New IPO filing – Remitly #Fintech Global money transfer company, previously valued at $15.B in Jul 2020

Remitly, a Seattle startup that helps immigrants in developed countries send money home to family and friends in developing nations has filed confidentially for an IPO. Pricing and terms will be known by early July.

Remitly CEO Matt Oppenheimer

Remitly competes with Western Union, Transfer Wise, Money Gram, Xoom and others in the $550B remittances market.

Remitly competitor TransferWise has also seen its valuation rise, with investors recently pegging its worth at $5 billion during a secondary share sale in July 2020.

Matt Oppenheimer, started Remitly in 2011 after running internet and mobile banking at Barclays in Kenya with Shivaas Gulati and Josh Hug, as cofounders.

Remitly eliminates forms, codes, agents, and other fees typically associated with the international money transfer process. 

Send money to M. Lhuillier with Remitly

Remitly started with the Philippines market, but today lets over 4M consumers ship money to 50 countries, worldwide.

Remitly Review 2021: Low-Cost Platform to Transfer Money Abroad

It owns no retail outlets. Customers can only initiate a transfer digitally, although on the receiving end in developing countries, Remitly partners with cash-pickup locations.

On average, money transfer agents charge a 13% fee on remittance transactions.  For those sending money home, the appeal of faster and less expensive money transfers is obvious.

HOW REMITLY WORKS WITH GCASH? |Tesha EK - YouTube

Remitly makes money by charging transaction fees and marking up foreign exchange rates. Fees vary widely by country, but on average, Remitly charges about 1.5% for a transfer.

Western Union, which owns many brick-and-mortar locations and brought in $852 million in profit last year, charges roughly 5%.

Remitly expands coverage for mobile remittance program to 40 countries,  nears 1K employee mark - GeekWire

Remitly has grown revenue nearly 100% annually over the past five years, reaching an estimated $80M in 2018 and over $250M by 2020.

Remitly customer growth increased by 200% in 2020, compared to a year ago, with 3 million customers served in aggregate spread evenly across the 17 send-from markets and the 57 send-to countries.

Remitly | Impact 20 | Fortune

Remitly has over 1000 employees has raised over $400M in funding so far, with over $80M in debt alone. It last raised money from Visa in March 2021, and previously $85M at $1.5B in valuation on July 2020. It is seeking $4 – $5B valuation.

Remitly will use the IPO funds to invest in PassBook, a banking and debit card product aimed at multinational workers, who frequently face hurdles when trying to set up bank accounts.

Jeff Bezos-backed Remitly announces free money transfers to the Philippines  - GeekWire

Remitly has acquired 2 startups – Symphoni, an AI Product in the #Fintech space and Wire, a mobile messaging app.

Valuation

At $4B valuation and about $220M in revenue, (estimated), 18X last twelve months valuation is rich in the #fintech space but in line with $AFRM at 24X P/S. Given the rapid growth in customers this may be justified, but until we know the final valuation sought and the revenue growth this seems rich.

Analysis

With over 500 IPOs in the last 6 months, the pickings are great. Remitly will do very well during IPO time if the market conditions are good.

I do think however, that I am going to wait to see their final numbers and decide if they will be in the top 1% of IPOs that I will invest in.

What we still need to review:

  1. Revenue, customer growth in 2020 and expected projections
  2. Gross Margins (estimated at 30 – 40%)
  3. Average $ per transaction and average take rate
  4. Repeat customer usage of platform – do customers like using it or are they very price conscious and use the platform with lowest fees each time?