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 September 30, ~~2022~~2023

☐ 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	☒☐

~~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~~

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 ~~November 4, 2022,~~October 30, 2023, the registrant had ~~170,663,803~~185,157,741 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents


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 ofSeptember 30, ~~2022~~2023 and December 31, ~~2021~~2022	1
	Condensed Consolidated Statements of Operations for the three and nine months ended S~~eptember~~September 30, 2023 3 0 ~~, 2022~~ and ~~2021~~2022	2
	Condensed Consolidated Statements of Comprehensive Loss for the thre e and nine months ended S~~eptember~~September 30, 2023 3 0 ~~, 2022~~ and ~~2021~~2022	3
	Condensed Consolidated Statements of ~~Redeemable Convertible Preferred Stock and~~ Stockholders’ Equity ~~(Deficit)~~ for the three ~~and~~ n~~ine~~and nine months ended S~~eptember~~September 30, 2023 ~~30, 2022~~ and ~~2021~~2022	4
	Condensed Consolidated Statements of Cash Flows for the nine months ended S~~eptember~~September 30, 2023 30 , ~~2022~~ and ~~2021~~2022	6
	Notes to ~~Condensed Consolidated Financial Statements~~Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2022
Item 3.	Quantitative and Qualitative Disclosure s About Market Risk	3334
Item 44.	Controls and Procedures	3435

Part II	Other Information	36
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Mine Safety Disclosures	36
Item 5.	Other Information	36
Item 6.	~~Exhibits~~Exhibit s	37

Signatures		38

Table of Con t ents

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;

• ~~the COVID-19 pandemic, and its impact on our employees, customers, strategic partners, vendors, results of operations, liquidity, and financial condition;~~

• uncertainties regarding the impact of general economic and market conditions, including as a result of currency fluctuations, inflation, or regional and global conflicts, such as the conflict in Israel, 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.

Table of Contents

Part 1. Financial Information

Item 1. Financial Statements (Unaudited)

REMITLY GLOBAL, INC.

Condensed Consolidated Balance Sheets

(inIn thousands, except share and per share data)

(unaudited)


		September 30,		December 31,			September 30,		December 31,
		2022		2021			2023		2022
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	376,451	$	403,262	Cash and cash equivalents	$	223,273	$	300,635
Disbursement prefunding	Disbursement prefunding	155,536		119,627		Disbursement prefunding	216,232		158,055
Customer funds receivable, net	Customer funds receivable, net	114,029		67,215		Customer funds receivable, net	259,316		191,402

Prepaid expenses and other current assets	Prepaid expenses and other current assets	20,119		17,448		Prepaid expenses and other current assets	30,015		19,327
Total current assets	Total current assets	666,135		607,552		Total current assets	728,836		669,419
Restricted cash		81		51

Property and equipment, net	Property and equipment, net	10,270		9,249		Property and equipment, net	14,713		11,546
Operating lease right-of-use assets	Operating lease right-of-use assets	9,420		5,302		Operating lease right-of-use assets	10,299		8,675
Goodwill						Goodwill	54,940		—
Intangible assets, net						Intangible assets, net	17,856		—
Other noncurrent assets, net	Other noncurrent assets, net	4,431		3,510		Other noncurrent assets, net	6,106		6,313
Total assets	Total assets	$	690,337	$	625,664	Total assets	$	832,750	$	695,953
Liabilities and Stockholders’ Equity	Liabilities and Stockholders’ Equity					Liabilities and Stockholders’ Equity
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	8,180	$	1,210	Accounts payable	$	17,861	$	6,794

Customer liabilities	Customer liabilities	104,861		70,483		Customer liabilities	143,116		111,075
Short-term debt						Short-term debt	2,354		—
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	99,573		66,683		Accrued expenses and other current liabilities	131,671		87,752
Operating lease liabilities	Operating lease liabilities	3,168		3,240		Operating lease liabilities	5,395		3,521
Total current liabilities	Total current liabilities	215,782		141,616		Total current liabilities	300,397		209,142
Operating lease liabilities, noncurrent	Operating lease liabilities, noncurrent	6,667		2,907		Operating lease liabilities, noncurrent	5,749		5,674

Other noncurrent liabilities	Other noncurrent liabilities	1,399		813		Other noncurrent liabilities	812		1,050
Total liabilities	Total liabilities	$	223,848	$	145,336	Total liabilities	$	306,958	$	215,866
Commitments and Contingencies (Note 14)
Commitments and contingencies (Note 15)						Commitments and contingencies (Note 15)

Stockholders’ equity	Stockholders’ equity					Stockholders’ equity
Common stock, $0.0001 par value; 725,000,000 shares authorized as of September 30, 2022 and December 31, 2021 both; 170,467,139 and 164,239,555 shares issued and outstanding, as of September 30, 2022 and December 31, 2021, respectively		17		16
Common stock, $0.0001 par value; 725,000,000 shares authorized as of September 30, 2023 and December 31, 2022 both; 185,128,562 and 173,250,865 shares issued and outstanding, as of September 30, 2023 and December 31, 2022, respectively						Common stock, $0.0001 par value; 725,000,000 shares authorized as of September 30, 2023 and December 31, 2022 both; 185,128,562 and 173,250,865 shares issued and outstanding, as of September 30, 2023 and December 31, 2022, respectively	19		17
Additional paid-in capital	Additional paid-in capital	822,929		739,503		Additional paid-in capital	983,197		854,276
Accumulated other comprehensive (loss) income		(2,389)		253
Accumulated other comprehensive loss						Accumulated other comprehensive loss	(1,142)		(743)
Accumulated deficit	Accumulated deficit	(354,068)		(259,444)		Accumulated deficit	(456,282)		(373,463)
Total stockholders’ equity	Total stockholders’ equity	466,489		480,328		Total stockholders’ equity	525,792		480,087
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	690,337	$	625,664	Total liabilities and stockholders’ equity	$	832,750	$	695,953

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

(inIn thousands, except share and per share data)

(unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenue	Revenue	$	169,259	$	121,244	$	462,528	$	323,350	Revenue	$	241,629	$	169,259	$	679,527	$	462,528
Costs and expenses	Costs and expenses									Costs and expenses
Transaction expenses(1)	Transaction expenses(1)	69,872		47,560		186,961		135,175		Transaction expenses(1)	85,742		69,872		239,995		186,961
Customer support and operations(1)	Customer support and operations(1)	18,142		12,005		48,867		32,435		Customer support and operations(1)	21,190		18,142		62,604		48,867
Marketing(1)	Marketing(1)	43,337		30,365		127,807		82,639		Marketing(1)	61,351		43,337		159,074		127,807
Technology and development(1)	Technology and development(1)	36,178		18,123		95,836		44,965		Technology and development(1)	57,014		36,178		160,699		95,836
General and administrative(1)	General and administrative(1)	35,504		24,539		96,355		47,429		General and administrative(1)	49,817		35,504		130,715		96,355
Depreciation and amortization	Depreciation and amortization	1,843		1,319		4,870		3,890		Depreciation and amortization	3,418		1,843		9,634		4,870
Total costs and expenses	Total costs and expenses	204,876		133,911		560,696		346,533		Total costs and expenses	278,532		204,876		762,721		560,696
Loss from operations	Loss from operations	(35,617)		(12,667)		(98,168)		(23,183)		Loss from operations	(36,903)		(35,617)		(83,194)		(98,168)
Interest income	Interest income	1,400		82		1,875		92		Interest income	1,808		1,400		5,200		1,875
Interest expense	Interest expense	(330)		(512)		(975)		(1,048)		Interest expense	(585)		(330)		(1,566)		(975)
Other income, net		1,765		396		4,121		3,044
Other income (expense), net										Other income (expense), net	283		1,765		(2,774)		4,121
Loss before provision for income taxes	Loss before provision for income taxes	(32,782)		(12,701)		(93,147)		(21,095)		Loss before provision for income taxes	(35,397)		(32,782)		(82,334)		(93,147)
Provision for income taxes	Provision for income taxes	287		261		1,477		1,085		Provision for income taxes	258		287		485		1,477

Net loss attributable to common stockholders		$	(33,069)	$	(12,962)	$	(94,624)	$	(22,180)
Net loss										Net loss	$	(35,655)	$	(33,069)	$	(82,819)	$	(94,624)
Net loss per share attributable to common stockholders:	Net loss per share attributable to common stockholders:									Net loss per share attributable to common stockholders:
Basic and diluted	Basic and diluted	$	(0.20)	$	(0.41)	$	(0.57)	$	(0.85)	Basic and diluted	$	(0.20)	$	(0.20)	$	(0.46)	$	(0.57)
Weighted-average shares used in computing net loss per share attributable to common stockholders:	Weighted-average shares used in computing net loss per share attributable to common stockholders:									Weighted-average shares used in computing net loss per share attributable to common stockholders:
Basic and diluted	Basic and diluted	168,604,378		31,641,400		166,517,398		26,055,903		Basic and diluted	182,598,013		168,604,378		178,956,602		166,517,398

__________________

(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

(inIn thousands)

(unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Net loss	Net loss	$	(33,069)	$	(12,962)	$	(94,624)	$	(22,180)	Net loss	$	(35,655)	$	(33,069)	$	(82,819)	$	(94,624)
Other comprehensive loss:	Other comprehensive loss:									Other comprehensive loss:
Foreign currency translation adjustments	Foreign currency translation adjustments	(1,375)		(293)		(2,642)		(309)		Foreign currency translation adjustments	(992)		(1,375)		(399)		(2,642)
Comprehensive loss	Comprehensive loss	$	(34,444)	$	(13,255)	$	(97,266)	$	(22,489)	Comprehensive loss	$	(36,647)	$	(34,444)	$	(83,218)	$	(97,266)

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

Table of Contents

REMITLY GLOBAL, INC.

Condensed Consolidated Statements of ~~Redeemable Convertible Preferred Stock and~~ Stockholders’ Equity ~~(Deficit)~~

For the Three and Nine Months Ended September 30, ~~2022 and 2021~~2023

(Iinn thousands, except share data)

(unaudited)


		Three Months Ended September 30, 2022
		Redeemable Convertible Preferred Stock			Common Stock			Additional Paid-in Capital				Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit					Total Stockholders’ Equity						Common Stock						Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stockholders’ Equity
		Shares	Amount		Shares	Amount											Shares						Amount
Balances as of July 1, 2022		—	$	—	167,789,651	$	17			$	789,221					$	(1,014)				$	(320,999)			$	467,225
Balance as of January 1, 2023																						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	Issuance of common stock in connection with ESPP	—	—		177,461	—		1,634				—		—					$	1,634		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	Issuance of common stock upon exercise of stock options, including early exercised options, and vesting of restricted stock units	—	—		2,320,448	—		3,914				—		—					3,914			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
Donation of common stock		—	—		181,961	—		1,972				—		—					1,972
Taxes paid related to net share settlement of equity awards		—	—		(2,382)	—		(25)				—		—					(25)

Issuance of common stock for acquisition consideration																						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																						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																						Taxes paid related to net shares settlement of equity awards			(99,550)				—		(1,413)			—			—			(1,413)
Stock-based compensation expense	Stock-based compensation expense	—	—		—	—		26,213				—		—					26,213			Stock-based compensation expense			—				—		29,775			—			—			29,775
Other comprehensive loss		—	—		—	—		—				(1,375)		—					(1,375)

Other comprehensive income																						Other comprehensive income			—				—		—			348			—			348
Net loss	Net loss	—	—		—	—		—				—		(33,069)					(33,069)			Net loss			—				—		—			—			(28,314)			(28,314)
Balance as of September 30, 2022		—	$	—	170,467,139	$	17	$	822,929			$	(2,389)	$	(354,068)				$	466,489
Balance as of March 31, 2023																						Balance as of March 31, 2023			177,733,293				$	18	$	897,575		$	(395)		$	(401,777)		$	495,421

		Three Months Ended September 30, 2021
		Redeemable Convertible Preferred Stock			Common Stock			Additional Paid-in Capital				Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit					Total Stockholders’ (Deficit) Equity
		Shares	Amount		Shares	Amount
Balances as of July 1, 2021		127,410,631	$	390,687	26,385,643	$	3			$	17,193						$	575					$	(229,906)			$	(212,135)

Repayment of non-recourse promissory note		—	—		—	—		3,060				—		—					3,060
Conversion of redeemable convertible preferred stock to common stock in connection with initial public offering		(127,410,631)	(390,687)		127,410,631	13		390,674				—		—					390,687
Issuance of common stock upon initial public offering and private placements, net of offering costs, underwriting discounts, and commissions		—	—		7,581,395	—		305,191				—		—					305,191
Donation of common stock		—	—		181,961	—		6,933				—		—					6,933
Issuance of common stock upon exercise of warrants		—	—		254,014	—		—				—		—					—
Issuance of common stock upon exercise of stock options, including early exercised options, and vesting of restricted stock units		—	—		1,951,856	—		2,341				—		—					2,341

Stock-based compensation expense		—	—		—	—		4,861				—		—					4,861
Other comprehensive loss		—	—		—	—		—				(293)		—					(293)

Issuance of common stock upon exercise of stock options, including early exercised options, and vesting of restricted stock units																						Issuance of common stock upon exercise of stock options, including early exercised options, and vesting of restricted stock units			3,468,316				—		3,586			—			—			3,586
Taxes paid related to net shares settlement of equity awards																						Taxes paid related to net shares settlement of equity awards			(39,883)				—		(698)			—			—			(698)
Stock-based compensation expense																						Stock-based compensation expense			—				—		36,033			—			—			36,033
Other comprehensive income																						Other comprehensive income			—				—		—			245			—			245
Net loss	Net loss	—	—		—	—		—				—		(12,962)					(12,962)			Net loss			—				—		—			—			(18,850)			(18,850)
Balance as of September 30, 2021		—	$	—	163,765,500	$	16	$	730,253			$	282	$	(242,868)				$	487,683
Balance as of June 30, 2023																						Balance as of June 30, 2023			181,161,726				$	18	$	936,496		$	(150)		$	(420,627)		$	515,737
Issuance of common stock in connection with ESPP																						Issuance of common stock in connection with ESPP			328,272				—		3,317			—			—			3,317
Issuance of common stock upon exercise of stock options, including early exercised options, and vesting of restricted stock units																						Issuance of common stock upon exercise of stock options, including early exercised options, and vesting of restricted stock units			3,561,018				1		3,991			—			—			3,992
Donation of common stock																						Donation of common stock			181,961				—		4,600			—			—			4,600
Taxes paid related to net shares settlement of equity awards																						Taxes paid related to net shares settlement of equity awards			(104,415)				—		(2,600)			—			—			(2,600)
Stock-based compensation expense																						Stock-based compensation expense			—				—		37,393			—			—			37,393
Other comprehensive loss																						Other comprehensive loss			—				—		—			(992)			—			(992)
Net loss																						Net loss			—				—		—			—			(35,655)			(35,655)
Balance as of September 30, 2023																						Balance as of September 30, 2023			185,128,562				$	19	$	983,197		$	(1,142)		$	(456,282)		$	525,792

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

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REMITLY GLOBAL, INC.

Condensed Consolidated Statements of ~~Redeemable Convertible Preferred Stock and~~ Stockholders’ Equity ~~(Deficit)~~

For the Three and Nine Months Ended September 30, 2022 ~~and 2021~~

(iIn thousands, except share data)

(unaudited)



	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balances as of January 1, 2022	164,239,555	$	16	$	739,503	$	253	$	(259,444)	$	480,328
Issuance of common stock in connection with ESPP	202,213	—		1,882		—		—		1,882
Issuance of common stock upon exercise of stock options, including early exercised options, and vesting of restricted stock units	1,696,601	1		2,677		—		—		2,678


Stock-based compensation expense	—	—		9,921		—		—		9,921
Other comprehensive income	—	—		—		4		—		4
Net loss	—	—		—		—		(23,310)		(23,310)
Balance as of March 31, 2022	166,138,369	$	17	$	753,983	$	257	$	(282,754)	$	471,503

Issuance of common stock upon exercise of stock options, including early exercised options, and vesting of restricted stock units	1,653,909	—		2,154		—		—		2,154

Taxes paid related to net shares settlement of equity awards	(2,627)	—		(30)		—		—		(30)
Stock-based compensation expense	—	—		33,114		—		—		33,114
Other comprehensive loss	—	—		—		(1,271)		—		(1,271)
Net loss	—	—		—		—		(38,245)		(38,245)
Balance as of June 30, 2022	167,789,651	$	17	$	789,221	$	(1,014)	$	(320,999)	$	467,225
Issuance of common stock in connection with ESPP	177,461	—		1,634		—		—		1,634

Issuance of common stock upon exercise of stock options, including early exercised options, and vesting of restricted stock units	2,320,448	—		3,914		—		—		3,914
Donation of common stock	181,961	—		1,972		—		—		1,972
Taxes paid related to net shares settlement of equity awards	(2,382)	—		(25)		—		—		(25)
Stock-based compensation expense	—	—		26,213		—		—		26,213
Other comprehensive loss	—	—		—		(1,375)		—		(1,375)
Net loss	—	—		—		—		(33,069)		(33,069)
Balance as of September 30, 2022	170,467,139	$	17	$	822,929	$	(2,389)	$	(354,068)	$	466,489

~~(unaudited)~~

Nine Months Ended September 30, 2022
Redeemable Convertible
Preferred Stock Common Stock Additional
Paid-in
Capital Accumulated
Other
Comprehensive
Loss Accumulated
Deficit Total
Stockholders’ Equity
Shares Amount Shares Amount
Balance as of January 1, 2022 — $ — 164,239,555 $ 16 $ 739,503 $ 253 $ (259,444) $ 480,328
Issuance of common stock in connection with ESPP — — 379,674 — 3,516 — — 3,516
Issuance of common stock upon exercise of stock options, including early exercised options, and vesting restricted stock units — — 5,670,958 1 8,745 — — 8,746
Donation of common stock — — 181,961 — 1,972 — — 1,972
Taxes paid related to net shares settlement of equity awards — — (5,009) — (55) — — (55)
Stock-based compensation expense — — — — 69,248 — — 69,248
Other comprehensive loss — — — — — (2,642) — (2,642)
Net loss — — — — — — (94,624) (94,624)
Balance as of September 30, 2022 — $ — 170,467,139 $ 17 $ 822,929 $ (2,389) $ (354,068) $ 466,489
Nine Months Ended September 30, 2021
Redeemable Convertible
Preferred Stock Common Stock Additional
Paid-in
Capital Accumulated
Other
Comprehensive
Income Accumulated
Deficit Total
Stockholders’
(Deficit) Equity
Shares Amount Shares Amount
Balance as of January 1, 2021 127,082,605 $ 387,707 24,289,906 $ 2 $ 8,766 $ 591 $ (220,688) $ (211,329)
Issuance of Series F redeemable convertible preferred stock, net of issuance costs 328,026 2,980 — — — — — —
Repayment of non-recourse promissory note — — — — 3,060 — — 3,060
Conversion of redeemable convertible preferred stock to common stock in connection with initial public offering (127,410,631) (390,687) 127,410,631 13 390,674 — — 390,687
Issuance of common stock upon initial public offering and private placements, net of offering costs, underwriting discounts, and commissions — — 7,581,395 — 305,191 — — 305,191
Donation of common stock — — 181,961 — 6,933 — — 6,933
Issuance of common stock upon exercise of warrants — — 254,014 — — — — —
Issuance of common stock upon exercise of stock options, including early exercised options, and vesting of restricted stock units — — 4,021,834 1 6,374 — — 6,375
Issuance of common stock — — 25,759 — 169 — — 169
Stock-based compensation expense — — — — 9,086 — — 9,086
Other comprehensive loss — — — — — (309) — (309)
Net loss — — — — — — (22,180) (22,180)
Balance as of September 30, 2021 — $ — 163,765,500 $ 16 $ 730,253 $ 282 $ (242,868) $ 487,683

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

(inIn thousands)

(unaudited)


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2022		2021			2023		2022
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net loss	Net loss	$	(94,624)	$	(22,180)	Net loss	$	(82,819)	$	(94,624)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Adjustments to reconcile net loss to net cash used in operating activities:						Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	Depreciation and amortization	4,870		3,890		Depreciation and amortization	9,634		4,870
Stock-based compensation expense, net	Stock-based compensation expense, net	67,880		8,965		Stock-based compensation expense, net	101,007		67,880
Donation of common stock	Donation of common stock	1,972		6,933		Donation of common stock	4,600		1,972

Other	Other	268		360		Other	4,674		268
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Disbursement prefunding	Disbursement prefunding	(35,909)		(7,212)		Disbursement prefunding	(52,162)		(35,909)
Customer funds receivable	Customer funds receivable	(52,547)		(29,072)		Customer funds receivable	(68,553)		(52,547)

