Andrew Bauch: If I could just squeeze in a follow-up. You mentioned discipline around stock-based comp as a focus in 2024. If you could just provide a finer point on what that should look like for our models, would be very helpful for calibrating the model?
Hemanth Munipalli: Yeah. So on stock-based compensation we’ve been, one, just to step back here again, stock comp is an incentive comp, obviously, with our employees, and we believe in incentivizing our employees this way. So it remains an important incentive for us to drive our growth and our strategic priorities. We have been moderating the growth on stock-based comp. So pointing you back to Q4 was at a — the growth year-over-year was in line or a little bit lower than what we saw in Q3 of 2023. So we expect to remain actively focused on not just stock-based comp, but also in terms of shares that we issue, which would impact dilution, especially as we continue to grow our profits and reduce our losses, we do want to think about what that means in terms of EPS.
Andrew Bauch: Great. Thanks for taking the questions.
Operator: One moment for our next question. Our next question comes from Darrin Peller with Wolfe Research. Your line is open.
Darrin Peller: Hey, guys. Matt, I heard you talking earlier a bit about going deeper with the customer base, and I think we saw a website suggesting a new app. I think it was Remitly Circle, appearing to offer just a different range of money management services, alongside money transfer. So if there’s anything you can give us a little more. It reminds me of Passbook. I’m not sure if it’s similar. Any more on time being or what that actual reach could be and maybe geographies or what the plans really are around that would be great?
Matt Oppenheimer: Thanks, Darrin. Yeah. Great to hear from you. So, as I mentioned during the opening remarks, one of the things that is really important to understand is the amount of investments we’ve been making in our technology platform and taking it from a more integrated kind of or more monolith to something that is more modular in terms of APIs that then not only our remittance team can continue to deliver on in terms of greater developer efficiency improvements on the risk side in terms of privacy, security, etc., but it also creates a platform for our new product schemes to be able to test and iterate more effectively and quickly. And so I’m glad that you noticed Circle out there. I would view Circle as one of a few but very important and targeted areas that we think we can solve broader customer pain points when it comes to cross-border financial service’s needs.
And we’ll talk about them more publicly as they get to the point of scale that it makes sense to. But I’m glad you noticed it because it is indicative of the kind of testing, launching and various products that we’re very serious about adding to our customers and think we have the ability to do so.
Darrin Peller: That’s exciting to hear. And just maybe we could revisit quickly the strategy and your stated goals on profitability metrics, if you don’t mind, just both with and without stock comp over the next couple of years. I know you obviously have shown very strong success with your LTV, and obviously, customer adds are coming in strong as well, but, I mean, just a reminder of what your intentions are? Thanks, guys.
Hemanth Munipalli: Yeah. Good question, Darrin. I think one, we haven’t yet talked about what it means from a long-term perspective, but what’s important to recognize here is one, we’re really anchored around continued growth in the business and the opportunity that we have, which is obviously significant just given the size of the market and what we are today. So we’ll continue to make sure that we are able to drive that growth. On the topic of profitability, we’ve been on the path of what I’d say sustainably growing our profits, and we demonstrated that last year with every quarter being profitable, and we ended at $44 million of adjusted EBITDA profitability, so we plan to continue on that trajectory. And what you’re kind of seeing in our guidance, it’s reflecting and it’s significantly increasing EBITDA profitability from last year to this year.
And as we continue to focus on being more efficient and also being able to take some of those efficiencies and continue to fund our growth will be on that path for years to come.
Darrin Peller: Okay. Great. Thanks a lot, guys.
Operator: One moment for our next question. Our next question comes from David Scharf with Citizens JMP. Your line is open.
David Scharf: Yeah. Good afternoon, and thanks for taking my questions. Apologize if I heard this incorrectly, swapping in between calls, but did you mention that LTV, as you’re projecting it, has been increasing after the profile of the record new customer accounts that you added in the fourth quarter, should we be viewing LTV still on an upward trajectory?
Hemanth Munipalli: Yeah. So, just thanks, David, for the question. So when we think about LTV, we’re talking about revenue less the transaction expenses for a period of five years. And we’ll point you to a chart that we shared, which shows that we have that trajectory of revenue less expenses growing. And so that’s one thing that, just to kind of point you back. To that, we are increasing LTV from two dimensions. One is we’re seeing — important to recognize that we’re seeing higher transaction intensity from our customers. A lot of that is, again, sort of the digital distribution options, which is a good which we think is a good tailwind from being a digital player at scale, but also reducing transaction expenses for all of the types of remittance options that we have out there. So based on that, we see LTV remains strong, is actually improving based on these factors, and which also gives us increased confidence around marketing investments behind it.
David Scharf: Got it. So related to that, does the geographic mix of the business impact that transactional intensity? Just the revenue component of LTV. And the reason I ask, obviously, going back a few years, the company was much more heavily concentrated in the U.S. to India, U.S. to Philippines. And I think those demographic cohorts tend to have higher wages than maybe the industry on average, probably larger send amounts on average. Is there any downward pressure on revenue per active account over time as the geography becomes more diversified or is that just rounding your stuff?
