Remitly Global Inc

Notes to Condensed Consolidated Financial Statements

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., which is now a wholly-owned subsidiary of Remitly Global, Inc.

Remitly is a trusted provider of digital financial services that transcend borders. With a global footprint spanning more than 170 countries, Remitly’s digitally native, cross-border payments app delights customers with a fast, reliable, and transparent money movement experience.

Unless otherwise expressly stated or the context otherwise requires, the terms “Remitly” and the “Company” within these notes to the condensed consolidated financial statements refer to Remitly Global, Inc. and its wholly-owned subsidiaries.

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited 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 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, 2023.

The accompanying unaudited interim 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, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024, or for any other future annual or interim period.

Principles of Consolidation

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

Reclassification

The condensed consolidated financial statements and accompanying notes have been prepared consistently, with the exception of certain prior year amounts which have been reclassified to conform with the current period presentation. Reclassifications include a change in presentation of shares purchased under the ESPP within the Condensed Consolidated Statements of Cash Flows. Beginning in the year ended December 31, 2023, the Company changed the presentation of shares purchased under the Employee Stock Purchase Plan (“ESPP”) to reflect an operating cash outflow for compensation paid to employees and a financing cash inflow for cash paid by employees in exchange for shares. Previously, such activity was treated and disclosed as noncash activity for the nine months ended September 30, 2023. The Company has conformed the prior period statement of cash flows to the current period presentation to enhance transparency and provide comparability.

Use of Estimates

The preparation of the accompanying condensed consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported and disclosed within the 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, the carrying value of operating lease right-of-use assets and operating lease liabilities, the recoverability of deferred tax assets, capitalization of software development costs, goodwill, and intangible assets. The key assumptions applied for the value of the intangible assets include revenue 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.

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, 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, Mexico, and 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, 2024 and 2023.

For the three and nine months ended September 30, 2024 and 2023, no individual customer represented 10% or more of total revenues or customer funds receivable.

Cash and Cash Equivalents

The Company holds its cash and cash equivalents with financial institutions throughout the world, which management assesses to be of high credit quality. The Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents, so long as the Company has legal title to such amounts held in these accounts. Amounts that are held in accounts for which the Company does not have legal title to are recorded separately on the Condensed Consolidated Balance Sheets, typically as disbursement prefunding balances. Cash and cash equivalents consist of cash on hand and various deposit accounts, including accounts held in the Company’s name for the benefit of the Company’s customers for which the Company has control.

Summary of Significant Accounting Policies

The Company’s significant accounting policies are discussed in Note 2. Basis of Presentation and Summary of Significant Accounting 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, 2023. There have been no significant changes to these policies during the nine months ended September 30, 2024, except as noted above.

Advertising

Advertising expenses are charged to operations as incurred and are included as a component of ‘Marketing expenses’ within the Condensed Consolidated Statements of Operations. Advertising expenses are used primarily to attract new customers. Advertising expenses totaled $54.6 million and $48.3 million during the three months ended September 30, 2024 and 2023, respectively. Advertising expenses totaled $163.1 million and $123.5 million during the nine months ended September 30, 2024 and 2023, respectively.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

None.

Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial statements. The Company will adopt this new guidance beginning with its annual report for fiscal year ending December 31, 2024. The Company is currently evaluating the potential impact of adopting this new guidance to its condensed consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign), and (3) income tax expense or benefit from continuing operations (separated by federal, state, and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state, and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. The Company is currently evaluating the potential impact of adopting this new guidance to its condensed consolidated financial statements and related disclosures.

There are other new accounting pronouncements issued by the FASB that the Company has adopted or will adopt, as applicable. The Company does not believe any of these accounting pronouncements have had, or will have, a material impact on 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 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, in an amount that reflects the consideration the Company expects to be entitled to in exchange for services provided, 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. The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, 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

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

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 country 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 expenses’ 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 for the three and nine months ended September 30, 2024 and 2023:

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’ 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, including promotions, discounts, and other sales incentives. Evaluating whether a sales incentive is a payment to a customer requires judgment. Sales incentives determined to 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,’ as these incentives are paid in exchange for a distinct service.

