# Remitly Global, Inc. (RELY) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Remitly Global, Inc.'s 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1782170/000178217025000018/rely-20241231.htm
Accession: 0001782170-25-000018
Filing date: 2025-02-19
Report date: 2024-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture.
Confidence: high

Company profile: /company/RELY/
All MD&A years: /company/RELY/mda/
Previous year: /company/RELY/mda/fy2023/ (FY 2023)
Next year: /company/RELY/mda/fy2025/ (FY 2025)

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes appearing elsewhere in this Annual Report on Form 10-K and our audited consolidated financial statements and the related notes. You should read the sections titled “Risk Factors” and “Special Note Regarding Forward-Looking Statements” for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. The forward-looking statements in this Form 10-K represent our views as of the date of this Form 10-K. Except as may be required by law, we assume no obligation to update these forward-looking statements or the reasons that results could differ from these forward-looking statements. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Form 10-K.

This section generally discusses the results of our operations for the year ended December 31, 2024, compared to the year ended December 31, 2023. For a discussion of the year ended December 31, 2023, compared to the year ended December 31, 2022, please refer to Part I, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023.

Overview

Remitly is a trusted provider of digital financial services that transcend borders. With a global footprint spanning more than 170 countries, Remitly’s digitally native, cross-border payments app delights customers with a fast, reliable, and transparent money movement experience. Building on its strong foundation, Remitly is expanding its suite of products to further its vision and transform lives around the world.

Our Revenue Model

For our remittance business, which represents substantially all of our revenue today, we generate revenue from transaction fees charged to customers and foreign exchange spreads applied to the amount the customer is sending.

Transaction fees vary based on the corridor, the currency in which funds are delivered to the recipient, the funding method a customer chooses (e.g., ACH, credit card, debit card, etc.), the disbursement method a customer chooses (e.g., bank deposit, mobile wallet, cash pick-up, etc.), and the amount the customer is sending.

Foreign exchange spreads represent the difference between the foreign exchange rate offered to customers and the foreign exchange rate on our currency purchases. They are an output of proprietary and dynamic models that are designed to provide fair and competitive rates to our customers, while generating a spread based on our ability to buy foreign currency at generally advantageous rates.

Revenue from transaction fees and foreign exchange spreads is reduced by customer promotions. For example, we may, from time to time, waive transaction fees for first-time customers, or provide customers with better foreign exchange rates on their first transaction. These incentives are accounted for as reductions to revenue, up to the point where net historical cumulative revenue, at the customer level, is reduced to zero. We consider these incentives to be an investment in our long-term relationship with customers.

Key Performance Metrics

We regularly review the following key performance metrics to evaluate our performance, identify trends affecting our business, prepare financial projections, and make strategic decisions. We believe that these key performance metrics provide meaningful supplemental information for management and investors in assessing our historical and future operating performance. The calculation of these key performance metrics discussed below may differ from other similarly titled metrics used by other companies, analysts, or investors.

Active Customers

Active customers, measured as of the quarterly periods ended December 31, 2024, 2023, and 2022 were as follows:

[[GREPCENT_TABLE]]
[["","December 31,"],["(in thousands)","2024","","2023","","2022"],["Active customers","7,780","","","5,911","","","4,188"]]
[[/GREPCENT_TABLE]]

We believe that the number of our active customers is an important indicator of customer engagement, customer retention, and the overall growth of our business.

Active customers increased to approximately 7.8 million, or 32% growth, for the three months ended December 31, 2024, compared to the three months ended December 31, 2023. This increase was primarily due to an increase in the number of new customers, driven by investments in our mobile app and efficient marketing spend, our focus on customer experience and how we serve our customers, expansion of our global disbursement network, and the continued diversification across both send and receive countries. While we continue to see strong results in our largest existing receive countries (India, Mexico, and the Philippines), our successful diversification of our corridor portfolio across both send and receive countries has contributed to new customer growth.

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Send Volume

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["(in millions)","2024","","2023","","2022"],["Send volume","$","54,615","","","$","39,459","","","$","28,631"]]
[[/GREPCENT_TABLE]]

We measure send volume to assess the scale of remittances sent by our customers. Our customers mostly send from the United States and Canada. Our customers and their recipients are located in over 170 countries and territories across the globe; the largest receive countries by send volume include India, Mexico, and the Philippines.

Send volume increased 38%, to $54.6 billion for the year ended December 31, 2024, compared to $39.5 billion for the year ended December 31, 2023, driven by the increase in active customers.

Key Factors Affecting Our Performance

Customer Retention and High Customer Engagement

Our send volume is primarily driven by existing customers who regularly use our remittance product to send money to family and friends. We believe our mobile-first products and superior customer experience encourage high retention and repeat usage, which are significant though not the only drivers of our performance.

