rely-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-40822

Remitly Global, Inc.

(Exact name of registrant as specified in its charter)

Delaware

7372

83-2301143

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification Number)

1111 Third Avenue,

Suite 2100

Seattle,

98101

(Address of Principal Executive Offices)

(Zip Code)

(888) 736-4859

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value

RELY

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 29, 2024, the registrant had 192,480,627 shares of common stock, $0.0001 par value per share, outstanding.

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TABLE OF CONTENTS		Page(s)
Special Note Regarding Forward-Looking Statements		ii

Part I	Financial Information
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023	1
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023	2
	Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2024 and 2023	3
	Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2024 and 2023	4
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosure s About Market Risk	29
Item 4.	Controls and Procedures	30

Part II	Other Information	31
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	31
Item 6.	Exhibit s	32

Signatures		33

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding future events or our future results of operations, financial condition, business, strategies, financial needs, and the plans and objectives of management, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “likely,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or similar expressions and the negatives of those terms. These forward-looking statements include, but are not limited to, statements concerning the following:

• our expectations regarding our revenue, expenses, and other operating results;

• our ability to acquire new customers and successfully retain existing customers;

• our ability to develop new products and services and bring them to market in a timely manner;

• our ability to achieve or sustain our profitability;

• our ability to maintain and expand our strategic relationships with third parties;

• our business plan and our ability to effectively manage our growth;

• our market opportunity, including our total addressable market;

• anticipated trends, growth rates, and challenges in our business and in the markets in which we operate;

• our ability to attract and retain qualified employees;

• uncertainties regarding the impact of general economic and market conditions, including as a result of currency fluctuations, inflation, or regional and global conflicts or related government sanctions;

• our ability to maintain the security and availability of our solutions;

• our ability to maintain our money transmission licenses and other regulatory approvals;

• our ability to maintain and expand internationally; and

• our expectations regarding anticipated technology needs and developments and our ability to address those needs and developments with our solutions.

You should not place undue reliance on our forward-looking statements and you should not rely on forward-looking statements as predictions of future events. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements. The forward-looking statements made in this Quarterly Report on Form 10-Q speak only as of the date of this report. We undertake no obligation to update any forward-looking statements made in this report to reflect events or circumstances after the date of this report or to reflect new information or the occurrence of unanticipated events, except as required by law. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in “Risk Factors” in this Quarterly Report on Form 10-Q. New risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make.

Unless the context otherwise requires, the terms “Remitly Global,” “Remitly,” “the Company,” “we,” “us,” and “our” in this Quarterly Report on Form 10-Q refer to Remitly Global, Inc. and our consolidated subsidiaries, taken as a whole.

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Part 1. Financial Information

Item 1. Financial Statements (Unaudited)

REMITLY GLOBAL, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

(unaudited)


	March 31,		December 31,
	2024		2023
Assets
Current assets
Cash and cash equivalents	$	285,997	$	323,710
Disbursement prefunding	202,042		195,848
Customer funds receivable, net	439,183		379,417

Prepaid expenses and other current assets	44,789		33,143
Total current assets	972,011		932,118

Property and equipment, net	19,335		16,010
Operating lease right-of-use assets	10,315		9,525
Goodwill	54,940		54,940
Intangible assets, net	15,427		16,642
Other noncurrent assets, net	7,173		7,071
Total assets	$	1,079,201	$	1,036,306
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	12,278	$	35,051

Customer liabilities	192,296		177,473
Short-term debt	2,445		2,481
Accrued expenses and other current liabilities	155,080		145,802
Operating lease liabilities	5,746		6,032
Total current liabilities	367,845		366,839
Operating lease liabilities, noncurrent	5,345		4,477

Long-term debt	150,000		130,000
Other noncurrent liabilities	6,653		5,653
Total liabilities	529,843		506,969
Commitments and contingencies (Note 16)

Stockholders’ equity
Common stock, $0.0001 par value; 725,000,000 shares authorized as of March 31, 2024 and December 31, 2023 both; 192,311,050 and 188,435,952 shares issued and outstanding, as of March 31, 2024 and December 31, 2023, respectively	19		19
Additional paid-in capital	1,062,029		1,020,286
Accumulated other comprehensive (loss) income	(307)		335
Accumulated deficit	(512,383)		(491,303)
Total stockholders’ equity	549,358		529,337
Total liabilities and stockholders’ equity	$	1,079,201	$	1,036,306

The accompanying notes are an integral part of these condensed consolidated financial statements.