The following table presents the Company’s sales incentives for the three and nine months ended September 30, 2024 and 2023:

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, 2024 and 2023, attributed to the country in which the sending customer is located:

4. Prepaid Expenses & Other Current Assets

Prepaid expenses and other current assets consisted of the following:

5. Property and Equipment

Property and equipment, net consisted of the following as of September 30, 2024 and December 31, 2023:

Depreciation and amortization expense related to property and equipment was $2.9 million and $2.2 million for the three months ended September 30, 2024 and 2023, respectively.

Depreciation and amortization expense related to property and equipment was $8.1 million and $6.0 million for the nine months ended September 30, 2024 and 2023, respectively.

Capitalized Internal-Use Software Costs

The following table presents the Company’s capitalized internal-use software, including amortization expense recognized, for the three and nine months ended September 30, 2024 and 2023:

(1)Amounts are inclusive of stock-based compensation costs capitalized to internal-use software as denoted within the table.

(2)Amounts are included within ‘Depreciation and amortization’ within the Condensed Consolidated Statements of Operations.

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, 2024 and 2023:

The following table presents the Company’s total capitalized cloud computing arrangement costs, net of accumulated amortization, on the Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023:

6. Business Combinations

There were no significant acquisitions accounted for as business combinations or divestitures completed in the nine months ended September 30, 2024.

Acquisition Completed in 2023

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 met the criteria to be accounted for as a business combination in accordance with ASC 805, Business Combinations (“ASC 805”). This method required, 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 acquisition date fair value of consideration transferred for the acquisition totaled $77.9 million, as follows:

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 atwo-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 excluded 133,309 shares and restricted stock units held back and not legally issued at the 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. As of the acquisition date, the majority of this holdback was expected to be settled in cash, with the remainder in 133,309 shares of Company common stock and restricted stock units. Such amounts were subject to 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 the Company’s common stock, subject to the aforementioned adjustments. Refer to the discussion below regarding the settlement of the holdback consideration during the nine months ended September 30, 2024.

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. The change in the pre-existing receivable to an intercompany receivable has been considered as a noncash activity reflected within the operating activities of the Condensed Consolidated Statements of Cash Flows.

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 Condensed Consolidated Balance Sheets at the acquisition date. The portion of the holdback settled in Company shares was 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 settled in equity used 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 was considered a Level 3 measurement, as defined in ASC 820, Fair Value Measurement (“ASC 820”).

There wasno change in the fair value of the holdback liability during the three months ended September 30, 2024, as the holdback was settled in April 2024. The Company recorded $0.2 million during the nine months ended September 30, 2024 to reflect the change in the fair value of the holdback liability through the date of settlement.The Company recorded $0.9 million and $1.9 million during the three and nine months ended September 30, 2023, respectively, to reflect the change in the fair value of the holdback liability. Such amounts were recorded within ‘General and administrative expenses’ within the Condensed Consolidated Statements of Operations.

In April 2024, the holdback liability discussed above was settled with a cash payment of $10.3 million and with $2.8 million of equity consideration, consisting of 131,507 shares of the Company’s common stock and restricted stock units. The holdback settlement was adjusted for immaterial post-closing net purchase price adjustments identified during the period.

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 revenue growth rates for a hypothetical market participant, selected discount rates, as well as migration curves for developed technology. The following table summarizes the allocation of the purchase consideration to the assets acquired and liabilities assumed based on their acquisition-date fair values:

As of December 31, 2023, the valuation of assets acquired and liabilities assumed of Rewire was complete.

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’sone 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 has collected substantially all of these receivables.

Transaction Costs

There wereno transaction costs for the three months ended September 30, 2024. Transaction costs totaled $0.2 million for the nine months ended September 30, 2024, which related to the change in the fair value of the holdback liability. Transaction costs totaled $0.9 million and $2.3 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 are primarily related to the Company’s aforementioned acquisition of Rewire.

Other Disclosures

The results of operations of Rewire are included within the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) since the date of the acquisition.

