Remitly Global, Inc. (RELY) Bundle
Understanding Remitly Global, Inc. (RELY) Revenue Streams
Understanding Remitly Global, Inc.’s Revenue Streams
As of September 30, 2024, Remitly Global, Inc. reported a substantial revenue increase, showcasing a robust growth trajectory. The total revenue for the three months ended September 30, 2024, was $336.5 million, compared to $241.6 million for the same period in 2023, marking a 39% increase. For the nine months ended September 30, 2024, revenue was $912.1 million, up from $679.5 million in 2023, reflecting a 34% growth rate.
Breakdown of Primary Revenue Sources
The primary revenue sources for Remitly consist of transaction fees and foreign exchange spreads. The geographical breakdown of revenue for the three months ended September 30, 2024, is as follows:
| Geography | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) |
|---|---|---|
| United States | $219,066 | $160,729 |
| Canada | $36,022 | $29,501 |
| Rest of World | $81,439 | $51,399 |
| Total Revenue | $336,527 | $241,629 |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate illustrates the company's expanding customer base and increased transaction volumes. The growth rates for the three and nine months ended September 30, 2024, are summarized below:
| Period | Revenue (2024, in millions) | Revenue (2023, in millions) | Growth Rate |
|---|---|---|---|
| Q3 | $336.5 | $241.6 | 39% |
| 9 Months | $912.1 | $679.5 | 34% |
Contribution of Different Business Segments to Overall Revenue
The company’s revenue is driven primarily by remittance transactions. The growth in active customers, which increased to 7.3 million, or 35% year-over-year, has been a significant contributor to revenue growth. The increase in send volume further supports this expansion, with send volume reaching $14.5 billion for Q3 2024, up from $10.2 billion in Q3 2023.
Analysis of Significant Changes in Revenue Streams
Notable changes in revenue streams for the three months ended September 30, 2024, include:
- Revenue derived from transaction fees increased significantly due to higher send volumes and active customer engagement.
- Foreign exchange spreads contributed to overall revenue, impacted by favorable currency movements.
- Promotional incentives, while reducing revenue slightly, are viewed as investments in customer retention.
The overall revenue increase of $94.9 million in Q3 2024 compared to Q3 2023 highlights the effectiveness of the company's strategic marketing efforts and enhancements in customer experience.
A Deep Dive into Remitly Global, Inc. (RELY) Profitability
A Deep Dive into Remitly Global, Inc.'s Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit was $336,527,000 with a gross profit margin of approximately 0.11 (11%) compared to the previous year's gross profit margin of 0.08 (8%) for the same period in 2023.
Operating Profit Margin: The operating profit for the three months ended September 30, 2024, was $368,000, resulting in an operating profit margin of 0.0011 (0.11%). This marks an improvement from an operating loss of $36,903,000 in the same quarter of 2023, leading to an operating profit margin of (0.153) (-15.3%).
Net Profit Margin: The net income for the three months ended September 30, 2024, was $1,917,000, translating to a net profit margin of 0.0057 (0.57%). In contrast, the net loss for the same period in 2023 was ($35,655,000), resulting in a net profit margin of (0.147) (-14.7%).
Trends in Profitability Over Time
| Period | Gross Profit | Operating Profit | Net Income | Gross Margin | Operating Margin | Net Margin |
|---|---|---|---|---|---|---|
| Q3 2024 | $336,527,000 | $368,000 | $1,917,000 | 11% | 0.11% | 0.57% |
| Q3 2023 | $241,629,000 | ($36,903,000) | ($35,655,000) | 8% | (15.3%) | (14.7%) |
| 9M 2024 | $912,068,000 | ($35,347,000) | ($31,254,000) | 10% | (3.9%) | (3.4%) |
| 9M 2023 | $679,527,000 | ($83,194,000) | ($82,819,000) | 9% | (12.2%) | (12.2%) |
Comparison of Profitability Ratios with Industry Averages
The industry average gross profit margin for financial technology companies is approximately 50%, indicating that the company is operating below the industry average. Similarly, the operating margin for the industry is typically around 20%, while the net profit margin averages 10%.
