Remitly Global, Inc. (RELY) Earnings Call Transcript & Summary

All right. I think we can go. Terrific. Thanks, everybody, for joining here at the end of the day. My name is Tien-Tsin Huang. I cover the payments, IT services sector and really excited to have Remitly with us. We're going to do fireside chat, go through some questions I've gathered. And we'll take questions from the audience, also from the portal as well. So feel free to chime in there with -- from the webcast. But Matt, welcome. Thanks for being here.

Thanks for having me. Great to be here.

I think last time I had an interview with you, I think it was probably San Francisco, your private company?

Yes.

And here we are. So I thought you always do a great job, Matt, as, of course, Co-Founder and CEO of the company, talking about the mission of the company and the story of the founding. Would you mind doing that for us upfront?

Absolutely, yes. So our vision is to really improve and transform the lives of immigrants and their families by providing the most trusted financial services on the planet. That's what we're all about. I started the business just over 10 years ago. And most poignantly, the founding story is I was living in Nairobi, Kenya, and I saw how hard it was to send money internationally. And I saw how, quite frankly, more important it was for a lot of my Kenyan friends that received money to make sure that there was a better way of doing it. And M-Pesa was transforming domestic financial services. And certainly, there's a mobile component and mobile-first strategy that's been key since the founding of the business. But more broadly than Kenya, I've traveled to close to 100 countries throughout my life, and I've seen the impact that when we throw out numbers like $1.6 trillion in remittances that it makes in a lot of folks' lives, how underserved folks have been by some of the legacy remittance providers. And as the company has grown, if you go back to that vision, our vision has also grown to expand, to continue to disrupt the remittance business, but then also provide a wider range of financial services to our customers. And we'll talk about, I'm sure, the economy and other aspects, but it feels good to run a business that makes an impact. And it feels good to run a business that's a really critical service during -- regardless of the economic times.

Yes. And that's what I've always admired about you, and you've always been mission-driven in that way. So before we get into some of the numbers, I'm curious how has the company changed from private to public company, also pre-pandemic, post-pandemic? How would you characterize that?

Yes. I think that I'll start with the pre-pandemic versus post-pandemic, and then I can go public to private. I think that one of the things that we talked about during the pandemic is that remittances are always important, but they're especially important during a global pandemic. And as we headed into the pandemic, we saw an immediate shift that was happening to digital-first providers. Ultimately, our business comes down to trust, which we'll talk about. And there was an inflection point where more and more customers trusted remittances -- to remittances to be sent via digital device. So that happened immediately, and that was an inflection point that even after the pandemic, there's now word of mouth and other things that folks are trusting more and more remittances to be sent from a digital device. The other thing that we didn't know, quite frankly, going into the pandemic, was how resilient our customer base would be. We have a really diverse customer base, whether it's Indian Americans, Filipino Americans, Mexican Americans, but a lot of our customers were impacted as the pandemic unfolded and what we found was really inspiring quite frankly. Our customers are resilient. They're sending money back to family is not discretionary. It is critical. And the resilience of our customer base through the pandemic, which you've seen in our numbers, was inspiring, remarkable and makes me grateful to be able to run this business. And then public to private, we have raised close to $400 million in private capital. So we had always operated with, I think, a lot of rigor and a great investor base. Obviously, the public markets and the volatility has been the biggest change. But we have been, I think, pretty focused on our long-term vision and focused on continuing to grow and deliver results and build credibility with the public markets.

Yes. Perfect. So I still get this question a lot, Matt. Who are your target customers? You've got 3 million users. I wrote down, what, up 42% last quarter year-on-year. Who are they? What do they look like demographically?

