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

Good day, and thank you for standing by. Welcome to the Remitly Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, David Beckel, Head of Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us for Remitly's Second Quarter 2026 Earnings Call. Joining me on the call today are Sebastian Gunningham, Chief Executive Officer of Remitly; and Vikas Mehta, Chief Financial Officer. Results and additional management commentary are available in the 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 the 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 the earnings release and SEC filings for more information regarding the risk factors that may affect 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 non-GAAP financial measures to the most directly comparable GAAP metric, please see the earnings press release and the appendix to the earnings presentation, which are available on the IR section of our website. Now I will turn the call over to Sebastian to begin.

Thank you for joining our second quarter earnings call. My first 6 months as CEO have been intense, and they've confirmed something I already knew. Remitly matters deeply to its customers. This quarter's results prove it. Record revenue, record adjusted EBITDA, both above the high end of guidance again. We also achieved an important milestone for the company, over 10 million quarterly active users aided by record new customer additions. That's a direct reflection of the trust and confidence customers place in Remitly and our team's ability to execute. This quarter's strong results reflect 3 enduring attributes of our business. First, a strategy that works, providing affordable, fast and trusted money movement for a wide range of global customers. Second, a competitive position that is strong and defensible. We continue to gain share and the advantages of lower cost, network breadth and operating scales are compounding. And third, a cost discipline that is structural. The operating leverage in this business is real, and AI is driving genuine productivity gains, which can be redeployed to invest in growth, strengthening our confidence in the top line while we continue to expand adjusted EBITDA margins. Today, I will provide an update on my operating philosophy, discuss our progress across our core business and growth accelerators and explain how AI has been shaping the economics of our business model and share our latest view on capital allocation. When I joined, I was clear about how I wanted this organization to work. Smaller teams, clearer ownership, customer-first design, AI embedded everywhere, speed as the default. This quarter, we kept building towards that. The result is a flatter, faster-moving company. Product teams are being consolidated into fewer locations to take advantage of faster speeds to design build and launch features. Fewer layers mean [ fairer ] ownership and faster decisions. Faster decisions mean more products and more products mean more revenue. And through this rapid evolution, our culture has held. Our team continues to obsess over building the most affordable, fastest and most trusted way to move money. They understand every transaction matters to a real family, and I'm proud to confirm what I see every day. Everybody at Remitly cares deeply about our customer-focused mission. Moving on to an update on our business. Last quarter, I introduced a framework for how we think about our opportunities. Core senders, high-value senders, business senders and receivers against 4 offerings, which are send, borrow, spend and save. Everything outside our core send, we call growth accelerators. This quarter, we shipped against all these boxes. As we broaden our offerings beyond remittances, we build a powerful flywheel, driving better loyalty, higher volumes and more diversified revenue. This quarter's results are evidence that the flywheel is turning. I'll now cover key customer and product updates across core send and our growth accelerators. Our global pay-in and payout network is our strongest competitive advantage. This quarter, we expanded our network on the dimensions customers care about most, reach, speed and reliability. We added 5 countries, New Zealand, Niger, Mali, Angola and Botswana, bringing the total received geographies to 179. 32 of these countries are now send and receive enabled. Speed and reliability matter to our customers and are important drivers of retention. This quarter, new real-time pay-in rails, FedNow and Real-Time Payments in the U.S. improved our pay-in funding speeds. And in the second quarter, nearly 70% of Remitly's global funded transfers were delivered in under 20 seconds, an all-time high. Further, payments and customer onboarding improvements drove record pay-in acceptance and record low defect rates, reinforcing the basics that drive customer trust in the Remitly platform. Last month, we announced our participation in Open USD, a stablecoin consortium as a founding member. This new stablecoin has the potential to cut pay and settlement times by up to 1 day and lets us share in stablecoin wallet economics. Since our last earnings call, we strengthened our regulatory foundation across 3 important geographies. We received the stored value facilities license from the Central Bank in the UAE, an electronic money institution