Flywire Corporation

Greetings. Welcome to the Flywire Corporation second quarter 2021 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Akhil Hollis. Thank you. You may begin.

Thank you and good afternoon. With me on today's call are Mike Massaro, Chief Executive Officer, Rob Orgel, President and Chief Operating Officer, and Mike Ellis, Chief Financial Officer. Our second quarter 2021 earnings, press release, supplemental presentation, and associated Form 8K can be found at ir.flywire.com. During the call, we will be discussing certain forward-looking information. Actual results could differ materially from those contemplated by these forward-looking statements. We also will be discussing certain non-GAAP financial measures. Please refer to our press release and SEC filing for more information on the risks regarding these forward-looking statements, risk factors associated with our business, and required disclosures related to non-GAAP financial measures. This call is being webcast live and will be available for replay for one month on our website. I would now like to turn the call over to Mike Massaro.

Thank you for joining us today for our first earnings call as a public company. We are incredibly excited to share with you today our Q2 2021 results. But before we do that, I would like to take a few moments to recognize all the work that went into building Flywire and our recent listing as a public company on the NASDAQ. While thanks is due in large part to all of you, our investors and shareholders, we would not be here today without the hard work, determination, and sacrifice of our now nearly 600 Flymates, our employees, all around the world. It was truly their efforts with the support of family and friends that made this company possible. Additionally, I'd like to also thank our amazing clients that have helped to propel Flywire into the public markets. We are proud to serve our education, healthcare, travel, and business clients and achieve our mission to help them get paid, to help their customers pay with ease from anywhere in the world. As some of you joining us here today may be new to the Flywire story, our president, COO, Rob Orgel, and I will spend some time reviewing the amazing opportunity we have ahead of us here at Flywire, the key differentiators that make the Flywire business and technology unique, the favorable industry dynamics we are seeing in our end markets we serve today, and the multiple proven growth levers we have to help sustain long-term growth strategy. However, since this is a call about our Q2 2021 results, let me first provide some key financial highlights on a strong quarter we just completed. Q2 2021 revenue came in at $33 million, or 77% higher than Q2 2020. We saw an 85% increase in total payment volume as well for the quarter. Finally, you will see that we improved our adjusted EBITDA significantly to nearly break even at negative 0.1 million for the quarter. These are very strong results, and they'll be covered in great detail later on our call by our CFO, Mike Ellis. And of course, we'll be happy to answer questions later in the Q&A session. For those new to the Flywire story, I want to highlight our belief that the digitization of payments is inevitable. We've all seen it occur in many sectors of the global economy, such as retail and e-commerce, where the ability to purchase items is now seamless and easy. But the reality is, in massive sectors of the economy, digitization hasn't happened yet, and payment experiences are fragmented and often difficult for both the payer and the receiver. In many sectors, including those that Flywire operates in today, education, healthcare, travel, and B2B have almost been left behind by traditional software and payment solutions. For example, in education, solving affordability is incredibly important. It means giving flexibility to students to pay their tuition over time and in the preferred method that they choose. Today, what may be considered a flexible payment is a rigid plan, manually tracked, not digital and not in real time. In healthcare, a lack of digital payment solutions and affordable, personalized payment experiences are leading to more and more patients falling behind and hospitals losing critical revenue. In travel, clients tell us before Flywire, they were spending an average of 25% of their work week managing payments. And in a recent survey Flywire conducted with over 300 CFOs of global organizations, 89% of them said that they lost revenue to time spent on manual accounts receivable processing. At the end of the day, our clients aren't payment experts, and they shouldn't have to be. And their clients are demanding flexible, convenient, and digital ways to pay, similar to how they pay in other aspects of their lives. We believe the next decade will bring a wave of digitization across these industries that we serve and that Flywire is uniquely positioned to lead this trend with the unmatched combination of our software and payment functionality. At Flywire, we're focused on high stakes, high value payments, and ultimately helping our clients get paid and helping their customers pay seamlessly and easily from all over the world. And in order to do that, you need software. You'll hear us often say that software drives value in payments, and we drive that value with our Flywire Advantage, which is the unique combination of payment and software technology, which includes our next generation payment platform, our proprietary global payment network, and vertical specific software. Starting first with our payment platform, think of this as a horizontal platform that has a series of shared services, such as making a bank transfer, performing a currency conversion, setting up a recurring payment plan, checking payment status, and much, much more. Our platform is coupled with a proprietary global payment network, which took us over 10 years to build. Our network, which is focused entirely on the received side of a transaction, allows users the ability to transact in all types of payment methods, local bank transfers, credit and debit cards, third-party wallets, and alternative payments. Our network serves more than 240 countries and territories and over 130 currencies. On top of the platform and network sits industry-specific billing payment and reconciliation software that addresses the complex needs and pain points of the industries that we serve. This software delivers rich payment experiences for our clients' customers, These experiences are modern, engaging, and tailored to specifically handle the industry and geographic complexities that are required. For example, our software enables a university to provide the ability for students to sign up for a payment plan to pay their tuition over multiple semesters, or give the business the ability to embed our cross-currency invoicing into their legacy ERP system. to ensure that their customers are being invoiced in a familiar and convenient manner around the world. Our Flywire Advantage, a platform, network, and vertical software is a major differentiator for Flywire, as is our proven go-to-market approach. We pair the high tech with a local high touch team of industry experts. We have vertically focused sales, marketing, and implementation teams that have expertise in the industries and regions they serve. They have spent 10 to 15 years of their careers selling and delivering solutions into these industries. Lastly, our software is deeply integrated into our clients' business processes and key systems of record. Having our software embedded between the critical business systems of our clients and their customers highlights how strategic the Flywire relationship is to their business operations. The industries we serve today with our solutions are some of the largest in the global economy. As of quarter end, we now serve more than 2,400 clients globally in over 30 countries. In education, where our business started, we serve private and public universities, colleges, boarding schools, language and technical programs all around the world. We are helping these clients improve how they engage students and families, digitizing how they get paid, and streamlining their business processes. In healthcare, we focus on the market for patient out-of-pocket spend, also referred to as patient responsibility portion of the medical bill. Today, we serve more than 80 healthcare and hospital systems, including four of the top 10 healthcare systems here in the United States, ranked by hospital size, helping to improve the patient experience while simplifying their accounts receivable. We continue to accelerate growth in our newer verticals as well, including travel and B2B payments, and now have more than 300 clients in these sectors. In travel, one of our focuses is on high-end luxury experiences, such as villa rentals, destination vacations, and luxury accommodations. We also serve industry-leading multi-day tour operators, destination management companies. These travel purchases are large in size, often cross-border, and have a layer of complexity. And in B2B payments, we are focused on accounts receivable payments in the manufacturing, technology, and professional services sectors that have been largely underserved with paper checks and an antiquated international wire system. As mentioned previously, the industries we serve here at Flywire have huge potential to digitize over the coming decade. And there are also many global developments helping to accelerate this trend. For instance, the COVID pandemic has accelerated the digitization and consumerization of healthcare. We recently completed a study that found that 77% of respondents said that the technology for healthcare needs to be closer to what they personally use in other areas of their life. And 65% plan to use online methods for healthcare payments going forward. In education, college and university campuses are seeing a return to normal as major education markets take student-friendly policy positions on things like visas and student travel. such as Canada, offering permanent residency to postgraduate international students. And as reported by Pi News, a recent study by RBC found that Canada's population is growing at its fastest rate since the pandemic began, with international students being one of the primary drivers of Canada's overall population growth. The UK also reported that international student enrollment reached a record high last year, growing by 12%, despite the COVID-related disruptions. And the government there is allowing flexibility with the student visa process, helping international students affected by COVID travel restrictions to begin or continue their studies in the UK with as little disruption as possible and to remain eligible for post-study work opportunities. And here within the United States, the largest market for international students, the U.S. Department of State and U.S. Department of Education recently released a joint statement renewing their commitment to international education in the United States, signaling the continued importance to the U.S. economy and growth. For travel, more borders are opening. Just yesterday, the Canadian borders reopened to fully vaccinated U.S. travelers. Vendors are accelerating the adoption of digital solutions. Consumers have more money to pay for travel, and there is pent up consumer demand to see the world due to the global pandemic restrictions. Flywire recently completed a survey of over 800 frequent travelers to the US, Canada, the UK, Spain, and Japan. And 70% of them said that they would spend more money on travel in 2022 than they have in the past five years. And importantly for us, 70% say the ease of payment impacts their choice of travel agent and or tour operator. Looking at our expansion into B2B payments, adoption of our solution continues to accelerate, as does the need for digitization of payments and finance automation. Mentioned earlier, a recent survey found that 55% of CFOs report monthly revenue losses of between 4% to 5% due to operational inefficiencies related to their current payment processing system. And almost a quarter, 23%, say that they lose 6% to 10% of revenues. In addition, 92% said that they could increase global expansion if they had a better way to handle foreign exchange. The opportunity that Flywire has in front of us is tremendous. We have a unique set of capabilities, our payment platform, proprietary payment network, and vertical specific software, and a proven track record of delivering enterprise solutions to help digitize some of the largest sectors of the global economy. Our amazing team of Flymates has proven over the last decade that they can innovate, execute, and deliver exceptional client satisfaction with very strong business results. I would now like to turn the call over to Rob Orgel, our president and COO, to review some operational highlights from the second quarter and the context behind our growth strategy.

