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spk03: Greetings and welcome to Flywire Corporation's fourth quarter 2023 earnings conference 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Akhil Hollis, Vice President, Investor Relations, and FP&A. Thank you. You may begin.
spk30: 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 fourth quarter and fiscal year 2023 earnings press release, supplemental presentation, and when filed, 410-K can be found at .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 will also be discussing certain non-GAP financial measures. Please refer to our press release and SEC filing for more information on the risks regarding these forward-looking statements. It could cause actual results to differ materially and the required disclosures and reconciliations related to non-GAP financial measures. This call is being webcast live and will be available for replay on our website. I'd now like to turn the call over to Mike Massaro.
spk08: Thank you, Akhil, and thank you to everyone that is joining us today. We are pleased to share our Q4 and fiscal 2023 results with you all, showing strong performance across the business. We are also eager to share our business priorities and financial outlook for 2024. In a few minutes, Rob Orgel, our President and COO, and Mike Ellis, our CFO, will go into greater detail about our results for Q4 2023. We will try to keep our prepared remarks short to leave more time for questions. I will start with a few financial highlights from Q4 2023. Revenue less ancillary services was $96.1 million in Q4, an increase of 43% year over year. Adjusted gross profit for the quarter was $63.5 million, an increase of 42% year over year. An adjusted EBITDA was $7.7 million for the quarter, increasing by $6.7 million year over year. These Q4 results now cap off another great year for Flywire. I will take a few moments to talk about some of the key achievements in fiscal year 2023. First, starting with our fiscal year 2023 financial highlights. Flywire's revenue less ancillary services grew by 43% year on year, and our adjusted EBITDA increased to $42 million or 11% of revenue less ancillary services. Both results were well above our targets discussed at the beginning of the year. In FY 2023, we also added more than 700 new clients across all verticals, and now serve more than 3,800 clients globally. Finally, we moved more than $24 billion through our global payment now in 2023, a 33% increase year over year. We also achieved a number of business highlights across all verticals and geographies. In education, we continue to expand our higher education footprint globally, including notable growth in the United Kingdom and throughout Asia Pacific. We also continue to see success in our land and expand strategy in the United States, increasing the footprint of our full suite solution landing many blue chip clients. In travel, we experienced strong growth in terms of new clients signed, most notably with poor operators and destination management companies, in EMEA and APAC regions. In B2B, we continue to sign large enterprise deals and see success in our partner strategy. In healthcare, we accelerated our partnership strategy, solidifying relationships with Cerner and Finthrive. We bolstered our global payment network with a focus on supporting our strategic pair markets like India and China, enhancing our relationships with WeChat Pay, as well as three of the largest banks in India. Lastly, we continued our strong track record of strategic M&A with the acquisition of StudyLink, and our sizable cash position allows us to pursue additional M&A that fits our core thesis. Now let's look ahead to 2024. Mike Ellis and Rob Orgel will talk about full year 2024 guidance in detail, but our plan anticipates strong growth numbers in a complex macro environment, further expansion of EBITDA in alignment with our multi-year expectations, and delivering positive net income. We are truly excited for what is ahead for Flywire. As we look at 2024, we remain focused on optimizing our -to-market capabilities, expanding our Flywire advantage, and strengthening our Flymate community. We are continuously working to optimize and invest in our -to-market efforts to sustain our growth algorithm. For example, in fiscal year 2023, we improved our sales ramp time from hire date to first deal close by more than 30%. This year, we plan to increase our investment in sales and relationship managers by more than 15% in aggregate, spread across all verticals and geographies. As we continue to grow, we will do so in the context of a very disciplined hiring plan that focuses on key roles to meet our objectives. Another area of investment in -to-market is our channel partnership strategy. We plan to grow our channel effectiveness and deepen partnerships by investing in channel sales teams, integration engineering resources, and building more certified integrations with our partners. Today, we have more than 90 partnerships in tech ERP integrations across our verticals that help us identify new clients, find clients faster, and accelerate our implementations. We have seen significant success with partners like Ellucian and Bank of America, and we strongly believe further investment in channel partners can be a significant driver of future revenue. 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. This year, we are focusing on our ability to embed payments into the existing software and workflow processes of clients, partners, and payers to add more value to our growing ecosystems. A cornerstone of us capitalizing on this opportunity is our API strategy to better serve our clients and partners and complement the Flywire software solutions they use today. In 2023, we began to invest in building a public API to surface the power of the entire Flywire payments platform. This allows our customers across all verticals to integrate our API into their existing ERPs or software to leverage everything from our KYC and AML processes all the way through our global payment net so they can control their workflows and user experience in a PCI-compliant fashion. We believe Flywire will be even more unique in our ability to provide a -to-use platform for complex domestic and cross-border payments. Along with optional flexibility to use components of our powerful API when clients seek deeper integrations into their workflows. Likewise, we will be exposing our new payables platform as an API, which can embed into any AP process of an ERP. We have proven our ability to identify new use cases where software drives value and
spk12: payment,
spk08: and we'll continue to invest more to drive growth and value for our clients. One example is our investment in StudyLink, which we acquired in Q4 and whose software connects agents in Australian education institutions, empowers the application and offer of admission and acceptance process for their international students. Embedding Flywire's payment technology into StudyLink's international admissions application and agent management software unlocks our opportunity to monetize the nearly $1 billion in deposit volume their platform is involved in today. Our vision is to extend the StudyLink platform beyond Australia, leveraging Flywire's global clients and team. We will also focus on the strategic payables opportunity, particularly around commission payments in our travel and education verticals. As a reminder, we are applying our existing framework of using software and our global payment network to solve specific payable use cases for our clients. In travel payable volumes, clients and our network of beneficiaries continues to grow since we piloted the solution last year. For many European DMCs, Flywire is the only way they can both receive and pay out cross-border high value travel payments. And in our education vertical, we are growing the number of clients who are using our solution to pay commissions to international education agents. We are also expanding our partner ecosystem of US investment savings accounts for using Flywire's payable solution to digitally disperse 529 plan payments to US colleges and institutions. Finally, we also continue to be focused on strengthening and growing our Flymate community. As I've referenced in the past, our culture and Flymates are what makes Flywire successful. We believe that our financial success enables us to give back to our communities and empowers our Flymates to build their careers of a lifetime. As we continue into 2024, we remain committed to building and maintaining high performance teams, developing exceptional talent, and having a positive impact on the world around us. In closing, I could not be more proud of the progress we made in 2023. I'm excited for the years ahead as we seek to continue to grow Flywire into one of the leading global payments companies of our generation. Before turning the call over to Rob, I wanted to officially welcome our incoming CFO, Cosmon Pidagoy, who will officially join Flywire on March 4th. Most recently, as Senior Vice President in Finance at PayPal, Cosmon brings decades senior financial leadership and a proven track record of scaling organizations in complex global environments. He is the ideal CFO to help us achieve the next level of scale and solidify our leadership position in the global payments ecosystem. I wanted to also thank Mike Ellis for his many contributions to Flywire over the past nine years, including establishing many of our finance functions, taking the company public, and managing many strategic acquisitions. He has been a trusted partner to me, and we appreciate the seamless CFO transition that he is enabling. 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?