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REMITLY GLOBAL, INC.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share data)

(unaudited)


	Three Months Ended March 31,
	2024		2023
Revenue	$	269,118	$	203,865
Costs and expenses
Transaction expenses(1)	89,881		74,066
Customer support and operations(1)	20,119		19,931
Marketing(1)	68,014		44,123
Technology and development(1)	63,206		49,376
General and administrative(1)	44,173		41,408
Depreciation and amortization	3,678		3,029
Total costs and expenses	289,071		231,933
Loss from operations	(19,953)		(28,068)
Interest income	2,226		2,024
Interest expense	(769)		(389)
Other expense, net	(1,586)		(1,511)
Loss before provision for income taxes	(20,082)		(27,944)
Provision for income taxes	998		370


Net loss	$	(21,080)	$	(28,314)
Net loss per share attributable to common stockholders:
Basic and diluted	$	(0.11)	$	(0.16)
Weighted-average shares used in computing net loss per share attributable to common stockholders:
Basic and diluted	189,848,799		175,113,904

__________________

(1) Exclusive of depreciation and amortization, shown separately, above.

The accompanying notes are an integral part of these condensed consolidated financial statements.

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REMITLY GLOBAL, INC.

Condensed Consolidated Statements of Comprehensive Loss

(In thousands)

(unaudited)


	Three Months Ended March 31,
	2024		2023
Net loss	$	(21,080)	$	(28,314)
Other comprehensive (loss) income:
Foreign currency translation adjustments	(642)		348
Comprehensive loss	$	(21,722)	$	(27,966)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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REMITLY GLOBAL, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share data)

(unaudited)


	Three Months Ended March 31, 2024
		Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
		Shares	Amount
Balance as of January 1, 2024		188,435,952	$	19	$	1,020,286	$	335	$	(491,303)	$	529,337



Issuance of common stock in connection with ESPP		439,247	—		5,004		—		—		5,004
Issuance of common stock upon exercise of stock options, including early exercised options, and vesting of restricted stock units		3,500,485	—		2,530		—		—		2,530
Taxes paid related to net shares settlement of equity awards		(64,634)	—		(1,366)		—		—		(1,366)
Stock-based compensation expense		—	—		35,575		—		—		35,575
Other comprehensive loss		—	—		—		(642)		—		(642)
Net loss		—	—		—		—		(21,080)		(21,080)
Balance as of March 31, 2024		192,311,050	$	19	$	1,062,029	$	(307)	$	(512,383)	$	549,358


	Three Months Ended March 31, 2023
		Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
		Shares	Amount
Balance as of January 1, 2023		173,250,865	$	17	$	854,276	$	(743)	$	(373,463)	$	480,087
Issuance of common stock in connection with ESPP		297,095	—		2,729		—		—		2,729
Issuance of common stock upon exercise of stock options, including early exercised options, and vesting of restricted stock units		3,589,965	1		4,992		—		—		4,993

Issuance of common stock for acquisition consideration		590,838	—		6,635		—		—		6,635
Issuance of common stock, subject to service-based vesting conditions, in connection with acquisition		104,080	—		581		—		—		581
Taxes paid related to net shares settlement of equity awards		(99,550)	—		(1,413)		—		—		(1,413)
Stock-based compensation expense		—	—		29,775		—		—		29,775
Other comprehensive income		—	—		—		348		—		348
Net loss		—	—		—		—		(28,314)		(28,314)
Balance as of March 31, 2023		177,733,293	$	18	$	897,575	$	(395)	$	(401,777)	$	495,421

The accompanying notes are an integral part of these condensed consolidated financial statements.

