Marathon Partners 的 Mario Cibelli 更新 Remitly 投资逻辑 $RELY

You're about to listen to the Yet Another Value podcast. Today we have Mario Sabelli from Marathon on the podcast. Mario, this is his fifth time on the podcast. That means he's getting he asked me on the podcast. It is a very high quality yet another value podcast shirt on the back end, but Mario is one of the people's favorite guests and for a good reason. His ideas have been, you know, not investing advice. You see the disclaimer at the end of the podcast, but his ideas have been bangers and more importantly that he's a super thoughtful investor. So the conversations we have is are great. Today he is coming back on to talk about remittly which he pitched about a year ago. The stock has it's it's worked out okay but it went up quite a bit and it's come back down. And he talks about everything remittly. We talk about stable coins risk. We talk about don't get him started on comparing remittly to wise but we talk about everything remittly. I think you're going to find it a fascinating podcast on a fascinating idea. So we're going to get there in one second but first a word from our sponsors. Today's podcast is sponsored by trytroda.com. Look, you've heard me pitch TRDA several times on this podcast. If you're watching on the YouTube, you can see me wearing the tried trota.com hat, but TRDA is awesome. You should try it. It is expert calls for byiders and that means it's two byiders who hop on and discuss a stock that they know and then you get to see, you can either be part of the interview, be one of the byiders, or you can just go read a transcript. And it is an incredible way to get up to speed on new ideas. You're about to listen to a podcast on Remittly. Guess one of the big ways I prepped for this podcast. A a I I read a ton a ton of conferences and earnings and everything that they did. But B, I went on try it had a rimly call in the past month. Went on read about it. Saw how to people who are invested in the stock, who are thinking about investing in the stock, how they're thinking about stable coin risk, how they're thinking about other types of risk. And then when I can see that, I can think about them. I can prep for my podcast with them. I've loved the podcast. I think you will, too. Go to trtrada.com. That's tryrada t r a ta.com to give them a try.

Hello, and welcome to Yet Another Value Podcast. I'm your host, Andrew Walker. With me today, I'm happy to have Mario Cibelli from Marathon Partners. Mario, how's it going?

All right. How are you doing?

Doing good. Is this your fifth time? I think this is the fifth podcast.

Yeah, we did 4 new ideas. This is the first repeat of an idea, but it's worth repeating an idea if the opportunity is potentially high. So here we are.

I agree, and I know a lot of people agree because I was getting tons of inbound messages about this one. Mario, the company we want to talk about today is Remitly. We did a podcast on it—the ticker is RELY—almost a year ago. The stock did well, came back, and you said one line from that podcast that I will always remember: “Sometimes you just see it.”

Right now, I'm seeing it so clearly, like it's about to hit the inflection point. I've tried to incorporate that into my investing process: wait until you see something and really get your teeth into the meat. Anyway, why don't we do a quick refresher on what Remitly is, and then we can get into the new stuff, the old stuff, whatever it is?

The only thing I'd say is that I'm not getting ahead of the quarter here. I tend not to want to have podcasts about anything ahead of a quarter. I think the opportunity here is quite interesting and the share price has been super weak, but anything I say here is definitely not, “Make a big bet on this going into the quarter.”

Other than that, it's simply described. Remitly is a digital remittance provider. It's kind of like an online version of Western Union. They don't have any stores; it's 100% digital. It's all done through the app and online.

It's a different spin on an old business, which is cross-border transactions and payments, essentially from developed nations to developing nations. They tend to be small send amounts, so lots of small transactions that add up over time into a pretty big business.

You have Western Union, and you had MoneyGram, which went private. You had a company called International Money Express, or IMXI, that's going private now and being bought by Western Union. You have Wise, which is public, though they're not directly in the business. Of course, there are lots of banks that do this. Banks still do the most overall, but think of Remitly as a digital, app-based version of Western Union.

That's a great overview. The most frequent question—so maybe we can just dive into that—we addressed it on the first podcast, but I got asked it so much when I said you were coming on this podcast. Wise has been, off and on, a market darling and a compounder darling. The most frequent question I get from people is: Why Remitly over Wise? Why Wise over Remitly? Can you compare and contrast?

I hate that question. Even though it's the most frequent one, it's the worst one.

I'm not agreeing or disagreeing. I'm just saying that at some point, you have to give the people what they want. When you put out that Mario's coming on the podcast to talk about Remitly and get 20 inbound messages asking why Wise won't kill them or whether they'll kill Wise, you have to mention it.

Wise has a fanatic fan base of shareholders, and that's a strategic asset in this market. Wise's send amounts are multiples of Remitly's. Wise's take rate is a function of its mix, which is a much lower percentage of low send amounts.

If you were to look at Wise on a low send amount in the same corridor as Remitly, you would see that the prices are more in line. Wise isn't sending $225 from the U.S. to Mexico for 40 basis points or 30 basis points. It doesn't make any sense. These transactions are generating $6 or $7 of revenue per transaction, before a lot of other costs.

It's not a business that banks really love, and that's part of the reason the whole industry exists. Western Union pulled that business out from within banks, streamlined it, and made it a lot easier for a segment of the population that likes it and uses it frequently.

I think Wise and Remitly are going in different directions. At the margins, they may compete. I'm not an expert in the plumbing and financial engineering underneath Wise versus Remitly, but I know Remitly pretty well, and I've followed the remittance business for a long time. I don't think the plumbing underneath Wise and Remitly is the same.

Both have a platform and a brand that appeal to consumers.

I don't think about Wise too much. They may make good merger partners one day. I mean, one day that wouldn't be the craziest and nuttiest thing. And I'm not suggesting that they would at any point in time, but they have different sets of muscle and skill set.

