Fintech unicorn Zepz, owner of WorldRemit, lays off 26% of staff
Zepz, which owns the WorldRemit and Sendwave brands, has a total workforce of around 1,600.
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Money transfer group Zepz is laying off 420 employees, the company told CNBC exclusively, as the fintech sector struggles with a tough macroeconomic environment.
The London-headquartered company began informing employees of the layoffs on Monday, with individual employees told by their managers before larger communications were issued. On Tuesday, the entire company had been notified of the move.
Zepz, which owns the WorldRemit and Sendwave brands, has a total workforce of around 1,600, meaning the cuts translate to around 26% of its workforce.
The cuts will mainly affect Zepz’s customer care and engineering teams as Zepz looks to move those operations from multiple countries to more centralized hubs, the company said.
The firm is headquartered in London, but has regional offices in the US, Canada, Australia, Hong Kong, Poland, Kenya and beyond.
Zepz said it implemented what it called “workforce optimization” to account for roles that had been duplicated following the combination of Sendwave with WorldRemit under one parent company.
Together, both money transfer services are used by more than 11 million users in 150 countries. Sendwave was acquired by Zepz in 2020 for an undisclosed sum.
It is the second time in less than a year that Zepz has laid off employees. In June 2022, Zepz implemented redundancies affecting around 5% of its workforce, according to Sky News.
Mark Lenhard, Zepz’s CEO, said the decision marked “an important and necessary step in the transition from two large, segmented teams to one dynamic organization under Zepz, laying ambitious foundations towards our long-term strategic direction as a portfolio business.”
He added that the company made the decision to reduce the number of employees due to a need to streamline the structure rather than macroeconomic pressures.
“Over the past year, we’ve taken a serious look at how we can optimize the organization to continue to scale in a mature way that sets the business up for long-term success,” he said.
“The remittance industry has maintained robust growth despite global economic conditions, and we’ve seen this audience take great action to ensure their loved ones are supported as costs rise around the world.”
Employees will be offered support in the form of counselling, coaching and careers, CV development, job applications and interview skills.
Despite the job cuts, Zepz said it is still hiring for 200 roles.
The company enables users to send money abroad from a smartphone or computer with people on the other end receiving it in their bank accounts, in cash, to a mobile wallet or as a mobile airtime top-up.
The service is a challenger to established money transfer services such as Western Union, with cheaper fees and the ability to transfer money quickly. A close rival is Wise, which claims to offer cheaper international money transfers than the banks.
Fintechs like Zepz face a number of challenges, including more cost-conscious consumers and increased regulatory scrutiny. These have hit the value of various companies in the sector — both in the public and private markets. Funding has dried up and several fintechs have taken value cuts.
Even legacy banks have struggled to gain traction in the market, with Goldman Sachs recently pulling back on its fintech ambitions.
Zepz last raised cash in August 2021 at a valuation of $5 billion when it announced $292 million in new funding from investors led by hedge fund Farallon Capital. The startup is backed by leading venture capital firms including Leapfrog, TCV and Accel.
Zepz has long been a darling of the UK fintech scene. It was founded in 2010 by British-Somali entrepreneur Ismail Ahmed, who started the company after moving to the UK after fleeing civil war-torn Somalia.
Ahmed’s idea to create Zepz, then WorldRemit, stemmed from his own experience moving money across emerging markets; he wanted to transfer funds to his family, who were then living in a refugee camp in Ethiopia, but the transfers were expensive and took months to complete.
Ahmed stepped down as Zepz’s CEO in 2018, although he remains on the board as non-executive chairman. His replacement at the time was Breon Corcoran, an Irish businessman who previously headed British betting company Paddy Power Betfair.
In 2022, Corcoran was replaced by Mark Lenhard, a former executive at bill payment firm Bill.com, whose appointment reportedly came as prospects for an initial public offering for the company had waned.
Lenhard said Zepz “never announced an IPO timeline and does not plan to announce exit plans at this time.” The company achieved operating profitability in the first half of 2022, he said, adding that it is “on a sustainable track to increase profit margins.”