Spruce Point Capital Management Announces Investment Opinion: Releases Report and Strong Sell Research Opinion on Remitly Global, Inc. (Nasdaq: RELY)

Real Estate

Aerospace

Industrials

NOTE TO EDITORS: The Following Is an Investment Opinion Issued by Spruce Point Capital Management

Highlights Short-Term Risks Tied to the Uncertain Nature of U.S. Immigration Policies and Longer-Term Structural Displacement Risk From Increasing Adoption of Stablecoins by Processing Partners Such As Stripe

Provides Evidence That Remitly Uses Dubious Images and Inaccurate Names of Immigrant Customer Testimonials Along With Doctored Trustpilot Reviews

Questions The Stability of Remitly's Take Rate Claims Despite Evidence of Declining Average Transaction Size and A Recent Omission of the Number of Digital Wallets Within Its Disbursement Network

Expresses Concerns With Remitly Governance, Including Two Audit & Risk Board Members Having Been Associated With Controversial Companies, One of Which Was Defrauded and Another Alleged to Have Been a Fraud

Believes That RELY's Share Price Trades at an Irrational Premium to Peers and Sees 40% – 55% Potential Long-Term Downside Risk

Spruce Point Capital Management, LLC ("Spruce Point" or "we" or "us"), a New York-based investment management firm that focuses on forensic research and short-selling, today issued a detailed report entitled, "Why We Mistrust Remitly", that outlines why we believe and estimate that shares of Remitly Global, Inc. (NASDAQ:RELY) ("RELY" or the "Company") face approximately 40% – 55% potential long-term downside risk, or $9.00 – $12.00 per share. Download and view the report and its Full Legal Disclaimer by visiting www.SprucePointCap.com for additional information and exclusive updates.

***

Spruce Point Report Overview

Remitly Global, Inc. is a Seattle, WA-based provider of cross-border remittance services through its mobile app and website. The Company has historically served immigrants and its global network spans 5,100 corridors. Its relationships provide customers with the choice of disbursement and enable them to send funds within minutes, or even seconds, to over five billion bank accounts and mobile wallets, as well as approximately 470,000 cash pick-up options (including retail outlets and banks). As of the last 12 months ended December 31, 2024, the Company reported approximately $1,264 million and $134 million of revenues and Adjusted EBITDA, respectively. Remittances to Mexico, India and the Philippines represented 49% of revenue in 2024.

The concerns we outline in our report include:

Trust is perhaps the #1 factor on which Remitly's immigrant customer base chooses to use its services, and it may be betraying their trust through inauthentic customer testimonials.
- In a recent interview, co-founder and CEO Matt Oppenheimer stressed that "trust" is ultimately what his business is about. In fact, "Why should I trust Remitly?" is the first item under its Frequently Asked Questions (FAQ). However, despite the focus on trust and transparency, the Company recently removed "Be Transparent" from its corporate values in favor of "Lead Authentically".
- Based on our research, we do not believe that Remitly is leading authentically with its customer reviews. We find evidence that Remitly uses stock images and changes the purported names of people depicted in these images on its customer reviews website.
- Furthermore, Remitly uses Trustpilot review ratings as another means to instill confidence and trust in its services with prospective customers. We find evidence that Remitly doctored its ratings by artificially boosting identical reviews from the same source from 4.5 to 5.0 stars.
- More recently, Remitly placed greater emphasis on its Google and Apple app store reviews. However, it recently footnoted that its app rating is based on all countries or regions and that its rating may vary based on user location and device type.

We believe Remitly is facing numerous short- and long-term disruption risks.
- Remitly relies heavily on serving immigrant customers and derives substantial revenue from send volumes originating in the U.S., which accounts for 65% of revenues. As a result, uncertain U.S. immigration policies and the potential deportations of millions of immigrants adds notable short-term risks to its business that the Company has not yet addressed.
- Longer-term, Remitly faces challenges from the growing adoption of cryptocurrency such as stablecoins to facilitate payments. These financial innovations are likely to put pressure on transaction fees and disrupt traditional money remitters like Remitly. Of note, Remitly finally acknowledged this risk by including reference to stablecoins in its latest 10-K as a risk factor. Equally concerning is the fact that Stripe, which is Remitly's European partner and payment processor, plans to accelerate stablecoin with the recent acquisition of Bridge.
- It is worth noting that there is already evidence of the impact stablecoins are having on the industry. For example, app downloads for Remitly, Western Union, MoneyGram and others are showing significant year-over-year decline and monthly active user growth is waning.
- Against this backdrop, it is also important to highlight that Remitly's corridor growth rate has already sharply declined to just 2% in 2024. Historically, Remitly has said that corridor growth is key to increasing its total addressable market ("TAM"). However, Remitly recently changed its TAM claim from $1.6 trillion to ~$1.8 trillion, and the source data for the claim from the World Bank and International Monetary Fund to a private corporation of which it is a client. In addition, Remitly subtly changed its description under attracting new customers from "immigrants" to "global citizens with cross-border needs" and altered the depiction of its "Flywheel" chart to generate value – which we believe signals that its historical value proposition is changing.