What Remitly has built, which I think is difficult to build—I think people would acknowledge that now, especially—is essentially: “I'll send your payment in their send markets. I'll send these funds. I'll take any form of payment you want to give me except cash, and I'll deliver the funds to digital wallets, cash, or bank accounts digitally. I'll do it fast, I'll do it really efficiently, and I'll charge you a pretty fair price for that. It's not going to be 0.”

The ability to pay out in all the modalities where there's demand is the difference between the 2, but I honestly don't think it makes a lot of sense to think about these 2 companies competing. Maybe they'll compete very directly one day, but I think they both have very long runways before that's a possibility.

Let's go to something else. I've got so much I want to talk to you about. I keep looking at my notes and pulling up highlights from conferences and everything, but let's rewind.

We did this podcast roughly a year ago. I think it was at the beginning of September 2024. Remitly's stock was, to make the numbers easy, around where it is today. After we did the podcast, they reported Q3 earnings, Donald Trump got elected, and the stock was a rager. It basically doubled from there, and then over the past 6 months, it's come back.

We can talk about all sorts of things, but at a high level, I would say, “Hey, Mario, 2025 looks like it's going pretty well for them, right? They gave guidance, and they've increased it twice.”

I believe the initial guidance was $1.57 billion of revenue. Now they’re over $1.61 billion. They were guiding to $190 million in adjusted EBITDA; now it’s over $225 million. They’re repurchasing shares.

So, if I just laid all that out and backed out, I’d say, “Mario, what is the market worried about when it seems like things are going pretty well right now?”

Yeah. And, just technically, the share price was about $13.50 when I was on the podcast, so we got a little bit of appreciation.

Mario takes great pride in his perfect record on the Yet Another Value Podcast. You can’t—

If we’re going to have a perfect record, this thing’s going to have to do pretty well from here. I think this would be a blemish if this is fairly valued.

In the past year, revenue is up 35%. Gross profits are up 35%. EBITDA is up well over 200%. They’ve made a lot of progress, and then they’ve dipped cleanly into GAAP operating profit. I think those losses are in the rearview mirror here. That should be gone and never seen again.

They’ve made a lot of progress, and I think a year ago—coming up on a year ago—when they reported Q3, they had another good result and talked about the growth rate for 2025, which they’re now exceeding and beating. That got people excited, so the shares did really well for a period of time.

I think a couple of things happened. There was a whole big discussion about taxes on remittances, and that weighed on the shares in February. That ended up being resolved in their favor. There’s going to be a 1% tax on cash remittances starting on January 1, so that actually got resolved in their favor. I’m going to put that aside; that part’s been settled.

In general, with the Trump administration, there are fears about ICE pulling out immigrants and people being deported. At the margin, I think that’s something people can see, visualize, and think about. But the opportunity in front of Remitly is so big that I just don’t think that’s something that can affect them for a period of time.

The big thing—and I’m happy to jump into this—

Yes.

—is stablecoins. The stablecoin and crypto narrative has become very loud and very intense since March. I think stablecoins are an interesting product, but it’s a narrative-driven market. It’s a moment-driven market. This overlay has cast such a dark cloud on this business model, and I think it’s completely unfair. It hasn’t shown up in any numbers or anything yet, but I think there’s a perception that Remitly is at risk of a very low terminal value.

In fact, at today’s prices, with some assumptions that I make, the terminal value multiple on a pretty reasonable estimate for 2030—using pretty unspectacular growth but nice margin expansion—is absurdly low, less than 4 times. I think that is the main thing.

The debate I hear—I talked to 3 or 4 shareholders just in the past week—is, “What is this business going to look like in a couple of years?” Because stablecoins and crypto, and more specifically stablecoins now, are going to make this business really easy and very commodity-like. I think that’s patently wrong and very likely to be wrong.

I do think there are some legitimate use cases for stablecoins, but a lot of things have to happen really, really right for stablecoins to have an effect on this business. Essentially, Remitly is in a basket of stablecoin losers along with 8 or 9 other names, including Mastercard, Visa, dLocal, Western Union, Euronet, PayPal, and a number of others.

I think it’s being shorted rather indiscriminately against longs in Robinhood, Circle Internet Group, and Coinbase. That’s been a great trade. It’s worked really well.

That happened about a year ago. People were long Tesla and short Uber, and that was an awesome trade from the election through about mid-December. Then it unwound. I think we’re looking at the same thing.

To me, that’s the answer for why we’re here a year later, even though they’ve made awesome progress in their P&L. This profit inflection isn’t coming in 2026 or 2027; it’s happening right now. They’re in the midst of a fairly intense profit inflection.

In Q2, they went from roughly negative $15 million to positive $15 million in GAAP operating income—not adjusted EBITDA, GAAP operating income. They’re swinging it. It’s happening.

So, let me pause you there. And now that you’ve paused yourself, let me put you there.

I think the bear case—and you are right, like, every time aside from Remitly versus Wise, the most common question you get is stablecoins, right? The bear case is, “Remitly will transfer money from the U.S. to Mexico, from the U.S. to the Philippines, whatever corridor you want, and it’ll take 2% to 4% of the transaction if you’re doing low-dollar figures.”

People look at stablecoins and say that’s basically free and instantaneous. Why doesn’t this eat all transfer business? What are people who are saying stablecoins will replace Remitly, Western Union, and all these companies missing?

Well, just for starters, Remitly isn’t in a 2% to 4% range. Its weighted take rate is about 2.1%. I looked at World Bank data just before we got on the call here. For a digital remittance player, the take rate is about 3.55%, and then a cash take rate is even higher than that.

