Yet Another Value Podcast - Marathon Partners' Mario Cibelli updates the Remitly Thesis $RELY

Episode Date: October 20, 2025

In this episode of Yet Another Value Podcast, host Andrew Walker welcomes back Mario Cibelli of Marathon Partners for his fifth appearance. This time, they revisit Remitly (RELY), a name Mario originally pitched a year ago on podcast #266. The stock has seen ups and downs since, prompting a fresh look at its fundamentals, growth trajectory, and competitive standing—especially against players like Wise. The duo explores key risks including stablecoin disruption, regulatory dynamics, fraud prevention, and recent product launches like Remitly One and Remitly Business. Mario also explains why he believes the market misunderstands Remitly’s valuation and long-term potential.______________________________________________________________________[00:00:00] Intro: Mario returns, Remitly focus[00:02:15] Fifth time guest, same topic[00:03:18] Quick disclaimer, start discussion[00:04:51] Remitly vs. Wise comparison[00:09:26] Market concerns despite guidance[00:14:16] Stablecoin threat deeply discussed[00:20:15] Conversion costs with stablecoins[00:24:55] Fraud handling, hidden barrier[00:28:50] AML/KYC as entry barrier[00:32:17] Remitly potentially stablecoin beneficiary[00:35:15] Stablecoins: trend or transformation?[00:38:19] If Remitly fails, what happened?[00:42:44] Growth, valuation, market misunderstanding[00:44:16] New products: Remitly One, Business[00:48:44] Personal plan boosts repeat use[00:50:26] Closing thoughts, insider selling discussed[00:57:35] Narrative shift, comp valuation contrast[58:14:00] Sign-off and exclusive shirt chatLinks:Yet Another Value Blog - https://www.yetanothervalueblog.com See our legal disclaimer here: https://www.yetanothervalueblog.com/p/legal-and-disclaimer

You're about to listen to the yet another value podcast. Today we have Mario Sibelie 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 in advice. He's 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 are great. Today, he is coming back on to talk about remitly, which he pitched about a year ago. The stock has, it's worked out okay, but it went up quite a bit and it's come back down. And he talks about everything remitly. We talk about stable coins risk. We talk about who don't get him started on comparing remitly to wise, but we talk about everything

remitly. 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 try trotta.com. Look, you've heard me pitched Trotta several times on this podcast. If you're watching on the YouTube, you can see me wearing the try trotter.com hat. But Trotta is awesome. You should try it. It is expert calls for bysiders. And that means it's two bysiders 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 bysiders, 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 Remitly. Guess one of the big ways I prep for this podcast. A, I read a ton of a ton of conferences and earnings and everything that they did. But B, I went on, Try Trotta, had a remitly call in the past month, went on, read about it, saw how to people who are invested in the stock, who are thinking about invested in the stock, how they're thinking about stablecoin risk, how they're thinking about other types of risk. And then I can see that, I can think about them. I can print for my podcast with them. I've loved the podcast.

I think you will to go to try trotta.com. That's try trotta, T-R-A-T-A-T-A-com to give them a try. All right. Hello, and welcome to yet another value podcast. I'm your host, Andrew Walker. With me today, I'm happy to have on Mario. Mario Sveli from Marathon Partners. Mario, how's it going? All right. How are you doing? Doing good. I think, is this your fifth time. I think this is the fifth podcast. Yeah, we did four new ideas. This is the first repeat of an idea. But, you know, it's worth repeating an idea if the opportunity is high, potentially. I think it is. So like, here, here we are. Well, let's let me just do the quick disclaimer and then we'll hop into it. I agree. And I'm telling you, I know that a lot of people agree because I was getting just tons of in bounds on this one. But before we get there, quick disclaimer, remind everyone, nothing in this podcast investing advice. Please see the full disclaimer at the end of the podcast. Mario, the company we want to talk about today, refresh, remitly. We did a podcast on them.

The tickers, there is R-E-L-Y, did a podcast on them. I can't believe it was almost a year ago, but about a year ago. Stock did well, came back, and you, I will always remember one line from that podcast. You said, sometimes you just see it. And right now, I'm seeing it so clearly, like it's about to hit the inflection point. And I've actually tried to really mentally incorporate that to my investing process where wait until you like see something and you like really got your teeth in the meat, I think is the direct quote you said. But anyway, why don't we do a quick refresher on what remitly is? And then we can opt into the new stuff, the old stuff, whatever it is. Yeah. You know, one little thing I'd say is that

you know, I'm not getting ahead of the quarter here. And actually I kind of tend not to want to have podcasts about anything ahead of a quarter and you know I think the opportunity here is quite interesting and the share price has been super weak but you know anything I say here is definitely not like hey you know make a big bet on this going into the quarter so other than that yeah you know it's it's simply described it's a 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 So it's all, you know, all done through the app and online. And so it's a different spin on an old business, which is cross-border transactions and payments, you know, essentially from developing nations, from developed nations to developing nations.

And they tend to be small send amounts. So lots of small transactions that kind of add up over time into a pretty big business. So you got Western Union, you had MoneyGram. one private. You had a company called International I-MXI International remittances or something like that. The name's escaping me at the moment. That's going private now, being bought by Western Union. You know, why is that public? They're not kind of directly in the business. You know, and there's lots of banks, of course, that do this. Banks do a lot of transactions. They still do the most overall. But, yeah, just so think of a digital version app-based Western Union.

