Shares Of Money-Transfer Fintech Remitly Rise 13% In IPO, Valuing It At $7.8 Billion

Remitly is a Seattle fintech company competing with Western Union WU 0.0 percent and lets customers transfer money internationally using an app. Its shares climbed 13% during its debut day as a publicly-traded company. The company’s market capitalization was $7.8 billion, increasing from $1.5 billion when it last sought private funds in July 2020.

The business was founded in 2010 in the early days of former Barclay’s Banker Matt Oppenheimer, 39, businessman Josh Hug, 43, and engineer Shivaas Gulati, 33. The early venture capital investors were Nigel Morris at QED and Jeff Bezos’ fund, Bezos Expeditions. According to financial disclosures, the stock of Oppenheimer in Remitly is worth approximately $300 million. Hug’s is worth around $200 million. Gulati’s stake isn’t disclosed (only the highest-ranking executives or board members, as well as holders of greater than five percent of the stock, have to declare their holdings).

The majority Of Remitly’s 2.4 million active customers are foreigners living within the U.S. who send money to family members or friends living in India and Mexico, India Philippines, and Mexico. “If you look at the basic family requirements that a lot of the funds that is sent cross-border helps, it’s pretty humbling,” Josh Hug says. “We see our customers sending funds to pay for instructing for their family members, to pay for normal living expenses, to pay for food.”

In 2020, when the flu epidemic kept people indoors, and jobless rates in emerging markets grew dramatically, Remitly’s growth rate accelerated like many fintech. Revenues reached $257 million, which was a doubling over the year before. The company employs technologies and statistical methods such as machine learning to reduce sending money abroad. The company doesn’t have physical retail stores, similar to Western Union, but it cooperates with companies from other nations to allow customers to drop off and collect cash. Remitly isn’t making money, but it is nearing the point of breaking even – it lost 1 million dollars in the month that ended 30 June 2021. lower than an 8 million loss in the year before.

Remitly is still significantly smaller and less profitable than Western Union. Its foreign exchange and fees markup rates, which are approximately 2%, are much lower than Western Union’s, but Remitly makes more money per customer. It earns $136 per customer as opposed to just $98 with Western Union, according to FXC Intelligence, a U.K.-based company that provides financial data.

What’s the reason for the increased amount for Remitly? Maybe more loyalty among customers. “Remitly could be driving more transactions and volume per customer per year,” says Daniel Webber, founder, and CEO of FXC Intelligence.

At $7.8 billion, Remitly’s market value is reasonable and within the same range as the other fintech that has recently become public. Investors estimate it to be around 30 times its revenue in 2020, which is slightly more than the value of London-based Wise, worth around 27x revenue. Wise also allows the transfer of money internationally. However, it concentrates on markets with more established economies and has lower costs. Flywire is the Boston company that handles international tuition payments for universities and can trade at a revenue multiplier of 38.

Remitly will eventually aim to be an all-service digital bank that caters to immigrants. The company launched last year Passbook an online checking account. However, it’s yet to see significant growth in its adoption. “It’s still early days,” Hug says. Hug. I asked if Remitly will introduce a loan product in the next few years, Hug declined to comment on the matter, stating the fact that “we see a diverse set of financial needs from our customers” and that the company has the “vision of becoming the most trusted financial services company for customers–not just for remittances–on the planet.”

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Robert Scoble
Robert is the assistant managing editor for HC News, overseeing coverage of markets, companies, strategy and business leaders. Originally from Boston, Scoble began his journalism career in 1997 & now resides outside New York.

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