Remitly, which provides cross-border remittances and financial services for immigrants, today began trading on the NASDAQ Global Select Market. The Seattle-based fintech, with $312.6 billion in assets, priced its initial public offering (IPO) at $43 a share under the ticker symbol RELY.
Shares climbed to a high of $50.70 at 11:45 a.m. before dipping to $46.15 at 1:40 p.m. The stock rebounded to close at $48.45, up 12.67%.
Remitly’s IPO offered 12,162,777 shares of its common stock to the public, consisting of 7 million shares the company sold to raise $301 million and 5.16 million shares of common stock offered by Remitly’s existing shareholders.
As part of the IPO, underwriters have a 30-day option to purchase up to an additional 1,824,417 shares of common stock — 1,269,627 shares from Remitly and 554,790 shares from current stockholders — at the IPO price, less underwriting discounts and commissions.
The IPO will help the fintech expand into new corridors, Matt Oppenheimer, Remitly co-founder and CEO told Bank Automation News.
“Becoming a public company will accelerate Remitly’s ability to serve more customers, expand into new corridors and continue to extend product offerings into broader financial services,” Oppenheimer said. “We’re excited in the long term about offering a wider range of financial services to serve our customers and deliver on our important vision, which is to transform the lives of immigrants and their families by providing the most trusted financial services on the planet.”
Remitly reported total revenues of $202.1 million in its August S-1 filing — a year-over-year growth of 92% from the same period in 2020 when the company reported $105.1 million revenue.
The fintech’s send volume — representing the amount of money it transferred for customers — was $16.1 billion from June 30, 2020, to June 30, 2021. That represents 1% of the $1.5 trillion in estimated total migrant remittance inflow volume in 2020 — which generates approximately $40 billion in transaction fees globally, the S-1 stated.
While it certainly presents an opportunity for growth, the company has also consistently lost money, a fact it cites as a possible risk for investors. Remitly reported a net loss of $9.2 million for the six months ending June 30, 2021, down from $21.1 million during the same period in 2020. The company also incurred net losses of $51.4 million in fiscal year ending Dec. 31, 2019, and $32.6 million in fiscal year ending Dec. 31, 2020.
While the filing did not name specific competitors, it noted that digital-first cross-border payment providers, incumbent providers, online-only banks, cryptocurrency players and other financial services offered by banks could offer cross-border remittances. Though Remitly counts traditional banks as competition, it does report a “relationship” with more than 15 top-tier banks, including Barclays, Chase, HSBC and Wells Fargo, according to its IPO filing.
“These relationships provide our customers an array of payment (or pay-in) options to fund remittances with a bank account, card-based payment, or alternative payment method,” the filing stated. “Our disbursement network provides our customers with a choice of various digital and traditional delivery methods and enables us to disburse (or pay-out) funds within minutes, or even seconds, to more than 3.5 billion bank accounts, over 630 million mobile wallets and alternative payment methods, and over 355,000 cash pickup locations (including retail outlets and banks).”
The company also partnered with Sunrise Bank to launch Passbook in February 2020, a digital banking service available through a mobile app designed for immigrants, the S-1 reported.
“With tailored [know your customer] and identity verification processes using our existing technology platform, they can sign up for a Passbook account in under ten minutes,” Remitly noted. “While Passbook is still in early stages, we believe that, over time, we will be able to utilize the data and insights gathered from our remittance customers to tailor meaningful financial services for the needs of our immigrant customers, which will give us broad access to shared revenue and fees from the bank partners to whom we market these financial services.”
That would allow the remittance company to diversify its revenue streams across multiple products while still serving the same customers, it added.
Additional details on today’s IPO
Goldman Sachs and JP Morgan are the lead book-running managers for the proposed offering with Barclays, Citigroup and William Blair acting as joint book-running managers. JMP Securities, KeyBanc Capital Markets, Wolfe I Nomura Strategic Alliance, Cabrera Capital Markets LLC and Blaylock Van, LLC will act as co-managers for the proposed offering.
In addition to the shares sold in the IPO, Remitly announced the concurrent sale of 581,395 shares of its common stock to PayU Fintech Investments B.V., an existing stockholder, at a price per share equal to the initial public offering price, in a private placement. The sale of these shares will not be registered under the Securities Act of 1933, as amended.
The offering is expected to close on Sept. 27, subject to the satisfaction of customary closing conditions.