Prepaid expenses and other assets	Prepaid expenses and other assets	(3,355)		(9,491)		Prepaid expenses and other assets	(9,652)		(3,355)
Operating lease right-of-use assets	Operating lease right-of-use assets	2,743		2,023		Operating lease right-of-use assets	3,796		2,743
Accounts payable	Accounts payable	6,863		1,229		Accounts payable	10,448		6,863
Customer liabilities	Customer liabilities	36,803		50,284		Customer liabilities	29,211		36,803
Accrued expenses and other liabilities	Accrued expenses and other liabilities	40,399		16,013		Accrued expenses and other liabilities	34,164		40,399
Operating lease liabilities	Operating lease liabilities	(3,152)		(2,317)		Operating lease liabilities	(3,470)		(3,152)
Net cash (used in) provided by operating activities		(27,789)		19,425
Net cash used in operating activities						Net cash used in operating activities	(19,122)		(27,789)
Cash flows from investing activities	Cash flows from investing activities					Cash flows from investing activities
Purchases of property and equipment	Purchases of property and equipment	(2,197)		(1,347)		Purchases of property and equipment	(2,268)		(2,197)
Capitalized internal-use software costs	Capitalized internal-use software costs	(2,444)		(1,941)		Capitalized internal-use software costs	(4,249)		(2,444)
Cash paid for acquisition, net of acquired cash and cash equivalents		(375)		—
Cash paid for acquisition, net of acquired cash, cash equivalents, and restricted cash						Cash paid for acquisition, net of acquired cash, cash equivalents, and restricted cash	(40,933)		(375)
Net cash used in investing activities	Net cash used in investing activities	(5,016)		(3,288)		Net cash used in investing activities	(47,450)		(5,016)
Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities
Proceeds from issuance of common stock upon initial public offering and private placements, net of underwriting discounts and commissions and other offering costs		—		307,094
Repayment of non-recourse promissory note		—		3,060
Proceeds from issuance of Series F convertible preferred stock, net of issuance costs		—		2,980

Proceeds from exercise of stock options	Proceeds from exercise of stock options	8,245		7,519		Proceeds from exercise of stock options	12,258		8,245
Payment of debt issuance costs		—		(988)
Repayments of revolving credit facility borrowings, net		—		(80,000)

Proceeds from revolving credit facility borrowings						Proceeds from revolving credit facility borrowings	424,000		—
Repayments of revolving credit facility borrowings						Repayments of revolving credit facility borrowings	(424,000)		—
Taxes paid related to net share settlement of equity awards	Taxes paid related to net share settlement of equity awards	(55)		—		Taxes paid related to net share settlement of equity awards	(4,711)		(55)
Net cash provided by financing activities		8,190		239,665
Repayment of assumed indebtedness						Repayment of assumed indebtedness	(17,068)		—
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(9,521)		8,190
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash	Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash	(2,166)		(262)		Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash	(599)		(2,166)
Net (decrease) increase in cash, cash equivalents, and restricted cash		(26,781)		255,540
Net decrease in cash, cash equivalents, and restricted cash						Net decrease in cash, cash equivalents, and restricted cash	(76,692)		(26,781)
Cash, cash equivalents, and restricted cash at beginning of period	Cash, cash equivalents, and restricted cash at beginning of period	403,313		188,075		Cash, cash equivalents, and restricted cash at beginning of period	300,734		403,313
Cash, cash equivalents, and restricted cash at end of period	Cash, cash equivalents, and restricted cash at end of period	$	376,532	$	443,615	Cash, cash equivalents, and restricted cash at end of period	$	224,042	$	376,532
Supplemental disclosure of cash flow information	Supplemental disclosure of cash flow information					Supplemental disclosure of cash flow information
Cash paid for interest	Cash paid for interest	$	690	$	936	Cash paid for interest	$	1,329	$	690
Cash paid for income taxes	Cash paid for income taxes	1,397		303		Cash paid for income taxes	4,691		1,397
Supplemental disclosure of noncash investing and financing activities	Supplemental disclosure of noncash investing and financing activities					Supplemental disclosure of noncash investing and financing activities

Operating lease right-of-use assets obtained in exchange for operating lease liabilities	Operating lease right-of-use assets obtained in exchange for operating lease liabilities	$	7,441	$	2,532	Operating lease right-of-use assets obtained in exchange for operating lease liabilities	$	5,414	$	7,441
Vesting of early exercised options	Vesting of early exercised options	554		263		Vesting of early exercised options	311		554
Noncash issuance of common stock in connection with ESPP	Noncash issuance of common stock in connection with ESPP	3,516		—		Noncash issuance of common stock in connection with ESPP	6,046		3,516
Stock-based compensation expense capitalized to internal-use software	Stock-based compensation expense capitalized to internal-use software	1,368		—		Stock-based compensation expense capitalized to internal-use software	2,194		1,368
IPO and debt issuance costs incurred but not yet paid		—		2,287
Conversion of redeemable convertible preferred stock to common stock in connection with initial public offering		—		390,687
Issuance of common stock for acquisition consideration						Issuance of common stock for acquisition consideration	6,635		—
Issuance of common stock, subject to service-based vesting conditions, in connection with acquisition						Issuance of common stock, subject to service-based vesting conditions, in connection with acquisition	581		—
Amounts held back for acquisition consideration						Amounts held back for acquisition consideration	11,899		—
Settlement of preexisting net receivable in exchange for net assets acquired in business combination						Settlement of preexisting net receivable in exchange for net assets acquired in business combination	2,401		—

Reconciliation of cash, cash equivalents, and restricted cash	Reconciliation of cash, cash equivalents, and restricted cash					Reconciliation of cash, cash equivalents, and restricted cash
Cash and cash equivalents	Cash and cash equivalents	$	376,451	$	443,313	Cash and cash equivalents	$	223,273	$	376,451
Restricted cash		81		302
Total cash, cash equivalents and restricted cash		$	376,532	$	443,615
Restricted cash included in prepaid expenses and other current assets						Restricted cash included in prepaid expenses and other current assets	715		—
Restricted cash included in other noncurrent assets, net						Restricted cash included in other noncurrent assets, net	54		81
Total cash, cash equivalents, and restricted cash						Total cash, cash equivalents, and restricted cash	$	224,042	$	376,532

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)~~(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 and their families 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” inwithin these notes to the ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements refer to Remitly Global, Inc. and its ~~wholly owned~~wholly-owned subsidiaries.

~~Initial Public Offering and Private Placement~~

In September 2021, the Company completed its initial public offering (the “IPO”), in which the Company issued and sold 7,000,000 shares of its common stock at $43.00 per share. Concurrently, 5,162,777 shares were sold by certain of the Company’s existing stockholders. In addition, the Company issued 581,395 shares of common stock to an existing stockholder in a private placement at the same offering price as the IPO. The Company received net proceeds of $305.2 million for the IPO and private placement, after deducting underwriting discounts and other fees of $20.8 million. In connection with the IPO, 127,410,631 shares of outstanding redeemable convertible preferred stock automatically converted into an equivalent number of shares of common stock on a one-to-one basis.

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited ~~Condensed Consolidated Financial Statements~~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 ~~condensed balance sheet~~ 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, ~~2021.~~2022.

The accompanying unaudited interim ~~Condensed Consolidated Financial Statements~~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 and nine months ended September 30, ~~2022~~2023 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2022,~~2023, or for any other future annual or interim period.

Principles of Consolidation

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

Use of Estimates

The preparation of the accompanying ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed inwithin the ~~Condensed Consolidated Financial Statements~~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, ~~including the estimated fair value per share of common stock,~~ the carrying value of operating lease right-of-use assets, the recoverability of deferred tax assets, ~~and~~ capitalization of software development ~~costs.~~costs, goodwill, and the recoverability of intangible assets. The key assumptions applied for value of the intangible assets include forecasted revenue and 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.~~

~~Table of~~ ~~Contents~~

condensed consolidated financial statements.

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, ~~Philippines~~Mexico, and ~~Mexico.~~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 and nine months ended September 30, ~~2022~~2023 and ~~2021.~~2022.

For the three and nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, no individual customer represented 10% or more of the Company’s total ~~revenue~~revenues or the Company’s customer funds receivable.

~~Trade Settlement Liabilities~~7

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Restricted Cash

~~Our trade settlement liability represents~~The Company has relationships with certain payment processors that are responsible for processing the ~~total~~Company’s incoming customer payments. These processors require the Company to maintain certain restricted cash balances as collateral throughout the term of ~~book overdrafts~~the processor arrangement. In addition, the Company may be required to maintain restricted cash as a result of other contractual arrangements with vendors and ~~disbursement postfunding liabilities owed to our disbursement~~ partners. Book overdrafts are created when the sum of outstanding checks related to a specific bank account are in excess of funds on deposit for the respective bank account. Disbursement postfunding liabilities are created when the sum of customer transactions related to a specific account held with a disbursement partner are in excess of funds on deposit for the respective account. Book overdrafts and disbursement postfunding liabilities totaled $48.1 million and $18.9 million as of September 30, 2022 and December 31, 2021, respectively, and wereRestricted cash is classified as within ‘~~‘Accrued~~Prepaid expenses and other current ~~liabilities’~~assets’ ~~in the Condensed Consolidated Balance Sheets. The Company’s policy is to report the change in book overdrafts~~ and ~~prefunding liabilities as an operating activity in the Consolidated Statements of Cash Flows based on the underlying nature of the transactions.~~

~~Deferred Offering Costs~~

~~Prior to the IPO, deferred offering costs, which consist of direct incremental legal, accounting, and consulting fees relating to the IPO, were capitalized and included in~~ ‘Other noncurrent assets, net’on the Condensed Consolidated Balance ~~Sheets. Upon completion~~Sheets, based on its contractual terms. Prior year amounts have been reclassified on the Condensed Consolidated Balance Sheets to conform to the current year presentation.

Goodwill

Goodwill represents the excess of the ~~IPO~~purchase price over the acquisition date fair value of net assets, including the amount assigned to identifiable intangible assets, acquired in ~~September 2021,~~a business combination. The Company evaluates goodwill for impairment annually and whenever events or circumstances make it more likely than not that impairment may have occurred. The Company has the option to first assess qualitative factors to determine whether events or circumstances indicate it is more likely than not that the fair value of a reporting unit is greater than its carrying amount. The Company considers 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 the Company ~~reclassified $4.3 million~~elects to bypass the qualitative assessment or does not pass the qualitative assessment, a quantitative assessment is performed. The quantitative assessment compares the carrying value to the fair value of ~~deferred offering costs to additional-paid-in capital offsetting~~goodwill, with the ~~IPO proceeds.~~difference representing an impairment loss.

Advertising

Advertising expenses are charged to operations as incurred and are included as a component of ‘Marketing ~~Expenses’~~expenses’ within theCondensed Consolidated Statements of Operations. Advertising expenses are used primarily to attract new customers. Advertising expenses totaled ~~$34.6~~$48.3 million and ~~$25.6~~$34.6 million during the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. Advertising expenses totaled ~~$105.2~~$123.5 million and ~~$70.1~~$105.2 million during the nine months ended September 30, 2023 and 2022, ~~and 2021,~~ respectively.

~~Business Combinations and Asset Acquisitions~~

The Company evaluates acquisitions to determine if they meet the definition of a business. If the acquisition does meet the definition of a business, it is accounted for as a business combination. For a business combination, assets acquired and liabilities assumed are generally recorded at their fair value at the date of acquisition. Any excess of the fair value of consideration transferred for the business, over the fair values of the identifiable assets acquired and liabilities assumed is recognized as goodwill.

Acquisitions that do not meet the criteria to be accounted for as a business combination are accounted for as an asset acquisition. In an asset acquisition, the cost of the acquisition, including transaction costs, is allocated to the acquired assets and assumed liabilities based upon their relative fair values as of the acquisition date, and no goodwill is recognized.

~~Transaction costs related to business combinations are expensed as incurred and are included in ‘General and Administrative Expenses~~’ in the Condensed Consolidated Statements of Operations. Acquisition expenses primarily include external legal, accounting, valuation, and due diligence costs, as well as advisory and other professional services fees necessary to integrate acquired businesses. Transaction costs totaled $1.8 million and $2.6 million for the three and nine months ended September 30, 2022. There were no transaction costs incurred for the three and nine months ended September 30, 2021. Such costs are primarily related to our pending acquisition of Rewire, as further discussed in “Management’s Discussion and Analysis” included in Part I, Item 2 within this Quarterly Report on Form 10-Q.

Intangible Assets

Intangible assets with finite lives primarily consist of ~~licenses~~developed technology, customer relationships, and trade names acquired through business combinations or asset acquisitions. Intangible assets acquired through business combination are recorded at their respective estimated acquisition date fair ~~values upon acquisition close.~~value and amortized over their estimated useful lives. Other intangible assets acquired through asset ~~acquisition~~acquisitions are recorded at their respective cost. ~~The Company determines the estimated useful lives for acquired intangible~~Intangible assets ~~based on the expected future cash flows associated with the respective asset. The Company's intangible assets with finite lives~~ are amortized using ana method that reflects the pattern in which the economic ~~benefit method,~~benefits of the intangible asset are expected to be realized over their estimated useful lives, ~~unless amortizing on a straight-line basis would~~or straight-lined if not ~~be significantly~~materially different.

Long-Lived Assets

The Company ~~evaluates the recoverability of intangible~~assesses potential impairments to its long-lived assets ~~periodically by taking into account~~when events or changes in circumstances ~~that may warrant revised estimates~~indicate the carrying amount of ~~useful lives or that indicate~~ the asset may not be ~~impaired.~~recoverable. If any indicators of impairment are present, the Company tests recoverability. The carrying value of a long-lived asset or asset group is not recoverable if the carrying value exceeds the sum of the estimated undiscounted future cash flows expected to be generated from the use and eventual disposition of the asset or asset group. If the estimated undiscounted future cash flows do not exceed the asset or asset group’s carrying amount, then an impairment loss is recorded, measured as the amount by which the carrying amount of a long-lived asset or asset group exceeds its estimated fair value.

Severance and Other Related Expenses

The Company records severance-related expenses based on the applicable accounting guidance and whether the severance relates to an ongoing benefit arrangement or relates to a one-time involuntary benefit arrangement. Ongoing benefit arrangements, including statutorily-required notice periods, are recorded when both probable of being paid and estimable. One-time involuntary benefit arrangements and other associated costs are generally recognized when a liability is incurred. The Company also evaluates whether these costs are associated with restructuring activities. Severance costs are expensed within the appropriate Costs and expenses component within our Condensed Consolidated Statements of Operations and associated accruals are recorded within 'Accrued expenses and other liabilities.'

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Out-of-Period Adjustment

The ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements include an adjustment of $4.4 million to stock-based compensation expense and additional paid-in capital, to correct for an error identified by management during the preparation of the prior ~~quarter’s~~period’s financial statements for the three months ended June 30, 2022. This adjustment is to reflect the straight-lining of expense over the full service period for graded-vested stock-based compensation awards under ~~ASC~~Accounting Standards Codification (“ASC”) 718,Compensation - Stock Compensation, and relates to prior annual fiscal periods. Management has determined that this error was not material to the historical financial statements in any individual period or in the aggregate and did not result in the previously issued financial statements being materially misstated. Additionally, although the impact to the three months ended June 30, 2022 was considered material, the impact to the nine months ended September 30, 2022 and full year 2022 ~~expected~~ results is not material. As such, management recorded the correction as an out-of-period adjustment in the three months ended June 30, 2022, as disclosed in ~~our~~the Quarterly Report on Form 10-Q for the three months ended June 30, 2022. Substantially all of the cumulative adjustment was related to stock-based compensation for personnel who support ~~our~~the Company’s general and administrative functions and was recorded to ‘~~general~~General and administrative expenses.’within the Condensed Consolidated Statements of Operations.

Summary of Significant Accounting Policies

The Company’s significant accounting policies are discussed in Note ~~2, “Basis~~2. Basis of Presentation and Summary of Significant Accounting ~~Policies” in~~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, ~~2021.~~2022. There have been no significant changes to these policies during the ~~three~~nine months ended September 30, ~~2022,~~2023, except as noted ~~below.~~above.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

~~In August 2018, the FASB issued ASU No. 2018-15,~~ ~~Intangibles - Goodwill and Other Internal-Use Software (Subtopic 350-40),Customer’s~~ 2021-08, “Business Combinations (Topic 805): Accounting for ~~Implementation Costs Incurred~~Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”). ASU 2021-08 will require companies to apply the definition of a performance obligation under ASU 2014-09, “Revenue from contracts with customers” (“Topic 606”) to recognize and measure contract assets and contract liabilities relating to contracts with customers that are acquired in a ~~Cloud Computing Arrangement That is a Service Contract.~~business combination. Under ~~existing U.S.~~current GAAP, there is diversity in practice in accounting for the costs of implementing cloud computing arrangements (“CCA”) that are service contracts. The standard aligns the requirements for capitalizing implementation costs incurredan acquirer generally recognizes assets acquired and liabilities assumed in a ~~hosting arrangement that is a service~~business combination, including contract assets and contract liabilities arising from revenue contracts with customers, at fair value on the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard also requires the presentation of the amortization of the capitalized implementation costsacquisition date. ASU 2021-08 will result in the acquirer recording acquired contract assets and liabilities on the same ~~line item in~~basis that would have been recorded by the ~~Condensed Consolidated Statements of Operations as~~acquiree before the ~~fees associated with the hosting arrangement. The new standard~~acquisition under Topic 606. ASU 2021-08 is effective for fiscal years beginning after December 15, ~~2020,~~2022 for public entities and ~~interim periods within fiscal years beginning after~~ December 15, ~~2021~~2023 for all other entities, with early adoption permitted. ~~This ASU was adopted on a prospective basis for the fiscal year ended December 31, 2021.~~ The Company assessed the impact of the guidance to its condensed consolidated financial statements for the three and nine months ended September 30, ~~2021~~2023 and concluded that the standard did not have a material impact on its financial statements. ~~See Note 4. for further disclosure of the ongoing impact of ASU 2018-15 to the Company’s Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2022.~~

Accounting Pronouncements Not Yet Adopted

~~In June 2016, the FASB issued ASU No. 2016-13,~~ ~~Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU replaces the existing incurred loss impairment methodology that recognizes credit losses when a probable loss has been incurred with new methodology pursuant to which loss estimates~~There are based upon lifetime expected credit losses. The amendments in this ASU require a financial asset that is measured at amortized cost to be presented at the net amount expected to be collected. The Condensed Consolidated Statements of Operations would then reflect the measurement of credit losses for newly recognized financial assets as well as changes to the expected credit losses that have taken place during the reporting period. The change in allowance recognized as a result of adoption will occur through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the ASU is adopted. The new standard is effective for fiscal years beginning after December 15, 2022, and interim periods within that fiscal year with early adoption permitted. The Company is currently assessing the impact of the guidance on its consolidated financial statements.

~~There are~~other new accounting pronouncements issued by the FASB that ~~we have~~the Company has adopted or will adopt, as applicable. ~~We do~~The Company does not believe any of these accounting pronouncements have had, or will have, a material impact on ~~our~~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 ~~who are sending remittances~~ 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~~(Topic 606)~~, which includes the following steps:

(1)identification of the contract with a customer;

(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

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

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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 contain 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~~‘Transaction expenses in’ 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:~~

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2022 2021 2022 2021
Deferred revenue, beginning of the period $ 1,084 $ 1,126 $ 1,212 $ 1,105
Deferred revenue, end of the period 1,122 1,269 1,122 1,269
Change in deferred revenue during the period 38 143 (90) 164

~~Revenue recognized during~~follows for the three ~~month periods~~and nine months ended September 30, ~~2022~~2023 and ~~2021 from amounts included in deferred revenue at the beginning of the~~ ~~period were $0.4 million and $0.3 million, respectively.~~2022:

~~Revenue recognized during the nine month periods ended September 30, 2022 and 2021 from amounts included in deferred revenue at the beginning of the~~ ~~period were $0.6 million and $0.3 million, respectively.~~


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Deferred revenue, beginning of the period	$	626	$	1,084	$	1,108	$	1,212
Deferred revenue, end of the period	889		1,122		889		1,122

Revenue recognized from amounts included in deferred revenue at the beginning of the period	$	296	$	449	$	735	$	602

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’~~liabilities’ on the Condensed Consolidated Balance Sheets, as the performance obligations are expected to be fulfilled within the next year.

Sales Incentives

The Company provides sales incentives to customers in a variety of ~~forms. Cash~~forms, including promotions, discounts, and other sales incentives. Evaluating whether a sales incentive is a payment to a customer requires judgment. Sales incentives ~~given~~determined to ~~customers~~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.~~‘Marketing expenses,’ as these incentives are paid in exchange of a distinct service.

~~During~~The following table presents the Company’s sales incentives for the three ~~months ended September 30, 2022~~ and 2021, payments made to customers resulted in reductions to revenue of $6.7 million and $4.3 million, respectively, and charges to sales and marketing expense of $5.2 million and $2.6 million, respectively.

