Why I Would Invest in Remitly Global Despite No Dividends and Shareholder Dilution

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Key Facts on Remitly Global

Remitly Global (NASDAQ: RELY) has reported significant growth with active customers increasing 20% to 10.2 million compared to 2.4 million in the same quarter last year. The company generated revenue of $495 million in the last quarter, marking a 350% increase over the past five years. Remitly processed $23.5 billion in remittance volume last quarter, amidst a total annual payment volume that runs into the tens of trillions.

The company’s trailing EBIT was $187 million, with an operating margin of 13.5% that is steadily rising. Although perceived as expensive with a multiple of 24x, predictions suggest that if Remitly grows its revenue to $2 billion while maintaining a 15% operating margin, it could yield $300 million in earnings, potentially lowering the earnings multiple to 10x its current market cap of $4.37 billion.

Despite competitive pressures from offerings like Nu Holdings’ U.S. bank account for remittances, Remitly continues to provide one of the most cost-effective options for money transfers. Moving forward, the company’s plans to introduce new services could enhance its growth trajectory.

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