Rob? Thanks, Mike, and good afternoon, everyone. As Mike indicated in his opening comments, we had an excellent Q2. Q2 revenue came in at $33 million, or 77% higher than Q2 2020. The Q2 results reflected continued execution of our growth strategies in our target markets, strength across our geographies, as well as the favorable COVID recovery trends Mike just mentioned. We managed through the pandemic by staying focused on our clients and growth strategies, as well as staying attentive to Flywire culture and our flymates. Over the next few minutes, I'll provide a very quick refresher on our addressable markets and then focus on some of our notable achievements in Q2. In terms of our markets, we're already achieving meaningful scale. What we like to say, though, is that we're just getting started. Flywire has a tremendous runway for growth as demand for domestic and cross-border money movement continues to grow. If you look at just education, healthcare, and travel, We estimate the addressable market for our solutions is over $1.7 trillion in global payment volume. And when you include our B2B payments offering, that adds an incremental $10 trillion in volume to our TAM. Together, our market opportunity is nearly $12 trillion. With our focus on the receivable side and our unique combination of assets, we don't see other current players attacking these opportunities like we can. We've prioritized our growth in five key areas to further penetrate our markets, and we saw strong results in Q2. Here's some context and some highlights. The first element of our growth strategy is to grow with existing clients. Our strategy is to become an integral part of our client's business and grow by adding complementary solutions. Our average annual dollar-based net retention rate over the three years, including 2018 to 2020, was 118%, indicating that we've historically started each year with reoccurring revenue and growth from our existing clients. We're pleased to report we've seen a strong return to growth in our NRR in this Q2 when comparing against either Q2 2020 or Q2 2019. Our clients continue to love Flywire Solutions, our global payment network, and our technology. and they continue to expand their work with us in solving their complex payments challenges. An example of expanding our services with existing clients is the rollout of our new omnichannel engagement capabilities to the healthcare vertical. Our initial clients are seeing great success, reporting an over 80% increase in email conversions, which has led to an 11% increase in self-service online payments at those clients. the Flywire Healthcare team has also launched a new user experience in the second quarter. The patient experience represents a dedicated effort to make healthcare easier for patients with the expectation that the improvements will deliver positive results for our clients. With this launch, Flywire has seen a 5% to 20% increase in total payment volume for clients using the new user experience. On the education side, We continued to expand with existing clients. A notable expansion signed in Q2 is Texas A&M, which was an existing client previously using Flywire only for cross-border payments. In Q2, we replaced their incumbent provider for domestic payments and are now the sole provider of all student tuition payments for both domestic and international. Texas A&M has added all of Flywire's education capabilities within our full suite solutions. including e-store, payment plans, sponsored billing, and our past due receivables product, AR Collect. Continuing with notable achievements in education, in Q2, we announced the expansion of our full suite solution to Canadian institutions. We are seeing early success and in Q2 signed six deals that were upsells with current cross-border clients. Overall, Q2 was an excellent quarter of growth and achievement with our existing clients. The second element of our strategy focuses on continuing to win new clients. We do this primarily by expanding our sales and marketing efforts that increase brand awareness and highlight the value of our solutions. In the first half of 2021, we've already added over 200 new clients, including over 100 in the second quarter. Q2 was one of the best quarters in the company's history in terms of projected ARR of clients signed across all verticals. We acquire new clients primarily through a direct model, leveraging local and regional team members who have domain expertise in our verticals. This deep domain expertise differentiates our sales approach, but also supports our strong long-term relationship management, both key strengths of Flywire. Through COVID, we also accelerated our digital marketing efforts and expect this trend to continue as our clients continue their own rapid digital adoption. For education, we had a number of large wins around the globe showcasing the global reach of our education business. These new client wins include major universities from Mexico to Malaysia, a Swiss boarding school, a learning institute in New Zealand, among many, many others. In healthcare, we built on our success in 2020 by signing additional significant hospitals and health networks in the first half of the year. This is on top of multiple expansions at existing clients. In addition to driving digital adoption and addressing patient affordability challenges, Flywire's healthcare platform simplifies the patient's financial experience by creating a single bill and single payment plan across multiple accounts and even entities. LifeBridge Health, for instance, a large $1.5 billion health system with multiple hospitals and physician practices, contracted with Flywire to consolidate their patient billing experience for both offline paper statements and online digital interactions. We're very pleased to be helping them in their goals of reducing costs, increasing payments, and improving patient satisfaction. Our two emerging verticals, B2B and travel, also enjoyed many solid wins in the second quarter. Our B2B team signed multiple clients for domestic and international B2B accounts receivable solutions, and the travel team saw growth of its key DMC segment. Following our award-winning work with Hilton Grand Vacations, our travel team was able to sign a record number of accounts in Q2 2021. In addition, New travel clients are starting to use Flywire faster than they were a year ago. This speed of implementation is good for us and our clients and reflects the good work done by our engineering and delivery teams to make our platform more robust and flexible, and therefore easier and faster to deploy. In summary, we're adding a lot of new clients, and it's across all of our verticals. Third, we are seeing strong results from our channel partnerships and continue to see this ecosystem grow rapidly. We leverage endorsements from our channel partners to reach a large network of potential clients. We are seeing excellent momentum from our technology partners such as Cerner, where our integrated offering is driving new clients. LifeBridge Health, which I mentioned a few minutes ago, is a perfect example. We are also seeing continued momentum with Epic clients supported by our integrations through the Epic App Orchard. This includes single sign-on to MyChart, which has been rolled out to several new and existing clients, and secure checkout, which provides an embedded payment experience in MyChart. In travel, we continue to work closely with key integration partners such as ResD, RoomBoss, and OptiGest. We see these partnerships growing as the world begins to travel more. And on the B2B side, we continue to invest in key channels and partners for growing our client base. Yeapay, a leading provider of AR automation software, look to us to expand their international reach and capabilities by embedding Flywire directly into their solution. We appreciate the partnership with Yeapay and the benefits we will deliver to our new joint clients. Fourth, we grow by expanding to new industries and new geographies. Given the breadth of our payments platform and global network, we can expand into new verticals with minimal investment. We've done this most recently with our emerging segments in travel and B2B payments. For new geographies, we are able to leverage our solutions by simply directing our go-to-market efforts at a specific region and use case. We've been able to generate multi-million dollar growth in many new geographies, resulting in great returns for our business. Earlier this year, we announced the availability of our education solution to key markets in Latin America, including Brazil, Mexico, and Chile. In Q2, we enhanced our payments capabilities, adding Colombia, Chile, and Peru enhancements. Latin America represents an exciting opportunity for Flywire as both a source market for schools abroad and as an increasingly popular destination for international students. Our global payments team is hard at work on our next set of geographic expansions and enhancements. Finally, we have a track record of doing successful M&A, and we plan to continue to pursue strategic and value-enhancing acquisitions. Our multi-pronged growth strategy is designed to build upon momentum we have already generated while creating new opportunities to drive even greater value for our clients and their customers. In the bigger picture, We are just at the beginning of what is possible when it comes to leveraging our software to drive value and payments. I would now like to turn the call over to Mike Ellis, our CFO, to review our business model, our results for the second quarter, and guidance for the remainder of the year. Mike?