~~During the~~ nine months ended September 30, ~~2022~~2023 and 2021, payments made to customers resulted in reductions to revenue of $17.5 million and $13.4 million, respectively, and charges to sales and marketing expense of $13.8 million and $8.4 million, respectively.2022:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Reduction to revenue	$	8,528	$	6,699	$	24,123	$	17,525
Marketing expenses	4,765		5,175		13,292		13,803
Total sales incentives	$	13,293	$	11,874	$	37,415	$	31,328

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Revenue by Geography

The following table presents the Company’s revenue disaggregated by primary geographical location for the three and nine months ended September 30, 2023 and 2022, attributed to the country in which the sending customer is located:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
United States	$	160,729	$	122,068	$	458,815	$	337,986
Canada	29,501		20,624		81,838		56,983
Rest of world	51,399		26,567		138,874		67,559
Total revenue	$	241,629	$	169,259	$	679,527	$	462,528

4. Property and Equipment

Property and equipment, net consisted of the ~~following:~~following as of September 30, 2023 and December 31, 2022:


		September 30,		December 31,			September 30,		December 31,
(in thousands)	(in thousands)	2022		2021		(in thousands)	2023		2022
Capitalized internal-use software	Capitalized internal-use software	$	12,682	$	9,022	Capitalized internal-use software	$	20,259	$	14,072
Computer and office equipment	Computer and office equipment	5,825		4,700		Computer and office equipment	8,081		6,177
Furniture and fixtures	Furniture and fixtures	1,982		1,445		Furniture and fixtures	2,589		2,056
Leasehold improvements	Leasehold improvements	6,656		6,655		Leasehold improvements	7,986		7,036
Projects in Process		17		533
		27,162		22,355
Projects in process						Projects in process	4		722
Total gross property and equipment						Total gross property and equipment	38,919		30,063
Less: Accumulated depreciation and amortization	Less: Accumulated depreciation and amortization	(16,892)		(13,106)		Less: Accumulated depreciation and amortization	(24,206)		(18,517)
Property and equipment, net	Property and equipment, net	$	10,270	$	9,249	Property and equipment, net	$	14,713	$	11,546

Depreciation and amortization expense related to property and equipment was ~~$1.9~~$2.2 million and ~~$1.3~~$1.8 million for the three months ended September 30, 2023 and 2022, ~~and 2021, respectively~~respectively.

Depreciation and amortization expense related to property and equipment was ~~$4.9~~$6.0 million and ~~$3.9~~$4.9 million for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

Capitalized Internal-Use Software Costs

~~There has been no impairment of previously~~The following table presents the Company’s capitalized ~~costs during the three and nine months ended September 30, 2022 and 2021.~~

~~Three months ended September 30, 2022 and 2021~~

~~The Company capitalized $1.2 million and $0.5 million for~~ internal-use software, costs for three month periods ended September 30, 2022 and 2021, respectively. The Company capitalized $0.5 million of stock-based compensation costs to internal-use software during the three month period ended September 30, 2022. The Company capitalized inconsequential amounts of stock-based compensation costs to internal-use software during the three months ended September 30, 2021. The Company recordedincluding amortization expense ~~of $1.1 million and $0.6 million for the three months ended September 30, 2022 and 2021, respectively.~~

~~Nine months ended September 30, 2022 and 2021~~

The Company capitalized $3.8 million and $2.0 million for internal-use software costs during the nine months ended September 30, 2022 and 2021, respectively. The Company capitalized $1.4 million of stock-based compensation costs to internal-use software during the nine months ended September 30, 2022. The Company capitalized inconsequential amounts of stock-based compensation costs to internal-use software during the nine months ended September 30, 2021. The Company recorded amortization expense of ~~$2.5 million~~ a~~nd $1.8 million for the nine months ended September 30, 2022 and 2021, respectively.~~

~~Capitalized Cloud Computing Arrangements~~

The Company capitalized $0.4 million and $1.1 million related to the implementation of cloud computing arrangements and recorded amortization expense of $0.2 million and $0.4 million during the three and nine months ended September 30, 2022. As of September 30, 2022, capitalized costs, net of accumulated amortization, were approximately $1.6 million, of which $0.7 million was recorded within ‘~~Prepaid expenses and other current assets’~~ ~~and $0.9 million was recorded within ‘Other noncurrent assets, net’ on the Company’s Condensed Consolidated Balance Sheets, which is inclusive of a $0.5 million reclassification from ‘Other noncurrent assets, net’~~ ~~to ‘Prepaid expenses and other current assets’~~ ~~for the nine months ended September 30, 2022, in-line with the respective underlying useful life of the capitalized costs.~~

~~Amortization expense related to cloud computing arrangements~~recognized, for the three and nine months ended September 30, ~~2022 was as follows:~~
Three Months Ended Nine Months Ended
(in thousands) September 30, 2022
Technology and development $ 166 $ 413
General and administrative 4 19
Total amortization $ 170 $ 432
2023 and 2022:

The Company assessed the impact of the guidance to its consolidated financial statements for the three and nine months ended and as of September 30, 2021 and concluded that the standard did not have a material impact on its financial statements.


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Total capitalized internal-use software costs(1)	$	2,725	$	1,226	$	6,443	$	3,813
Stock-based compensation costs capitalized to internal-use software	820		468		2,194		1,368
Amortization expense(2)	1,193		1,047		3,136		2,478

__________

(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.

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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 and nine months ended September 30, 2023 and 2022:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Total capitalized cloud computing arrangement costs	$	859	$	386	$	2,732	$	1,097

Technology and development	$	416	$	166	$	1,087	$	413
General and administrative	59		4		148		19
Total amortization expense	$	475	$	170	$	1,235	$	432

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 September 30, 2023 and December 31, 2022:


	September 30,		December 31,
(in thousands)	2023		2022
Prepaid expenses and other current assets	$	2,097	$	1,289
Other noncurrent assets, net	1,875		1,186
Total capitalized cloud computing arrangement costs, net	$	3,972	$	2,475

5. Business Combinations

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 meets the criteria to be accounted for as a business combination in accordance with ASC 805, Business Combinations (“ASC 805”). This method requires, 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.

Consideration Transferred

The estimated 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 excludes 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. The majority of this holdback is expected to be settled in cash, and the remainder in Company common stock and restricted stock units, which approximated 133,309 shares held back and not legally issued at acquisition date. Such amounts will be settled after 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.

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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.

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 to be 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 that will be 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 September 30, 2023, the holdback liability was recorded within ‘Accrued expenses and other current liabilities’ on the Company’s Condensed Consolidated Balance Sheets as the liability is set to be fulfilled within twelve months of the balance sheet date.

During the three and nine months ended September 30, 2023, the Company recorded $0.9 million and $1.9 million, 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 September 30, 2023, the fair value of the holdback liability was $13.8 million, of which $10.4 million will be paid in cash and the remainder in equity.

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 forecasted revenue and growth rates for a hypothetical market participant, selected discount rates, as well as migration curves for developed technology. The following table summarizes the preliminary 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 September 30, 2023, the valuation of assets acquired and liabilities assumed of Rewire is substantially complete except with respect to the finalization of certain assets and liabilities. These amounts may be further adjusted as management continues to gather and evaluate information about circumstances that existed as of the acquisition date, and, as the resulting fair values of net assets acquired are finalized, such adjustments could be significant. The measurement period will not exceed 12 months from the date of acquisition.

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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 expects to collect substantially all of these receivables.

Transaction Costs

Transaction costs totaled $0.9 million and $2.6 million for the three and nine months ended September 30, 2023, respectively, which included $0.9 million and $1.9 million, respectively, for the change in the fair value of the holdback liability. Transaction costs totaled $1.8 million and $2.6 million for the three and nine months ended September 30, 2022, respectively. Such costs are primarily related to the Company’s aforementioned acquisition of Rewire.

Other Disclosures

The results of Rewire have been included within the condensed consolidated financial statements since the date of the acquisition. Rewire’s ‘Revenue’ included within the Condensed Consolidated Statements of Operations since the acquisition date was $3.2 million and $10.1 million, for the three and nine months ended September 30, 2023, respectively. Rewire’s ‘Net Loss’ included within the Condensed Consolidated Statements of Operations since the acquisition date was $(10.0) million and $(28.2) million for the three and nine months ended September 30, 2023, respectively.

Pro forma financial information has not been presented, as revenue and expenses related to the acquisition did not have a material impact on the Company’s unaudited condensed consolidated financial statements. Had Rewire been acquired on January 1, 2022, the Company’s revenue and expenses would not have been materially impacted; however, the Company’s net loss would have increased during 2022. Significant pro forma adjustments include transaction costs and amortization of acquired intangibles, as discussed further above.

6. Goodwill and Intangible Assets

Goodwill

The goodwill recorded on the Condensed Consolidated Balance Sheets as of September 30, 2023 was attributable to the acquisition of Rewire completed within the period, including measurement period adjustments, as described further in Note 5. Business Combinations. There were no other adjustments to goodwill during the nine months ended September 30, 2023.

Intangible Assets

The components of identifiable intangible assets as of September 30, 2023 were as follows:


(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Estimated Remaining Useful Life (in years)
Trade name	$	1,000	$	(250)	$	750	2.3
Customer relationships	8,500		(1,594)		6,906		3.3
Developed technology	12,000		(1,800)		10,200		4.3
Total	$	21,500	$	(3,644)	$	17,856

The acquired identified intangible assets have preliminary estimated useful lives ranging from three to five years. Amortization expense for intangible assets was $1.2 million and $3.6 million for the three and nine months ended September 30, 2023, respectively.

Identifiable intangible asset balances as of December 31, 2022 and related amortization expense for the three and nine months ended September 30, 2022 were immaterial.

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Expected future intangible asset amortization as of September 30, 2023 was as follows:


(in thousands)	Amount
Remainder of 2023	$	1,215
2024	4,858
2025	4,858
2026	4,525
2027	2,400

Total	$	17,856

7. Fair Value Measurements

~~There~~Except for the holdback liability related to the Rewire acquisition discussed in Note 5. Business Combinations, there were no financial assets and liabilities that were measured at ~~fair~~fair value on a recurring basis as of September 30, ~~2022~~2023 and December 31, 2021. We previously invested approximately $80.0 million of our cash and cash equivalents into a Level 2 term deposit during the three months ended March 31, 2022, which had an original maturity of three months or less at the time of purchase. Upon maturity, in the three months ended June 30, 2022, we re-invested approximately $50.0 million, into a new term deposit, that was subsequently liquidated during the nine months ended September 30, 2022.

The carrying values of certain financial instruments, including disbursement prefunding, customer funds receivable, accounts payable, accrued expenses and other current liabilities, customer liabilities, short-term debt, and ~~borrowings~~long-term debt approximate their respective fair values due to their relative short maturities. If these financial instruments were measured at fair value in the financial statements, they would be classified as Level 2.

~~Other than as described above, there were no transfers between Level 1 and Level 2 during the three and nine months ended September 30, 2021.~~

6.8. Debt

Secured Revolving Credit Facility

New Revolving Credit Facility

On September 13, 2021, Remitly Global, Inc. and Remitly, Inc., a ~~wholly owned~~wholly-owned subsidiary of Remitly Global, Inc., as co-borrowers, entered into a credit agreement (the “New Revolving Credit Facility”) with certain lenders and JPMorgan Chase Bank, N.A. acting as administrative agent and collateral agent, that provides for revolving commitments of $250.0 million (including a $60.0 million letter of credit sub-facility) and terminated its then-existing 2020 Credit ~~Agreement (as defined below).~~Agreement. Proceeds under the New Revolving Credit Facility are available for working capital and general corporate purposes. ~~As part~~The New Revolving Credit Facility was amended on June 26, 2023 to reflect changes as a result of the ~~refinancing,~~sunsetting of the ~~Company performed a debt modification analysis, utilizing the borrowing capacity test within ASC 470-50,~~ ~~Debt — Modification and Extinguishment, on a lender-by-lender basis, resulting in the capitalization of $1.4 million of new debt issuance costs incurred in connection with~~LIBOR interest rate, as noted below. No other changes were made to the New Revolving Credit ~~Facility during~~Facility. The Company evaluated the ~~third quarter of 2021~~amendment as a debt modification pursuant to ASC 470-50, Debt — .Modification and Extinguishment, ~~Such amounts were capitalized and recorded within ‘Other noncurrent assets, net’~~ ~~on the Condensed Consolidated Balance Sheets, and will~~noting no material impact. Unamortized debt issuance costs continue to be amortized ~~to interest expense~~ over the term of the New Revolving Credit Facility. The Company previously had $0.5 million of unamortized debt issuance costs associated with its existing Revolving Credit Facility. As a result of the debt modification analysis, the Company continues to amortize $0.4 million of unamortized debt issuance costs over the term of the New Revolving Credit Facility. The remaining $0.1 million was expensed as a debt extinguishment cost within interest expense in the Condensed Consolidated Statements of Operations during the third quarter of 2021.

~~The New Revolving Credit Facility was used to refinance its existing 2020 Credit Agreement.~~ The New Revolving Credit Facility has a maturity date of September 13, 2026. Borrowings under the New Revolving Credit Facility accrue interest at a floating rate per annum equal to, at the Company’s option, (1) the Alternate Base Rate (defined in the New Revolving Credit Facility as the rate per annum equal to the highest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect for such day plus 0.50% and (c) the Adjusted ~~LIBO~~Term SOFR Rate for an interest period of one month plus 1.00%~~, subject~~ (subject to a floor of 1.00%) plus 0.50% per annum or (2) the Adjusted ~~LIBO~~Term SOFR Rate (subject to a floor of 0.00%) plus 1.50%. per annum. Such interest is payable (a) with respect to loans bearing interest based on the Alternate Base Rate, ~~loans,~~ the last day of each March, June, September and December and (b) with respect to loans bearing interest based on the Adjusted ~~LIBO~~Term SOFR Rate, ~~loans,~~ at the end of each applicable interest period, but in no event less frequently than every three months. In addition, an unused commitment fee, which accrues at a rate per annum equal to 0.25% of the unused portion of the revolving commitments, is payable on the last day of each March, June, September and December.

The New Revolving Credit Facility contains customary conditions to borrowing, events of default and covenants, including covenants that restrict the ability to dispose of assets, merge with other entities, incur indebtedness, grant liens, pay dividends or make other distributions to holders of its capital stock, make investments, enter into restrictive agreements, or engage in transactions with affiliates. As of September 30, 2023 and December 31, 2022, financial covenants in the New Revolving Credit Facility include (1) a requirement to maintain a minimum Adjusted Quick Ratio of 1.50:1.00, which is tested quarterly and (2) a requirement to maintain a minimum Liquidity of $100.0 million, which is tested quarterly. The Company was in compliance with all financial covenants under the New Revolving Credit Facility as of September 30, ~~2022~~2023 and December 31, ~~2021~~2022.

The obligations under the New Revolving Credit Facility are guaranteed by the material domestic subsidiaries of Remitly Global, Inc., subject to customary exceptions, and are secured by substantially all of the assets of the borrowers and guarantors thereunder, subject to customary exceptions. Amounts of borrowings under the New Revolving Credit Facility may fluctuate depending upon transaction volumes and seasonality.

As of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company had no outstanding borrowings under the New Revolving Credit Facility. As of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company had ~~$19.2~~$47.5 million and ~~$18.9~~$22.3 million, respectively, in issued, but undrawn, standby letters of credit. As of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company had unused borrowing capacity of ~~$230.8~~$202.5 million and ~~$231.1~~$227.7 million, respectively, under the New Revolving Credit Facility.

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Advance for Future Deposits

~~2020 Credit Agreement~~

~~Since 2013,~~As part of the acquisition of Rewire, the Company ~~had access to a variable rate credit facility. In November 2020, Remitly Global, Inc.~~assumed short-term indebtedness of Rewire that represents an advance for future deposits from Rewire’s amended agreement with one of its financial partners (the “Amendment” and ~~Remitly, Inc., a wholly owned subsidiary of Remitly Global, Inc., as borrower, further modified its then-existing credit agreement (the “2020 Credit Agreement”). Following such modification,~~ the ~~2020 Credit Agreement provided Remitly, Inc. with access up to $150.0 million~~“Depositor,” respectively) entered into in ~~revolving credit facility borrowings (including a $30.0 million letter of credit sub-facility) with~~October 2021. The Amendment has a maturity date of November ~~16,~~ 2023. The Depositor made an advance payment to Rewire with respect to future deposits (the “Advance for Future Deposits”). The original amount of 9.0 million Israeli shekel, approximately $2.8 million, was transferred as an advance under the Amendment. As ~~noted above,~~of September 30, 2023, the Company had $2.4 million outstanding under the Amendment and was included within ‘Short-term debt’ on the Condensed Consolidated Balance Sheets. The change in the outstanding balance is driven by the change in the foreign exchange conversion rate. The Advance for Future Deposits bears a floating interest rate of 1.4%+ Israeli Prime per annum, paid on a monthly basis. The Israeli Prime rate is defined as the Bank of Israel rate + 1.5%. The weighted-average interest rate as of September ~~2021, the New Revolving Credit Facility~~30, 2023 was ~~used to refinance the 2020 Credit Agreement.~~ 3.0%.

Assumed Short-term Debt of Rewire

As ~~a result~~part of the ~~refinancing,~~acquisition of Rewire, the ~~2020 Credit Agreement was terminated~~Company assumed the amounts due on a revolving credit line that Rewire had entered into in 2021 and ~~all~~the amounts due on a bridge loan that Rewire had entered into in 2022. The total outstanding ~~including any accrued interest,~~amounts were repaid ~~in full.~~

~~Borrowings under~~during the ~~2020 Credit Agreement were subject~~nine months ended September 30, 2023, along with certain other acquired indebtedness, subsequent to ~~mandatory repayment within 20 business days in an amount necessary to reduce the borrowings, in the aggregate, to an amount less than~~ the Company’s ~~customer funds account maintained with~~acquisition of Rewire and was included within the ~~lender. Interest on borrowings under the 2020 Credit Agreement accrued at~~Condensed Consolidated Statements of Cash Flows as a floating rate per annum equal to (i) ABR (defined in the 2020 Credit Agreement as the rate per annum equal to the highest of (a) the Prime Rate in effect on such day, (b) 3.25% and (c) the Federal Funds Effective Rate in effect for such day plus 0.50% plus (ii) 1.0%. In addition, an unused revolving line facility fee accrued at a floating rate per annum equal to 0.40% of the unused portion of the line, payable monthly.

The 2020 Credit Agreement contained customary conditions to borrowing, events of default and covenants, including covenants that restrict the Company’s ability to dispose of assets, merge with or acquire other entities, incur indebtedness, pay dividends, incur encumbrances, make distributions to holders of its capital stock, make investments or engage in transactions with affiliates. Defined events of default included the occurrence of a Material Adverse Effect (as defined in the 2020 Credit Agreement) on the business or financial condition of the Company. Financial covenants included (1) a requirement to maintain a minimum Adjusted Quick Ratio of 1.50:1.00, which was tested monthly and (2) a requirement to maintain minimum trailing twelve month Consolidated Adjusted EBITDA (as defined in the 2020 Credit Agreement), which was tested quarterly.

The obligations under the 2020 Credit Agreement were guaranteed by the material subsidiaries of Remitly Global, Inc., subject to customary exceptions, and were secured by substantially all of the assets of the borrowers and guarantors thereunder, other than intellectual property.

financing activity.

7.9. Net Loss Per Common Share

The following table presents the calculation of basic and diluted net loss per share attributable to common stockholders for the periods indicated. As the Company reported a net loss, diluted net loss per share was the same as basic net loss per share because the effects of potentially dilutive items were anti-dilutive for all periods presented.


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except share and per share amounts)		2022		2021		2022		2021
(in thousands, except share and per share data)										(in thousands, except share and per share data)	2023		2022		2023		2022
Numerator:	Numerator:									Numerator:
Net loss	Net loss	$	(33,069)	$	(12,962)	$	(94,624)	$	(22,180)	Net loss	$	(35,655)	$	(33,069)	$	(82,819)	$	(94,624)

Denominator:	Denominator:									Denominator:
Weighted-average shares used in computing net loss per share attributable to common stockholders:	Weighted-average shares used in computing net loss per share attributable to common stockholders:									Weighted-average shares used in computing net loss per share attributable to common stockholders:
Basic and diluted	Basic and diluted	168,604,378		31,641,400		166,517,398		26,055,903		Basic and diluted	182,598,013		168,604,378		178,956,602		166,517,398
Net loss per share attributable to common stockholders:	Net loss per share attributable to common stockholders:									Net loss per share attributable to common stockholders:
Basic and diluted	Basic and diluted	$	(0.20)	$	(0.41)	$	(0.57)	$	(0.85)	Basic and diluted	$	(0.20)	$	(0.20)	$	(0.46)	$	(0.57)

The following potentially dilutive securities were excluded from the computation of diluted net loss per share calculations for the periods presented because the impact of including them would have been ~~antidilutive:~~anti-dilutive:


		As of September 30,			As of September 30,
		2022	2021		2023	2022
Stock options outstanding	Stock options outstanding	18,364,196	24,061,073	Stock options outstanding	11,449,901	18,364,196
RSUs outstanding~~(1)~~	RSUs outstanding~~(1)~~	19,930,996	1,301,084	RSUs outstanding~~(1)~~	25,501,813	19,930,996
ESPP	ESPP	1,396,853	—	ESPP	654,994	1,396,853
Shares subject to repurchase	Shares subject to repurchase	205,727	554,973	Shares subject to repurchase	19,710	205,727
Unvested common stock, subject to service-based vesting conditions, issued in connection with acquisition(1)				Unvested common stock, subject to service-based vesting conditions, issued in connection with acquisition(1)	104,080	—
Equity issuable in connection with acquisition(1)				Equity issuable in connection with acquisition(1)	133,309	—
Total	Total	39,897,772	25,917,130	Total	37,863,807	39,897,772

__________

(1) ~~A portion~~Refer to Note 5. Business Combinations for further discussion of ~~these RSUs were subject~~equity issued or to ~~a performance-based vesting condition until September 22, 2021. See Note 10 for details on these awards.~~be issued in connection with the Rewire acquisition.