And let's, great overview, the most frequent question, so maybe you 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. It's worth remembering. Wise has been off and on a market darling, a compounder darling. The most frequent question I get from people is, why remitly over wise, why wise over remitly, you know, can you compare and contrast? I start hate, I hate that question, man.

It's the most frequent one. worst one. Look, I'm not agreeing or disagreeing. I'm just saying, you know, at some point, you got to give the people what they want. And when you put out a, hey, Mario's coming to the podcast talk remitly and you get 20 inbound asking, why won't Wise kill them or will they kill wise? You got to, you got to mention it. Wise has a fan base of shareholders. And that's good. That's just strategic asset in this market. Wise send amounts are multiples, multiples of of remitly. Wise's take rate is a function of mix, which is a, you know, a much, much lower percentage of low send amounts. So, you know, if you were to look at Wise, you know, on a low send

amount in the same corridor as Remitly, you would see these prices are kind of more in line. So, you know, Wise isn't sending $225 from U.S. to Mexico for 40 biffs, for 30 biffs. It's not doing that. It doesn't make any sense. These transactions, are generating $6 or $7 of, you know, a revenue per transaction. That's before a lot of other costs. So it's not a business that banks really love, and that's part of the reason why the whole industry exists. Western Union kind of pulled out that business from within banks

and streamlined and made it a lot easier for a segment of the population that likes it and uses it, you know, kind of frequently. But I just, I think wise. and Remitly are kind of going, you know, in different directions at the margins they may compete. I am not a plumbing financial engineering expert, but, you know, I know Remitly pretty well, and I've filed the business for a long time, the Remittance business. So I'm not an expert on the actual plumbing underneath Wise versus Remitly. I don't think it's the same. Both have a platform that, you know, in a brand that appeals to consumers. So I don't, I don't, I,

honestly don't think about wise too too much. They may make good merger partners one days. 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. The what remidly is built, which I think is difficult, I think people would probably acknowledge, you know, now especially that it's actually difficult to build what they built. Now, that's like, I'll send your payment, you know, in their set markets, I'll send, I'll send, I'll send these funds, you know, I'll take any form of payment you want to give me except cash. And I'll deliver them, you know, to digital walls. I'll deliver them cash. I'll deliver them to bank accounts digitally. I'll do it fast. I'll do it really efficiently. And I'll charge you, you know, a pretty fair price for that. It's not going to be zero. So, you know, the ability to pay out in all the modalities that there's demand is kind of a difference between the two. But, I honestly don't think it makes a lot of time and makes a lot of sense to kind of think about these two companies competing. Maybe they'll compete very directly one day, but I think that

they both have like very long runways before that's kind of a possibility. Perfect. 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 then pulling up highlights, having conferences, everything. But let's just rewind. We did this podcast roughly a year ago, I think it was the beginning of September, for 2024. Remitly stock was, let's just make the number as easy and say around where it was today. After we do the podcast, they report Q3 earnings, Donald Trump gets elected. I mean, the stock is a rager, right? It basically doubles from there. And then over the past six months, it's come back. We can talk about all sorts of things. But high level, I would say, hey,

Mario, 2025 looks like it's going pretty well for them, right? They gave guidance. They've increased it twice, I believe. The initial guidance was $1.57 billion of revenue. Now they're over $1.61. They were got into 190 and adjusted EBDA. Now it's over 225. They're repurchasease. 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 I think just to technically, the share price was about 13 and a half 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 much.

well from here. I think this would be a blemish if this is kind of fairly valued. You know, in that past year, the revenue is up 35%. Gross profits are up 35%. EBITDA is up well over 200%. You know, so they've made a lot of progress, and then they've

dipped cleanly into the gap operating profit. And I don't, I think that's losses are in the rearview mirror here. That should be gone and never seen again. So they made a lot of progress. And I think a year ago, coming up a year ago when they reported Q3, they had another good result and they talked

about growth rate for 2025 that, you know, they're now exceeding and beating, but that got people excited. So the shares did really well for a period of time. You know, I think a couple of things happened. There was a whole big discussion about taxes on remittances, and that weighed on the shares kind of like in February. That ended up being resolved in their favor. There's going to be a 1% tax on cash remittances starting on January 1st. So that actually got resolved in their favor. So I'm going to kind of put that and, you know, that part's been settled. There's been, I mean, so in general, kind of the Trump administration, there's fears about like, well, they're, you know, ICE, so they're pulling out to immigrants, people being deported. You know,

there's that at the margin. I think that's something that people see and can visualize and think about, but, you know, the opportunity in front of remitly is so big that I just think that that's really not something that can affect them for a period of time. The big thing, and I'm happy to jump into this, is stable coins. It's the stable coin crypto narrative has become very loud and very intense, you know, since March. And, you know, I think there's a stable coin. coins are kind of an interesting product, but, you know, it's, well, it's, it is a narrative-driven market. It's a momentum-driven market. And this overlay has been, it has cast such a dark cloud on this business model, I think is completely unfair. It hasn't showed up in any numbers or anything

yet, but I think there's a perception that remitly is at risk for a very low terminal value. And in fact, at today's prices, you know, with some assumptions that I make, you know, that the terminal value, the terminal value multiple, like on kind of, I think, you know, a pretty reasonable estimate for 2030 that using pretty unspectacular growth, but nice margin expansion is absurdly low, like less than four times. So I think that is the main thing. The debate I hear, I talked to three or four shareholders just in the past week, is what is it? this business going to look like in a couple of years because stable coins and cryptos, and more specifically stable coins now, they're going to make this business really easy and very commodity life. I think that's patently wrong, very likely to be wrong. And I do think there's some legitimate use cases for stable coins, but a lot of things have to happen really,

