Sending money around the world is big business, whether it’s cross-border transactions on Visa (V) or MasterCard (MA) or businesses like Western Union (WU). Part of that business is remittances, where workers in the U.S. (or other countries, but focusing on the U.S. today) send money home to families abroad. Matt Oppenheimer, the co-founder and CEO of Remitly (RELY) joined The Watch List this week to talk about their slice of this market and recent 3Q earnings.

Remitly, founded in 2011 and IPO-ing in 2021, currently offers money transfers to over 170 countries. It’s 3Q report on Oct. 30 beat estimates on the top and bottom line with EPS of $0.01 and revenue of $336.5 million, making this its first profitable quarter. Active customers rose 35% to 7.3 million, with send volume up 42% to $14.5 billion. Remitly primarily makes its money from transaction fees and foreign exchange spreads. Their three largest receive markets are India, the Philippines, and Mexico. However, they are seeing growth in sub-Saharan Africa and the UAE.

The value story for Remitly is it allows electronic transfers at high speed. Oppenheimer said “90% of transactions are delivered in less than an hour.” He added that Remitly can transfer to over 5 billion bank accounts and mobile wallets, and that its customers are sticky. He describes the current “flywheel spin” of scaling its reach and volume in turn bringing costs down for the company and customers, which allows investments in the business.

Oppenheimer added that remittances are a “non-discretionary” service since customers are supporting cost-of-living and basic income for their loved ones abroad – meaning the business will continue to thrive regardless of economic circumstances. He also said that Remitly only has a small share of the total remittance market so far, which the World Bank estimated at $669 billion in 2023. Market research firms expect the total value to grow to $1.3 trillion by 2032. As far as shares, RELY is down 4% over the last 52 weeks, and around flat on the year, but they saw a strong jump after their profitable 3Q report.

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