Remitly is a leading digital financial services provider for immigrants and their families in over 170 countries around the world.
Our differentiated approach to addressing the complexity of cross-border remittances and financial services is composed of four core elements:
Our Revenue Model
Initial Public Offering and Private Placement
Key Business Metrics
As active customers are measured on a quarterly basis, the data for the full-year periods for active customers is not meaningful, and therefore is only presented on a quarterly basis herein.
We believe that the number of our active customers is an important indicator of customer engagement and the overall growth of our business.
We measure send volume to assess the scale of remittances sent using our platform. Our customers mostly send from the United States, Canada, United Kingdom, other countries in Europe, and Australia. The recipients are located in over 160 countries and territories across the globe; the largest receive countries by send volume include India, Mexico, and the Philippines.
Key Factors Affecting Our Performance
Customer Retention and High Customer Engagement
We measure active customers to monitor the growth and performance of our customer base. The majority of our active customers send money for recurring, non-discretionary needs multiple times per month, providing a reoccurring revenue stream with high visibility and predictability.
Attracting New Customers
Efficiently acquiring customers is critical to our growth and maintaining attractive customer economics, which is impacted by online marketing competition, our ability to effectively target the right demographic, and competitor pricing.
Our Technology Platform
Macroeconomic and Geopolitical Changes
Impact of the COVID-19 Pandemic
Throughout the COVID-19 pandemic, the Company has remained focused on serving its customers and communities, as well as the well-being of its employees.
Components of Results of Operations
Costs and expenses
Reserve for Transaction Losses
Customer Support and Operations
Technology and Development
Depreciation and Amortization
Depreciation and amortization expense includes depreciation on property and equipment and leasehold improvements, as well as the amortization of internal-use software costs and amortization of intangible assets.
Interest income consists primarily of interest income earned on our cash and cash equivalents.
Interest expense consists primarily of the interest expense on our borrowings.
Other Income (Expense), net
Other income (expense), net primarily consists of foreign exchange gains and losses.
Results of Operations
Comparison of the three and nine months ended September 30, 2022 and 2021
Customer Support and Operations Expenses
As a percentage of revenue, customer support and operations expenses increased to 11% for the nine months ended September 30, 2022, from 10% for the nine months ended September 30, 2021, due to an increase in staffing to support growth in new customer acquisition.
Technology and Development Expenses
General and Administrative Expenses
Depreciation and Amortization
Depreciation and amortization increased $0.5 million, or 40%, for the three months ended September 30, 2022, compared to the three months ended September 30, 2021. This increase is primarily due to an increase in depreciation for internally developed software and computers.
Depreciation and amortization increased $1.0 million, or 25%, for the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021. This increase is primarily due to an increase in depreciation for internally developed software, computers, and leasehold improvements.
Interest expense changed by an immaterial amount for the three- and nine-month periods ended September 30, 2022, as compared to the three- and nine-month periods ended September 30, 2021.
Other income, net increased $1.4 million for the three-month period ended September 30, 2022, compared to the three-month period ended September 30, 2021.
Other income, net increased $1.1 million for the nine-month period ended September 30, 2022, compared to the nine-month period ended September 30, 2021.
The provision for income taxes increased $0.4 million, or 36%, for the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021.
The increase in income taxes was primarily due to an increase in taxable income in line with business growth.
Adjusted EBITDA is a key output measure used by our management to evaluate our operating performance, inform future operating plans, and make strategic long-term decisions, including those relating to operating expenses and the allocation of internal resources.
Adjusted EBITDA has limitations as a financial measure, should be considered as supplemental in nature, and is not meant as a substitute for the related financial information prepared in accordance with GAAP. These limitations include the following:
•Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
•Adjusted EBITDA does not reflect the effect of income taxes that may represent a reduction in cash available to us;
•Adjusted EBITDA does not reflect the effect of gains and losses from the remeasurement of foreign currency assets and liabilities into their functional currency;
•other companies, including companies in our industry, may calculate Adjusted EBITDA differently from how we calculate this measure or not at all, which reduces its usefulness as a comparative measure.
Liquidity and Capital Resources
Sources of Liquidity and Material Future Cash Requirements
Cash used in investing activities consists primarily of purchases of property and equipment, capitalization of internal-use software, and cash paid for acquisitions of businesses.
Contractual Obligations and Commitments
Off-Balance Sheet Arrangements
Critical Accounting Policies and Estimates
There have been no material changes to the Company’s critical accounting policies and estimates as compared to those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in our Annual Report on Form 10-K for the year ended December 31, 2021.
Recently Issued Accounting Pronouncements
See Note 2, “Basis of Presentation and Summary of Significant Accounting Policies,” in the notes to the Company’s Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.
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