license in the U.K. and an extension of our EU payments institution license. These licenses open the door to new products designed specifically for customers in these regions. Each of our growth accelerator gained important traction this quarter. Our approach to investing in growth is deliberate. We start small and scale only when we see product market fit and a clear return. Vikas will cover the financials. I will cover the operating highlights. High-value senders are those who send $5,000 or more in a single transaction, often for property investments or larger transfers to family. For them, reliability matters most and the economics of earning their loyalties are strong. In Q2, we lowered friction across a number of dimensions for these customers and added bank wires as a funding option. And in Latin America, a key growth region for this customer category, we raised send limits and eliminated unnecessary customer actions. As a result, high-value send volume more than doubled in the U.S.-Mexico corridor. Remitly business grew strongly again this quarter with sequential revenue and volume growth both accelerating quarter-over-quarter. New features like bulk send and the addition of 23 new countries in the European Union are helping broaden our customer base. More than 80% of customers added to the business platform this quarter are new to Remitly and usage is sticky with the average business customer sending money 10 times a quarter. This quarter, we grew the receiver product from 6 to 130 countries. It's still early, but we're optimistic about its potential to drive send revenue and eventually spend and save. The bet with receivers is simple: build direct relationships with receivers and senders will follow. In countries where stable currencies and dependable financial services are scarce, we think we can serve receivers better than anyone. We recently launched a global stablecoin wallet [ and with ] debit card, starting our rollout in Latin America, a first-of-its-kind offering, letting receivers get paid, hold and spend in USDC. Longer term, we want to be a big part of our receivers' financial lives, not just where one transaction lands. This is the first step. Last week, we launched the Remitly Global Card, an all-in-one product for our customers to borrow, to spend and to save as easily as they can send money home. The Remitly Global Card is the next step in our journey from a remittance company to a broader suite of products our customers need and want. The Remitly Global Card combines one-of-a-kind features, including our best remittances prices, faster and lower fee sends, no fee everyday spending, a bank account for everyone, the ability to hold and move money in fiat currency or USDC, instant transfers between Remitly Global cardholders, no foreign transaction fees, direct deposit, global ATM access and a line of credit to the Remitly Global Card membership plan, among other valuable new features for our global customers. The launch of this card marks an important milestone for our company. For millions of people, banking wasn't built for them. This card is. With the Remitly Global Card, we are giving communities who live across borders, frictionless access to borrowing, spending, saving and sending. No paperwork, no bank branch, no waiting. All card members get default access to the lowest cost, fastest remittance options on Remitly. Our customers shouldn't have to shop for the best rate every time they send money home. The Remitly Global card allows us to more fully address the financial needs of tens of millions of customers who have sent or received money via Remitly. And our intent is to put the Remitly Global card in the hands of each and every Remitly customer over time. In the coming quarters, we plan to expand the Remitly Global card to additional countries, enabling seamless direct payouts for global workers and broader multicurrency holding capabilities for consumers and businesses worldwide. Finally, an update on AI. There are 3 ways AI benefits Remitly: speed, trust, cost. Speed, we build and ship faster; trust, we deliver a better, more personal experience and cost, we run leaner. This quarter, all 3 move forward. Speed and trust gains are starting to show up in the top line through faster launches and a better customer experience. Cost remains the clearest AI win so far. AI-driven productivity has allowed us to hold headcount below plan as I reoriented the company towards speed and tested our growth bets. I ask every team the same question. Show me the number that proves your function is more self-driving than it was 1 quarter ago. The answers are getting better. Before I hand the call to Vikas, I want to say a word on capital allocation. This quarter, we generated $130 million in free cash flow. Today, this management team is balancing 2 things: reinvesting in profitable growth and executing share buybacks within the limits set by our Board. We believe this is the right plan, and we'll continue to update our shareholders as our thinking evolves. Let me close with this. We delivered an excellent quarter. We're gaining ground with customers in geographies that matter. We're doing it more efficiently than ever. Our products are working for customers. I'm optimistic, not because of our forecast, but because of what I see in the business every day. Thank you.