Yes. It's a real range. So we send from 22 origination corridors in North America, so U.S., Canada, Europe and then a few APAC countries like Australia and Singapore. And then we send to over 100 received markets, primarily in Asia, Africa and Latin America. And within our customer base, it's very diverse. We talk a lot about how remittances are global, but customers are very much local. And so when you think about who our customers are, it could be everyone from a Philippine American that works in a local hospital as a nurse to a Mexican American that works in construction in the U.S. to a Kenyan living in the U.K. and having a range of professions. So really diverse amazing customer base, a customer base that traditionally has gone to a physical cash location to be able to send money back home. That's the way, believe it or not, the majority of remittances are still sent going to a physical location, giving cash. And what we provide is that customer to be able to use any digital device, but primarily our mobile app to link their bank account or to link their debit card and then to be able to instantly send money back to billions of bank accounts, hundreds of millions of mobile wallets, hundreds of thousands of cash pickup locations, even door-to-door delivery, which is popular in a couple of markets where a courier comes and delivers funds to the recipient's door. That's what we enable our customers to do. And those ways of receiving funds with the risk systems we built, the disbursement network that we've built are usually instant. So you can be sitting on your couch on a Friday night, your mom needs to buy groceries in the Philippines. You send money instantly. The risk systems, the disbursement network, they get a text message immediately, go pick up funds. And it's a really seamless trusted easy-to-use platform.

Great. So what service are you typically displacing when you're finding a new customer? How do they find Remitly, right? How do you -- and how sticky are they, right? Once they come on, that's the logical questions we always get.

Yes. Yes. We're usually displacing what I'll broadly define as like a legacy provider, and those could be large legacy remittance companies or they could be what is a big, big portion of the market are what we call country or corridor specific players. So if you send money back to the Philippines, you might know Banco de Oro or Bank of the Philippines. If you don't, you probably haven't heard of them. And that applies to most of the countries that we serve. Folks are shifting from those off-line providers to use us. And once we've built that trust, customers come back again and again and again. They have a recurring need. They're usually sending a part of their paycheck back home, and we measure that. We think about the business very much in terms of unit economics, what's the customer acquisition cost, what's the lifetime value. And you see that from a quantitative standpoint, 6x LTV to CAC ratios. You see 200% IRR is another stat that we've shared. But importantly, what that means is once we've built the trust, once we've delivered on that promise to customers and of which, because of the complexity of remittances, promises have often not been delivered, not because of good intent, but because of the operational complexity with the remittances. Once we deliver on that, customers come back to us again and again. And we window our lifetime value calculation at 5 years just because that we view as an industry standard. We have a lot of customers. We've been around 10 years that stay with us for much longer, given the recurring need and nature of sending money home.

How important is pricing to customer acquisition? And what is your overall pricing philosophy? And I know I've heard you talk about this before I asked it to Western Union the same question, right, with the U.N. wanting to get prices of remittances down below 3%. You're already there. So how does that inform your thinking if other peers are perhaps going to get more aggressive on price?

Yes. So when I started the business 10 years ago, I used to think that -- by the way, I see the exact same Apple watch as me. So we'll have to compare exercise notes later.

If we tend to wear this. It looks like I'm fit.

I love it. So when we talk about pricing, I used think 10 years ago that it was all about pricing and certainly providing a fair and transparent price is critical to build and maintain trust with customers. That is critical. But once -- what's happening at an industry level is you look at the World Bank, it's 6%, 7% is the industry average. That is very much influenced by every transaction size, which we'll talk about later. But at an industry level, that's 6% to 7%. If you look at the digital players and whether that's a legacy provider providing a digital solution or whether that's us as a digital first player, there's what I call a new equilibrium that's being formed. But you take a bunch of costs out of the system by not having that physical location where you have to collect funds. And if you look at our take rate, it's been in the 2% to 2.5% consistently for the last 8 quarters and what you see there is a lot of stability within that new equilibrium or new normal once you've taken cost out of the system. But once you're within that 2% to 2.5%, pricing is very far from a silver bullet because trust is paramount. If you put yourself in the shoes of our customers sending several hundred dollars of their hard earned money home, they're making, call it, really varies depending on the corridor. Let's take a customer who's making $30,000 a year providing their name, address, last 4 of social or tax ID, date of birth, and then giving us money to be delivered oftentimes hundreds or thousands of miles away back home, oftentimes to be picked up in cash, that is a high trust hurdle. And then you overlay the fact that whether it's issues with the disbursement network, whether it's issues with risk systems, which I can talk about in more detail, there's a lot of complexity that means that customers have had bad experiences or they know their friends who have had bad experiences where the transaction has been sidelined meaning put into a manual review, delayed funds. And because of that, trust is paramount once you're in that new equilibrium. And within that, customers care about speed, they care about reliability. They care about trust. And so I expect industry prices to come down, which is a very good thing. But I expect it to stay within that new equilibrium where we operate, which is a great thing for the world, but also has a lot of stability from a business standpoint.