spk10: Thanks, Mike. Good afternoon, everyone. After another strong year as a public company, I'd like to start today by revisiting
spk32: the algorithm we use
spk10: to achieve sustained long-term growth. Our model includes, first, expansion with our existing clients, second, annualization of clients signed the prior year, and third, revenue from clients signed in the current year. We are also adding new payer and non-client services as a fourth component that feeds our annual growth. Our growth starts with expansion with existing clients, which is driven by our primary focus on delivering exceptional solutions and service for our clients across all of our verticals. For fiscal year 2023, we recorded net revenue retention of 125%, continuing in a favorable range denoted by the 123% three-year average between 2019 and 2021 we shared at our analyst's day, and the 124% we reported for 2022. Our technology and client service teams are obsessed with meeting our clients' needs. Their hard work and our new solutions allow us to earn clients' trust, deliver client retention that exceeds 95% per annum, grow clients effectively, and produce a net promoter score in the 60s. Next in the growth algorithm, we benefit each year from the annualization and growth of clients signed in the prior year. As Mike mentioned, we signed over 700 clients in 2023, including over 170 in the fourth quarter. Our expected revenue per client signed in 2023 remains strong, and as usual, we only realized a fraction of that revenue last year. In 2024, based on our track record of positive client experiences, we expect to benefit from both a full year's revenue from these clients, as well as further penetration of our clients' payers. Third in the algorithm, we recognize a push of the revenue from new clients in the year we sign them. We invest in our -to-market capabilities to maintain our long-term growth. We estimate that our penetration of the total addressable market across our four verticals is in the low single-digit percentage range. We see opportunity everywhere and plan to continue to build -to-market teams to capitalize on these opportunities and increase our market share. Finally, as we address the needs of payers in our ecosystem, we have begun to generate meaningful revenue that is not associated with any particular client. For example, as we grow our -e-school capabilities rapidly, we recognize revenue from -to-schools that are not flywire clients. In other examples, we are helping students procure other needed services, such as student health insurance required in Australia, and with moving money from India to cover living expenses outside of tuition. We are excited to layer in payer services to our solution set and believe there can be a multi-year roadmap in this area. Next, I'd like to briefly discuss how we grew across our four verticals during the fourth quarter. In our education vertical, we estimate our TAM to be about $660 billion. This TAM includes US cross-border education, international cross-border education, and domestic education, both in the US and internationally. It includes higher ed, A-12, trade schools, summer programs, and more. We are penetrating our TAM through broad integrations with -in-class enterprise systems, as well as deeper relationships with education agents, prevalent and international education. We are also expanding our TAM by offering new solutions to payers and schools. During the fourth quarter, we signed several new clients in our US cross-border and domestic subsegments, as well as across Europe, Asia Pacific, and Latin America. Recently, we went live with our domestic solution at Adelphi University, a private university based in Long Island, New York, with over 7,500 students. Adelphi had been a cross-border education client of ours since 2013, representing another example of where we had been able to leverage our trusted relationship that originated with our cross-border solution to expand into a much broader offering. For our US cross-border segment, we went live with Florida State University and Oklahoma State University. Outside of the US, we went live with George Brown College. George Brown College is a publicly accredited top 10 research college in Canada with nearly 27,000 full-time students. We are now live with both our cross-border and domestic education solutions. JBC chose to work with Flywire to add more payment options, enhanced functionality support education agent related payment flows, and top-notch customer support. George Brown was one of the education clients that was signed in Q3, but went live after the peak season. All delayed education implementations that we referred to in our Q3 call have now gone live. In healthcare, we estimate our TAM to be about $500 billion, and we are serving many of the largest US hospital systems. We are expanding how we work with partners in this channel to provide deeper integrations and even more flexible affordability solutions. We are also expanding into specialty subsegments. During the fourth quarter, we went live with OrthoNebraska, a specialty hospital based in Omaha, Nebraska, focused on orthopedic care. In implementing Flywire's payment solutions, OrthoNebraska saw nearly 80% of all payments come through the patient self-service portal. Flywire's solution has helped the specialty provider significantly reduce staff hours spent on manually reconciling payments and has received high patient satisfaction scores. Overall, we are seeing early traction in new subsegments of the healthcare market as our receivable software solution helps reduce outstanding patient balances and increase collection rates for specialty hospital providers. In travel, we estimate our TAM to be about $530 billion. We have categorized our clients as destination management companies or DMCs, global travel operators and accommodations providers. During the fourth quarter, we signed new clients in each of our existing subsegments. We are also exploring new areas of focus such as ocean experiences and niche online travel agencies or OTAs. Recently, we went live with Aqua Expeditions, a luxury travel company specializing in small ship cruises in remote and exotic destinations such as the Peruvian Amazon and Mekong Delta of Vietnam and Cambodia, along with yachting experiences in Indonesia and the Galapagos Islands. Integrating with Flywire has helped Aqua Expeditions streamline their accounts' receivable payment reconciliation process, enabling faster payment notification and funds' disbursement capabilities. We are excited to tap into this new subsegment of travel and expand with ocean experience providers around the world. Finally, our B2B vertical covers a broad TAM estimated to be about $10 trillion, where we focus on providing mid-market enterprise clients with a sophisticated integrated accounts receivable solution. Although starting from a smaller base currently, our B2B business is our fastest growing vertical and we believe has a very promising future impact with Flywire. Within this massive B2B TAM, Flywire is gaining traction in various subsegments of the market, including insurance, software and tech, manufacturing and distribution, franchises and others that include the public sector. We recently went live with the European Union Aviation Safety Agency, or EASA for short, which is an agency of the European Union responsible for overseeing and coordinating aviation safety across its member countries. Flywire is directly integrated into EASA's SAP instance to ensure a consistent billing and payment workflow with their existing ERP system, with a key benefit being automated payment reconciliation to remove manual processes around accounts receivable. While on the topic of ERP integrations, I'll also mention that we built out and are live with an integration with Workado, a cloud automation and integration platform for enterprises that seamlessly connects to widely used enterprise accounting systems such as SAP, Sage Intact, Microsoft Dynamics 365 Business Central, Intuit QuickBooks Online and Oracle NetSuite. We believe that further building out our integrations with leading ERP integrators and systems will help us further penetrate our large TAM opportunity. Stepping out of the verticals and moving to our efforts towards efficiency and scale, I would highlight that in 2023, while we grew revenue less ancillary services by 43%, we reduced our hiring by almost 50% in terms of incremental run rate spend versus what we added in 2022. Our paced hiring in 2023 helped drive personnel expenses as a percentage of revenue less ancillary services down by over 530 basis points when comparing 2023 to 2022. We generate these scale efficiencies by working as a very collaborative team that is focused on careful pacing of hiring and managing of expenses. We expect to continue this focusing on managing all expenses, including personnel expense, in 2024 to produce additional improvement in run rate personnel expense relative to revenue and to improve adjusted EBITDA margin. I will now turn the call over to Mike Ellis to go over our results for the quarter and year as well as provide guidance for 2024.
