Shares of Remitly Global (RELY -1.17%), the tech-centric remittance specialist, plunged today after the company posted mixed results in its earnings report. Although it beat revenue estimates, it missed on the bottom line, and revenue growth slowed from the previous quarter.
Also, shares have soared this year on a recovery in revenue growth, leading some to believe that the stock had become overbought heading into its earnings report.
The stock finished the day down 31.9% on the news.
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Bottom-line improvements are slowing
There was nothing particularly terrible about Remitly's earnings report. Active customers rose 42% to 5.4 million, and send volume jumped 36% to $10.2 billion. That drove revenue up 43% to $241.6 million, better than estimates at $239.2 million.
On the bottom line, it flipped a loss of $3.7 million under adjusted earnings before interest taxes depreciation and amortization (EBITDA) in the quarter a year ago to $10.5 million, though that difference largely comes from an increase in share-based compensation of nearly $11 million.
On the basis of generally accepted accounting principles (GAAP), its net loss widened slightly from $33.1 million to $35.7 million and was flat on a per-share basis at $0.20, which missed estimates for a loss of $0.16 per share. That loss was also significantly worse than the second-quarter net loss of $18.9 million, a sign that progress on the bottom line could be unwinding.
CEO Matt Oppenheimer said, "We are in a very strong position to deliver robust long-term growth rates at compelling unit economics, sustain targeted high-return-generating investments for long-term value creation, and to deliver operating leverage."
Guidance gets a boost
Remitly also raised its full-year guidance for both revenue and adjusted EBITDA. It now sees full-year revenue in a range of $935 million to $943 million, up from a prior range of $915 million to $925 million, representing growth of 43% to 44%. And it raised its adjusted EBITDA range of $33 million to $40 million, to a range of $36 million to $41 million.
While the widening GAAP loss is concerning, the sell-off feels exaggerated, especially considering the guidance raise. There's no reason to sell the stock based on today's news.
