Remitly (NASDAQ:RELY) Misses Q1 Sales Targets, Stock Drops 20.7%

Kayode Omotosho /
2024/05/01 4:45 pm EDT

Online money transfer platform Remitly (NASDAQ:RELY) missed analysts' expectations in Q1 CY2024, with revenue up 32% year on year to $269.1 million. On the other hand, the company's outlook for the full year was close to analysts' estimates with revenue guided to $1.24 billion at the midpoint. It made a GAAP loss of $0.11 per share, improving from its loss of $0.16 per share in the same quarter last year.

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Remitly (RELY) Q1 CY2024 Highlights:

  • Revenue: $269.1 million vs analyst estimates of $273.9 million (1.7% miss)
  • EPS: -$0.11 vs analyst estimates of -$0.15 (25.2% beat)
  • The company reconfirmed its revenue guidance for the full year of $1.24 billion at the midpoint
  • Gross Margin (GAAP): 59.1%, up from 53.9% in the same quarter last year
  • Free Cash Flow was -$61.12 million compared to -$35.06 million in the previous quarter
  • Active Customers: 6.2 million, up 1.6 million year on year
  • Market Capitalization: $3.43 billion

“We are pleased with our strong start to the year that reflects our resilient customer base and superior customer 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 50.7% annually. This quarter, Remitly reported solid 32% year-on-year revenue growth but fell short of Wall Street's expectations.

Remitly Total Revenue

Ahead of the earnings results, analysts were projecting sales to grow 30.8% over the next 12 months.

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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 44.8% annually to 6.2 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 Q1, Remitly added 1.6 million active buyers, translating into 34.8% 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 2.1% year on year to $43.41 per buyer.

Key Takeaways from Remitly's Q1 Results

It was unfortunate to see Remitly miss analysts' revenue estimates this quarter as its active customer count fell short. On the bright side, its adjusted EBITDA and EPS beat.

Looking ahead, the company's full-year revenue guidance slightly missed Wall Street's forecast. Overall, the results could have been better, especially considering Remitly's premium valuation. The company is down 20.7% on the results and currently trades at $13.89 per share.

So should you invest in Remitly 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.