Remitly may be running out of growth levers to pull in order to improve performance.
- Outside of changes to its TAM, Remitly's other growth lever is to gain a greater share of customer wallet by expanding into new services. However, based on our research, we believe Remitly has largely failed in these endeavors. Two notable examples that Remitly has largely gone silent on include "Passbook" and "Remitly for Developers."
- We also believe that Remitly is playing a dangerous game of slowing customer support and operations expense, either in response to anticipated slowing customer growth, or to boost earnings. It claims to be relying more on artificial intelligence (AI) to deliver a better experience for customers. However, while this may help earnings in the short term, it risks aggravating customer relationships and leading to higher churn in the future.
- Based on our analysis of 2024 results, it appears that Remitly's financial performance has worsened. For example, revenue per active customer and per dollar of send volume declined by -1.3% and -3.3%, respectively. Transaction margin, or revenue less transaction expense per send volume, also declined by -2.2%. When looking at the annual increase in transaction expenses and direct transaction costs in relation to both revenue and send volume we also find these ratios worsened.
- Remitly has left clues to suggest it is engaging in microlending and increasing risks by transferring money to recipients before funds are received from customers. We also find it concerning that Remitly more intensely used its short-term credit facility in 2024. After a period of improved transaction losses from fraud or credit events in relation to send volumes in 2023, the ratios modestly worsened in 2024. Remitly added a new risk factor that its quantitative models may present risks and challenges that could adversely impact it.

Remitly recently dropped "Be Transparent" as a corporate value at a time when we believe they should be more, not less, transparent and should explain the stability of their take rate.
- At or around the time of its IPO, Remitly provided numerous metrics and figures about its business that it no longer discloses. Examples include number of transactions, details behind its long-term customer value to customer acquisition cost ("LTV/CAC"), revenue contribution cohort, and order completion rate. We believe Remitly should provide more detail for each of these metrics. Remitly also modified its definition of active customer from one that completed at least one transaction "during a given quarter" to "during a given period."
- The one metric that Remitly frequently talks about is the take rate or revenue as a percentage of the transaction size and claims it has been stable between 2.0% - 2.5%. The Company says the take rate is heavily influenced by the average transaction size. Since becoming public, Remitly once said in 2023 that its average transaction size is between $200 - $300. When it was a private company in a letter to the Federal Reserve in 2020, it said the average transaction size was $350 which indicates a decline of 14% - 43%. The other variable that might explain movements in take rate is the shift to mobile wallets. However, as of Q2 2024, Remitly ceased disclosing the number of mobile wallets within its disbursement network. We believe Remitly should provide more transparency into how its take rate is stable, especially considering a dramatic decline in the average transaction size.

Recent executive departures combined with Remitly's history of material weaknesses give investors reasons to be concerned by the Company's audit and risk.
- Since its 2021 IPO, Remitly has reported three areas of weaknesses in its internal control over reporting. The reports of the weaknesses coincide with at least four executives holding the role of Chief Accounting Officer.
  - The most recent CAO was Gail Miller who departed nine days after the 2024 10-K was filed and was previously CAO at Shift4 Payments (NYSE:FOUR). During Mrs. Miller's tenure, Shift4 Payments restated its financials after an error in classification of customer acquisitions costs was identified.
- In addition, Remitly's Audit and Risk Committee is currently led by two executives with connections to controversial companies. First, Director Ryno Blignaut was CFO and Chief Risk Officer at Xoom Corp. (NASDAQ:XOOM) where within a month after his resignation, the company reported its finance department had been criminally defrauded of $30.8 million in corporate cash. Second, Remitly's Audit Chair Peggy Smyth has been associated with numerous controversial companies, including most recently Lilium NV (NASDAQ:LILM) which an activist alleged was a fraud and which recently filed for bankruptcy.
- Companies adhering to best governance practices generally prohibit executives from pledging company stock as collateral for personal matters, since doing so creates potential risks such as the involuntary sale of stock at inopportune moments. Despite this, as of the last proxy statement, we find that Remitly permitted its co-founder to pledge two million shares for a personal line of credit. At today's value, the share pledge is approximately $40 million. Given the numerous short and long-term headwinds present in Remitly's business, we do not believe this was a decision made in the best interest of all shareholders.