really right for stable coins to kind of have an effect on this business. And so essentially, remittly is in a basket of stable coin losers around with eight or nine other names, including MasterCard, Visa, D-Local, Western Union, Euronet, PayPal, a number of them. And so I think it's being shorted rather indiscriminately against Longs and Robin Hood, Circle, Internet Group, and Coinbase. And that's been a great trade. It's been a great trade. It's been a great trade. It's worked really well. That happened about a year ago. People are long, Tesla, and short, Uber, and that was an awesome trade from the election through about mid-December, and then it kind of unwound. I think we're looking at the same thing. So to me, that is the answer

of kind of why we're here a year later, even though they've made awesome progress in their P&L and their profit inflection. It's not like coming in 20s or seven. It's happened. It's happening right now. in the midst of a fairly intense profit inflection. In Q2, I'll stop in a second. Long run on sentence here. In Q2, they went from like Neg 15 to positive 15 in gap operating income. Like, not even da, gap operating income.

They're swinging in it. It's happening. So let me pause you there. And now that you pause yourself, let me go to there. Okay. I think the bear case, and you are right. Like every time, aside from Remitly versus Wise, the most common question you get is stable coins, right?

And I think the bear case is, hey, remitly will transfer money from, you know, U.S. to Mexico, U.S. to Philippines, whatever quarter you want, and it'll take 2 to 4% of the transaction if you're doing low dollar figures. I think people look at stable coins and say that is basically free and instantaneous. Why doesn't this eat, why doesn't this eat all transfer business? So I will just pause there. Why doesn't? What are people who are saying stable coins will replace? Remitly, Western Union, all these.

What are they missing? Well, and just for starters, Remitly isn't a 2 to 4% range. It's weighted take rate is like 2.1%. And then, you know, I looked at World Bank data just before we got on the call here. There's a digital remitance player only take rate that's like 3.55% and then a cash take rate that's even higher than that. So Remitly is actually a low-cost producer. of this service. And, you know, it's kind of like the cost code, the remittance space,

just kind of funny to think about because it's certainly not getting that reputation right now. And they're launching a membership model too. So there's one more, 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's lots of Knox them, by the way. If you're an investor and you think stable coins are going to get a high rate of penetration with consumers, and there's lots of reasons why that may not happen or wouldn't happen quickly. Like, there's lots of problems, including, like, wicked mismatches between assets and liabilities

and banks, right? So be careful. It's one of those things. Be a little bit careful what you wish for, but specifically on remittances and payments. Stable coins are cheap, and they're really fast and they're instantaneous. And, you know, oh, by the way, you know, is remotely going to use them kind of like to make gets business easier when it has pre-funded deposits everywhere to kind of make this, the magical service that is, make something look instant when it's actually really not instant. Yeah,

they're going to be a beneficiary of that. But, you know, a couple simple things, which is, you know, I think a stable coin, you know, delivers the most value in savings when it doesn't have to be off ramped into anything else. And currently, you know, the remittance businesses, you know, there's a high level of frequency for remittances, you know, I think greater than once a month. month for remitly. That was implied in their S1 when they went public. That's a high degree of frequency. That's kind of telling you, this money is being consumed very quickly. So this is not being, you know, other than India, which has some different dynamics, this is money that's being spent rather quickly. So if you were just kind of going to use a blockchain and move money from

A to point A to point B and leave it there and not need to spend it on utilities and food and health care, car payments and mobile phone payments and all that, that might make sense. But once it needs to kind of go into a fiat currency that's spendable. That's where the remains companies come into play. So I've heard use cases, to me, the one of the major ones is kind of even internal movements of funds, of big companies kind of moving around very quickly. But then there's this whole other thing about stable coins that are so weird, which is they have to be managed. You know, stable coins are an attempt to create digital cash. Well, cash has some traits and characteristics that are way better than stable coins, 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, right? There already have been waves of, you can look back for years on kind of money market assets and how interest rates affect demand for that and they're at all time highs and they come crashing down. That is a component to stable coins that's very different than typical cash. Typical cash is printed and replaced periodically every now and then, but it just gets passed around from one to another. You don't have anyone monitoring it. So there's this whole level of layer of complexity that has to exist and has to be managed, including is the possibility of breaking the buck on some of these things, that underlie this speed and cheapness that has to be taken into account. So they're not some magical pixie-does

thing, just darting all around the world, kind of making life easier for everyone. It's a complicated thing. So I think that they'll have use cases for sure, but I just don't think, you know, know, like, it isn't cheap. Sorry, it isn't expensive right now to move money between major currency pairs globally for a big, big wholesale buyer like Remitly. It's extremely cheap. Remitli's costs are about 75 dips, transactional costs about 75 dips. 90 to 95% of those costs come in the form of what's the payment mechanism the customer prefers

and what's the payout mechanism the receiver wants. So it's somehow in some bizarre way, like there's suddenly like you've been incentivized. How are they going to incentivize Andrew Walker to use a bunch of stable coins? Well, they'll probably have to reward you something or this or that. But let's say any way you do it. Even in that scenario, Remitly would gladly take a lower, lower cost, quicker form of payment and pass that savings on to its customer. So one of the things I look at is I look at Remitly's net take rate.