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REMITLY GLOBAL, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)


	Three Months Ended March 31,
	2024		2023
Cash flows from operating activities
Net loss	$	(21,080)	$	(28,314)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	3,678		3,029
Stock-based compensation expense, net	34,088		29,234


Other	249		1,083
Changes in operating assets and liabilities:
Disbursement prefunding	(6,194)		(44,157)
Customer funds receivable	(59,432)		69,608

Prepaid expenses and other assets	(10,377)		(12,078)
Operating lease right-of-use assets	1,392		1,184
Accounts payable	(22,707)		(4,512)
Customer liabilities	14,744		(7,448)
Accrued expenses and other liabilities	10,429		(9,570)
Operating lease liabilities	(1,598)		(355)
Net cash used in operating activities	(56,808)		(2,296)
Cash flows from investing activities
Purchases of property and equipment	(945)		(864)
Capitalized internal-use software costs	(3,369)		(1,296)
Cash paid for acquisition, net of acquired cash, cash equivalents, and restricted cash	—		(40,933)
Net cash used in investing activities	(4,314)		(43,093)
Cash flows from financing activities




Proceeds from exercise of stock options	2,483		4,844
Proceeds from issuance of common stock in connection with ESPP	5,004		2,729
Proceeds from revolving credit facility borrowings	275,000		75,000
Repayments of revolving credit facility borrowings	(255,000)		(75,000)
Taxes paid related to net share settlement of equity awards	(1,366)		(1,413)
Repayment of assumed indebtedness	—		(17,068)
Net cash provided by (used in) financing activities	26,121		(10,908)
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash	(1,099)		219
Net decrease in cash, cash equivalents, and restricted cash	(36,100)		(56,078)
Cash, cash equivalents, and restricted cash at beginning of period	325,029		300,735
Cash, cash equivalents, and restricted cash at end of period	$	288,929	$	244,657















Reconciliation of cash, cash equivalents, and restricted cash
Cash and cash equivalents	$	285,997	$	244,159
Restricted cash included in prepaid expenses and other current assets	2,190		444
Restricted cash included in other noncurrent assets, net	742		54
Total cash, cash equivalents, and restricted cash	$	288,929	$	244,657

The accompanying notes are an integral part of these condensed consolidated financial statements.

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REMITLY GLOBAL, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Organization and Description of Business

Description of Business

Remitly Global, Inc. (the “Company” or “Remitly”) was incorporated in the State of Delaware in October 2018 and is headquartered in Seattle, Washington, with various other global office locations. Remitly was founded and incorporated in the State of Delaware in 2011 under the name of Remitly, Inc., and is a wholly-owned subsidiary of Remitly Global, Inc.

Remitly is a leading digital financial services provider for immigrants, their families, and other global citizens in over 170 countries, helping customers send money internationally in a quick, reliable, and more cost-effective manner, by leveraging digital channels and supporting cross-border transmissions across the globe.

Unless otherwise expressly stated or the context otherwise requires, the terms “Remitly” and the “Company” within these notes to the condensed consolidated financial statements refer to Remitly Global, Inc. and its wholly-owned subsidiaries.

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. The year-end data within the Condensed Consolidated Balance Sheets was derived from audited financial statements, but does not include all disclosures required by GAAP and therefore the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the historical audited annual consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K, for the year ended December 31, 2023.

The accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to state fairly the Company’s consolidated financial position, results of operations, comprehensive loss, and cash flows for the interim periods. The interim results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024, or for any other future annual or interim period.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Remitly Global, Inc. and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Reclassification

The condensed consolidated financial statements and accompanying notes have been prepared consistently, with the exception of certain prior year amounts which have been reclassified to conform with the current period presentation. Reclassifications include a change in presentation of shares purchased under the ESPP within the Company’s Condensed Consolidated Statements of Cash Flows. Beginning in the year ended December 31, 2023, the Company changed the presentation of shares purchased under the ESPP to reflect an operating cash outflow for compensation paid to employees and a financing cash inflow for cash paid by employees in exchange for shares. Previously, such activity was treated and disclosed as noncash activity for the three months ended March 31, 2023. The Company has conformed the prior period statement of cash flows to the current period presentation to enhance transparency and provide comparability.

