Executive Summary / Key Takeaways

• Structural Regulatory Advantage: The One Big Beautiful Bill Act (OBBBA), effective January 1, 2026, imposes a 1% tax on cash remittances while exempting digital transfers, creating a powerful tailwind that will accelerate market share gains from legacy providers and could add meaningful revenue growth starting in 2026.

• Business Model Inflection: Remitly has achieved GAAP profitability while maintaining 25%+ revenue growth and 15% adjusted EBITDA margins, demonstrating that its digital-first model has reached scale where operational leverage compounds—customer support costs fell to 6% of revenue, technology costs to 19%, and marketing efficiency improved 473 basis points year-over-year in Q1 2025.

• Diversification Beyond P2P: New initiatives (Remitly Business serving 10,000 companies, High Amount Senders growing 45%+, Flex with 100,000 users, and stablecoin integration) expand the addressable market from $2 trillion to $22 trillion while increasing send volume per active customer 11% and creating multiple monetization levers beyond transaction fees.

• AI as Revenue Driver, Not Just Cost Saver: Agentic AI handling nearly 2 million real-time interactions and WhatsApp Send achieving highest conversion rates among offline-to-online migrants proves AI is acquiring customers and expanding the market, not merely automating support—this positions Remitly to capture the secular digital shift more effectively than cash-dependent incumbents.

• Critical Risk: Recent immigration headwinds in key send countries (U.S. and Canada) could pressure new customer acquisition, making 2026 guidance for high-teens revenue growth vulnerable if policy restrictions intensify, though the existing 8.9 million active customer base provides a resilient foundation with high revenue visibility.

Setting the Scene: The Digital Remittance Revolution

Remitly Global, founded in 2011 and headquartered in Seattle, built its business by recognizing that the $2 trillion cross-border remittance market was dominated by high-cost, cash-based incumbents who treated digital as an afterthought. The company's mobile-first approach—evidenced by 4.9-star iOS and 4.8-star Android ratings with over 5 million reviews—wasn't merely a channel choice but a fundamental reimagining of how immigrants send money. While Western Union (WU) and Ria built physical agent networks, Remitly constructed a global money movement network with direct integrations to over 5.4 billion bank accounts and mobile wallets across 5,300+ corridors, enabling 94% of transactions to complete in under an hour.

This infrastructure creates a structural cost advantage that becomes more powerful as volume scales. In 2024, customers sent over $50 billion through the platform, generating $1.26 billion in revenue at a 2.28% take rate. More importantly, Revenue Less Transaction Expenses (RLTE) held steady at 66.4% of revenue, proving that even as the company expanded to 170+ countries, unit economics remained intact. Remitly has built a digital-only model where each incremental dollar of revenue costs less to serve than the last, a dynamic that cash-heavy incumbents cannot replicate.

The competitive landscape reveals the moat's depth. Western Union's hybrid model still relies on 500,000+ physical agents, creating fixed costs that digital players don't bear. PayPal's (PYPL) Xoom, while digital, lacks Remitly's corridor-specific localization and immigrant-focused product innovation. Wise (WISE) excels at low-cost P2P but doesn't match Remitly's speed in urgent corridors or its expanding B2B capabilities. Euronet's (EEFT) Ria faces the same physical network drag as Western Union. Remitly's 35% send volume growth in Q3 2025 versus low-single-digit growth for incumbents demonstrates that the market is voting with its dollars.

Technology, Products, and Strategic Differentiation

Core Remittance Engine and AI Integration

Remitly's proprietary routing technology optimizes every transaction across its global network, but the real breakthrough is how AI and machine learning have transformed risk management and customer experience. Transaction losses fell to 12.8 basis points of send volume in Q3 2025—the lowest level in 2024—while simultaneously enabling the company to raise send limits for certain U.S. customers to $100,000 per transfer. Such improvements remove friction for high-value senders without increasing fraud, a trade-off legacy providers cannot manage profitably.