We believe Remitly's shares trade at an undeserved premium to peers.
- We believe Remitly is extremely dependent on keeping the perceived value of its equity high because it is the most aggressive issuer of stock-based compensation among financial technology peers at 12% of revenue and 78% of operating cash flow. If employees lost confidence in the value of the stock and demanded more cash compensation, Remitly's financial struggles would likely intensify.
- Remitly's has only one analyst calling it a "Sell" while analysts project a consensus target of $29.50 per share implying +47% upside. However, we believe they fail to properly assess the tectonic shift happening in the industry toward stablecoins and crypto payments.
- Despite the disconnect between the upside potential to consensus target and the current share price, both co-founders and the Chief Business Officer are selling stock through 10b5-1 programs.
- Remitly trades at a substantial premium to industry peers at 22x and 72x 2025E Adj. EBITDA and free cash flow. We believe its premium is likely to compress as take rates decline and its growth rate slows as the transition to digital payments increases. By valuing Remitly's shares at a discounted multiple to Wise PLC, its closest competitor, we estimate approximately 40% – 55% long-term potential downside risk, or $9.00 – $12.00 per share. We expect RELY's share price to underperform its industry peers and the broader equity market.

***

Please note that the items summarized in this press release are expanded upon and supported with data, public filings and records, and images in Spruce Point's full report. As a reminder, our full report, along with its investment disclaimers, can be downloaded and viewed at www.SprucePointCap.com.

As disclosed, Spruce Point and/or its clients have a short position in Remitly Global, Inc. (NASDAQ:RELY) and owns derivative securities that stand to net benefit if its share price falls. Following publication of the report, we intend to continue transacting in the securities covered therein, and we may be long, short, or neutral at any time hereafter regardless of our initial opinion. For additional important information, please review the "Full Legal Disclaimer" contained in the report.

About Spruce Point

Spruce Point Capital Management, LLC is a forensic fundamentally-oriented investment manager that focuses on short-selling, value and special situation investment opportunities.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250311593213/en/

Daniel Oliver

Spruce Point Capital Management

doliver@sprucepointcap.com

(914) 999-2019

Recent Analyst Ratings for

Company	Date	Price Target	Rating	Analyst
Remitly Global Inc. $RELY	5/7/2026	$30.00 → $33.00	Buy	Monness Crespi & Hardt
Shift4 Payments Inc. $FOUR	4/22/2026	$50.00	Market Perform	BMO Capital Markets
Shift4 Payments Inc. $FOUR	4/17/2026	$50.00	Overweight → Equal-Weight	Stephens
Shift4 Payments Inc. $FOUR	4/16/2026		Buy → Neutral	Seaport Research Partners
Shift4 Payments Inc. $FOUR	4/15/2026		Outperform → Peer Perform	Wolfe Research
Shift4 Payments Inc. $FOUR	3/26/2026	$67.00	Strong Buy → Outperform	Raymond James
Remitly Global Inc. $RELY	2/10/2026	$18.00	Buy	BofA Securities
Remitly Global Inc. $RELY	1/27/2026	$17.00	Overweight	Cantor Fitzgerald

More analyst ratings

Spruce Point Capital Management Announces Investment Opinion: Releases Report and Strong Sell Research Opinion on Remitly Global, Inc. (Nasdaq: RELY)

3/11/25 9:00:00 AM ET

Real Estate

Aerospace

Industrials

NOTE TO EDITORS: The Following Is an Investment Opinion Issued by Spruce Point Capital Management

Provides Evidence That Remitly Uses Dubious Images and Inaccurate Names of Immigrant Customer Testimonials Along With Doctored Trustpilot Reviews

