Hemanth Munipalli : Yeah. Maybe let me try to give you some color on context, Alex. Thanks for the question. I think we’ve said — as we’ve said before and including last quarter that an LTV CAC ratio of 6% is a pretty attractive unit economics place to be in. And we think we’ve got some room here to be able to make further investments, particularly as we’ve been talking about in terms of marketing and still have really robust and attractive unit economics. When we look at this internally, we also look at this from an incremental payback and cash perspective as well as look at sort of the NPV of these investments. And we feel pretty comfortable by looking at and triangulating it on multiple places that the returns we expect to generate from this in the horizon we’re looking at makes a lot of sense.
Matt Oppenheimer : And I would say, Alex, the only thing I’d add on that front is I feel very good about both the average and incremental CAC on the marketing investments that we’re making right now. And I think what you see in the guide is we raised adjusted EBITDA guidance — had we decided not to invest as much in some of the marketing investments in Q4, which we can always choose to dial up or dial down, then what you would see is dialing up or down our confidence when we eventually guide to 2024 growth. But because of the fact that we are able to raise guidance be, we’re in control of how much we’re spending and growing and see that the marginal and average payback are very good right now. I think that we’re threading that needle to invest the right amount for the long term in Q4.
And by long term, I mean we’ll get that — the return from those investments in 2024. And we’re being very intentional about dialing those levers up and down to kind of balance growth and profitability, not only in Q4 but also in 2024 as we think about next year.
Alex Markgraff : That’s great. Thank you. So that I think probably makes the next question a bit easier. But just in terms of the implied EBITDA margin in the fourth quarter, I mean, I think it’s pretty clear, a lot of that is kind of marketing investment related. Just curious, Hemanth, anything on the transaction expense line to consider for the fourth quarter?
Hemanth Munipalli : Yeah. Look, I think broadly, I think the transaction expense line, we’ve been really pleased with the progress we’ve made both in sort of driving down reducing pay in and payout costs, which are basically related to economics with our partners, both on the pay in side and the disbursement side and as well as I think we’ve talked about the advances in terms of fraud management while keeping the friction with our customers low. And so we would expect that the trajectory on that will be consistent as we look forward to this quarter or subsequent quarters into next year. I think what’s important to point out is Q4 is seasonally high. And I think as we look at that with a record number of customers, we generally add in a quarter like this, there could be kits where we might see some increased fraud levels, which we plan for, but we are actively monitoring.
But that’s the only, I would say, call out, particularly with regard to Q4, but the trends are very favorable in terms of driving continued margin improvement.
Alex Markgraff : Great, thank you, both.
Operator: Thank you. [Operator Instructions] One moment for questions. Our next question comes from David Scharf with JMP Securities. You may proceed.
David Scharf : Yeah, good afternoon. Thanks for squeezing me in here. I apologize if these have been asked and have been jumping bouncing between three or four different calls. I am already assuming there have been about six questions about the fourth quarter marketing plan, so I’ll pass on that. But Matt, I’m not sure if you covered this already, but is there any incremental commentary just on not just the competitive environment, but in particular where are the newer customers lately have been coming from? And specifically, as we kind of referenced the stepped-up investment in digital from Western Union, for example, we have less visibility in the MoneyGram now into private. But is the profile of your new ads changing at all? Meaning, are they first-time digital remitters and you have a chance to kind of maintain the loyalty. Do you get a sense that there are folks that have used Western Union or other providers and the stickiness is still in question?
Matt Oppenheimer : Yeah. Thanks, David. Great questions, and good to see you. I think that the headline on the competitive landscape is there have been no material changes in the last quarter. I think that the structural changes in the industry, meaning shift to digital. And I’d say that is coming from a wide range of customers, whether that’s a scaled legacy player, whether that’s subscale legacy players who have difficulty building out a viable, trusted, reliable digital solution or whether that’s other digital players that are maybe subscale and not able to provide the reliable service we do. We’re seeing a shift from a wide range of competitors when you think about our new customer acquisition. And we think that we’re uniquely positioned given our scale, given our operational excellence, and given our digital-first approach, and you see that in our overall quarterly active user growth and the resilience of our existing customers coming back again and again as well as new customers that are increasingly choosing us because of things like word of mouth and others that are recommending their service to the front.
David Scharf : Got it. And maybe just as a follow-up. On the marketing side, when you make a comment or provide an observation that you believe the LTV to CAC ratio is trending upward. Can you provide a little more meat around the bones in terms of — where is that incremental lifetime value coming from? Is it based on a sense that your average principal percent is increasing? Are you seeing something innate that tells you the average velocity or number of cents per year is increasing? What actually takes up in LTV?
Hemanth Munipalli : Yeah. Great question, David. Let me try to answer that for you. I think first off, when you look at LTV, just as a reminder, it’s really sort of our cumulative transaction profit we would expect to get from our customers and cohorts. And there’s two components of that, that has given us confidence that we are a considering improving our LTV. One is our interest transaction intensity. I think being also digital first in that scale, we’re seeing increasing digital transactions and the intent of those transactions is increasing, and that’s across our active customer base. So that intensity increased, coupled with a transaction margin, which has continued to improve for the reasons we have described previously around scale for pay in and payout costs and some of the work that’s been done on the fraud side, gives us high conviction and just analytics around LTV on a good trajectory. So those are the key components there.