Remitly is actually a low-cost producer of this service. It’s kind of like the Costco of the remittance space, which is funny to think about because it’s certainly not getting that reputation right now.

And they’re launching a membership model, too. There’s one more thing, though: They want to be Amazon Prime, and I want to ask about membership in a second, but please continue.

Yeah. So, look, I think stablecoins are an interesting technology. There are lots of knocks against them, by the way. If you’re an investor and you think stablecoins are going to get a high rate of penetration with consumers, there are lots of reasons why that may not happen or wouldn’t happen quickly, including wicked mismatches between assets and liabilities in banks, right?

So be careful. It’s one of those things where you should be a little bit careful what you wish for.

Specifically on remittances and payments, stablecoins are cheap, really fast, and instantaneous. Is Remitly going to use them to make its business easier when it has prefunded deposits everywhere, to make this the magical service that makes something look instant when it’s actually not instant? Yes, they’re going to be a beneficiary of that.

But a couple of simple things: I think a stablecoin delivers the most value and savings when it doesn’t have to be off-ramped into anything else. Currently, in the remittance business, there’s a high level of frequency for remittances. I think it’s greater than once a month for Remitly. That was implied in their S-1 when they went public.

That’s a high degree of frequency. It tells me this money is being consumed very quickly. So, other than India, which has some different dynamics, this is money that’s being spent rather quickly.

If you were just going to use a blockchain to move money from point A to point B and leave it there, without needing to spend it on utilities, food, healthcare, car payments, mobile phone payments, and all that, that might make sense. But once it needs to go into a fiat currency that’s spendable, that’s where the remittance companies come into play.

I’ve heard use cases where, to me, one of the major ones is even the internal movement of funds by big companies—moving them around very quickly.

But there’s this whole other thing about stablecoins that’s so weird: They have to be managed. Stablecoins are an attempt to create digital cash. Well, cash has some traits and characteristics that are way better than stablecoins. Digital cash has to be managed. It’s like a tradable money-market fund or something. How does that work in a zero-interest-rate policy?

There have already been waves—you can look back for years at money-market assets and how interest rates affect demand for them. They’re at all-time highs, and they come crashing down. That is a component of stablecoins that’s very different from typical cash.

Typical cash is printed and replaced every now and then, but it just gets passed around from one person to another. You don’t have anyone monitoring it. So there’s this whole layer of complexity that has to exist and has to be managed, including the possibility of breaking the buck on some of these things that underlie this speed and cheapness. That has to be taken into account.

They’re not some magical pixie dust just darting all around the world and making life easier for everyone. It’s a complicated thing. I think they’ll have use cases, for sure, but I just don’t think it’s expensive right now to move money between major currency pairs globally for a big wholesale buyer like Remitly.

It's extremely cheap. Remitly's costs are about 75 bps. The transactional cost is about 75 bps. 90% to 95% of those costs come in the form of what payment mechanism the customer prefers and what payout mechanism the receiver wants, right? So, if somehow, in some bizarre way, you've suddenly been incentivized, how are they going to incentivize Andrew Walker to use a bunch of stablecoins? They'll probably have to reward you with something or this or that.

But let's say you do it anyway. Even in that scenario, Remitly would gladly take a lower-cost, quicker form of payment and pass those savings on to its customer. So one of the things I look at is Remitly's net take rate. What's their take rate after their costs, which are largely chosen by the customer? It's only 1% to 1.5%. So, if stablecoins did get high penetration—and I don't think they will with consumers—then they could drop the take rate dramatically and still preserve those unit economics because now they have a funding mechanism that costs them very little.

Mario, can I pause you there? I'm going to be willing to sound and look stupid here because this is the thing I've been trying to put together in my mind, and I just haven't quite got it right. I think the bear case would be: You, Mario, are working in the United States, and you decide to send me, Andrew, who's working in the Philippines, some money—$50, right? Remittances right now, you do it through Remitly, and Remitly would take—Remitly plus all the fees you just said, 1.5%—it'd be 2.1% all in. It would charge you about a buck for that $50.

The bears on stablecoins would say, “Hey, in this future, Mario is going to take USDC and send it to Andrew, and Andrew will convert it to whatever the currency of the Philippines is and take it that way.” What do the bears have wrong about that? The bears say, “Hey, that will be basically free using stablecoins.” What do the bears have wrong about that process?

Just look, I said it has to be off-ramped into a currency, and once you do that, there are costs involved. If you just want to, you could do this right now with crypto. If you want to pay your friend in Singapore $500 to settle a bet—

They're making some big bets here.

Yeah, that's very easy to do. You don't need a remittance company to do that. You just move it over there. Now, it's their fault. If they want to convert it into something else, that's going to add friction and cost. So, as long as it's something that's on-chain, I would agree that it's very low cost, but it's not valuable on-chain right now.

I don't think the Philippine government is going to be like, “Yeah, you know, it's okay. We could have all these merchants, everything like that, and we're going to go on the U.S. dollar. Everyone can accept the U.S. dollar, all that kind of stuff, and we're going to formalize and digitize that.” We're not going to say, “The Philippine peso”—I think that's what it's called—“Thai baht, Mexican peso, euro…” I don't know all the names of the various currencies.

This makes total sense. If I'm hearing you correctly, the issue is going to be that I'm in the Philippines, you sent me the money, and when I try to convert it from the USDC stablecoin—or the Philippine stablecoin, if that's a thing—into actual money that I can spend to pay a credit card bill or whatever it is I'm going to pay, I'm going to pay more because I'm going to get hit with the FX fees.