What's their take rate after their cost, which are largely chosen by the customer? It's only 1.5%. So if stable coins even did get high penetration, and I don't think they will with consumers, then as long as the take rate, 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 at it. 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 to 50 bucks, right? And 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 for that $50 about a buck. I think the bears with stable coins would say, hey, in this future, Mara is going to take USC and send it to Andrew, and Andrew will convert it to whatever the dollar of the Philippines is and then take it that way. What do the bears have wrong about that stable coin? And the bears say, hey, that will be basically free using all stable coins. What do the bears have wrong about

that process? Just look, I said you have to, it has to be off ramp into a currency. And once you do that. There's costs involved. So if you just want, you could do this right now with cryptos. If you want to pay your friend in Singapore 500 bucks to settle a bet and that person values, we're making the big bets here. Yeah. That's very easy to do. You don't need to do a remittance company to do that. Just move it over there. Now it's their fault. Now if they want to convert it into something, that's going to add friction and costs. So as long as it's something that's on chain, I would agree that that's very local. cost, but it's not valuable on chain right now. And I don't think the Philippine government is going

to be like, yeah, you know, it's okay. All these merchants, everything like that, you know, 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 that and digitize that. And we're, you know, the Filipino peso, I think that's what it's called, Thai bot, you know, 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, the issue is going to be, so I'm in the Philippines, you sent me the money. The issue is going to be when I tried to convert it from the USC stable coin or the Philippine stable coin, if that's the thing, into actual money that I can spend, you know, to pay a credit card bill, to pay whatever

it is, I'm going to pay more because I'm going to get rig through the coal on FX fees. I have to go to a bank and say, hey, take this USD stable coin or Philippines stable coin, if that's a thing, and convert it into money that I can use to spend. And the bank is going to rate me through the fees on the FX, all that sort of stuff. It will end up be, how to having been cheaper to use remitly with all their, ignoring the anti-fraud and everything, but just with their bulk scale of FX buying, it would have been cheaper for you to send through remitly in that case. Am I kind of driving to that correctly? I think that's fair. I think it costs 10 bits or something or less for wholesale transaction

between currency pairs. So the people that are remidly would use stable coins 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 the remittance business is not the transfer of money. That's a component of it. The real costs are all the K-Y-C, AML, knowing all the rules, G&A, marketing, tech developing, 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 stable coins are going to magically make the remittance business easier. It has the potential to do that, but stable coins are very focused on speed and efficiency. And that is not the only

two factors when it comes into like a currency ecosystem. And I said this, this is excluding this whole other layer of someone is behind the scenes managing this and making sure it doesn't break the buck and thinking about interest rates and what their revenue is, you know, what if interest rates go to zero? Do they like, what do they do? How do they cover their cost? Because it's going to cost something to manage, you know, to manage stable coins. So, you know, remitly is a low-cost producer.

It is on the leading edge of the transformation of high-cost remittances into lower-cost remittances. So I just think, like, there's a lot of wood to chop before you kind of come out and and say, hey, you know, you're really, you're charging way too much for the service. This is not, this is not where the market's going. So 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 in the Q2 call, they said, hey, provision for transaction losses was 15.2 basis points of send volume, 15.2 basis points.

And that was high for them. And they called out a sophisticated fraud incident in May that cost them almost 3.8. million dollars. Without that, it was 13.1 basis points. But I was just looking at that. And I was like, hey, like, they had one giant fraud attack that resulted in, you know, two basis points of extra spend. But I was thinking of that in relation to stable coins where, you know, if you're saying to me, how many times is that getting hacked on the other end, ignoring the KYC and AML? Like, these guys, they're dealing with fraud at, you know, $4 million, a big check, but it's a very small percentage of them. And I just, I don't know where I'm driving with that, but I was very impressed by

that number. And it kind of put into account like, hey, 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. And we can talk about, you know, that there is an AI component and machine learning, all this sort of stuff that enables all that fraud. But I just thought that was really interesting and spoke to their mode. 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 will compare that price to Remitly's price. If you're really good at fraud and your tech forward, you know, in the West Coast companies tend to be kind of more cutting edge on these kinds of things versus you know, a company headquartered in Dallas or Denver that's trying to kind of have an app to and compete with the West Coast guys. They tend to be very good at this. So they are better at detecting and spotting fraud. So essentially they're giving, and I said this in the first podcast, but they're giving a higher percentage of their customers with the very best customer experience.

And of course, this then bleeds into retention, frequency, LTVs and what you can pay to acquire customers. So I think there's a huge, huge advantage with the companies and the fact that fraud exists, and of course fraud exists, the very sophisticated criminal organizations out there that kind of test everything at all times nonstop. It's a constant game of cat or mouse. But essentially, the tech forward, tech first companies could handle it better. And so 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 buried entry, and it shows up. I mean, here, Remitly is going to be bigger than the Western Union and send volume in a couple of years, right? And the Internet's been around for two decades. So Western Union's had a long time to make their products good. But it is not a simple thing to get right. So I do think that Remitly's, you know, the platform they built 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, very best possible service. So the fraud component is a 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 we are, and maybe I'm too domestic focus, but it seems to me that KYC and AML in the current regulatory administration, whether you like them or don't like them, it seems to me those requirements are going down.

Would that be a bare case for Remitly? just like, hey, KYC and AML are huge regulatory burdens, and if those barriers are going down, is that an ability 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, you know, if you give them money, they send it, no questions asked. That is not my perception. You know, 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, you know, I don't want.

undocumented workers, unscheduled border crossers, using, you know, these rails. I'm going to make that effort. I'm going to tax them if they do that. Now, ironically, I would say where I'd say that is like, you know, you know, cryptos, obviously, I think, are, you know, 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, you know, one of the biggest use case for stable coins right now, this is very, very little demand to pay and move stable coins around, you know, on remittance

networks, it's really about crypto trading, right? Over 90% of the use cases funding crypto trading right now. Yep. You know, that to me is like a bit of an unusual dynamic. So, you know, the regulatory bodies usually catch up with some delay on some of these things. And, you know, like I said, this money is spent rapidly when it shows up in the Philippines or Mexico or somewhere else. So, you know, cryptos and stables is just the last thing.

a lot of these customers are asking for, though there are some use cases when you have a rapidly depreemently with its new products or addressing some of this. Never rapidly depreciation, depreciating, depreciating currency. No, you may want to stick it in a stable coin and kind of like pull the money out kind of more slowly. Yep. So stick it in US, move it over there, have it in USC and kind of convert it differently. But in general, you can almost solve that anyway. You could just send a smaller amount. You could do more frequent sends. Like, you know, that can be taken care of just by kind of using the platform a little 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 USDA, and they just announce a partnership with Circle, keep it in USC, and then switch it to convert your currency as needed, exactly like you're saying. And I do kind of laugh because I'm like, well, the US dollar is kind of rapidly depreciating these days. Oh, that's the funny thing. I didn't really, yeah, gold's done pretty well recently here, maybe Bitcoin, too. But, yeah, like, like the dollars, like our U.S. government isn't outstanding, like, drunken sailors, you know, like into oblivion, possibly.

Hopefully not in our lifetime, but whatever. That's a different topic. Let me ask a slightly different question. You know, stable coins. I've done some work on them. MasterCard and Visa will say, hey, we are stable coin beneficiaries, not stable coin losers because stablecoins basically kind of what you're hitting at. they involve an extra piece of the ramp, right? Like you have to get back into the traditional baking service at some point from the stable

coin into the traditional banking service and then back out to the stable coin. So MasterCardivists say, hey, we'll verify that on off. That's an extra piece of the ramp. This is great for us. Remitly's 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 stable coin, or we can use stable coins, you know, to move money into a company, as you're kind of saying, and lower our funding costs, have to deal with less FX. And I'd love to just ask you, you know,

is remitly, like, do you see a world where remitly is, maybe not a full out stable coin winner, but a stable coin beneficiary? And like, do you kind of believe the beneficiary piece that they're pitching? I think growth pros and VC guys are kind of having a high. moment with stable coins and, you know, my instinct is that they are additive to the financial ecosystem and not completely transformative. Like big U.S. retailers like Walmart and Target and Amazon, four years, decades, have wondered about how can I avoid interchange? How could I get more of my retail sale? They've done joint ventures in the past.

They've tried everything, you know, and a lot of times that's just to kind of try to negotiate kind of a lower, you know, more favorable rate, you know, of interchange that they end up having to pay. To some extent, you know, Visa and MasterCard, you know, they have, you know, such a good business model. And, you know, if you bought those companies when they demutualized years ago, like congratulations, that was totally awesome. But, you know, to some extent, I think, you know, they do provide a service. They aren't pretty good things. There are a couple of things they do well, and they charge kind of a fair price for it.

Now, they're regulated in many parts of the world and all that kind of stuff, and there's some debit, you know, interchange, regulation, all that kind of stuff. Other people know that better than me. But to some extent, this has been something that people have wanted to kind of, they've wanted to disrupt kind of the traditional. payment rails, including MasterCard and Visa, including other things, for a very, very long period of time. And I just don't think stable coins are the instrument to do it. What is your incentive to pay Walmart with a stable coin? What would you care? You don't have a big problem. You can pay

with your credit card. You can pay with your debit card. You can pay with cash. So they would have to motivate you. What would motivate you on a discount? Well, the discount they'd have to give you to motivate you in order to pay for that and kind of minted at Chase or Wells Fargo probably would exceed the cost of every thing that they're already doing. I mean, Walmart is better and you will spend more at Walmart than Panera. But it's not loss of me that Panera all the time, you get, hey, buy $50 worth of gift cards and get 10 free. And if you'll allow me to say 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 credit card. But, you know, Walmart. I'm sure Walmart could come to you and say, hey, pay with

ACH and buy Walmart, Sablecoin, and we'll give you 5% discount. But then they just got paid a lot more than the margin. So 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 is the behind why is the thing everybody asked. So if there's anything else you want to talk about or get out there, I'm happy to go there. Not really. I think stable coins actually have some really fascinating use cases. And like I said before, I do think Remitly is a beneficiary of them. Remittances in general, there are tricks. Like, there's tricks to making the service instantaneous, right? Because it's coming across a rickety old

Fiat banking system and Remitly made it, like, appear instantly on the other side of the world. But Remitly's main funding mechanism are debit cards. Devacards don't clear instantly, and there's fraud involved in them. Yet they're making that payment on the receive side very quickly. have to pre-fund deposits all over the place and negotiate with banks and all that kind of stuff. And I think stable coins will probably be an working capital enhancer for remitly over time. And by the way, their scale, just their sheer scale of like delivering so much value coming into these banks, you know, they're flipping the funding back to the banks in some of these cases. And that's like a multi-year negotiation. These things are happening.