7. Intangible Assets

The components of intangible assets as of September 30, 2024 and December 31, 2023 were as follows:

The acquired identified intangible assets have estimated useful lives ranging from three tofour years. Amortization expense for intangible assets was $1.7 million and $1.2 million for the three months ended September 30, 2024 and 2023, respectively. Amortization expense for intangible assets was $4.1 million and $3.6 million for the nine months ended September 30, 2024 and 2023, respectively.

Expected future intangible asset amortization as of September 30, 2024 was as follows:

8. Fair Value Measurements

There were no financial assets and liabilities that were measured at fair value on a recurring basis as of September 30, 2024.

Except for the holdback liability related to the Rewire acquisition discussed in Note 6. Business Combinations, there were no financial assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2023.

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 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.

9. Debt

Secured Revolving Credit Facility

2021 Revolving Credit Facility

On September 13, 2021, Remitly Global, Inc. and Remitly, Inc., a wholly-owned subsidiary of Remitly Global, Inc., as co-borrowers, entered into a credit agreement (the “2021 Revolving Credit Facility”) with certain lenders and JPMorgan Chase Bank, N.A. acting as administrative agent and collateral agent, that provided 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.

The 2021 Revolving Credit Facility was amended on June 26, 2023 to reflect changes in the applicable interest rate as a result of the sunsetting of the LIBOR interest rate, as noted below. The 2021 Revolving Credit Facility was further amended on December 20, 2023 to increase the revolving commitments from$250.0 million (including a$60.0 million letter of credit sub-facility) to$325.0 million. All other terms of the 2021 Revolving Credit Facility remained unchanged.

As of September 30, 2024 and December 31, 2023, $0.9 million and $1.2 million, respectively, of unamortized debt issuance costs were included within ‘Other noncurrent assets’ on the Condensed Consolidated Balance Sheets.

The 2021 Revolving Credit Facility has a maturity date of September 13, 2026. Borrowings under the 2021 Revolving Credit Facility after the June 26, 2023 amendment accrue interest at a floating rate per annum equal to, at the Company’s option, (1) the Alternate Base Rate (defined in the 2021 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 Term SOFR Rate for an interest period of one month plus 1.00% (subject to a floor of 1.00%) plus 0.50% per annum) or (2) the Adjusted 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, the last day of each March, June, September, and December and (b) with respect to loans bearing interest based on the Adjusted Term SOFR Rate, 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 2021 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, 2024 and December 31, 2023, financial covenants in the 2021 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 2021 Revolving Credit Facility as of September 30, 2024 and December 31,2023.

The obligations under the 2021 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 2021 Revolving Credit Facility may fluctuate depending on transaction volumes and seasonality.

As of September 30, 2024, the Company hadno outstanding borrowings under the 2021 Revolving Credit Facility. As of December 31, 2023, the Company had $130.0 million outstanding borrowings under the 2021 Revolving Credit Facility. As of December 31, 2023, the weighted-average interest rate was 9.0%. As of September 30, 2024 and December 31, 2023, the Company had unused borrowing capacity of$276.3 million and $146.8 million, respectively, under the 2021 Revolving Credit Facility. As of September 30, 2024 and December 31, 2023, the Company had $49.3 million and $49.4 million, respectively, in issued, but undrawn, standby letters of credit.

Advance for Future Deposits

As part of the acquisition of Rewire, the Company 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 the “Depositor,” respectively) entered into in October 2021. The Amendment has a maturity date of November 2024. 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 of September 30, 2024 and December 31, 2023, the Company had $2.4 million and $2.5 million outstanding under the Amendment, respectively, 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%. As of both September 30, 2024 and December 31, 2023, the weighted-average interest rate was 3.0%.

Assumed Short-term Debt of Rewire

As part of the acquisition of Rewire, the Company assumed the amounts due on a revolving credit line that Rewire had entered into in 2021 and the amounts due on a bridge loan that Rewire had entered into in 2022. The total outstanding amounts were repaid during the nine months ended September 30, 2023, along with certain other acquired indebtedness, subsequent to the Company’s acquisition of Rewire and were included within the Condensed Consolidated Statements of Cash Flows as a financing activity.

10. Net Income (Loss) Per Common Share

The following table presents the calculation of basic and diluted net income (loss) per share attributable to common stockholders for the periods indicated. Basic net income (loss) per share is calculated using the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share is calculated using the weighted-average number of shares of common stock outstanding including the dilutive effect of all potential shares of common stock as determined under the treasury stock method. Dilutive common shares primarily include outstanding stock options, unvested RSUs, and ESPP related shares. In periods when the Company reported a net loss, diluted net loss per share is the same as basic net loss per share because the effects of potentially dilutive items were anti-dilutive.

The following securities were not included in the computation of diluted shares outstanding because the effect would be anti-dilutive:

(1)Refer to Note 6. Business Combinations for further discussion of equity issued or to be issued in connection with the Rewire acquisition.

11. Common Stock

As of September 30, 2024, 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 toone 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. No dividends have been declared or paid by the Company during the nine months ended September 30, 2024 and 2023.

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 installments overten years. On September 10, 2021, the Company executed the stock donation agreement, pursuant to which it issued the first installment of the Pledge 1% commitment to Remitly Philanthropy Fund, a donor advised fund administered on the Company’s behalf by Rockefeller Philanthropy Advisors, Inc., on the day after consummation of the Company’s initial public offering.

The Company donated 181,961 shares of its common stock to Remitly Philanthropy Fund on both September 18, 2024 and September 20, 2023, pursuant to the stock donation agreement, and in connection with the Pledge 1% 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. For the three and nine months ended September 30, 2024 and 2023, the Company recorded a chargeof $2.6 million and $4.6 million, respectively, to ‘General and 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 18, 2024 and September 20 2023, respectively.

12. Stock-Based Compensation

Shares Available for Issuance

As of September 30, 2024,11,615,477 and 6,921,709 awards remain available for issuance under the 2021 Plan and the ESPP, respectively.

Stock Options

The following is a summary of the Company’s stock option activity during the nine months ended September 30, 2024:

(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, 2024 and 2023.

The following is a summary of the Company’s stock option activity during the nine months ended September 30, 2024 and 2023:

Restricted Stock Units

Restricted stock unit activity during the nine months ended September 30, 2024 was as follows:

The following is a summary of the Company’s restricted stock unit activity during the nine months ended September 30, 2024 and 2023:

Employee Stock Purchase Plan (“ESPP”)

A new 24-month ESPP offering period commences on March 1 and September 1 of each fiscal year, and the plan includes a rollover feature for the purchase price if the Company's stock price at the end of the purchase period is less than the Company's stock price on the first day of the offering. If this rollover feature is triggered, a new 24-month offering period begins. This feature under the ESPP was triggered on February 29, 2024 and August 30, 2024, resulting in incremental stock-based compensation expense of $1.7 million and $4.5 million, respectively, to be recognized over the new offering periods.

The fair value of the ESPP offerings, including those 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, 2024 and 2023, as well as updated valuation information as of the modification date for any offerings for which a modification occurred during the periods presented herein:

Stock-Based Compensation Expense

Stock-based compensation expense for stock options, RSUs, and ESPP, included within the Condensed Consolidated Statements of Operations, net of amounts capitalized to internal-use software, as described in Note 5. Property and Equipment, was as follows:

As of September 30, 2024, the total unamortized compensation cost related to all non-vested equity awards, including options and RSUs, was $342.1 million, which will be amortized over a weighted-average remaining requisite service period of approximately 2.7 years. As of September 30, 2024, the total unrecognized compensation expense related to the ESPP was $12.0 million, which is expected to be amortized over the next 1.9 years.

13. Restructuring Initiatives

In thenine months ended September 30, 2024, as a result of simplifying and scaling certain processes, functions, and team capabilities, the Company continued restructuring initiatives that commenced within the three months ended September 30, 2023 in order to better serve the Company's customers and allow the Company to centralize, transform, and automate global operations. Restructuring costs incurred primarily included severance and certain other associated costs. These specific restructuring initiatives are complete.