Matt Oppenheimer: Yeah. Thanks, David. I can take that one. I think that the headline is that we have a pretty diversified portfolio at this point. And so while there are variables depending on the geography, it’s not that there’s a macro shift that is impacting, especially the LTV side of the equation. You might have, as an example, lower profit per transaction in a specific corridor, but you’d make up for it with active rates in terms of number of transactions that customers send. And we monitor that on a very de-average basis and we continue to see consistency, not a lot of changes over the past, several quarters on that front. And in addition to geography, you look at how funds are collected, how funds are dispersed, what the average transaction size is, that’ll also vary within a specific country or corridor, as an example.
And we feel very good about the trends that we’re seeing, including trends towards things like digital disbursement, which can actually improve the revenue less transaction expense, which is what the ultimate input is into LTV because the costs of dispersing funds are lower. And so overall trends remain stable. Excited about the direction from an LTV standpoint. And while you might see some regional or even within-region variances, we have a good, diversified portfolio at this point, and that continues to have that stability.
David Scharf: Great. Very helpful, Matt. Thanks so much.
Operator: One moment for our next question. Our next question comes from Marc Feldman with William Blair. Your line is open.
Marc Feldman: Hi, guys. Thanks for taking the question. It’s great to see the marketing investments resulting in the record number of new customer ads. And I also just appreciate the LTV retention number you gave. But is there a way to frame the ramp-up of LTV from these new customers that you acquired in Q4, I guess in all of 2023; as we look into 2024, I know you gave that 95% retention number for second year, but just the first year of growth, I guess?
Hemanth Munipalli: Yeah. Thanks, Marc for the question. So we would see, it’s generally a fairly — a relatively quick ramp from that point. I mean, obviously Q4 and when you think about Q4 is really, December is generally the sort of the high activity month given holidays. And we look at Q1, you generally have Jan and Feb being lower in terms of activity just across the board. And it’s not just a Remitly thing, but it’s an industry-wide remittance phenomenon. And so we’ll start seeing pickup of all of that in March. And so we do think that in a relatively short period of time, we should be able to see increased activity from the new customers that were acquired, and that model holds. And so there’s some seasonality in terms of when we see more customer activity than others. But generally speaking, as we progress through the year, Q2, Q3, and then Q4 generally is more of a seasonal high quarter from a remittance perspective.
Matt Oppenheimer: Yeah. And the only quick thing I’d add on that front is, I think that we shared again Slide 9 very intentionally as a new chart to kind of give you a sense of how resilient and durable our customer base is. And you can see that a lot of that from a cohort basis, even as you project out to 2024, is because of the predictability and resilience that we kind of go into ’24 with, given how we can kind of model out the existing cohorts. And then it’s about — our growth is then about how we continue to add new cohorts and new customers and build that top funnel of trust, while continuing to deliver a delightful and superb experience with our existing base, and that only continues to get better.
Marc Feldman: Great. Thanks for that. And then I guess one more, still early, but I guess any update on the efforts in the UAE and when can we start to see material contributions from the market? And then just on that, I guess what’s the typical, just remind us of the typical timeline for ramp in the new send market and how’s the UAE tracking against that? Thank you.
Matt Oppenheimer: Yeah. Thanks. Good question. We focus on the UAE because it’s a big market. And I would say that we continue to be excited and bullish and that it’s largely on track. What is important to recognize, going back to the 2% of a $1.8 trillion TAM and that we’ve launched, I think it’s over 3,000 corridors since our IPO, there’s a lot of opportunity to continue to grow in the markets that we’re in. And so I would view markets like the UAE as planting the seeds for future quarters and years of compounding growth with no shortage of options in the coming quarters for us to grow not only there, but in a lot of the markets that we’ve been in for the past several quarters or years. So really excited about the market opportunity and potential out there.
Marc Feldman: Great. Thanks for taking my questions.
Operator: Thank you. That concludes the question-and-answer session. At this time, I would like to turn the call back to Matt Oppenheimer for closing remarks.
Matt Oppenheimer: Great. Thanks so much and thanks everyone for the thoughtful questions. As we always do at Remitly, I’d like to end the call just by highlighting another one of our customers, Alexandra and before I go into her story, I just have to say that one of the unique aspects of this business is our incredible customers and their resilience, their tenacity, and the reason that they send money home being such a non-discretionary service. And that is something that makes Remitly unique, something that I am incredibly grateful for as CEO to get to serve our customers every day. And I know it’s something that motivates the Remitly team every single day. So, Alexandra is one of millions of customers that’s using our platform and she sends money from Spain to her family in Colombia.
And Alexandra was one of our many new customers we added last year and reflects the increasing diversity of our corridor portfolio. And Alexandra commented, amazing. It worked as it described, it was reliable and quick. I am very happy I tried it. We thank Alexandra for her loyalty to Remitly and her recognition of the reliability and speed of our service. Thanks everybody for joining us. Appreciate your support. We are excited about the opportunities ahead and look forward to sharing more of our progress in 2024.
Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.