Use of Estimates

The preparation of the accompanying condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed within the condensed consolidated financial statements and accompanying notes. These estimates and assumptions include, but are not limited to, revenue recognition including the treatment of sales incentive programs, reserves for transaction losses, stock-based compensation expense, the carrying value of operating lease right-of-use assets, the recoverability of deferred tax assets, capitalization of software development costs, goodwill, and the recoverability of intangible assets. The key assumptions applied for value of the intangible assets include revenue growth rates for a hypothetical market participant, selected discount rates, as well as migration curves for developed technology. The Company bases its estimates on historical experience and on assumptions that management considers reasonable. Actual results could differ from these estimates and assumptions, and these differences could be material to the condensed consolidated financial statements.

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Concentration of Credit Risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents, disbursement prefunding, restricted cash, and customer funds receivable. The Company maintains cash and cash equivalents and restricted cash balances that may exceed the insured limits by the Federal Deposit Insurance Corporation. In addition, the Company funds its international operations using accounts with institutions in the major countries where its subsidiaries operate. The Company also prefunds amounts which are held by its disbursement partners, which are typically located in India, Mexico, and the Philippines. The Company has not experienced any significant losses on its deposits of cash and cash equivalents, disbursement prefunding, restricted cash, or customer funds receivable in the three months ended March 31, 2024 and 2023.

For the three months ended March 31, 2024 and 2023, no individual customer represented 10% or more of the Company’s total revenues or the Company’s customer funds receivable.

Advertising

Advertising expenses are charged to operations as incurred and are included as a component of ‘Marketing expenses’ within the Condensed Consolidated Statements of Operations. Advertising expenses are used primarily to attract new customers. Advertising expenses totaled $51.7 million and $34.6 million during the three months ended March 31, 2024 and 2023, respectively.

Summary of Significant Accounting Policies

The Company’s significant accounting policies are discussed in Note 2. Basis of Presentation and Summary of Significant Accounting Policies within the notes to consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. There have been no significant changes to these policies during the three months ended March 31, 2024, except as noted above.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

None.

Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company is currently evaluating the potential impact of adopting this new guidance to its condensed consolidated financial statements and related disclosures.

In December 2023, the FASB issued Accounting Standards Update No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign), and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state, and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. The Company is currently evaluating the potential impact of adopting this new guidance to its condensed consolidated financial statements and related disclosures.

There are other new accounting pronouncements issued by the FASB that the Company has adopted or will adopt, as applicable. The Company does not believe any of these accounting pronouncements have had, or will have, a material impact on the condensed consolidated financial statements or disclosures.

3. Revenue

The Company’s primary source of revenue is generated from its 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 the Company’s currency purchases. Revenue is recognized when control of these services is transferred to the Company’s customers, which is the time the funds have been delivered to the intended recipient in an amount that reflects the consideration the Company expects to be entitled to in exchange for services provided. The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, which includes the following steps:

(1)identification of the contract with a customer;

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(2)identification of the performance obligations in the contract;

(3)determination of the transaction price;

(4)allocation of the transaction price to the performance obligations in the contract; and

(5)recognition of revenue when, or as, the Company satisfies a performance obligation.

Customers engage the Company 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 the Company’s 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 countries to which the funds are transferred. The Company’s 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, the Company’s contracts are defined at the transaction level and do not extend beyond the service already provided.

The Company’s service comprises a single performance obligation to complete transactions for the Company’s customers. Using compliance and risk assessment tools, the Company performs a transaction risk assessment on individual transactions to determine whether a transaction should be accepted. When the Company accepts a transaction and processes the designated payment method of the customer, the Company becomes obligated to its customer to complete the payment transaction, at which time a receivable is recorded, along with a corresponding customer liability. None of the Company’s contracts contains a significant financing component.

The Company recognizes transaction revenue on a gross basis as it is the principal for fulfilling payment transactions. As the principal to the transaction, the Company controls the service of completing payments on its payment platform. The Company bears primary responsibility for the fulfillment of the payment service, is the merchant of record, contracts directly with its customers, controls the product specifications, and defines the value proposition of its services. The Company is also responsible for providing customer support. Further, the Company has full discretion over determining the fee charged to its customers, which is independent of the cost it incurs in instances where it may utilize payment processors or other financial institutions to perform services on its behalf. These fees paid to payment processors and other financial institutions are recognized as ‘Transaction expenses’ within the Condensed Consolidated Statements of Operations. The Company does not have any capitalized contract acquisition costs.

Deferred Revenue

The deferred revenue balances from contracts with customers were as follows for the three months ended March 31, 2024 and 2023:


	Three Months Ended March 31,
(in thousands)	2024		2023
Deferred revenue, beginning of the period	$	1,124	$	1,108
Deferred revenue, end of the period	1,250		833

Revenue recognized from amounts included in deferred revenue at the beginning of the period	$	824	$	553

Deferred revenue represents amounts received from customers for which the performance obligations are not yet fulfilled. Deferred revenue is primarily included within ‘Accrued expenses and other current liabilities’ on the Condensed Consolidated Balance Sheets, as the performance obligations are expected to be fulfilled within the next year.

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Sales Incentives

The Company provides sales incentives to customers in a variety of forms, including promotions, discounts, and other sales incentives. Evaluating whether a sales incentive is a payment to a customer requires judgment. Sales incentives determined to be consideration payable to a customer or paid on behalf of a customer are accounted for as reductions to revenue, up to the point where net historical cumulative revenue, at the customer level, is reduced to zero. Those additional incentive costs that would have caused the customer level revenue to be negative are classified as advertising expenses and are included as a component of ‘Marketing expenses’ within the Condensed Consolidated Statements of Operations. In addition, referral credits given to a referrer are classified as ‘Marketing expenses,’ as these incentives are paid in exchange for a distinct service.

The following table presents the Company’s sales incentives for the three months ended March 31, 2024 and 2023:


	Three Months Ended March 31,
(in thousands)	2024		2023
Reduction to revenue	$	8,778	$	7,555
Marketing expenses	6,619		4,227
Total sales incentives	$	15,397	$	11,782

Revenue by Geography

The following table presents the Company’s revenue disaggregated by primary geographical location for the three months ended March 31, 2024 and 2023, attributed to the country in which the sending customer is located:


	Three Months Ended March 31,
(in thousands)	2024		2023
United States	$	175,393	$	139,092
Canada	32,949		24,859
Rest of world	60,776		39,914
Total revenue	$	269,118	$	203,865

4. Prepaid Expenses & Other Current Assets

Prepaid expenses and other current assets consisted of the following:


	March 31,		December 31,
(in thousands)	2024		2023
Prepaid expenses	$	22,728	$	11,122
Payment card receivable	8,258		15,599
Tax receivable	4,390		2,813
Other receivables	4,025		—
Restricted cash	2,190		774
Prepaid compensation arrangements	2,038		1,518
Other prepaid expenses and other current assets	1,160		1,317
Prepaid expenses and other current assets	$	44,789	$	33,143

5. Property and Equipment

Property and equipment, net consisted of the following as of March 31, 2024 and December 31, 2023:


	March 31,		December 31,
(in thousands)	2024		2023
Capitalized internal-use software	$	28,051	$	23,195
Computer and office equipment	8,541		8,529
Furniture and fixtures	2,721		2,636
Leasehold improvements	8,109		8,080
Projects in process	98		—
Total gross property and equipment	47,520		42,440
Less: Accumulated depreciation and amortization	(28,185)		(26,430)
Property and equipment, net	$	19,335	$	16,010

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Depreciation and amortization expense related to property and equipment was $2.5 million and $1.8 million for the three months ended March 31, 2024 and 2023, respectively.

Capitalized Internal-Use Software Costs

The following table presents the Company’s capitalized internal-use software, including amortization expense recognized, for the three months ended March 31, 2024 and 2023:


	Three Months Ended March 31,
(in thousands)	2024		2023
Total capitalized internal-use software costs(1)	$	4,856	$	1,606
Stock-based compensation costs capitalized to internal-use software	1,487		541
Amortization expense(2)	1,649		929

__________

(1) Amounts are inclusive of stock-based compensation costs capitalized denoted below.