Okay. Good. Now look, the trust piece is big. I get it. This is -- these are big dollar amounts in relation to earnings. So you can't mess that up. Average ticket size, you mentioned that, Matt. It does matter. And we get trapped into looking at take rates all the time, right, whether it's Xoom or Wise. So can you educate us on how to level set that?

Yes. So at an industry level, take rate is good. That's a good way of looking at the business. At a company level, it can be -- it's super important to understand the impact that average transaction size has on take rate. And what I mean by that is, what is take rate? It's the total fee and foreign exchange divided by the average transaction size. So if the average transaction size of like broadly defined, developed-to-developed is $1,500 compared to developed-to-developing, and I'm rounding, I'm not using like specific industry averages. But directionally, this is right. Let's call it, $1,500 versus a $250 average transaction size for developed-to-developing markets, then it's 6x the take rate, even though the revenue per transaction and the profit per transaction, which is ultimately the driver for LTV is more similar. The take rate will look like it's a lot less for an average transaction that's $1,500 versus $250. It's somewhat obvious when you walk through it. But to your point about the industry talking a lot about take rates, I think that nuance is lost frequently. And it's especially lost between the bank-to-bank segment, the segment that Wise is going after versus the developed-to-developing segment, which is who some of the legacy providers serve and who we serve. The average transaction size is lower there, meaning take rate is going to be higher.

Good. Thanks for going through that. So before we get into some more of the financials, let's talk about the network quickly. I know your corridor expansion has been moving really quickly. You've got a lot of cash pickup locations. I wrote down 400,000, 700 million wallets. So from here, where is the greatest expansion potential if you think about them in terms of levers? I know you're bigger competitors like a Western Union has a ton of corridors. So what do you prioritize?

Yes. We're in over 2,000 corridors now, and that's Country A to Country B, right, is how we define a corridor like U.S., Mexico would be a corridor or Canada, Mexico would be a corridor. So that's the definition of corridors. We're in over 2,000 now. We've added several hundred just in the last few quarters. And the way to think about our opportunity is I think a lot of companies have gone really broad, really fast. And what they miss is that remittances are global, but customers are very much local. And so we have this very methodological, what we call corridor expansion playbook. And the corridors that we launched 1 year or 2 ago, those are the ones that are now actually driving more revenue in addition to countries we've been in for 8 or 10 years now. And the countries that we're rolling out and launching now are planting the seeds for revenue in the quarters and years to come. The exciting thing is you can look at the World Bank data and you can look at a map where we currently offer our remittance services. There's a lot of both regions and countries that we haven't even launched yet, and we'll do that in this very methodological way, which makes us more confident in our not just short-term growth but long-term growth in being able to continue to expand in new geographies.

Okay. No, good. I know there's a lot of avenues and growth engines at the company. Let's talk about ARPU. Let's talk about ARPU. So I think ARPU really strong last year. Saw a little bit of a sequential decline in the first quarter. But just generally speaking, when you prioritize other KPIs, how important is ARPU and how do you see that trending short, mid, long term?

Yes. And on the growth vectors, since you touched on that, and then I'll talk about ARPU. I think it's important to distill the kind of 4 areas where we can continue to not only grow for the quarters to come, but years to come. New customer acquisition at the right unit economics. 6x LTV to CAC that I mentioned 200% IRR. That's number one. Number two, new geographies, we covered that. Number three is as a digital-first player with scale, we can continue to invest in the remittance experience to continue to build that piece of mind and trust in an unparalleled way. And then number 4 is new products and services, which we may get to later. But really clear growth vectors and also on different timelines that give us a lot of opportunity for ample growth in the years to come, especially when the context that we're 1% of the TAM, 3% of the SAM and then even more of an opportunity as we expand that TAM by going to broader financial services. So that actually does tie to ARPU. I think the strategic level on ARPU in the medium to long term is broader financial services for our customers. I think that when you look at ARPU on a quarterly basis and historically, we did see some increase and then a more modest increase in Q1. But the component that is important to understand there is it's also impacted by mix shift. And by mix shift, it also counterintuitively, to some extent. If we add more customers at the end of this -- so if we're adding new customers, which is a leading indicator of future growth in the quarters to come, but you add more of those customers towards the end of the quarter. That's going to bring down ARPU because those customers just have less time to fully mature and transact in that quarter. And so there's some mix shift there. I expect stability on ARPU when it comes to the core remittance area, maybe some marginal upside. And then the biggest unlock there is as we think about unlocking broader financial services for our customers.