I have to go to a bank and say, “Hey, take this USD stablecoin—or Philippine stablecoin, if that's a thing—and convert it into money that I can use to spend.” The bank is going to rake me through the fees on the FX and all that sort of stuff. It would end up having been cheaper to use Remitly, with all their anti-fraud costs ignored, simply because of their bulk scale of FX buying. It would have been cheaper for you to send it through Remitly in that case. Am I driving to that correctly?

I think that's fair. I think it costs 10 bps or something, or less, for wholesale transactions between currency pairs. People at Remitly would use stablecoins if there's demand for it and if it actually comes attached with super-low costs. They'll pass that along to the consumer.

But the cost of being in the remittance business is not the transfer of money. That's a component of it. The real costs are all the KYC, AML, knowing all the rules, G&A, marketing, technology development, and all the things you have to do to make a really good, compelling consumer service. People aren't going to offer to do it for free. They're just not.

So I think it is a misnomer that stablecoins are going to magically make the remittance business easier. They have the potential to do that, but stablecoins are very focused on speed and efficiency, and those are not the only 2 factors when it comes to a currency ecosystem.

I said this before: This is excluding this whole other layer of someone behind the scenes managing this, making sure it doesn't break the buck, and thinking about interest rates and what their revenue is. What if interest rates go to 0? What do they do? How do they cover their costs? It's going to cost something to manage stablecoins.

Remitly is a low-cost producer and is on the leading edge of the transformation of high-cost remittances into lower-cost remittances. So I just think there's a lot of wood to chop before you come to Remitly and say, “Hey, you're really charging way too much for the service. This is not where the market's going.”

I think they're the Costco versus kind of Neiman Marcus or something like that. That's not a great analogy.

One thing that blew my mind is that, in the Q2 call, they said, “Provision for transaction losses was 15.2 basis points of send volume.” 15.2 basis points, and that was high for them. They called out a sophisticated fraud incident in May that cost them almost $3.8 million. Without that, it was 13.1 basis points.

I was just looking at that, and I was like, hey, they had one giant fraud attack that resulted in 2 basis points of extra spend. But I was thinking of that in relation to stablecoins: If you're sending money to me, how many times is that getting hacked on the other end? Ignoring the KYC and AML, these guys are dealing with fraud at $4 million—a big check—but it's a very small percentage of their transactions.

I don't know where I'm driving with that, but I was very impressed by that number. It put into context that if they're charging 2%, their take rate is 2%. If 15 basis points is going to cover fraud, then about 10% of their take rate is covering just these fraudulent transactions. I think that's very interesting.

We can talk about the AI component and machine learning, all that sort of stuff that enables all that fraud, but I just thought that was really interesting and spoke to their moat. You can take that wherever you want. I'm kind of rambling on it.

Fraud is a hidden cost in the business and also a hidden barrier to entry. The general thing that happens is that if you're bad at fraud, you slow down the movement of money to your consumers, which they don't like, and you charge them less. A lot of people compare that price to Remitly's price.

If you're really good at fraud and you're tech-forward, West Coast companies tend to be more cutting-edge on these kinds of things versus a company headquartered in Dallas or Denver that's trying to catch up and compete with the West Coast guys. They tend to be very good at this. They're better at detecting and spotting fraud.

Essentially, they're giving a higher percentage of their customers the very best customer experience. Of course, this then bleeds into retention, frequency, LTVs, and what you can pay to acquire customers. So I think there's a huge advantage with the fact that fraud exists and with the companies that know how to deal with it.

Of course, fraud exists because there are very sophisticated criminal organizations out there that test everything at all times, nonstop. It's a constant game of cat and mouse. Essentially, tech-forward, tech-first companies can handle it better, and therefore they don't have to slow down their movement of money as much as others that are less forward on that.

So it's really a barrier to entry, and it shows up. I mean, here, Remitly is going to be bigger than Western Union in send volume in a couple of years, right? The internet has been around for 2 decades, so Western Union's had a long time to make its product good. But it is not a simple thing to get right.

I do think that Remitly's platform is definitely valuable, not easy to replicate, and has lots of direct connections with banks all over the world, so they can offer the very best possible service. The fraud component is part of the barriers to entry in this business, for sure.

Let me ask you a weird risk factor. Again, this is just Andrew being weird in his head, and I've got tons of other stuff, but I do wonder—maybe I'm too domestically focused—it seems to me that KYC and AML, in the current regulatory administration, whether you like them or don't like them, seem to be going down.

Would that be a bear case for Remitly? Just like, hey, KYC and AML are huge regulatory burdens, and if those barriers are going down, is that an opportunity for a legacy competitor to lower their costs and catch up? Or does that kind of incentivize new startups who maybe care a little bit less and, if you give them money, they send it—no questions asked?

That is not my perception. As far as the money transfer organizations go, I think there's actually more of an effort to be like, “Let's—I don't want undocumented workers, unauthorized border crossers, using these rails.”

I'm going to make that tougher. I'm going to tax them if they do that. Now, ironically, I'd say that is crypto. Obviously, I think you can move money around, and there's something...

That might be where the question is coming from. Yeah.

And I do think, by the way, one of the biggest use cases for stablecoins right now—there's very, very little demand to pay and move stablecoins around on remittance networks. It's really about crypto trading, right?

Over 90% of the use cases are funding crypto trading right now. Yep.

You know, that, to me, is a bit of an unusual dynamic. The regulatory bodies usually catch up with some delay on some of these things. And, look, like I said, this money is spent rapidly when it shows up in the Philippines or Mexico or somewhere else, so crypto and stablecoins are just the last thing I think a lot of these customers are asking for. There are some use cases when you have a rapidly depreciating currency, and Remitly, with its new products, is addressing some of this. You may want to stick it in a stablecoin and pull the money out more slowly.