spk19: Mike? Thank you, Rob. Good afternoon, everyone.
spk20: Today I'll provide an overview of our results for the fourth quarter and then discuss our outlook for Q1 and the full year. Revenue less ancillary services was 96.1 million in Q4, representing a 43% growth rate compared to Q4 2022. On a constant currency basis, our revenue less ancillary services growth rate for Q4 2023 was 41% compared with Q4 2022. Our revenue growth rate was driven by increases in total payment volume due to strong growth from our international cross border payment volumes in our education vertical, particularly with our UK higher education clients as well as growth from our travel clients. FX rate changes represented a tailwind in comparison to Q4 of 2022 and a tailwind against the guidance we provided for Q4 and full year on our last earnings call, which were based on prevailing rates on September 30th, 2023. For purposes of comparing our Q4 2023 reported results against our most recent Q4 guidance, we had an FX tailwind that amounted to approximately 0.7 million on Q4 reported results. Q4 revenue less ancillary services outperformance compared to our expectations was driven by stronger than expected volumes from new UK higher education clients, strong monetization of payment volumes, better than expected utilization of our payment plan capabilities in the United States and higher Canadian volume, which we believe was driven by students accelerating some 2024 payments. With respect to payment volumes, we processed 5.4 billion during Q4 2023, which represented an increase of 33% from the 4.1 billion processed during Q4 2022. Specifically, transaction revenue increased 45% compared to Q4 2022, driven by a 46% increase in transaction payment volume. Platform and usage based revenue increased 32% compared to Q4 2022, driven by a 5% increase in platform and usage based payment volume as well as from platform fees that do not carry any associated payment volumes including revenue associated with the contributions of our payer services offerings and our recent acquisition of StudyLink. We generated 63.5 million in adjusted gross profit during the quarter representing a 42% increase compared to the 44.5 million earned during Q4 2022. Specifically, our adjusted gross margin was .1% for Q4 2023, up 10 basis points from .0% as adjusted for Q4 2022. The year over year change in adjusted gross margin was driven primarily by monetization rates on transactions and improved economics with our payment partners. However, this was offset by strong growth of our transaction revenue versus our platform revenue, particularly from our travel vertical where credit cards are predominant. Adjusted EBITDA for the quarter was 7.7 million, an increase of 6.7 million over the 1.0 million reported for Q4 2022. With respect to capitalization as of December 31, 2023, we had 655 million in cash and cash equivalents, no long-term debt and 122.5 million shares of common stock outstanding. We also increased our borrowing capacity to 125 million
spk19: through an
spk20: updated credit facility with an expanded five-year term. While we're not planning to draw on the facility in the near term, it provides financial flexibility for funding M&A and other strategic investments. Moving on to guidance. The full year 2024, which is based on foreign exchange rates as of December 31, 2023, we expect revenue less ancillary services to be in the range of 483 million to 509 million, representing a -over-year growth rate of 30% at the midpoint. This growth reflects continued confidence in our go-to market and ongoing penetration of the TAM across our verticals. Our guidance reflects a net reduction of low teams millions of dollars to revenue related to recent announcements that the Canadian government will reduce applications for international study permits. We expect to deliver full year 2024 adjusted EBITDA in the range of 65 million to 76 million. At the midpoint of our full year 2022 guidance range, we expect to generate approximately 320 basis point improvement in adjusted EBITDA as a percentage of revenue less ancillary services for the year. We expect to achieve adjusted EBITDA margin expansion through strong revenue growth and disciplined spending offset in part by the adjusted gross margin impact from our ongoing shift in revenue mix. In addition to the impact on our full year revenue guidance, the Canadian regulatory changes are expected to impact the seasonality of our business in 2024. Ordinarily, revenue from education customers in Canada is earned relatively evenly throughout the year. Under the new Canadian undergraduate student permit policies that were announced in late January, provinces are not expected to allocate study permits to schools until late Q1 or early Q2. This is reducing applications, admissions decisions, and payments for many international students so far in Q1. These dynamics are expected to push some payments in subsequent quarters as permits are available in Canada or students seek alternative destinations. With that context, Q1 2024 revenue less ancillary services is expected to be in the range of 106 million to 111 million. This guidance reflects a reduction of Q1 revenue in the mid single digit millions
spk18: due to changes
spk20: in Canada. Rounding out the guidance discussion, we expect Q1 adjusted EBITDA to be in the range of 9 million to 11 million. Overall, we are excited about a strong 2024 and look forward to what we expect will be a strong year of revenue and adjusted EBITDA growth. I want to finish by saying that it's been a great honor to be Flywire's CFO for the past nine years. Flywire is well positioned for continued success and I will continue to cheer them on. I'll now turn it back over to the operator for questions. Operator.
spk03: Thank you. Ladies and gentlemen, at this time we will be conducting a question and answer session. If you'd like to ask your question, you may 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 star key. In the interest of time, please limit yourself to one question and one follow-up so we may get to everybody's questions. Our first question comes from the line of Dan Perlin with RBC Capital Markets. Please proceed with your question.
spk21: Thanks. Good evening and great quarter. You know, I wanted to ask about the net revenue retention rate of 125 percent. Like, it's accelerated from 22 and the average that we've seen from 19 to 21, which is pretty impressive and usually not necessarily the case. You see this accelerate. So, I'm just trying to piece out a little bit how we're thinking about where that's coming from specifically. So, is that mixed within the new cohorts and verticals that you're bringing on? Or is it more or less kind of the revenue opportunities that you're talking about within those new cohorts just being larger as they're coming onto the platform?
spk10: So, Dan, it's Rob. I'll jump in on this first one. So, we've always talked about the multiple levers that drive NRR. And the continuing, you know, story for us is that all those levers are continuing to work. So, as you go across the verticals, what you'll see is we're always working to increase the footprint we have inside the clients. So, whether it's more hospitals, more schools and departments, or more of a businesses sort of operations and subsidiaries, you know, the first driver is to continue to expand our footprint inside those clients. The second thing you see is we expand based on the products that we supply. So, whether it's going pre-service on top of post-service at a hospital, whether it's adding more of our product functionality from our domestic capability, all of that is what's helping drive these things. There are other additional benefits where we do things like grow the payment network that allows us to capture more payments from more places around the world. But the first two that I mentioned are the main drivers there of sort of a healthy set of drivers on NRR that we feel really good about.