Yes. So let's talk about that. And you've -- I know we talked about this even dating back to when the company was private, P2P, domestic P2P, you're in cross-border P2P, but we've seen other companies leverage that to own the trust of the customer and then cross-sell more financial services, more bank-like services, a lot of famous companies about that. Cash App, Venmo, PayPal, et cetera. So Passbook is your, I call it, neobank or debit card equivalent to promote it. So where are we with that?

Yes. Well, the first thing, I think, since you brought up a lot of the kind of what I'll define as more mass market neobanks is that, that segment of neobanking and mass market is, I think, has a lot of competition is more crowded. But when you look at banks -- neobanks, let alone banks in general, that are designed for immigrants, the 250 million immigrants that live and work outside the country they're born, that is where we believe there's an opportunity to build differentiated products and services. And where we given the data that we have, given the trust that we have with our customers, given the customer understanding, we have the ability to really serve that segment in a differentiated way. And so that's our focus. So Passbook is a bank account specifically designed for immigrants, whether that's signing up for the core like product and bank account that's designed for a customer that's not a naturalized citizen, collecting different information, but still doing all of the KYC processes appropriately, whether that is thinking about language localization for the specific customers that we're serving as well as a range of features. That is a longer build to build out that DDA but also foundational when you think about the other financial services that we can provide our customers in addition to that core banking product. And so that is where we're on in that journey. We've built some of the foundation with the DDA account. There's a clear business model there with interchange, but also it gives us the foundation to start thinking about other financial services pain points that we can solve for immigrants. We haven't announced those other products yet, but I think that you can imagine the other pain points outside of just getting a bank account that works for immigrants, other pain points that moving to a new country our customers might face where we might be able to have the data, the analytics, the customer understanding to be able to help them with it. So we're excited. We've been clear, don't expect material revenue from new products this year, but it is something that's very core to our vision, and I think that we have a unique opportunity to potentially solve.

So just to close out that, is it going to be more regional in terms of you testing this, Matt, in certain spaces and maybe trying to get density there and then learn and grow? Or do you expect something broader than that?

I think given how diverse our customers are, I do think that similar to how we built the remittance business where we started -- we've been around 10 years. First 2 years, all we did was focus on remittances from the U.S. to the Philippines. And I do think we'll take a similar approach to broader financial services and then be able to scale up from a position of strength.

Okay. Makes sense. Let's talk about Remitly for Developers. I think as we did research on the company, the one thing we learned was that developers really like working with Remitly. Whether it was a bank or wallets or fintechs, you guys were very quick to work with them to stand something up. And so having said that, I know crypto was a big early sort of area for you to work with some certain developers. I'm curious where you are now with that? With crypto, I know a lot has changed and asset values have come down, et cetera, but update us on the crypto thinking, if you don't mind.

Yes. Yes, happy to talk about both crypto and Remitly for Developers. So maybe I'll start with RFD since you started there. So if you think about expansion beyond remittances, there's broader financial services, which we talked about for consumers, and then there is leveraging our infrastructure for more of an offering to other businesses. And what RFD is, is it offers other businesses an API and the ability to disperse funds via the billions of bank accounts, hundreds of millions of mobile wallets, hundreds of thousands of cash pickup locations and door-to-door delivery. And the 2 companies that we work with right now are Novi and Coinbase. So they've been in the crypto space. What excites me about the RFD space broadly, which we believe is a TAM expander as well as a great opportunity in the 2 initial partnerships to stay close to and learn from what is happening in the crypto space, which I think -- we can talk about crypto separately here in a minute. But the TAM expansion is why we believe that's a big opportunity. And I think that if I look at the pipeline, it's much broader than crypto. It's companies that have a need to disperse funds in emerging markets. And there's a wide range of companies that have that need, whether their customers or businesses, individuals is also a wide range. So excited about the pipeline there. More to come. And I think the first 2 partnerships in the crypto space have taught us a couple of things. One, we have a really valid good offering that beats out some of the competition that also has this offering in terms of enabling others to disperse the other network. And then the second thing is it's very -- while I'm very personally bullish on certain aspects of crypto, blockchain, stable coin, CBC, we can talk about a lot of those things. I think that it's a very specific niche use case that is very, very early days as it pertains to remittances, and we aren't seeing that as a disruptor. We're seeing that as something that, again, staying very close to the space. Folks need to be able to use our service to be able to get money back home.