Thank you, Rob. Good afternoon, everyone. As Mike and Rob mentioned, our business model is predicated on delivering high-stakes, high-value payments in massive and growing industries. Today, I'll be discussing our non-GAAP financial metrics for our second quarter of 2021, including revenue-less ancillary services, adjusted gross margin, and adjusted EBITDA. For our financial results prepared in accordance with U.S. generally accepted accounting principles, please read the financial statements included within our earnings release and our Form 10-Q when filed with the SEC. To start off, I want to define how we generate revenue. We have two primary revenue types. The first revenue type is transaction revenue. Transaction revenue represented 77% of total revenue less ancillary services earned during the quarter and consists of payment processing fees we earn on the payments we process on behalf of our clients. It's generated predominantly from cross-border activities. The second revenue type is platform and usage-based fee revenue. Platform and usage-based fee revenue represented 23% of total revenue less ancillary services earned during the quarter and consists of the amounts we earn for the use of our platform. There are three primary elements within this revenue stream. Number one, fees earned for our software-enabled managed accounts receivable services. Number two, amounts paid for the initiation and payments made in connection with payment plans. And number three, SAS-based license fees. This revenue primarily comes from domestic activities. The key driver of our aggregate revenue-less ancillary services is the total payment volume we process. For additional background, I want to point out that our revenue is subject to seasonality due to the verticals in which we operate and the timing of when our clients' customers process their payments. Specifically, Q3 and Q1 are our strongest quarters, while Q2 is typically our slowest quarter. With respect to our financial performance, we reported solid financial results for the quarter. During the quarter, we generated revenue-less ancillary services of $33.0 million, which represented a 77% growth rate compared to the second quarter of 2020, which was driven by an increase in our total payment volume. We processed $1.9 billion in total payment volume during the quarter, an increase of 85% from the $1.0 billion we processed during the second quarter of 2020. We experienced revenue and total payment volume growth across all regions due to COVID-19 pressures easing, as well as increased utilization of our solution from existing and new clients. Looking at our specific revenue streams that I previously described, Transaction revenue increased 116% compared to the second quarter of 2020, driven by a 127% increase in transaction payment volume. And platform and usage-based fee revenue increased 21% compared to the second quarter of 2020, also due to an increase in platform and usage-based payment volume. Moving on to adjusted gross margin. Adjusted gross margin was 68.2% for the quarter, which represented an increase of 5.3% in absolute terms compared to the 62.9% reported for the second quarter of 2020. This increase was driven by two factors. Number one, a payment method mix shift towards bank transfers, and number two, reduced processing costs as we scale our total payment volumes. Revenue-less ancillary services as a percent of total payment volume was slightly lower due to this shift towards bank transfers, which carry a lower price point compared to other payment methods, but more importantly, generate higher gross margins than some other payment methods. Changes in payment method mix, as well as changes in vertical mix, payment size, and currency pairs process may impact the percentage obtained from quarter to quarter when dividing revenue-less ancillary services by total payment volumes. Yet another way, those changes are outputs reflecting the composition of the business in the quarter, and that percentage will be impacted by where and how we grow. The key point is that our platform and proprietary global payments network allows us to support many payment types for several verticals across many currencies that all have good economics for Flywire. We manage our business based on three key performance indicators, revenue-less ancillary services, adjusted gross margin, and adjusted EBITDA, and we are pleased with the reported results for the quarter. Moving on to operating expenses. Technology and development expenses were $6.9 million, an increase of 8% over the $6.4 million incurred during the second quarter of 2020. This increase was the result of our hiring activities during the trailing 12 months into June 30, 2021, where we increased the number of employees within our technology and development departments by 10%. Selling and marketing expenses were $10.9 million, an increase of 35% over the $8.1 billion incurred during the second quarter of 2020, also due to our hiring efforts within these departments and higher compensation costs due to our favorable revenue results. General and administrative expenses were unchanged at $13.5 million for both the second quarter of 2021 and 2020. Many factors impacted our general and administrative costs incurred during the quarter, but the primary factors included our hiring activities, incremental costs associated with our recent initial public offering, and changes in the fair value measurement of our contingent consideration associated with our acquisition of Simply. Moving on to adjusted EBITDA. Adjusted EBITDA was negative $0.1 million for the quarter, compared to a negative $7.0 million generated during the second quarter of 2020. This improvement was due to the contribution from our incremental adjusted gross margin, driven by the 77% revenue-less ancillary services growth rate during the quarter, as previously discussed, partially offset by increased investments in spending and compensation-related costs as we invest in our technology and product teams, as well as our sales and marketing teams and initiatives. Moving to the balance sheet, with respect to capitalization, as of June 30th, 2021, we had $412 million in cash and cash equivalents and $24.4 million in long-term debt. On May 28, 2021, we completed our initial public offering, in which we issued and sold 12.0 million shares of common stock at a public offering price of $24 per share, which included 1.6 million shares of common stock issued pursuant to the exercise in full of the over-allotment option by our underwriters. We received $263.8 million in net proceeds after deducting underwriting discounts and commissions of $19.4 million and other offering costs of $4.9 million. As of June 30, 2021, we had 104.7 million shares issued in outstanding. Based on our financial results for the second quarter of 2021 and current financial trends, we are providing full-year 2021 guidance for revenue-less ancillary services and adjusted EBITDA For the full year 2021, revenue-less ancillary services will be in the range of $158 to $161 million. This guidance reflects the optimism regarding the strength of our business for both Q3 and Q4 of 2021. With respect to adjusted EBITDA, we will be in the range of 4 to 6 million. However, we will continue to invest in the business to drive revenue growth based on the addressable markets our solutions can serve. And as a result, we do not expect to generate adjusted EBITDA in 2022 or 2023. As with prior quarters, this range assumes no further unforeseen COVID-related impacts, which could influence the remainder of 2021. To summarize, We believe we have a scalable business model that puts us in a strong position to continue our success with a clear opportunity for future revenue growth and path towards profitability. I would now like to turn the call back over to Mike to wrap things up before taking your questions.