Yep. So stick it in USDC, move it over there, have USDC, and kind of convert it differently.

I completely agree with you, though. I do laugh every time they say, "Hey, if your currency is rapidly depreciating, you might want to keep it in USDC," and they just announced a partnership with Circle: keep it in USDC and then switch it to convert your currency as needed. Exactly like you're saying. I do kind of laugh because I'm like, well, the U.S. dollar is kind of rapidly depreciating these days.

Oh, that's the funny thing. Yeah, gold's done pretty well recently here. Maybe Bitcoin, too. But, yeah, the dollar is—our U.S. government is...

Outspending like drunken sailors, you know, into oblivion, possibly. Hopefully not in our lifetime, but whatever. That's a different topic.

Let me ask a slightly different question. I've done some work on stablecoins. Mastercard and Visa will say, "Hey, we are stablecoin beneficiaries, not stablecoin losers," because stablecoins basically involve an extra piece of the ramp, right? You have to get back into the traditional banking service at some point, from the stablecoin into the traditional banking service and then back out to the stablecoin.

Mastercard will say, "Hey, we'll verify that on/off ramp. That's an extra piece of the ramp. This is great for us." Remitly has kind of said it differently, but as you said, they said, "Hey, if you're in a rapidly depreciating currency, maybe you want to keep it in your Remitly wallet and keep it in a stablecoin. Or we can use stablecoins to move money into a company, as you're saying, and lower our funding costs and have to deal with less FX."

I'd love to ask you: Do you see a world where Remitly is maybe not a full-out stablecoin winner, but a stablecoin beneficiary? Do you believe the beneficiary piece that they're pitching? I think growth bros and VC guys are kind of having a hot moment with stablecoins. My instinct is that they are additive to the financial ecosystem and not completely transformative.

Big U.S. retailers like Walmart, Target, and Amazon have wondered for years, even decades, how they can avoid interchange and get more of their retail sale. They've done joint ventures in the past. They've tried everything. A lot of times, that's just to try to negotiate a lower, more favorable rate of interchange that they end up having to pay.

To some extent, Visa and Mastercard have such a good business model. If you bought those companies when they demutualized years ago, congratulations. That was totally awesome. But, to some extent, I think they do provide a service. They do a couple of things well, and they charge a fair price for it. There are also all the ways they're regulated in many parts of the world, debit interchange regulation, and all that kind of stuff. Other people know that better than me.

To some extent, this is something that people have wanted to disrupt—the traditional payment rails, including Mastercard and Visa, and other things—for a very, very long period of time. I just don't think stablecoins are the instrument to do it. What is your incentive to pay Walmart with a stablecoin? Why would you care? You don't have a big problem. You can pay with your credit card, your debit card, or cash. They would have to motivate you.

What would motivate you? A discount? The discount they'd have to give you to motivate you, in order to pay for that and mint it at Chase or Wells Fargo, would probably exceed the blended cost of everything they're already doing. Walmart is better, and you will spend more at Walmart than Panera, but it's not lost on me that at Panera all the time you get, "Hey, buy $50 worth of gift cards and get $10 free." If you'll allow me to say it, that's basically a 20% discount on gift cards to get you to give Panera money, which, by the way, I've been paying with a credit card. Walmart is still paid with a card.

I'm sure Walmart could come to you and say, "Hey, pay with USDC, buy a Walmart stablecoin, and we'll give you a 5% discount." But then they just got paid a lot more than the margin.

I'm completely with you there. I want to take this conversation to a few other interesting new areas that have come up recently, but I just want to pause there. Stablecoins are the "but why?" thing everybody asks. If there's anything else you want to talk about or get out there, I'm happy to go there.

Not really. I think stablecoins actually have some really fascinating use cases and, like I said before, I do think Remitly is a beneficiary of them. With remittances in general, there are tricks to making this service instantaneous, right? It's coming across a rickety old fiat banking system, and Remitly made it appear instantly on the other side of the world.

Remitly's main funding mechanism is debit cards. Debit cards don't clear instantly, and there's fraud involved in them. Yet they're making that payment on the receiving side very quickly. They have to pre-fund deposits all over the place and negotiate with banks and all that kind of stuff. I think stablecoins will probably be a working-capital enhancer for Remitly over time.

By the way, their scale—their sheer scale of delivering so much value coming into these banks—they're flipping the funding back to the banks in some of these cases, and that's a multiyear negotiation. These things are happening. I think that dynamic, along with stablecoins, probably will create a working-capital windfall for Remitly over time.

That means they'll be able to grow pretty significantly, but their working-capital demands will be less sharp than their gross-send-volume demands, which is a positive thing for them. I don't have anything further to say. I do think it's this hot moment when all these VCs want to go over it, and these companies are coming public.

Now, by the way, every kind of company that comes public that has a stablecoin or blockchain narrative goes on the long side. That puts more pressure on the short side, including Remitly in the short basket. One went public about 2 weeks ago. I can't remember the name. FIGR was the symbol or something like that. It was blockchain technology and had 3 or 4 different businesses. It was not the easiest.

I'm sure it's a great company.

More and more pressure on the short side. It was around a $10 billion market cap when I last looked. So I think stablecoins are in a hot moment. They're definitely going to have some use cases, but a tradable money-market fund is not the worst way to think about it.

Remitly should just take the lessons of 2021. Instead of fighting it, they should just announce the Remitly stablecoin, merge it into a SPAC, and just do it. Figure out the details later.