(2) Amounts are included within ‘Depreciation and amortization’ within the Company’s Condensed Consolidated Statements of Operations.

Capitalized Costs of Cloud Computing Arrangements

The following table presents the Company’s capitalized costs related to the implementation of cloud computing arrangements, including amortization expense recognized, for the three months ended March 31, 2024 and 2023:


	Three Months Ended March 31,
(in thousands)	2024		2023
Total capitalized cloud computing arrangement costs	$	529	$	902

Technology and development	$	497	$	327
General and administrative	90		24
Total amortization expense	$	587	$	351

The following table presents the Company’s total capitalized cloud computing arrangement costs, net of accumulated amortization, on the Company’s Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023:


	March 31,		December 31,
(in thousands)	2024		2023
Prepaid expenses and other current assets	$	2,281	$	2,220
Other noncurrent assets, net	1,692		1,811
Total capitalized cloud computing arrangement costs, net	$	3,973	$	4,031

6. Business Combinations

There were no acquisitions accounted for as business combinations or divestitures completed in the three months ended March 31, 2024.

Acquisition Completed in 2023

The Company completed its acquisition of Rewire (O.S.G.) Research and Development Ltd. (“Rewire”) on January 5, 2023 by acquiring all outstanding equity interests of Rewire in exchange for cash and equity consideration, described below. The acquisition of Rewire allows the Company to accelerate its opportunity to differentiate the remittance experience with complementary products, by bringing together its remittance businesses in new geographies, along with a strong team that is culturally aligned with the Company.

The acquisition met the criteria to be accounted for as a business combination in accordance with ASC 805, Business Combinations (“ASC 805”). This method required, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date and that the difference between the fair value of the consideration paid for the acquired entity and the fair value of the net assets acquired be recorded as goodwill, which is not amortized but is tested at least annually for impairment.

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Consideration Transferred

The acquisition date fair value of consideration transferred for the acquisition totaled $77.9 million, as follows:


(in thousands)	Amount
Cash paid to selling shareholders	$	56,398
Equity issued to selling shareholders, including replacement of equity awards attributable to pre-combination services	7,216
Holdback liability to be settled in cash and Company equity	11,899
Effective settlement of pre-existing net receivable owed to the Company	2,401
Total consideration transferred	$	77,914

The fair value of equity was determined based on the closing price of the Company’s common stock immediately prior to acquisition, and includes 694,918 shares issued in Company common stock, inclusive of 104,080 shares which are subject to service-based vesting conditions over a two-year period. Approximately $0.6 million of these proceeds were accounted for as pre-combination expense, and included within the total consideration transferred noted above, with the remaining $0.9 million to be recognized as post-combination share-based compensation expense over the requisite service period. The equity issued excluded 133,309 shares and restricted stock units held back and not legally issued at acquisition date, as further discussed below.

Approximately $11.9 million of the cash and equity proceeds were held back to satisfy any necessary adjustments, including without limitation, indemnification claims related to general representations and warranties, and any net working capital adjustments. As of the acquisition date, the majority of this holdback was expected to be settled in cash, with the remainder in 133,309 shares of Company common stock and restricted stock units. Such amounts were subject to a 15-month holdback period, net of any amounts necessary to satisfy all unsatisfied or disputed claims for indemnification and net working capital adjustments. As of the acquisition date, this represented approximately $10.4 million in cash and $1.5 million in equity, as discussed above, issuable at the end of the holdback period in Company common stock, subject to the aforementioned adjustments. Refer to the discussion below regarding the settlement of the holdback consideration subsequent to March 31, 2024.

Included in consideration transferred is the settlement of a pre-existing net receivable owed to the Company by Rewire, which was effectively settled and became intercompany arrangements as of the closing of the transaction. Excluding the impact of the outstanding net receivable owed to the Company by Rewire, the Company would have paid $2.4 million more for the business at closing, and therefore the GAAP purchase price reflects an increase in that amount. The settlement of pre-existing relationships between the Company and Rewire did not result in any material gain or loss. The change in the pre-existing receivable to an intercompany receivable has been considered as a noncash activity reflected within the operating activities of the Condensed Consolidated Statements of Cash Flows.

