Remitly's (RELY) Remarkable Q2 Earnings and Revised Guidance Signal a Strong Turnaround

In Q2 2025, Remitly Global (RELY) delivered a performance that defies conventional expectations. While its earnings per share (EPS) of $0.03 fell short of the $0.19 forecast—a 84% negative surprise—the company's revenue surged 34% year-over-year to $411.9 million, outpacing expectations by 6.88%. This divergence between top-line and bottom-line results raises critical questions: Is Remitly's growth sustainable, or is it a temporary spike in a crowded market? To answer this, we must dissect its financials, strategic initiatives, and positioning within the $227.63 billion cross-border payments sector.

Financial Resilience Amid EPS Disappointment

Remitly's GAAP net income of $6.5 million for the second consecutive quarter and a 16% adjusted EBITDA margin ($64 million) underscore its operational discipline. The company's ability to generate positive cash flow despite a softer EPS performance reflects cost optimization and scale. Notably, send volume grew 40% to $18.5 billion, and active customers hit 8.5 million, a 24% increase. These metrics suggest that Remitly is capturing market share even as it invests in innovation.

The revised full-year guidance—$1.61–1.62 billion in revenue (27–28% growth) and $225–230 million in adjusted EBITDA—signals confidence in its ability to sustain momentum. A $550 million secured credit facility and a $200 million share repurchase program further reinforce its financial flexibility. While the EPS miss is concerning, the market's 0.86% post-earnings rally indicates investor focus on long-term growth over short-term volatility.

Strategic Expansion: From Consumer Remittances to B2B Markets

Remitly's recent product launches—Remitly Business, Remitly One, Remitly Wallet, and Remitly Flex—are pivotal to its long-term sustainability. The launch of Remitly Business alone expands its total addressable market (TAM) from $2 trillion to $22 trillion, targeting small and medium-sized enterprises (SMEs) with cross-border payment needs. Early cohorts show twice the average transaction size and six times higher lifetime value compared to consumer customers, hinting at a lucrative new revenue stream.

The integration of agentic AI and stablecoins (via partnerships with Circle and Stripe's Bridge) further differentiates Remitly. AI-driven automation reduces customer service costs by 46 basis points, while stablecoin support enables near-instant settlements in volatile markets. These innovations position Remitly to compete with incumbents like Western Union and Wise, which rely on traditional SWIFT and wire transfers.

Market Dynamics: Growth, Competition, and Innovation

The cross-border payments sector is projected to grow at a 7.1% CAGR through 2030, driven by B2B transactions (72.6% of 2024 market share) and digital consumer payments. Remitly's focus on high-amount senders (45% YoY growth in this segment) and multi-corridor sending aligns with trends toward larger, more frequent transactions. Its Mexican received business outperformed overall revenue growth despite a soft market, demonstrating resilience in key corridors.

However, competition is fierce. Wise's 22% YoY volume growth to $185.2 billion and PayPal's expansion into China via its PayPal Complete Payments platform highlight the need for Remitly to maintain its innovation edge. The company's Rule of 50 (revenue growth + profit margin > 50%) and 16% EBITDA margin suggest it is already outperforming many peers in profitability.

Risks and Opportunities

While Remitly's financials and strategy are compelling, risks persist. Regulatory scrutiny of stablecoins and AI-driven compliance models could delay product rollouts. Additionally, the B2B segment is dominated by banks and legacy players like Citi and JPMorgan, which have deeper treasury systems. However, Remitly's agility and customer-centric approach—such as its WhatsApp integration and “send to self” feature—offer a unique value proposition.

Analysts remain bullish, with price targets ranging from $25 to $32, implying 54–94% upside from its $16.47 post-earnings close. The company's InvestingPro score of 2.66 (“GOOD”) further validates its strong cash flow and growth metrics.

Investment Thesis

Remitly's Q2 results and strategic pivot to B2B markets validate its long-term potential. The company is not just a remittance platform but a modern financial infrastructure provider for globally mobile individuals and businesses. Its ability to balance innovation (AI, stablecoins) with operational efficiency (422 bps reduction in marketing expenses) positions it to outperform in a sector expected to grow to $320.73 billion by 2030.

For investors, the key question is timing. With a 16% EBITDA margin, a $200 million share repurchase program, and a revised full-year outlook, Remitly appears undervalued relative to its TAM expansion and growth trajectory. However, patience is warranted as the B2B segment matures. A long-term hold, with a focus on execution of its product roadmap, is recommended for those comfortable with the sector's regulatory and competitive risks.