~~Table of~~ ~~Contents~~

8.10. Common Stock

As of September 30, ~~2022,~~2023, the Company has authorized 725,000,000 shares of common stock with a par value of $0.0001 per share. Each holder of a share of common stock is entitled to one vote for each share held at all meetings of stockholders and is entitled to receive dividends whenever funds are legally available and when declared by the Company’s board of directors. ~~Through September 30, 2022 and September 30, 2021, no~~No dividends have been declared or paid by the ~~Company.~~Company during the nine months ended September 30, 2023 and September 30, 2022.

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Donation to Remitly Philanthropy Fund

In July 2021, the Company’s board of directors approved the reservation of up to 1,819,609 shares of common stock (which was approximately 1.0% of the fully diluted capitalization as of June 30, 2021) that the Company may issue to or for the benefit of a 501(c)(3) nonprofit foundation or a similar charitable organization pursuant to the Company’s Pledge 1% commitment in ~~equal~~ installments over ten years. On September 10, 2021, the Company executed the stock donation agreement, pursuant to which it ~~would issue~~issued the first installment of the Pledge 1% commitment to Remitly Philanthropy Fund, a donor advised fund ~~that will be~~ administered on ~~its~~the Company’s behalf by Rockefeller Philanthropy Advisors, Inc., on the day after consummation of the IPO.

The Company donated 181,961 shares of its common stock to Remitly Philanthropy Fund on both September 20, 2023 and September 28, 2022, ~~and 2021, respectively,~~ pursuant to the stock donation agreement, and in connection with the Pledge 1% ~~campaign,~~commitment, which publicly acknowledges the Company’s intent to give back and increase social impact, in order to sustainably fund a portion of its corporate social responsibility goals and further its mission to expand financial inclusion for immigrants. ~~The~~For the three and nine months ended September 30, 2023 and 2022, the Company recorded a charge of $4.6 million and $2.0 million, ~~and $6.9 million~~respectively, to ‘General and ~~Administrative Expenses~~administrative expenses’ within the Condensed Consolidated Statements of Operations based on the closing price of its common stock as reported on the Nasdaq Global Select Market (the “NASDAQ”) on September 20, 2023 and September 28 2022, ~~and 2021,~~ respectively.

~~Warrants~~11. Stock-Based Compensation

~~In connection with a previous Credit Agreement,~~Shares Available for Issuance

The following table presents the ~~Company issued stock warrants to purchase~~Company’s shares of common stock with terms of ten years, exercisable at any time, and exercise prices ranging from $0.054 to $0.64 per share, subject to standard anti-dilution adjustments. The warrants were recorded as additional paid-in capital and capitalized as debtavailable for issuance costs on the Condensed Consolidated Balance Sheets. On September 24, 2021, the holders of these stock warrants provided a notice of exercise and on September 30, 2021, warrants to purchase 256,250 shares of common stock were exercised in a cashless exercise, pursuant to the terms of the original warrant agreement, resulting in the issuance of 254,014 shares. There were no warrants outstanding as of September 30, ~~2022~~2023 and December 31, ~~2021.~~ 2022:

~~9. Redeemable Convertible Preferred Stock~~

Prior to the Company’s IPO, the Company had 127,410,631 shares of redeemable convertible preferred stock outstanding. Upon completion of the IPO, all shares of redeemable convertible preferred stock were automatically converted into an equivalent number of shares of common stock on a one-to-one basis and their carrying value of $390.7 million was reclassified into stockholders’ equity. In addition, in connection with the IPO, the Company’s amended and restated certificate of incorporation became effective, which authorized the issuance of 50,000,000 shares of undesignated preferred stock with a par value of $0.0001 per share with right and preferences, ~~including voting rights, designated from time to time by the Company’s board of directors.~~

~~As of September 30, 2022 and December 31, 2021, there were no~~ ~~shares of redeemable convertible preferred stock issued and outstanding.~~

~~10. Stock-Based Compensation~~

In 2011, the Company adopted the Equity Incentive Plan (the “2011 Plan”), as amended, which provided for the issuance of up to 43,899,677 incentive stock options, nonqualified stock options, restricted common stock, RSUs and stock appreciation rights to employees, directors, officers, and consultants of the Company.

In September 2021, the Company adopted the Remitly Global, Inc. 2021 Equity Incentive Plan (the “2021 Plan”, and together with the 2011 Plan, the “Plan”) as a successor to the 2011 Plan. The 2021 Plan authorizes the issuance of incentive stock options, nonqualified stock options, restricted common stock, stock appreciation rights, RSUs, and performance and stock bonus awards. Pursuant to the 2021 Plan, incentive stock options may be granted only to Company employees. The Company may grant all other types of awards to its employees, directors, and consultants. The 2021 Plan is administered by the Company’s board of directors, which determines the terms of the grants, including exercise price, number of equity awards granted, and vesting schedule. The 2021 Plan provided for the initial issuance of up to 25,000,000 shares of common stock, plus any reserved shares not issued or subject to outstanding grants under the 2011 Plan, which was 552,736 on the effective date of the 2021 Plan, for a total of 25,552,736 shares initially reserved for issuance under the 2021 Plan. Beginning in January 2022, the number of shares reserved for issuance under the 2021 Plan will increase automatically on January 1 of each year through 2031 by the number of shares equal to 5% of the aggregate number of outstanding shares of all classes of common stock as of the immediately preceding December 31, or a lesser number as may be determined by the Company’s talent and compensation committee, or by the Company’s board of directors acting in place of the talent and compensation committee. In January 2022, there was an increase in the shares reserved for issuance under the 2021 Plan, in accordance with the automatic increase provision.

~~Table of~~ ~~Contents~~

In addition, in September 2021, the Company adopted the Remitly Global, Inc. 2021 ESPP (the “ESPP”) to enable eligible employees to purchase shares of common stock with accumulated payroll deductions at a discount. The ESPP provided for the initial issuance of up to 3,500,000 shares of common stock. Beginning in January 2022, the number of shares reserved for issuance and sale under the ESPP will increase automatically on January 1 of each year through 2031 by the number of shares equal to 1% of the aggregate number of outstanding shares of all classes of common stock as of the immediately preceding December 31, or a lesser number as may be determined by the Company’s talent and compensation committee, or by the Company’s board of directors acting in place of the talent and compensation committee. Subject to stock splits, recapitalizations, or similar events, no more than 35,000,000 shares of common stock may be issued over the term of the ESPP. The ESPP is intended to qualify under Section 423 of the Code, provided that the administrator may adopt sub-plans under the ESPP designed to be outside of the scope of Section 423 for participants who are non-U.S. residents. In January 2022, there was an increase in the shares reserved for issuance under the 2021 ESPP Plan, in accordance with the automatic increase provision.

~~As of September 30, 2022, 14,733,269 equity incentive awards remain available for issuance under the 2021 Plan and 4,762,721 shares of common stock remain available for issuance under the ESPP.~~


	September 30,	December 31,
	2023	2022
Equity incentive awards that remain available for issuance under the 2021 Plan	11,528,072	10,890,112
Shares of common stock that remain available for issuance under the ESPP	5,869,862	4,762,721

Stock Options

Stock options granted under the Plan generally vest over a period from two years to four years from the vesting commencement date on a monthly basis with or without a one-year cliff or, for nonemployees, ratably on a monthly basis over a shorter period, depending upon anticipated duration of services. Other vesting terms are determined by the Company’s board of directors. All options granted under the Plan are exercisable for up to ten years from the grant date, subject to vesting. In the event of termination of service, options will generally remain exercisable, to the extent vested, for three months following the termination of service.

The following is a summary of the Company’s stock option activity during the nine months ended September 30, ~~2022:~~2023:

Stock Options
(in thousands, except share and per share amounts) Number of Options Outstanding Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (Years)
Aggregate Intrinsic Value (1)
Balances as of January 1, 2022 23,386,942 $ 3.70 7.66 $ 395,676
Granted 166,113 11.15
Exercised (3,776,392) 2.18 30,850
Forfeited (1,412,467) 5.12
Balances as of September 30, 2022 18,364,196 3.98 7.03 133,458
Vested and exercisable as of September 30, 2022 10,653,383 2.37 6.19 93,049
Vested and expected to vest as of September 30, 2022 18,524,923 $ 3.97 7.04 $ 134,689


	Stock Options
(in thousands, except share and per share data)	Number of Options Outstanding	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (1)
Balances as of January 1, 2023	15,988,268	$	4.11	6.79	$	119,467

Exercised	(3,957,847)	2.98			59,845
Forfeited	(580,520)	5.96
Balances as of September 30, 2023	11,449,901	4.41		6.13	238,255
Vested and exercisable as of September 30, 2023	8,375,110	2.97		5.58	186,326
Vested and expected to vest as of September 30, 2023	11,424,611	$	4.43	6.14	$	237,534

_________________

(1)The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock options and the estimated fair value of the Company’s common stock.

No stock options were granted during the nine months ended September 30, 2023.

The fair value of each employee stock option granted during the ~~three and~~ nine months ended September 30, 2022 ~~and 2021~~ was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Risk-free interest rates 2.86% 0.74% to 1.10% 2.86% 0.32% to 1.19%
Expected term 6.1 years 5.0 to 6.5 years 6.1 years 3.5 to 6.8 years
Volatility 64.0% 49.3% to 50.5 % 64.0% 37.8% to 50.5 %
Dividend rate —% —% —% —%

~~Fair value of underlying common stock~~

Prior to the completion of the IPO, the Company’s board of directors considered numerous objective and subjective factors to determine the fair value of the Company’s common stock at each meeting in which awards were approved. The factors considered included, but were not limited to: (i) the results of contemporaneous independent third-party valuations of the Company’s common stock; (ii) the prices, rights, preferences, and privileges of the Company’s redeemable convertible preferred stock relative to those of its common stock; (iii) the lack of marketability of the Company’s common stock; (iv) actual operating and financial results; (v) current business conditions and projections; (vi) the likelihood of achieving a liquidity event, such as an initial public offering or sale of the Company, given prevailing market conditions; and (vii) precedent transactions involving the Company’s shares. After the completion of the IPO, the fair value of the Company’s common stock is determined by the closing price, on the date of grant, of its common stock, which is traded on the NASDAQ.


	Nine Months Ended September 30,
		2022
Risk-free interest rates		2.86%
Expected term		6.1 years
Volatility		64.0%
Dividend rate		—	%

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The weighted-average grant date fair value of options granted during the ~~three~~nine months ended September 30, 2022 ~~and 2021~~ was ~~$6.78 and $15.31, respectively.~~ $6.78.

The ~~weighted-average grant date fair value~~following is a summary of ~~options granted~~the Company’s stock option activity during the nine months ended September 30, ~~2022~~2023 and ~~2021 was $6.78 and $5.22, respectively.~~

~~The aggregate grant-date fair value of options vested for the three months ended~~ September 30, 2022 and 2021 was $2.5 million and $2.1 million, respectively. The aggregate grant-date fair value of options vested for the nine months ended September 30, 2022 and 2021 was $9.6 million and $5.4 million, respectively.2022:


	Nine Months Ended September 30,
(in thousands)	2023		2022
Aggregate grant-date fair value of options vested	$	7,068	$	9,561
Intrinsic value of options exercised	59,845		30,850

Restricted Stock Units

Prior to the IPO, the Company granted performance-based RSUs (“PRSUs”) to employees and directors that contained both service-based and performance-based vesting conditions. The service-based vesting condition for these awards is typically satisfied over four years with a cliff-vesting period of one year and continued vesting quarterly thereafter. The performance-based vesting condition is satisfied on the earlier of (i) the effective date of a registration statement of the Company filed under the Securities Act for the sale of the Company’s common stock or (ii) immediately prior to the closing of a change in control of the Company. Both events were not deemed probable until consummated, and therefore, stock-based compensation expense related to these PRSUs remained unrecognized prior to the effectiveness of the IPO. Upon the effectiveness of the IPO the performance-based vesting condition was satisfied, and therefore, the Company recognized cumulative stock-based compensation expense of $1.1 million, using the accelerated attribution method for the portion of the awards for which the service-based vesting condition has been fully or partially satisfied. The remaining grant-date fair value of these PRSUs is being recognized over the remaining requisite service period.

Beginning in August 2021, the Company began granting RSUs to employees and directors with service-based vesting conditions. The service-based vesting condition for these awards is typically satisfied over four years with a cliff vesting period of one year and continued vesting quarterly thereafter. The grant-date fair value of these RSUs will be recognized over the requisite service period.

Restricted stock unit activity ~~including PRSUs,~~ during the nine months ended September 30, ~~2022~~2023 was as follows:


		Number of Shares	Weighted-Average Grant-Date Fair Value Per Share			Number of Shares	Weighted-Average Grant-Date Fair Value Per Share
Unvested at January 1, 2022		3,372,585	$	24.83
Unvested at January 1, 2023					Unvested at January 1, 2023	23,366,355	$	11.86
Granted	Granted	19,393,131	10.66		Granted	11,167,967	16.85
Vested	Vested	(1,770,540)	13.64		Vested	(6,636,117)	12.05
Cancelled/forfeited	Cancelled/forfeited	(1,064,180)	17.49		Cancelled/forfeited	(2,396,392)	12.86
Unvested at September 30, 2022		19,930,996	12.43
Unvested at September 30, 2023					Unvested at September 30, 2023	25,501,813	$	13.90

~~In addition, during the three months ended March 31, 2022, as~~The following is a ~~result~~summary of the ~~expiration of the lock-up agreement related to its IPO, the Company issued 124,026 shares of common~~Company’s restricted stock ~~subject to RSUs that were vested as of December 31, 2021, but not yet settled.~~

~~The weighted-average grant date fair value of RSUs, including PRSUs, granted~~unit activity during the nine months ended September 30, ~~2022~~2023 and ~~2021 was $10.66 and $23.16, respectively. The aggregate grant-date fair value of RSUs, including PRSUs, vested for the nine months ended~~ September 30, ~~2022 and 2021 was $24.2 million and $0.1 million, respectively.~~2022:


	Nine Months Ended September 30,
(in thousands, except share and per share data)	2023		2022
Weighted-average grant date fair value of RSUs granted	$	16.85	$	10.66
Aggregate grant-date fair value of RSUs vested	79,962		24,150

Employee Stock Purchase Plan

The ESPP provides for offering periods during which eligible employees can participate in the ESPP and be granted the right to purchase shares. Except for the first offering period, which commenced on September 22, 2021, offering periods shall commence on each subsequent March 1 and September 1, with each offering period consisting of four six-month purchase periods, for a total of a 24-month offering period. No offering periods may last longer than 27 months. Except for the first offering period, the grant date for accounting purposes is generally the first date of each offering period and expense is recognized over the requisite service period, which is considered to be the 24-month offering period. For the first offering period, the grant date for awards under the ESPP was met in October 2021, upon mutual agreement of terms and conditions between the Company and participants of the ESPP. (“ESPP”)

The offering period that commenced on September 22, 2021, for which the accounting grant date was met in October 2021, ended on February 28, 2022, due to a decline in the Company’s stock price at the end of the purchase period, triggering a new offering period, as required by the ESPP plan documents. A new 24-month offering period commenced on March 1, 2022. This event was accounted for as a modification under US GAAP in the first quarter of 2022, whereby the fair value of the ESPP offering was measured immediately before and after modification, resulting in incremental stock-based compensation expense of $3.6 million, which ~~will be~~is being recognized over the new offering period, which is deemed to be the requisite service period. ~~In addition, a~~A new subsequent 24-month offering ~~commenced~~period commences on March 1 and September 1 ~~2022.~~

~~Eligible employees can contribute up to 15%~~ of their eligible compensation, subject to limitation as provided for in the ESPP, and purchase the common stock at a purchase price per share equal to 85% of the lesser of the fair market value of the common stock on (i) the offering date, which is defined as the first business day of the offering period, or (ii) the purchase date, which is the final business day of the purchase period.

~~Table of~~ ~~Contents~~

each fiscal year.

The fair value of the ESPP offerings ~~was~~described above were estimated using the Black-Scholes option-pricing model as of the respective offering dates, using the following assumptions. These assumptions represent the grant date fair value inputs for new offerings which commenced during the nine months ended September 30, 2023 and 2022, as well as updated valuation information as of the modification date for any offerings for which a modification occurred ~~requiring incremental expense to be measured at~~during the ~~modification date:~~periods presented herein:

~~Nine Months Ended September 30,~~

~~2022~~

~~Risk-free interest rates~~

~~0.60% to 3.48%~~

~~Expected term~~

~~0.5 to 2.0 years~~

~~Volatility~~

~~58.3% to 73.0%~~

~~Dividend rate~~

—

Nine Months Ended September 30,

2023

2022

Risk-free interest rates

4.81% to 5.40%

0.60% to 3.48%

Expected term (in years)

0.5 to 2.0 years

Volatility

47.8% to 65.2%

58.3% to 73.0%

Dividend rate

—

As the March 1, 2022 offering was accounted for as a modification to the October 2021 offering, the ESPP was fair valued immediately before and after modification on March 1, 2022 to assess the incremental fair value provided as a result

Table of the modification. The inputs to the incremental fair value are included in the table above. For the inputs to the original grant date fair value for that offering in October 2021, please see Note 10. “Stock-Based Compensation” t within the footnotes to the audited annual consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.Contents

Stock-Based Compensation Expense

Stock-based compensation expense for stock options, RSUs, ~~PRSUs,~~ and the ESPP, included inwithin the Condensed Consolidated Statements of Operations, net of amounts capitalized to internal-use software, as described in Note 4,4. Property and Equipment, was as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2023		2022		2023		2022
Customer support and operations	Customer support and operations	$	226	$	40	$	596	$	77	Customer support and operations	$	386	$	226	$	1,010	$	596
Marketing	Marketing	3,352		486		7,149		1,207		Marketing	4,525		3,352		12,235		7,149
Technology and development	Technology and development	13,238		1,698		30,959		3,522		Technology and development	19,828		13,238		55,047		30,959
General and administrative	General and administrative	8,929		2,516		29,176		4,159		General and administrative	11,834		8,929		32,715		29,176
Total	Total	$	25,745	$	4,740	$	67,880	$	8,965	Total	$	36,573	$	25,745	$	101,007	$	67,880

As of September 30, ~~2022,~~2023, the total unamortized compensation cost related to all non-vested equity awards, including options and RSUs, ~~and PRSUs~~ was ~~$240.6~~$314.2 million, which will be amortized over a weighted-average remaining requisite service period of approximately ~~2.9~~2.7 years. As of September 30, ~~2022,~~2023, the total unrecognized compensation expense related to the ESPP was ~~$5.1~~$4.2 million, which is expected to be amortized over the next 1.9 years.

12. Restructuring Initiatives

In the three months ended September 30, 2023, as a result of simplifying and scaling certain processes, functions, and team capabilities, the Company began implementing restructuring initiatives in order to better serve the Company's customers and allow the Company to grow and scale global operations. Restructuring costs incurred primarily included severance and certain other associated costs. These specific restructuring initiatives are expected to be substantially complete by the end this year.

The Company ~~did not record a material income tax benefit related to stock-based compensation expense~~incurred charges of $1.4 million for the three months and ~~stock option exercises, during~~nine months ended September 30, 2023.

The following table presents the restructuring costs included within the Company’s Condensed Consolidated Statements of Operations for the three and nine months ended September 30, ~~2022 and 2021, since~~2023:


(in thousands)	Amount
Customer support and operations	$	749
Technology and development	510
General and administrative	96
Total restructuring costs	$	1,355

The following table presents the ~~Company currently maintains a full valuation allowance against its net deferred tax assets~~changes in ~~the jurisdictions where material stock compensation expense charges are~~liabilities, including expenses incurred and ~~stock option exercises occurred.~~cash payments resulting from the restructuring costs and related accruals, during the nine months ended September 30, 2023:


(in thousands)	Amount
Balance as of December 31, 2022	$	—
Expenses incurred	1,355
Cash payments	(685)
Balance as of September 30, 2023	$	670

~~11.~~13. Related Party Arrangements

~~The Company entered into promissory note agreements in October 2018 which~~There were ~~fully repaid in August 2021. The promissory note agreements were entered into with two executive employees in conjunction with their early exercise of stock options to purchase 1,800,000 shares of~~no significant related party transactions for the ~~Company’s common stock. The principal amount of the notes was $3.1 million,~~three and interest accrued at 2.83% on the outstanding principal amount annually. The notes were secured by the shares that were exercised. Based on the nonrecourse nature of these agreements, the agreements were accounted for as grants of options to purchase common stock. The fair value of the stock options, determined using the Black-Scholes option pricing model was being recognized over the requisite service period. The associated shares are legally outstandingnine months ended September 30, 2023 and included in shares of common stock outstanding in the Condensed Consolidated Financial Statements, but were historically excluded from the Company’s net loss per common share calculations, as these shares of common stock were considered unvested until the underlying promissory notes were repaid.

On August 23, 2021, the promissory notes were paid in full, including all accrued interest. After repayment of the loan, these shares are now considered outstanding for purposes of the Company’s net loss per common share calculations to the extent the shares are vested.2022.

~~12.~~14. Income Taxes

The Company computes its tax provision for interim periods by applying the estimated annual effective tax rate to year-to-date income from recurring operations and adjusting for discrete items arising in that quarter.

~~Table of~~ ~~Contents~~

The Company’s effective tax rates on ~~pretax~~pre-tax income were ~~(0.9)~~(0.7)% and ~~(2.1)~~(0.9)% for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively and ~~(1.6)~~(0.6)% and ~~(5.1)~~(1.6)% for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The difference between the effective tax rate and the U.S. federal statutory rate of 21.0% in both periods was primarily the result of foreign income taxed at different rates and changes in the U.S. valuation allowance.

In addition, during the three and nine months ended September 30, 2023, the Company recognized a discrete income tax benefit related to excess stock-based compensation deductions.

Table of Contents

The Company maintains a full valuation allowance against the U.S. net deferred tax assets, as it believes that these deferred tax assets do not meet the more likely than not threshold.

The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and internationally. As of September 30, ~~2022,~~2023, tax years ~~2011~~2012 through ~~2021~~2022 remain open for examination by taxing authorities.

The Company has applied ASC 740, Income Taxes, and has determined that it has no uncertain tax positions both during the three and nine months ended September 30, ~~2022~~2023 and ~~2021.~~2022. The Company recognizes interest and, if applicable, penalties for any uncertain tax positions. Interest and penalties are recorded as a component of income tax expense.

~~13. 401(k) Defined Contribution Plan~~

The Company has a defined contribution savings plan under Section 401(k) of the Internal Revenue Code. This plan covers substantially all domestic employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pretax basis. The Company makes discretionary matching contributions that are funded in the following year. The Company matches 50% of the first 3% of compensation that a participant contributes to the 401(k) plan, up to a maximum of $1,000 per plan year. The Company contributed $0.3 million and $0.2 million to the 401(k) plan during each of the nine months ended September 30, 2022 and 2021, respectively, which represents the current period contribution for the prior plan year. The Company may also make discretionary profit-sharing contributions. No profit-sharing contributions were made during the three and nine months ended September 30, 2022 and 2021.

~~14.~~15. Commitments and Contingencies

Guarantees and Indemnification

In the ordinary course of business to facilitate sales of its services, the Company has entered into agreements with, among others, suppliers and partners that include guarantees or indemnity provisions. The Company also enters into indemnification agreements with its officers and directors, and the Company’s certificate of incorporation and bylaws include similar indemnification obligations to its officers and directors. To date, there have been no claims under any indemnification provisions; therefore, no such amounts have been accrued as of September 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

Litigation and Loss Contingencies

Litigation

From time to time, the Company may be a party to litigation and subject to claims incident to the ordinary course of business, including intellectual property claims, labor and employment claims, threatened claims, breach of contract claims, and other matters. The Company accrues estimates for resolution of legal and other contingencies when losses are probable, as defined under GAAP, and estimable. Although the results of litigation and claims are inherently unpredictable, the Company ~~believes~~does not believe that there was ~~not at least~~ a reasonable possibility that it had incurred a material loss with respect to such loss contingencies as of September 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

Indirect taxes

The Company is subject to indirect taxation in various states and foreign jurisdictions in which it conducts business. The Company continually evaluates those jurisdictions in which indirect tax obligations exist to determine whether a loss is probable, as defined under ~~U.S.~~ GAAP, and the amount can be estimated. Determination of whether a loss is probable, and an estimate can be made, is a complex undertaking and takes into account the judgment of management, third-party research, and the potential outcome of negotiation and interpretations by regulators and courts, among other information. Such assessments include consideration of management’s evaluation of domestic and international tax laws and regulations, external legal advice, and the extent to which they may apply to ~~our~~the Company’s business and industry. ~~Our~~The Company’s assessment of probability includes consideration of recent inquiries, potential or actual self-disclosure, and applicability of tax ~~rules driven by the growth in our business.~~rules. As a result of this assessment, management accrued an estimated liability of approximately ~~$3.8~~$4.3 million and $6.0 million as of September 30, 2023 and December 31, ~~2021,~~2022, respectively, reflecting the amount that the Company believes is probable and estimable. ~~There was no change to the estimated liability as of September 30, 2022.~~ The estimated liability is recorded within ‘Accrued expenses and other current liabilities’ on the Company’s Condensed Consolidated Balance Sheets. Although the Company believes its indirect tax estimates and associated liabilities are reasonable, the final determination of indirect tax audits or settlements could be materially different than the amounts ~~recorded, and such differences could be material.~~recorded.

~~Table of~~ ~~Contents~~

Reserve for Transaction Losses

The Company is exposed to transaction losses including chargebacks, unauthorized credit card use, fraud associated with customer transactions and other non-fraud-related losses. The Company establishes reserves for such 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 Condensed Consolidated Balance Sheets. The provision for transaction losses is included as a component of ‘Transaction expenses’ within the Condensed Consolidated Statements of Operations.~~

The table below summarizes the Company’s reserve for transaction losses for the three and nine months ended September 30, ~~2022~~2023 and ~~2021:~~2022:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2023		2022		2023		2022
Beginning balance	Beginning balance	$	2,264	$	2,321	$	3,134	$	3,250	Beginning balance	$	2,808	$	2,264	$	3,762	$	3,134
Provisions for transaction losses	Provisions for transaction losses	13,005		5,492		31,240		20,065		Provisions for transaction losses	9,004		13,005		28,150		31,240
Losses incurred, net of recoveries	Losses incurred, net of recoveries	(12,514)		(6,306)		(31,619)		(21,808)		Losses incurred, net of recoveries	(8,929)		(12,514)		(29,029)		(31,619)
Ending balance	Ending balance	$	2,755	$	1,507	$	2,755	$	1,507	Ending balance	$	2,883	$	2,755	$	2,883	$	2,755

~~15.~~

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16. Accrued Expenses & Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:


		September 30,		December 31,			September 30,		December 31,
(in thousands)	(in thousands)	2022		2021		(in thousands)	2023		2022
Trade settlement liability(1)	Trade settlement liability(1)	$	48,101	$	18,924	Trade settlement liability(1)	$	42,612	$	26,266
ESPP employee contributions		449		1,551
Accrued transaction expense	Accrued transaction expense	15,987		12,639		Accrued transaction expense	19,982		15,878
Accrued marketing expense	Accrued marketing expense	8,546		10,788		Accrued marketing expense	16,936		11,394
Accrued salary, benefits, and related taxes(2)						Accrued salary, benefits, and related taxes(2)	14,379		4,026
Holdback liability(3)						Holdback liability(3)	13,764		—
Accrued taxes and taxes payable						Accrued taxes and taxes payable	5,990		8,288
Reserve for transaction losses	Reserve for transaction losses	2,755		3,134		Reserve for transaction losses	2,883		3,762
Accrued salaries and benefits		4,593		2,923
ESPP employee contributions						ESPP employee contributions	1,160		1,926
Other accrued expenses	Other accrued expenses	19,142		16,724		Other accrued expenses	13,965		16,212
Total	Total	$	99,573	$	66,683	Total	$	131,671	$	87,752

_________________

(1)The trade settlement liability amount represents the total of ~~book overdrafts and~~ disbursement postfunding liabilities and book overdrafts owed to ~~our~~the Company’s disbursement partners. Refer to Note 2. ~~“Basis~~Basis of Presentation and Summary of Significant Accounting ~~Policies”~~Policies within the Notes to ~~our Condensed~~ Consolidated Financial Statements included in ~~Part I, Item 1 of this Quarterly~~the Company’s Annual Report on Form ~~10-Q~~10-K for the year ended December 31, 2022 for further discussion.

~~16. Segment~~(2) The accrued salary, benefits, and ~~Geographical Information~~

~~The Company determines operating segments based on how its chief operating decision maker (“CODM”) manages the business, makes operating decisions around the allocation~~related taxes amount is inclusive of ~~resources, and evaluates operating performance. The Company’s CODM is its Chief Executive Officer, who reviews~~accrued severance as part of the Company’s ~~operating results on a consolidated basis. The Company operates as one segment. Based~~restructuring that occurred within the quarter. Refer to Note 12. Restructuring Initiatives for further detail on the ~~information provided~~Company’s restructuring activities.

(3) Refer to ~~and reviewed by~~Note 5. Business Combinations for further detail on the Company’s CODM, the Company believes that the nature, amount, timing, and uncertainty of its revenue and how it is affected by economic factors are most appropriately depicted through the Company’s primary geographical locations. Revenues recorded by the Company are substantially all from the Company’s single performance obligation which are earned from similar services for which the nature of associated fees and the related revenue recognition models are substantially the same.

~~The following table presents the Company’s revenue disaggregated by primary geographical location:~~

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2022 2021 2022 2021
United States $ 122,068 $ 88,852 $ 337,986 $ 238,695
Canada 20,624 15,025 56,983 39,980
Rest of world 26,567 17,367 67,559 44,675
Total revenue $ 169,259 $ 121,244 $ 462,528 $ 323,350
Holdback liability.

~~Revenue is attributed to the country in which the sending customer is located.~~

1921

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Item 2. 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 ~~Condensed Consolidated Financial Statements~~unaudited condensed consolidated financial statements and the related notes, appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. You should read the sections titled “Risk Factors” in this Quarterly Report on Form 10-Q as well as in the Annual Report on Form 10-K 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-Q represent our views as of the date of this Form 10-Q. 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-Q.

Overview

Remitly is a leading digital financial services provider for immigrants and their families in over 170 countries around the world. The combination of our differentiated approach and our relentless focus on meeting the financial services needs of our immigrant communities has resulted in significant customer growth, high customer engagement, rapid send volume and transaction growth, and attractive customer economics built on top of an expansive global network.

Our ~~differentiated approach~~brand promise is to ~~addressing the complexity~~bring “peace of mind” into everything we do. We focus on bringing trust, reliability, and a fair and transparent price to cross-border remittances and complementary financial ~~services is composed~~services.

To deliver on our brand promise, we have a differentiated approach that aligns with the specific needs and interests of our customers and solves the problems immigrant communities often face in making remittances. There are four core ~~elements:~~elements to our differentiated approach:

•Providing a ~~simple~~Simple and ~~reliable way~~Reliable Way of ~~sending money~~Sending Money with ~~our mobile-centric suite~~Our Mobile-Centric Suite of ~~products.~~Products. Today, over 90% of our customers engage with Remitly on their mobile phones, shifting what traditionally required an in-person interaction, including waiting in line to speak with an agent to the palm of their hands. As of September 30, ~~2022,~~2023, our Remitly mobile app had a 4.9 iOS App Store rating with ~~more than 860,000~~approximately 1.2 million reviewers and a 4.8 Android Google Play rating with ~~more than 490,000~~over 690,000 reviewers. We have achieved this level of engagement and these high ratings by designing mobile-centric products that make the customer experience simple and convenient and give our customers complete peace of mind.

Our mobile app for cross-border remittances provides an easy-to-use, end-to-end process. In just a few minutes, customers are able to set up and send money for the first time with Remitly, and repeat transactions become easier with just a few taps. Our customers and their families can also track the status of their transactions in real time. This mobile-centric experience enables us to engage beyond the initial transaction, generating strong repeat usage and high customer loyalty.

•Conveniently ~~putting money safely~~Putting Money Safely in the ~~hands~~Hands of ~~our customers’ families, wherever they are,~~Our Customers’ Families, Wherever They Are, by ~~relying~~Relying on ~~our global network~~Our Global Network. ~~As of September 30, 2022, our~~Our global network of funding and disbursement partnerships enables us to complete money transfers in approximately ~~4,200~~4,900 corridors without the need to deploy local operations in each country. We are able to do this while complying with global and local licensing and regulatory requirements. A corridor represents the pairing of a send country, from which a customer can send a remittance, with a specific receive country to which such remittance can be sent. As a result of the quality of our network and the foundational investments we have made, in general, every new send country we add results in a significant number of new corridors, as we are able to quickly connect send countries with receive countries, allowing us to continue to scale rapidly.

Our disbursement options within our global network continue to grow and remain an important driver of customer loyalty. We have partner relationships with global banks and leading ~~global~~ payment providers to give our customers an array of payment (or pay-in) options, including with a bank account, card-based payments, and alternative payment methods. Our disbursement network provides our customers with various digital and traditional delivery methods and enables us to send (or ~~pay out)~~pay-out) funds ~~generally within minutes across the majority of transactions,~~ to ~~more than 3.9~~approximately 4.0 billion bank accounts, ~~over 875 million~~approximately 1.2 billion mobile wallets, and ~~over 420,000~~approximately 460,000 cash pickup locations. ~~These partner relationships help drive~~We focus on creating financial inclusion by providing payout optionality and access for recipients who do not always have convenient access to traditional banking. We believe our focus on financial inclusion creates peace of mind for our customers and their families while attracting and retaining loyal customers. We continue to believe the quality of our network and our focus on customer preference in disbursement options remain a ~~better customer experience, including faster transfers, higher acceptance rates, and enhanced reliability.~~competitive differentiator.

•Creating ~~trusted~~Trusted and ~~personalized experiences~~Personalized Experiences with ~~our localization expertise~~Our Localization Expertise at ~~scale~~Scale. We believe ~~that~~ our expertise in localizing our marketing, products, and customer support at scale is a key differentiator and enables us to provide customers with a personalized experience that drives peace of mind. Localization can mean many things. To us, it means speaking with our customers in their preferred language, reaching them through the media channels they frequent, and being culturally relevant through their journey. While our business is global, we recognize the importance of a culturally relevant experience being delivered to our customers and their families in the many countries we serve. We strive to deliver marketing, product, and support experiences that connect with them in meaningful ways. For example, we tailor our customer experience with more than 15 native languages, and we provide peace of mind with our global customer support team. Additionally, for disbursement of funds, we partner with local brands that are among the most trusted and recognized by our customers and their families.

•Using ~~our data-driven approach~~Our Data-Driven Approach to ~~better serve our customers~~Better Serve Our Customers and ~~provide more value~~Provide More Value. We have a data-driven approach to how we grow our business, prioritize our investments, and manage our operations. Because our customers initiate transfers digitally, we capture and leverage a body of transaction-related data that provides insight into customer behavior and customer experience. This data and the analytics we perform inform our marketing investments and product development prioritization. In addition, we leverage our data platform and proprietary ~~machine learning~~ models to improve our compliance systems and manage pricing, treasury, fraud risk, and customer support.

Acquisition of Rewire

On January 5, 2023, we acquired 100% of the outstanding equity interests of Rewire (O.S.G) Research and Development Ltd., a company organized under the laws of the State of Israel (“Rewire”), for approximately $77.9 million of aggregate consideration, the majority of which was or will be settled in cash, with the remaining consideration settled or to be settled in Remitly equity. The ~~combination~~acquisition of Rewire allows us to accelerate our ~~differentiated approach and~~opportunity to differentiate the remittance experience with complementary products, by bringing together our ~~relentless focus on meeting the financial services needs of our immigrant communities has resulted~~remittance businesses in ~~significant customer growth, high customer engagement, rapid send volume and transaction growth, and attractive customer economics built on top of an expansive global network.~~new geographies, along with a strong team that is culturally aligned with Remitly.

Our Revenue Model

For our remittance business, which represents ~~the vast majority~~substantially all of our revenue today, we generate revenue from transaction fees charged to customers ~~who are sending remittances~~ and foreign exchange spreads applied to the ~~customer’s principal.~~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 of the ~~customer’s principal.~~

customer is sending.

Foreign exchange spreads represent the difference between the foreign exchange rate offered to customers and the foreign exchange rate on the Company’s 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 for the Company 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.

~~Initial Public Offering and Private Placement~~

In September 2021, the Company completed its IPO, in which the Company issued and sold 7,000,000 shares of its common stock at $43.00 per share. Concurrently, 5,162,777 shares were sold by certain of our existing stockholders. In addition, the Company issued 581,395 shares of common stock to an existing stockholder in a private placement at the same offering price as the IPO. The Company received net proceeds of $305.2 million for the IPO and private placement, after deducting underwriting discounts and other fees of $20.8 million. In connection with the IPO, 127,410,631 shares of outstanding redeemable convertible preferred stock automatically converted into an equivalent number of shares of common stock on a one-to-one basis.

Key Business Metrics

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

•“Active customers” is defined as the number of distinct customers ~~that~~who have successfully completed at least one ~~remittance~~ transaction using Remitly during a given calendar quarter. We identify customers through unique account numbers.

•“Send volume” is defined as the sum of ~~all customers’ principal,~~the amount that customers send, measured in U.S. dollars, related to transactions completed during a given period. ~~The customers’ principal~~This amount is net of cancellations, does not include transaction fees from customers, and does not include any credits, offers, or bonuses applied to the ~~transactions~~transaction by us.

As active customers are measured on a quarterly basis, the data for the full-year periods for active customers is not meaningful, and therefore this metric is only presented on a quarterly basis herein.

Active Customers

Three Months Ended September 30,
2022 2021
(in thousands)
Active customers 3,818 2,561


	Three Months Ended September 30,
(in thousands)	2023	2022

Active customers	5,409	3,818

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 ~~3.8~~5.4 million, or ~~49%~~42% growth, for the three months ended September 30, ~~2022,~~2023, compared to the three months ended September 30, ~~2021.~~2022. This increase was primarily due to an increase in the number of new customers, driven by investments in our mobile platform 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, our successful diversification of our corridor portfolio across both send and receive countries has contributed to new customer growth. ~~In addition, while not a primary driver of results, we believe the strength in the US dollar contributed to new customer acquisition in certain markets during the period.~~

2123

Send Volume

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
(in millions)
Send volume $ 7,521 $ 5,239 $ 20,579 $ 14,488


	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2023		2022		2023		2022
Send volume	$	10,227	$	7,521	$	28,351	$	20,579

We measure send volume to assess the scale of remittances sent using our platform. Our customers mostly send from the United States, Canada, ~~United Kingdom,~~and other countries in ~~Europe,~~Europe. Our customers and ~~Australia. The~~their recipients are located in over ~~160~~170 countries and territories across the globe; the largest receive countries by send volume include India, Mexico, and the Philippines.

Send volume increased ~~approximately 44%~~36% to $10.2 billion for the three months ended September 30, 2023, compared to $7.5 billion for the three months ended September 30, 2022, ~~compared~~driven by the increase in active customers.

Send volume increased 38%, to ~~$5.2~~$28.4 billion for the ~~three~~nine months ended September 30, ~~2021. This increase was primarily due to the growth of quarterly active customers, which increased 49% over the same period.~~

~~Send volume increased $6.1 billion, or 42%,~~2023, compared to $20.6 billion for the nine months ended September 30, 2022, ~~compared to $14.5 billion for the nine months ended September 30, 2021,~~ driven by the increase in ~~quarterly~~ 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 home. We believe ~~that~~ our mobile-first products and superior customer experience encourage high retention and repeat usage, which are ~~important~~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 ~~reoccurring~~recurring revenue stream with high visibility and predictability.

Attracting New Customers

Our continued ability to attract new customers to our platform 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 immigrants. 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 may negatively impact net loss and Adjusted EBITDA in the ~~initial period, while positively impacting~~quarter they are acquired, but are expected to favorably impact net loss and Adjusted EBITDA in subsequent periods.

Customer Acquisition

Efficiently acquiring customers is critical to our growth and maintaining of attractive customer economics, which isare impacted by online marketing competition, our ability to effectively target the right demographic, and competitor pricing.

We have a history of successfully monitoring customer ~~acquisitions~~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 refer to direct marketing expenses deployed to acquire new customers and primarily ~~includes~~include digital advertising costs. As we look ahead to the fourth quarter we expect customer acquisition costs to increase sequentially but decline year over year as we remain focused on driving efficiencies across the marketing funnel.

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 ~~countries~~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, ~~which occur throughout the year,~~ although the impact ~~of seasonality~~ is generally lower than the seasonality we see in the fourth quarter. 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. The number of business days in a quarter and the day of week that the last day of the quarter falls on may also ~~introduces~~introduce variability in our results, working capital balances, or cash flows period over period.

2224

Our Technology Platform

We will continue to invest significant resources in our technology platform. 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 ~~regulatory 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 ~~tailor~~tune our risk models to target other illegitimate activity.

Macroeconomic and Geopolitical Changes

Global macroeconomic and geopolitical factors, including inflation, currency fluctuations, immigration, trade and regulatory policies, the conflict in Ukraine, the conflict in Israel, 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, 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 do impact our business in numerous ways. For example, as the USU.S. dollar strengthens, we see customers in certain markets taking advantage of the ability to get more local currency to their families and friends. We also believe the strength of the USU.S. dollar and the strength inof other developed market currencies versus emerging market currencies make it easier to acquire new customers in certain markets. Conversely, expansion of our international business can negatively impact our condensed consolidated results when ~~other~~these currencies weaken against the USU.S. dollar.