The Agentic AI platform, handling nearly 2 million real-time interactions, exemplifies how technology drives revenue, not just efficiency. By embedding AI into WhatsApp Send, Remitly achieves its highest conversion rates among customers previously transacting offline, directly attacking the 90% of remittances that still occur in cash. This creates a powerful on-ramp to digital inclusion, particularly in U.S.-to-Latin America corridors where WhatsApp penetration is near-universal. AI isn't just lowering customer support costs to 6% of revenue—it's actively expanding the addressable market by converting cash users to digital.

Product Diversification: From Transactions to Financial Relationships

Remitly Business, launched in Q2 2025 and expanded to the U.K. and Canada by Q3, demonstrates platform extensibility. Nearly 10,000 businesses now use the platform, with average transaction sizes roughly double consumer transfers and customer lifetime value approximately 6x higher. Business send volume nearly doubled sequentially in Q3, while the total addressable market expanded more than tenfold to $22 trillion. This diversification shifts revenue beyond P2P remittances into higher-value B2B payments, where pricing power is stronger and competition from traditional players is weaker.

High Amount Senders represent another high-margin growth vector. Send volume for transactions over $1,000 grew over 45% year-over-year in Q2 2025, with the mix increasing 300 basis points. Strategic pricing investments in corridors like U.S.-to-India, combined with dynamic risk models that tailor send limits to customer behavior, are capturing a segment legacy providers serve poorly due to compliance friction. The result: send volume per active customer increased a record 12% in Q2, driving revenue growth that outpaces customer acquisition.

Remitly One, launching in September 2025 with Remitly Wallet and Remitly Flex, represents the most significant strategic shift—from transactional to relational banking. The Wallet's multicurrency storage for fiat and stablecoins, integrated with Apple Pay and Google Pay, creates daily engagement beyond send events. Flex's "send now, pay later" model, with over 100,000 active users and $20.8 million in receivables (90% current), addresses timing mismatches for credit-invisible migrants while generating three revenue streams: instant funding fees, membership revenue, and cross-border payment volume. This evolution transforms Remitly from a remittance provider into a primary financial relationship, dramatically increasing customer lifetime value and reducing churn.

Stablecoin Integration and Capital Efficiency

Stablecoin initiatives launched in Q3 2025 with Bridge (a Stripe company) for disbursements in Nigeria and Argentina, and Circle for wallet storage, address a critical pain point in inflationary economies. By tokenizing U.S. dollar liquidity for treasury operations, Remitly achieves near-instant settlement across markets, reducing idle float and improving capital efficiency. For customers, stablecoins offer stability and flexibility beyond local currencies. Internally, this lowers working capital requirements; externally, it opens corridors where traditional banking is unreliable, creating a competitive advantage that cash-based providers cannot match.

Financial Performance & Segment Dynamics

Revenue Quality and Growth Sustainability

Q3 2025 revenue of $419.5 million grew 25% year-over-year, a deceleration from Q2's 34% but still robust given the toughest comparison of the year. More telling is the composition: U.S. revenue grew 28% while Rest of World grew 20% (down from 58% in Q3 2024), reflecting both the law of large numbers and strategic focus on deepening existing corridors rather than pure geographic expansion. Mexico receive revenue outpaced overall growth despite a soft industry environment, indicating continued market share gains from localized innovations like QR code-based cash pickup.

The take rate compressed to 2.15% in Q3 from 2.28% in Q4 2024, but this is intentional. Management is strategically investing in pricing to acquire high-value customers and expand volume, a trade-off that makes sense when send volume per active customer is growing 11% and RLTE margins remain stable at 65%. Revenue growth is increasingly volume-driven rather than price-driven, creating more durable, compounding growth as the customer base matures.

Operational Leverage and Margin Expansion

Adjusted EBITDA margins reached 15% in Q3 2025, up from 12% in Q4 2024, demonstrating powerful operating leverage. The drivers are systematic, not one-off: customer support and operations expenses fell to 6% of revenue from 7% year-over-year due to AI automation; technology and development costs dropped to 19% from 20-22% through efficiency gains; general and administrative expenses declined to 13-14% from 15% as scale kicked in. Marketing spend at 20.8% of revenue is flat year-over-year, but spend per active customer rose only 3% despite 21% customer growth, proving that brand strength and word-of-mouth are reducing acquisition costs.