Thank you, Sebastian, and good afternoon, everyone. We delivered another excellent quarter of profitable growth and strong free cash flow, reflecting solid execution and a rigorous attention to cost discipline. Second quarter revenue was $495 million, $11 million above the midpoint of our guidance and up 20% year-over-year. Adjusted EBITDA was $115 million, $28 million above the midpoint of our guidance at 23% margin. Let me share an overview of our second quarter results and then provide our outlook for the third quarter of 2026 and our updated guidance for the full year. Strong top line results this quarter reflected momentum in core send and the continued scaling of our growth accelerators. Revenue outperformance this quarter was driven by a number of factors. Regulatory changes in the United States continued to support a shift towards digital remittances, driving another quarter of record new customers acquired. And Mother's Day weekend volumes strongly exceeded expectations. As noted last quarter, the pacing of Q2 growth relative to Q1 was due to a shift in the timing of Ramadan and Easter to earlier in the year. Unpacking revenue growth drivers for Q2, send volume grew 27% to $23.5 billion. Send volume per active customer reached a record $2,300, up 6% year-over-year, driven by growth in high-value senders and business customers as well as higher average transaction sizes among core senders. Quarterly active customers grew 20% year-over-year to 10.2 million. This was our first quarter above 10 million QAUs, an important milestone, which validates the strength and durability of our business model. Quarterly active customer growth remained strong due to effectiveness of our Skip the Line campaign, which targets customers seeking alternatives to cash-based remittance methods. Our take rate this quarter was 2.11%. Now let me dive deeper into our revenue performance from a geographic and new product perspective. From a send perspective, U.S. revenue grew 24%, reflecting continued share gains in key geographies. Rest of the world revenue grew 18% year-over-year. On the receive side, revenue from transactions to regions outside of India, the Philippines and Mexico once again grew faster than overall revenue growth and comprised over half of our revenue mix. I will now discuss the performance of our growth accelerators. As a reminder, growth accelerators include all customer categories and offerings outside of core send. Our growth accelerators continue to gain traction and scale and are well on track to comprise around 5% of total revenue in 2026 and exceed 10% of total revenue by 2028. Let me take a few minutes to provide more detail on the performance of each of our primary growth accelerators. Let me start with high-value senders. High-value sender volume grew 37% year-over-year, a 70 basis point increase in mix year-over-year. We achieved a number of milestones with high-value senders this quarter, including our first transaction of $300,000 and our first customer to spend more than $1 million in a single quarter. This quarter, we also expanded our customers can fund transfers by adding bank wires. Customers can now wire funds directly to Remitly, which we then deliver instantly through our global network, avoiding the cost and delays of traditional international wire. This gives more customers, particularly high-value senders, a flexible way to fund transactions and is already resonating. Customers using wires send nearly 3x more per transaction. This quarter, high-value sender volume growth was softer in June due to fluctuations in the Indian rupee relative to primary send currencies as well as short-term foreign currency mobilization measures announced by the Reserve Bank of India. We expect [ sends ] affecting Indian corridors to normalize over the course of the year. Further, we have a robust pipeline of high-value [ standard ] product enhancements. And in the second half of the year, we are expanding our marketing and targeting efforts for this important customer category. Now moving on to Remitly Business. Remitly business performance continues to exceed our expectations. We ended Q2 with over 25,000 Remitly business users and saw a sequential acceleration in quarter-over-quarter growth for both volume and revenue. Growth was supported by the continued reduction in friction associated with onboarding and transaction flows. Shifting to receivers. Our receiver offering generated revenue for the first time this quarter, an important inflection point for this business. The receiver product allows us to unlock a direct relationship with more than 30 million receivers on our platform, creating a new flywheel at little to no marketing cost. Finally, our fourth growth accelerator, spend, save and borrow. We are excited to share an important milestone, the launch of the Remitly Global Card. With this offering, card members can