Remitly Global's Profit Turnaround: A Strong Start, But Challenges Loom

Remitly Global (RELY) has delivered a pivotal quarter, marking its first-ever GAAP net profit in Q1 2025 and raising its full-year revenue guidance. The cross-border remittance leader’s results reflect disciplined cost management and accelerating customer adoption, yet lingering questions about monetization and seasonal volatility underscore the path ahead. Here’s what investors need to know.

The company’s revenue surged 34.4% year-on-year to $361.6 million, exceeding analyst expectations by 4.1%. This growth was fueled by a 41% YoY jump in send volume to $16.2 billion and a 29% rise in active customers to 8.0 million. The latter figure now stands at a record high, with 1.79 million new users added in the quarter alone.

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Yet, the company’s adjusted EBITDA margin of 16.2%—up from 8.5% in Q4 2024—suggests operational efficiency is paying off. Management cited cost discipline in technology and marketing as key drivers. “We’re seeing the benefits of scaling our platform,” CEO Matt Oppenheimer noted, emphasizing a focus on high-margin services like loans and currency exchange.

A Mixed Guidance Picture
While Remitly raised its full-year 2025 revenue guidance to $1.581 billion (25% YoY growth), Q2 projections fell short of expectations. The $383–$385 million midpoint for Q2 is 0.9% below analyst estimates, reflecting cautious assumptions about seasonal demand. Historically, Q2 has seen lower remittance activity due to factors like tax filing deadlines and reduced migrant labor in certain regions.

The stock’s 2.7% post-earnings rise to $21.66 highlights investor optimism, but the market cap of $4.32 billion still leaves room for skepticism. Analysts will scrutinize whether Q2’s muted guidance materializes and whether Remitly can close the widening gap between customer growth and revenue per customer (ARPC). The latter grew just 4.3% YoY to $45.20, lagging behind the 29% customer expansion rate—a potential red flag for long-term profitability.

Risks on the Horizon
Remitly faces a triple threat: macroeconomic headwinds, competitive pressures, and margin sustainability. Global remittance flows are highly sensitive to inflation and immigration policies—for instance, a 1% GDP contraction in key source markets like the U.S. or EU could reduce send volume. Meanwhile, rivals like Wise and WorldRemit are intensifying price competition, particularly in high-volume corridors.

The company’s reliance on non-GAAP metrics also warrants caution. Excluding stock-based compensation (which totaled $14.7 million in Q1) inflated adjusted net income to $16.1 million, versus GAAP net income of $11.4 million. Such adjustments are standard in tech, but they highlight the need for sustained organic growth.

Conclusion: Momentum vs. Margins
Remitly’s Q1 turnaround is undeniably impressive, with a profit swing from a $21.1 million loss to $11.4 million profit and a 157% surge in EBITDA. The 8 million active customers and 41% send volume growth validate its value proposition in cross-border finance. However, the ARPC stagnation and Q2’s conservative guidance reveal underlying challenges.

To sustain the 22% annual revenue growth implied by its $1.58 billion full-year target, Remitly must address two key issues:
1. Monetization Strategy: Boost ARPC through upselling higher-margin products like loans or savings accounts.
2. Seasonal Stability: Mitigate Q2 volatility by expanding into markets with steadier remittance demand, such as Southeast Asia or Africa.

Investors should monitor Q2’s execution and the trajectory of ARPC. With a forward price-to-sales ratio of 2.8x (versus 2.1x for Wise), the stock’s premium hinges on delivering margin improvements that match its customer growth. For now, Remitly’s first profit milestone is a milestone—but the road to consistent profitability remains bumpy.

In the near term, the company’s revised guidance and stock price reaction suggest cautious optimism. However, with risks like economic slowdowns and competitive pressures lingering, Remitly’s ability to convert its scale into sustained profitability will determine its long-term investment case.