Stock-based compensation fell to 9.5% of revenue from 11.8% in Q4 2024, a 250 basis point improvement that directly boosts free cash flow per share. Net income of $8.8 million in Q3 marks the third consecutive quarter of GAAP profitability, a milestone that validates the business model's durability. Remitly has crossed the inflection point where fixed costs are covered and incremental revenue flows through at high margins, a dynamic that will drive accelerating earnings growth if revenue continues compounding.

Balance Sheet and Capital Allocation

With $476.9 million in cash and no debt, plus a $550 million revolving credit facility (unused borrowing capacity of $484.6 million), Remitly has fortress liquidity to fund growth and weather shocks. The $200 million share repurchase program, with $188 million remaining, signals management's confidence that the stock is undervalued despite strong performance. During Q3, the company repurchased 613,560 shares for $11.9 million, suggesting disciplined execution rather than aggressive buybacks at any price.

The five-year, $134.5 million cloud infrastructure commitment increases future purchase obligations but locks in favorable rates, protecting margins as compute needs scale with AI deployment. Net cash from operations of $175.5 million for the nine months ended September 2025, driven by $26.7 million in net income plus $142 million in non-cash charges, demonstrates that profitability is translating into cash generation. Remitly can self-fund expansion into Business, Flex, and stablecoins without diluting shareholders or taking on debt, a significant advantage over cash-burning fintech competitors.

Outlook, Management Guidance, and Execution Risk

2025 Trajectory and 2026 Setup

Management raised full-year 2025 guidance to $1.619-$1.621 billion (28% growth) and adjusted EBITDA of $234-$236 million (15% margin), both representing sequential improvements. Q4 2025 guidance implies 21-22% revenue growth, a deliberate deceleration as the company laps tough comparisons and invests in new product adoption. The key assumption is that send volume growth will continue exceeding revenue growth, driven by business and high-amount senders, while send volume per active customer grows in the mid-single digits.

The early 2026 outlook calls for high-teens revenue growth, a material step-down that reflects both immigration headwinds and prudent conservatism. Management explicitly notes that recent immigration policy shifts in the U.S. and Canada could weigh on new customer acquisition, a risk that is real but quantifiable: with 8.9 million active customers and high retention, the base business provides visibility even if new customer growth slows. The OBBBA tax on cash remittances, effective January 1, 2026, is expected to provide a "modest tailwind" as it accelerates digital adoption, but management cautions it won't be a major 2026 contributor.

Execution Swing Factors

The thesis hinges on three execution variables: (1) can Remitly Business scale from 10,000 to 100,000+ customers while maintaining 6x higher lifetime value; (2) will Flex's credit model maintain sub-10% loss rates as it scales beyond 100,000 users; and (3) can AI-driven customer acquisition offset immigration-related headwinds in core P2P? The Q2 2025 fraud incident that caused a $3.8 million discrete loss reminds us that scaling financial products introduces new risks, though the rapid response and bolstered systems suggest operational resilience.

Management's "flywheel framework"—where delightful experiences drive volume, lower cost structure, enable better pricing, and fund innovation—provides a clear mental model for how these initiatives compound. Since IPO, revenue more than doubled while RLTE dollars tripled, proving the flywheel is working. Investors should note that 2026's high-teens growth guidance likely embeds conservatism; if Business, Flex, and OBBBA tailwinds exceed expectations, upside could be meaningful.

Risks and Asymmetries

Immigration Policy: The Primary Threat

The most material risk is restrictive immigration policy in key send countries. Management's explicit warning that "recent immigration headwinds in key send countries such as the U.S. and Canada could potentially weigh on new customer acquisition" directly threatens the 2026 growth outlook. Unlike macroeconomic cycles that impact all players equally, this risk is asymmetric: Remitly's digital model, while more efficient, is still acquiring new customers primarily from immigrant populations. If deportations increase or visa programs tighten, the pool of new senders could shrink, making high-teens growth unattainable.

