Remitly CEO on his money-transfer company’s 10-year journey to an IPO

It was 10 years ago, in 2011, that Matt Oppenheimer was inspired to co-found remittance startup Remitly, after a stint working in Kenya for Barclays showed him just how difficult and expensive it was for ordinary Africans to receive money transfers from family members living and working abroad.

Today, Remitly is among a wave of fintech startups—alongside the likes of Wise and WorldRemit—leveraging technology to make it faster, easier, and cheaper to send and receive money around the world. In addition to competing against each other, these young firms are fighting for market share in a $1.5 trillion cross-border remittance market long dominated by legacy incumbent Western Union

Thursday marked a particularly important milestone for Oppenheimer and his company, as Remitly’s shares began trading on Nasdaq after an initial public offering. The Seattle-based firm raised roughly $300 million through the IPO, which was priced at $43 per share—above the previously announced offering range of $38 to $42. Shares in the company opened Thursday well above their IPO price, at $52.90, and ended the day up 13% at $48.45, sending Remitly’s market valuation to near $8 billion

“I would say I feel proud, excited, and optimistic,” Oppenheimer told Fortune on Thursday afternoon, adding that he’s “even more excited” about Remitly’s “longer-term vision of transforming the lives of immigrants and their families” by providing them a better class of financial services. 

That includes products and offerings beyond its core money-transfer business, which serves more than 5 million customers who sent more than $16 billion in the 12 months through June. Remitly currently lets customers in 17 developed countries send money in more than 75 currencies to over 115 countries. But Oppenheimer acknowledges that the company has only 1% market share in the global remittance market, and diversifying its offerings to grow its customer base is a key part of its “long-term growth strategy,” he said.

That includes services like Passbook, a banking service targeted at immigrants that Remitly premiered last year. The company is also eyeing “strategic partnerships and acquisitions,” Oppenheimer said—with one recent partnership being an alliance with Visa that saw the payments giant invest in Remitly, while also granting the startup access to its Visa Direct money-movement service. Oppenheimer also said Remitly plans to expand its geographic reach beyond the 135 total countries it currently serves, as it seeks to achieve the scale critical to better compete with the likes of Western Union.

“Ultimately you’ve got to scale out and drive volume. Otherwise, you’re always going to be exposed to pricing competition over time,” according to Morningstar equity analyst Brett Horn, who covers the payment processing sector. “That’s how you win in this industry—you get bigger and drive scale.”

Horn adds that while Remitly, like many fintech startups, has been aided by the coronavirus pandemic prompting a “strong industry shift toward digital,” legacy players have also recognized the need to grow their own digital capabilities. He notes that Western Union—which has long relied on a network of hundreds of thousands of physical retail locations worldwide—has invested heavily in its digital operations. Digital money transfers represented more than a third of Western Union’s consumer-to-consumer money transfers in the second quarter of this year, while its digital money transfer revenues exceeded $265 million in the period—eclipsing Remitly’s total 2020 revenues of $257 million.

But Remitly—which itself relies on more than 350,000 physical cash pickup locations globally to get money in the hands of recipients—is confident that it can find an edge by catering its services to hundreds of millions of immigrants worldwide, which Oppenheimer describes as an “especially underserved market that we can substantially improve” through offerings like Passbook.

With that focus, Remitly believes it can sustain the kind of growth that has seen it dramatically improve its financial results recently. The company more than doubled its revenue last year from $126.6 million in 2019, and reported $202 million in revenue in the first six months of 2021 alone, according to regulatory filings. Meanwhile, it’s significantly slashed its losses, which stood at $9.2 million through the first six months of this year—down from $32.6 million for all of 2020, and $51.4 million for all of 2019.

“Like most technology companies, there are advantages to gaining scale and size from a profitability standpoint,” Oppenheimer said. “But we focus on making business decisions around what is the right long-term return, and that’s important to emphasize as we enter this next chapter.”

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