{ "docId": "019dd923-622c-750b-8b99-ab3a8a46c579", "docSlug": "0241ef55185f", "documentTitle": "Remitly Global, Inc. (RELY)", "authorId": "54_Spruce_Point_Capital", "authorName": "Spruce Point Capital Management", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2025-03-11 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 6, "pageCount": 74, "prevPage": 5, "nextPage": 7, "slideType": "executive_summary", "function": "summarize", "density": "overcrowded", "nDataPoints": 12, "notes": "The slide uses a dense paragraph structure to summarize multiple pillars of a short thesis.", "elementsJson": [ "headline_text", "paragraph" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b99-ab3a8a46c579/6", "deckHref": "/decks/019dd923-622c-750b-8b99-ab3a8a46c579", "deckJsonHref": "/decks/019dd923-622c-750b-8b99-ab3a8a46c579.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b99-ab3a8a46c579#slide-6", "components": [ { "bbox": null, "kind": "callout", "text": "We estimate 40%–55% long-term potential downside risk to RELY’s shares and expect it to underperform the financial services industry and the broader equity market.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd952-e6e9-749a-ba7e-27090d684e46", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.25, "x": 0.02, "y": 0.04 }, "kind": "image", "text": "Spruce Point Capital Management", "attrs": null, "subkind": "logo", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "1d3eac40-6954-4f31-b6a7-a6ee88b61dc3", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "downside risk: 40% - 55%", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd952-e6e9-749a-ba7e-297a5548835c", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.25, "w": 0.96, "x": 0.02, "y": 0.17 }, "kind": "paragraph", "text": "After conducting a forensic financial and accounting review of Remitly Global, Inc (Nasdaq: RELY or “the Company”), a $4 billion money transfer and remittance provider serving immigrant customers, we find evidence that the Company has used dubious customer testimonials and doctored Trustpilot reviews. According to the CEO, his business is ultimately about trust and the top listed frequently asked question among its immigrant customers is “Why should I trust Remitly?”. Moreover, we believe there is ample evidence to distrust the Company’s accounting, financial reporting, governance and equity growth story. We lay out the case that Remitly is exhausting its ability to pull revenue and cost levers to improve its financial performance as the shift to digital payments accelerates and it may have weakened its compliance protections to prevent fraud in pursuit of lower quality and/or riskier customer growth.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "00e92ba7-984c-43eb-a9dd-bfa1339ff875", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.3, "w": 0.96, "x": 0.02, "y": 0.43 }, "kind": "paragraph", "text": "We lack confidence in Remitly’s financial reporting given high turnover in the CFO / Chief Accounting Officer (“CAO”) function, including the recent CAO resignation nine days after the 10-K was filed. The CAO was previously CAO at Shift4 Payments (NYSE: FOUR) which restated financial results during their tenure related to expenses. Remitly previously disclosed three material weaknesses but claimed they were rectified in 2022. Remitly ceased disclosure of metrics we believe are important such as number of transactions, long-term customer value to acquisition cost calculations (LTV/CAC) and overhauled its flywheel depiction despite minimal business shift. It also modified its definition of active customers, is intensifying dependency on its short-term credit facility, and fails to disclose how much of cash is held for the benefit of customers. Remitly claims its take rate is stable at 2% - 2.5% despite evidence that average transaction size (a metric it obscures and key driver) collapsed by 14% - 43% from 2020-23. It also ceased to disclose mobile wallets, which factors into the equation. We believe the take rate is likely to contract going forward. Remitly recently removed “transparency” as a key corporate value in favor of “authenticity”.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "9431383a-9131-4d55-aeb6-6c903f7daf01", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.96, "x": 0.02, "y": 0.74 }, "kind": "paragraph", "text": "We also question the fitness of Director Ryno Blignaut, who was appointed to Remitly’s Board Audit and Risk committees in April 2023. Under his leadership as CFO and Chief Risk Officer at Xoom Corp. (Nasdaq: XOOM), the company was ill-prepared for criminal misappropriation of $30.8 million in corporate cash a month after he resigned. We also question the fitness of Board member Peggy Smyth who served on the Board of Lilium NV (Nasdaq: LILM) which a noted activist alleged was a fraud and filed for bankruptcy.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "985513c7-7e6f-4722-a38e-87d79cbb3f11", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.14, "w": 0.96, "x": 0.02, "y": 0.85 }, "kind": "paragraph", "text": "We believe Remitly trades at an irrational premium to peers at 22x and 72x 2025E Adj. EBITDA and free cash flow on the belief it is a high quality fintech with new product growth opportunities and sustainable competitive advantages. We disagree and believe its business faces long-term displacement risk from stablecoins and short-term disruption from U.S. immigration policy tightening. Remitly is dependent on maintaining the perception its equity has value given its aggressive use of stock-based compensation which, at 12% of revenue and 78% of operating cash flow, is the highest among fintech peers with >$1 billion in revenues. Both co-founders and the Chief Business Officer recently enacted 10b5-1 programs to liquidate stock while Remitly has disregarded best corporate governance practices by allowing co-founder Hug to pledge $40 million of stock as collateral for a personal line of credit according to last year’s proxy statement. Given the disclosure last week that Mr. Hug is transitioning out of Remitly, he may ultimately start selling more shares. We estimate 40%–55% long-term potential downside risk to RELY’s shares and expect it to underperform the financial services industry and the broader equity market.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "ab0ddc7d-aa1b-45f8-954c-42bc52cfd603", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.68, "x": 0.28, "y": 0.05 }, "kind": "title", "text": "Spruce Point Issues \"Strong Sell\" Opinion On Remitly Global (RELY) And Sees 40% - 55% Long-Term Downside Risk", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c50c43dd-1aa8-4b28-93be-580b67f289d5", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [ { "name": "Executive summary", "slug": "executive-summary", "agent": null, "layer": "slide", "matchId": "ffdec470-dc18-47e4-ba2c-b62e82614d3c", "evidence": "The slide provides a detailed summary of Spruce Point's opinion on Remitly Global.", "confidence": 0.9 } ], "frameworks": [], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }