By Emily Bary
In a vote of confidence for more modern remittance technology, shares of Remitly Global Inc. popped more than 20% in their initial-public-offering debut Thursday, though they later pulled back from the opening price.
Shares of Remitly /zigman2/quotes/229492987/composite RELY -3.89% opened at $52.90 apiece, above the company’s $43 IPO price, which itself came in ahead of the company’s proposed price range of $38 to $42 . The stock headed lower after the first trade and recently changed hands just above $46.
The company, which raised $301 million through its offering, sees a big market opportunity as it seeks to simplify the process of allowing immigrants to send money to relatives living abroad. Remitly is targeting an addressable market of $540 billion in remittance flows sent to low- and medium-income countries through formal means. The company is catering to immigrants who it says must often pay excessive fees or deal with unreliable operators when trying to send funds through traditional means.
“Dominated by banks, operators of brick-and-mortar locations, and informal channels, the players in these markets typically rely on disparate legacy systems and processes,” Remitly said in its prospectus. “This results in a poor customer experience and additional operating costs that are passed down to the customer.”
Remitly is able to operate with a lower cost structure than traditional players because of its digitally focused product, Chief Operating Officer Josh Hug told MarketWatch. He said the product also offers a “much simpler and clearer approach for customers” that can help people save time when trying to access or send money across borders.
Remitly IPO: 5 things to know about the remittance company
The company recorded $202.1 million in revenue during the first six months of 2021, up from $105.1 million during the first six months of 2020. It lost $9.2 million in the first six months of 2021 compared with $21.1 million in the first six months of 2020.
While Remitly has made progress in improving its profit margins, the company plans continued investments in the business, according to Chief Financial Officer Susanna Morgan. Growth investments are the “top priority” for Remitly, she continued.
Looking beyond remittances, the company sees room to expand into financial services more broadly with offerings tailored to the immigrant population. Remitly launched its Passbook mobile app last year, allowing customers to access digital banking services provided by a partner bank, and it has seen “encouraging early adoption” since that rollout began.