Digital Remittances And Small Business Expansion Will Drive Powerful Long Term Earnings Potential

Catalysts

About Remitly Global

Remitly Global provides digital financial services that enable individuals and businesses to move money seamlessly across borders.

What are the underlying business or industry changes driving this perspective?

• Rapid expansion into small business cross-border payments, supported by nearly 10,000 business customers and a tenfold increase in addressable market, positions Remitly to increase send volume and transaction revenue beyond its current sub 1% share of a 22 trillion opportunity.
• A focused push into high-amount senders with higher limits up to 100,000 per transfer, targeted corridor pricing, and 40 percent send volume growth in transfers above 1,000 is increasing average transaction size and send per customer, which supports revenue growth and improved unit economics.
• Remitly One, Flex, and multicurrency wallet and card products are deepening customer relationships and frequency of use, with over 100,000 active Flex users already, creating higher lifetime value and new fee streams that may expand revenue and earnings with relatively limited additional cost to serve.
• Tokenization of treasury funds and growing use of stablecoins in funding and disbursement rails are affecting FX and liquidity management, which may influence transaction expenses and RLTE and could affect net margins over time.
• A global shift from cash to digital remittances, amplified by the 1 percent tax on physical remittance instruments starting in 2026, supports Remitly's digital-first model and brand, which may affect its ability to gain market share and maintain adjusted EBITDA margins.

Assumptions

This narrative explores a more optimistic perspective on Remitly Global compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts. How have these above catalysts been quantified?

• The bullish analysts are assuming Remitly Global's revenue will grow by 20.2% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 1.4% today to 10.0% in 3 years time.
• The bullish analysts expect earnings to reach $267.8 million (and earnings per share of $1.13) by about December 2028, up from $21.0 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $142.2 million.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 30.6x on those 2028 earnings, down from 145.9x today. This future PE is greater than the current PE for the US Diversified Financial industry at 13.6x.
• The bullish analysts expect the number of shares outstanding to grow by 4.21% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.35%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Stricter immigration policies in key send markets such as the U.S. and Canada could structurally slow the inflow of new migrants, reducing the long-term pool of remittance senders and weighing on customer growth and revenue over time.
• As Remitly leans into high amount senders and small business payments, intensified competition and the need for strategic pricing investments could structurally compress take rates, limiting RLTE expansion and ultimately pressuring net margins.
• The Flex send now pay later product and broader credit initiatives increase exposure to consumer credit cycles, and any deterioration in repayment behavior or higher charge-offs as the portfolio seasons could drive up transaction losses and reduce earnings.
• Growing reliance on stablecoins, tokenized treasury funds and complex cross-border compliance frameworks may face adverse regulatory changes or operational disruptions, which could increase transaction expenses and constrain net margins and earnings.
• Management is signaling a deceleration to high teens revenue growth in 2026 despite multiple new products and tailwinds. If these initiatives fail to scale as expected, the company could see structurally slower revenue growth that no longer justifies a bullish valuation multiple.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for Remitly Global is $28.0, which represents up to two standard deviations above the consensus price target of $21.17. This valuation is based on what can be assumed as the expectations of Remitly Global's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $28.0, and the most bearish reporting a price target of just $18.0.
  
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2028, revenues will be $2.7 billion, earnings will come to $267.8 million, and it would be trading on a PE ratio of 30.6x, assuming you use a discount rate of 7.3%.
  
• Given the current share price of $14.65, the analyst price target of $28.0 is 47.7% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.