We came across a bullish thesis on Remitly Global, Inc. (RELY) on Substack by LongTermValue Research. In this article, we will summarize the bulls’ thesis on RELY. Remitly Global, Inc. (RELY)’s share was trading at $21.38 as of April 2nd.
A customer receiving a mobile money transfer notification on their phone.
Remitly is a leading international payments provider specializing in cross-border remittances, enabling customers to send money from 30 countries to over 170 destinations. With more than 5,100 unique pay-in/pay-out corridors, the company facilitates transfers through bank deposits, credit/debit cards, and cash pickups. It boasts a robust disbursement network, reaching over 5 billion bank accounts and mobile wallets, along with 470,000 cash pickup locations worldwide. A key differentiator is its customer-centric approach—over 90% of transactions are processed within an hour, and its mobile app holds an impressive 4.9/5 rating across 1.8 million reviews. This commitment to reliability and efficiency has fueled significant user growth, with active customers increasing 32% year-over-year to 7.8 million in Q4 2024. The business is scaling rapidly, with revenue growing 33% and Adjusted EBITDA reaching 13% in the second half of 2024. Notably, Remitly also turned a surprise GAAP profit in Q3 2024, reinforcing the strength of its financial trajectory. Management’s 2025 guidance projects 24-25% revenue growth and $180-$200 million in Adjusted EBITDA, with room for outperformance given the company’s demonstrated ability to drive operating leverage.
The global remittance market is a massive $1.8 trillion industry, supported by trends such as increasing globalization, rising migrant incomes, and a shift towards digital payments. Banks remain the most expensive option for remittances, charging an average fee of 12.1%, whereas mobile operators offer significantly lower costs at 4.1%. Over the last 15 years, take rates have been steadily declining as consumers shift to low-cost digital alternatives like Remitly, which maintains an average take rate of 2.32%. The remittance space remains highly fragmented, with Western Union leading at ~5.8% market share, followed by competitors like Wise, MoneyGram, and PayPal’s Xoom. While several players focus on cross-border transactions, Remitly’s unique cash pickup offering alongside digital disbursements gives it a competitive edge. The company has also significantly outpaced legacy players, achieving a 40% compound annual growth rate in send volume over the past three years, while Western Union has grown at just 4%.
Remitly is reaching a key inflection point where it is transitioning from a high-growth, capital-intensive business into a profitable, scalable enterprise. The company’s strong unit economics—boasting a customer lifetime value (LTV) to acquisition cost (CAC) ratio of 7x and a sub-10-month payback period—support sustained margin expansion. Marketing spend remains a primary cost driver, but the company’s ability to scale customers while maintaining efficiency suggests EBITDA margins could exceed 14% in 2025, significantly beating consensus estimates. Over the next two years, Remitly is positioned to drive further operating leverage, with EBITDA margins expanding toward 20% as fixed costs like technology and data expenses become less burdensome. If the company maintains 27-28% revenue growth while improving margins, EBITDA could reach $385 million by 2026—42% above current Street estimates. This would lead to substantial earnings revisions and a likely stock re-rating.
Valuation-wise, Remitly trades at a compelling ~8x EV/2026 EBITDA, well below digital payments peers. Applying a conservative 13x multiple, in line with growth-focused fintechs, yields a price target of $38, representing substantial upside. The downside scenario assumes lower growth and EBITDA margins in the 10-12% range, potentially resulting in a $16 share price, or 29% downside. However, this is an unlikely outcome given Remitly’s momentum and market position. A bullish case, where the company sustains mid-20s growth and expands margins toward 20%, could see the stock reach $52, delivering ~135% upside. While some bears speculate on crypto disrupting the remittance industry, cash-heavy economies in Remitly’s key markets make such a shift unlikely in the near term.
In sum, Remitly presents a compelling investment opportunity with asymmetric risk-reward. The stock is trading at a discount to its growth potential, offering a rare combination of strong execution, expanding margins, and a large addressable market. As the company continues to scale, investors could see significant appreciation over the next 18-24 months, making Remitly a standout GARP (growth at a reasonable price) opportunity in the fintech sector.
Remitly Global, Inc. (RELY) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 35 hedge fund portfolios held RELY at the end of the fourth quarter which was 29 in the previous quarter. While we acknowledge the risk and potential of RELY as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than RELY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.