We measure active customers to monitor the growth and performance of our customer base. The majority of our active customers send money for recurring, non-discretionary needs multiple times per month, providing a recurring revenue stream with high predictability and durability.

Attracting New Customers

Our continued ability to attract new customers is a key driver for our long-term growth. We continue to expand our customer base by launching new send and receive corridors, by continuing to innovate on existing and new products, and by providing the most trusted financial services for customers with cross-border financial needs. We plan to continue to acquire new customers through digital marketing channels and word-of-mouth referrals from existing customers, and by exploring new customer acquisition channels. Given the nature of our business, new customer acquisition marketing investments may negatively impact net loss and Adjusted EBITDA in the quarter they are acquired, but are expected to favorably impact net loss and Adjusted EBITDA in subsequent periods as many customers continue to send transactions in the periods after they are acquired.

Customer Acquisition Costs

Efficiently acquiring customers is critical to our growth and maintaining attractive customer economics, which are impacted by online marketing competition, our ability to effectively target the right demographic, and competitive environment. We have a history of successfully monitoring customer acquisition costs and will continue to be strategic and disciplined toward customer acquisition. For example, for performance marketing, we set rigorous customer acquisition targets that we continuously monitor to ensure a high return on investment over the long term, and we can increase or decrease this investment as desired. Customer acquisition costs, which are deployed to acquire new customers or retain existing customers in certain circumstances, are a component of advertising expenses as defined in Note 2. Basis of Presentation and Summary of Significant Accounting Policies in the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Corridor Mix

Our business is global and certain attributes of our business vary by corridor, such as send amount, customer funding sources, and transaction frequency. For example, a period of high growth in receive corridors with large average send amounts, such as India, could disproportionately impact send volume while impacting active customers to a lesser extent. While shifts in our corridor mix could impact the trends in our global business, including send volume and customer economics, we have the ability to optimize these corridors over the long term based on their specific dynamics.

Seasonality

Our operating results and metrics are subject to seasonality, which may result in fluctuations in our quarterly revenues and operating results. For example, active customers and send volume generally peak as customers send gifts for regional and global holidays including, most notably, in the fourth quarter around the Christmas holiday. This seasonality typically drives higher fourth quarter customer acquisition, which generally results in higher fourth quarter marketing costs and transaction losses. It also results in higher transactions and transaction expenses, along with higher working capital needs. Other periods of favorable seasonality include Ramadan/Eid, Lunar New Year/Tết, and Mother’s Day, although the impact is generally lower than the seasonality we see in the fourth quarter and the timing of some of these holidays varies from year to year. Conversely, we typically observe lower customer acquisition and existing customer activity through most of the first quarter, especially in regions that experience favorable seasonality in the fourth quarter. Following the fourth quarter, typically the second quarter is seasonally the next strongest quarter from an existing customer activity perspective, however customer activity and the impact on financial results can vary across quarters based on the timing of holidays and other geographic drivers. Additionally, the number of business days in a quarter and the day of the week that the last day of the quarter falls on may also introduce variability in our results, working capital balances, or cash flows period over period.

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Our Technology

We will continue to invest significant resources in our technology. These investments will allow us to introduce new and innovative products, add features to current products, enhance the customer and recipient experience, grow our payment and disbursement network, invest in our risk and security infrastructure, and continue to secure data in accordance with evolving best practices and legal requirements. While we expect our expenses related to technology and development to increase, which may impact short-term profitability, we believe these investments will ultimately contribute to our long-term growth.

Management of Risk and Fraud

We manage fraud (e.g., through identity theft) and other illegitimate activity (e.g., money laundering) by utilizing our proprietary risk models, which include machine learning processes, early warning systems, bespoke rules, and manual investigation processes. Our models and processes enable us to identify and address complex and evolving risks in these unwanted activities, while maintaining a differentiated customer experience. In addition, we integrate historical fraud loss data and other transaction data into our risk models, which helps us identify emerging patterns and quantify fraud and compliance risks across all aspects of our customer interactions. These models and processes allow us to achieve and maintain fraud loss rates within desired guardrails, as well as tune our risk models to target other illegitimate activity.

Macroeconomic and Geopolitical Changes

Global macroeconomic and geopolitical factors, including inflation, currency fluctuations, immigration and immigration policy, regulatory changes, trade and regulatory policies, regional and global conflicts, global crises and natural disasters, unemployment, potential recession, and the rate of digital remittance adoption impact demand for our services and the options that we can offer. These factors evolve over time, and periods of significant currency appreciation or depreciation, whether in send or receive currencies, changes to global migration patterns or immigration policy, and changes to digital adoption trends may shift the timing and volume of transactions, or the number of customers using our service. In addition, foreign currency movements impact our business in numerous ways. For example, as the U.S. dollar strengthens, we see customers in certain geographies taking advantage of the ability to get more local currency to their families and friends. We also believe the strength of the U.S. dollar and the strength of other developed country currencies versus emerging country currencies make it easier to acquire new customers in certain geographies. Conversely, expansion of our international business can negatively impact our consolidated results when these currencies weaken against the U.S. dollar. As we grow, we are becoming more diversified across geographies and currencies, which can help mitigate some localized geopolitical risks and macroeconomic trends. As foreign currency can have a significant impact on our business, we strive to maintain a diversified cash balance portfolio and frequently assess for foreign currency cash concentrations. Refer to Note 2. Basis of Presentation and Summary of Significant Accounting Policies in the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for a more comprehensive description of current business concentrations.