The mitigating factor is customer base maturity: with 8.9 million active customers and send volume per customer growing 11%, existing users provide revenue visibility. As Matthew Oppenheimer noted, "the vast majority of our customers have been here a long time and are sending money to loved ones on a consistent basis," suggesting resilience in the installed base. However, the growth story requires new customer acquisition; if immigration headwinds intensify, valuation multiples could compress as the market reprices long-term growth assumptions.

Transaction Losses and Credit Risk

The Q2 2025 fraud incident that caused a $3.8 million loss highlights that scaling digital financial services invites sophisticated attacks. While provision for transaction losses remains controlled at 12.8 basis points, Flex's "send now, pay later" model introduces credit risk. With $20.8 million in outstanding receivables, 90% current, the model appears sound, but rapid scaling could deteriorate credit quality. Management's emphasis that Flex is offered "primarily to existing customers with established cross-border payment history" is prudent, but as the product expands, risk models will face new challenges.

Competitive and Regulatory Dynamics

Partner bank API fees could increase costs, though management notes 70%+ of funding comes via debit/credit cards, mitigating ACH dependency. More concerning is whether legacy players can pivot quickly enough to defend market share as OBBBA tilts the playing field. Western Union's digital revenue grew just 7% in Q3 2025—far slower than Remitly's 25%—suggesting incumbents are struggling to adapt. However, if cash providers lobby for regulatory relief or digital tax parity, the structural advantage could weaken.

Valuation Context

Trading at $13.43 per share, Remitly carries a market cap of $2.81 billion and enterprise value of $2.37 billion. The stock trades at 14.51 times free cash flow and 12.15 times operating cash flow, metrics that appear reasonable for a company growing revenue at 28% with emerging profitability. The EV/EBITDA multiple of 48.46 reflects the early stage of margin expansion; as adjusted EBITDA margins stabilize at 15% and grow, this multiple should compress.

Peer comparisons provide context: Western Union trades at 7.25 times free cash flow but is growing revenue at low-single digits with declining relevance. PayPal trades at 10.69 times free cash flow with 1-2% growth. Wise trades at 36.4 times earnings but faces margin pressure from rising costs. Remitly's growth-adjusted cash flow multiples are attractive relative to its 28% revenue growth trajectory, particularly given the 15% EBITDA margin and positive net income.

The balance sheet strength—$476.9 million in cash, no debt, and minimal cash burn—provides downside protection. With $188 million remaining on the share repurchase authorization, management has dry powder to support the stock if market volatility creates opportunities. Remitly is priced as a profitable growth company, not a speculative fintech, and the multiple appears supported by accelerating operational leverage and regulatory tailwinds.

Conclusion

Remitly stands at the intersection of three powerful forces: a regulatory tailwind that punishes cash and rewards digital, a product expansion that increases customer lifetime value from single transactions to ongoing financial relationships, and an AI-driven efficiency engine that compounds operational leverage. The company's ability to deliver 25% revenue growth with 15% EBITDA margins while achieving GAAP profitability proves the digital-first model has reached scale.

The central thesis hinges on whether immigration headwinds prove transitory or structural. If policy stabilizes and OBBBA drives accelerated digital adoption as expected, Remitly's high-teens 2026 growth guidance could prove conservative, with Business, Flex, and stablecoins providing upside optionality. If immigration restrictions intensify, new customer acquisition could slow, compressing multiples despite the resilient base business.

For investors, the critical variables to monitor are monthly active customer growth in core corridors, Flex loss rates as the user base scales, and the pace of Business customer acquisition. The stock's valuation at 14.5 times free cash flow appears reasonable for a company with Remitly's growth profile and margin expansion potential. The story is no longer about whether digital remittances will win—that outcome is certain—but whether Remitly can capture disproportionate share while building a multi-product financial platform for the globally connected. The early evidence suggests it can.