So I think that dynamic, along with stable coins, probably will create a working capital windfall for remitly over time, meaning that they'll be able to grow pretty significantly, but their working capital demands will be less sharp than their kind of growth send volume demands, which is a positive thing for them. So, yeah, I don't have anything further to say. I do think it's this this hot moment, you know, and every, you know, all these VCs wanting to go over, like they're going to go over and, you know, these companies are coming public now. By the way, every kind of company that comes public that has a stable coin or blockchain narrative goes on the long side. That puts more pressure on the short side, including remitly in the short basket. So like one went public like two weeks ago. I can't remember the name. It's like FIGR was the symbol or something like that.

It was like blockchain technology. It had three or four different businesses. It was not the easy. I'm sure it's a great company. More and more pressure. It's like 10 billion market cap my last look. More and more pressure on the short side. So I think stable coins are in a hot moment.

They definitely are going to have some use cases. But, you know, this is a tradable money market fund to me is not the worst way to think about it. Remittly should just take the lessons of 2021. Instead of fighting it, they should just announce the Remitly stable coin, merge it into a SPAC, and, you know, just do it. 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, and people, long-time listeners will know I'm serious because on my podcast with Arden Poken, I mentioned to it, I was like the thing Mario said where he said, I can just see the ball clearly, I can, I feel like I've got my teeth in the meat. It's actually really stuck with me. And I know you told me before this, you listened to the podcast with Arden 20 times, and you like that reference. So you're welcome.

Did I listen to 20? I'm kidding. I'm kidding. But if this doesn't work, if Remittly doesn't work, right now I think the average bearer would say stable coin bro, whatever. What do you think would have caused if you and I are filming this podcast four years from now and Remitly didn't work? Why did Remitly not work? That 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 actually the Tam is

a lot smaller and growth just is kind of stalling out and this is a GDP grower from here on now. Growth stalls out. Though we know what's kind of fascinating and this to me points to like the skewed nature of the opportunity right now. You know, we did a terminal value analysis on it. We grew with their business like 20, 21% and 2026. And then we took that growth right down to 13.5% through 2030. Now, we did an important thing. You know, the CEO Matt Oppenheimer is on record saying that over time

that they believe that they could exceed Western Union's margins, Western Union's gap operating margin, I think is like 18 and a half percent, 18, 19%, you know, right about now, that if, and look, we talk to this management team, we give them feedback, 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 at inflection coming. What I'm saying here is that the model is sensitive to 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, right?

Western Union has much higher variable costs than Remitly. If I take them to 19% operating margins in 2030, like they're going to have half a billion dollars of gap after tax, after SBC net income in 2030. That's on a 13 and a half percent growth rate kind of looking out. Now, yes, I did do something good with the margins. So growth could stall out here, but if they deliver on the margins and deliver strong incremental, 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 to a very, very good investment.

Now, perhaps that won't happen, but it's already in process. And I'm telling you, we're coaching them as hard as we can. can on this. I'm very confident they've bought in to this notion. And it's logical, of course, it has to happen. And we went through it with Uber. Uber, I do think profit inflections drive narrative. Right now, the narrative for Remedly is terrible. It's shockingly bad, as far as I'm concerned. And maybe I got it wrong. I don't know. But once Uber turned the corner on that profit inflection, and you have profits growing much, much faster than top line, and they still have some nice top line growth, and you're improving the quality of earnings while that's going

on. So stock-based comp as a percentage of revenue is going down and down and down. It is really hard for someone to sit back and be like, hey, you know, 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 really drive profits through the roof, but I'll be able to cover it five times earnings because that's where Western Union's trading. I just think that's totally unrealistic and not how it's going to work. And I'll say one more quick thing. And I'll pause. You know, there is a problem with Remittly. There's not a good, there's not a good comp anymore. Like Monty Graham went private. There is wise, but they're not in the exact same business. West Union has 11% dividend yield. If you bought any

remittance company over the past 10 years, you've done nothing but lose money. So a lot of people have really kind of negative thoughts about the space. It is kind of like a smaller corner of payments that exist, but they're not kind of putting any thought that this could be a digital category killer. This could be like a booking or Flutter or Uber of its space. And that's what I'm kind of playing for. So I think, you know, if you go out a couple years in the business as much higher margins, generating lots of free cash, way more profitable, but even let's say, Let's say by 2030, they're a high single-digit grower and low double-digit grower profits, but they have way more profits they have now.

And it's clear that they've kind of like, they are a player in this space. Those kinds of businesses tend to get pretty high multiples. That was a really fascinating framing. The way I 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. And all of them are shrinking, high-dividend yield. They've been great funding shorts, to be honest with you. 100%. And now you've got funding, which is funny for remittances. And now you've got remittly,

which is kind of, I'm just going to say category killer growthy company, but everybody applies to legacy framing. Like, it's almost a capital cycle type framework, right? Where you've got a chemicals company that there's been no investment in the chemicals for 10 years. And everybody says, oh, everybody's got their brains blown out buying chemicals companies. And then, you know, the cycle kind of turns. Like this is almost, I get it's not one to one, but it reminds me of the capital cycle stories that people really like to invest in. You've got a cycle. got a new growth company. 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 run and remitly biz I wanted to ask you.