Components of Results of Operations

Revenue

Our revenue is generated on transaction fees charged to customers and foreign exchange spreads between the foreign exchange rate offered to customers and the foreign exchange rate on our currency purchases. Revenue is recognized, in an amount that reflects the consideration we expect to be entitled to in exchange for services provided, when control of these services is transferred to our customers, which is the time the funds have been delivered to the intended recipient.

Costs and Expenses

Transaction Expenses

Transaction expenses include fees paid to disbursement partners for paying funds to the recipient, provisions for transaction losses, and fees paid to payment processors for funding transactions. Transaction expenses also include chargebacks, fraud prevention, fraud management tools, and compliance tools. We establish reserves for transaction losses based on historical trends and any specific risks identified in processing customer transactions. This reserve is included in ‘Accrued expenses and other current liabilities’ on the Consolidated Balance Sheets included in Part II, Item 8 of this Annual Report on Form 10-K. Over the long term we expect to continue to benefit from improvements in our proprietary fraud models, although we expect some variability in transaction expense from quarter to quarter.

Customer Support and Operations

Customer support and operations expenses consist primarily of personnel-related expenses associated with our customer support and operations organization, including salaries, benefits, and stock-based compensation expense, as well as third-party costs for customer support services, and travel and related office expenses. This includes our customer service teams which directly support our customers, consisting of online support and call centers, and other costs incurred to support our customers, including related telephony costs to support these teams, customer protection and risk teams, investments in tools to effectively service our customers, and increased customer self-service capabilities. Customer support and operations expenses also include corporate communication costs and professional services fees.

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Marketing

Marketing expenses consist primarily of advertising costs used to attract new customers, including branding-related expenses. Marketing expenses also include personnel-related expenses associated with marketing organization staff, including salaries, benefits, and stock-based compensation expense, promotions, costs for software subscription services dedicated for use by marketing functions, and outside services contracted for marketing purposes.

Technology and Development

Technology and development expenses consist primarily of personnel-related expenses for employees involved in the research, design, development, and maintenance of both new and existing products and services, including salaries, benefits, and stock-based compensation expense. Technology and development expenses also include professional services fees and costs for software subscription services dedicated for use by our technology and development teams, as well as other company-wide technology tools. Technology and development expenses also include product and engineering teams used to support the development of both internal infrastructure and internal-use software, to the extent such costs do not qualify for capitalization. Technology and development costs are generally expensed as incurred and do not include software development costs which qualify for capitalization as internal-use software. The amortization of internal-use software costs which were capitalized in accordance with ASC 350-40, Intangibles - Goodwill and Other-Internal-Use Software, are separately presented under the caption ‘Depreciation and amortization’ within the Consolidated Statements of Operations included in Part II, Item 8 of this Annual Report on Form 10-K.

We believe delivering new functionality and improving existing technology is critical to attract new customers and expand our relationship with existing customers. We expect to continue to make investments to expand our solutions in order to enhance our customers’ experience and satisfaction, and to attract new customers.

General and Administrative

General and administrative expenses consist primarily of personnel-related expenses for our finance, legal, compliance, human resources, facilities, administrative personnel, and other leadership functions, including salaries, benefits, and stock-based compensation expense. General and administrative expenses also include professional services fees, software subscriptions, facilities, indirect taxes, credit losses, and other corporate expenses, including acquisition and integration expenses. Such expenses primarily include external legal, accounting, valuation, and due diligence costs, advisory and other professional services fees necessary to integrate acquired businesses. Refer to Note 6. Business Combinations in the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further details.

Depreciation and Amortization

Depreciation and amortization expense includes depreciation on property and equipment and leasehold improvements, as well as the amortization of internal-use software costs and intangible assets.

Interest Income

Interest income consists primarily of interest income earned on our cash and cash equivalents.

Interest Expense

Interest expense consists primarily of the interest expense on our borrowings.

Other Income (Expense), Net

Other income (expense), net, primarily includes foreign currency exchange gains and losses due to remeasurement of certain foreign currency denominated monetary assets and liabilities.

Provision for Income Taxes

Provision for income taxes consists primarily of income taxes in certain foreign jurisdictions in which we conduct business and state income taxes in the United States. We maintain a full valuation allowance for U.S. deferred tax assets. We expect to maintain this full valuation allowance in the United States for the foreseeable future as it is more likely than not that the assets will not be realized based on our history of losses.

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Results of Operations

Comparison of the years ended December 31, 2024 and 2023

The following table sets forth our results of operations together with the dollar and percentage change for the years ended December 31, 2024 and 2023:

[[GREPCENT_TABLE]]
[["","Years Ended December 31,","","","","Change"],["(dollars in thousands)","2024","","2023","","","","Amount","","Percent"],["Revenue","$","1,263,963","","","$","944,285","","","","","$","319,678","","","34","%"],["Costs and expenses"],["Transaction expenses","431,604","","","329,113","","","","","102,491","","","31","%"],["Customer support and operations","83,918","","","82,521","","","","","1,397","","","2","%"],["Marketing","303,799","","","234,417","","","","","69,382","","","30","%"],["Technology and development","269,817","","","219,939","","","","","49,878","","","23","%"],["General and administrative","195,857","","","179,372","","","","","16,485","","","9","%"],["Depreciation and amortization","18,054","","","13,118","","","","","4,936","","","38","%"],["Total costs and expenses","1,303,049","","","1,058,480","","","","","244,569","","","23","%"],["Loss from operations","(39,086)","","","(114,195)","","","","","75,109","","","(66)","%"],["Interest income","8,077","","","7,447","","","","","630","","","8","%"],["Interest expense","(3,241)","","","(2,352)","","","","","(889)","","","38","%"],["Other income (expense), net","3,999","","","(2,838)","","","","","6,837","","","(241)","%"],["Loss before provision for income taxes","(30,251)","","","(111,938)","","","","","81,687","","","(73)","%"],["Provision for income taxes","6,727","","","5,902","","","","","825","","","14","%"],["Net loss","$","(36,978)","","","$","(117,840)","","","","","$","80,862","","","(69)","%"]]
[[/GREPCENT_TABLE]]

The following discussion and analysis is for the year ended December 31, 2024 compared to the same period in 2023.

Revenue

Revenue increased $319.7 million, or 34%, for the year ended December 31, 2024, compared to the year ended December 31, 2023. The increase was primarily driven by a 32% increase in active customers period over period, continued strength in the retention of existing customers, favorable customer behavior based on foreign currency movement, and a continued mix shift trending towards digital disbursements. Revenue derived from each transaction varies based on a number of attributes, including the funding method chosen by the customer, the size of the transaction, the currency to be ultimately disbursed, the rate at which the currency was disbursed, the disbursement method chosen by the customer, and the country to which the funds are transferred.

As a reflection of this growth, send volume increased 38% to $54.6 billion for the year ended December 31, 2024, as compared to $39.5 billion for the year ended December 31, 2023.

Transaction Expenses

Transaction expenses increased $102.5 million, or 31%, to $431.6 million for the year ended December 31, 2024, compared to $329.1 million for the year ended December 31, 2023. The increase was primarily due to an $80.5 million, or 30%, increase in direct costs associated with processing a higher volume of our customers’ remittance transactions and the disbursement of our customers’ funds to their recipients, and a $19.6 million increase in our provision for transaction losses.

As a percentage of revenue, transaction expenses decreased to 34% for the year ended December 31, 2024, from 35% for the year ended December 31, 2023.

Customer Support and Operations Expenses

Customer support and operations expenses increased $1.4 million, or 2%, for the year ended December 31, 2024, compared to the year ended December 31, 2023. The increase was primarily driven by a $1.0 million increase in personnel-related costs compared to the year ended December 31, 2023.

As a percentage of revenue, customer support and operations expenses decreased to 7% for the year ended December 31, 2024, from 9% for the year ended December 31, 2023. The decrease was primarily due to process improvements and automation across customer support headcount at internal and third-party customer support sites.

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Marketing Expenses

Marketing expenses increased $69.4 million, or 30%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to an increase of $56.2 million in advertising expense and other targeted marketing expense, including online and offline marketing spend and promotion costs to acquire new customers. In addition, personnel-related costs increased by $9.1 million, driven by a 22% increase in marketing headcount compared to year ended December 31, 2023.

As a percentage of revenue, marketing expenses decreased to 24% for the year ended December 31, 2024, from 25% for the year ended December 31, 2023.

Technology and Development Expenses

Technology and development expenses increased $49.9 million, or 23%, for the year ended December 31, 2024, compared to the year ended December 31, 2023. The increase was driven by $41.2 million in personnel-related expenses, net of personnel-related expenses capitalized as internal-use software. This was the result of a 23% increase in headcount compared to the year ended December 31, 2023, as part of our continued investment in our technology. The increase in technology and development expense was also driven by an $8.1 million increase in software costs for cloud services to support incremental transaction volume.

