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TIVP032: Remitly (RELY): Future Multibagger or Stablecoin Casualty? w/ Daniel Mahncke & Shawn O’Malley

·1 hr 28 min·5 clips

Remitly uses pre-funded accounts to deliver 92% of transfers in under an hour, unlike slow correspondent banking.

This episode of The Intrinsic Value Podcast features hosts Shawn O’Malley and Daniel Mahncke analyzing the investment case for the digital remittance company Remitly. Daniel Mahncke presents Remitly as a fast-growing company at a financial inflection point, similar to Uber in its early stages. The company operates in the global remittance market, which saw approximately $850 billion in flows during 2023, with $650 billion going to low- and middle-income countries. Remitly was founded in 2011 by Matt Oppenheimer after he observed the inefficiencies and high costs of traditional cash-based remittance services while working in Kenya. The company, which went public in 2021, now serves over 170 countries and processes more than $50 billion in annual send volume. Its core strategy involves using pre-funded accounts in destination countries to enable faster and cheaper transfers compared to traditional correspondent banking networks. Key remittance corridors for the business include transfers from the U.S. to Mexico, India, and the Philippines, with the U.S.-Mexico corridor alone representing over $60 billion in annual flows. Daniel argues that Remitly is gaining significant market share from legacy players like Western Union and MoneyGram, whose revenues are declining as the industry digitizes. He notes Remitly's revenue has grown at a compounded annual rate of 57% since 2019, and the company recently became free cash flow positive. A major insight is that remittance flows are considered sticky and counter-cyclical, as migrants consistently send money home for essentials like groceries, making the business potentially recession-proof. The company's focus solely on migrant workers, rather than broader business payments, is presented as a strategic strength that builds deep expertise and trust within that niche. Scale advantages are highlighted, with data showing Remitly's operating expenses as a percentage of revenue have declined significantly since 2019. The company achieves a 92% rate for dispersing funds to recipients in under one hour and has a 90% customer retention rate after one year. Daniel contrasts Remitly with the larger competitor Wise, noting Wise's average transaction size is ten times larger and its customer base is fundamentally different, focusing on businesses and higher-value personal transfers. He suggests Wise is unlikely to aggressively pursue Remitly's migrant-worker market due to the required investment and different operational needs. The discussion acknowledges a common concern that payment intermediaries compete primarily on cost, potentially leading to a "race to the bottom" in fees. The counter-argument presented is that Remitly's specialized focus, complex corridor management, and the high-trust nature of its service create customer stickiness and operational advantages that can protect its economics. The tone is analytical and educational, structured as a deep-dive investment pitch between two knowledgeable hosts. This episode would appeal to investors interested in fintech, growth-stage companies, and sector analysis, while those seeking purely macroeconomic discussions or guaranteed dividend stocks might find it less relevant.

As heard by us

Remitly is framed as a case where specialization and scale may reveal earnings power the market is overlooking.

The piece treats Remitly as a growth story the market may still be missing. It argues that current spending can mask the business's earnings power, and it makes the valuation case through the mechanics of remittances rather than broad market gloss.

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Why you'd press play

You want to judge Remitly before the market wakes up.

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