Remitly (US:RELY)2024-07-31 20:10Special Note Regarding Forward-Looking Statements This section highlights that the report contains forward-looking statements subject to risks and uncertainties, with actual results potentially differing materially - This report contains forward-looking statements concerning future events, results of operations, financial condition, and business strategies, subject to substantial risks and uncertainties, where actual results could differ materially56 - Key areas covered by forward-looking statements include expectations for revenue and expenses, customer acquisition and retention, new product development, profitability, strategic relationships, growth management, market trends, and regulatory compliance5 Part I - Financial Information Financial Statements This section presents Remitly Global's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, with accompanying notes Condensed Consolidated Financial Statements This subsection provides key unaudited financial statement highlights for Remitly Global, including operations, balance sheet, and cash flow data Condensed Consolidated Statements of Operations Highlights (unaudited, in thousands) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $306,423 | $234,033 | $575,541 | $437,898 | | Loss from operations | $(15,762) | $(18,223) | $(35,715) | $(46,291) | | Net loss | $(12,091) | $(18,850) | $(33,171) | $(47,164) | | Net loss per share (basic and diluted) | $(0.06) | $(0.11) | $(0.17) | $(0.27) | Condensed Consolidated Balance Sheets Highlights (unaudited, in thousands) | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total current assets | $840,554 | $932,118 | | Total assets | $950,193 | $1,036,306 | | Total current liabilities | $341,846 | $366,839 | | Total liabilities | $371,291 | $506,969 | | Total stockholders' equity | $578,902 | $529,337 | Condensed Consolidated Statements of Cash Flows Highlights (unaudited, in thousands) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(7,909) | $(54,196) | | Net cash used in investing activities | $(8,570) | $(44,843) | | Net cash (used in) provided by financing activities | $(118,631) | $25,883 | | Net decrease in cash, cash equivalents, and restricted cash | $(136,339) | $(72,493) | Notes to Condensed Consolidated Financial Statements This subsection details the accounting policies and specific financial items supporting the condensed consolidated financial statements, including revenue recognition and liabilities - Revenue is primarily generated from transaction fees and foreign exchange spreads, recognized when funds are delivered to the recipient, with the company acting as the principal in these transactions3437 Revenue by Geography (in thousands) | Region | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | United States | $201,884 | $158,994 | $377,277 | $298,086 | | Canada | $34,710 | $27,478 | $67,659 | $52,337 | | Rest of world | $69,829 | $47,561 | $130,605 | $87,475 | | Total revenue | $306,423 | $234,033 | $575,541 | $437,898 | - The holdback liability from the 2023 Rewire acquisition was settled in April 2024 with a cash payment of $10.3 million and $2.8 million in equity consideration58 - As of June 30, 2024, the company had $15.0 million outstanding under its $325.0 million revolving credit facility, with $262.1 million of unused borrowing capacity73 - In June 2024, the company entered into a seven-year lease for a new corporate headquarters in Seattle, with a total contractual commitment of approximately $22.9 million, commencing July 202597 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, highlighting revenue growth, key metrics, non-GAAP measures, and liquidity, with a focus on operational improvements Overview Remitly provides digital cross-border payment services, emphasizing a mobile-first experience, global platform, data-driven marketing, and scalable technology - Remitly provides digital financial services for cross-border payments across more than 170 countries, aiming to deliver a fast, reliable, and transparent experience103 - The company's differentiated approach is built on four core elements: a mobile-first user experience, a global scale and high-quality money movement platform, attractive unit economics driven by a data-driven marketing platform, and a superior, scalable technology platform103104106107 Key Business Metrics This subsection presents key operational metrics, including active customers and send volume, demonstrating the company's growth drivers Key Business Metrics (Q2 2024 vs Q2 2023) | Metric | Q2 2024 | Q2 2023 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Active customers (thousands) | 6,851 | 5,033 | +1,818 | +36% | | Send volume (millions) | $13,241 | $9,580 | +$3,661 | +38% | - Growth in active customers was driven by investments in the mobile platform, efficient marketing, focus on customer experience, and expansion of the global disbursement network113 Results of Operations This subsection provides a detailed comparison of the company's financial results, analyzing revenue, expenses, and net loss for the periods presented Comparison of Results of Operations (in thousands) | Line Item | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $306,423 | $234,033 | $72,390 | 31% | | Total costs and expenses | $322,185 | $252,256 | $69,929 | 28% | | Loss from operations | $(15,762) | $(18,223) | $2,461 | (14)% | | Net loss | $(12,091) | $(18,850) | $6,759 | (36)% | - Revenue increased by 31% for Q2 2024, primarily driven by a 36% increase in active customers and strong retention139 - Transaction expenses increased 34% in Q2 2024, due to higher transaction volume and a $7.5 million increase in the provision for fraud and other losses141 - Marketing expenses rose 44% in Q2 2024, driven by a $20.9 million increase in advertising and promotion costs to acquire new customers146 - Technology and development expenses grew 24% in Q2 2024, reflecting a 16% increase in headcount and higher cloud service costs to support transaction volume147 Non-GAAP Financial Measures This subsection reconciles non-GAAP financial measures, specifically Adjusted EBITDA, to the most directly comparable GAAP measure, net loss Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(12,091) | $(18,850) | $(33,171) | $(47,164) | | Adjusted EBITDA | $25,104 | $20,416 | $44,368 | $25,778 | - Adjusted EBITDA is a key non-GAAP measure used by management, calculated by adjusting net loss for items like interest, taxes, D&A, foreign exchange gains/losses, and stock-based compensation156 Liquidity and Capital Resources This subsection outlines the company's principal sources of liquidity, cash flow activities, and assessment of future working capital sufficiency - As of June 30, 2024, principal sources of liquidity were cash and cash equivalents of $185.2 million and a $325.0 million revolving credit facility159 - The company believes existing cash and available credit will be sufficient to meet working capital requirements for at least the next twelve months160 - Net cash used in operating activities was $7.9 million for the six months ended June 30, 2024, primarily driven by timing impacts on working capital, including an $82.1 million increase in customer funds receivable164 - Net cash used in financing activities was $118.6 million for the six months ended June 30, 2024, mainly due to net repayments of $115.0 million on the revolving credit facility and a $10.3 million settlement for the Rewire acquisition167 Quantitative and Qualitative Disclosures About Market Risk The company discusses its exposure to market risks, primarily credit risk from partners and foreign currency exchange rate fluctuations from international operations - The company is exposed to credit risk from its pay-in payment processors and disbursement partners, which it mitigates by engaging with reputable partners and performing credit reviews176 - Foreign currency exchange rate risk is a principal exposure, where a hypothetical 10% change in the U.S. dollar's value would impact the fair value of customer transaction-related assets and liabilities by approximately $13.4 million as of June 30, 2024177179 Controls and Procedures Management evaluated the effectiveness of the company's disclosure controls and procedures, concluding they were effective as of June 30, 2024 - Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2024181 - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls182 Part II - Other Information Legal Proceedings The company is involved in various legal proceedings, but management believes any resulting liability will not materially affect its financial condition - In the opinion of management, any liability from ongoing legal proceedings would not have a material adverse effect on the company's business or financial condition184 Risk Factors This section refers investors to the comprehensive discussion of potential business risks detailed in the company's Annual Report on Form 10-K - The report refers to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023, for a comprehensive understanding of potential risks185 Unregistered Sales of Equity Securities and Use of Proceeds This section details the issuance of unregistered common stock for the Rewire acquisition and confirms no material change in IPO proceeds use - In April 2024, 112,888 shares of common stock were issued to former Rewire shareholders in connection with the acquisition holdback release, as unregistered securities under Regulation S and Regulation D exemptions186 - There has been no material change in the planned use of the $305.2 million net proceeds from the company's September 2021 IPO187 Other Information No officers or directors adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2024 - No officers or directors adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2024187 Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including corporate documents and certifications - The report includes several exhibits, such as the 2021 Employee Stock Purchase Plan, certifications by the Principal Executive Officer and Principal Financial Officer (pursuant to Sarbanes-Oxley Sections 302 and 906), and XBRL data files189 Signatures The report was duly signed by the CEO, CFO, and Chief Accounting Officer on July 31, 2024 - The report was duly signed on July 31, 2024, by Matthew Oppenheimer (CEO), Hemanth Munipalli (CFO), and Gail Miller (Chief Accounting Officer)191192