Flywire Corporation

materially from those contemplated by these forward-looking statements. We will also be discussing certain non-GAAP financial measures. Please refer to our press release and SEC filings for more information on the risks regarding these forward-looking statements that could cause actual results to differ materially, 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 on our website. I would now like to turn the call over to Mike Massaro.

Thank you, Akhil, and thank you to everyone that is joining us today. We are pleased to share our Q4 and fiscal year 2022 results here with you all today. These results continue to show strong performance across the business. We are also eager to share our business priorities and financial outlook for 2023 as well during this call. In a few minutes, Rob Orgel, our president and COO, as well as Mike Ellis, our CFO, will go into greater detail about our results during the quarter. But first, I will start with a few financial highlights. First, let's start with the fourth quarter. Revenue-less ancillary services was 67.4 million, representing year-over-year growth of 47%, or 57% on a constant currency basis. Adjusted gross profit for the quarter was 44.5 million, an increase of 40% year over year. And adjusted EBITDA was $1 million for the quarter. As our Q4 results now cap off another great year for Flywire, I want to take a few moments to talk about some of the things we were able to achieve in fiscal year 2022, a truly exceptional year for Flywire. Starting with our fiscal year 2022 financial highlight, Flywire Revenue West Ancillary Services grew by 47%, or 55%, on a constant currency basis. Our adjusted gross profit grew 40%, and our adjusted EBITDA was $14.9 million, despite our record investment year. In FY 2022, we also added more than 590 clients across all verticals and now serve more than 3,100 globally. We moved more than $18 billion around the world, we saw significant growth in our travel vertical, more than tripling the revenue of this business. And we completed the acquisition of Cohort Go and continue to successfully integrate the WPM business, finishing the year with over 40 clients for our combined solution. These great achievements are in addition to significant progress in our three key investment areas for 2022. First, we continue to enhance our go-to-market efforts. with a key focus on sales effectiveness, client delivery capacity, and efficient digital acquisition. In Q4, we saw more than 100% year-on-year increase in pipeline creation by our global sales team and continue to see strong ROI of our investment in our digital marketing efforts, with more than 65% year-over-year increase in marketing-sourced deals in our travel vertical alone. Our strong track record of LTV to CACs combined with our proven unit economics, continue to give us confidence in our go-to-market investments. Second, we continue to expand our Flywire advantage, part of our long-term vision to power the ecosystems in our core industries of education, healthcare, travel, and B2B payments. As an example, following our acquisition of Cohort Go in July of last year, we have delivered new features and migrated the first wave of agent partners into the Flywire platform. We have leveraged Cohort Go's Pay Any School capability to allow Flywire agents the ability to pay a much broader set of educational institutions, as they are no longer limited to sending tuition payments to only Flywire-contracted schools. Educational agents, international students, and client institutions all benefit from these investments, driving growth and further delivery of value to multiple stakeholders in the ecosystem. And our third key investment area was to strengthen and grow our Flymate community. Flywire is committed to providing Flymates a place where they can build their careers of a lifetime. And you see this reflected in the ways in which we invest in them and their career growth. We expanded and invested in our employee resource groups, which provide spaces for Flymates to come together, connect around shared interests, and foster meaningful conversation. We strengthened our internal mobility programs, called One Flywire, that focuses on upskilling and providing new opportunities for growth, as well as training and education for our people managers. Flymates attests that these experiences provide them with incredible growth opportunities, both personally and professionally. We are thrilled to continue to be recognized for our award-winning culture, including recently where Flywire was named Best Workplace in Financial Services by Fortune Magazine. and a top place to work by the Boston Globe. A lot of this is detailed in our inaugural Environmental, Social, and Governance Report, which was released in December of 2022. Whether through the work of our charitable foundation or through the community service trips our flymates embark on, we believe that being a force for good can be linked to generating growth and long-term value. We look forward to evolving our ESG efforts in 2023 and beyond. We truly had a fantastic 2022 and our team is quite proud of what we have accomplished. We've demonstrated that we can execute against our multiple growth levers to accelerate our business and have a proven track record of growing with existing clients, growing with new clients, expanding our partner ecosystem, scaling into new geographies and pursuing and integrating value enhancing acquisitions. We also demonstrated our ability to be laser focused on efficiency. investing in high potential ROI areas like targeted sales, new software functionality, and network capabilities, while controlling costs in other areas like consolidating tools and vendor management. This is an important balance we continue to aim to strike and proves that we can deliver more value to clients and payers with efficient deployment of our resources. We are proud of what we have accomplished, but we are also excited for what is ahead for Flywire. As we look at 2023, we remain focused on investing in go-to-market, expanding our flywire advantage, and strengthening and growing