send, spend, save and get paid money from the same account. The Remitly Global Card is an important strategic offering and enabler of revenue diversification as we extend the value of the Remitly platform further into our customers' financial lives. The Remitly Global Card comes with no monthly fees or minimums. Customers can further upgrade to our membership plan, which for $9.99 per month contains valuable benefits, including access to an open-end line of credit that customers can use to remit money home before payday and pay back over time. We plan to evolve our liquidity offerings, which more than doubled year-over-year to a card-focused format over time. The newer card plan format is showing strong early customer uptake with response and conversion rates exceeding prior benchmarks. Lines of credit associated with the Remitly Global Card are funded by a third-party bank partner. As a result, we expect receivables associated with our liquidity products to reduce over time. Turning to our focus on driving profitable growth on Slide 13. This quarter, we are replacing the term revenue less transaction expense, an abbreviation RLTE, with transaction margin, which we believe is a more intuitive description of this metric. Transaction margin is calculated in the same manner as the measure we previously referred to as revenue less transaction expense in prior periods. Transaction margin dollars grew 25% to $334 million, outpacing revenue growth. Transaction margin dollar growth reflects strong customer activity as well as improved partner economics, [ routing ] optimization and economies of scale. Transaction margins were 67%, improving 235 basis points year-over-year. Transaction expenses this quarter were $161 million and as a percentage of revenue were 33%. Excluding provisions for transaction losses, other transaction expenses were $137 million, improving 51 basis points year-over-year as a percentage of revenue. This reflects improved network economics as well as continued shift in mix towards digital receive volume. We continue to see early benefits from the use of stablecoins in our treasury settlement operations, but the impact remains modest in absolute terms. Provision for transaction losses was $24.5 million or 10.4 basis points as a percentage of [ spend ] volume. This was better than expected as we continue to benefit from efficiencies afforded by the AI-driven fraud prevention and detection model deployed late last year. With that, let me walk you through the specific non-GAAP expense categories. Marketing investments remain disciplined and growth focused. We spent $96.5 million on marketing in Q2, up 20.9% year-over-year. As a percentage of revenue, marketing expense was 19.5%, roughly in line with prior year levels. Marketing spend per active customer was $9.46, up 0.9% year-over-year and in line with our expectations. Marketing consists primarily of advertising and promotions. This quarter's notable brand campaigns included the expansion of our Skip the Line campaign to new U.S. cities, a World Cup promotion featuring Cristo Fernández of Ted Lasso fame and additional marketing investment in the UAE. Promotions, including those in contra revenues grew 35% year-over-year, reflecting a deliberate focus on driving higher retention and win back among our back book of customers. Our LTV to CAC ratio was about 6x, while our payback period remained under 12 months. Continued efficiencies reflect growth in customer acquisition through unpaid channels and word of mouth. As a reminder, our marketing investments drive returns for many years beyond initial investments due to our growing base of repeat users. Customer support and operations expense was $26.2 million and as a percentage of revenue was 5.3%, improving 68 basis points year-over-year and continuing a multiyear trend of steady operating leverage. Technology and development expense was $55.5 million and as a percentage of revenue was 11.2%, improving 175 basis points year-over-year and reflecting the benefits of embedding Agentic AI into our engineering and product teams. Despite a modest increase in AI-related spend, the benefits of AI-related labor productivity have outweighed the direct AI spend, a trend we expect will continue. G&A expense was $41 million, declining 11% year-over-year, our first year-over-year decline in G&A ever as a public company. We delivered significant leverage this quarter, 295 basis points as a percentage of revenue year-over-year, reflecting lower-than-expected hiring as we evaluate business priorities, along with a continued rigorous focus on operating discipline. Strong revenue growth, combined with operating leverage and cost discipline led to a record level of adjusted EBITDA of $115 million. Adjusted EBITDA outperformance was driven by higher-than-expected revenue, lower-than-expected transaction losses and lower-than-expected expenses due