Holdback Liability

The holdback of cash and equity proceeds discussed above was recorded at its acquisition date fair value and was classified as a liability within ‘Other noncurrent liabilities’ on the Company’s Condensed Consolidated Balance Sheets at the acquisition date. The portion of the holdback settled in Company shares continues to be recorded at its fair value through its settlement date, with changes recorded to earnings. The estimated fair value of the portion of the holdback liability settled in equity uses both observable and unobservable inputs, specifically considering the price of the Company’s common stock, as well as the probability of payout at the end of the holdback period, and is considered a Level 3 measurement, as defined in ASC 820, Fair Value Measurement (“ASC 820”). As of March 31, 2024, the holdback liability was recorded within ‘Accrued expenses and other current liabilities’ on the Company’s Condensed Consolidated Balance Sheets as the liability was fulfilled within twelve months of the balance sheet date, as further discussed below.

The Company recorded $0.2 million and $0.8 million during the three months ended March 31, 2024 and 2023, respectively, to reflect the change in the fair value of the holdback liability, recorded within “General and Administrative Expenses ” within the Condensed Consolidated Statements of Operations. As of March 31, 2024, the fair value of the holdback liability was $13.2 million, of which $10.4 million was set to be paid in cash with the remainder in equity, as further discussed below.

The holdback of cash and equity consideration discussed above was paid by the Company subsequent to the balance sheet date in April 2024, adjusted for immaterial post-closing net purchase price adjustments identified during the period. These proceeds were inclusive of $10.3 million in cash and 131,507 shares of Company common stock and restricted stock units.

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Fair Value of Assets Acquired and Liabilities Assumed

The identifiable assets acquired and liabilities assumed of Rewire were recorded at their preliminary fair values as of the acquisition date and consolidated with those of the Company. Assigning fair market values to the assets acquired and liabilities assumed at the date of an acquisition requires the use of significant judgments regarding estimates and assumptions. The fair values of intangible assets were estimated using inputs classified as Level 3 under the income and cost approaches, including the multi-period excess earnings method for developed technology. The key assumptions in applying the income approach used in valuing the identified intangible assets include revenue growth rates for a hypothetical market participant, selected discount rates, as well as migration curves for developed technology. The following table summarizes the allocation of the purchase consideration to the assets acquired and liabilities assumed based on their acquisition-date fair values:


(in thousands)	Purchase Price Allocation
Cash, cash equivalents, and restricted cash	$	15,465
Disbursement prefunding	6,016
Customer funds receivable, net	3,423
Prepaid expenses and other assets, net	1,187
Intangible Assets
Trade name	1,000
Customer relationships	8,500
Developed technology	12,000
Goodwill	54,940
Customer liabilities	(3,075)
Advance for future deposits	(2,550)
Other assumed indebtedness	(16,234)
Other liabilities, net	(2,758)
Total consideration transferred	$	77,914

As of December 31, 2023, the valuation of assets acquired and liabilities assumed of Rewire was complete.

The excess of the purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill and is primarily attributable to the revenue and cost synergies expected to arise from the acquisition through continued geographic expansion and product differentiation, along with the acquired workforce of Rewire. Goodwill is deductible for income tax purposes. The acquisition did not change the Company’s one operating segment.

Acquired Receivables

The fair value of the financial assets acquired include ‘Disbursement prefunding’ and ‘Customer funds receivable, net,’ with a fair value of $6.0 million and $3.4 million, respectively, as disclosed above. The Company has collected substantially all of these receivables.

Transaction Costs

Transaction costs totaled $0.2 million and $1.2 million for the three months ended March 31, 2024 and 2023, respectively, which included $0.2 million and $0.8 million, respectively, for the change in the fair value of the holdback liability.

Other Disclosures

The results of operations of Rewire are included within the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss since the date of the acquisition.

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7. Intangible Assets

The components of identifiable intangible assets as of March 31, 2024 and December 31, 2023 were as follows:

SEC Form 10-Q filed by Remitly Global Inc.