shift. So that's within the normal band. There's nothing that's happening from a competitive standpoint in Q1 that changed that. I love your question around digital disbursement because I think that we have a strategic advantage with our digital-first approach at scale to continue to drive variable costs out of the system. And as we do that, we can decide how much we pass along to customers versus how much we pass along to improving transaction expense, but lots of room for us to continue to differentiate there. We're leading the way when it comes to digitization, and we're really excited and proud of that and excited about what it will hold for our customers as we look forward.

And then just maybe as a follow-up, the seasonality kind of dynamics, I think, have come up every other quarter. I hear your commentary on the cadence in the back half of the year, which is, I guess, great to hear the confidence. I wanted to follow up on the idea that the growth rate should actually be stronger in the second half of the year on easier comps. When you talk about stronger growth rates in the back half of the year, is that mostly a comment on the third quarter? Or are you expecting to see acceleration even as we lap what was a pretty stellar performance in the fourth quarter last year?

Yes. I think the way that we were trying to frame this to help people understand seasonality. Of course, there are seasonal patterns, which largely relate to holidays and gift-giving periods. We see that again in Q2 with some of the holidays coming up or having come up earlier this quarter. Now to your question on growth rates, yes. I think when we look at last year, first half, second half and this year, first half, second half, we had an exceptionally strong first half of 2023. So when we think about growth rates, we're trying to share a little more around how we think about Q2 as you already have the numbers for Q1. We do think that Q3 and Q4 will have improved revenue growth rates from that perspective. We’re within the guidance range, again reinforcing the 30% to 32% for the full year. So that's how it plays out with the year-over-year comparison and the seasonal elements underpinning all of that. We also want to point out that we've had record new customers. We continue to be excited about adding a lot of new customers. Our bases continue to grow, and we're seeing strong active customer growth.

And it comes from the line of Tien-Tsin Huang with JPMorgan.

I just want to clarify on the new marketing efforts. I know you mentioned something here in L.A. Do you think some of these investments will be more focused in the second quarter? Or is this more spread out? Do you see it spreading to other cities or regions as well based on what you learned? I'm just trying to understand what's new versus a structural change in your approach to marketing.

I would say it's a continuation. So this is not something that's dramatically new or different. It's more rolling out what we've done in new geographies. So I wouldn't expect there to be large spikes quarter-to-quarter. We have a lot of confidence in the playbook that we've rolled out. So I just mentioned the L.A. example is one, but we've got a lot of other performance marketing channels that are great acquisition channels, especially during times that customers send like Mother's Day and other seasons.

And then just quickly on the volatility in foreign currency, especially the strong dollar here. Is there anything to consider with respect to pull forward of growth? I know it will be transient, but just figured I'd ask. And also FX volatility call out with respect to take rate or fees, monetization, that kind of thing?

When we look at a global basis, we don't see anything significant. We have an increasingly diversified portfolio of corridors, and we see FX impacts everywhere. Generally speaking, on a constant currency basis, as you can see, our revenue growth rate was flat. There's always going to be some degree of FX sensitivity for short periods at certain transaction sizes, and we see that as well. But on an aggregate basis, as we look across, we haven't seen anything that is material or significant to the results.

And it comes from the line of Rufus Hone with BMO.

I wanted to ask about the broader competitive environment and whether you're seeing any incremental change in competitive intensity. Any extra color there would be great.

And the headline there is, as you do, we look at the competitive dynamics, and we haven't seen any material changes in Q1. I think that's indicative of the fact that it's a very large market, as we've mentioned, we're 2% of that very large market. And we're outperforming that market. Our growth is driven by strong retention in an industry-leading product, and we're excited about continuing to have the kind of growth that I mentioned as we look forward. So no changes to note in the competitive dynamics other than the structural benefit that we believe we have as a digital-first player at scale and how that resonates with our product.

And just a quick follow-up on Remitly Circle. I was wondering whether there was any sort of update on progress there?

We continue to be really excited about the ability to offer broad financial services for our customers. As I mentioned during last earnings call, we're investing in what we call our technology platform, and that has paid dividends when it comes to the efficiency and velocity of our engineering team. We're also making targeted investments that are more efficient to make those investments on top of that technology platform in what we call complementary products and services. Circle is one of those. Given our scale and size of the business and just our approach in general, we like to have products get to more materiality before we talk about them broadly, but excited about what's to come with Circle and another area that we're investing in.

And it's from the line of Chris Kennedy with William Blair.

Matt, you talked about the structural profitability of the business. Can you give us your updated views on the long-term margin opportunity here?

I think when you think about, first of all, stepping back, we know that we have a significant growth opportunity in cross-border remittances, and we're excited about that. Our focus remains on our growth trajectory, and we expect to maintain that as the primary focus of all of our investments. As we look across the P&L, we've been delivering improvements in transaction expense reduction. We've been excited about the work that's been done in reducing our customer service expenses, which has been reducing year-over-year quite substantially due to both processes and bringing in AI and other technologies. We're making progress on improving our margins, to your question, but I think it's a little too early for us to talk about the long-term margin profile. The business fundamentally has very strong unit economics, and we've seen that continue to play out with strong retention and aspects of customer behavior. We want to make sure we're taking a balanced approach.

Yes. And Chris, the only thing that I would add is that remittance businesses, our payments business at scale can yield a lot of leverage and cash flow when done effectively, especially digital payments companies. Even a year ago, we had just over $5 million in adjusted EBITDA. Now we're at $19 million in the first quarter of this year, and we've guided to $85 million to $95 million in adjusted EBITDA for the year. So that kind of ramp gives you a sense of how the business is getting leveraged. We’re still growing at 32% year-on-year while getting that leverage, and we want to balance growth and profitability. Having run this business for the last ten-plus years, getting leverage out of the business is much easier now because we are at a larger scale.