~~Impact of the COVID-19 Pandemic~~

~~The COVID-19 pandemic has had,~~ As we grow we are becoming more diversified across geographies and ~~continues to~~currencies which can help mitigate some localized geopolitical risks and macroeconomic trends. As foreign currency can have a significant impact on ~~the U.S. economy and the markets in which we operate. As a result of the COVID-19 pandemic,~~ our business, we strive to maintain a diversified cash balance portfolio and frequently assess for foreign currency cash concentrations. See Note 2. Basis of Presentation and Summary of Significant Accounting Policies in the digital financial services industry in general, saw accelerated growth, as digital remittances increasingly became the choice of senders and receivers; however, we also experienced disruptions. In responseCompany’s Notes to the ~~COVID-19 pandemic, government authorities and businesses globally implemented varying levels~~Condensed Consolidated Financial Statements included in Part I, Item 1 of ~~travel restrictions, border closures, quarantines, shelter-in-place and lockdown orders, mask and social distancing requirements, and~~this Quarterly Report on Form 10-Q for a more comprehensive description of current business limitations and shutdowns, which contributed to a variety of changes to consumer behavior as well as to government and business practices. As a result, we observed that consumer behavior evolved rapidly to favor forms of commerce that do not require in-person interactions, with acceleration in the shift to digital and contactless forms of payment. During 2020 and 2021, this led to rapid customer, transaction, and revenue growth for our business. We have experienced a stabilization in growth in 2022. It remains unclear to what extent these conditions will impact our customers’ behavior in the future.

In some cases, pandemic-related measures also negatively impacted Remitly, including disruptions to workforce stability during 2020 and 2021. However, certain operating expenses during those years grew more slowly than usual due to reduced business travel and the virtualization or cancellation of events. These operating expenses have begun to return to normal growth levels as pandemic restrictions are lifted.

The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations, cash flows, and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted, particularly if new variants of the virus emerge. While we expect the trend toward increased use of digital payments to continue, its velocity may abate as conditions change. In addition, the impact from new variants and other factors arising from the COVID-19 pandemic could adversely effect the use of our services by our customers, the ability of our employees to perform work, and our business generally, which could have a material adverse impact on our operating and financial results.

We will continue to actively monitor the situation and may take further actions that may alter our business practices as may be required by federal, state, or local authorities or that we determine are in the best interests of our employees, customers, or business partners.

~~Throughout the COVID-19 pandemic, the Company has remained focused on serving its customers and communities, as well as the well-being of its employees.~~

concentrations.

Components of Results of Operations

Revenue

The Company’s 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 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.

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 ~~bad debt expense,~~credit losses, chargebacks, fraud prevention, fraud management tools, and compliance tools. Over the long term we expect to continue to benefit from increasing scale and improvements in our proprietary fraud models, although we expect some variability in transaction expense from quarter to quarter.

~~Reserve~~Provisions for Transaction Losses

The Company is exposed to transaction losses, including chargebacks, unauthorized credit card use, fraud associated with customer transactions, and other non-fraud-related losses. The Company establishes reserves for such 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 Condensed Consolidated Balance Sheets. The provision for transaction losses is included as a component of ‘Transaction expenses’ within the Condensed Consolidated Statements of Operations.

Customer Support and Operations

Customer support and operations expenses consist primarily of personnel-related expenses associated with the Company’s 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 professional services fees.

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 the Company’s marketing organization staff, including salaries, benefits and stock-based compensation expense, promotions, software subscription services dedicated for use by the Company’s 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 ~~predominantly~~dedicated for use by the Company’s technology and development ~~teams.~~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.

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. We expect our technology and development expenses to increase in absolute dollars, but they may fluctuate as a percentage of total revenue from period to period as we expand our technology and development team to develop new solutions and enhancements to existing solutions. In fiscal year 2022, as we invest in our platform to expand our offerings, improve the user experience, and drive geographic expansion, we expect technology and development expense to increase as a percentage of revenue.

General and Administrative

General and administrative expenses consist primarily of personnel-related expenses for the Company’s finance, legal, corporate and business development, human resources, facilities, ~~and~~ 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, and other corporate expenses, including acquisition and integration expenses. Such expenses primarily include external legal, accounting, valuation, and due diligence costs, ~~as well as~~ advisory and other professional services fees necessary to integrate acquired businesses.

See Note 5.
Business Combinations

~~We have incurred and expect~~ in the Notes to ~~continue to incur additional expenses as a result~~the Condensed Consolidated Financial Statements included in Part I, Item 1 of ~~operating as a public company, including costs to comply with the rules and regulations applicable to companies listed~~this Quarterly Report on ~~a national securities exchange, costs related to compliance and reporting obligations, and increased expenses~~Form 10-Q for ~~insurance, investor relations, and professional services. We have also invested in additional headcount to support both public company costs and to support our growth initiatives.~~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 amortization of 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 ~~consists of~~includes foreign currency exchange gains and ~~losses.~~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, which includes net operating loss carryforwards. We expect to maintain this full valuation allowance in the U.S. for the foreseeable future as it is more likely than not that the assets will not be realized based on our history of losses.

Results of Operations

Comparison of the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022

Revenue


		Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change					Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change
(dollars in thousands)	(dollars in thousands)	2022		2021		Amount		Percent		2022		2021		Amount		Percent		(dollars in thousands)	2023		2022		Amount		Percent		2023		2022		Amount		Percent
Revenue	Revenue	$	169,259	$	121,244	$	48,015	40	%	$	462,528	$	323,350	$	139,178	43	%	Revenue	$	241,629	$	169,259	$	72,370	43	%	$	679,527	$	462,528	$	216,999	47	%

Revenue increased ~~$48.0~~$72.4 million and $217.0 million, or ~~40%~~43% and 47%, ~~to $169.3 million~~respectively, for the three and nine months ended September 30, 2023, as compared to the three and nine months ended September 30, 2022. This increase was primarily driven by an increase in active customers period over period, continued strength in the retention of existing customers 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 countries to which the funds are transferred. Rewire contributed approximately 2% to the year over year revenue growth rate in ~~send volume, which~~both periods.

Transaction Expenses


	Three Months Ended September 30,						Change				Nine Months Ended September 30,						Change
(dollars in thousands)	2023			2022			Amount		Percent		2023			2022			Amount		Percent
Transaction expenses	$	85,742		$	69,872		$	15,870	23	%	$	239,995		$	186,961		$	53,034	28	%
Percentage of total revenue	35		%	41		%					35		%	40		%

Transaction expenses increased ~~$2.3 billion,~~$15.9 million, or ~~44%~~23%, to ~~$7.5 billion~~$85.7 million for the three months ended September 30, ~~2022,~~2023, compared to $5.2 billion for the three months ended September 30, 2021, reflecting an increase in active customers compared to the third quarter in 2021 and continued strength in the retention of existing customers.

While not a primary driver of results, foreign currency movements, particularly the recent strength in the US dollar, impacted our business in the three months ended September 30, 2022. For example, we saw customers taking advantage of the ability to get more local currency to their families and friends. The strong US dollar was also a benefit to new customer acquisition and retention in certain markets. Conversely, the increase in our revenue growth globally was negatively impacted by foreign currency translation related to our international revenue, as our international business continues to grow and currencies such as the British pound and Euro weakened against the US dollar.

Revenue increased $139.2 million, or 43%, to $462.5 million for the nine months ended September 30, 2022, compared to $323.4 million for the nine months ended September 30, 2021. This increase in revenue was driven primarily by the growth in send volume, which increased $6.1 billion, or 42%, to $20.6 billion for the nine months ended September 30, 2022, compared to $14.5 billion for the nine months ended September 30, 2021. Send volume growth reflects an increase in active customers.

~~Transaction Expenses~~

Three Months Ended September 30, Change Nine Months Ended September 30, Change
(dollars in thousands) 2022 2021 Amount Percent 2022 2021 Amount Percent
Transaction expenses $ 69,872 $ 47,560 $ 22,312 47 % $186,961 $135,175 $ 51,786 38 %
Percentage of total revenue 41 % 39 % 40 % 42 %

~~Transaction expenses increased $22.3 million, or 47%,~~ to $69.9 million for the three months ended September 30, ~~2022, compared to $47.6 million for the three months ended September 30, 2021.~~2022. The increase was primarily due to a ~~$13.1~~$19.0 million 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 ~~a $7.8 million increase in fraud and other losses largely driven by growth in new customers and send volume,~~ and a ~~$1.4~~$1.5 million increase in other transaction expenses, primarily related to software and tools that support our compliance and risk ~~operations.~~operations, partially offset by a decrease in our provision for fraud and other losses.

~~As a percentage of revenue, transaction~~Transaction expenses increased $53.0 million, or 28%, to ~~41%~~$240.0 million for the ~~three~~nine months ended September 30, ~~2022, from 39% for the three months ended September 30, 2021, due to an increase in fraud and other losses as a percentage of revenue.~~

~~Transaction expenses increased $51.8 million, or 38%,~~2023, compared to $187.0 million, for the nine months ended September 30, ~~2022, compared to $135.2 million, for the nine months ended September 30, 2021.~~2022. The increase was primarily due to a ~~$36.1~~$53.4 million 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 ~~a $12.1 million increase in fraud and other losses largely driven by growth in new customers and send volume,~~ and a $3.6 million increase in other transaction expenses, primarily related to software and tools that support our compliance and risk ~~operations.~~operations, partially offset by a $4.0 million decrease in our provision for fraud and other losses.

As a percentage of revenue, transaction expenses decreased to 35% for both the three and nine months ended September 30, 2023, as compared to 41% and 40% for the three and nine months ended September 30, 2022, ~~from 42% for the nine months ended September 30, 2021,~~respectively. The decrease was primarily due to better economics with partners as we are able to ~~drive~~secure better terms with our payment and disbursement partners as a result of by increasing ~~scale.~~scale, and also due to improvements in our ability to prevent fraud and other losses.

Customer Support and Operations Expenses


		Three Months Ended September 30,						Change				Nine Months Ended September 30,						Change					Three Months Ended September 30,						Change				Nine Months Ended September 30,						Change
(dollars in thousands)	(dollars in thousands)	2022			2021			Amount		Percent		2022			2021			Amount		Percent		(dollars in thousands)	2023			2022			Amount		Percent		2023			2022			Amount		Percent
Customer support and operations	Customer support and operations	$	18,142		$	12,005		$	6,137	51	%	$	48,867		$	32,435		$	16,432	51	%	Customer support and operations	$	21,190		$	18,142		$	3,048	17	%	$	62,604		$	48,867		$	13,737	28	%
Percentage of total revenue	Percentage of total revenue	11		%	10		%					11		%	10		%					Percentage of total revenue	9		%	11		%					9		%	11		%

Customer support and operations expenses increased ~~$6.1~~$3.0 million, or ~~51%~~17%, ~~for~~for the three months ended September 30, ~~2022,~~2023, compared to the three months ended September 30, ~~2021.~~2022. The increase was primarily driven by a ~~$2.4~~$1.8 million increase in third-party and internal personnel costs ~~at our sites in the Philippines, Nicaragua, and Ireland that~~to support customer operations, a ~~$2.2 million increase in third-party customer support costs, a $1.1~~$0.8 million increase in software and telephony costs as we supported ~~more~~an increased volume of active customers, and ~~$0.4~~a $0.7 million increase due to restructuring costs primarily related to severance. We expect these restructuring activities to generate approximately $1.0 million to $2.0 million in ~~other operating expenses.~~estimated annual savings. Refer to Note 12. Restructuring Initiatives in the Notes to the Condensed Consolidated Financial Statements for more information on the restructuring costs.

Customer support and operations expenses increased $13.7 million, or 28%, for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022. The increase was primarily driven by a $10.3 million increase in third-party and internal personnel costs to support customer operations, a $3.2 million increase in software and telephony costs as we supported an increased volume of active customers, and a $0.7 million increase due to restructuring costs primarily related to severance (refer to Note 12. Restructuring Initiatives in the Notes to the Condensed Consolidated Financial Statements for more information on the restructuring costs).

As a percentage of revenue, customer support and operations expenses ~~increased~~decreased to ~~11%~~9% for both the three and nine months ended September 30, ~~2022,~~2023, from ~~10%~~11% for both the three ~~months ended September 30, 2021 due to an increase in staffing to support growth in new customer acquisition.~~

~~Customer support~~ and ~~operations expenses increased $16.4 million, or 51%, for the~~ nine months ended September 30, 2022, ~~compared~~respectively, due to ~~the nine months ended September 30, 2021. The increase was primarily driven by a $6.4 million increase in~~process improvements and automation driving scale across customer support headcount at internal ~~personnel costs at our sites in the Philippines, Nicaragua,~~ and ~~Ireland that support customer operations, a $6.2 million increase in~~ third-party customer support ~~costs, a $2.8 million increase in software and telephony costs as we supported more active customers, and a $1.0 million increase in other operating expenses.~~

As a percentage of revenue, customer support and operations expenses increased to 11% for the nine months ended September 30, 2022, from 10% for the nine months ended September 30, 2021, due to an increase in staffing to support growth in new customer acquisition.sites.

Marketing Expenses


		Three Months Ended September 30,						Change				Nine Months Ended September 30,				Change					Three Months Ended September 30,						Change				Nine Months Ended September 30,						Change
(dollars in thousands)	(dollars in thousands)	2022			2021			Amount		Percent		2022		2021		Amount		Percent		(dollars in thousands)	2023			2022			Amount		Percent		2023			2022			Amount		Percent
Marketing	Marketing	$	43,337		$	30,365		$	12,972	43	%	$127,807		$82,639		$	45,168	55	%	Marketing	$	61,351		$	43,337		$	18,014	42	%	$	159,074		$	127,807		$	31,267	24	%
Percentage of total revenue	Percentage of total revenue	26		%	25		%					28	%	26	%					Percentage of total revenue	25		%	26		%					23		%	28		%

Marketing expenses increased ~~$13.0~~$18.0 million, or ~~43%~~42%, for the three months ended September 30, ~~2022,~~2023, compared to the three months ended September 30, ~~2021,~~2022, due primarily to an increase of ~~$8.3~~$14.1 million in direct marketing expense, including online and offline marketing spend and promotion costs to acquire new customers. Personnel-related costs increased by $3.7 million, driven by a ~~31%~~62% increase in marketing headcount compared to the same period in ~~2021 and~~2022, inclusive of a ~~$2.9~~$1.2 million increase in stock-based compensation expense. ~~The~~Contributing to the increase in our marketing ~~expenses was also driven by a $0.6 million increase in other indirect~~headcount expense and direct marketing ~~a $0.2 million increase in professional fees, a $0.1 million increase in employee-related costs, and a $0.1 million increase in software costs.~~

~~As a percentage~~expense is the acquisition of revenue, marketing expenses increased to 26% for the three months ended September 30, 2022, from 25% for the three months ended September 30, 2021, primarily due to an increase in stock-based compensation and headcount due to growth in personnel who are directly engaged in acquiring new customers and marketing our services.

Rewire.

Marketing expenses increased ~~$45.2~~$31.3 million, or ~~55%~~24%, for the nine months ended September 30, ~~2022,~~2023, compared to the nine months ended September 30, ~~2021,~~2022, due primarily to an increase of ~~$33.3~~$19.5 million in direct marketing expense, including online and offline marketing spend and promotion costs to acquire new customers. Personnel-related costs increased by ~~$9.1~~$10.9 million, driven by a ~~34%~~58% increase in marketing headcount compared to the same period in ~~2021 and~~2022, inclusive of a ~~$5.9~~$5.1 million increase in stock-based compensation expense. ~~The~~Contributing to the increase in our marketing ~~expenses was also driven by a $1.7 million increase in other indirect~~headcount expense and direct marketing a $0.4 million increase in professional fees, a $0.4 million increase in software costs, and a $0.4 million increase in employee-related costs, partially offset by a $0.1 million decrease in other operating expenses.expense is the acquisition of Rewire.

As a percentage of revenue, marketing expenses ~~increased~~decreased to 25% and 23% for the three and nine months ended September 30, 2023, respectively, from 26% and 28% for the three and nine months ended September 30, 2022, ~~from 26% for the nine months ended September 30, 2021,~~respectively, due to ~~growth in new customers~~continued channel optimizations and ~~higher~~momentum from a larger customer acquisition costs, as our marketing spend was mostly dedicated to acquiring new customers, and an increase in stock-based compensation and headcount due to growth in personnel who are directly engaged in acquiring new customers and marketing our services.base.

Technology and Development Expenses


		Three Months Ended September 30,						Change				Nine Months Ended September 30,						Change					Three Months Ended September 30,						Change				Nine Months Ended September 30,						Change
(dollars in thousands)	(dollars in thousands)	2022			2021			Amount		Percent		2022			2021			Amount		Percent		(dollars in thousands)	2023			2022			Amount		Percent		2023			2022			Amount		Percent
Technology and development	Technology and development	$	36,178		$	18,123		$	18,055	100	%	$	95,836		$	44,965		$	50,871	113	%	Technology and development	$	57,014		$	36,178		$	20,836	58	%	$	160,699		$	95,836		$	64,863	68	%
Percentage of total revenue	Percentage of total revenue	21		%	15		%					21		%	14		%					Percentage of total revenue	24		%	21		%					24		%	21		%

Technology and development expenses increased ~~$18.1~~$20.8 million, or ~~100%~~58% for the three months ended September 30, ~~2022,~~2023, compared to the three months ended September 30, ~~2021.~~2022. The increase was driven by ~~a $16.4~~$17.3 million ~~increase~~ in personnel-related ~~expenses. These~~ expenses ~~were primarily due to~~resulting from a ~~39%~~55% increase in headcount compared to the same period in ~~2021 undertaken~~2022, as part of our continued investment in our technology platform, and included ~~an $11.5~~a $6.6 million increase in stock-based compensation expense. The increase in technology and development expense was also ~~included~~driven by a ~~$1.5~~$2.0 million increase in software costs for cloud services ~~and employee tools attributable to resources required~~ to support incremental transaction volume. Contributing to the increase in our technology and development headcount expense is the acquisition of Rewire.

Technology and ~~transaction volume~~development expenses increased $64.9 million, or 68%, for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022. The increase was driven by $55.5 million in personnel-related expenses resulting from a 58% increase in headcount compared to the same period in 2022, as part of our continued investment in our technology platform, and included a ~~$0.2~~$24.1 million increase in ~~facilities costs.~~stock-based compensation expense. The increase in technology and development expense was also driven by a $6.1 million increase in software costs for cloud services to support incremental transaction volume. Contributing to the increase in our technology and development headcount expense is the acquisition of Rewire.

As a percentage of revenue, technology and development expenses increased to 24% for both the three and nine months ended September 30, 2023, from 21% for both the three and nine months ended September 30, 2022, ~~from 15% for the three months ended September 30, 2021,~~ driven by an increase in headcount and stock-based compensation expense ~~and headcount~~ due to hiring additional personnel and contractors who are directly engaged in developing and enhancing our platform and complementary new products, enabling increasing automation, and providing technology support and ~~security.~~security, and inclusive of our acquisition of Rewire.

~~Technology~~

General and ~~development~~Administrative Expenses


	Three Months Ended September 30,						Change				Nine Months Ended September 30,						Change
(dollars in thousands)	2023			2022			Amount		Percent		2023			2022			Amount		Percent
General and administrative	$	49,817		$	35,504		$	14,313	40	%	$	130,715		$	96,355		$	34,360	36	%
Percentage of total revenue	21		%	21		%					19		%	21		%

General and administrative expenses increased ~~$50.9~~$14.3 million, or ~~113%,~~40% for the ~~nine~~three months ended September 30, ~~2022,~~2023, compared to the ~~nine~~three months ended September 30, ~~2021.~~2022. The increase was driven by ~~$44.5~~$7.3 million in personnel-related expenses resulting from a ~~44%~~38% increase in headcount compared to the same period in ~~2021 due to our continued investment in our technology platform~~2022, and ~~inclusive of $27.4~~included a $2.9 million increase in stock-based compensation expense. ~~Contributing to the~~The increase in ~~technology~~general and ~~development~~administrative expense was also driven by a ~~$4.4~~$2.6 million increase in ~~software costs for employee tools and cloud services attributable~~charitable contributions related to ~~resources required to support incremental headcount and transaction volumes,~~our annual Pledge 1% donation, a ~~$0.8~~$2.2 million increase in ~~facilities costs,~~indirect taxes, and a ~~$0.8~~$0.9 million increase in ~~employee-related expenses, and a $0.4 million increase in professional fees.~~the fair value of the holdback liability associated with the Rewire acquisition.

As a percentage of revenue, ~~technology~~general and ~~development~~administrative expenses remained flat at 21% for the three months ended September 30, 2023 and the three months ended September 30, 2022.

Included in the nine months ended September 30, 2022 results is approximately $5.2 million of stock-based compensation expense related to a prior period that was identified and corrected for in the three months ended June 30, 2022. The discussion below excludes this amount from the nine months ended September 30, 2022 results in all places, for comparative purposes. Excluding the aforementioned amount, general and administrative expenses would have increased ~~to 21%~~$39.6 million, or 43% for the nine months ended September 30, ~~2022, from 14%~~2023, compared to the nine months ended September 30, 2022.