Thanks, Mike. We believe here at Flywire that we have a clear and simple value proposition that will continue to help us win. We help our clients get paid and help their customers pay with ease no matter where they are in the world. We provide best-in-class execution for high-stakes, high-value payments. We have an extensible suite of solutions across global and local industries and markets made possible by our flywire advantage, that payment platform, the global network, and vertical-specific software. We have a robust and attractive business model with very sticky client relationships. Finally, our innovative mindset and execution-driven culture will continue to guide us and help make Flywire a transformative company. None of what we do would be possible without our nearly 600 amazing Flymates. This is a team that has truly innovated over the last decade. With a team that embodies our values of collaboration, ambitious innovation, fulfillment, execution, authenticity, and evolved learning, I am proud to lead this team and would like to thank them for all their continued hard work. With that, I'd like to turn the call back over to the operator for questions. Operator?

Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start keys. Due to time constraints, we ask that everyone limit themselves to one question and one follow-up per person. One moment, please, while we poll for questions. Our first question is from Darren Peller of Wolf Research. Please state your question.

Hey, congrats on this, guys, on the first quarter out of the box and good results. I guess, Mike and Rob, if we think about the sources of upside, I mean, I think the results were obviously strong. A lot of investors expected strong results from you guys and potential upside. But I think the magnitude was somewhat eye-opening in terms of both the contribution, just really overall the business and top line. When we think about that and the major drivers you're seeing, that's really the major points that are pushing that. I mean, what would you say? Is it same-store sales that's really coming back, or is it more the combination of incremental customers flowing through at a faster pace? And then how much of it is really macro-driven versus what's in your control?

Yeah, thanks very much, Darren. Good to hear from you. So I'll take the first part, and then maybe Rob can speak a little bit about the cohorts and what was new business and what was kind of year-on-year client growth. But just in general, I mean, it was obviously a great quarter. I mean, transaction volume saw significant strong growth, I think 127 or so percent. transactional revenue, 116%. And I would say big call-outs for where that growth came from, both the travel sector and the education sector. And if you give you a flavor for it, you know, Canada, for instance, in cross-border education really outperformed, right? So one good example in travel, it was, you know, our recent investments in luxury tour operator, multi-day trips, and really that coming back, you know, a bit earlier than expected as well. And then I just say client acquisition was quite strong in the quarter, right? So, again, gave us really good confidence going forward. But, you know, Rob, you want to talk a little bit maybe about the split of new business versus existing customer growth? Yes, thanks, Mike.

So, Darren, it was really a strong performance across the board. So if you think about our way of segmenting clients, and we've talked about cohorts in the past, sort of you think about that most established cohort are 2019 and prior clients. all grew very well. So you'd see in that a return in the NRR, and you heard my comments about the strong NRR. But that was the largest single contribution in terms of the allocation of the growth that you saw. You also saw a very nice contribution from the 2020 class. So that group also grew very well and contributed meaningfully to the 2021 period. Obviously, we had a nice quarter in terms of new signings as well with 100 plus new clients added to the tape during the quarter. Obviously, those folks get live distributed through the quarter or even after. So their contribution to the quarter is smaller, but the growth really came in all three areas.

All right. So it's pretty broad-based, it sounds like, but the existing customers sound extremely strong, which is good to hear. Just one quick follow-up would be on the guidance you guys gave. And actually, I'm going to hit on the EBITDA side for a minute because it was interesting to see that it was actually positive. Let's call it $5 million. I think you said $4 to $6 million. Um, you know, you're a company that we know is going to invest or reinvest, you know, considerably into the business given the opportunities, but you know, here you are guiding to a positive EBITDA number. Uh, so can you just touch on your thought process around that versus, um, and what we should be thinking about in terms of your, you know, potential for operating leverage and pass through? Thanks guys.