spk21: Okay. That's great. And then just a quick follow-up on seasonality. Mike, you were just kind of running through this quick. But one of the things that you guys have kind of hammered into us was that kind of 2Q and 4Q obviously being typical peak seasons for travel and how that's changed in the seasonality of the business. And so, I'm just making sure that obviously 1Q, I understand the Canadian argument, but if it spills into second quarter, is it kind of like second quarter, third quarter that we're ramping or should we expect kind of the guide to be maybe slightly heavier on the margin side within second quarter relative to what we would have normally thought given the seasonality of travel?
spk20: Sure. Thanks for the question. It's Mike Yellow. So, as you know, we got into about 30% for the full year. And as discussed, the Canadian regulation changes will impact that quarterly revenue and seasonality specifically as it impacts Q1. And we do expect Q1 to be our slowest growth quarter. And I would expect that Q2 will be higher than the average. And the second half will be right around the average annual growth rate. Hopefully, that
spk06: gives you enough context there.
spk03: Our next question comes from the line of Will Nance with Goldman Sachs. Please proceed with your question.
spk11: Hi, guys. Appreciate you taking the question. Nice quarter today. Yeah, I was wondering
spk13: if you could maybe just kind of go through the Canada stuff again to make sure everyone's getting the moving pieces there. I thought I heard maybe two separate impacts, one around the seasonality and the timing of payments and one around just regulatory changes overall. That it sounded like there was a low teams impact in the numbers for the full year. So, I just, you know, the $5 million that you called out in the first quarter, is that overlapping with the low teams for the full year? Or is that a timing impact and the low teams are separate and just, you know, bigger picture in any color on just what kind of assumptions you guys are having to make in the forecasting around this issue and just how you think about the range of outcomes over the course of the year. Thanks.
spk08: Yeah. Hey, Will. This is Mike. I'll start and I'll probably talk to Rob as we kind of go into how we modeled it. In short, you know, we've got a history of dealing with certain types of shifts like this in enrollment from different countries. You know, we have a large diverse client base. You know, we're heavily connected to our clients. When we see something like Canada, we're talking to them. We have a massive network of educational agents that are also preparing those applications throughout the year. And so, we get input from them. And as the year goes on, you can expect us to talk about the release of permits, these study permits as they become more released. You expect updates from us throughout the year. And also, potentially different areas of study, right? If students, you know, potentially can't get a permit in a place like Canada, they may end up in a different location. And again, Flywire benefits from that diversity. And so, we did call out an impact in Q1, single digit millions and full year, low teen millions. And I'll let Rob talk about exactly how we structured that.
spk10: Yeah. So, Will, let me just clarify for one thing that I thought was in the middle of your question there. Those two effects are essentially inclusive. Meaning, when we talked about Q1 having the low, sorry, the mid single digit millions. And then, we talked about the full year as low teens. Do not add those. That is cumulative or integrated in terms of just making you understand the effect on the two different periods. So, the way we got to that measurement, obviously, we, you know, have gone and done our work to understand what we hear from our agent community, from our client community. And based on that, we modeled out a series of scenarios. So, a number that will be relevant for you, if you look at the business, about 14% of the business is Canadian higher ed. And so, we worked through scenarios about sort of the impact and the recapture. And as we went through those sort of informed scenarios, that's where we came out at the mid teen millions, sorry, the low teens millions for the full year impact.
spk13: Got it. That's all very clear. And appreciate the detailed answer there. And then, maybe, you know, maybe want to follow up on earlier question on some of the NRR dynamics. And I guess, in particular, looking at the cohort slide that you guys provide in the deck, you know, you guys are seeing kind of mid to high teens growth in cohorts from seven years ago, obviously, super impressive. Just wondering if you could talk about, you know, specifically, what's driving the continued strong growth among some of your back book cohorts? I know you touched a lot on a lot of the levers that you guys have just in general. But, you know, for such season ventures to be growing so strong, you know, any call outs on kind of what you guys are seeing success on over the past year? Thanks.
spk10: Yeah, maybe the one extra dimension of granularity I could add from my prior comment is the way to understand this is to understand that we do see growth just based in the core volumes that we see from the cohorts, meaning increased student penetration, increased payment volume from the offerings that we have. All of that is part of the hard work of our relationship managers instilling best practices at our clients, our reputation, our network, all the things that help grow sort of that base. What you'll also see is that within, obviously, a subset of any given year's cohort, we manage to do the land and expand, meaning a new product or service or going domestic as an obvious example. But it could be that or our collection management or our e-store. All of those will take some of those members of that older cohort and allow us to dramatically increase the revenue. Adelphi is the example we called out on this earnings call, right? 2013 client, but went full domestic capabilities just now. So all of that helps feed the NRR of that longer cohort.
spk03: Our next question comes from the line of Jeff Cantwell with Wells Fargo. Please proceed with your question.
spk04: Hey, thanks so much. On the Jeff
spk05: Cantwell support research, I just wanted to make sure on the 2024 guidance, Mike, can you talk a little bit about do your revenue grows less ancillary services, 483 to 509 million? Can you talk about the volume, incremental volume that you're expecting in 2024, whether that's coming from education or your other three verticals, and where specifically you're thinking about volume growth across, you know, domestic versus international. I just want to get a flavor for how you are considering where your volumes will be growing in 2024. Thanks
spk20: very much. Hi, Jeff. It's Mike. So first off, the range that we provided was 483 to 509 million, just to clarify the top end of that range. Listen, the business and historically has always grown based off of payment volume improvement over time. And that's one of the things that we're really proud of. The quality of our revenue growth has been exceptional since the beginning of our business. And to your point, we do expect continued improvement with B2B and travel to continue to contribute to our overall growth rate and payment volumes, as well as our education business. As you know, the health care business is predominantly within our platform business and less about transaction volumes in that vertical. But so we expect continued really good throughput based on all of the new client signs and again, the NRR that we've talked about.
spk04: Okay, great. Thanks so much. And then Mike Ellis, I just wanted to ask
spk05: you on your, obviously, you've been very appreciative of all that you've contributed to, you know, fly by over time. So I just wanted to get your thoughts on the Azure Leap Company and what your thoughts are on the state of the company and going forward, you know, obviously, you've done a lot on the, you know, the focus on margins and so forth. So I just wanted to get your sense of, you know, how you are handing things over to Cosme. And is there anything that Cosme can contribute on this call as far as, you know, how we're thinking about going forward? I just would like to get a sense of, you know, what the transition is like and then, you know, how we should think about margins and so forth. And anything you guys can talk about.