The Company incurredno charges and $0.8 million for the three and nine months ended September 30, 2024, respectively. The Company incurred $1.4 million related to restructuring initiatives for the three and nine months ended September 30, 2023.

The following table presents the restructuring costs included within the Condensed Consolidated Statements of Operations for thenine months ended September 30, 2024:

The following table presents the changes in liabilities, including expenses incurred and cash payments resulting from the restructuring costs and related accruals, during thenine months ended September 30, 2024:

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.

The Company’s effective tax rates on pre-tax income were 49.1% and (0.7)% for the three months ended September 30, 2024 and 2023, respectively, and (24.4)% and (0.6)% for the nine months ended September 30, 2024 and 2023, respectively. The difference between the effective tax rate and the U.S. federal statutory rate of 21.0% in all periods was primarily the result of foreign income taxed at different rates, changes in the U.S. valuation allowance, non-deductible stock-based compensation, and recognition of a discrete income tax benefit, primarily driven by excess stock-based compensation deductions.

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, 2024, tax years 2012 through 2023 remain open for examination by taxing authorities.

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 amended and restated certificate of incorporation and amended and restated bylaws include similar indemnification obligations to its officers and directors. To date, there have beenno claims under any indemnification provisions; therefore, no such amounts have been accrued as of September 30, 2024 and December 31, 2023.

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 and estimable. Although the results of litigation and claims are inherently unpredictable, the Company does not believe that there was a reasonable possibility that it had incurred a material loss with respect to such loss contingencies as of September 30, 2024 and December 31, 2023.

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 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 the Company’s business and industry. The Company’s assessment of probability includes consideration of recent inquiries with, or actions taken by, regulators and courts, potential or actual self-disclosure, and applicability of tax rules and the Company will continue to evaluate the accounting and disclosure of any related contingencies as they arise.

As a result of this assessment, management has recorded an estimated liability within ‘Accrued expenses and other current liabilities.’ The Company’s estimate is based on the totality of factors including applicability of the tax rules, correspondence with tax authorities including payments made, and tax analysis and documentation supporting the Company’s positions.

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.

Purchase Commitments

The disclosure of purchase commitments in these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes within the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The Company routinely enters into marketing and advertising contracts, software subscriptions or other service arrangements, including cloud infrastructure arrangements, and compliance-application related arrangements that contractually obligate us to purchase services, including minimum service quantities, unless given notice of cancellation based on the applicable terms of the agreements. During the nine months ended September 30, 2024, the Company entered into athree-year cloud infrastructure arrangement in an amount of$6.9 million, increasingthe total future minimum payments under non-cancellable purchase commitments from the amounts disclosed within the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Lease Agreement Not Yet Commenced

In June 2024, the Company entered into an agreement to lease certain office space in Seattle, Washington, for the use of its corporate headquarters office. The lease payment term begins on July 1, 2025 for a period ofseven years with optional renewal periods available. The total contractual commitment related to this lease, including contractual lease increases, is approximately $22.9 million, exclusive of variable maintenance and operating expenses under the lease agreement. Leasehold improvements within the office space will be constructed under the Company’s direction, and the Company will be entitled to an allowance for a substantial portion of the improvements.

The Company will recognize the related right-of-use asset and operating lease liability on its balance sheet when it gains control of the leased office space.

Reserve for Transaction Losses

The table below summarizes the Company’s reserve for transaction losses for the three and nine months ended September 30, 2024 and 2023:

16. Accrued Expenses & Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

(1)The trade settlement liability amount represents the total of disbursement postfunding liabilities and book overdrafts owed to the Company’s disbursement partners. Refer to Note 2. Basis of Presentation and Summary of Significant Accounting 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, 2023 for further discussion.

(2) Refer to Note 6. Business Combinations for further detail on the Holdback liability, which was settled in April 2024.

17. Supplemental Cash Flow Information

The supplemental disclosures of cash flow information consisted of the following: