It used to be that immigrants looking to send money back to their families would send cash. Or maybe get gouged by 8% (or greater) fees to make an electronic funds transfer through a legacy provider. Even in the current age of digital payments, it’s not always easy, fast, or cheap to send money. That’s where Remitly Global (RELY) comes in, explains Tyler Laundon, editor of Cabot Small-Cap Confidential.

The company was founded in 2011 when co-founder and CEO Matt Oppenheimer, who previously worked for Barclays, was living in Kenya and realized how difficult, opaque, and expensive it was to send money internationally.

He saw an opportunity, especially as mobile device usage exploded globally, to transform hundreds of millions of lives around the world by creating a scalable remittance solution that put customers first. Today, Remitly helps families transfer money internationally across 100+ currencies with no hidden fees.

Most money is sent from the US, Canada, and the EU. A few of the largest recipient countries include India, Mexico, and the Philippines. The company has relationships with major banks, including Barclays (BCS), Chase (JPM), HSBC (HSBC) and Wells Fargo (WFC), as well as leading payment processors, such as Visa (V), that give customers options to fund remittances with bank accounts, card-based payments, or other alternatives.

It also has many partners around the globe (banks, mobile wallet partners, cash pick-up locations, etc.) that give customers a choice of where to deliver money. Over the last twelve months, $34 billion has been sent across the platform. And in the last quarter, the company had over 5 million quarterly active users.

Perhaps most impressive, Remitly grew revenue by almost 50% in the most recent quarter, while delivering a profit. And EPS is poised to double next year. In short, the trends are good.

Remitly’s digital cross-border remittance platform can be used via the web, or a mobile app. Customers simply set up an account and are off and running, sending money internationally within just a few minutes. Customers and their families can track the status of the funds in real-time.

Remitly is doing a fantastic job bringing new customers to its platform. A year ago, it had 3.4 million customers. It now has just over 5 million. That’s a 47% increase. Remitly is growing fast in both the US and Canada (+36% and +44%, respectively, in Q2), but the Rest of World (ROW) growth is by far the fastest (+120% in Q2).

Remitly generates revenue from transaction fees (vary based on currency, funding, and disbursement method, etc.) and foreign exchange spreads (vary based on the company’s ability to buy foreign currency at advantageous spreads). Customer promotions may affect both. At the end of the day, the biggest factors affecting the business are active customer count and send volume (in dollars).

Recommended Action: Buy RELY.

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