Remitly Global — a fast-growing emerging-market money transfer IPO breakdown

Marcos Bento
10 min readSep 2, 2021


Every Sunday in Hong Kong and Singapore one can expect streets, shopping malls, and public spaces bustling with movement of people going after their personal chores and enjoying their free time. Sundays are also the busiest day of the week for one type of business: Remittance shops. Immigrant women and men spend hours of their only allowed day off per week lined up in these shops to send their hard-earned money in the hopes of supporting the financial needs of their families back in their home countries. By one account, for every $100 dollars of global GDP in 2020, $0.826 comprise of personal transfers and compensation of employees. But for some countries, such as Somalia, El Salvador and Haiti, remittances alone are responsible for 35.3%, 24.1% and 23.2% of their annual GDP, respectively.

Out of a personal need for converting and sending money abroad while working in Kenya, Remitly was founded ten years ago and this week the founder-led Seattle-based company filed its prospectus with the SEC to become a publicly traded company. It shows that the company is responsible for 1% of the $1.5 trillion dollars of migrant remittance flow, solid transaction unit economics and 100%+ annual growth rates.


Remittances are funds sent by immigrants and migrant workers to their families and friends in their original country. The industry has scaled as banks and money transfer operators set their physical networks in the countries with the most active currency corridors (US, UK, Philippines, China, India, Mexico). More recently, digital-first cross-border payment and financial services startups emerged as an alternative for these transactions.

At a foundational level, these companies earn revenue from two main sources: transaction fees and foreign exchange spreads charged against the customer’s principal. Therefore, the key sources of moat (or competitive advantage) include price and speed of the remittance and to a greater extent the breath of the network of funding and disbursement alternatives (methods of payments and cash distribution options).

In the case of Remitly, customers can fund their transfers through bank accounts, credit or debit cards or direct deposits. Delivery methods vary by country but include mobile wallets, bank transfers and physical cash pickups, with the ability to select the speed of delivery.

This 30-sec video is an excellent opportunity to recognize how customer-centric the app is in minimizing friction and the number of steps required to complete a transaction, especially when a potential customer compare with the traditional brick-and-mortar experience. The result is an app that is easy and transparent to complete a transaction, creating trust with consumers and improving incentives for continued use.

The company disclosed in its prospectus that send volume — or the sum of all customer’s principal net of fees — increased to $12.1 billion (+70.4% YoY) in 2020, compared to $7.1 billion in 2019 and $9.2 billion, or +78% YoY, for the six months ended June 30, 2021, compared to $5.2 billion for the six months ended June 30, 2020, mainly due to higher transaction volumes from new and existing customers, partially offset by lower average send amount per active customers as a result of increasing geographic diversification.

On the other side of the transactions, their largest receiving countries include India, the Philippines, and Mexico, representing 75% and 70% of send volumes in 2020 and for the six months in 2021, respectively.

Revenues associated with send volumes originated from the United States represented 77% of total revenue in 2020 (down from 83% in 2019). Canada is the second largest sending volume country with 12% and 10% of total revenues for 2020 and 2019, respectively.

The map below reveals the breath of their 1,700 currency corridors and the opportunities ahead: the company does not yet support money transfers from the US to Canada nor to Europe, and many countries in Africa and in the Middle East have yet to become online.

These remittance transactions can only be completed by relying on a global network of banks, financial institutions, payment processors and retail outlets in the sending and receiving countries, providing a range of payment options to fund remittances, and enabling Remitly to disburse funds 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). These partner relationships help drive a better customer experience, including faster transfers, higher acceptance rates, and enhanced reliability.

The trusted relationships with customers and the repeat nature of their sending behavior have resulted in strong revenue retention rates, increased ability to establish partnerships, greater access to data that allow Remitly to target the next best customer and to offer new services. This is how the company spin its flywheel and generate stronger network effects.

To prove how strong the network effects is, Remitly shows what is arguably the most impressive chart in the IPO prospectus by breaking down the revenue associated per customer cohort acquired during a particular year and its associated revenue for each year thereafter. On average, revenue in the first full calendar year for an annual cohort grows more than 160% compared to the acquisition year, retaining over 90% of the revenue generated in the preceding year.

For example, customers acquired in 2019 have an estimated five-year LTV (lifetime value) of $195.1 million and a CAC (customer acquisition cost) of $29.7million. With these estimates I created the graph below to demonstrate how front-loaded their marketing spent is compared to future (and profitable) revenue streams, with an estimated payback period of 10 months.

There is a consistent volume of remittance per active customer in the Remitly platform, even after factoring the increase in the number of sending and receiving countries. Over the past six quarters, the volume of remittance per active customer was $1,976, and in the same period send volume has grown on average 15% sequentially, and the number of active customers grew by 16%. With over 31 million remittances in 2020, customers completed more than 16 transactions in that year, or more than 1.5 per month. These numbers tell part of the sacrifices that immigrants make to support their families.

The company is also branching to new services within the platform: Remitly For Developers and Passbook.