Let me ask you a different question. As I told you at the start of this podcast, longtime listeners will know I'm serious, because on my podcast with Arden Pock, I mentioned it. I was like, the thing Mario said—where he said, "I can just see the ball clearly. I feel like I've got my teeth in the meat"—it's actually really stuck with me. I know you told me before that you listened to the podcast with Arden Pock 20 times and that you liked that reference, so you're welcome.

I listened to 20.

I'm kidding. I'm kidding. But if this doesn't work—if Remitly doesn't work right now—I think the average bear would say, "Stablecoin, bro. Whatever."

What do you think would have caused it if you and I were filming this podcast 4 years from now and Remitly didn’t work? Why did Remitly not work?

They had penetrated into their market more than I thought.

So, just the markets: They’re saying the TAM is huge, and it turns out the TAM is actually a lot smaller. Growth is stalling out, and this is a GDP grower from here on out.

Growth stalls out. Though, you know what’s kind of fascinating—and this, to me, points to the skewed nature of the opportunity right now—is that we did a terminal value analysis on it. We grew their business at 20–21% in 2026, and then we took that growth rate down to 13.5% through 2030.

Now, we did an important thing. The CEO, Matt Oppenheimer, is on record saying that, over time, they believe they could exceed Western Union’s margins. Western Union’s GAAP operating margin, I think, is about 18.5%—18–19% right about now. We talked to this management team, we give them feedback, and we’re trying to be helpful to them. We’ve had a very constructive dialogue with them.

We are very, very big believers that there’s a profit inflection coming. What I’m saying here is that the model is sensitive to the growth rate, but it’s really sensitive to margin.

So, if I take Remitly—and I think this is a very reasonable thing to do, because they have a very different cost structure than Western Union—Western Union has much higher variable costs than Remitly. I might take Remitly to 19% operating margins in 2030. They’re going to have half a billion dollars of GAAP, after-tax, after-SBC net income in 2030. That’s on a 13.5% growth rate, looking out.

Now, yes, I did do something good with the margins. Growth could stall out here, but if they deliver on the margins and deliver strong incrementals, like they are in the first half of 2025, it’s not going to be a disappointing investment. It’s going to be a great investment—a very, very good investment.

Perhaps that won’t happen, but it’s already in process, and I’m telling you, we are coaching them as hard as we can on this. I’m very confident they’ve bought into this notion, and it’s logical. Of course it has to happen, and we went through it with Uber.

With Uber, I do think profit inflections drive the narrative right now. The narrative for Remitly is terrible. It’s shockingly bad, as far as I’m concerned. Maybe I got it wrong; I don’t know. But once Uber turned the corner on that profit inflection, you had profits growing much, much faster than the top line. They still had some nice top-line growth, and you were improving the quality of earnings while that was going on. Stock-based compensation as a percentage of revenue was going down and down and down.

It is really hard for someone to sit back and say, “Hey, I’m going to stay short this thing because the terminal value—the terminal multiple—is going to be really low. Yeah, they’re going to drive profits through the roof, but I’ll be able to cover at 5 times earnings because that’s where Western Union is trading.” I just think that’s totally unrealistic and not how it’s going to work.

I’ll say one more quick thing, and I’ll pause. There is a problem with Remitly: There’s not a good comp anymore. MoneyGram went private. There is Wise, but they’re not in the exact same business. Western Union has an 11% dividend yield. If you bought any remittance company over the past 10 years, you’ve done nothing but lose money.

A lot of people have really negative thoughts about the space. It is kind of a smaller corner of payments, but they’re not putting any thought into the possibility that this could be a digital category killer. This could be the Booking, Flutter, or Uber of its space, and that’s what I’m playing for.

I think if you go out a couple of years and the business has much higher margins, is generating lots of free cash, and is way more profitable—even if, by 2030, they’re a high-single-digit grower and a low-double-digit grower of profits, but they have way more profits than they have now and it’s clear that they are a player in this space—those kinds of businesses tend to get pretty high multiples.

Mario, that was a really fascinating framing. The way I’d almost say it is: Look, you’ve got these legacy remittance players that have been the only public-equity game in town for legacy remittance. All of them are shrinking and have high dividend yields. They’ve been great funding shorts, to be honest with you.

Now you’ve got Remitly, which is—I’m just going to say—a category-killer, growthy company, but everybody applies the legacy framing. It’s almost a capital-cycle-type framework, right? You’ve got a chemicals company where there’s been no investment in chemicals for 10 years, and everybody says, “Oh, everybody’s had their brains blown out buying chemical companies.” Then the cycle kind of turns.

It’s not a one-to-one comparison, but it reminds me of the capital-cycle stories that people really like to invest in. You’ve got a new growth company, and all the people in the space have been killed. I’ll let you comment on anything there. I did have some other questions about Remitly One and Remitly Business that I wanted to ask you.

Yeah, you’re channeling my old boss, Bob Robotti, there—picking off industries that have been in a bad place for a long time. That’s true of this space, 100%. I’ve seen it. I’ve gone to luncheons where people say, “That’s interesting. That’s interesting. That’s interesting.” Then: “Yeah, but you’re just a remittance company, so you’re never going to get a multiple.”

I can’t believe I’ll ask you that offline. That was a funny joke.

Let me ask about Remitly as well. In the past few months, it has launched 2 new products: Remitly Business, which is Remitly for businesses, and Remitly One. Both of them kind of interest me. I’ll let you go first. You can give an overview of whichever one you think is more interesting. I’ve got a few quick questions on them.

Actually, this is something I wouldn’t spend too much time on. The new product launch was a little bit poorly received by the marketplace, which was surprising. I thought the products were pretty good ideas. They’re not costing a lot to launch, either. That’s the most interesting thing.

