Remitly Global, Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual report, not a standalone fourth-quarter earnings report; Q4 operating metrics are identified where provided. Remitly is a digital remittance and financial-services provider serving customers in more than 150 countries. Remittances generated substantially all revenue.
Financial and operating performance
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Revenue | $458.6 million | $257.0 million | +78% |
| Operating loss | $39.7 million | $29.2 million | Loss widened |
| Net loss | $38.8 million | $32.6 million | Loss widened |
| Adjusted EBITDA (non-GAAP) | $(10.5) million | $(19.9) million | Improved by $9.3 million |
| Operating cash flow | $(18.4) million | $(114.2) million | Cash use decreased |
| Cash and cash equivalents, year-end | $403.3 million | $186.7 million | Increased |
| Revolving-credit borrowings, year-end | None | $80.0 million | Repaid/refinanced |
- Transaction expenses were $191.6 million, or 42% of revenue, versus $110.4 million, or 43%, in 2020. Marketing was $120.9 million (26% of revenue), down from 29%; technology and development was $64.1 million (14%), down from 16%. General and administrative expense rose to $70.9 million (15% of revenue) from $31.7 million (12%), including IPO/public-company costs and a $6.9 million stock donation.
- Send volume grew 70% to $20.4 billion from $12.1 billion. Fourth-quarter active customers were 2.8 million, up 50% year over year; average revenue per active customer was $47.69, up 13%.
- Transaction losses incurred, net of recoveries, rose to $29.7 million from $17.2 million; as a share of send volume, the rate increased to 0.15% from 0.14%.
- Year-end current assets were $607.6 million and current liabilities were $141.6 million. The company had a $250 million revolving facility, with $231.1 million of unused borrowing capacity after $18.9 million of issued, undrawn letters of credit. It reported compliance with facility covenants.
Material changes and notable items
- Revenue growth was primarily driven by higher send volume and customer growth. Net loss nevertheless widened, while non-GAAP Adjusted EBITDA improved.
- The September 2021 IPO and concurrent private placement generated $305.2 million in net proceeds for the company. Preferred shares converted into common stock; the new $250 million revolving facility replaced the prior facility, and year-end borrowings were zero.
- Operating cash use fell substantially from 2020, but remained negative. Management attributed 2021 use in part to increased disbursement prefunding and customer funds receivable, partly offset by accrued liabilities and non-cash expenses.
- Approximately 70% of 2021 revenue came from remittances to Mexico, the Philippines, and India, compared with approximately 75% in 2020.
Outlook, risks, and contingencies
- The filing provides no specific revenue or earnings guidance. Management expected technology and development expense to rise as a percentage of revenue in 2022 while investing in its platform, products, customer experience, and geographic expansion. It also expected operating costs to rise as travel and events resumed.
- Management stated that cash, cash equivalents, and available credit were expected to meet working-capital needs for at least 12 months. Remittance operations have significant working-capital needs, including prefunding, settlement timing, and regulatory capital and safeguarding requirements.
- The company cited uncertainty over the pandemic’s effects on digital-remittance adoption, customer demand, staffing, customer support, and partners. It also noted geopolitical and macroeconomic risks, including having ceased transactions to Russia and Belarus following the war in Ukraine and related sanctions.
- Key exposures include extensive money-transfer, AML, sanctions, consumer-protection, and privacy regulation; cyber and fraud losses; reliance on payment processors, banks, cloud services, and disbursement partners; foreign-exchange volatility; and competition. The company said it did not use currency hedges at year-end.
- Two material weaknesses in internal control over financial reporting remained unremediated: weaknesses in financial-system change management and user-access controls, and inadequate segregation of duties for journal entries. Management concluded disclosure controls were not effective at the reasonable-assurance level. The weaknesses had not caused a reported financial-statement misstatement; management said remediation could extend beyond the next fiscal year.
- The company accrued approximately $3.8 million for indirect taxes; management stated it was not party to legal or regulatory proceedings believed material and had not identified a material probable loss contingency at year-end.
Important facts for investors to verify
- Whether growth in revenue, send volume, and customers can continue without further deterioration in net losses or transaction-loss rates.
- Progress and costs in remediating the disclosed control weaknesses, and the timing of any independent auditor attestation.
- Availability of liquidity under the credit facility and the effects of prefunding, settlement timing, and seasonal volume on cash flows.
- Revenue and risk concentration in Mexico, the Philippines, and India, and the company’s exposure to foreign-exchange movements and partner or regulatory disruption.
- The sustainability of customer-acquisition economics and the contribution of newer offerings, including Passbook and Remitly for Developers; the filing does not provide a clear standalone revenue or profitability value for these products.