Yes. So just to go back to the TAM expansion term that you're applying here, Matt, we totally agree. But how do you know you're not feeding the beast that they're leveraging your network and owning the retail side of the equation and potentially collapsing pricing on the retail side, right? That's a common comeback question. I understand it. It does feel like it's very, very far away. But how do you balance or protect yourself from that?

Yes. Yes. I think that if you look at some of the examples within the crypto space, what they actually are, are not like a remittance service per se. What they are, are a wallet in the country. So like Coinbase in Mexico. If you have a Coinbase wallet in that country, then to be able to get funds out to be able to use them in cash, use those funds in cash, which is how commerce is done largely in Mexico then that network is really valuable, and that's what we can offer as part of the ecosystem. So when I say TAM expander, it could be wallets in emerging markets for global companies that need to do that funds disbursement. And when it comes to the expertise of remittances, that's something that we believe we are very good at that applies to whether that is crypto-to-crypto, fiat-to-crypto or fiat-to-fiat. That is a core competency of ours. And I think that, that's something that can apply as the world evolves. I think there's a lot of questions about crypto will evolve. But as it evolves, again, what we're good at is getting money in the hands of customers the way that they need it, going between one currency and another and that applies to crypto or fiat depending on how things evolve.

Yes. Like remittance is hard, compliance is hard and it's hard to put into words, but we definitely appreciate that. I learned that over the time. So let me -- we have 10 minutes. Happy to take questions at this point. I've got some of the profitability questions I wanted to get through, but I want to give people a chance to ask questions and check the portal. Use the mic, if you don't mind. Thanks.

Keeping the business is very competitive. What is the biggest advantage you said, corridors, you have 2,000 corridors right? Do you think that is the biggest advantage you have got against your competition?

Yes. I think that -- it's interesting because I think that there are a lot of competitors in remittances, but there are very few digital-first competitors at scale. And what that means -- and there are a few legacy players. I won't go through all the names, but you can kind of count them on plus or minus one hand when you think of both digital-first players as well as legacy players at scale. And the reason that matters from a customer experience standpoint, from a differentiation perspective is because with scale, you can invest more in your risk systems because you have more data and analytics as well as the machine learning and other team that we have to manage, delineating between good and bad customers, which is really complex from a compliance and fraud prevention standpoint, really complex. And so that's an area where scale matters. Scale matters when you talk about our disbursement network and being able to do 100-plus integrations in emerging markets such that when a customer is sending money to their loved one and they need to change the recipient's name or that bank in India or Mexico goes down that there is visibility to be able to reroute those funds or if the recipient bank needs additional information from a compliance or fraud standpoint, there's a direct relationship there. All these things create friction in the system, and it's only with scale size that you have the ability to go deeper from a network perspective, that you have the ability to have more data and analytics that are fed into those machine learning systems that you have the capital ability and expertise, especially as a digital-first player to communicate all of this complexity in a very simple and easy-to-use way for the consumer. And so I think it is a very crowded space, but I think there's increasingly a delineation between what I would call subscale players and especially subscale legacy players to where that gets confused as hypercompetitive. When in reality, in terms of reliable ways to send money home that are trusted, it's a handful of companies and I think there'll be consolidation amongst those handful of companies with us being a both digital-first player and a player that increasingly has scale to build unparalleled trust and peace of mind with customers.

[indiscernible] Between the countries, do you do dedicated drills? These are dedicated drills, corridors are dedicated drills, right?