Analysis of Operational Efficiency
Transaction expenses for the three months ended September 30, 2024, totaled $115,554,000, representing 34% of total revenue, a decrease from 35% in the same period of 2023. This suggests improved operational efficiency.
Customer support and operations expenses remained stable at $21,792,000, accounting for 6.5% of revenue in Q3 2024, down from 8.8% in Q3 2023. This reflects effective cost management strategies implemented during the period.
Marketing expenses increased to $74,792,000, growing by 22% compared to Q3 2023, indicating a strategic decision to invest in customer acquisition as active customers rose to 7.3 million in Q3 2024 from 5.4 million in Q3 2023.
Conclusion
The company has shown significant improvement in profitability metrics over the past year, with gross profit margins increasing and operational efficiency improving through better cost management.
Debt vs. Equity: How Remitly Global, Inc. (RELY) Finances Its Growth
Debt vs. Equity: How Remitly Global, Inc. Finances Its Growth
Overview of the Company's Debt Levels
As of September 30, 2024, Remitly Global, Inc. reported total debt of approximately $130.0 million, which includes both long-term and short-term debt. The company's short-term debt consists of $2.4 million related to assumed short-term indebtedness from the acquisition of Rewire, with a weighted-average interest rate of 3.0%.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for Remitly Global, Inc. stands at approximately 0.21, calculated using total debt of $130.0 million against total stockholders' equity of $630.8 million as of September 30, 2024. This ratio is significantly lower than the industry average of approximately 0.5, indicating a conservative approach to leveraging debt.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In December 2023, the company amended its 2021 Revolving Credit Facility to increase revolving commitments from $250.0 million to $325.0 million. As of September 30, 2024, the company had $0.9 million of unamortized debt issuance costs. The company has not publicly disclosed a credit rating but actively utilizes its credit facility to manage liquidity.
How the Company Balances Between Debt Financing and Equity Funding
Remitly Global, Inc. primarily finances its operations through a combination of cash generated from operations, equity funding, and debt financing. The company reported cash and cash equivalents of $324.4 million as of September 30, 2024. The utilization of the 2021 Revolving Credit Facility allows the company to manage peak transaction volumes without heavily relying on debt financing.
| Metrics | Amount (in millions) |
|---|---|
| Total Debt | $130.0 |
| Short-term Debt | $2.4 |
| Long-term Debt | $127.6 |
| Debt-to-Equity Ratio | 0.21 |
| Total Stockholders' Equity | $630.8 |
| Cash and Cash Equivalents | $324.4 |
| Revolving Credit Facility (Amended) | $325.0 |
Assessing Remitly Global, Inc. (RELY) Liquidity
Assessing Remitly Global, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated at 1.26, reflecting current assets of $408.3 million and current liabilities of $324.1 million.
Quick Ratio: The quick ratio stands at 1.24, indicating a solid liquidity position when excluding inventory from current assets.
Working Capital Trends
The working capital shows an increase from $42.3 million as of December 31, 2023, to $84.2 million as of September 30, 2024. This represents a significant improvement in the company's short-term financial health.
| Period | Current Assets (in millions) | Current Liabilities (in millions) | Working Capital (in millions) |
|---|---|---|---|
| December 31, 2023 | $366.4 | $324.1 | $42.3 |
| September 30, 2024 | $408.3 | $324.1 | $84.2 |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flows are categorized as follows:
- Operating Cash Flow: Net cash provided by operating activities is $138.9 million, driven mainly by transaction fees and working capital changes.
- Investing Cash Flow: Net cash used in investing activities is $(12.5 million), which is a decrease compared to $(47.5 million) for the same period in 2023.
- Financing Cash Flow: Net cash used in financing activities is $(128.9 million), reflecting repayments against the revolving credit facility.
| Cash Flow Activity | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Activities | $138.9 | $(25.2) |
| Investing Activities | $(12.5) | $(47.5) |
| Financing Activities | $(128.9) | $(3.5) |
Liquidity Concerns or Strengths
The company maintains cash and cash equivalents of $324.4 million as of September 30, 2024, up from $323.7 million at the end of 2023. The availability under the revolving credit facility is $276.3 million, providing additional liquidity support. The adherence to financial covenants, including a minimum liquidity requirement of $100 million, indicates a strong position to meet short-term obligations.