spk20: That would be great. Thanks very much. So this is Mike Ellis. So two questions here. With respect to your adjusted gross margin question, you know, we do expect continued revenue mix shifts over 2024. And I would suggest similar to last year that the range of the AGM should be declining somewhere between one and 200 basis points. But that's all built into the great adjusted EBITDA throughput that we've guided to at the midpoint for 2024. So again, really good business, whether it's B2B, travel, education, and we'll continue to enjoy those healthy adjusted gross margins. With respect to my view of the business, I've said it in my prepared remarks. Flywire is well positioned. It comes down to the fact that the team is focused on execution. And that really cuts across every single flymate that works for the business. And for that, it's been an honor and a privilege to be a part of that type of execution mindset. And again, just given the addressable markets that the company has to go after is really astounding and lots of room to continue to grow. And that's why we're confident with this 30% growth forecast in the guidance range. Finally, with respect to transitioning to Cosmin, I welcome Cosmin to the Flywire team. I will be available for him for as long as he needs me to get to understand the business and be able to transition all of the institutional knowledge that I may retain. But one thing good about Flywire is there really is no single point of failure. There's a lot of redundancy of knowledge across the organization. So I am 100% confident that Cosmin will be able to get up and running very quickly.
spk03: Our next question comes from the line of Nate Svensson with Deutsche Bank. Please receive any questions.
spk22: Hi, guys. Thanks for the question and great results. So in your prepared remarks, you talked about a few drivers of revenue out of performance in the quarter that I was hoping we could dive a little deeper on. So two things you specifically mentioned were one, better monetization of payment volumes and two, better utilization of payment plans. So maybe can you give a little more color on what happened in the quarter that led to better monetization rates and then likewise, what drove that higher utilization of payment plans in the US in the fourth quarter?
spk10: Hi, it's Rob. I'll jump in and start here. So, you know, for the most part, it was a straightforward, really strong performance across the business, right? So if you looked in education, which was, I think, the focus of your question, performed really well, that strength was in the UK and the US, notably in the US around that payment plan usage, but lots of good revenue performance elsewhere as well. I think in that payment plan utilization, it's around some enhancements we've made in the user experience as well as just the expanding footprint for our domestic platform. In terms of healthcare, we had quarterly revenue growth year over year, which was good after a few tough quarters. Travel and B2B performing exceptionally well, really growing very nicely. And, you know, in terms of the Ajat Tidiba, it was helped mostly by the extra revenue, but also by the strong gross margin.
spk22: Got it. That's helpful color. So the follow-up I had, so, you know, a few weeks ago, you announced the new partnership with the State Bank of India to help digitize payments in the country. And I know, so given some of the commentary from last quarter about FX volumes in India, there's obviously been a lot of focus on payment choice in that country specifically. So I'm hoping you can talk a little bit more about the new partnership. And what it means with regards to your ability to capture FX volumes going forward in India. And I guess maybe building on that, can you talk maybe more about similar partnerships you're exploring in other geographies? I know you had a few comments in your prepared remarks there. So any color that would be very helpful.
spk10: Yeah, so a couple things. So first of all, SBI, you know, one of the very largest Indian banks, you know, we have done similar partnerships with three of the top banks, all part of our strategy for making sure that we deliver a great user experience in India. And we really are the easiest way to pay for folks. Overall, that combined with the other aspects of our strategy, mostly focusing around agents and our servicing of the agent ecosystem, all contributed to a really strong quarter for India. So India overall for us performed very nicely, growth rates sort of in line with the overall corporate average. And so we view that as a very good result. So all part of our strategy to, you know, continue, you know, sort of growing that FX volume and continuing to drive impressive growth out of India, definitely one of our key markets.
spk08: Yeah, Nate, the only thing I'd add to that is just obviously we're looking for other ways in which we can go ahead and add more online banking connectivity. We believe there's huge potential in digitizing a lot of the flows with banking rails in the future.
spk03: Our next question comes from the line of Darren Peller with Wolf Research. Please proceed with your question.
spk23: Guys, hey, maybe just start off with the strength you've been seeing in customer ads, which obviously has been coming in. I think it's around 170, 180 clients or customers per quarter the last couple of quarters. Clearly higher than it was, you know, per quarter as well before that. So just a bit more of an understanding as to the verticals around it. And if some of them are smaller customers, perhaps in the travel side or, you know, anything else that makes up that strength. And then if there's any also, also just any changes in the sort of vintage analysis. Then another way, if there's like a translation of revenue from those at a different pace, it'd be good to know. Thanks, guys.
spk10: Hey, Darren, Rob here. So, you know, this was another really strong quarter, 170 plus clients signed. In this case, education actually got the top of the table in terms of driving the most client wins. So just beat out travel by a little bit. But in this case, a really strong quarter for the education team alongside a strong quarter for travel, nice ads and B2B and healthcare as well. On the deal size, the average deal size just slightly lower than what you've seen across our sort of historical average, but only just slightly. And, you know, again, strong and in a very good range. So we're pretty happy with all of those results in terms of the numbers and the deal size. Lots of good size deals in there, too.
spk24: That's great, Jim. The final thing I would point out. Yeah, go ahead, Rob.
spk10: Sorry, I was just going to go on to the point. We, you know, we're also feeling really good about our investments in the -to-market, right? So you're seeing these numbers come in strong. And the thing that we are very bullish on is that we are seeing very good efficiency as we invest in -to-market. So when we look at the return on that investment in sales, we're seeing them get productive faster. We're seeing win rates be higher. We have a very favorable ratio in terms of their contract value. They get signed in the first year relative to their costs. So they are delivering well over their, you know, a nice multiple of their salary in terms of contract value wins in that first period. And if you look over at the RM side, which is the other side of our investment in -to-market, you know, we're assigning out, you know, substantial, you know, growth targets for RMs as they get assigned out into the field on our accounts. And we feel really good about those results, too.
spk23: That's great. That's great. That's great. It's good to hear that it's a diverse set of, you know, cross segments. And then just a quick question on the CFO side or the financial side. First, Mike, congrats and all the best. And then, Cosman, congrats to you, too, and welcome. But when we think about the guidance for, it's about 300 bips of margin expansion this year. I think it's closer to the low end of the 300 to 600 bips that you typically have called out. But I know last year you also kind of started off lower and ended up with over 500 bips of margin expansion. So I just, I guess we're just trying to figure out if there's an element of just starting off the year the right way and providing for some upside. Or is this really something about the model that might lead that to be the case this year?