The increase in general and administrative expenses for the nine months ended September 30, ~~2021, driven by an increase in stock-based compensation expense and headcount due~~2023, compared to ~~hiring additional personnel and contractors who are directly engaged in developing our platform and providing technology support and security.~~

~~General and Administrative Expenses~~

Three Months Ended September 30, Change Nine Months Ended September 30, Change
(dollars in thousands) 2022 2021 Amount Percent 2022 2021 Amount Percent
General and administrative $ 35,504 $ 24,539 $ 10,965 45 % $ 96,355 $ 47,429 $ 48,926 103 %
Percentage of total revenue 21 % 20 % 21 % 15 %

~~General and administrative expenses increased $11.0 million, or 45%, for~~ the ~~three~~nine months ended September 30, 2022, ~~compared to the three months ended September 30, 2021. This increase~~ was primarily driven by a ~~$10.3~~$20.9 million increase in personnel-related ~~costs~~expenses due to a ~~58%~~44% increase in general and administrative headcount compared to the same period in ~~the prior year~~2022 and ~~inclusive of $6.4~~included a $8.7 million increase in stock-based compensation expense. Contributing to the increase in general and administrative expenses were $1.8 million of legal, accounting, and diligence acquisition and integration expenses, primarily driven by the pending acquisition of Rewire. The ~~remaining~~ increase in general and administrative expenses was also ~~due to~~driven by a ~~$2.5~~$3.9 million increase in indirect taxes, a $3.6 million increase in professional ~~regulatory, and corporate~~ fees, a ~~$0.9~~$3.0 million increase in charitable contributions primarily related to our annual Pledge 1% donation, $2.3 million increase in facilities costs, and a $1.9 million increase in the fair value of the holdback liability associated with the Rewire acquisition. Contributing to the increase in our general and administrative headcount expense, software costs, ~~and $0.4 million increase to other operating expenses, partially offset by a $4.9 million decrease to charitable contributions. The increase in headcount~~employee-related costs, and professional ~~regulatory, and corporate~~ fees ~~has been to support~~is the ~~growth~~acquisition of ~~the business and ongoing public company costs.~~Rewire.

As a percentage of revenue, general and administrative expenses ~~increased~~decreased to ~~21% for the three months ended September 30, 2022, from 20% for the three months ended September 30, 2021, due to an increase in headcount, stock-based compensation, and ongoing public company costs.~~

~~General and administrative expenses increased $48.9 million, or 103%,~~19% for the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021. This increase was primarily driven by a $38.0 million increase in personnel-related costs due to a 68% increase in general and administrative headcount compared to the same period in the prior year and inclusive of a $25.0 million increase in stock-based compensation expense. Contributing to the increase in general and administrative expenses were $2.6 million of legal, accounting, and diligence acquisition and integration expenses, primarily driven by the pending acquisition of Rewire. The remaining increase in general and administrative expense was also due to a $8.3 million increase in professional, regulatory, and corporate fees, a $3.8 million increase to employee-related and facilities costs, and $0.8 million increase to software costs, and a $0.2 million increase in taxes and other operating expenses, partially offset by a $4.8 million decrease in charitable contributions.The increase in headcount and professional, regulatory, and corporate fees has been to support the growth of the business and ongoing public company costs, including incremental D&O insurance required as a public company.

~~As a percentage of revenue, general and administrative expenses increased to~~2023, from 21% for the nine months ended September 30, 2022, ~~from 15%~~as we begin to leverage scale in our general and administrative functions as a result of our continued revenue growth.

Depreciation and Amortization


	Three Months Ended September 30,						Change				Nine Months Ended September 30,						Change
(dollars in thousands)	2023			2022			Amount		Percent		2023			2022			Amount		Percent
Depreciation and amortization	$	3,418		$	1,843		$	1,575	85	%	$	9,634		$	4,870		$	4,764	98	%
Percentage of revenue	1		%	1		%					1		%	1		%

Depreciation and amortization increased $1.6 million and $4.8 million, or 85% and 98%, respectively, for the three and nine months ended September 30, ~~2021, due to an increase in headcount, stock-based compensation, and ongoing public company costs.~~

~~Depreciation and Amortization~~

Three Months Ended September 30, Change Nine Months Ended September 30, Change
(dollars in thousands) 2022 2021 Amount Percent 2022 2021 Amount Percent
Depreciation and Amortization $ 1,843 $ 1,319 $ 524 40 % $ 4,870 $ 3,890 $ 980 25 %
Percentage of revenue 1 % 1 % 1 % 1 %

~~Depreciation and amortization increased $0.5 million, or 40%, for the three months ended September 30, 2022,~~2023, compared to the three ~~months ended~~ ~~September 30, 2021. This increase is primarily due to an increase in depreciation for internally developed software~~ and ~~computers.~~

~~Depreciation and amortization increased $1.0 million, or 25%, for the~~ nine months ended September 30, ~~2022, compared to the nine months ended September 30, 2021. This~~2022. The increase in both periods is primarily ~~due to an increase~~driven by the amortization of acquired intangible assets, as part of the acquisition of Rewire in ~~depreciation for internally developed software, computers, and leasehold improvements.~~the first quarter of 2023.

Interest Income


		Three Months Ended September 30,				Change			Nine Months Ended September 30,				Change				Three Months Ended September 30,				Change			Nine Months Ended September 30,				Change
(dollars in thousands)	(dollars in thousands)	2022		2021		Amount		Percent	2022		2021		Amount		Percent	(dollars in thousands)	2023		2022		Amount		Percent	2023		2022		Amount		Percent
Interest income	Interest income	$	1,400	$	82	$	1,318	nm	$	1,875	$	92	$	1,783	nm	Interest income	$	1,808	$	1,400	$	408	nm	$	5,200	$	1,875	$	3,325	nm
nm = not meaningful	nm = not meaningful															nm = not meaningful

Interest income increased by ~~$1.3~~$0.4 million and ~~$1.9~~$3.3 million for the three and nine months ended September 30, ~~2022,~~2023, respectively, as compared to the three and nine months ended September 30, ~~2021.~~2022. These increases are primarily due to an increase in ~~yield~~interest rates and ~~higher cash~~an increase in average invested balances ~~in interest bearing accounts.~~

~~Interest Expense~~

Three Months Ended September 30, Change Nine Months Ended September 30, Change
(dollars in thousands) 2022 2021 Amount Percent 2022 2021 Amount Percent
Interest expense $ (330) $ (512) $ (182) (36) % $ (975) $ (1,048) $ 73 (7) %

~~Interest expense changed by an immaterial amount for~~throughout the ~~three- and nine-month periods ended September 30, 2022, as compared to the three- and nine-month periods ended September 30, 2021.~~

quarter.

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~~Other income, net~~Interest Expense


		Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change					Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change
(dollars in thousands)	(dollars in thousands)	2022		2021		Amount		Percent		2022		2021		Amount		Percent		(dollars in thousands)	2023		2022		Amount		Percent		2023		2022		Amount		Percent
Other income, net		$	1,765	$	396	$	1,369	346	%	$	4,121	$	3,044	$	1,077	35	%
Interest expense																		Interest expense	$	(585)	$	(330)	$	(255)	77	%	$	(1,566)	$	(975)	$	(591)	61	%

~~Other income, net~~Interest expense increased ~~$1.4~~by $0.3 million and $0.6 million for the ~~three-month period~~three and nine months ended September 30, 2023, respectively, as compared to the three and nine months ended September 30, 2022, ~~compared~~primarily due to draws on the ~~three-month period ended September 30, 2021.~~New Revolving Credit Facility.

Other income (expense), net ~~increased $1.1 million for the nine-month period ended September 30, 2022, compared to the nine-month period ended September 30, 2021.~~


	Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change
(dollars in thousands)	2023		2022		Amount		Percent		2023		2022		Amount		Percent
Other income (expense), net	$	283	$	1,765	$	(1,482)	(84)	%	$	(2,774)	$	4,121	$	(6,895)	(167)	%

Other income ~~in all periods was~~(expense), net is primarily ~~due to~~driven by unrealized losses and gains on foreign exchange remeasurements ~~related to transactions associated with high-volume balance sheet amounts.~~of certain foreign currency denominated monetary assets and liabilities.

Provision for Income Taxes


		Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change					Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change
(dollars in thousands)	(dollars in thousands)	2022		2021		Amount		Percent		2022		2021		Amount		Percent		(dollars in thousands)	2023		2022		Amount		Percent		2023		2022		Amount		Percent
Provision for income taxes	Provision for income taxes	$	287	$	261	$	26	10	%	$	1,477	$	1,085	$	392	36	%	Provision for income taxes	$	258	$	287	$	(29)	(10)	%	$	485	$	1,477	$	(992)	(67)	%

The provision for income taxes ~~increased by an immaterial amount for~~decreased in both the three months and nine months ended September 30, ~~2022~~2023 compared to the three ~~months ended September 30, 2021.~~

~~The provision for income taxes increased $0.4 million, or 36%, for the~~and nine months ended September 30, 2022, ~~compared~~primarily due to a discrete income tax benefit related to excess stock-based compensation deductions in the three and nine months ended September 30, ~~2021.~~

~~The increase in income taxes was primarily due to an increase in taxable income in line with business growth.~~2023.

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.

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) ~~non-cash~~noncash charge of depreciation and amortization; (iv) gains and losses from the remeasurement of foreign currency assets and liabilities into their functional currency; (v) ~~non-cash~~noncash charges associated with our donation of common stock in connection with our Pledge 1% ~~commitment,~~commitment; (vi) ~~non-cash~~noncash stock-based compensation expense, net; and (vii) certain ~~transaction~~acquisition, integration, and ~~integration costs associated with acquisitions.~~restructuring 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 ~~expense;~~expenses;

•Adjusted EBITDA excludes stock-based compensation expense, 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;

2930

•Adjusted EBITDA excludes certain transaction costs, ~~primarily~~related to acquisition, integration, and restructuring costs. The acquisition and integration ~~expenses~~costs are primarily related to the ~~pending~~ Rewire ~~acquisition. Transaction costs~~acquisition and primarily include external legal, accounting, valuation, and due diligence costs, ~~as well as~~ advisory and other professional services fees necessary to integrate acquired ~~businesses;~~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:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2023		2022		2023		2022
Net loss	Net loss	$	(33,069)	$	(12,962)	$	(94,624)	$	(22,180)	Net loss	$	(35,655)	$	(33,069)	$	(82,819)	$	(94,624)
Add:	Add:									Add:
Interest expense, net		(1,070)		430		(900)		956
Interest (income) expense, net										Interest (income) expense, net	(1,223)		(1,070)		(3,634)		(900)
Provision for income taxes	Provision for income taxes	287		261		1,477		1,085		Provision for income taxes	258		287		485		1,477
Depreciation and amortization expenses		1,843		1,319		4,870		3,890
Foreign exchange gain		(1,815)		(396)		(4,171)		(3,044)
Depreciation and amortization										Depreciation and amortization	3,418		1,843		9,634		4,870
Foreign exchange (gain) loss										Foreign exchange (gain) loss	(376)		(1,815)		2,611		(4,171)
Donation of common stock(1)	Donation of common stock(1)	1,972		6,933		1,972		6,933		Donation of common stock(1)	4,600		1,972		4,600		1,972
Stock-based compensation expense		25,745		4,740		67,880		8,965
Transaction costs(1)		2,385		—		2,385		—
Stock-based compensation expense, net										Stock-based compensation expense, net	36,573		25,745		101,007		67,880
Acquisition, integration, and restructuring costs(2)										Acquisition, integration, and restructuring costs(2)	2,901		2,385		4,390		2,385
Adjusted EBITDA	Adjusted EBITDA	$	(3,722)	$	325	$	(21,111)	$	(3,395)	Adjusted EBITDA	$	10,496	$	(3,722)	$	36,274	$	(21,111)

__________

(1) ~~Included in transaction~~Refer to Note 10. Common Stock within the Notes to the Condensed Consolidated Financial Statements for further detail on the donation of common stock.

(2) Acquisition, integration, and restructuring costs ~~above are approximately $0.5 million~~for the three and nine months ended September 30, 2023 consists of expenses ~~incurred in connection with~~related to the ~~pending~~ acquisition and integration of Rewire (O.S.G) Research and Development Ltd. that were incurred in the three months ended June 30, 2022. We have determined it is not material to retrospectively reflect this amount in Adjusted EBITDA for prior periods; therefore we have included the full amount in the three months ended September 30, 2022, in order for year to date Adjusted EBITDA to appropriately reflect the full year impact of transaction, as well as restructuring charges incurred. Acquisition and integration expenses ~~in accordance with our non-GAAP policy, effective as of the third quarter of 2022.~~

~~Adjusted EBITDA was $(3.7) million~~ for the three ~~months ended September 30, 2022, compared to $0.3 million for the three months ended September 30, 2021. Adjusted EBITDA was $(21.1) million for the~~and nine months ended September 30, ~~2022, compared to $(3.4)~~2023 were $1.5 million and $3.0 million, respectively. These acquisition and integration expenses included the fair value of the holdback liability of $0.9 million and $1.9 million, respectively, and professional fees incurred for acquisition and integration costs of $0.6 million and $1.1 million, respectively. Restructuring charges incurred for both the three and nine months ended ~~September 30, 2021. Although we have continued~~were $1.4 million. Refer to ~~experience growth, this has been offset by higher investments~~Note 5. Business Combinations and Note 12. Restructuring Initiatives in ~~headcount~~the Notes to ~~support our customer~~the Condensed Consolidated Financial Statements for more information on the acquisition ~~growth, continued investments in our technology platform,~~ and ~~other general~~integration costs and ~~administrative expenses to support growth initiatives and operate as a public company.~~restructuring costs, respectively.

Liquidity and Capital Resources

Sources of Liquidity and Material Future Cash Requirements

As of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, our principal sources of liquidity were cash and cash equivalents of ~~$376.5~~$223.3 million and ~~$403.3~~$300.6 million, respectively, as well as funds available under the New Revolving Credit ~~Facility.~~Facility, which we entered into in September 2021. We have historically financed our operations and capital expenditures primarily through cash generated from operations including transaction fees and foreign exchange ~~spreads and sales of our redeemable convertible preferred stock. Since September 2021,~~spreads. In recent periods, we have ~~primarily financed~~supplemented those cash flows with borrowings on our ~~operating growth and capital expenditures through the proceeds from our IPO and concurrent private placement. In addition, in September 2021, we entered into our $250.0 million~~ New Revolving Credit ~~Facility; however,~~Facility, primarily to support customer transaction volumes during peak periods, which we ~~have not yet~~expect to continue to do in the future. During the nine months ended September 30, 2023, we borrowed against this credit facility ~~given~~which was repaid by September 30, 2023. Operations continue to be substantially funded by the existing cash we have on hand ~~to fund operations, other than utilizing~~and ongoing utilization of the New Revolving Credit Facility (including the letter of credit ~~sub-facility, on an as needed basis.~~sub-facility), which has included active borrowings and repayments during 2023. As of September 30, ~~2022,~~2023, we have unused borrowing capacity of ~~$230.8~~$202.5 million.

We believe that our cash, cash equivalents, and funds available under the New 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. In addition, inon January 5, 2023, we acquired 100% of the ~~three months ended September 30, 2022 we entered into an agreement to acquire~~outstanding equity interests of Rewire (as defined herein) for approximately ~~$80~~$77.9 million, which includes the fair value of ~~aggregate consideration,~~cash and equity issued, or to be issued, to selling shareholders. A portion of these proceeds were held back at closing for any potential indemnity claims, which will be released after a 15-month holdback period, subject to any deductions, the majority of which will be settled in cash, with a portion in Company common stock. As of September 30, 2023, the ~~majority~~fair value of the liability held back that will be settled in cash and Company common stock was $13.8 million and is expected to be settled in ~~cash.~~ the next 12 months.

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.~~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. In addition, as discussed elsewhere in this Quarterly Report on Form 10-Q, 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, as well as ongoing operating costs as a public company.~~expansion. We also routinely enter into marketing and advertising contracts, ~~as well as~~ 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 ~~cash flows~~Condensed Consolidated Statements of Cash Flows for the periods presented:


		Nine Months Ended September 30,					Nine Months Ended September 30,
(in thousands)	(in thousands)	2022		2021		(in thousands)	2023		2022
Net cash provided by (used in):	Net cash provided by (used in):					Net cash provided by (used in):
Operating activities	Operating activities	$	(27,789)	$	19,425	Operating activities	$	(19,122)	$	(27,789)
Investing activities	Investing activities	(5,016)		(3,288)		Investing activities	(47,450)		(5,016)
Financing activities	Financing activities	8,190		239,665		Financing activities	(9,521)		8,190

Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash						Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash	(599)		(2,166)
Net decrease in cash, cash equivalents, and restricted cash						Net decrease in cash, cash equivalents, and restricted cash	$	(76,692)	$	(26,781)

The year over year change in our cash, cash equivalents, and restricted cash balances is primarily driven by timing of customer transaction-related balances as well as activity related to our acquisition of Rewire, further discussed below.

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 quarter end falls on, including holidays and long weekends. For example we generally have higher prefunding amounts if the quarter closes on a weekend or in advance of a long weekend, such as a holiday, which creates variability in customer ~~transaction related~~transaction-related balances period over ~~period.~~period and can reduce our cash position at a particular point in time. These balances inwithin our Condensed Consolidated ~~Statement~~Statements of Cash Flows include disbursement prefunding, customer funds receivable, customer liabilities, and ~~book overdrafts and~~ disbursement postfunding liabilities and book overdrafts, both of which are included within the line ~~item:~~item ‘Accrued expenses and other liabilities.’

For the nine months ended September 30, 2023, net cash used in operating activities was $19.1 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 $52.2 million and customer funds receivable of $68.6 million, offset by an increase in customer liabilities of $29.2 million and accrued expenses and other ~~liabilities.~~liabilities, which are inclusive of disbursement postfunding liabilities and book overdrafts, of $34.2 million, which were the key drivers for the unfavorable changes in our operating assets and liabilities of $56.2 million. This change in our operating assets and liabilities was also partially offset by cash generated from our operations, when excluding the $119.9 million of noncash charges included within the $82.8 million net loss for the period.

For the nine months ended September 30, 2022, net cash used in operating activities was $27.8 million, which primarily consisted of unfavorable changes in our operating assets and liabilities of $8.2 million, and net loss of $94.6 million, partially offset by $75.0 million of noncash charges included within net loss for the period. The primary driver for the unfavorable change in operating assets and liabilities was due to the overall growth in our business and the timing of funding customer transactions, including an increase in customer funds receivable of $52.5 million partially offset by an increase in customer liabilities of $36.8 million and changes in the timing of other operating assets and liabilities. As compared to the nine months ended September 30, 2021, the unfavorable change in our customer transaction related balances is primarily due to the timing of funding of our customer transactions, as the quarter ended on a Friday prior to a high funding weekend, compared to the same date in prior year, which ended during the week.

For the nine months ended September 30, 2021, net cash provided by operating activities was $19.4 million, which primarily consisted of favorable changes in our operating assets and liabilities of $21.5 million offset by net loss of $22.2 million, excluding approximately $20.1 million of non-cash charges included within net loss for the period. The main drivers for the change in operating assets and liabilities were an increase in customer liabilities of $50.3 million due to growth in our business and timing of disbursements, offset by an increase in customer receivables of $29.1 million in line with the growth in our business, and timing of cash settlement.

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.~~businesses, net of acquired cash, cash equivalents, and restricted cash.

Net cash used in investing activities was $47.5 million for the nine months ended September 30, 2023, an increase of $42.5 million, compared to net cash used in investing activities of $5.0 million for the nine months ended September 30, ~~2022,~~2022. This increase was primarily ~~related to purchases of property and equipment to support the increase in headcount, capitalization of internal use software costs and~~driven by the acquisition of ~~a business.~~

~~Net cash used~~Rewire in ~~investing activities was $3.3 million for~~ the ~~nine months ended September 30, 2021, primarily related to purchases~~first quarter of ~~property and equipment to support the increase in headcount, and capitalization of internal use software costs.~~2023.

Financing Activities

Cash ~~provided by~~used in financing activities consists primarily of borrowings on the Company’s line of credit and proceeds from the exercise of stock options, offset by repayments of ~~our revolving credit facility~~ borrowings and ~~payment of debt issuance costs. Cash provided by~~other indebtedness.

Net cash used in financing activities ~~also historically consisted~~for the nine months ended September 30, 2023 was $9.5 million, a decrease of ~~proceeds from our IPO and concurrent private placement, as well as previous issuances of redeemable convertible preferred stock.~~

~~Net~~$17.7 million, compared to net cash provided by financing activities for the nine months ended September 30, 2022 of $8.2 ~~million~~million. This decrease was primarily driven by ~~proceeds from~~ the ~~exercise~~repayment of ~~stock options~~assumed indebtedness of ~~$8.2 million.~~

~~Net cash provided by financing activities for the nine months ended September 30, 2021 of $239.7~~$17.1 million was primarily driven by proceeds from the issuance of common stock upon our IPO and concurrent private placement, net of underwriting discounts and commissions and other offering costs of $307.1 million, which excludes $1.9 million of offering costs not yet paid as of September 30, 2021. These proceeds were partially offset by repayments of our Revolving Credit Facility borrowings of $80.0 million and payments of debt issuance costs of ~~$1.0 million. Other financing sources~~that occurred in the nine months ended September 30, ~~2021 included proceeds from the exercise of stock options of $7.5 million, the repayment of a non-recourse promissory note of~~ ~~$3.1 million, and the issuance of Series F redeemable convertible preferred stock, net of issuance costs of $2.9 million.~~2023.