Yeah, for sure. So, you know, obviously, uh, you know, the, the business performed quite well and you, you saw the, the kind of revenue outpace, uh, I'd also just highlight the fact that, as we've said before, we have really great industry unit economics, and you see that in the quarter as that flows through into adjusted EBITDA. As you look forward, it gives us, frankly, more confidence to invest in growth. The business is a great business, and you can see that with the quarter's performance. And so I would say expect us to continue to accelerate. Hiring for us is at record pace. It's continuing. Right. There's a big hunt for talent out there. And that's something you're going to see us continue to invest a lot in, specifically around product and tech, as well as sales and marketing. And frankly, I think that's what the market is going to ask of us. So, you know, that's where you're going to see us continue to continue to grow and invest. You know, again, we want to make sure people have an understanding of where we see opportunities to invest and grow. We'll be making them. And, you know, it is nice to see quarters like this, though, where where the business economics flow right through.

Understood. All right. Thanks again, guys. Thanks, John.

Our next question is from Tinjin Wang of JPMorgan. Please state your question.

Thank you so much, and congrats again on your first public call. And I'll echo what Darren said. It's pretty amazing results here. I'll ask actually on the con side, if you don't mind. On gross margin, Higher than expected. I know you mentioned bank transfers and payment method mix helped, but just curious if that is sustainable or if there's anything unusual that maybe we need to consider going forward in the second half because, you know, with the big magnitude on the revenue, then you're also getting the better gross margin flow through. You know, that does change our thinking positively, obviously. So just want to make sure we get that right.

Sure, thanks. This is Mike Ellis. That's a great question. And I'll kind of just start off by saying, you know, the business is seasonal, right? And you understand that based on what we've shared with AS1. And you're right in what I said that the basic improvement in gross margin was essentially the result of some payer choices that were basically due to bank transfers being a more preferred method during the quarter, predominantly as Mike and Rob talked about the improvement that we saw in our markets in Canada and EMEA. And that's really the majority of the improvement for the adjusted gross margin. But just like when price points increase over time, whether that's in U.S.-based educations or higher-priced travel, bank transfers tend to be used more often, and we see that happening in Q3 as well. So the improvement to the 68% range is expected. We do expect our adjusted gross margin to have a level set for the next number of quarters and don't expect any type of major increases. But we do continue to drive efficiencies through our payment network. And you see that as well. That's the other major component to the improvement And we'll continue to drive scale, not only through the fact that we'll increase our payment volume, but we continue to negotiate with our providers. And you know that we control the network, so we get to control that flow. So we've got opportunity and leverage to drive margins, but we anticipate maybe not such a great 530 basis points. You should not be thinking about that on a sequential quarter basis improvement.

Understood. No, that's very clear. Then my follow-up, just on the investment side, given the strength on the revenue front, are you able to spend and hit your hiring targets and lean in from an OpEx and investing standpoint? I know the war on talent right now is pretty tough, so just curious if you're hitting your budget on the investment side.

Yeah, I'll jump in here. This is Rob. We've expanded significantly already this year. We're We've hired well over 100 people into the company already. We have an anticipation of continuing to expand significantly with similar growth through the second half of the year. We, you know, I think we have a pretty good proposition to share with new prospective fly mates. It's a company with a great culture as well as a great opportunity in front of it. And so you're right, the war for talent is definitely, you know, it's a tough game out there, but we do think we play well in it and we are expanding in areas like talent acquisition and that team to be able to make sure that we are sort of out there in all the places that we're hiring. And again, for us, it is all over the world. It's across the verticals. And so that gives us the chance to look in a lot of places for the talent we need.

Yeah, and I just add to what Rob said. We're also seeing talent find us now that we're in the public markets and have a bigger stage. And so really impressed with the talent we're bringing into the business today and excited for the future. We're happy to compete in this kind of future of work world and continue to recruit great flymates.

Good stuff. Thank you, guys. Thanks, Ginger.

Our next question is from Dan Perlin of RBC Capital Markets. Please state your question.

Thanks. And let me also echo great results. uh always appreciate that right out of the box it's always helpful for us too so congratulations congratulations on that um you know one of the questions i had is we did see a pretty you know material rebound sequentially in your monetization rates which i know is maybe not something you're going to be providing specific guidance to but i definitely want to make sure we're on the same page when we think about um you know some of the seasonality and mix that goes into driving that into the second half of the year. So is there any call-outs in terms of maybe just this rebound in, you know, kind of cross-border volumes that helped with this quarter and maybe some of the expectations just from a cadence perspective for the back half?

Thanks, Dan. I guess the question is when you're making reference to the monetization rate, I mean, how are you calculating that? I think that's the first thing that I want to make sure if you're talking about a defined term, we don't define necessarily a monetization rate. What I made reference to was revenue less ancillary services as a percent of total payment volume if someone wanted to actually do that calculation. We don't do that calculation because it's not an important aspect of our business. But I'm not sure it rebounded. If you're looking at it from Q1 to Q2, then yes, there was an increase in monetization or what you're referring to as that monetization rate. And that was really a function of payment mix, the method of choice. So for instance, like I said, the bank transfers will have a lower price point, so therefore a lower monetization rate in this case, but you'll also have higher gross margins. I think the point that you have to look at is when you look at our economic profile, it's really at the adjusted gross margin level and knowing that the quotient you get by dividing revenue less ancillary services by total payment volume is going to stay within a pretty regular band. depending on the quarter. So if someone felt so inclined to do that analysis, I would ask you to look on a quarter to previous year's quarter, not sequentially because of the seasonality of the business.

Yeah. And I'll just, just to add onto what Mike said, you know, transaction size, right? The transaction size, you know, what a tuition bill or what a travel bill could be at a given quarter or month can impact, right? As well as different currency pairs. So when you're dealing with certain types of peaks in different countries or different regions, you have different payment methods within those regions that also does then govern it. So that's what causes the seasonality and the quarterly seasonality that exists, the methods and the transactional size.

Yeah, okay. No, that's super helpful. And just quickly on my follow-up, this is more kind of an anecdotal question, but as you're having conversations with your existing clients and prospective clients, it's clear that you're – you're creating a lot of excitement in the market and you're generating a lot of demand and you're winning a lot of clients. I guess the question is, you know, near term, I'm wondering what their attitude is around kind of the Delta variant in particular around education and cross border. I know it sounds like some of the borders are opening back up, but I would just be interested to hear kind of in real time, maybe what some of those conversations sound like. Thanks and congratulations again.

