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.