Contractual Obligations and Commitments

Our principal commitments consist of standby letters of ~~credits,~~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, ~~as well as~~ software subscriptions or other service arrangements, including cloud infrastructure arrangements, and compliance-tool related arrangements that contractually obligate us to purchase services, ~~in the near term,~~ including minimum service quantities, unless we give notice of cancellation based on the applicable terms of the agreements. Most contracts are typically cancelable within a period of less than one ~~year. As~~year, although some of September 30, 2022, we had approximately $7.0 million in total purchase commitments under these arrangements, of which approximately $3.0 million is cancellable within 90 days of the date of this Quarterly Report on Form 10-Q. The remaining amount includes oneour larger software or cloud service subscriptions require multi-year ~~commitment through 2023.~~commitments. 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.

In addition, ~~we have entered into the following commitments during 2022:~~

•~~On August 15, 2022,~~on February 19, 2023, we entered into a definitive agreement pursuant to which we, through a newly formed merger subsidiary, will acquire the outstanding equity interests of Rewire (O.S.G) Research and Development Ltd., a company organized under the laws of the State of Israel (“Rewire”). Pursuant to the terms and conditions set forth in the agreement, Rewire’s selling shareholders will receive approximately $80 million of aggregate consideration in exchange for their outstanding equity interests in Rewire, subject to customary purchase price adjustments. The aggregate purchase consideration will be settled in a combination of cash and Company stock. Some portion of the equity consideration will be recognized as share-based compensation expense, as it requires a future service period. The closing of the transaction is subject to customary closing conditions, including, among other things, (i) the receipt of regulatory approvals from Dutch Central Bank (De Nederlandsche Bank) and the Capital Market Insurance and Saving Authority in Israel, (ii) the accuracy of certain representations and warranties made by the other party in the agreement (subject to certain materiality exceptions) and (iii) the other party’s material compliance with its covenants set forth in the agreement.

•~~On May 4, 2022, the Company amended and renewed the~~ lease for ~~its corporate headquarters~~an office in ~~Seattle, Washington. In addition, during 2022, the Company amended certain of its existing~~Israel. This lease ~~agreements to accommodate additional space needed for its workforce, as a result of the Company’s continued growth, which included entering into a new multi-year lease agreement~~commenced in ~~Ireland. These leases commenced, or will commence, in various months during 2022 and expire between~~ 2023 and ~~2025.~~will expire in 2027. Total incremental estimated cash payments that will be made over the course of ~~these~~the lease ~~agreements~~agreement total approximately ~~$10~~$6.0 million. ~~These leases have~~This lease has been recorded in accordance with ASC 842, Leases, onthe Company’s Condensed Consolidated Balance Sheets as of September 30, ~~2022.~~2023.

During the nine months ended September 30, ~~2022,~~2023, other than software, cloud infrastructure, marketing, and compliance-tool related contracts entered into in the normal course of business, there were no other material changes ~~outside of the ordinary course of business~~ to the contractual obligations and contingencies as disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. For further discussion of commitments and contingencies, also refer to Note ~~14. “Commitments~~15. Commitments and ~~Contingencies”~~Contingencies of the Notes to ~~our~~the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Off-Balance Sheet Arrangements

As of September 30, ~~2022,~~2023, we had no material off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our condensed 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 Condensed Consolidated Financial Statements on our Annual Report on Form 10-K, we elected not to record leases on our Condensed Consolidated Balance Sheets if the lease term is 12 months or less. For further information on our lease arrangements, refer to our Annual Report on Form 10-K for the year ended December 31, 2022.

Critical Accounting Policies and Estimates

The Company’s ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements and accompanying notes included in this Quarterly Report on Form 10-Q are prepared in accordance with GAAP. The preparation of these ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, equity, revenue, ~~and~~ expenses, and related disclosures. The Company’s estimates are based on historical experience and on various other factors that it believes 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.

There have been no material changes, other than as described in Note 2. Basis of Presentation and Summary of Significant Accounting Policies of the Notes to the Condensed Consolidated Financial Statements and as described below to the Company’s critical accounting policies and estimates as compared to those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Impairment of goodwill and other intangible assets

Goodwill and indefinite-lived intangible assets are subject to an impairment assessment annually, or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. Long-lived assets, other than goodwill and indefinite-lived intangible assets, are tested for impairment whenever events or circumstances indicate that their carrying amount may not be recoverable. If the carrying value of the asset cannot be recovered from estimated future cash flows, undiscounted and without interest, the fair value of the asset is calculated using the present value of estimated net future cash flows. If the carrying amount of the asset exceeds its fair value, an impairment is recorded.

The impairment assessments involve 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.

3233

Recently Issued Accounting Pronouncements

See Note ~~2, “Basis~~2. Basis of Presentation and Summary of Significant Accounting Policies” in the ~~notes~~Company’s Notes to the ~~Company’s~~ Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.

~~JOBS Act~~

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups (the “JOBS Act”). The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (1) are no longer an emerging growth company or (2) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our Condensed Consolidated Financial Statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. Based on the market value of our common stock held by nonaffiliates as of the last business day of our fiscal second quarter ended June 30, 2022, we will cease to be an emerging growth company as of December 31, 2022.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the potential for economic losses to be incurred on market ~~risk sensitive~~risk-sensitive instruments arising from adverse changes in market factors such as interest rates, foreign currency exchange rates, and equity investment risk. Management establishes and oversees the implementation of policies governing our investing, funding, and foreign currency activities in order to mitigate market risks. We monitor risk exposures on an ongoing basis.

Credit Risk

We have a limited number of pay-in payment processors and therefore we are exposed to credit risk relating to those pay-in payment providers if, in the course of a transaction, we were to disburse funds to the recipient but the pay-in payment provider ~~does~~did not deliver our customer’s funds to us (for example, due to their illiquidity). We mitigate this credit risk by engaging with reputable pay-in payment providers and entering into written agreements with pay-in providers allowing for legal recourse. We are also exposed to credit risk relating to many of our disbursement partners when we prefund or remit funds in advance of having collected funds from our customers through our pay-in payment processors, if our disbursement partners fail to disburse funds according to our instructions (for example, due to their insufficient capital). We mitigate these credit exposures by engaging with reputable disbursement partners and performing a credit review before onboarding each disbursement partner and by negotiating for post-funding arrangements where circumstances permit. We also periodically review credit ratings, or, if unavailable, other financial documentation, of both our pay-in payment providers and disbursement partners. We have not experienced significant losses during the periods presented.

Foreign Currency Exchange Rate Risk

Given the nature of our business, we are exposed to foreign exchange rate risk in a number of ways. Our principal exposure to foreign exchange rate risk includes:

•Exposure to foreign currency exchange risk on our cross-border payments if exchange rates fluctuate between initiation of the transaction and transaction disbursement to the recipient. We disburse transactions in multiple foreign currencies, including most notably the Indian rupee, the Mexican peso, and the Philippine peso. In the vast majority of cases, the recipient disbursement occurs within a day of sending, which mitigates foreign currency exchange risk. To enable disbursement in the receive currency, we prefund many disbursement partners one to two business days in advance based on expected send volume. Foreign exchange rate risk due to differences between the timing of transaction initiation and payment varies based on the day of the week and the bank holiday schedule; for example, disbursement prefunding is typically largest before long weekends.

•While the majority of our revenue and expenses are denominated in the U.S. dollar, certain of our international operations are conducted in foreign currencies, a significant portion of which occur in Canada ~~the United Kingdom,~~ and Europe. Changes in the relative value of the U.S. dollar to other currencies may affect revenue and other operating results as expressed in U.S. dollars. In addition, certain of our international subsidiary financial statements are denominated in and operated in currencies outside of the USU.S. dollar. As such, the condensed consolidated financial statements will continue to remain subject to the impact of foreign currency translation, as our international business continues to grow. In periods where other currencies weaken against the USU.S. dollar, this can negatively impact our consolidated results which are reported in ~~the US dollar.~~U.S. dollars.

As of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, a hypothetical uniform 10% strengthening or weakening in the value of the U.S. dollar relative to other currencies in which our net loss iswas generated, would have resulted in a decrease or increase to the fair value of our customer ~~transaction related~~transaction-related assets and liabilities denominated in currencies other than the subsidiaries’ functional currencies of approximately ~~$14.5~~$14.9 million and ~~$11.6~~$10.2 million, respectively, based on our unhedged exposure to foreign currency at that date. There are inherent limitations in this sensitivity analysis, primarily due to the following assumptions: (1) foreign exchange rate movements are linear and instantaneous, (2) exposure is static, and (3) customer transaction behavior due to currency rate changes is static. As a result, the analysis is unable to reflect the potential effects of more complex market changes that could arise, which may positively or negatively affect our results from operations. For example, both the disbursement prefunding balance and the customer funds liability balance (and resulting net impact to our net currency position) may be highly variable day to day. In addition, changes in foreign exchange rates may impact customer behavior by altering the timing or volume of transactions sent through our platform. For example, an increase in the value of a send currency against a receive currency may accelerate the timing or amount of remittances.

To the extent practicable, we minimize our foreign currency exposures by maintaining natural hedges between our current assets and current liabilities in similarly denominated foreign currencies. At this time, we do not enter into derivatives or other financial instruments in an attempt to hedge our foreign currency exchange risk. We may do so in the future, but it is difficult to predict the impact hedging activities would have on our operating results.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

~~Our~~Based on their evaluation as of September 30, 2023, our management, ~~with the participation of~~including our Chief Executive Officer and Chief Financial Officer, ~~has evaluated the effectiveness of~~have concluded that our disclosure controls and procedures ~~as of September 30, 2022, the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures,” as~~(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Based on such evaluation, and in consideration of the material weaknesses in our internal control over financial reporting described below, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and proceduresamended) were not effective. Accordingly, our management has performed additional analyses, reconciliations, and other post-closing procedures. On the basis of these procedures, management has concluded that, notwithstanding the material weaknesses in our internal control over financial reporting, the Condensed Consolidated Financial Statements for the periods covered by and included in this Quarterly Report on Form 10-Q fairly state, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.

~~Previously Identified Material Weaknesses in Internal Control Over Financial Reporting~~

In connection with preparing our consolidated financial statements as of and for the year ended December 31, 2021, we identified two material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there iseffective at a reasonable ~~possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.~~

~~The material weaknesses are as follows:~~

•We did not design and maintain effective controls over certain information technology (“IT”) general controls for information systems that are relevant to the preparation of our financial statements. Specifically, we did not design and maintain: (1) program change management controls for certain financial systems to ensure that IT program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately; and (2) user access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to certain financial systems, programs, and data to appropriate Company personnel.

•We did not design and maintain effective controls over segregation of duties in journal entries. More specifically, certain personnel had the ability to prepare and post journal entries without an independent review performed by someone without this ability.

These material weaknesses did not result in a misstatement to the Condensed Consolidated Financial Statement periods covered by this Quarterly Report on Form 10-Q. However, the material weaknesses described above could result in misstatements potentially impacting all financial statement accounts and disclosures that would result in a material misstatement to the annual or interim Condensed Consolidated Financial Statements that would not be prevented or detected.

In addition, in the second quarter of 2022, we identified a new material weakness. We did not design and maintain controls to monitor the impact of vesting terms on the timing and accuracy of stock-based compensation expense for graded-vesting equity awards. This material weakness resulted in the misstatement of stock-based compensation expense and related financial disclosures for the year-ended December 31, 2021 and the interim period ended March 31, 2022, which was corrected in the interim period ended June 30, 2022, as described in Note 2 to the Company’s Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Management has determined that this error was not material to the historical financial statements in any individual period or in the aggregate and did not result in the previously issued financial statements being materially misstated. This material weakness could result in misstatements of the aforementioned account balances or disclosures that would result in a material misstatement to the annual or interim Condensed Consolidated Financial Statements that would not be prevented or detected.

~~Remediation Plan for Material Weaknesses~~

With the oversight of the Audit and Risk Committee of our board of directors, we have continued throughout 2022 to dedicate significant resources and efforts to improve our control environment and to take steps to remediate the material weaknesses identified above. Our internal audit organization, which reports directly to our Audit and Risk Committee, has played an integral role in providing direction to achieve a stronger control environment. While certain remedial actions have been completed, we continue to actively plan for and implement additional control procedures.

~~Actions Taken During the Current Quarter~~

As of the date of this Quarterly Report on Form 10-Q, these remain material weaknesses and we are in the process of remediating them. In order to remediate these material weaknesses, we have taken the following actions:

•~~developed enhanced risk assessment procedures and monitoring controls related to changes in the financial reporting system;~~

•~~implemented comprehensive access control protocols to implement restrictions on user and privileged access to the affected financial reporting system;~~

•~~implemented controls to review and monitor user access;~~

•~~established additional controls over the preparation and review of journal entries; and~~

•~~established additional controls to monitor the impact of vesting terms on the timing and accuracy of stock-based compensation expense.~~

~~Status of Remediation Efforts~~

We believe the measures described above will facilitate the remediation of the control deficiencies we have identified and strengthen our internal control over financial reporting. We are committed to continuing to improve our internal control processes and will continue to review, optimize and enhance our financial reporting controls and procedures. As we continue to evaluate and work to improve our internal control over financial reporting, we may take additional measures to address control deficiencies, or we may modify, or in appropriate circumstances not complete, certain of the remediation measures described above. While we are taking the necessary actions to address each of the material weaknesses discussed above, each material weakness will not be considered remediated until the applicable remedial measures have been implemented for a sufficient period of time and management has concluded, through testing, that the enhanced controls are operating effectively.

We have concluded that these material weaknesses in our internal control over financial reporting occurred as we are a new public company, and, prior to the effectiveness of our initial public offering, we were a private company and did not have the necessary business processes and related internal controls necessary to satisfy the accounting and financial reporting requirements of a public company.assurance level.

Changes in Internal Control over Financial Reporting

~~The third quarter remediation activities described above, are~~There were no changes in our internal control over financial reporting as defined in the Exchange Act Rule 13a-15(f) that occurred during the quarter ended September 30, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

In the normal course of business, the Company occasionally becomes involved in various legal proceedings. In the opinion of management, any liability from such proceedings would not have a material adverse effect on the business or financial condition of the Company.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, which could materially affect our business, reputation, financial condition, future results, or the trading price of the Company’s stock. These are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, reputation, financial condition, and/or operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Equity Securities

None.

Use of Proceeds

In September 2021, we completed ~~the IPO,~~our initial public offering (the “IPO”), in which we issued and sold 7,000,000 shares of our common stock at $43.00 per share. Concurrently, 5,162,777 shares were sold by certain of our existing stockholders. In addition, ~~the Company~~we concurrently issued 581,395 shares of common stock in a private placement at the same offering price as the IPO. ~~The Company~~We received net proceeds of $305.2 million for the IPO and private placement, after deducting underwriting discounts and other fees of $20.8 million. ~~In connection with the IPO, 127,410,631 shares of outstanding redeemable convertible preferred stock automatically converted into an equivalent number of shares of common stock on a one-to-one basis.~~

All of the shares issued and sold in our IPO were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-259167), which was declared effective by the SEC on September 22, 2021. There has been no material change in the planned use of proceeds from our IPO as described in ~~the~~our final prospectus relating to the IPO. The managing underwriters of our IPO were Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC. No payments were made by us to directors, officers or persons owning 10% or more of our common stock or to their associates, or to our affiliates, in connectionfiled with the ~~issuance and sale of~~SEC on September 24, 2021 pursuant to Rule 424(b) under the ~~securities registered.~~Securities Act.

Issuer Purchase of Equity Securities

None.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

~~None.~~Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements

On August 9, 2023, Matthew Oppenheimer, our Chief Executive Officer and Chair of our Board of Directors, adopted a trading plan intended to satisfy the conditions under Rule 10b5-1 of the Exchange Act. Mr. Oppenheimer’s plan is for the sale of up to 250,000 shares of our common stock and terminates on the earlier of the date all the shares under the plan are sold and October 18, 2024.

On September 14, 2023, Joshua Hug, our Chief Operating Officer and a member of our Board of Directors, adopted a trading plan intended to satisfy the conditions under Rule 10b5-1 of the Exchange Act. Mr. Hug’s plan is for the sale of up to 444,504 shares of our common stock, the actual amount of which may be less based on tax withholdings of RSUs, and terminates on the earlier of the date all the shares under the plan are sold and December 31, 2024.

Item 6. Exhibits

Incorporated by reference
Exhibit Number Description Filed Herewith Form File No. Exhibit Filing Date
2.1
Agreement and Plan of Merger, dated as of August 15, 2022, by and among, Remitly Global, Inc., Ramon Merger Sub Ltd., Rewire (O.S.G) Research and Development Ltd. a nd Fortis Advisors LLC
8-K 001-40822 2.1 August 16, 2022
3.1
Amended and Restated Certificate of Incorporation
10-Q 001-40822 3.3 November 12, 2021
3.2
Restated Bylaws
10-Q 001-40822 3.4 November 12, 2021
31.1
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
x
31.2
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
x
32.1*
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
x
32.2*
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
x
101.INS Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). x
101.SCH Inline XBRL Taxonomy Extension Schema Document. x
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. x
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. x
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. x
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. x
104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). x

Incorporated by reference

Exhibit Number

Description

Filed Herewith

Form

File No.

Exhibit

Filing Date

3.1

Amended and Restated Certificate of Incorporation

10-Q

001-40822

3.3

November 12, 2021

3.2

Restated Bylaws

10-Q

001-40822

3.4

November 12, 2021

31.1

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

101.SCH

Inline XBRL Taxonomy Extension Schema Document.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

* The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Form 10-Q and are not deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Remitly Global, Inc.

Date:

November ~~09, 2022~~1, 2023

By:

/s/ Matthew Oppenheimer

Matthew Oppenheimer

Chief Executive Officer

(Principal Executive Officer)

Date:

November ~~09, 2022~~1, 2023

By:

/s/ Hemanth Munipalli

Hemanth Munipalli

Chief Financial Officer

(Principal Financial ~~and~~Officer)

Date:

November 1, 2023

By:

/s/ Gail Miller

Gail Miller

Chief Accounting Officer

(Principal Accounting Officer)


	Nine Months Ended September 30, 2022
	Redeemable Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance as of January 1, 2022	—	$	—	164,239,555	$	16	$	739,503	$	253	$	(259,444)	$	480,328


Issuance of common stock in connection with ESPP	—	—		379,674	—		3,516		—		—		3,516
Issuance of common stock upon exercise of stock options, including early exercised options, and vesting restricted stock units	—	—		5,670,958	1		8,745		—		—		8,746

Donation of common stock	—	—		181,961	—		1,972		—		—		1,972
Taxes paid related to net shares settlement of equity awards	—	—		(5,009)	—		(55)		—		—		(55)



Stock-based compensation expense	—	—		—	—		69,248		—		—		69,248
Other comprehensive loss	—	—		—	—		—		(2,642)		—		(2,642)



Net loss	—	—		—	—		—		—		(94,624)		(94,624)
Balance as of September 30, 2022	—	$	—	170,467,139	$	17	$	822,929	$	(2,389)	$	(354,068)	$	466,489

	Nine Months Ended September 30, 2021
	Redeemable Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stockholders’ (Deficit) Equity
	Shares	Amount		Shares	Amount
Balance as of January 1, 2021	127,082,605	$	387,707	24,289,906	$	2	$	8,766	$	591	$	(220,688)	$	(211,329)
Issuance of Series F redeemable convertible preferred stock, net of issuance costs	328,026	2,980		—	—		—		—		—		—
Repayment of non-recourse promissory note	—	—		—	—		3,060		—		—		3,060
Conversion of redeemable convertible preferred stock to common stock in connection with initial public offering	(127,410,631)	(390,687)		127,410,631	13		390,674		—		—		390,687
Issuance of common stock upon initial public offering and private placements, net of offering costs, underwriting discounts, and commissions	—	—		7,581,395	—		305,191		—		—		305,191
Donation of common stock	—	—		181,961	—		6,933		—		—		6,933
Issuance of common stock upon exercise of warrants	—	—		254,014	—		—		—		—		—
Issuance of common stock upon exercise of stock options, including early exercised options, and vesting of restricted stock units	—	—		4,021,834	1		6,374		—		—		6,375
Issuance of common stock	—	—		25,759	—		169		—		—		169
Stock-based compensation expense	—	—		—	—		9,086		—		—		9,086
Other comprehensive loss	—	—		—	—		—		(309)		—		(309)



Net loss	—	—		—	—		—		—		(22,180)		(22,180)
Balance as of September 30, 2021	—	$	—	163,765,500	$	16	$	730,253	$	282	$	(242,868)	$	487,683


	Three Months Ended		Nine Months Ended
(in thousands)	September 30, 2022
Technology and development	$	166	$	413
General and administrative	4		19
Total amortization	$	170	$	432