As a percentage of revenue, technology and development expenses decreased to 21% for the year ended December 31, 2024, from 23% for the year ended December 31, 2023, as we benefited from increasing efficiencies.

General and Administrative Expenses

General and administrative expenses increased $16.5 million, or 9%, for the year ended December 31, 2024, compared to the year ended December 31, 2023. The increase was primarily driven by a $24.4 million increase in personnel-related expenses resulting from a 24% increase in headcount compared to the year ended December 31, 2023. This was partially offset by $4.9 million decrease in professional fees, $4.3 million decrease in operational taxes, and a $2.0 million decrease in the fair market value of our charitable contributions related to our annual Pledge 1% donation.

As a percentage of revenue, general and administrative expenses decreased to 15% for the year ended December 31, 2024, from 19% for the year ended December 31, 2023, as we continue to leverage efficiencies in our general and administrative functions.

Depreciation and Amortization

Depreciation and amortization increased $4.9 million, or 38%, for the year ended December 31, 2024, compared to the year ended December 31, 2023. The increase is primarily driven by an increase in amortization of internal-use software.

Interest Income

Interest income increased $0.6 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023. The increase is primarily due to an increase in average invested balances throughout the year.

Interest Expense

Interest expense increased by $0.9 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023, primarily due to draws on the 2021 Revolving Credit Facility.

Other Income (Expense), Net

Other income (expense), net is primarily driven by unrealized losses and gains on foreign exchange remeasurements of certain foreign currency denominated monetary assets and liabilities.

Provision for Income Taxes

The provision for income taxes increased $0.8 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023. The increase is primarily due to increases in taxable income in certain foreign jurisdictions and decreases in income tax benefits related to excess stock-based compensation deductions. This was partially offset by non-recurring uncertain tax positions recorded in the year ended December 31, 2023 related to intercompany transactions.

Non-GAAP Financial Measures

We regularly review the following non-GAAP measure to evaluate our performance, identify trends affecting our business, prepare financial projections, and make strategic decisions. We believe that this non-GAAP measure provides meaningful supplemental information for management and investors in assessing our historical and future operating performance. The calculation of this non-GAAP measure discussed below may differ from other similarly titled metrics used by other companies, analysts, or investors.

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We use Adjusted EBITDA, a non-GAAP financial measure to supplement net loss. Adjusted EBITDA is calculated as net loss adjusted by (i) interest (income) expense, net; (ii) provision for income taxes; (iii) noncash charges of depreciation and amortization; (iv) gains and losses from the remeasurement of foreign currency assets and liabilities into their functional currency; (v) noncash charges associated with our donation of common stock in connection with our Pledge 1% commitment; (vi) noncash stock-based compensation expense, net; and (vii) certain acquisition, integration, restructuring, and other costs.

Adjusted EBITDA is a key output measure used by our management to evaluate our operating performance, inform future operating plans, and make strategic long-term decisions, including those relating to operating expenses and the allocation of internal resources.

Adjusted EBITDA has limitations as a financial measure, should be considered as supplemental in nature, and is not meant as a substitute for the related financial information prepared in accordance with GAAP. These limitations include the following:

•although depreciation and amortization are noncash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditures or other capital commitments;

•Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

•Adjusted EBITDA does not reflect the effect of income taxes that may represent a reduction in cash available to us;

•Adjusted EBITDA does not reflect the effect of gains and losses from the remeasurement of foreign currency assets and liabilities into their functional currency;

•Adjusted EBITDA excludes noncash charges associated with the donation of our common stock in connection with our Pledge 1% commitment, which is recorded in general and administrative expenses;

•Adjusted EBITDA excludes stock-based compensation expense, net, which has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy;

•Adjusted EBITDA excludes certain transaction costs, related to acquisition, integration, restructuring, and other costs. The acquisition and integration costs are primarily related to the Rewire acquisition and primarily include external legal, accounting, valuation, and due diligence costs, advisory and other professional services fees necessary to integrate acquired businesses, and the change in the fair value of the holdback liability as part of the acquisition of Rewire. The restructuring costs are primarily related to severance and other associated costs; and

•other companies, including companies in our industry, may calculate Adjusted EBITDA differently from how we calculate this measure or not at all, which reduces its usefulness as a comparative measure.

The following table sets forth a reconciliation of net loss to Adjusted EBITDA, the most directly comparable financial measure prepared in accordance with GAAP, for each of the periods indicated:

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["(in thousands)","2024","","2023","","2022"],["Net loss","$","(36,978)","","","$","(117,840)","","","$","(114,019)"],["Add:"],["Interest income, net","(4,836)","","","(5,095)","","","(2,847)"],["Provision for income taxes","6,727","","","5,902","","","1,043"],["Depreciation and amortization","18,054","","","13,118","","","6,724"],["Foreign exchange (gain) loss","(4,394)","","","2,603","","","(5,261)"],["Donation of common stock(1)","2,587","","","4,600","","","1,972"],["Stock-based compensation expense, net","152,137","","","136,967","","","95,293"],["Acquisition, integration, restructuring, and other costs(2)","1,468","","","4,197","","","3,462"],["Adjusted EBITDA","$","134,765","","","$","44,452","","","$","(13,633)"]]
[[/GREPCENT_TABLE]]
__________________

(1) Refer to Note 11. Common Stock within the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further detail on the donation of common stock.