our flymate community. First, we are working to optimize our go-to-market motion to improve the effectiveness of our sales and relationship management teams and accomplish more with our recent investments. To enable this, we plan to continue to enhance our capabilities of our sales, relationship management, marketing, and revenue operations functions. We continue to refine our delivery capacity and follow through on our digital acquisition strategy. A key part of our focused go-to-market this year will be around accelerating our channel and technology partners across all verticals. We have over 80 technology integrations across our business, and our ability to integrate directly with our partners makes the onboarding process and technology implementation faster and more efficient for our clients, further enhancing our defensible moat in the industries that we serve. For example, our channeled strategy in healthcare with Epic and Cerner, two of the largest EHRs in the industry, enables us to embed deeper into the workflows of our clients, making us stickier within our accounts while also helping us accelerate new wins. This is a winning model for us, and we expect to see similar trends play out across other verticals. As for expanding our Flywire advantage, we remain focused on product and payment innovation to power the vertical ecosystems in the industries that we serve. We have talked already about the success in our initiatives within education agents paying non-Flywire clients. We are also excited about the progress we are making in the 529 savings plan market. Flywire is now able to streamline and digitize the payment process for tuition payments from 529 plans, even if the recipient is not a Flywire client. And we are making great progress in payer services, bringing new solutions to market that provide benefit to the various stakeholders involved. in our ecosystems. These payer services are adjacent TAM expansion opportunities, and we believe they can enhance the lifetime value of our payer and deliver value for Flywire over time. Lastly, we will continue to be focused on strengthening and growing our Flymate community. We will continue to provide our globally distributed Flymate with resources they need to succeed. We will continue to support and develop top talent while finding opportunities to streamline internal processes. helping Flywire scale across all disciplines. Our Flymates have always excelled at execution. It is one of our core values, and they deserve the opportunity to be freed up from unnecessary and cumbersome tasks. We are in a strong position to keep investing in our Flymates, and particularly around the areas of learning and development, well-being, and diversity, equity, and inclusion. I now wanted to spend a few minutes reviewing the trends we are seeing across our verticals and geographies, which is giving us even more confidence in our plan for the year and for the long term. Across higher education, where we benefit from a geographically diversified business, we are continuing to see positive student mobility trends across the world. For example, according to the Australian government, Australia has issued more than 120,000 visas to international students since borders reopened. And student visa grants from January to September 2022 were the highest ever, while working holiday visas also surpassed 2019 levels. Additionally, according to the 2022 Open Doors Report on International Education Exchange, the United States saw an increase of 80% year-over-year in new international student enrollment in the 2021-2022 academic year, a return to pre-pandemic levels. Overall, we remain optimistic about international education and confident in our ability to keep winning clients and delivering value to students and families around the world. In healthcare, we continue to see hospitals and health systems prioritizing their revenue cycle management as the patient financial crisis accelerates. And according to our recent report, 90% of healthcare CIOs surveyed say patient collections is a key metric their job performance is measured against. We are continuing to expand our software capabilities to help address these market challenges and enable these hospital executives to meet their goals. In travel, there continues to be strong momentum in the subsectors we support. Our clients, consisting of travel operators, destination management companies, and accommodations providers, benefit from outsized demand from travelers for luxury travel experiences. According to our annual travel survey, More than 80% of luxury travelers surveyed said they're spending more on travel in 2023 compared with what they spent in 2022. And 84% say their vacations this year will be longer than those they took last year. We are also very encouraged about Asia's reopening over the prior few months and expect to see strong growth from clients in Southeast Asia, as well as continued growth in travelers from China and Japan. And lastly, in B2B, our largest market size opportunity, we are seeing success with our go-to-market efforts and ability to support major enterprise software systems like NetSuite and Salesforce. As finance professionals continue to view their ERP as their single source of truth, we believe we have a major opportunity to help them augment their ERP deployment when it comes to receiving payments. In a recent survey we conducted of global finance professionals, we found that as companies scale, they have challenges collecting global payments within their ERP systems. These challenges include invoicing in local languages and acceptance of multiple currencies, negatively impacting their DSO. Importantly, 89% of those surveyed said they think they could save money if more of the cross-border receivables process was integrated into their ERP system. This is exactly the use case that Flywire is able to address. In closing, I could not be more proud of the progress we've made in all areas in 2022 and more excited for the year ahead. I would now like to turn the call over to Rob Orgel, our President and COO, to review some operational highlights from the quarter.

