Western Union rival Zepz lays off 26% of employees as fintech cuts continue

Money transportation radical Zepz is laying disconnected 420 employees, the institution told CNBC exclusively, arsenic the fintech assemblage grapples with a pugnacious macroeconomic environment.

The London-headquartered institution began informing employees of the redundancies connected Monday, with idiosyncratic unit being told by their managers earlier larger communications were issued. By Tuesday, the full institution had been told astir the move.

Zepz, which owns the WorldRemit and Sendwave brands, has a full headcount of astir 1,600, meaning the cuts construe to astir 26% of its workforce.

The reductions volition chiefly interaction Zepz's lawsuit attraction and engineering teams arsenic Zepz looks to displacement those operations from aggregate countries to much centralized hubs, the institution said.

The steadfast is headquartered successful London but has determination offices successful the United States, Canada, Australia, Hong Kong, Poland, Kenya, and beyond.

Zepz said it was implementing what it called "workforce optimization" to relationship for roles that had been duplicated pursuing its operation of Sendwave with WorldRemit nether 1 genitor company.

Collectively, some wealth transportation services are utilized by much than 11 cardinal users crossed 150 countries. Sendwave was acquired by Zepz successful 2020 for an undisclosed sum.

It is the 2nd clip successful conscionable nether a twelvemonth that Zepz has laid disconnected staff. In June 2022, Zepz implemented redundancies affecting astir 5% of its workforce, according to Sky News.

Mark Lenhard, Zepz's CEO, said the determination marked "an important and indispensable measurement successful transitioning from 2 vast, segmented teams to 1 dynamic enactment nether Zepz, and laying ambitious foundations towards our semipermanent strategical absorption arsenic a portfolio business."

He added that the institution took the determination to trim its headcount owed to a request to streamline its operation alternatively than macroeconomic pressures.

"Over the past twelvemonth we person taken a superior look astatine however to optimize the enactment to proceed scaling successful a mature manner that sets up the concern for semipermanent success," helium said.

"The remittance manufacture has maintained robust maturation contempt planetary economical conditions, and we've seen this assemblage instrumentality large measures to guarantee their loved ones are supported arsenic costs emergence astir the world."

Employees volition beryllium offered enactment successful the signifier of counseling, coaching and career, CV development, occupation applications, and interviewing skills.

Despite the occupation simplification measure, Zepz said it is inactive hiring for 200 roles.

The institution enables users to nonstop wealth overseas from a smartphone oregon machine with radical connected the different extremity being capable to person it successful their slope accounts, by cash, to a mobile wallet, oregon arsenic a mobile airtime top-up.

The work is simply a challenger to established wealth transportation services similar Western Union, touting cheaper fees and the quality to transportation wealth rapidly. A adjacent rival is Wise, which claims to connection cheaper planetary wealth transfers than the banks.

Fintechs similar Zepz are facing a scope of challenges including much cost-conscious consumers and heightened regulatory scrutiny. These person deed the worth of assorted companies successful the assemblage — some successful the nationalist and backstage markets. Funding has dried up and respective fintechs person taken valuation cuts.

Even bequest banks person struggled to summation traction successful the market, with Goldman Sachs recently pulling backmost connected its fintech ambitions.

Zepz past raised currency successful August 2021 astatine a $5 cardinal valuation erstwhile it announced $292 cardinal of caller backing from investors led by the hedge money Farallon Capital. The startup is backed by starring task superior firms including Leapfrog, TCV and Accel.

"Having deed profitability past year, the Zepz squad has been focused connected businesslike maturation and continuing to physique a large, sustainable business," Harry Nelis, a spouse astatine Accel, told CNBC.

"Following the acquisition of Sendwave a mates of years ago, the adjacent signifier successful the integration of the 2 companies is to region the duplication of roles crossed the brands' locations."

"The team's determination to optimise the workforce, portion a hard one, was important for the business's semipermanent maturation and we're assured Zepz volition proceed to disrupt the industry," Nelis added.

Zepz has agelong been a darling of the U.K. fintech scene. It was founded successful 2010 by British-Somalian entrepreneur Ismail Ahmed, who started the institution aft moving to the U.K. aft fleeing civilian war-torn Somalia.

Ahmed's thought for creating Zepz, past WorldRemit, stemmed from his ain acquisition moving wealth crossed emerging markets; helium would transportation funds to his family, who past lived successful a exile campy successful Ethiopia, but the transfers were costly and took months to complete.

Ahmed stepped down arsenic Zepz's CEO successful 2018, though helium remains connected the committee arsenic non-executive chairman. His replacement astatine the clip was Breon Corcoran, an Irish businessman who formerly led British betting institution Paddy Power Betfair.

In 2022, Corcoran was replaced by Mark Lenhard, a erstwhile enforcement astatine measure payments steadfast Bill.com, whose assignment reportedly came arsenic the prospects of an archetypal nationalist offering for the institution had waned.

Lenhard said that Zepz "never announced a timeline for IPO and are not readying to denote exit plans astatine this time." The institution achieved operating profitability successful the archetypal fractional of 2022, helium said, adding that it is "on a sustainable way to summation nett margins."