spk09: Yeah, I'll take that one. This is Mike. So, you know, what I would say is I
spk08: think you've seen a bit of a track record from us. Like we, as we look to set out for a year, you know, we want to look at, you know, how the year builds as we look into revenue. We also have control over our cost dynamics. As we've proven, I think over the last couple of years, I think as Cosman comes in, you know, I don't think you're going to see a significant shift in how we look at that. I think you're going to see us continue to look at every bit of spend we have internally to the company, make sure we feel like we're good and on track when it comes to our top line numbers, and we're going to invest in the business in a, I think in an efficient way as people have seen from us. So hopefully people are taking away, it looks very similar. And that way we may be a bit boring, but we think we're delivering great results.
spk03: Our next question comes from the line of Jason Kofferberg with Bank of America. Please proceed with your question.
spk14: Hi. Good afternoon. This is Tyler DuPont on for Jason. Thanks for taking the questions. I wanted to start by asking about changes in the Canadian environment. It sounded like any prepared remarks that some of the 4QB was due to a pull forward in Canadian payments. Can you maybe just quantify how much, if any, of the single digit millions that isn't going to be in 1Q was pulled forward into 4Q versus move forward into later quarters? And then also just when looking on a go forward basis how we should be thinking about the EBITDA dollar impact due to this movement. Thank you.
spk09: Sure. Hey Tyler, it's Mike Massaro.
spk08: I would say you can think of that as a kind of single digit, sorry, single million dollar kind of impact from a pull forward perspective. So definitely not kind of anywhere near the number for kind of full Q1 in Q4. Really what it was was a dynamic where students knew regulations were changing and as they had the opportunity to already be sitting on a permit they were sure to pull the trigger on that permit where they may have had time in the first half of the year to make that decision as well. So they were actually making their payment a bit early because they had access to a permit that had already been issued. So that's really the dynamic we saw. It wasn't a huge impact to Q4, wasn't a huge pull forward for Q1, but we did call it out.
spk14: Okay, great. That's helpful Mike, appreciate the call. And then just as a follow up I wanted to ask briefly about potentially an update on the client implementation delays mentioned on the last call. I know it was only around a half dozen or so, but have you seen those contracts start yet and have you seen any incremental delays outside of those six? I'm just sort of trying to level set what we've seen last quarter versus, you know, what we expect for 2024.
spk10: Yeah, Rob here. So the vast majority of that revenue opportunity has gone live. And so we had overall a great quarter in terms of deployments across all the verticals. If you look at the year, we will have gotten in the neighborhood of 700 clients live. If you look at sort of the status of things right now, feel very good about the status of projects that have gone live on time as expected through
spk06: Q4.
spk03: Our next question comes from the line of Andrew Jeffrey with Truis. Please proceed with your question.
spk07: Hi, pardon me. Appreciate you taking the question. I just wanted to be clear, I don't need to belabor the point. On the guidance, by my math it looks like the midpoint of the range is about 27% sort of organic somewhere in that neighborhood. Recognizing sort of the puts and takes in Canada, I guess, does the, was some of those payments that were pulled forward into 4Q kind of normalizing for that or is Canada in the entirety of the delta between what otherwise would have been faster organic revenue growth? And it sounds like you have some levers that could accelerate it, namely some of the performance in gravel and better India payment monetization. I just wanted to make sure I'm understanding that correctly and I've got a quick follow up.
spk20: Yeah, your organic number is relatively right and if you look at it notwithstanding the Canadian impact, we would be right about that 30%. So we're pretty confident about the 30% growth rate. Okay, that's
spk29: really clear. Thank you.
spk08: Andrew, you had a question of kind of other areas. I mean, obviously, you know, as we look to the year, it's early in the year, but, you know, we think we have lots of opportunity across all our verticals. So you can imagine we're putting our effort in to offset any impacts that Canada could have and I expect FlyMates to continue to execute like they have the last many, many years.
spk07: Okay, thank you. And then I appreciate the deep dive into education in the slides this quarter. Particularly on slides 14 and 16, I wonder if I can ask the capabilities on 16 that you call out are really notable and seem to be client facing and then you discuss product expansion. One of the levers is agent portal adoption and I know that sort of the discussion of agent education has come up especially as it relates to cross border payments. Can you elaborate a little bit on how much of sort of the growth in existing customers comes from sort of agent education and how the agents sort of help students progress through the workflows and as a result, maybe monetize some of those expanding software solutions? If that question makes sense, are the agent angle lever for growth and penetration of existing customers?
spk10: So it's Rob here. So agents are an important presence in a number of the outbound student markets, right? So certainly India, China, Vietnam, they play a sizable role. And for certain inbound markets, they play a sizable role. Australia is most notable and we've mentioned before 75% of inbound students to Australia have benefited from the assistance of an education agent or an education counselor. So for our part, the software that we're providing, and I'll start pre-StudyLink and then I'll add the StudyLink part, the capabilities that we're providing are to help them essentially facilitate that portion of their experience around making sure that all the payments work properly, right? So the counselor is doing a bunch of things and they're using the Flywire portal, which may be integrated into the rest of their software to facilitate those payments. So we really help provide value to the student and to the agent and everything around the payment. And with StudyLink, what we added, as Mike mentioned in his comment, was the ability for that agent to use essentially a Flywire platform starting even earlier in the process with the submission of the application, managing the admissions decision, and then leading to the payment. So we're taking on more and more of that life cycle. Again, on a global basis, it's still not the majority of payments. It's still a smaller fraction than that. But for us, it's a great opportunity to further penetrate
spk06: these very large markets.
spk03: Our next question comes from the line of John Davis with Raven James. Please proceed with your question.
spk17: Hey, good evening, guys. I actually want to follow up on Darren's question on new logo growth. So if you look at 2023 NRR of 125, I think organic growth was about 39%. So 14 points from new logos, 700 new clients. Maybe talk a little bit about how you think about NRR and new logo growth going into 2024. And also how much growth you get in-year. You signed up 700 new clients this year. In the year you sign up a client, what percentage of that revenue do you get in-year versus the annualization the following year?
spk10: So when we've done our analysis into those two elements of the growth algorithm, sorry, greetings JD. When you look into the allocation between those two or the split, what you see is that it's relatively balanced. Slightly on the larger side is the contribution from full year effect of clients signed the prior year. So that's the slightly bigger half of that portion. The other piece being the client signed in-year. And so that's, I think, the allocation that you're looking for.
spk17: Okay, great. And then Rob, maybe just on the healthcare, Mike. Healthcare down 1%. How do we think about the re-acceleration of that business? Kind of thoughts, just bigger picture on healthcare and what you think that business can grow longer term.
