Remitly Global, Inc. — Q2 2022 Form 10-Q
Business context and reporting period. Unaudited results for the quarter and six months ended June 30, 2022, compared with 2021. Remitly provides digital cross-border money transfers, operating in more than 170 countries. Revenue primarily comes from transaction fees and foreign-exchange spreads.
Key financial results
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | $157.3 million | $111.1 million | $293.3 million | $202.1 million |
| Operating loss | $39.4 million | $1.9 million | $62.6 million | $10.5 million |
| Net loss | $38.2 million | $1.4 million | $61.6 million | $9.2 million |
| Adjusted EBITDA, non-GAAP | $(5.3) million | $2.1 million | $(17.4) million | $(3.7) million |
| Cash from operating activities | Not presented for quarter | Not presented for quarter | $26.0 million | $60.3 million |
- Q2 revenue grew 42%; six-month revenue grew 45%. Active customers increased 43% to 3.419 million and Q2 send volume increased 40% to $7.0 billion.
- Q2 operating-loss margin was approximately 25.0% and net-loss margin 24.3%, compared with 1.8% and 1.3%, respectively, in Q2 2021. Transaction expenses declined to 39% of revenue from 42%. For the first half, operating-loss margin was approximately 21.3% versus 5.2%.
- Cash and cash equivalents were $429.7 million at June 30, 2022, versus $403.3 million at December 31, 2021. Current assets were $704.1 million and current liabilities $251.9 million. No revolver borrowings were outstanding; $230.4 million of the $250 million facility remained available, with $19.6 million in undrawn letters of credit. The company reported compliance with facility covenants.
- Six-month operating cash flow fell to $26.0 million from $60.3 million, with cash flows materially affected by timing and movements in customer funds, prefunding and settlement balances. Investing cash outflow was $3.2 million; financing cash inflow was $4.4 million.
Material changes and management commentary
- Despite strong revenue and customer growth, losses widened as investment and costs increased. Marketing rose 68% in Q2 and 62% for the first half; technology and development rose 137% and 122%; general and administrative expenses rose 212% and 166%, respectively. Higher headcount, stock-based compensation, customer acquisition, technology investment and public-company costs were cited.
- Stock-based compensation expense was $32.5 million in Q2 and $42.1 million for the first half, versus $2.7 million and $4.2 million in the comparable 2021 periods.
- Management expects operating expenses to increase during 2022, including technology and development costs, and expects business travel and other event costs to rise as pandemic restrictions ease. The filing provides no specific revenue, earnings or Adjusted EBITDA guidance. Management believes cash and available credit are sufficient for at least the next 12 months.
- Management described 2022 growth as stabilizing after pandemic-accelerated digital adoption. Risks include macroeconomic and geopolitical changes, currency movements, fraud and transaction losses, regulatory and licensing requirements, partner credit exposure, seasonality and uncertainty in customer behavior.
Unusual items, contingencies and controls
- Q2 includes a $6.3 million out-of-period stock-compensation correction: $1.9 million related to Q1 2022 and $4.4 million to earlier fiscal periods. Management said the historical error was not material to any individual period or in aggregate, though its Q2 impact was material; it was recorded in general and administrative expense.
- Disclosure controls and procedures were deemed ineffective. The company reported material weaknesses involving IT general controls, journal-entry segregation of duties, and controls over stock compensation for graded-vesting awards. The latest weakness led to the correction above; remediation is underway and is not yet complete.
- A $3.8 million estimated indirect-tax liability remained unchanged from year-end. Management said it did not believe material litigation losses were reasonably possible, but final indirect-tax audit outcomes could differ materially from estimates.
- The company amended and renewed its Seattle headquarters lease and entered into or amended other leases; estimated incremental cash payments total approximately $10 million. It reported no material off-balance-sheet arrangements.
Important facts for investors to verify
- Whether customer and send-volume growth can translate into improved operating leverage as marketing, technology, administrative and stock-compensation costs remain elevated.
- How much reported operating cash flow depends on customer-fund and settlement timing, and whether working-capital needs rise with transaction volumes or seasonal peaks.
- Progress and testing results for remediation of all material weaknesses, particularly stock-compensation accounting and IT access/change controls.
- Potential exposure from indirect taxes, transaction losses, foreign-exchange volatility and reliance on payment and disbursement partners.
- Future expense trends and any formal outlook updates; the filing contains no specific financial guidance.