Yes, I agree with that.

I’ve got an entrepreneurial, founder-led management team, and they’re trying to grow the business still. I like that, and I don’t think they’re spending a ton of money on it.

I am definitely intrigued by a subscription product in this space because the business historically has always been highly transactional. It’s high frequency. Is there some trade-off, some combination of benefits you could offer to create an Uber One-like subscription—a new flywheel within their active customer base of lower-churning, happier, higher-LTV customers who are essentially paying to be members and get some benefits?

To me, that’s going to be hard to pull off, but I think they could do it. They’re saying that they like what they’re seeing so far, and they could tweak it. Uber One had 0 members at one point. Now it’s 30 million-plus people. I think that’s a good thing they should be going for, but I don’t think it’s a negative. It’s a free call option on them doing something smart.

I completely agree with everything you said. I will tell you, I thought it was weird. Remitly One, as Mario is saying, is their membership model, and they’ve got a lot of bonuses. The headline benefit—I’m looking at the Remitly One landing page—is instant access to a $250 “send now, pay later” feature. You could send it today and pay it 3 months from now.

The reason I was worried about it was that I thought, “Okay, they’re going to charge $10 per month for Remitly One, and there are other benefits, but the headline benefit is: Send $250 today, pay it 3 months from now.” Who is so short of money that they need a $250, 3-month bridge loan, but they can pay $10 a month for a Remitly subscription? I was looking at it and thinking, “That seems like a weird product-market fit,” if that makes sense.

Again, I wouldn’t think about this too much. Let’s call it “send now, pay later.”

In this market, it might be better not to think. Just go along the quantum-computing stocks and stop thinking. That’s not to poo-poo your question; that’s to say that they’ll have to find the right mixture of things to see if it works.

I think a buy-now, pay-later kind of service for remittances, to grease the wheels at the margin—let’s see how that goes. But do I think they’re looking to put on big loans and be a bank? I’ve talked to them about that. No way. I don’t think that’s the case.

A lot of people ask that question, and I think they pretty clearly say, “Hey, they’ve got data. These people have been sending payments for 6 months. They know the data. They’ve got the history. This is a bridge.” But I just kind of—

They’re going to do that. They may have to tweak this product. Maybe it costs a little bit less. They’ll have to throw in new benefits. Maybe they’ll have to offer a little bit of a discount on the fees or something like that.

There’ll be some combination of benefits and costs that will work for a portion of their customers, and they’ll be able to figure that out. But I don’t think this portends a slowdown in their business or their TAM or anything like that. I don’t think they’re desperate. Many big companies, at the margin, will grease the wheel for extra transactions on top to layer in additional transaction and gross profit dollars from their basic customers. I think that’s what they’re doing.

The one I thought was really interesting—again, I realize this product is literally in beta, coming soon—but Remitly Personal: one of the benefits is $5 per month when you send a transaction. If you sign up for this, they’ll give you $5 cash back per month if you do it over ACH.

I thought that was really interesting because you could imagine, if people have been funding it one way, shifting them to ACH, which is a less expensive means of funding it. You encourage continuous monthly volume, so you build that repeat customer base. You drop the customer acquisition cost because it’s a repeat customer, and you’re basically funding the monthly payments with this discount. I thought that was really interesting. I could see how that could unlock a lot of customer captivity and volume. I’ll pause there if you had anything else.

No, we’ll see how they do. I think I have a motivated, smart CEO who will be able to figure some things out. If there’s any product-market fit out there for some of these things, I think he’ll find it. There may not be. I don’t own this based on the new products needing to do well.

That was my next question. Go.

Microbusinesses make some sense, and they have talked to me about that in detail. I do not think at this time that that’s a Trojan horse into Wise’s business or anyone else’s. I really think they’re looking at the smallest of the small types of businesses—maybe an accountant in the US paying 4 or 5 different Filipino workers who are helping him or her run the business, that kind of stuff.

I think that’s what they’re focused on. I don’t think they have some secret intention to go upscale and say, “Hey, let me go compete with these other people that do that pretty well.”

No, that makes total sense. It’s just, look, they come out and say, “Hey, Remitly Business takes our TAM from—I think they said—$2 trillion to $22 trillion.” You start saying that, and obviously I was having trouble in my head: Who is the right person for international remittances at a very small scale for business? It just seems weird.

But as you said, it’s not like we’re buying this saying, “Hey, Remitly Business is going to be the next global international small-business winner.”

We’re at 8.5 times next year’s EBITDA, and we’re solidly GAAP profitable. There aren’t a lot of expectations in the share price right now for that kind of stuff to pan out and work.

That’s great. Mario, this has been about an hour. This has been an awesome update. I had tons of questions. We got through pretty much all of them, but is there anything else you want to leave listeners thinking about? Anything else on your mind when it comes to Remitly?

I don’t know. A couple things. We’ve talked to the team about some of the insider selling. I’m hopeful that the management team will show some sensitivity to price at one point.

I do think the company’s valuation is so low that it is not impossible that someone might look at that business model and say, “Yeah, I see that generating a lot of cash a couple years out from now.” That could be interesting. I actually think a pure financial sponsor could make a go at this as well. That is not an outcome I’m looking for, to have capped upside here, but MoneyGram did go private. It’s been in and out of public ownership. Western Union, actually, if you go back some time, traded hands in and out.

So, I do think they’ve gotten themselves down to a valuation where it is not impossible that someone might think that’s an interesting business to own, especially if they believe in this profit inflection that we see out there, which I think is really out there.

On the insider selling, you had mentioned this in our pre-talk, and I hear you, but it doesn’t look extreme to me. I mean, the CEO owns over 4 million shares. Most of the share sales have been low-cost-basis stock-option tax covering and some gifting.