spk10: So we're doing a bunch of things to try to accelerate revenue on the healthcare side. So we have great conviction in the platform. We have great conviction in the team. We're not satisfied with the results that we saw in 2023 and neither is the team. So in terms of things that we're focused on, we've been really good about trying to be very clear about how we can target the different segments at the hospital level. The large hospitals that have been the core of where we are, making sure that we have clear strategies around each of the different EHRs and ways to bring a different set of solutions based on the needs of that hospital and their setup. So it may be the fullest version of our capabilities. That is our full platform plus integrated financing that we provide via our partner. That's a very compelling offering. It may be the offering that we have installed in most of our base, which is sort of what you've heard us talk about in the past in terms of everything from pre-service to post-service. And we have new capabilities that focus just on payment, sort of the straightforward payment processing that are an even lighter lift that makes sense for some of our clients. So first thing is making sure we've got sort of that range of offerings in our traditional base. The second thing is the subsegments that we started talking about. So today I mentioned Ortho and Nebraska, but they're one of a whole category, sorry, multiple categories of subsegments that are an opportunity for us to take sort of the full power of our software and take it into these subsegments. And so that's a very exciting opportunity for us. We've allocated some of our sales team to that. So between those two and continuing to expand with our existing clients, those are the three elements that we are looking to see a return to better growth in 24 for the healthcare business.
spk03: Our next question comes from the line of Chris Kennedy with William Blair. Please proceed with your question.
spk16: Good afternoon. Thanks for taking the question. Can you give a little bit more color on the payer services initiative? I see in the deck over 10 million from the Australian insurance opportunity. Can you talk about the other opportunities that you have and how big those can, if they can move the needle?
spk08: Yeah. Hey, Chris, Mike Lassaro. So, you know, obviously the payer services is something we talked about, you know, back at our investor analyst day a couple of years ago and talked about expanding into these ecosystems that our industries really are surrounded, our industries. I would say when we got into payer services, we had a whole series of initiatives focused on what value add can we provide the payer in these instances. And so you start to look at things like insurance, which can be bundled at the point of checkout for education. There's potential, as we mentioned before publicly, of bundling something in relation to travel around that same component. If you look at how students acquire other services that they may need when studying abroad, insurance is just one of the many things that a student or a parent potentially would like to have. In Canada, we've mentioned things, a thing called the GIC, which is an actual deposit account that's required to get a permit in Canada to study. And that has to be funded prior to the issuance of that permit. And so again, that's something that, as you'd imagine, we're at a critical point in the flow between the family, potentially an educational agent, and the university. And as you've seen the success in the insurance product, in a very short period of time, we think we're at a unique position without any marketing dollars really to be spent to put great solutions in front of the payer that can make their experience great. And so again, that's the strategy. It's across multiple industries, and we think we're just getting started when it comes to payer services.
spk16: Great. Thank you. And then just real quickly, the follow-up, can you just give us an update on the FX volume that you had in India that was an issue that was called out in the September quarter? Did things kind of normalize in the December quarter? Thanks a lot.
spk10: Yeah, I think you used a good choice of words there when you said normalized. When you looked at Q4 versus Q3, the FX percentage was actually up just slightly. So we view that as a sort of good, healthy result and quite satisfied with the growth in India and
spk06: the FX percent.
spk03: Our last question comes from the line of Tian Xin with, Tian Xin Wong with JP Morgan. Please proceed with your question.
spk15: Hey, good afternoon, everyone. Good to talk to you guys. Just one question. I'll close out the call. Just with the guidance range, it looks a little bit wider than usual. Any change there in the visibility call out to get to the upper or the lower end of the guide? I know the quarter obviously came in ahead, so I'm just trying to better understand the variance there. That's all I had. Thanks.
spk20: Yeah, it's Mike Ellis. Yeah, we did expand the revenue guidance. It represents basically 5% of the full year guide. And given the growth of our revenue amounts, we thought it'd be reasonable given the uncertainty specifically around the Canadian regulatory challenges. And as we kind of update over the course of the year, of course, we'll narrow that range as that becomes more clear. No change with respect to how we guide.
spk06: Perfect. Thanks,
spk03: Mike. That is all the time we have for questions. I'd like to hand it back for management for closing remarks.
spk06: Appreciate everybody's time
spk09: on the call. Thank you very much. Talk to you soon.
spk03: Ladies and gentlemen, this does include today's teleconference. Thank you for your participation. You may disconnect your lines at this time
spk06: and
spk03: have a wonderful day.
spk26: Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.
spk03: Thank you. Thank
spk30: you. Thank you.
spk08: Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.
spk10: Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. where we focus on providing mid-market enterprise clients with a sophisticated and integrated accounts receivable solution. Although starting from a smaller base currently, our B2B business is our fastest growing vertical and we believe has a very promising future impact with Flywire. Within this massive B2B town, Flywire is gaining traction in various sub-segments of the market including insurance, software and tech, manufacturing and distribution, franchises and others that include the public sector. We recently went live with the European Union Aviation Safety Agency or EASA for short, which is an agency of the European Union responsible for overseeing and coordinating aviation safety across its member countries. Flywire is directly integrated into EASA's SAP instance to ensure a consistent billing and payment workflow with their existing ERP system with a key benefit being automated payment reconciliation to remove manual processes around accounts receivable. While on the topic of ERP integrations, I'll also mention that we built out and are live with an integration with Workado, a cloud automation and integration platform for enterprises that seamlessly connects to widely used enterprise accounting systems such as SAP, Sage Intact, Microsoft Dynamics 365 Business Central, Intuit QuickBooks Online and Oracle NetSuite. We believe that further building out our integrations with leading ERP integrators and systems will help us further penetrate our large TAM opportunity. Stepping out of the and moving to our efforts towards efficiency and scale, I would highlight that in 2023 while we grew revenue less ancillary services by 43%, we reduced our hiring by almost 50% in terms of incremental run rate spend versus what we added in 2022. Our paced hiring in 2023 helps drive personnel expenses as a percentage of revenue less ancillary services down by over 530 basis points when comparing 2023 to 2022. We generate these scale efficiencies by working as a very collaborative team that is focused on careful pacing of hiring and managing of expenses. We expect to continue this focusing on managing all expenses including personnel expense in 2024 to produce additional improvement and run rate personnel expense relative to and to improve adjusted EBITDA margin. I will now turn the call over to Mike Ellis to go over our results for the quarter and year as well as provide guidance for 2024.
spk19: Mike. Thank you Rob. Good afternoon everyone.