(2) Acquisition, integration, restructuring, and other costs for the year ended December 31, 2024 consisted primarily of $0.8 million in restructuring charges incurred, $0.5 million of non-recurring legal charges, and $0.2 million related to the change in the fair value of the holdback liability associated with the acquisition of Rewire. Acquisition, integration, restructuring, and other costs for the year ended December 31, 2023 consisted primarily of $1.7 million of expenses incurred in connection with the acquisition and integration of Rewire, $1.4 million in restructuring charges incurred, and $1.1 million related to the change in the fair value of the holdback liability associated with the acquisition of Rewire. Refer to Note 6. Business Combinations and Note 13. Restructuring Initiatives in the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information on these costs. Acquisition, integration, restructuring, and other costs for the year ended December 31, 2022 primarily represent expenses related to the acquisition of Rewire.

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Liquidity and Capital Resources

Sources of Liquidity and Material Future Cash Requirements

As of December 31, 2024 and December 31, 2023, our principal sources of liquidity were cash and cash equivalents of $368.1 million and $323.7 million, respectively, as well as funds available under the 2021 Revolving Credit Facility, which we entered into in September 2021. The 2021 Revolving Credit Facility was amended in December 2023 to increase the revolving commitments from $250.0 million (including a $60.0 million letter of credit sub-facility) to $325.0 million. We have historically financed our operations and capital expenditures primarily through cash generated from operations including transaction fees and foreign exchange spreads. In recent periods, we have supplemented those cash flows with borrowings on our 2021 Revolving Credit Facility, primarily to support customer transaction volumes during peak periods and weekends, which we expect to continue to do in the future. During the years ended December 31, 2024 and 2023, the average term of outstanding borrowings under our 2021 Revolving Credit Facility was approximately four days. Operations continue to be substantially funded by the existing cash we have on hand and ongoing utilization of the 2021 Revolving Credit Facility (including the letter of credit sub-facility). During the year ended December 31, 2024, we cumulatively borrowed $1,453.0 million against this credit facility and repaid $1,583.0 million, including outstanding amounts from the prior year. As of December 31, 2024, we had no outstanding borrowings under the 2021 Revolving Credit Facility. As of December 31, 2024, we have unused borrowing capacity of $277.3 million.

We believe that our cash, cash equivalents, and funds available under the 2021 Revolving Credit Facility will be sufficient to meet our working capital requirements for at least the next twelve months. Our material cash requirements include funds to support current and potential operating activities, capital expenditures, and other commitments, and could include other uses of cash, such as strategic investments.

Our future capital requirements will depend on many factors, including our rate of revenue growth, the expansion of our sales and marketing activities, the timing and extent of expansion into new corridors, and the timing of introductions of new products and enhancements of existing products, and other strategic investments. Furthermore, certain jurisdictions where we operate require us to hold eligible liquid assets, based on regulatory or legal requirements, equal to the aggregate amount of all customer balances that have not yet been disbursed. In addition, as discussed elsewhere in this Annual Report on Form 10-K, we expect that our operating expenses may continue to increase to support the continued growth of our business, including increased investments in our technology to support product improvements, new product development, and geographic expansion. We also routinely enter into marketing and advertising contracts, software subscriptions and other service arrangements, including cloud infrastructure arrangements, which are generally entered into in the ordinary course of business, and that can include minimum purchase quantities, requiring us to utilize cash on hand to fulfill these amounts. Refer to “Contractual Obligations and Commitments” discussed further below.

In the future, we may also attempt to raise additional capital through the sale of equity securities or through equity-linked securities, and the ownership of our existing stockholders would be diluted. In addition, if we raise additional financing by incurring additional indebtedness, we may be subject to increased fixed payment obligations and could also be subject to additional restrictive covenants, such as limitations on our ability to incur additional debt, and other operating restrictions that could adversely impact our ability to conduct our business. Any future indebtedness we incur may result in terms that are unfavorable to equity investors. There can be no assurances that we will be able to raise additional capital. The inability to raise capital would adversely affect our ability to achieve our business objectives.

