Despite a revenue beat, the market is hammering the stock (NAS:RELY). Oftentimes, management can present earnings and be in shock when they gaze back at the price action on their screens and this is one of those times. The stock is down ~35% on the day. Growth traders, momentum buyers, and Johnny-come-latelys are washing out. We believe this is a great opportunity to buy an incredibly attractive business after an unjustifiable sell-off. We added a significant amount at around $20 a share and the position is now close to 6% of our portfolio.
Earnings Update:
Revenue totaled $241.6 million, compared to $169.3 million, up 43%. y/y (slight beat on estimates)
Net loss was $35.7 million, compared to a net loss of $33.1 million. y/y (slight miss on estimates, mostly non-cash SBC)
Adjusted EBITDA was $10.5 million, compared to $(3.7) million. y/y
They continue to execute and grow according to our Thesis.
Our thoughts after the earnings call:
Management made it clear that they are focused on increased growth expenditures when the market wants them to pare back growth expenditures to focus on profitability.
Remitly cash burn is ~breakeven and they have ample liquidity (over 400mm) and no debt. They are internally funding growth. Shifting gears to focus on profitability now would be a self-inflicted mistake given they are in the ~second inning of an enormous and scalable market opportunity. This management is no stranger to market selloffs and is not in danger of letting the market dictate its strategy.
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Past performance is not necessarily indicative of future results. All investments carry significant risk, and it’s important to note that we are not in the business of providing investment advice. All investment decisions of an individual remain the specific responsibility of that individual. There is no guarantee that our research, analysis, and forward-looking price targets will result in profits or that they will not result in a full loss or losses. All investors are advised to fully understand all risks associated with any kind of investing they choose to do.