Yeah, you're channeling my old boss, Bob Rabati there, you know, kind of like picking off industries that have been in, you know, in a bad place for a long time. Yeah, 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. Yeah, but you're just a remittance company, so you're never going to get a multiple. Can you believe, I'll ask you that offline. That was a funny joke. Let me ask about remitly. So Remitly, also in the past few months, has launched two new products, Remitly business, which 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. Yeah, actually, you know, this is something I wouldn't spend too much time on. You know, the new product launch was, you know, a little bit poorly received, but, in the marketplace, which was surprising. You know, I thought the products were pretty good ideas.

They're not costing a lot to launch either. That's like the most interesting thing. Yes, I agree with that. I got an entrepreneurial management team, you know, that, you know, founder-led team, and he's trying to grow the business still. You know, I like that. And I don't think they're spending a ton of money on that. I do.

I am definitely intrigued by a subscription product in this space because the business historically has always been highly transactional. Yes. high frequency. So is there some trade, some combination of benefits you can do and kind of create like an Uber one likes Ubers where like the, they'll create a new flywheel of, you know, within their active customer base of this lower churning, happier, higher LTV customers that essentially are paying to be members that get some benefits. That to me is like going to be hard to pull off, but I think they could do it. They're saying that there's,

seeing, they like what they're seeing so far, you know, and they could kind of tweak that. And you're like, remit, Uber one had zero members at one point. Now it's like 30 million plus people. So I think that's a good thing that they should be going for. But I don't think it's a negative. It's like it's a free call on them doing something smart. I completely agree with everything you said. I will tell you, I thought it was weird. So Remitly won as Marius saying, it's their membership model. And they've got like a lot of bonuses in the headline one. I'm looking at the Remitly one landing page. And the first bonus they made. is instant access to $250, send now, pay later. So you could send it today, pay it three months

from now, right? And the reason I thought that was, I was worried about it was I saying, okay, they're going to charge $10 per month for remotely one. And there are other benefits. But the headline benefit is send $250 today, pay it three months from now. I mean, who is so short of money that they need a $250 kind of three-month bridge loan? but they can pay $10 a month for a remitly subscription. I was kind of looking at it. I was like, that seems like a weird product market fit, if that makes sense. Yeah, and again, I wouldn't think about this too much, right?

So let's call it kind of send now, pay later. In this market, it might be better not to think. Just go along the quantum computing stops and stop thinking. That's not to be to pooh-poo your question. You know, that's to say that they'll have to find the right mixture of things if it works. I think a buy now, pay later kind of service for remittances, you know, to grease the wheels at the margin, you know, let's see how that goes. But, you know, do I think that they're looking to put on like big loans and be a bank? I've talked 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 are like, hey, they've got data. These people have been sending payments for six months. Like they know the data. They've got the history. This is a bridge. But I just kind of thought. They're not going to do that. Yeah. 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 do a little bit of a discount on the fees or something like that. There'll be some, I believe there's 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 is, this doesn't portend like a slowdown in their

business or their TAM or something 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 off their basic customers. I think that's what they're doing. The one I thought was really interesting. Again, I realized this product is literally it's in beta coming soon, but they're remotely 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 or something. But I thought that was really interesting because you could imagine if people have been funding it one way, you shift them to ACH, which is a less,

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 a really, I could see how that could unlock a lot of kind of just customer captivity and volume. So pause there if you had anything else. No, we'll see how they do. I think I have a motivated smart CEO that will be able to figure some things out. If there's anything, if there's a product market fit out there for some of these things, I think he'll find it.

They may not be where I'm not, I don't own this kind of on the new products needing to do well. The small business, by the way, I do think. That was my next question. Goh. Microbusinesses make some sense. And they have talked to me about that in detail. I do not think at this time that that is kind of like, you know, a Trojan. horse into like, you know,

wise business or anyone else. So I really think they're looking at the smallest of the small types of businesses, you know, maybe an accountant in the U.S. paying, you know, four or five different kind of Philippine workers that's helped, you know, helping him or her run their business, that kind of stuff. I think that that's, you know,

what they're focused on. I don't think that they have some secret intention to kind of go upscale and like, hey, let me go compete with, you know, these other people that do that pretty well. No, that makes total sense. It's just, look, they come out and they say, hey, remitly business takes our tan from, I think they said, $2 trillion to $22 trillion. You start saying that. And obviously, I was having trouble in my head, like, hey, who is the right person for international remittance is at very small scale for business? You know, it just seemed weird. But as you said, it's not like we're buying the saying, hey, remitly business is going to be the next global international small business winner. We're at eight and a half times next year's EBITDA and we're solidly gap profitable. There's not a lot of expectations of the share price right now for that kind of stuff to kind of pan out and work. That's great.

Mario, this has been about an hour. This has been an awesome update. Again, I had tons of questions. We got through pretty much all of them. But anything else do you want to leave listeners thinking about? Anything else on your mind when it comes to remitly? Oh, I don't know. A couple things.

We've talked to the team about some of the insider selling, I think. You know, I'm hopeful that, you know, the manager team will show some sensitivity, you know, to prices at one point. I do think the company's valuation is so low that it's not impossible that, you know, that someone might look at that business model and say, yeah, I see that generating a lot of cash, you know, a couple years out for me for now. That could kind of be interesting. I actually think a pure financial sponsor could actually make it go at this as well. That is not an outcome that I'm looking for to have capped upside here. But Money Graham did go private. It's been in and out of public ownership.

