Stock Story -
Online money transfer platform Remitly (NASDAQ:RELY) reported Q2 CY2024 results topping analysts' expectations, with revenue up 30.9% year on year to $306.4 million. The company expects the full year's revenue to be around $1.24 billion, in line with analysts' estimates. It made a GAAP loss of $0.06 per share, improving from its loss of $0.11 per share in the same quarter last year.
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Remitly (RELY) Q2 CY2024 Highlights:
- Revenue: $306.4 million vs analyst estimates of $302 million (1.5% beat)
- EPS: -$0.06 vs analyst estimates of -$0.10 (38.2% beat)
- The company slightly lifted its revenue guidance for the full year from $1.24 billion to $1.24 billion at the midpoint
- Gross Margin (GAAP): 58.3%, up from 56.6% in the same quarter last year
- Free Cash Flow was -$16.48 million compared to -$57.75 million in the previous quarter
- Active Customers: 6.9 million, up 1.87 million year on year
- Market Capitalization: $2.61 billion
With Amazon (NASDAQ:AMZN) 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 MarketplaceMarketplaces 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 GrowthRemitly's revenue growth over the last three years has been impressive, averaging 46.1% annually. This quarter, Remitly beat analysts' estimates and reported solid 30.9% year-on-year revenue growth.
Ahead of the earnings results, analysts were projecting sales to grow 29.4% over the next 12 months.
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 43.7% annually to 6.9 million. This is among the fastest growth rates of any consumer internet company, indicating that users are excited about its offerings.
In Q2, Remitly added 1.87 million active buyers, translating into 37.1% year-on-year growth.
Revenue Per BuyerAverage 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's ARPB has declined over the last two years, averaging 2.3%. 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 4.5% year on year to $44.41 per buyer.
Key Takeaways from Remitly's Q2 Results We were very impressed by Remitly's buyer additions this quarter, which helped it beat analysts' revenue expectations and enabled the company to lift its full-year revenue guidance. We were also glad it beat Wall Street's EPS estimates. Overall, we think this was a really good quarter that should please shareholders. The stock traded up 9.4% to $14.49 immediately following the results.