Rob? Thanks, Mike. Good afternoon, everyone. Our strong results this year reflect continued execution of our growth strategies, carrying forward what was an excellent 2022 of execution and delivering results. After a significant investment year in 2022, we are working to scale our business efficiently as we move through 2023. We will focus on leveraging the incredible talent added to the company last year in this year's effort. In terms of the core business, we will focus our teams on revenue growth and efficiency initiatives across our business. In terms of our innovation areas, such as strategic payables and payer services, we're focusing on advancing revenue generation from these areas. There will be some hiring in 2023, but it is expected to be narrowly focused on areas of greatest need and highest return on spend. All in, the run rate spend added in 2023 is expected to be at least 60% less than last year's expansion. And that is into a much larger underlying business given the over 55% currency neutral growth in 2022 that Mike referenced in his opening comment. As you will see further when we get to the guidance discussion, Our strong underlying business and a focused and disciplined plan for 2023 position us for our forecasted adjusted EBITDA improvements in 2023 and also for continued growth and improved efficiency in 2024. Turning to the business performance in Q4 and 2022, we continue to see good results in two important metrics of our go-to-market performance. First, We grew existing clients with our NRR continuing for full year 2022 at 124%, supported by client volume growth and expansions, and despite the offsetting impact from the FX headwind we faced in 2022. In terms of new clients, we added over 145 new clients in the quarter, continuing our strong quarter-by-quarter performance through 2022. To highlight how we plan to continue this success, I'd like to highlight our 2023 strategic direction for our four verticals, share some of the exemplary 2022 successes, and then in a few minutes, mention other operational achievements that are important to our overall efficiency and scalability. Starting today with education. In 2023, we will continue to drive growth in our core markets as well as targeted newer markets. We plan to continue to focus on moving as much of our clients' total payment flows as possible, both international and domestic. That strategy, including continued success with our full suite solution, is core to our strong NRR and simultaneously drives client loyalty and satisfaction. We will invest to improve our global payment network with carefully selected international and domestic payment capability improvements. This strategy around managing domestic and international flows has worked for us at many of our most important global markets, and our teams are focused on its continued success. Second, we are focusing on effective collaboration and great integrations with partners like Ellucian and Tribal, as well as many others. Finally, we are continuing to focus on excellence in execution in key payer markets like India and China, where our work with agents and pay any school capabilities are proving very effective. Finally, we will continue our efforts to drive commercialization of our strategic payables as described back on our spring analyst day. St. Louis University exemplifies our continued growth with existing U.S. clients. SLU, founded over 200 years ago, is one of the nation's oldest Catholic universities and home to over 13,000 students. Flywire originally signed SLU in 2015 to support their cross-border students. However, after years of growing with them as a client, we have recently expanded our product offerings by launching our full suite comprehensive receivable solution. This will help provide flexible extended payment options to families, as well as help facilitate repayment options for students who have fallen behind. We are also building our client base in newer markets. For example, we recently leveraged our integration with Adapt IT of leading South Africa-based software provider for the higher education sector to sign the University of Johannesburg. This is a public university in South Africa with a student population of greater than 50,000 of which over 3,000 are international students from 80 plus countries. YWIRE is supporting the University of Johannesburg with our cross-border payment solution. Overall, we remain excited about the opportunities to expand in South Africa. which has over 25 public universities and over 40 private universities hosting over 45,000 international students per year. In terms of our most recent acquisition, we have efficiently integrated Cohort Go into our education vertical. Cohort Go brought us the ability to pay over 2,400 incremental schools globally, and since the acquisition, education agents in Flywire's existing network have paid over 450 non-Flywire schools. We are working to grow our paid school capabilities and look forward to welcoming an expanded set of institutions into our ecosystem in 2023. This, in turn, aids our education sales team in building a strong pipeline of new potential clients for our international cross-border and domestic education solution. Our agent solutions platform enables agents to have a single place to track all of their students' tuition payments, regardless of the school being a current Flywire client or not. Additionally, we are on track with integrating CohortGo's insurance cross-sell platform into Flywire's agent platform for the beginning of the second quarter of 2023, adding another cross-sell dimension to the acquisition, all in line with our original integration plan. With regard to WPM, we have passed the 12-month mark since the acquisition. We signed eight new schools during the fourth quarter for a total of 41 at the end of the year, and eight schools went live on the integrated WPM and Flywire solution during the fourth quarter. This includes Sheffield University, which has over 11,000 international students, and went live with Flywire's international and domestic card solution within the