to the ongoing assessment of business initiatives following Sebastian's arrival. Net income was $206 million, which included $140.6 million release of tax valuation allowance. Our North Star is growth in free cash flow while managing dilution, and Q2 demonstrated continued progress on both counts. Free cash flow nearly tripled year-over-year to over $130 million. This was aided by strong operating leverage, favorable working capital as well as lower property and equipment spending as we [ lap ] the build-out of our new headquarters from last year. Outstanding shares were $212 million, up 3% year-over-year, reflecting our disciplined approach to dilution management and share repurchase activity. Stock-based compensation was lower year-over-year for a second consecutive quarter. It declined 9% year-over-year, coming in at 7% of revenue, which is 228 basis points lower than the second quarter of 2025 due in part to lower-than-planned hiring. For all of 2026, we continue to expect stock-based compensation to increase modestly in absolute terms year-over-year, but decrease as a percentage of revenue. We continued repurchasing shares in Q2, opportunistically buying back $21 million worth of stock or over 1.1 million shares. Year-to-date, we have repurchased almost 4 million shares. This reflects conviction in our long-term growth opportunities and a view that share repurchases are an attractive use of capital. We'll continue to be disciplined and opportunistic in how we deploy capital towards buybacks. With that, I will move to our outlook. For the third quarter of 2026, we expect revenue of $505 million to $507 million or 20% to 21% growth. We continue to see strong momentum in our core, and we expect the continued shift toward digital remittances, growth in new geographies and the scaling of our growth accelerators to contribute to total company revenue growth of over 20% in the second half of the year, an increase relative to prior expectations. Breaking down our revenue growth, in Q3, we anticipate send volume growth to exceed revenue growth and revenue growth to modestly exceed quarterly active customer growth. Send volume per active customer is expected to grow in the mid- to high single digit range, supported by the continued shift in mix towards high-value senders and businesses. For the full year, we expect revenue between $1.978 billion and $1.988 billion, a growth rate of 21% to 22%, reflecting strong demand in our core and growing levels of contributions from our growth accelerators. As a reminder, we are lapping a particularly strong holiday season in Q4, which drove outsized volume growth in the prior year. Now let us pivot to profitability and expense guidance. Starting with transaction margins. We expect Q3 transaction margins to be slightly higher than the prior year. Note, transaction loss rate may fluctuate quarter-to-quarter. We remain disciplined about optimizing customer lifetime value while rigorously managing risk across our platform. For the full year, we continue to expect transaction margins to be broadly in line with the 2025 numbers on a normalized basis. Shifting to marketing. We expect continued marketing efficiencies in the back half of 2026 as we prioritize high ROI marketing opportunities. For Q3, we expect marketing spend for QAU to be slightly higher year-over-year as we expand our Skip the Line campaign and increased brand marketing in the UAE. Please note, marketing expense for QAU faces a tough comparison in Q4 as last year benefited from a focused and intentional approach to holiday period spend. Putting this all together, we expect Q3 adjusted EBITDA to be between $92 million and $94 million, translating to an adjusted EBITDA margin around 18% to 19%, an expansion of over 350 basis points year-over-year. For the full year, we expect adjusted EBITDA to be between $410 million and $415 million, representing an adjusted EBITDA margin of around 21% and expansion of over 400 basis points year-over-year. This improved adjusted EBITDA outlook reflects a more favorable outlook for revenue, Sebastian's deliberate assessment of the business in the first half of the year and our commitment to continued cost discipline, leveraging AI as we invest in growth. As always, we remain rigorously focused on balancing growth and profitability and we'll continue to look to further leverage the benefits of AI as we invest in top line growth. Our outlook also assumes normal levels of transaction losses for the remainder of the year. To summarize, in Q2, we delivered another excellent quarter with results that were strong across our key financial metrics. We achieved over 20% revenue growth and over 23% adjusted EBITDA margins. We delivered record GAAP profitability and record free cash flow, underscoring the power and scalability of our business model. With that, Sebastian and I will open up the call for your questions.