Believes That RELY's Share Price Trades at an Irrational Premium to Peers and Sees 40% – 55% Potential Long-Term Downside Risk

***

Spruce Point Report Overview

The concerns we outline in our report include:

Trust is perhaps the #1 factor on which Remitly's immigrant customer base chooses to use its services, and it may be betraying their trust through inauthentic customer testimonials.
- In a recent interview, co-founder and CEO Matt Oppenheimer stressed that "trust" is ultimately what his business is about. In fact, "Why should I trust Remitly?" is the first item under its Frequently Asked Questions (FAQ). However, despite the focus on trust and transparency, the Company recently removed "Be Transparent" from its corporate values in favor of "Lead Authentically".
- Based on our research, we do not believe that Remitly is leading authentically with its customer reviews. We find evidence that Remitly uses stock images and changes the purported names of people depicted in these images on its customer reviews website.
- Furthermore, Remitly uses Trustpilot review ratings as another means to instill confidence and trust in its services with prospective customers. We find evidence that Remitly doctored its ratings by artificially boosting identical reviews from the same source from 4.5 to 5.0 stars.
- More recently, Remitly placed greater emphasis on its Google and Apple app store reviews. However, it recently footnoted that its app rating is based on all countries or regions and that its rating may vary based on user location and device type.

We believe Remitly is facing numerous short- and long-term disruption risks.
- Remitly relies heavily on serving immigrant customers and derives substantial revenue from send volumes originating in the U.S., which accounts for 65% of revenues. As a result, uncertain U.S. immigration policies and the potential deportations of millions of immigrants adds notable short-term risks to its business that the Company has not yet addressed.
- Longer-term, Remitly faces challenges from the growing adoption of cryptocurrency such as stablecoins to facilitate payments. These financial innovations are likely to put pressure on transaction fees and disrupt traditional money remitters like Remitly. Of note, Remitly finally acknowledged this risk by including reference to stablecoins in its latest 10-K as a risk factor. Equally concerning is the fact that Stripe, which is Remitly's European partner and payment processor, plans to accelerate stablecoin with the recent acquisition of Bridge.
- It is worth noting that there is already evidence of the impact stablecoins are having on the industry. For example, app downloads for Remitly, Western Union, MoneyGram and others are showing significant year-over-year decline and monthly active user growth is waning.
- Against this backdrop, it is also important to highlight that Remitly's corridor growth rate has already sharply declined to just 2% in 2024. Historically, Remitly has said that corridor growth is key to increasing its total addressable market ("TAM"). However, Remitly recently changed its TAM claim from $1.6 trillion to ~$1.8 trillion, and the source data for the claim from the World Bank and International Monetary Fund to a private corporation of which it is a client. In addition, Remitly subtly changed its description under attracting new customers from "immigrants" to "global citizens with cross-border needs" and altered the depiction of its "Flywheel" chart to generate value – which we believe signals that its historical value proposition is changing.

Remitly may be running out of growth levers to pull in order to improve performance.
- Outside of changes to its TAM, Remitly's other growth lever is to gain a greater share of customer wallet by expanding into new services. However, based on our research, we believe Remitly has largely failed in these endeavors. Two notable examples that Remitly has largely gone silent on include "Passbook" and "Remitly for Developers."
- We also believe that Remitly is playing a dangerous game of slowing customer support and operations expense, either in response to anticipated slowing customer growth, or to boost earnings. It claims to be relying more on artificial intelligence (AI) to deliver a better experience for customers. However, while this may help earnings in the short term, it risks aggravating customer relationships and leading to higher churn in the future.
- Based on our analysis of 2024 results, it appears that Remitly's financial performance has worsened. For example, revenue per active customer and per dollar of send volume declined by -1.3% and -3.3%, respectively. Transaction margin, or revenue less transaction expense per send volume, also declined by -2.2%. When looking at the annual increase in transaction expenses and direct transaction costs in relation to both revenue and send volume we also find these ratios worsened.
- Remitly has left clues to suggest it is engaging in microlending and increasing risks by transferring money to recipients before funds are received from customers. We also find it concerning that Remitly more intensely used its short-term credit facility in 2024. After a period of improved transaction losses from fraud or credit events in relation to send volumes in 2023, the ratios modestly worsened in 2024. Remitly added a new risk factor that its quantitative models may present risks and challenges that could adversely impact it.