Yeah. You know, I would say as we look across our industries, right. I mean, you look at 2020, you know, you know, dealing with the first wave or multiple waves of COVID, you know, I'd say our clients, you know, continue to be quite resilient. They figured out paths around it. We supported them, especially when it came to billing processes, operational back office changes, those types of things. And again, I'd say, you know, they continue to innovate and figure out ways to keep moving in that environment. And And I think, you know, as much as, you know, some of the news and the headlines, I think, gives us all, you know, pretty much everywhere a bit of pause as to not knowing what the future is. I think they've spent the last 18 months. dealing with this pandemic. I think, you know, we're probably all collectively going to be dealing with this pandemic a bit longer. And I think we'll all find a path through it. And so I think it's, you know, they're at a point of more living with it from what we're seeing, as we all are, and realizing that this isn't something that you kind of shut the curtain on. It's something that you'll likely be dealing with over time. But again, you know, I can just highlight, you know, the signs we saw in Q2, the We're really encouraged. I mean, that's part of the reason we put out some guidance for the end of the year. So feeling really good about where things are at and how these industries are reacting to the world right now.

Yeah, it's really impressive. Thank you.

Our next question is from Jason Kupferberg of Bank of America. Please state your question.

Hey, good afternoon, guys. Great numbers here. I just wanted to start with a question on the guidance for the full year on the revenue less ancillary services. It does seem to imply some deceleration just in terms of the second half year-over-year growth rate relative to the first half year-over-year growth rate. But I think your year-over-year comparisons actually ease in the second half versus the first half. Just curious if there's any call-outs around that. Certainly nothing wrong with being conservative, but just wanted to unpack that a bit.

So I can jump in here if you like, Jason. You know, obviously we're very bullish on the second half of the year, and that's the sort of underlying point of putting out the guidance that we did. In terms of understanding sort of that rate of growth and looking at sort of first half versus second half, yeah, Please understand that the Q2 comparison against 2020 was the most impacted quarter when you look back at last year's quarter. So obviously we're very pleased with 77% growth. We do know that that was against the most impacted quarter of last year. As you look forward to the Q3 and Q4, obviously those are bigger quarters for us. And we're very optimistic about the performance for those quarters. without necessarily saying that they're going to achieve that same level of growth on a percentage basis.

Okay, understood. I wanted to hear a little bit more about the international expansion efforts. I know you touched a little bit on LATAM and some of the efforts in the education vertical there, but maybe if you could just give us a little bit more of a holistic view what you see on the international expansion front and, you know, any milestones perhaps we should be looking for on that front over the next two to three quarters?

Yes, international is definitely a focus area for us. It's a big part of the TAM, and it's a great growth opportunity for us, as you, I know well. You know, we started off as a U.S.-based company. We started off with a U.S.-centric offering with onshore clients and a single product. The company is a very global company today, but with enormous opportunities to expand in all these markets. So as you sort of think about our different verticals, education, we are expanding significantly in EMEA, investing significantly in Canada, Latin America, and APAC. All of those are growth areas for us where, you know, we start with pretty small teams and opportunities to grow those teams and grow the business opportunities in all those regions. Travel for us, similarly, a global opportunity where we have teams around the world, but still the opportunity to penetrate the travel segment way more deeply than we have thus far. And we are growing those teams. Similarly, if you look in our B2B segment, that's going to take advantage of our opportunity to capture that $10 trillion global TAM that we see out there. And that team grew significantly in Q2, and we expect to continue to grow that team for the rest of the year. So international is a big part of the story for us. You know, we are a global company today with flymates all over the world and clients all over the world, and that theme will be true and increasingly true going forward.

Okay. Good stuff. Congrats on the results.

Thanks, Jason.

Thanks, Jason.

Our next question is from Ashwin Shervikar of Citi. Please state your question.

Thank you. Hey, Mike. Congratulations. Hey, congratulations on the quarter. Good start to your public life. I wanted to get back to sort of the 3Q versus 4Q discussion. you know, just looking at it from the perspective of volumes, revs. So we know the seasonality, 3Q stronger than 4Q. As you look at your pipeline, do you see perhaps that seasonality to some extent being overridden by the strength of the pipeline? Just kind of thinking through how one should process, you know, the strength of the current results.

You know, so I would say you're right in Q3 being the largest quarter. I'd say as you look at guidance, I mean, definitely think through that in relation to kind of guidance given. We see strength in both quarters, but Q3 is the larger one, right? So that's worth noting. You know, I would say when it comes to client signs, you know, we really just see a continuation of the great first half. client signs and client acquisition metrics really continuing. I think that continues to be a fact that we feel really confident when it comes to where revenue will come in, but also where client acquisition will help. Remember that when you acquire, that actual payout for that acquisition of a client is usually in the subsequent year, right? So actually very little impact of net new clients happens within the given year in our business. That's what makes it such a great recurring growth model over time and that NRR is driven. And so it's really important to note that all these great client signs that we're having this year, those will really continue to pay off into 22 and 23.

Understood, understood. And one question we get relatively frequently from investors is with regards to education and sort of the, you know, what seems like the already very good penetration that you have with over 2,000 global institutions and so on and so forth. So as you think of the future education opportunity, and you kind of mentioned some of this in the past, adding new services, going after sort of the non-university market and so on, Can you talk a little bit about those incremental ads and the work you're doing there with the progress that you're making perhaps?

Sure. No, happy to. And I'm sure Ralph will probably jump a few things in at the end. You know, I'd say, you know, still feel like we're in the early innings, even though education was our first offering. Even when you look at the cross-border products signing, you know, big universities continuing to see great growth in many of those regions that Rob mentioned earlier. around global expansion. And so I would just highlight that. We've been fortunate to, again, be winning great clients in a who's who of top universities around the world. We've also found, as you mentioned, those great subsectors, right? Whether it's boarding schools, whether it's language programs, vocational schools, all those areas really bring us a great and diverse revenue stream, even within the education industry. And then I would just highlight, remember the land and expand strategy, really important, which I'm sure Rob will jump in and talk about. But, you know, we used to be an education solution provider with one product. And now we have a whole suite of offerings that is allowing us to go back into those universities and really go for all the payment volume, really help them digitize campus, right, doing all the domestic processing and much, much more. And I'm sure Rob will probably jump in it.