Yes. We'll use at times what we call aggregators to kind of get a sense of where there's volume in some of the smaller corridors. But then with our scale size expertise, we'll go deeper and deeper to that last mile to provide the reliability and peace of mind that I mentioned. So sometimes aggregators, but more direct given the strategy that I just mentioned.

Going back to RFD, without giving names, could you give us some examples of who might be interested in the solution? Like would it be large FIs, neobanks, e-commerce players? And then maybe walk us through the unit economics of someone using RFD versus your historical traditional business?

Yes. Yes. It could be anyone from a large FI like you said, a large technology company, could be a fundraising platform. It could be payroll providers. There's a wide range. So when you get a sense of those when I say TAM expanders, those are the kind of TAM expanders that we think that there's the opportunity for. And the unit economics are getting a fear or foreign exchange per transaction but basically getting revenue per transaction of funds dispersed, which is great. And the other thing it does is going back to the question earlier around differentiation and scale. The more we have going through our rails, guess what else we can do. We have more leverage with our partners, and we have more ability to invest further and further at that last mile. So it's synergistic to the remittance business and that creates more defensibility in that we're reinventing and rebuilding kind of global payment rails.

Yes. Going back to the competitive question that was asked earlier. You talk about digital-first being in the scaled digital-first operator. I'm curious there's also legacy operators that are doing digital payments as well that are also scaled. So yes, I'd just be curious to explain the differences between, say, a scaled legacy operator that's doing digital and your digital-first offering.

Yes. And I break those 2 out because I think that if you have -- if you're a legacy provider with scale, you're certainly in a better position, in my view, than a legacy provider without scale. But I think in terms of legacy provider with scale versus us, I work for first, I'll say strategically, I worked for Barclays Bank before I started the business, and it's just hard to build off like existing rails, whether that's all of the data capture that you need to do to feed into the machine learning models, whether that's how the integrations are done with disbursement partners. Certainly, if you go through the core user experience and flow in terms of building it in a next-generation way, those things, I think, as a digital first provider, the agility, customer centricity that we have is a strategic advantage. But that being said, the scale players have built decently sized digital businesses and I think they're in a much better position in an incredibly fragmented market, which is also important to keep in mind, like the largest player has 15-plus percent. The second largest has 5%. Everybody else is sub-5%. So it's a really -- going back to the question earlier around lots of competition, it's crowded in terms of number of players. But if you have scale, you're in a better spot as the market consolidates some. And then if you have scale in digital first, I think that's a good place to be.

[indiscernible] Do you use the distribution networks of any of the legacy players to distribute your funds?

Yes. We use one. We work with [ Dandelion ], which is [ Rio's ] product. And so as I mentioned, that's helpful for us to be able to see some of the longer tail corridors, and we appreciate the partnership. It's 1 of over 100 disbursement partnerships that we work with around the globe.

So you talked about the take rate between 2% to 2.5%. So call that I'm remitting $100 to Philippines. So you take $2.50. Could you disaggregate where does the $2.50 go to? So how much you capture, how much you spend on R&D spend, compliance on anti-money laundering and how much you give it to the disbursement network in Philippines, and all the other links in the middle? So if you could help us understand how the economics work along the value chain, that would be great.

Yes. Yes, complex question and answer simply. What I'll say at a high level is the 2 biggest components of transaction expense are onboarding funds, getting funds from bank account, debit card and then dispersing funds. And then under transaction expense, of which if you look at our transaction margin, it's healthy and improving actually, given some of the scale advantages that I mentioned. Below the line, yes, there's -- as a digital player, we are building out a lot of our compliance systems, building out a lot of our core products. We are marketing to new customers at solid unit economics that I mentioned. We spent -- and just for context on that, cutting down to the bottom line, we spent 12.1 -- our adjusted EBITDA was $12.1 million in Q1. We spent $40 million on really high 6x LTV to CAC, 200-plus percent IRR, marketing for primarily new customers. But if you put that in context, $40 million we spent on marketing for new customers, $12.1 million negative in adjusted EBITDA. You can get a sense of the inherent profitability of the business already, even though we're investing in growth and the rest of the fixed OpEx is team, but its team in a digital-first world that's automating and building a lot of systems as opposed to a legacy player that might have to invest a lot more in the physical team members that are going and monitoring agents and doing other things that just there's an inherent manual component. Ours is going to be more automated and building for the future.