The following table shows a summary of our Consolidated Statements of Cash Flows for the periods presented:

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["(in thousands)","2024","","2023","","2022"],["Net cash provided by (used in):"],["Operating activities","$","194,485","","","$","(53,590)","","","$","(108,656)"],["Investing activities","(17,702)","","","(50,037)","","","(7,309)"],["Financing activities","(127,440)","","","126,650","","","14,587"],["Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash","(4,555)","","","1,272","","","(1,201)"],["Net increase (decrease) in cash, cash equivalents, and restricted cash","$","44,788","","","$","24,295","","","$","(102,579)"]]
[[/GREPCENT_TABLE]]

Cash Flows

Operating Activities

Our main sources of operating cash are transaction fees charged to customers and foreign exchange spreads on transactions. Our primary uses of cash from operating activities have been for advertising expenses used to attract new customers, transaction expenses that include fees paid to payment processors and disbursement partners, personnel-related expenses, technology, and other general corporate expenditures. Our changes in operating cash flows are heavily impacted by the timing of customer transactions and, in particular, the day of the week that the year end falls on, including holidays and long weekends. For example, we generally have higher prefunding amounts if the year closes on a weekend or in advance of a long weekend, such as a holiday, which creates variability in customer transaction related balances period over period and can reduce our cash position at a particular point in time. These balances within our Consolidated Statements of Cash Flows include disbursement prefunding, customer funds receivable, customer liabilities, and trade settlement liabilities, which are included within the line item ‘Accrued expenses and other liabilities.’

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For the year ended December 31, 2024, net cash provided by operating activities was $194.5 million, which was primarily driven by timing impacts of current growth in our global network. Specifically, as a result of both growth and timing, we saw an increase in cash flow due to customer funds working capital changes of $80.9 million related to combined customer funds receivable, customer liabilities, disbursement prefunding, and trade settlement liability. In addition to these and other changes in working capital, the cash generated from operations reflects the $37.0 million net loss for the period exclusive of the $173.2 million of noncash charges.

For the year ended December 31, 2023, net cash used in operating activities was $53.6 million, which was primarily driven by an increase in overall growth in our global network of funding and disbursement partnerships, and an increase in volume of customer transactions. Specifically, as a result of both growth and timing, we saw an increase in disbursement prefunding of $31.8 million and customer funds receivable of $183.4 million, offset by an increase in customer liabilities of $61.7 million and accrued expenses and other liabilities, which is inclusive of our trade settlement liability, of $47.4 million, which were the key drivers for the unfavorable changes in our operating assets and liabilities of $91.2 million. This change in our operating assets and liabilities was also partially offset by cash generated from our operations, when excluding the $155.4 million of noncash charges included within the $117.8 million net loss for the period.

Investing Activities

Cash used in investing activities consists primarily of purchases of property and equipment, capitalization of internal-use software, and cash paid for acquisitions of businesses, net of acquired cash, cash equivalents, and restricted cash.

Net cash used in investing activities was $17.7 million for the year ended December 31, 2024, a decrease of $32.3 million, compared to net cash used in investing activities of $50.0 million for the year ended December 31, 2023. This decrease was primarily driven by the acquisition of Rewire in the first quarter of 2023 of $40.9 million, offset by an increase in capitalized internal-use software costs of $5.5 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023.

Net cash used in investing activities was $50.0 million for the year ended December 31, 2023, an increase of $42.7 million, compared to net cash used in investing activities of $7.3 million for the year ended December 31, 2022. This increase was primarily driven by the acquisition of Rewire in the first quarter of 2023.

Financing Activities

Cash used in financing activities consists primarily of borrowings on our 2021 Revolving Credit Facility, proceeds from the exercise of stock options, and proceeds from the issuance of common stock in connection with the ESPP, offset by repayments of our 2021 Revolving Credit Facility borrowings and other indebtedness.

Net cash used in financing activities for the year ended December 31, 2024, was $127.4 million, a decrease of $254.1 million, compared to net cash provided by financing activities for the year ended December 31, 2023, of $126.7 million. The decrease was primarily driven by the increase in net repayments on our 2021 Revolving Credit Facility of $260.0 million and the settlement of amounts previously held back for the Rewire acquisition of $10.3 million in the year ended December 31, 2024, offset by the repayment of assumed indebtedness of $17.1 million that occurred in the year ended December 31, 2023.

Net cash provided by financing activities for the year ended December 31, 2023, was $126.7 million, an increase of $112.1 million, compared to net cash provided by financing activities for the year ended December 31, 2022, of $14.6 million. This increase was primarily driven by net borrowings on our 2021 Revolving Credit Facility of $130.0 million, offset by the repayment of assumed indebtedness of $17.1 million that occurred in the year ended December 31, 2023.