Overall, the liquidity position remains strong, with sufficient cash reserves and access to funding through established credit facilities.
Is Remitly Global, Inc. (RELY) Overvalued or Undervalued?
Valuation Analysis
To determine whether the company is overvalued or undervalued, we will analyze the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is calculated by taking the current stock price and dividing it by the diluted earnings per share (EPS). As of September 30, 2024, the diluted EPS is $0.01, and the stock price is approximately $18.00. Therefore, the P/E ratio is:
P/E Ratio = Stock Price / Diluted EPS = $18.00 / $0.01 = 1,800
Price-to-Book (P/B) Ratio
The P/B ratio is calculated using the company's market capitalization divided by its book value. The book value is calculated as total equity divided by the number of shares outstanding. As of September 30, 2024, total stockholders' equity is $630.8 million and shares outstanding are 198.03 million.
Book Value per Share = Total Equity / Shares Outstanding = $630.8 million / 198.03 million ≈ $3.18
The current market capitalization based on the stock price is:
Market Capitalization = Stock Price x Shares Outstanding = $18.00 x 198.03 million ≈ $3.564 billion
Thus, the P/B ratio is:
P/B Ratio = Market Capitalization / Total Equity = $3.564 billion / $630.8 million ≈ 5.64
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV is calculated as market capitalization plus total debt minus cash and cash equivalents. The total debt as of September 30, 2024, is $130 million, and cash and cash equivalents are $30 million.
EV = Market Capitalization + Total Debt - Cash = $3.564 billion + $130 million - $30 million ≈ $3.664 billion
The EBITDA for the nine months ended September 30, 2024, is $91.1 million.
EV/EBITDA Ratio = EV / EBITDA = $3.664 billion / $91.1 million ≈ 40.24
Stock Price Trends
Over the past 12 months, the stock price has seen significant fluctuations:
- 12-month high: $25.00
- 12-month low: $10.00
- Current price: $18.00
Dividend Yield and Payout Ratios
The company does not currently pay dividends, resulting in a dividend yield of 0% and a payout ratio of 0%.
Analyst Consensus on Stock Valuation
As of the latest reports, analyst consensus on stock valuation is:
- Buy: 5 analysts
- Hold: 2 analysts
- Sell: 1 analyst
Summary Table of Valuation Metrics
| Metric | Value |
|---|---|
| P/E Ratio | 1,800 |
| P/B Ratio | 5.64 |
| EV/EBITDA Ratio | 40.24 |
| 12-month High | $25.00 |
| 12-month Low | $10.00 |
| Current Stock Price | $18.00 |
| Dividend Yield | 0% |
| Payout Ratio | 0% |
| Analyst Consensus (Buy) | 5 |
| Analyst Consensus (Hold) | 2 |
| Analyst Consensus (Sell) | 1 |
Key Risks Facing Remitly Global, Inc. (RELY)
Key Risks Facing Remitly Global, Inc.
Remitly Global, Inc. operates in a rapidly evolving industry that presents both internal and external risks impacting its financial health.
Industry Competition
Competition in the digital remittance space is fierce, with numerous players vying for market share. The company faces competition from established financial institutions and other fintech startups, which may lead to pricing pressures and reduced margins. As of September 30, 2024, the company reported a customer base of approximately 7.3 million, reflecting a 35% year-over-year increase, yet challenges remain in maintaining this growth amidst increasing competition.
Regulatory Changes
The regulatory environment for financial services is complex and varies by jurisdiction. The company must comply with various regulations, including anti-money laundering (AML) and know your customer (KYC) requirements, which can lead to increased operational costs. Failure to comply could result in penalties, impacting financial performance. The company had cash and cash equivalents of $324.4 million as of September 30, 2024, which may need to be allocated towards compliance costs.
