Remitly Global, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023; comparisons are with Q1 2022. Remitly operates a digital cross-border remittance business serving customers in more than 170 countries.
Financial and operating performance
| Metric | Q1 2023 | Q1 2022 |
|---|---|---|
| Revenue | $203.9 million | $136.0 million |
| Operating loss | $28.1 million | $23.2 million |
| Net loss | $28.3 million | $23.3 million |
| Net loss per share, diluted | $0.16 | $0.14 |
| Operating cash flow | $0.4 million | $40.3 million |
| Adjusted EBITDA, non-GAAP | $5.4 million | $(12.1) million |
- Revenue increased 50% year over year; send volume rose 40% to $8.5 billion and active customers increased 50% to 4.6 million. Rewire contributed approximately 2% to revenue growth.
- Transaction expenses were 36% of revenue, versus 41% a year earlier, improving the margin after transaction expenses to approximately 64% from 59%. Marketing declined to 22% of revenue from 30%; technology and development increased to 24% from 17%, and general and administrative expenses to 20% from 17%.
- Net loss widened as operating expenses increased, notably technology and development, general and administrative, and stock-based compensation. Stock-based compensation expense was $29.2 million, versus $9.6 million.
- Cash, cash equivalents and restricted cash totaled $244.7 million at quarter-end, down from $300.7 million at year-end. Operating cash flow was near breakeven; investing cash use was $43.1 million, mainly reflecting the Rewire acquisition, and financing cash use was $13.6 million, including debt repayment.
- Current assets were $606.9 million and current liabilities $197.5 million. The company had no borrowings on its $250 million revolving facility and $222.7 million of unused capacity; $27.3 million of letters of credit were issued but undrawn. It reported compliance with facility covenants.
- Short-term debt was $2.5 million, primarily an assumed Rewire advance due October 2023. The company repaid $17.1 million of assumed Rewire indebtedness during the quarter.
Material changes and unusual items
- Remitly acquired Rewire on January 5, 2023, for approximately $77.9 million in cash and equity consideration. The acquisition added $55.0 million of goodwill and $20.3 million of identifiable intangible assets; purchase-price allocation remained preliminary. Rewire contributed $3.2 million of revenue and an $8.5 million net loss after acquisition.
- Rewire-related transaction costs were approximately $1.2 million. Acquisition-related amortization contributed to higher depreciation and amortization.
- Interest income rose to $2.0 million from $0.04 million, reflecting higher yields. Other expense was $1.5 million, primarily from foreign-exchange remeasurement, compared with $0.7 million of other income a year earlier.
- Operating cash flow fell sharply year over year, which management attributed partly to working-capital timing, including quarter-end falling on a Friday in 2023 versus a Thursday in 2022, as well as acquisition activity.
Outlook, management commentary and risks
- No numerical revenue, earnings or cash-flow guidance is provided in the supplied filing text. Management expects technology and development expenses to increase as it invests in its platform, products, security and geographic expansion, which may affect near-term profitability.
- Management said cash and available revolving-credit capacity should be sufficient for working capital needs for at least the next 12 months. It also noted that future capital needs depend on growth, marketing, corridor expansion and product investment.
- Risks discussed include customer acquisition and retention, fraud and transaction losses, regulatory and licensing requirements, cybersecurity and service availability, competition, foreign-exchange volatility, macroeconomic and geopolitical conditions, and seasonal working-capital fluctuations. The filing estimates that a hypothetical 10% U.S. dollar move would change the fair value of relevant foreign-currency customer transaction assets and liabilities by approximately $12.7 million at March 31, 2023; the company does not currently hedge this exposure with derivatives.
- An estimated indirect-tax liability was $8.3 million, up from $6.0 million at year-end; final audit or settlement outcomes could differ materially. Management reported no material reasonably possible litigation loss and effective disclosure controls at quarter-end.
Important facts for investors to verify
- Whether revenue growth and improved transaction economics persist, and how much growth is attributable to Rewire, customer volume and corridor mix.
- Whether expense growth—especially technology, general and administrative costs, and stock-based compensation—allows sustained profitability and positive operating cash flow.
- Rewire’s eventual contribution to revenue and earnings, and any material changes to its preliminary purchase-price allocation or holdback liability.
- Working-capital and cash-flow trends beyond quarter-end, including the effect of customer prefunding and transaction timing.
- Developments in indirect-tax assessments, foreign-exchange exposure, regulatory compliance, fraud losses and revolving-credit covenant compliance.