Remitly Global, Inc. — Q1 2024 Form 10-Q
Business context and period: Unaudited results for the three months ended March 31, 2024, compared with Q1 2023. Remitly provides digital cross-border money transfers and related financial services in more than 170 countries. Its revenue is primarily transaction fees and foreign-exchange spreads.
Key financial results
| Metric | Q1 2024 | Q1 2023 | Change / context |
|---|---|---|---|
| Revenue | $269.1 million | $203.9 million | Up 32% |
| Send volume | $11.5 billion | $8.5 billion | Up 34% |
| Active customers | 6.2 million | 4.6 million | Up 36% |
| Transaction expenses | $89.9 million | $74.1 million | Up 21%; 33% of revenue versus 36% |
| Operating loss | $20.0 million | $28.1 million | Operating margin approximately -7.4% versus -13.8% |
| Net loss | $21.1 million | $28.3 million | Basic and diluted loss per share of $0.11 versus $0.16 |
| Adjusted EBITDA (non-GAAP) | $19.3 million | $5.4 million | Margin approximately 7.2% versus 2.6% |
| Operating cash flow | $(56.8) million | $(2.3) million | Higher working-capital use, particularly customer funds receivable |
| Cash and cash equivalents | $286.0 million | $323.7 million at Dec. 31, 2023 | Quarter-end balance; cash, cash equivalents and restricted cash totaled $288.9 million |
| Debt | $152.4 million | $132.5 million at Dec. 31, 2023 | Includes $150.0 million revolver borrowings and $2.4 million short-term debt |
The filing does not present a separate gross profit or gross margin figure. Q1 operating expenses totaled $289.1 million. Marketing expense rose 54% to $68.0 million, while technology and development expense rose 28% to $63.2 million. Stock-based compensation expense, net of amounts capitalized, was $34.1 million.
Material changes and management commentary
- Revenue growth was attributed to customer-base expansion, customer retention, and a continued mix shift toward digital disbursements. Management cited improved transaction expense leverage from partner economics and fraud-loss prevention, and lower support costs as a share of revenue from process improvements and automation.
- Higher marketing investment supported customer acquisition; advertising expense was $51.7 million versus $34.6 million. Technology spending increased as the company invested in its platform and supported higher transaction volumes.
- Operating cash outflow included a $59.4 million increase in customer funds receivable and a $6.2 million increase in disbursement prefunding, partly offset by increases in customer liabilities and accrued liabilities. Cash flows are sensitive to transaction timing and quarter-end calendars.
- The company borrowed $275.0 million and repaid $255.0 million on its revolving facility during the quarter. The $150.0 million quarter-end revolver balance was repaid on April 1, 2024. The facility matures in September 2026; the reported weighted-average rate was 9.0%. Unused borrowing capacity was $126.9 million, with $50.3 million in undrawn standby letters of credit.
- Management said cash, cash equivalents and available facility capacity should be sufficient for working-capital needs for at least the next 12 months. The filing provides no quantitative revenue, earnings, or cash-flow guidance.
Risks, contingencies and unusual items
- Key risks include customer acquisition and retention, competition, fraud and transaction losses, cybersecurity and service availability, regulatory and licensing requirements, partner and counterparty exposure, foreign-exchange movements, and macroeconomic or geopolitical changes. Management described seasonality, including typically higher activity and working-capital needs in Q4.
- A hypothetical 10% strengthening or weakening of the U.S. dollar would have changed the fair value of customer transaction-related assets and liabilities in non-functional currencies by approximately $10.0 million at March 31, 2024. The company does not currently use derivatives to hedge foreign-exchange risk.
- An estimated $7.6 million indirect-tax liability was accrued, up from $6.4 million at year-end; the ultimate outcome of audits or settlements could differ materially. Management did not believe ordinary-course litigation presented a reasonable possibility of material loss at quarter-end.
- Q1 included $0.8 million of restructuring charges; the initiatives were described as substantially complete. The Rewire acquisition holdback liability of $13.2 million was settled in April, including $10.3 million cash and 131,507 shares or restricted stock units. A discrete tax benefit related to excess stock-based compensation deductions was recognized in Q1.
- A putative stockholder lawsuit concerning bylaw provisions was dismissed with prejudice as to the named plaintiff and without prejudice as to other potential class claims after the company amended its bylaws. Remitly agreed to pay plaintiff’s counsel $465,000 to resolve a fee application.
Important facts for investors to verify
- Whether customer, send-volume and revenue growth continue, and whether higher marketing and technology investment produces durable customer economics.
- How much operating cash-flow volatility reflects transaction timing and working-capital growth, and how readily customer-related balances can be converted to available liquidity.
- Revolver use, borrowing costs, covenant compliance and facility availability; the company reported compliance with financial covenants at March 31, 2024.
- Trends in transaction losses, fraud controls, indirect-tax exposures and foreign-exchange sensitivity.
- The effect of recurring stock-based compensation on reported losses and dilution. The filing reported 192.3 million shares outstanding at March 31, 2024 and 192.5 million as of April 29, 2024.