Remitly (NASDAQ:RELY) Beats Q4 Sales Targets, Stock Jumps 11.6%

Petr Huřťák /
2024/02/21 4:14 pm EST

Online money transfer platform Remitly (NASDAQ:RELY) reported Q4 FY2023 results exceeding Wall Street analysts' expectations, with revenue up 38.6% year on year to $264.8 million. The company's full-year revenue guidance of $1.24 billion at the midpoint also came in 2.4% above analysts' estimates. It made a GAAP loss of $0.19 per share, down from its profit of $0.05 per share in the same quarter last year.

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Remitly (RELY) Q4 FY2023 Highlights:

  • Revenue: $264.8 million vs analyst estimates of $261.4 million (1.3% beat)
  • EPS: -$0.19 vs analyst estimates of -$0.20 (2.6% beat)
  • Management's revenue guidance for the upcoming financial year 2024 is $1.24 billion at the midpoint, beating analyst estimates by 2.4% and implying 31.1% growth (vs 45% in FY2023)
  • Free Cash Flow was -$37.06 million, down from $31.64 million in the previous quarter
  • Gross Margin (GAAP): 58.8%, up from 52.3% in the same quarter last year
  • Active Customers: 5.9 million, up 1.7 million year on year
  • Market Capitalization: $3.33 billion

“Our strong fourth quarter and full year 2023 performance is the direct result of delighting our customers with a reliable and fast cross-border payments experience,” said Matt Oppenheimer, co-founder and Chief Executive Officer, Remitly.

With Amazon founder Jeff Bezos as an early investor, Remitly (NASDAQ:RELY) is an online platform that enables consumers to safely and quickly send money globally.

Online Marketplace

Marketplaces have existed for centuries. Where once it was a main street in a small town or a mall in the suburbs, sellers benefitted from proximity to one another because they could draw customers by offering convenience and selection. Today, a myriad of online marketplaces fulfill that same role, aggregating large customer bases, which attracts commission-paying sellers, generating flywheel scale effects that feed back into further customer acquisition.

Sales Growth

Remitly's revenue growth over the last three years has been exceptional, averaging 56.3% annually. This quarter, Remitly beat analysts' estimates and reported impressive 38.6% year-on-year revenue growth.

Remitly Total Revenue

For the upcoming financial year, management expects revenue to reach $1.24 billion at the midpoint, representing 31.1% growth compared to the 45% increase in FY2023.

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Usage Growth

As an online marketplace, Remitly generates revenue growth by increasing both the number of buyers on its platform and the average order size in dollars.

Over the last two years, Remitly's active buyers, a key performance metric for the company, grew 46.5% annually to 5.9 million. This is among the fastest growth rates of any consumer internet company, indicating that users are excited about its offerings.

Remitly Active Customers

In Q4, Remitly added 1.7 million active buyers, translating into 40.5% year-on-year growth.

Revenue Per Buyer

Average revenue per buyer (ARPB) is a critical metric to track for consumer internet businesses like Remitly because it measures how much the company earns in transaction fees from each buyer. Furthermore, ARPB gives us unique insights as it's a function of a user's average order size and Remitly's take rate, or "cut", on each order.Remitly ARPB

Remitly's ARPB has declined over the last two years, averaging 2%. Although it's unfortunate to see the company lose its pricing power, it was still able to achieve strong buyer growth. This quarter, ARPB declined 1.3% year on year to $44.87 per buyer.

Key Takeaways from Remitly's Q4 Results

We were very impressed by Remitly's robust user growth this quarter. We were also excited it produced strong revenue growth and forward looking guidance was also optimistic. Zooming out, we think this was an impressive quarter that should delight shareholders. The stock is up 11.6% after reporting and currently trades at $19.75 per share.

Remitly may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.