Zepz, which owns the WorldRemit and Sendwave brands, employs around 1,600 people in total.
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Remittance group Zepz is laying off 420 employees, the company told CNBC exclusively, as the fintech sector grapples with a troublesome macroeconomic environment.
The London-based company began informing staff of the layoffs on Monday, with individual staff briefed by their managers ahead of wider announcements. On Tuesday, the entire company was informed about the move.
Zepz, which owns the WorldRemit and Sendwave brands, employs around 1,600 people in total, meaning the cuts affect around 26% of the workforce.
The reductions will mainly affect Zepz’s customer support and engineering teams as Zepz desires to move these operations from multiple countries to more centralized centers, the company said.
The corporate is headquartered in London, but has regional offices in the United States, Canada, Australia, Hong Kong, Poland, Kenya and more.
Zepz said it is implementing what it calls “workforce optimisation” to account for roles that were duplicated after Sendwave merged with WorldRemit under one parent company.
Combined, each money transfer services are utilized by greater than 11 million users in 150 countries. Sendwave was acquired by Zepz in 2020 for an undisclosed sum.
This is the second time in lower than a 12 months that Zepz has laid off employees. In line with Zepz data, in June 2022, it made redundancies involving about 5% of its workforce Messages from heaven.
Mark Lenhard, CEO of Zepz, said the decision was “a very important and crucial step in moving from two vast, segmented teams to 1 dynamic organization under Zepz and laid an ambitious foundation for our long-term strategic direction as a portfolio business.”
He added that the company made the decision to scale back employment as a consequence of the need to arrange the structure, not macroeconomic pressure.
“Over the past 12 months, we have taken a serious take a look at the best way to optimize the organization to proceed scaling in a mature manner that may prepare the business for long-term success,” he said.
“The remittance industry has maintained strong growth despite global economic conditions, and we have seen this audience take great strides to make sure their family members are supported as costs increase around the world.”
Employees will receive support in the form of advice, coaching and careers, creating CVs, job applications and interviewing skills.
Despite the job cuts measure, Zepz said it still employs 200 people.
The corporate allows users to send money abroad from a smartphone or computer, and folks on the other end can receive it of their checking account, in money, in a mobile wallet or as a cell phone top-up.
The service challenges established money transfer services like Western Union by touting cheaper fees and the ability to send money quickly. He’s a detailed competitor Smartwhich claims to supply cheaper international money transfers than banks.
Fintechs like Zepz face a spread of challenges, including more cost-conscious consumers and increased regulatory scrutiny. They hit the value of various firms in the sector – each in the private and non-private markets. Funding has dried up, and several other fintechs have lowered their valuations.
Even older banks have struggled to achieve traction in the market, with Goldman Sachs recently stepping back from its fintech ambitions.
Zepz last raised money in August 2021 at a $5 billion valuation when it announced $292 million in recent funding from investors led by hedge fund Farallon Capital. The startup is backed by leading enterprise capital firms including Leapfrog, TCV and Accel.
“After achieving profitability last 12 months, the Zepz team has focused on effective growth and continuing to construct a big, sustainable business,” Harry Nelis, a partner at Accel, told CNBC.
“Following the acquisition of Sendwave just a few years ago, the next step in integrating the two firms is to eliminate duplication of roles at brand locations.”
“The team’s decision to optimize the workforce, while difficult, was essential to the company’s long-term growth and we’re confident that Zepz will proceed to revolutionize the industry,” added Nelis.
Zepz has long been a darling of the UK fintech scene. It was founded in 2010 by British-Somali entrepreneur Ismail Ahmed, who founded the company after moving to the UK after fleeing civil war-torn Somalia.
Ahmed’s idea for creating Zepz after which WorldRemit got here from his own experience of putting money into emerging markets; he transferred funds to his family, who at the time lived in a refugee camp in Ethiopia, but the transfers were expensive and took months.
Ahmed stepped down as CEO of Zepz in 2018, although he stays on the board as non-executive chairman. His successor at the time was Breon Corcoran, an Irish businessman who previously headed the British betting company Paddy Power Betfair.
In 2022, Corcoran was replaced by Mark Lenhard, a former executive at bill payment company Bill.com, whose appointment reportedly got here as the company’s IPO prospects dim.
Lenhard said Zepz “has never announced an IPO schedule and has no plans to announce exit plans at the moment.” He said the company achieved operating profitability in the first half of 2022, adding that it was “on a sustained path of increasing profit margins.”