Contractual Obligations and Commitments

Our principal commitments consist of standby letters of credit, long-term leases, and other purchase commitments entered into in the normal course of business. In addition, we routinely enter into marketing and advertising contracts, software subscriptions or other service arrangements, including cloud infrastructure arrangements, and compliance-application related arrangements that contractually obligate us to purchase services, including minimum service quantities, unless we give notice of cancellation based on the applicable terms of the agreements. Most contracts are typically cancellable within a period of less than one year, although some of our larger software or cloud service subscriptions require multi-year commitments. As of December 31, 2024, we had approximately $37.7 million in total purchase commitments under these arrangements, of which $23.0 million are expected to be paid within the next year. Changes in our business needs, contractual cancellation provisions, fluctuating interest rates, and other factors may result in actual payments differing from the estimates. We cannot provide certainty regarding the timing and amounts of these payments.

For further discussion of commitments and contingencies, also refer to Note 16. Commitments and Contingencies and Note 18. Leases in the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

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Off-Balance Sheet Arrangements

As of December 31, 2024, we had no material off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures, or capital resources. From time to time we do enter into short-term leases that have lease terms of less than 12 months, and are typically month-to-month in nature. As described in the notes to the consolidated financial statements, we elected not to record leases on our Consolidated Balance Sheets if the lease term is 12 months or less. For further information on our lease arrangements, refer to Note 18. Leases in the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Critical Accounting Estimates

The consolidated financial statements and accompanying notes included in this Annual Report on Form 10-K are prepared in accordance with GAAP. The preparation of these consolidated financial statements requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, equity, revenue, expenses, and related disclosures. Our estimates are based on historical experience and on various other factors that we believe are reasonable under the circumstances. Actual results may differ significantly from the estimates made by management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected.

While our significant accounting policies are described in the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K, we believe that the following critical accounting estimates involve a greater degree of judgment and complexity. Accordingly, these are the policies we believe are the most important to aid in fully understanding and evaluating our reported financial results.

Revenue Recognition

Our primary source of revenue is generated from our remittance business. Revenue is earned from transaction fees charged to customers and the foreign exchange spreads earned between the foreign exchange rate offered to customers and the foreign exchange rate on our currency purchases. Revenue is recognized, in an amount that reflects the consideration we expect to be entitled to in exchange for services provided, when control of these services is transferred to our customers, which is the time the funds have been delivered to the intended recipient.

Customers engage us to perform one integrated service—collect the customer’s money and deliver funds to the intended recipient in the currency requested. Payment is generally due from the customer upfront upon initiation of a transaction, when the customer simultaneously agrees to our terms and conditions.

Revenue is derived from each transaction and varies based on the funding method chosen by the customer, the size of the transaction, the currency to be ultimately disbursed, the rate at which the currency was purchased, the disbursement method chosen by the customer, and the country to which the funds are transferred. Our contract with customers can be terminated by the customer without a termination penalty up until the time the funds have been delivered to the intended recipient. Therefore, our contracts are defined at the transaction level and do not extend beyond the service already provided.

Our service comprises a single performance obligation to complete transactions for our customers. Using compliance and risk assessment tools, we perform a transaction risk assessment on individual transactions to determine whether a transaction should be accepted. When we accept a transaction and process the designated payment method of the customer, we become obligated to our customer to complete the payment transaction, at which time a receivable is recorded, along with a corresponding customer liability. None of our contracts contains a significant financing component.

We recognize transaction revenue on a gross basis as we are the principal for fulfilling payment transactions. As the principal to the transaction, we control the service of completing payments for our customers. We bear primary responsibility for the fulfillment of the payment service, are the merchant of record, contract directly with our customers, control the product specifications, and define the value proposition of our services. We are also responsible for providing customer support. Further, we have full discretion over determining the fee charged to our customers, which is independent of the cost we incur in instances where we may utilize payment processors or other financial institutions to perform services on our behalf. These fees paid to payment processors and other financial institutions are recognized as ‘Transaction expenses’ within the Consolidated Statements of Operations. We do not have any capitalized contract acquisition costs.

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Impairment assessments

We monitor conditions related to long-lived assets and test for impairment whenever events or circumstances indicate that their carrying amount may not be recoverable, such as historical operating and/or cash flow losses of an asset group.

We perform a goodwill impairment test annually on October 31 or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. We have determined that our business comprises one reporting unit. The assessment of impairment involves the use of accounting estimates and assumptions, changes in which could materially impact our financial condition or operating performance if actual results differ from such estimates and assumptions. In performing the impairment assessment of goodwill, we have an option to first assess qualitative factors to determine whether events or circumstances indicate it is more likely than not that the fair value is greater than its carrying amount. We consider factors in performing a qualitative assessment, including, but not limited to, general macroeconomic conditions, industry and market conditions, company financial performance, changes in strategy, and other relevant entity-specific events. If we elect to bypass the qualitative assessment or do not pass the qualitative assessment, a quantitative assessment is then performed. The quantitative assessment compares the carrying value to the fair value of goodwill, with the difference representing an impairment loss.

Recently Issued Accounting Pronouncements

Refer to Note 2. Basis of Presentation and Summary of Significant Accounting Policies in the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for a discussion of recent accounting pronouncements.