You actually just talked about contribution margin basis. For example, I'm already your customer. So -- and so there is no CAC there. and you don't need to do R&D just for me. So just for me, you take $2.50 and who gets that? And which party gets how much?

Yes. The best way to think about it on an individual basis is from a unit economic standpoint. So when we're 6x, I don't know how to quantify it from a $2.50 standpoint analogy. But if we're -- if we pay $1 to acquire a new customer then we're getting within a -- within just the first 5 years, $6 in transaction profit -- cumulative transaction profit from that customer. And so some of the variable cost and things I mentioned would translate as well into the unit economics, but we have a lot of rigor around that. And that's why we feel really good about the inherent profitability of our business and the sustainability of it when you think about the relationship and the long-term relationship we have with our customers.

Yes. Let's talk about that really quickly before time is out. Just profitability. I know the current climate is asking for that this balance of growth and showing profits. You've given some answers around that, has your timing on that changed at all, Matt?

Yes. Yes. I think that it's certainly obviously a focus right now in the market. We believe that long term, it's 20% revenue growth at 20% adjusted EBITDA margins and that remains unchanged. I think that we've always had a lot of rigor around the 2 broad investments we make. One is marketing, and I mentioned kind of the math there and the inherent profitability. And we feel very good about that. Otherwise, we would dial that back, right, if we didn't have a lot of confidence. We are continuing to test elasticity to make sure that we're getting even stronger from a return standpoint. And then from a head count standpoint, I think that we also have a lot of rigor and discipline around the headcount investments that we make. So certainly aware of market dynamics. Certainly, the growth versus profitability in the short term from a public market standpoint, feels like it potentially has shifted. But what we believe is we need to make the right disciplined investments to continue to accomplish the long-term vision that we're trying to accomplish.

You've raised a lot of capital, right? So there's a lot of capital available. You mentioned consolidation. I don't know if it's part of the playbook or not, Matt, and we'll let you go, if you could answer the consolidation use of capital piece? And then just a quick thought on what you see with the consumer today? I think you mentioned is resilience. But with inflation, of course, higher wages, those things don't necessarily always balance out perfectly. Quick thoughts on that. And then we're out of time.

Yes. Very quick thoughts on that is resilience in terms of our customer base and good data points from previous economic cycles around how resilient remittances have been, might have some regional fluctuations. If you look at, obviously, folks who are exposed to Russia, if you look at folks who in the Middle East, when oil prices have changed over time, there have been regional impacts. In the markets we serve, it's been pretty resilient. And there's one quote that a guy on our team who's been in the industry for 20-plus years said, and he's been with a lot of companies, he said, he's learned not to bet against our customers. And that's because, especially in the markets we serve, if COVID hits and someone is working in a restaurant and they still need to get money back to mom, they're going to shift and become a delivery driver. And there's an inspiring component of who our customers are, how hard they work to send money back to their families. We watch the metrics like a hawk, as you can guess. During previous recessions, you've seen average transaction size decrease marginally. And in that instance, we still feel very good about the business because you still get the fee revenue and then you get almost all of the foreign exchange revenue. So it has a less material impact from a business standpoint. And importantly, since we're bringing industry prices down overall, we don't feel like we're gouging our customers. We feel like during economic hard times, remittances are always important. They're incredibly important during economic hard times, especially in emerging markets, especially with some of the food shortages and other things that may play out. And we feel really good about running a business that makes an impact. And as part of that, I think there's more resiliency than like a subscription business that you can kind of do without. Our customers know their families can't do without these funds.

Yes. [indiscernible] I think every year, except for 1 since World War II, migration has been positive. So migrants are pretty resilient. Fine. Well, quickly on the capital, and we'll let you go.

Yes. Capital, I mean, we have, I think, been pretty disciplined around capital deployment. We're very lucky to have a strong balance sheet. We'll continue to execute on organic. And then we also, I think, look at our strategy and are open to inorganic opportunities that accelerate our long-term vision.

Matt, time went by very, very quickly. Sorry, we went a little bit over, but I appreciate you being here.

Thank you very much.

Thank you, Matt.