Remitly for Developers is a remittance-as-a-service (RaaS) offering that leverages the company’s global payment network, compliance, and regulatory infrastructure. One use case the company discloses is that business can now use this new RaaS offering to send and receive payments through Remitly payments rails.

Passbook is Remitly’s foray into financial services (think deposits, savings accounts, debit cards, investments). In partnership with a U.S. bank, Passbook can become a unique channel to attract immigrants that are traditionally unbanked and underbanked in the U.S. but have trusted Remitly with their data and their services.


Founder-led companies tend to outperform the public markets over long-periods of time. These companies are more likely to issue more patents than executive-led companies and to continue to be focused on the guiding principles that made them valuable in the first place. And that is why it is important to understand their backgrounds and long-term motivations.

In the case of Remitly, two of the three co-founders still run the business, Matthew Oppenheimer (CEO) and Josh Hug(COO). The other co-founder, Shivaas Gulati, left in 2019, and while there isn’t specific news related to his departure, there were signs that a year earlier that change might have been boiling when the company hired John Scrofano — who now leads Passbook — as director of New Initiatives, a similar role to Shivaas’.

Matt, who a background in the financial services before founding Remitly, has spoken on his Medium page about immigration and his business, and one article worth highlighting relates to focus, a topic that he also speaks extensively. It’s only a 3-min read and will quote one paragraph that I think summarizes how and why the company has got to succeed in fast increments. Do one thing really well, and then move to the next.

As the CEO of Remitly, I’ve aimed to stay focused on the customer and product from Day One. For the first couple of years, we only focused our mobile remittance company on customers sending from the United States to the Philippines. I frequently saw analysts mistakenly assess our focus as slow execution or lack of scale.

For a deeper dive on his main talking points and his approach to leadership and company culture, there is an excellent 2019 Startup Grind interview:

Of note, his LinkedIn profile has the photo of the three co-founders, which tends to be a good sign of a solid and healthy working relationship among them (or at least a good PR strategy).

For a company with more than 1,600 employees (versus 750 in the beginning of 2019), the CEO approval on Glassdoor is 97%, albeit at a low number of ratings.

Now it’s time to review how the company culture and its competitive advantages translate to hard-core numbers.


For the fiscal years 2019 and 2020, the company generated revenues of $126.6 million and $257.0 million, respectively, representing year-over-year growth of approximately 103%, with net losses of $51.4 million and $32.6 million, respectively, for those same years.

Looking at the income statement, the company has maintained a consistent and disciplined approach to managing cost even at high revenue rates.

But the picture gets more interesting when the number of transactions — and its associated costs — are estimated. Assuming 31 million remittance transactions and a $110m in transaction expenses in fiscal year 2020, the cost per transaction is equal to $0.2808. This mean that if there were $46.5m in transaction expenses in the most recent quarter, there were 13 million transactions, and 24.5 million transactions in the first half of the year, an 89% increase YoY in the number of transactions and on par with revenue growth.

Another approach to understand economies of scale for Remitly is looking at revenue per USD million of send volume transacted within the platform. In March 2020 there were $2.448 billion in send volume for $45.7m in revenue, or $186.1 in revenue per USD million of send volume, whereas in June of 2021, this metric was $223.17, representing a 19% increase in five quarters. This is a significant step up considering how massive and competitive the industry is and how much scale matters to achieve profitability.

Once the Remitly discloses more information as a public company, analysts will be able to refine this analysis to understand and forecast how much does economies of scale factor in in the company’s profitability. These are only some of the metrics that management will look to forecast and predict its long-term profitability.

Given its long-term high-growth profile, one can expect that the founders had leverage when dictating the terms of each additional fundraising round, as well as choosing their investor base. The company is backed by well-known and high-profile tech entrepreneurs and executives (Paul Allen, Jeff Bezos and Eric Schmidt), fintech-only heavyweight investors (QED) and notable VCs (DFJ, DN Capital, Stripes Group). Assuming a theoretical IPO of $20 per share, the table below calculates the expected return per investment round according to calculations from the prospectus. Early-stage investors are expected to realize 50x+ returns and growth-stage investors in the 3–5x.

Note: Theoretical IPO price per share


The typical fast-growing technology IPO is US-focused given the sheer size and maturity of its market. Remitly is not one of them and long-term public-market investors that appreciate the importance of international currency flows (and especially to and from emerging economies) will soon have the ability to participate in this play. The same side of the coin also means that with that growth also comes the risks associated with doing business in emerging markets, from regulatory to foreign exchange fluctuations just to name a few obvious risks.

Using Remitly also means that people in Hong Kong, Singapore and elsewhere can send cash to their loved ones with a couple clicks on their phones instead of waiting in long lines, which is another tailwind for the business during Covid-19 times.

From high-profile investors to a disciplined high-growth mode, this is a company to keep a close eye and check their performance in the public markets

This is not an investment advice and should be used for educational purposes only.



Marcos Bento

Writing things that interest me