Yeah, it's a question we really appreciate, right? So I mentioned in my comments an example of the land of expand here in the U.S. where we talked about Texas A&M University, right? That for us is a classic case where we earned our good name in the client based on the work that we were doing around cross-border and managed to convert them to a domestic and international client where we are moving all of that tuition dollars. We're going to provide great service to Texas A&M, but we're also seeing it as a meaningful opportunity for the company. But we're doing that not just in the U.S., right? There are multiple U.S. examples, but we're doing a similar playbook in the U.K. where we have multiple examples where we are similarly taking on the domestic as well as the international processing. We're rolling out our CRS suite in the U.K. for multiple institutions. If you look at Canada, similarly in Canada, I mentioned in my comments six upsells for existing clients of our expanded capabilities that we've rolled out to Canada in the last year. And so Q2 was a good land and expand quarter for Canada as well. On top of all that is really sort of the new product capabilities, right? So we're in the very earliest days, not just of the sort of that CRS platform, but early days of rolling out AR collect capabilities around sponsored billing, international payment plans, elements of our suite that can be rolled out in different order to different clients based on their needs. And so for us, really a lot of opportunity to continue that land and expand.

Got it, got it.

No, thank you for all the detail. Appreciate it.

Our next question is from Bob Napoli of William Blair. Please state your question.

Thank you and good afternoon and congratulations. I'll add that to the very nice quarter and start. Good, great to see.

Thanks, Bob.

I guess just on, you know, the pipeline, Now the trends in the pipeline and maybe the composition, maybe a little color on the composition or has there been, how has the pipeline trended from prior to the IPO where you had a really nice pipeline and how much of that is cross border? Is there a different mix by geography? And then the clients you're adding, how does the size of the ARR of those clients compare to what you've had historically?

Bob, I can jump in and start with some thoughts on that. So we continue to have great pipeline strength, seen growth in the pipeline. You know, we shared with you in the past some, you know, directional guidance on just sort of the strength of our pipeline and our ARR, and it continues to be strong. So, you know, we signed this year over – sorry, this past quarter over 100 clients. You know, we've replenished those clients and more in the pipeline pipeline. The values in the pipeline remain strong, sort of consistent with our historical averages. They're diverse across the verticals that we have with pipeline strength across each of the verticals as well as across the geographies. Again, a very global business with a lot of opportunity in the U.S. and a ton of opportunity outside the U.S. So really sort of consistently strong and very pleased with where we stand in the pipeline sets us up very well for the future.

And then maybe, I mean, you have a very healthy balance sheet right now and a very strongly growing business. With your M&A, from an M&A perspective, maybe just some color on what's the highest priority. If you were to have your choice on the M&A front, where would you acquire? Is it within your current verticals? Is it a new vertical? Is it expansion in different geographies? I guess you're going to say all of the above.

Yeah, I'll take that one, Bob. So I would say, obviously, we're coming off of having done a couple of tuck-in acquisitions over the years. We think it's a muscle we know well and we're, frankly, good at. Obviously, I won't say anything's burning a hole in our pocket or anything right now. We're looking for great opportunities for us. We've had a great track record of client retention and employee retention on the acquisitions that we've done. But in general, things we would look at would probably be some way to accelerate a given industry or market, maybe a geography that we're already in, potential capability that we thought could be expanded or upsold into the existing, you know, 2400 plus customer base that we have. And then lastly, you know, the opportunity, you know, obviously exists to enter additional geographies. But it's not something that, you know, would really fall out probably any of those three areas.

Great. Thank you. Appreciate it.

Our next question is from John Davis of Raymond James.

Thanks. Good afternoon guys. And I'll add my, uh, my congrats. Um, Mike, maybe just to start off a little bit on Bob's question around MNA, maybe talk a little bit about how you guys look at it from a financial framework perspective. Are you guys looking to growth, the creative deals, you know, would you potentially do something more transformative, but maybe, you know, instead of kind of what you would buy, maybe focus a little bit on how you guys think it from a financial perspective.

Yeah, I would say we're definitely looking for things that either are growing at levels that would be consistent or better than what we're doing or have an ability for us to grow. So one area potentially could be leveraging, obviously, our ability to monetize payments in someone else's business that is yet to have a great way to monetize payments. That would still fit. even if the growth rate of that target potentially wasn't at the level because of the monetization potential. So I'd say that definitely falls in the level, but there's a lot of businesses out there that don't have that compounding growth story like we do that doesn't have that consistent. And again, we think that's really important, right? So we have to really believe in that story. We won't ignore transformative deals, but at the same time, we've had a good track record of finding deals that that, again, either fit into an existing industry, vertical or geography, have great people that don't want to kind of go run away. You know, don't look at us to to kind of do platform consolidation extensively. Don't look for us to do a roll up across lots of things. Right. We want people that want to grow with us, that want to build their careers here at Flywire and aren't done on their journey yet. And so those are the types of companies and the types of people we look for.

Okay, great. And then, Mike, you've been pretty explicit that you plan to kind of reinvest upside to the top line and kind of expect break-even kind of EBITDA for the foreseeable future, at least in 2022 and 2023. So, you know, I'm going to guess that 2Q probably beat your own expectations. And so if I think about where those incremental dollars, you know, if the momentum in the business continues and you end up with a great problem, which is more money to spend, you know, Where's the top priority for the incremental dollar of investment?

Yeah, I mean, inside here at Flywire, those conversations are just, they're frankly just so fun. I mean, there's opportunity everywhere. So, you know, there's probably even Flymates on this call listening for, you know, signal to go and do more and expand. And there's so many great ideas of new product capabilities to build, new markets to enter, ways we can enhance the global network. And so I'd say we're not waiting around for those investments. You know, frankly, you know, we've been looking at how to accelerate this business and continue to accelerate it. We'll continue to do so. You know, I would say some big areas, I mean, sales, marketing, client engagement, right? There's just that much more we can do based on what Rob said around land and expand. You know, how do we get in front of more customers? How do we have more support for those customers and accelerate new markets? And then I would say product and tech, right? you know, continue to scale so that we can build and enhance solutions and bring new products and capabilities to market faster. So those would be, I'd say, the big two investment areas. You know, but again, you know, really, really excited to have that capital to invest and also to just be able to look and say, you know, this is the good industry leading unit economics that we have in this business. You can see them at work. But at the same time, we're going to focus on growth.

Okay. Appreciate it, guys. Thanks.

Our next question is from Jeff Cantwell of Guggenheim.

Please. Hey, guys. Congrats on the results, and thanks for taking my question. Thanks, Jim. You're touching on this earlier. Hey, great to hear you. You're touching on this earlier. Can you talk some more about the client ads from the quarter and really the first half? You're now at 2,400 clients, which continues to increase. So my question is, what do you think is driving those new wins? And how do you feel about your sales team as far as how they're performing? Maybe talk a little bit about the Flymates and what changed this year compared to last year. Any kind of qualitative color you can share on customer acquisition in your Salesforce performance right now would be great. Thanks.

