Remitly Global (RELY) is a software company in the remittance payments space which competes with the likes of Western Union and Paypal. Their app has very strong reviews and a loyal and growing customer base. Revenue is growing at 49% so I think it may interest this board.
They recently reported Q2 earnings and raised guidance for the full year 2023,
Revenue 875-895M → 915-925
EBITDA 5-15M → 33-40
I saw this one had a decent price rise after earnings and the guidance raise has caught my eye. Additionally, international growth is over 100%: Our business outside North America was more than 20% of total revenue in the second quarter, and grew 120% year over year.
Some notes from the Q2 call are as follows,
- Our unit economics remain incredibly strong and are currently higher then the 6x LTV to CAC that we shared at our IPO
- We see word of mouth benefits across regions
- Geographic expansion strategy has delivered new markets and contributed substantially to growth and scale
- 1.6T remittance market and have 2% of it currently
- Improving customer activity and leverage in our transaction costs
- 234M revenue 49%+ yoy
- Scale efficiencies across transaction costs, marketing expenses, and other operating expenses resulted in exceptionally strong EBITDA of 20M in the Q
- Quarterly active customers grew 47% yoy
- 5M quarterly active customers and grew by 1.6M in last year
- Customer acquisition costs down 15% yoy
- International revenue grew 120%, makes up 20% of business
- Several key integration partners, including M-Pesa in Africa
- In largest end market, enabled Apple Pay and Google Pay
- more than 92% of transactions disbursed in less than one hour
- 1.2M ratings for app on Apple with 4.9 rating, 650k on Google play with 4.8 rating
- Sales volume grew 38% yoy to 9.6B
- GAAP net loss was 19M and included 35M of stock comp
- users continue to send money to support families regardless of economic cycles
- Digital options for sending have increased by 700 basis points
- Transaction expense as a percentage of revenue improved 440 basis points yoy
- localized digital marketing, increased creative velocity, improving brand awareness, word of mouth effect, and increasing scale in business outside north America
- improving returns on marketing has been a large driver of operating leverage over past few Qs
- scale has allowed optimizing and experimenting rapidly to determine highest returning marketing spend, highly efficient marketing engine
- Global diversification and increasing scale help mitigate localized macroeconomic issues
- focused on having strong unit economics
- Transaction expense improvement, transaction margin going up, fraud losses coming down, pay-in & payout costs improving
- Haven’t seen any short term fluctuations that have an impact on business, while legacy competitors have
- Added 1,600 payment “corridors” year over year, now in 4,800 corridors
- Focused on not just EBITDA but also operating income and making progress on reducing net losses
Since this is a SaaS company technically it’s on public comps and I compared it to other companies this board likes or previously was interested in.
RELY shines in valuation and revenue growth. Cash flows it looks quite poor on.
I’m definitely looking for some feedback on this one as it’s a small position for me now. Surprised to see there’s no thread on this one, is it just not on anyone’s radar or there’s reasons to stay away?