Remitly recently dropped "Be Transparent" as a corporate value at a time when we believe they should be more, not less, transparent and should explain the stability of their take rate.
- At or around the time of its IPO, Remitly provided numerous metrics and figures about its business that it no longer discloses. Examples include number of transactions, details behind its long-term customer value to customer acquisition cost ("LTV/CAC"), revenue contribution cohort, and order completion rate. We believe Remitly should provide more detail for each of these metrics. Remitly also modified its definition of active customer from one that completed at least one transaction "during a given quarter" to "during a given period."
- The one metric that Remitly frequently talks about is the take rate or revenue as a percentage of the transaction size and claims it has been stable between 2.0% - 2.5%. The Company says the take rate is heavily influenced by the average transaction size. Since becoming public, Remitly once said in 2023 that its average transaction size is between $200 - $300. When it was a private company in a letter to the Federal Reserve in 2020, it said the average transaction size was $350 which indicates a decline of 14% - 43%. The other variable that might explain movements in take rate is the shift to mobile wallets. However, as of Q2 2024, Remitly ceased disclosing the number of mobile wallets within its disbursement network. We believe Remitly should provide more transparency into how its take rate is stable, especially considering a dramatic decline in the average transaction size.

Recent executive departures combined with Remitly's history of material weaknesses give investors reasons to be concerned by the Company's audit and risk.
- Since its 2021 IPO, Remitly has reported three areas of weaknesses in its internal control over reporting. The reports of the weaknesses coincide with at least four executives holding the role of Chief Accounting Officer.
  - The most recent CAO was Gail Miller who departed nine days after the 2024 10-K was filed and was previously CAO at Shift4 Payments (NYSE:FOUR). During Mrs. Miller's tenure, Shift4 Payments restated its financials after an error in classification of customer acquisitions costs was identified.
- In addition, Remitly's Audit and Risk Committee is currently led by two executives with connections to controversial companies. First, Director Ryno Blignaut was CFO and Chief Risk Officer at Xoom Corp. (NASDAQ:XOOM) where within a month after his resignation, the company reported its finance department had been criminally defrauded of $30.8 million in corporate cash. Second, Remitly's Audit Chair Peggy Smyth has been associated with numerous controversial companies, including most recently Lilium NV (NASDAQ:LILM) which an activist alleged was a fraud and which recently filed for bankruptcy.
- Companies adhering to best governance practices generally prohibit executives from pledging company stock as collateral for personal matters, since doing so creates potential risks such as the involuntary sale of stock at inopportune moments. Despite this, as of the last proxy statement, we find that Remitly permitted its co-founder to pledge two million shares for a personal line of credit. At today's value, the share pledge is approximately $40 million. Given the numerous short and long-term headwinds present in Remitly's business, we do not believe this was a decision made in the best interest of all shareholders.

We believe Remitly's shares trade at an undeserved premium to peers.
- We believe Remitly is extremely dependent on keeping the perceived value of its equity high because it is the most aggressive issuer of stock-based compensation among financial technology peers at 12% of revenue and 78% of operating cash flow. If employees lost confidence in the value of the stock and demanded more cash compensation, Remitly's financial struggles would likely intensify.
- Remitly's has only one analyst calling it a "Sell" while analysts project a consensus target of $29.50 per share implying +47% upside. However, we believe they fail to properly assess the tectonic shift happening in the industry toward stablecoins and crypto payments.
- Despite the disconnect between the upside potential to consensus target and the current share price, both co-founders and the Chief Business Officer are selling stock through 10b5-1 programs.
- Remitly trades at a substantial premium to industry peers at 22x and 72x 2025E Adj. EBITDA and free cash flow. We believe its premium is likely to compress as take rates decline and its growth rate slows as the transition to digital payments increases. By valuing Remitly's shares at a discounted multiple to Wise PLC, its closest competitor, we estimate approximately 40% – 55% long-term potential downside risk, or $9.00 – $12.00 per share. We expect RELY's share price to underperform its industry peers and the broader equity market.

***

About Spruce Point

Spruce Point Capital Management, LLC is a forensic fundamentally-oriented investment manager that focuses on short-selling, value and special situation investment opportunities.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250311593213/en/

Daniel Oliver

Spruce Point Capital Management

doliver@sprucepointcap.com

(914) 999-2019

Recent Analyst Ratings for