Do you think—are you hearing a lot of people saying, “Hey, the insider selling here is an issue”? Or what? I mean, look, I am somebody who loves—I want big PSU packages with giant EBITDA, share buybacks, and insider buying, and I love that in all my things. But when I was reviewing this, it just didn’t strike me as a huge issue here, so I was surprised to hear you say it twice.

Yeah. Well, ironically, Remitly—and I didn’t even twist their arm; I mentioned it. I said, “We’d like it, but they approved—the board approved—a $200 million share repurchase at the last board meeting.” So, that gives you some clue about where they think the value is. We kind of had that happen.

Sorry, I just lost my train of thought. Can you say again what you asked me?

You were talking about the repurchases as a counter to the insider selling. It just didn’t jump off the screen as—

I don’t think it’s terrible, and there are lots of tech companies that have CEOs who diversify via sales. Sometimes those sales come with companies repurchasing shares and all that. I think that’s a minor conflict of interest, and not really a red flag—the fact that the company has a buyback and you have some insider selling. That’s very common in growth land, tech land.

But I would say, for a SMID-cap growth name that is not getting any respect, multiple-wise, and has done really well growing its business, at the margin, let me nitpick and try to see if there are things that could improve it. I would love to see that company remove that red flag—that tiny red flag of insider selling—showing some sensitivity to price.

We’ve discussed that with them, and we’ll see what, if anything, they do there. But a couple things: his salary is very—I think it’s less than $300,000—very modest. He hasn’t taken any grants or anything in 3 years. So, that speaks to me that this is not a person who’s just trying to max out the cash in his pocket. That talks to me a little bit like a person on a mission.

But at the margin, I’d be like, “Hey, maybe if I was on the comp committee, I’d say, maybe we give the CEO a bit of a raise, and in exchange for that, maybe we can get him to stop selling shares.” I don’t know. That would be an interesting trade to me. I would do it if I was on the comp committee.

It’s just so funny. Again, the CEO here is selling $500,000 worth of shares a quarter, right? Which is not nothing, but it’s pretty small in comparison to—I think he’s got maybe $50 million of equity or so. I can’t remember for sure, but it’s pretty small.

Far north of that, I think. He owns 2% or 3% of the company, and it’s a $3 billion company right now, right?

Yeah, so roughly. But you compare it to IonQ, which is every quantum computing investor’s favorite growth darling, and I think their executive chair sold all of his stock over the summer or something. Or Carvana—the bears always say, “Oh, look at the CEO and the chairman’s insider selling,” and that stock is just up every day.

It’s funny how here you’ve got a—and I’m not hating on either of the companies. I’m just saying, those companies have worked, and nobody except for the extreme bears talks about the insider selling there. Then here you have a company where the CEO is selling what is, to me, a reasonable-ish amount of equity—very small—and it’s like, “Oh my God, the insider selling.” It’s funny how narratives and price just change the discussion.

Narrative is a key word. I do think Matt holds himself to a pretty high standard. I think he’s a very high-quality CEO and a high-quality person. So, this is something that they could improve upon, and if they want to, they can.

I had 2 little things, if you’re up for it, before I go, because you said the word “narrative,” and I like narratives. It’s like, okay, I did get on with you. We talked about Xometry, and we did talk about Remitly.

Xometry has a great narrative right now, and it’s just funny to me. I was going to mention that Remitly’s narrative—they have a narrative too, but it’s quite negative. Not that these are comparable companies, but Remitly is about 25% bigger in market cap than Xometry.

Xometry has this great AI, reshoring narrative. It’s going to be very sensitive to US manufacturing.

So they got that, and it’s been a huge winner for us. Remitly is projected to grow faster next year, so they have that. But they have 2.5 times the revenue of Xometry. On next year’s estimates, they have 8 times the level of EBITDA, and Xometry is just breaking into EBITDA profitability here.

To me, again, these are just 2 companies I follow closely. We own both of them. Xometry has a pretty aggressive valuation here, and we own it. We’ve done some hedging, and I’m also telling you when it’s up a lot from when we mentioned it, so it definitely has high expectations, whereas Remitly doesn’t. It’s grown a lot, and the share price is just up a little bit since we did it. But the stark difference between the valuations, just based on narrative, highlighted the weirdness of this market, where you could have crazy disparities like that. Narratives are stories, and stories can change, so on both sides of that, you kind of would have the risk that there’s a different narrative that prevails at a period of time.

Yeah, it’s great. As you say, I remember—I’ve been thinking about 2021 a lot recently because how many killer growth companies were there in 2021? The narrative changed, and the business model—it turned out a lot of it was COVID fads—and those stocks are down 90% or 95%. Xometry, I doubt, is going to be down 90% or 95%, but there are going to be huge winners coming out of this as things shift, and there are going to be some big losers.

Anyway, Mario, this has been great. This was time five. So we're going to be shooting you the very exclusive Yet Another Value Podcast shirt. And I am looking forward to having you back on for the sixth podcast, whether that's a recap of another idea or one of the hot new picks.

Is the shirt cotton? Is it high quality?

It's high quality, my friend. This is an exclusive podcast. Well, right now it's ran and we get the stitching done on the—

Oh, definitely. Send me one then.

Oh, you were going to turn it down if it was just a normal cotton shirt. I like to waste things, you know. I don't like to do that.

I appreciate you saving me the money, but yeah, it's high quality.

I'm going to get your address after this and we'll send it later. Mario, a quick disclaimer. Nothing on this podcast should be considered investment advice. Guests or the hosts may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial adviser. Thanks.