Marathon Partners' Mario Cibelli on digital remittances company, Remitly $RELY

Sep 10, 2024

Mario Cibelli, Managing Partner at Marathon Partners Equity Management, discusses Remitly Global, a leader in digital remittances. He highlights the market's oversight in valuing $RELY and delves into customer trust issues and transaction complexities. The conversation addresses the competitive landscape between Remitly and Wise, as well as the operational hurdles posed by cybercrime. Cibelli also evaluates the potential of stablecoins in transforming remittance costs while pondering what keeps him up at night regarding his investment thesis.

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INSIGHT

Digital Remittances Are A Scale Business

Remitly is the digital analogue to Western Union and likely to be a scale-driven winner-take-most business.
Scale gives it cheaper pricing, lower switching costs, and a powerful advertising advantage.

INSIGHT

Remittance Unit Economics Are Small And Recurrent

Average send amounts are small (around $400) so revenue per transaction is low (~$9).
That creates a high-frequency, necessity-driven product with different economics from large-expat transfers.

INSIGHT

Fees Persist Because Real Costs Exist

Fees won't go to zero because compliance, fraud controls, and operational complexity impose real costs.
Crypto/stablecoins add friction and fees too, so they aren't an immediate margin killer.

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Mario Cibelli, Managing Partner at Marathon Partners Equity Management, LLC, joins the podcast for the fourth time to share his thesis on Remitly Global, Inc. (NASDAQ: RELY), a trusted provider of digital financial services that transcend borders.

Chapters:

[0:00] Introduction + Episode sponsor: Tegus

[1:58] What is Remitly Global $RELY and why are they so interesting to Mario

[3:22] What is Mario seeing in $RELY that the market is missing that makes this an alpha opportunity (in Mario's opinion)

[8:08] $RELY service use case / question of fees to transfer money / bear case / crypto

[17:25] How does their customer base trust them / why is it so complex to do digital disbursement the right way?

[27:32] Digital fraud / business environment

[35:34] Bear case cont'd. / valuation

[44:48] Thoughts on Wise

[51:13] Marketing expenses

[58:56] Valuation cont'd

[1:02:33] What keeps Mario up on at night on $RELY thesis

[1:08:10] Final thoughts / additional key points investors should be aware of about $RELY, i.e., direct connections

[1:16:34] Stable coins/crypto - why not a risk? Why Mario thinks it's an accelerant?

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