WPM integrated payment platform. Moving on to healthcare, our healthcare vertical enjoyed many successes in 2022, including delivering incredible results for our clients, and also use 2022 to position itself for what should be an even better 2023. We signed over 15 new clients and expanded services with 22 existing clients during the year. We expanded in a variety of ways, which include bringing on new hospital facilities and cross-selling additional products. We are seeing momentum in our pipeline driven by implementing our go-to-market approach and creating dedicated teams to sell into Cerner and Epic ecosystems. Our partnership with Sterner supports our ongoing expansion with Munson Healthcare. Munson is Northern Michigan's largest and leading healthcare system, serving the region's 540,000 residents. Due to our track record of facilitating increased collections through our digital self-service strategy across 30 plus Munson practices, we are now slated to integrate 44 incremental practices at Munson's central business office. To give another example, Advent Health, a faith-based nonprofit healthcare system headquartered in Florida with an integrated network spanning 46 hospital campuses across nine states, leveraged our expanded integration into Epic's EHR system as they went through a system consolidation process going from multiple EHRs to consolidating on Epic. Flywire's ability to integrate with multiple EHR systems helped Advent operate in a hybrid environment during the transition process. We look forward to continuing our work with AdSense. In our travel vertical, we are going from strength to strength. Following seasonally high volume from European destination management companies over the summer, we enjoyed record-setting revenue in the Asia Pacific region in Q4 as the region reopened post-pandemic. Our travel revenue in the Asia Pacific region in Q4 2022 alone exceeded 80% of our revenue for Q4 2021 for all of our travel verticals combined. This is driven by our strong client acquisitions in Asia, some of which we highlighted on our prior call. Our software integrations with leading online travel booking and reservation systems, such as RoomBoss, Beds24, and WooCommerce, enable many of our APAC customers to onboard in a self-service manner with minimal consultation required. Our past investments in building out software integrations with leading regional systems of record and travel vertical help us efficiently acquire new clients across geographies. Highlighting our success with enterprise clients, we were able to leverage our partnership with the American Resort Development Association, as well as our partnership with SPI Software to sign Devo Windham. Viva Windham has been developing and managing eight resorts in the Dominican Republic, Mexico, and the Bahamas for over 35 years. We are also pleased with the growth of our B2B vertical. We are expanding our integrations with leading ERP systems of record to drive higher adoption of our invoicing and AR collection solutions. For example, last week we announced our recently completed integration with FranConnect. a market-leading franchise management software provider for over 1,500 brands looking to grow their business both domestically and internationally. Flywire is the preferred payments provider on the FranConnect platform. FranConnect is expected to expand Flywire's B2B payment platform through its marketplace to enable franchisers to easily collect royalties and fees from franchisees in different currencies around the world. An example of a restaurant franchise client we are working with is Dickey's Barbecue Pit, the world's largest barbecue concept. Dickey's was founded in 1941 and is headquartered in Dallas, Texas, with over 550 locations across the United States and eight other countries, including Brazil, Japan, and Singapore. Dickey's continues its international push, having announced plans to develop 65 new locations in Canada and 40 new locations in the Philippines. Jim Perkins, Executive Vice President of International Development Support at Dickies, had this to say about the relationship with Flywire. My experience with global remittances before Flywire was characterized by payments being a number of days late, being hit with hidden fees, and managing a difficult reconciliation process. Working with and incorporating Flywire as the payment option has been a productivity improvement for my partners, as well as a clear path to timely and financial clarity for all involved. We look forward to supporting Vickie's on their global expansion efforts. We also continue to strengthen our channel partnership strategy in our B2B vertical. We announced a partnership with Huntington Bank last quarter, the 15th largest bank in the US with $178 billion in assets and nearly $6 billion in annual revenue. Based in Columbus, Ohio, Huntington has thousands of clients throughout the Midwest, Southeast, and we will work with Huntington to find ways for Flywire to serve them. Stepping out of our verticals and moving to highlight our efforts towards efficiency and scale, one example of our recent progress is that we launched the first instance of our AI chatbot for our customer support function at the end of the fourth quarter. Our overarching goal with the launch is to significantly reduce the assisted payer interaction volume of our high-quality payer support. We'll be adding more API-enabled support to the chatbot as this automation enables our customer support team to achieve faster inquiry resolution, scale efficiently, and focus their time and attention on more complex client needs. This is just one of many areas where we are aiming to use automation and analytics to drive more efficiency in the business. Overall, you can see we had a strong year and another very active quarter with Flywire's global team of flymates doing great work across our verticals and across the company to end the year. I would now like to turn the call over to Mike Ellis, our CFO, to review our results for the fourth quarter and full year, as well as our guidance for Q1 and 2020 series.