And then just you mentioned April. Can you give any more color on the trends that you saw in that month?

Yes, I'm happy to take that one, Chris. I think that it's a really important and good question. We've been pleased with the customer activity in April, given the seasonality points that we've made. So as we look at our QAU goals for Q2, we're feeling good about those. It reinforces that there's seasonality to the business, and customer retention continues to be strong. The customer acquisition continues to be strong, which gives us confidence for the rest of the year. We track monthly active rates as well as quarterly active rates, and our activity rates in April further reinforce that we're excited about our continued retention.

And it comes from the line of Darrin Peller with Wolfe Research.

Can we just circle back to the digital dispersed transaction trends in terms of the amount of volume per transaction? The trend line has been dropping for some time now. I want to understand the dynamics there and when you could see stabilization. What’s driving that?

I think we see in some markets an increase in digital disbursement trends, which we view as a real positive for our business. It might mean that customers transact more frequently but with a lower average transaction amount, given how easy it is to send to a mobile wallet as opposed to cash pickup. This takes costs out of the system and makes it easier for customers. We're well positioned to lead some of these transitions in some markets. However, I can't emphasize enough that it varies depending on the market. We're in 170 countries. Some markets remain cash pickup, while others are mobile wallet or bank deposit.

Just to follow up on corridor ad potential. It looks flat if I'm reading it right, curious to hear what the opportunity in the pipeline is there. Any timing expectations on Circle?

We are now at over 5,000 corridors, and there is no shortage of opportunity for us to grow in both the corridors that we're in and also new corridors that we can add. I mentioned sub-Saharan Africa as one region. It's not like we need to launch new corridors in the short or medium term to drive growth. We're focused on launching new corridors in a very intentional way and can fuel long-term growth at our scale. As for Circle, we are excited about the early results we're seeing. It's a complementary product that deepens relationships with existing customers.

And it comes from Alexander Markgraff with KeyBanc Capital Markets.

Just a couple for me. First, Matt, on the accelerated ACH offering that you mentioned going live later this year. Any considerations around the economics of that payment method versus what exists today for Remitly?

Yes, we're excited about launching Fast ACH later this year. The economics are favorable in the sense that we can offer a faster product without having to pay some of the card processing fees. So that's something we're excited to offer to our customers later this year.

Sorry to belabor the point on net adds. I'm trying to match seasonal opportunity to add customers with the comments around record new customers. What is the right metric to consider?

With the metrics we share, we understand the math being done there. We want to ensure clarity in the sense that customers are active in different periods of time, and the seasonality plays into effect. So in Q1, January and February are generally much lighter months than most months in the year, and March is when activity starts picking up. A significant portion of new customer acquisition came in the later part of Q1.

And it's from Andrew Bauch with Wells Fargo.

Looking at the yield trajectory that you're seeing, knowing we've been talking about the digital piece and the like. Can you help understand how to model this gross yield trajectory through the remainder of the year? Are you expecting a shift back into higher-yield corridors or looking at this incorrectly?

There's not necessarily an easy way to model that out because there are quite a few mix effects when you look at take rate. It depends on the average transaction price, which changes by corridor and is influenced by the digital trend. We generally look at this on an aggregate basis, and the best way to model going forward is to keep it within the existing range. There aren't any significant trends regarding take rate, outside of mix year-to-year.

It's been two or three quarters now with higher levels of marketing spend. I'm trying to understand when you ramp up investments in marketing, what those LTV curves look like. Should we expect more returns in customers in 2024?

Nothing fundamentally has changed in our marketing return profile, which remains strong and consistent. Our ratios of lifetime value to customer acquisition cost remain in a consistent range with payback periods under 12 months. We expect a seasonal growth and an increase in new customer acquisitions in Q2 versus Q1.

And it comes from Matthew O'Neill with FT Partners.

Most questions have been asked and answered, just curious, philosophically, around 5,000 corridors. Some competitors have a few multiples of that. Is that a target to achieve on a quarterly basis?

We expect to expand to that many corridors in the future. It's part of our DNA to be intentional about how we approach this business. Our initial focus was on the U.S.-Philippines corridor. We've built out 5,000 corridors, all of which have growth opportunities. So we will launch new corridors systematically to ensure we can fuel long-term growth.

If I could just squeeze in one more on marketing questions. Would you say you're still operating in a somewhat heightened marketing spend paradigm, or could this be a more structural shift to put more money towards marketing?

Not belaboring at all. Our data-driven approach to marketing is a competitive advantage. We're excited about the payback and record number of new customers. Given the cohort way our business works with seasonality, we're looking prospectively at QAUs and revenue growth, ultimately resulting in profit growth in the upcoming quarters.

That was the final question. I will now turn the call back to Matt Oppenheimer for closing remarks.

Thanks again, everyone, for the really thoughtful questions. As we always do at Remitly, I'd like to end the call by highlighting another one of our amazing customers, Remil. Remil sends money from the United Kingdom to his family in the Philippines. He was one of the many customers who shared their feedback with us last year, and Remil commented trustworthy, reliable, fast, and most of all, I feel safe. We want to thank Remil for placing his trust, which is ultimately what our product is all about in Remitly and for his recognition of the safety, reliability, and speed of our service. We want to thank all of you for joining us, and we appreciate your continued support. We are excited about the opportunities ahead, and we look forward to sharing our progress as we continue to execute on our vision of transforming lives with trusted financial services that transcend borders.

Thank you all for participating, and you may now disconnect.