Remitly expected up to $94 million in adjusted EBITDA. It made $121 million.

Remitly is turning more of the money moving through its network into profit. Revenue rose 22% in the third quarter, while adjusted EBITDA nearly doubled, helped by lower transaction costs relative to sales and slower growth in several operating expenses.

Adjusted EBITDA removes interest, tax, depreciation, amortization and selected other costs, including stock-based pay. The result was well above the money-transfer company's own August forecast and accounts for much of the increase in the full-year target.

A quarter that reshapes the annual target

In August, Remitly expected Q3 adjusted EBITDA of $92 million to $94 million. It delivered $120.8 million. The company now expects $441 million to $443 million for the year, up from $410 million to $415 million.

Research by Ticker Byline shows that Q3 exceeded the earlier forecast midpoint by $27.8 million, close in size to the $29.5 million increase in the annual midpoint.

For Q4, Remitly forecasts adjusted EBITDA of $104 million to $106 million on revenue of $531 million to $533 million. That would mean higher sales but lower adjusted profit than Q3, while still exceeding the $88.6 million earned in last year's final quarter.

More profit from the existing network

Customers sent $24.4 billion through Remitly in Q3, up 25%. The company earned $509.8 million in revenue from fees and currency conversion, up from $419.5 million a year earlier.

Transaction margin, the share of revenue left after processing and payout costs, including transaction-loss provisions, rose to 68% from 65%. More revenue was available to cover the rest of the business. Technology and development spending was roughly flat, while marketing spending grew more slowly than sales.

Reported operating profit rose to $69.4 million from $11.8 million. Net profit reached $67.6 million from $8.8 million, showing that the improvement extends beyond the adjusted measure.

Stock-based pay was $39.6 million, nearly unchanged from a year earlier. A $3.7 million decline in the provision for transaction losses also helped the quarter's transaction margin.

Cash improves at a different pace

Quarterly operating cash flow rose to $93 million from $89.7 million. After spending on equipment and software, free cash flow increased 7% to $87.8 million. Those gains are much smaller than the increase in adjusted EBITDA.

The longer view is stronger: operating cash for the first nine months rose 37% to $309.5 million, and free cash flow reached $290.6 million from $192.8 million. Both years use the same presentation for customer-fund flows, which are reported separately in financing cash flow.

Our Remitly company profile follows the revised expectations alongside cash flow, customer-funding needs and share repurchases.