Yeah, we're really pleased with our presence in the market and the ability of our Flymates to represent the company around the world. So as you look at our approach, our approach has always been to hire domain experts and take domain experts and put them with great product in market and then surround them with relationship management and other things that make our clients feel like they're getting true sort of white glove treatment and top notch technology, top notch service. So our reputation in the market is very strong and that helps drive the client acquisition that you've seen. And that's really true across the verticals. It's true across the geographies. You know, we benefit significantly from our good name in the market, and that's what's helping us continue to drive deeper into existing clients, win new clients. You know, we're also doing some of this via programs and marketing effort, right? So we're supporting that sales team with things like, you know, we have a Flywire Champions program, which is sort of a referral-type program. We have partnerships with folks like the ATTA. That's the Adventure Travel Trade Association. And we're working with them to help make sure that the Flywire proposition is understood as broadly as possible. And so sort of from that digital marketing, partner marketing, partner acquisition and strategy, all of those are helping support our sales team. And then the sales team is being very skilled and effective in the markets that they're tackling. And so all of that together is driving that strong pipeline, driving the strong quarterly client additions. We feel really good about where we are with that. That said, we're going to be hiring more of those folks and continuing to expand the team.

Jeff, the only thing I can add to that is just remember the Flywire advantage too, right? The platform, the network, and the vertical software, it differentiates us so much from other companies in the market. Having those things and having experts that know these industries, you know, it may not sound revolutionary, but within these industries, like buying from people who are experts and have the best technology to deploy as well to just solve the problem really goes a long way. So, you know, that's the other part that definitely don't count out when you think of our sales team. They're going to market with something that's quite unique and differentiated.

Okay, that's great color. Appreciate it. And then just as a follow up on Jason's question, I saw the press release of yours about La Liga Business School. And there's another one that you just mentioned about your expansion in Canada. So, you know, from the outside, it seems like the international opportunities accelerating. And so in that spirit, I was hoping you could talk more about your strategy internationally right now. You know, what's what's working? And can you share your level of optimism as you think ahead here? It'd be great to hear your thoughts on that. Thanks very much.

Yeah, I'll start and then others can jump in. But, you know, international has been very successful for us in recent years, and we sort of doubled down on our investment in international. So one thing that we have paid particular attention to is the expansion of capabilities in the global payment network to make sure that we could take domestic solutions internationally, right? So that's the idea that we are doing more than cross-border. In fact, we're moving both the domestic and international money for our clients in an increasing number of our markets. So what you're seeing us being able to do and doing effectively is offering that broader set of capabilities in more markets, right? So it started U.S., added U.K., added Canada, expanding across Europe, adding markets in Latin America and Asia Pacific. And so you're seeing us being able to take a broader proposition out to a broader set of clients. And with that, again, that increases our confidence in hiring and expanding the teams internationally. And so that's that sort of that positive reinforcing effect as we land sort of marquee clients in new markets that helps accelerate the ability to land the next clients and the next clients after that. And so we are true believers in that international investment and the return we're getting on that international investment and got our foot pretty hard on the pedal on that international expansion.

Okay, great. Thank you, and congrats again on the results.

Thanks, Jeff, so much.

Our final question is from Ken Suchosky of Autonomous Research.

Hi, Mike and team. Thanks for squeezing me in. I know we're going over, but congrats on the IPO and the nice quarter, and thanks for taking my question. I just wanted to ask about your ability to ramp in some of these newer verticals like travel and B2B and maybe even healthcare. I mean, how do you guys think about your competitive advantage in those verticals since they're somewhat newer verticals? I mean, where do you guys think you're differentiated versus competitors?

Hey, Ken, thanks for the kind words. Good to hear your voice as well. You know, I'd say when you look at these industries, remember, we're coming into any of our markets with that flywire advantage, right? So you have the platform of shared services, you have the shared network to move the money and to really take that burden of acceptance away from our clients and just handle all that complication. And then you have the targeted vertical software that's really best in class for the industry, right? So that combination really does help differentiate us and it gives us a huge leg up when we enter new industries such as travel and B2B, right? Where our time and energy really is spent is around building up the team of experts with that experience within the industry, and also building the, think of it as the connectors to the systems of record that we're typically seeing that differ by industry, of course, right? So in education, it could be a student information system. In healthcare, it's more of the EHRs, such as Cerner and Epic and such. In travel, you're going to see it's much more of the bookings platforms. Like Rob mentioned, Resdy is a good example, or RoomBoss. Those are great examples of integrations that have come up to help our go-to-market and to reinforce that we're the partner to select in those industries. And so when it comes to those new markets, we're starting off well down the road with all the capabilities built out around the movement of money in the network. And it's really about how do we configure this to deliver value for the customers and their payers and make the experiences great. And so that's really where we spend our time and effort. And that's part of the reason our time to revenue is so short as we go into new industries or as we go into new geographies, Again, we're not starting from scratch.

Yeah, that makes a lot of sense. That's exciting stuff there. Maybe just for my follow-up, I wanted to ask about your B2B business. You mentioned your focus on the AR side of the market. Can you maybe talk about where you're seeing the most opportunity? Is it domestic payments? Is it more international? I guess when you think about the competitors that you're bumping up against, who do you see in the markets? Thank you.

Yeah, Ken, I'll start with that one. You know, our proposition on the B2B side is going after things from the receivable side, and that already puts us in a relatively unique position, right? There's a fair bit of sort of noise on the industry on the payable side, but on the receivable side, you know, we bring a unique set of capabilities, as Mike just mentioned, and we're very clear in the markets that we're focused on. So to answer your question, you know, the The primary sort of momentum and target markets for us are around the segments we've targeted, which are sort of the tech, software, manufacturing, and professional services segments. We've seen success across all of those, and we are looking forward to continuing that investment in those areas. We're similarly working on the integrations, as Mike mentioned, sort of the key systems of record that matter in B2B, and Integrations like the one we mentioned in the call earlier around YayPay are the kinds of things that are helping generate business in our B2B segment. Final part of, I think, what you were asking about there, it is both international and domestic. What clients are looking for us to do is solve the problem broadly on the receivable side. So certainly we have a very distinctive capability around international, but our capabilities around domestic and international are both going to be very relevant as we solve the receivables challenge in this B2B segment.

Great to hear. Thanks a lot and congrats again. Thanks, Kat. Thanks.

We have reached the end of the question and answer session. I will now turn the call back over to Mike Massaro for closing remarks.

Well, thanks, everyone. I appreciate you joining us and spending a little extra time on our first earnings call as a public company. We're super excited about the future ahead. Hopefully you heard it here. Thanks again to all the flymates who helped execute an amazing Q2 and excited to get back on the phone with you very shortly to talk about Q3. Thanks very much.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

Goodbye.