Western Union actually, if you go back of some time, kind of traded hands, you know, in and out. So I do think they've kind of gotten themselves down to evaluation where it is not impossible that, you know, that someone might kind of think that is an interesting business to own, especially if they believe kind of this profit inflection that we see out there that I think is really out there. You know. Oh, go ahead. Oh, go ahead. Just on the insider selling, you had mentioned this in our pre-talk, and I hear it, but it doesn't look extreme to me. I mean, the CEO, he owns over 4 million shares. Most of the share sales have been for low-cost basis, stock option, tax covering, some gifting. Do you think the, are you hearing a lot of people saying, hey, the insider selling here is an issue? Or what is kind of, I mean, look, I am somebody who loves, I want big PSU packages with giant EBITO. share buybacks and insider buy. 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 just suppressed here. You say it twice.

Yeah, well, you know, kind of ironically, remitly, and, you know, I didn't even twist their arm. I mentioned it. I said, so we'd like it. But like, you know, they approved it to, the board approved a 200 million sharey purchase at the last board meeting. So they, that, you know, gives you some clue about what they, you know, where they think the value is. So we kind of had that happen. Sorry, I just lost my train of thought. You just say, one second 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. There's lots of tech companies that, you know, have CEOs that kind of diversify via sales. And sometimes those sales come with, you know, many times, big tech, you know, companies repurchasing shares and all that. I think that's a minor conflict of interest, you know, and kind of not really a red flag. that the company has the 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 kind of not getting any respect, you know, multiple wise and, you know, and it's done really well growing its business, you know, I would say like at the margin, let me nitpick and let me try to see if, you know, there's 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. So, you know, we've kind of discussed that with them. And, you know, we'll see what, if anything, they do there.

But I hit his couple things. His salary is, I think it's less than $300,000. It's very modest. He hasn't taken any grants or anything in three years. So that speaks to me that this is not a person that just is trying to max out, you know, cash in their, in their pocket. So that talks to me a little bit like a person on a mission. But at the margin, you know, what I'd be like, hey, you know, maybe if I was on the

comp committee and say, hey, maybe we give the CEO a bit of a race. And, you know, in exchange for that, maybe we can get them 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, it's 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, memory serves, $50 million of equity or so. I can't remember for sure, but pretty small. Mark north of that. I think he owns two or three percent of the company, and it's a three billion company right now, right? Yeah, so roughly right. But you compare it to like, you know,

ion queue, which is every quantum computing's favorite growth darling. And I think their executive chair sold all of his stock over the summer or something. Or Carbana, you know, the bears always say, oh, look at the CEO and the chairman's insider selling. And that stock is just up every day. And it's just, it's funny how here you've got like a, and I'm not hating on either the companies. I'm just saying like those companies have just worked and nobody except for the extreme bears talks about the insider selling there. And then here you have a company where the CEO is selling a, to me, reasonable-ish amount of equity, very small, and be like, oh, my God, the insider selling. It's just, it's funny how narratives and price just change the

discussion. Narrative is a keyword. I do think Matt holds himself to a pretty high standard. I think he's a very high-quality, CEO, a high-quality person. So, you know, this is something that I think they could improve upon. And if, you know, if they want to, they can't. I had two little things if you put up to me before I go because you said the word narrative and I like narrative is like, okay, I did get on with you. We talked about zometry and we did talk about remitly. Zometry has a great narrative right now. And it's just funny to me.

So I was going to mention this. Remitly's narrative, they have a narrative too, but it's quite, quite negative. So not that these are comparable companies, but like remitly is like 25% bigger market cap. than zometry. Zometry has this great, like AI, you know, kind of narrative reshoring. It's like it's going to be very sensitive to U.S. manufacturing. So they got that. And it's been a huge winner for us.

Remittly is projected to grow faster next year. So they have that. But they have two and a half times the revenue is zometry. They have on next year's estimates like eight times a level of, of EBITDA. And, you know, Zometry is just breaking into kind of like, kind of profitability here, EBITDA profitability. That to me, again, these are just two companies I follow close. We own both of them. Zometry, you know, has a pretty aggressive valuation here, and we own it. We have done some hedging. And I'm also telling you kind of when, you know,

it's up a lot from when we kind of mentioned it. So like, it definitely has high expectations. Remitly it doesn't. It's grown a lot. And the share price is just up a little bit. it since we did it. But the stark difference between the valuations just based on narrative, it just to me kind of highlighted like the weirdness of this of this market where you could have like crazy disparities like that. And narratives are stories and stories can change. And so like on both sides of that you kind of would have the risk that there's a different narrative that that kind of prevails at, you know, at a period of time. It's great. And I, do, as you say it, I remember, like, I've been thinking about 2021 a lot recently because

how many, you know, killer growth companies were there in 2021? And the narrowed have changed and the business model. It turned out a lot of it was COVID one-time fads. And those stocks are down 995%. This I'm not sure I tell this is going to be down 995%. But they're going to be huge winners coming out of this as things shift and there's going to be some big losers. All right, 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 shirt cotton? Is it a high quality show? Oh, it's high quality, my friend. This is an

exclusive podcast. It's, well, right now it's Roan 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 lace things. I don't like to do that. I appreciate you, say, 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 an 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 advisor. Thanks.