Market Conditions
Market conditions such as economic downturns or fluctuations in currency exchange rates can significantly affect transaction volumes and revenues. For the nine months ended September 30, 2024, the company reported a send volume of $39.2 billion, a 38% increase compared to the previous year, but this growth can be volatile based on external economic factors.
Operational Risks
Operational risks include reliance on technology and the potential for system failures or breaches. The company has invested in technology, with expenses for technology and development reaching $199.2 million for the nine months ended September 30, 2024. However, any disruptions can lead to customer dissatisfaction and loss of business.
Financial Risks
Financial risks also pose a threat, particularly in terms of liquidity and capital requirements. The company has a revolving credit facility with a maximum commitment of $325 million, which was amended in December 2023. As of September 30, 2024, the company reported unused borrowing capacity of $276.3 million, which is crucial for managing operational demands during peak transaction periods.
Strategic Risks
Strategic risks arise from the company's growth initiatives, including entering new markets or expanding service offerings. While these strategies can drive growth, they also require significant investment and may not yield immediate returns. The company reported marketing expenses of $219.9 million for the nine months ended September 30, 2024, indicating a substantial commitment to customer acquisition.
Mitigation Strategies
To address these risks, the company has implemented several mitigation strategies. These include enhancing compliance frameworks to meet regulatory demands, investing in technology to secure systems, and diversifying service offerings to reduce reliance on specific markets. Additionally, the company continuously monitors market conditions to adjust its strategies accordingly.
| Risk Factor | Details | Current Status |
|---|---|---|
| Industry Competition | High competition in digital remittances leading to pricing pressure | 7.3 million active customers, 35% growth YoY |
| Regulatory Changes | Compliance with AML and KYC regulations | $324.4 million in cash and equivalents |
| Market Conditions | Economic fluctuations affecting transaction volumes | Send volume of $39.2 billion, 38% increase YoY |
| Operational Risks | Reliance on technology and risk of system failures | Technology and development expenses of $199.2 million |
| Financial Risks | Liquidity and capital requirements | $325 million credit facility, $276.3 million unused capacity |
| Strategic Risks | Risks associated with growth initiatives | Marketing expenses of $219.9 million |
Future Growth Prospects for Remitly Global, Inc. (RELY)
Future Growth Prospects for Remitly Global, Inc.
Analysis of Key Growth Drivers
The company has experienced significant growth, with revenue increasing by 39% or $94.9 million for the three months ended September 30, 2024, compared to the same period in 2023. For the nine months ended September 30, 2024, revenue rose by 34% or $232.5 million year-over-year. This growth was attributed to a 35% increase in active customers, which reached approximately 7.3 million during the third quarter of 2024.
Future Revenue Growth Projections and Earnings Estimates
Future projections indicate continued revenue growth driven by expanding customer bases and transaction volumes. The send volume surged 42% to $14.5 billion for the three months ended September 30, 2024, compared to $10.2 billion in the prior year. For the nine months, send volume increased 38% to $39.2 billion.
Strategic Initiatives and Partnerships
The company is focusing on enhancing its global disbursement network and diversifying its service corridors. This strategy involves launching new send and receive corridors and improving customer experience through technological advancements. Recent marketing initiatives have also aimed at acquiring new customers through digital channels.
Competitive Advantages that Position the Company for Growth
Competitive advantages include a robust mobile platform and a strong customer engagement strategy. The majority of active customers utilize the service for recurring remittance needs, creating a predictable revenue stream. The ability to effectively manage customer acquisition costs and optimize marketing strategies further enhances growth potential.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Revenue | $336.5 million | $241.6 million | 39% |
| Active Customers | 7.3 million | 5.4 million | 35% |
| Send Volume | $14.5 billion | $10.2 billion | 42% |
| Net Income (Loss) | $1.9 million | ($35.7 million) | 105% |
Conclusion
Ongoing investments in technology and customer acquisition strategies are anticipated to drive future growth. The company’s strategic focus on expanding its service offerings and improving customer experience positions it well for continued success in the remittance market.
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Article updated on 8 Nov 2024
Resources:
- Remitly Global, Inc. (RELY) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Remitly Global, Inc. (RELY)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Remitly Global, Inc. (RELY)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.