[Operator Instructions] Our first question comes from Tien-Tsin Huang with JPMorgan.

Nice results here. Sebastian, I thought, given your prepared remarks kind of triggered me to think of asking you about what you're excited about the most amongst some of the things you talked about and where you're leaning in more? We heard about Global Card, USDC, AI. It sounds like business also outperformed. What's changed in the last 90 days in terms of your excitement and where you're leaning in more?

Good question. Thank you. I think I'd say the sum of the parts, I think we are hitting on many cylinders right now. I think the sum of the parts look really good to us. We're a very diversified business globally. As I've said before, you get these puts and takes on different corridors. I really like the rhythm that we're gaining on upgrading the products, the new launches. So it's hard for me to pick one specific piece, Tien-Tsin. But I would say that today, standing here today, I'm very pleased with the momentum on many pieces of the business. Of course, as you look under the cover, as you look under the hood of the business, there are many pieces that make up the delivery of this money movement, whether it be on the network side, on the risk side, on the compliance side, there's just a lot of good momentum across the company. So you force me to pick one piece, I'm avoiding your question and saying, I think it's the sum of everything right now.

Our next question comes from Ramsey El-Assal with Cantor Fitzgerald.

Vikas, you mentioned that you'll be expanding your marketing efforts for the high-value senders in the second half. Can you think -- help us think through kind of the cadence and the magnitude of that investment? Is it kind of a gradual ramp through the balance of the year, a more meaningful step-up in marketing spend later in the year? How should we think about that from a modeling perspective?

So overall, I would say that we remain very confident in our high-value sender business and the long-term growth potential of that business. As we have shared in the prior few quarters, we are just getting started there, raising the send limits, making product enhancements. In fact, this quarter, you saw some very interesting highlights. We had our first set of $300,000-plus transfers. That's a pretty big milestone compared to where we were 12 months back. And within the same construct, one of our customers sent more than $1 million in the recent quarter. And that just tells that the demand is there. Our network is set up for that. And it's just a matter of focus and marketing for us. And once we can be more targeted, we can see a lot of benefits here. We haven't invested a lot in the marketing in the specific high-value sender market. And again, we will be very deliberate. We will be gradual and we'll be thoughtful how we increase the marketing. We'll learn from our early marketing campaigns before we expand more in FY '27. But overall, I'd say disciplined, but at the same time, focused and thoughtful marketing in the [ HVAC ].

Our next question comes from Cris Kennedy with William Blair.

I think productivity gains from AI is a key theme from the call and incremental EBITDA margins were over 60% in the quarter. I think that's nearly double kind of what you've historically talked about. Can you just talk about the levers there and what that means going forward and the opportunities to reinvest back in the business?

Yes. I think we're on this -- I think we're all on this AI journey. And I just reflect that I don't -- a week doesn't go by that you don't get some kind of wow moment on what you can do inside the company with AI. We -- and it varies across -- obviously, the most obvious ones are some of the -- the fact that you can constrain some of your people growth but speed is money, productivity is money, simplifying the organization is money also. So it slowly compounds. And as you get -- we track almost every piece of our AI usage down to the individuals, down to the production of code and the use across the company, and we're launching all different agents that do different tasks within the company. So this is a snapshot in time. You're seeing the benefits. Your question is, is this going to accelerate over time? It's hard to say. I certainly don't see it decelerating. And I think that we can look over the next few years, and we're just going to keep learning how this is going to change our company, how it changes the management. So it is a theme. We live it every day. And I think I'm optimistic about the future trajectory and the efficiencies that we can get with AI within Remitly.

Yes. And if I were to add on the expense categories, if you look at -- Cris, if you look at all the expense categories, we got benefits across the board, whether you think about transaction loss and the AI/ML capabilities that we are building, that has definitely -- we have seen that over the last couple of quarters. If you go further into customer support, that's a key area of benefit that we have been harvesting. This quarter, specifically, the 2 standouts were the technology and development spend, which just grew in mid-single digits, thanks to the net AI benefits that we were getting in spite of a modest increase in the AI spend. And finally, G&A, that was the biggest one of the first year-over-year decline as we are able to harness that benefit across all our support functions, whether it's legal, HR, finance and the platform. So AI net benefit for us has been a positive, clearly early days, and we will be very mindful and thoughtful here.