spk20: Today I'll provide an overview of our results for the fourth quarter and then discuss our outlook for Q1 and the full year. Revenue less ancillary services was 96.1 million in Q4 representing a 43% growth rate compared to Q4 2022. On a constant currency basis our revenue less ancillary services growth rate for Q4 2023 was 41% compared with Q4 2022. Our revenue growth rate was driven by increases in total payment volume due to strong growth from our international cross-border payment volumes in our education vertical particularly with our UK higher education clients as well as growth from our travel clients. FX rate changes represented a tailwind in comparison to Q4 of 2022 and a tailwind against the guidance we provided for Q4 and full year on our last earnings call which were based on prevailing rates on September 30th 2023. For purposes of comparing our Q4 2023 reported results against our most recent Q4 guidance we had an FX tailwind that amounted to approximately 0.7 million on Q4 reported results. Q4 revenue less ancillary services outperformance compared to our expectations was driven by stronger than expected volumes from new UK higher education clients, strong monetization of payment volumes, better than expected utilization of our payment plan capabilities in the United States and higher Canadian volume which we believe was driven by students accelerating some 2024 payments. With respect to payment volumes we processed 5.4 billion during Q4 2023 which represented an increase of 33% from the 4.1 billion process during Q4 2022. Specifically transaction revenue increased 45% compared to Q4 2022 driven by a 46% increase in transaction payment volume. Platform and usage based revenue increased 32% compared to Q4 2022 driven by a 5% increase in platform and usage based payment volume as well as from platform fees that do not carry any associated payment volumes including revenue associated with the contributions of our payer services offerings and our recent acquisition of study link. We generated 63.5 million and adjusted gross profit during the quarter representing a 42% increase paired to the 44.5 million earned during Q4 2022. Specifically our adjusted gross margin was .1% for Q4 2023 up 10 basis points from .0% as adjusted for Q4 2022. The year over year change in adjusted gross margin was driven primarily by monetization rates on transactions and improved economics with our payment partners. However this was offset by strong growth of our transaction revenue versus our platform revenue particularly from our travel vertical where credit cards are predominant. Adjusted EBITDA for the quarter was 7.7 million an increase of 6.7 million over the 1.0 million reported for Q4 2022. With respect to capitalization as of December 31st 2023 we had 655 million in cash and cash equivalents, no long-term debt and 122.5 million shares of common stock outstanding. We also increased our borrowing capacity to 125 million
spk19: through an
spk20: updated credit facility with an expanded five-year term. While we're not planning to draw on the facility in the near term it provides financial flexibility for funding M&A and other strategic investments. Moving on to guidance. The full year 2024 which is based on foreign exchange rates as of December 31st 2023 we expect revenue less ancillary services to be in the range of 483 million to 509 million representing a -over-year growth rate of 30% at the midpoint. This growth reflects continued confidence in our go to market and ongoing penetration of the TAM across our verticals. Our guidance reflects a net reduction of low teens millions of dollars to revenue related to recent announcements that the Canadian government will reduce applications for international study permits. We expect to deliver full year 2024 adjusted EBITDA in the range of 65 million to 76 million. At the midpoint of our full year 2022 guidance range we expect to generate approximately 320 basis point improvement in adjusted EBITDA as a percentage of revenue less ancillary services for the year. We expect to achieve adjusted EBITDA margin expansion through strong revenue growth and disciplined spending offset in part by the adjusted gross margin impact from our ongoing shift in revenue mix. In addition to the impact on our full year revenue guidance the Canadian regulatory changes are expected to impact the seasonality of our business in 2024. Ordinarily revenue from education customers in Canada is earned relatively evenly throughout the year. Under the new Canadian undergraduate student permit policies that were announced in late January, provinces are not expected to allocate study permits to schools until late Q1 or early Q2. This is reducing applications, admissions decisions and payments for many international students so far in Q1. These dynamics are expected to push some of the new payments in subsequent quarters as permits are available in Canada or students seek alternative destinations. With that context Q1 2024 revenue less ancillary services is expected to be in the range of 106 million to 111 million. This guidance reflects a reduction of Q1 revenue in the mid single digit millions
spk18: due to changes in
spk20: Canada. Rounding out the guidance discussion we expect Q1 adjusted EBITDA to be in the range of 9 million to 11 million. Overall we are excited about a strong 2024 and look forward to what we expect will be a strong year of revenue and adjusted EBITDA growth. I want to finish by saying that it's been a great honor to be Flywire CFO for the past nine years. Flywire is well positioned for continued success and I will continue to chair them on. I'll now turn it back over to the operator for questions. Operator.
spk03: Thank you. Ladies and gentlemen at this time we will be conducting a question and answer session. If you'd like to ask your question you may 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 star key. In the interest of time please limit yourself to one question and one follow-up so we may get to everybody's questions. Our first question comes from the line of Dan Perlin with RBC Capital Markets. Please proceed with your question.
spk21: Thanks. Good evening and great quarter. You know I wanted to ask about the net revenue retention rate of 125 percent like it's accelerated from 22 and the average that we've seen from 19 to 21 which is it's pretty impressive and usually not necessarily the case to see this accelerate. So I'm just trying to piece out a little bit how we're thinking about where that's coming from specifically. So is that mixed within the new cohorts and verticals that you're bringing on or is it more or less kind of the revenue opportunities that you're talking about within those new cohorts just being larger as they're coming onto the platform.
spk10: So Dan it's Rob I'll jump in on this first one. So we've always talked about the multiple levers that drive NRR and the continuing you know story for us is that all those levers are continuing to work. So as you go across the verticals what you'll see is we're always working to increase the footprint we have inside the client. So whether it's more hospitals, more schools and departments or more of a businesses sort of operations and subsidiaries you know the first driver is to continue to expand our footprint inside those clients. Second thing you see is we expand based on the products that we supply. So whether it's going pre-service on top of post-service at a hospital, whether it's adding more of our product functionality from our domestic capability, all of that is what's helping drive these things. There are other additional benefits where we do things like grow the payment network that allows us to capture more payments from more places around the world but the first two that I mentioned are the main drivers there of sort of a healthy set of drivers on NRR that we feel really good about.
spk21: Okay that's great and then just a quick follow-up on seasonality. Mike you were just kind of running through this quick but one of the things that you guys have kind of hammered into us was that kind of 2Q and 4Q obviously being typical peak seasons for travel and how that's changed some of the seasonality of the business and so I'm just making sure that obviously 1Q I understand the Canadian argument and it but if it spills into second quarter is it kind of third quarter that we're ramping or should we expect kind of the guide to be maybe slightly heavier on the margin side within second quarter relative to what we would have normally thought given the seasonality of travel?
spk01: Thanks.
spk20: Sure thanks for the question it's Mike Ella. So as you know we got into about 30% for the full year and as discussed the Canadian regulation changes will impact that quarterly revenue and seasonality specifically as it impacts Q1 and we do expect Q1 to be our slowest growth quarter and I would expect that Q2 will be higher than the average and the second half will be right around the average annual growth rate. Hopefully that
spk06: gives you enough context there.
spk03: Our next question comes from the line of Will Nance with Goldman Sachs. Please proceed with your question.
spk11: Hi guys appreciate you taking the question. Nice quarter today. Yeah I was wondering
spk13: if you could maybe just kind of go through the Canada stuff again to make sure everyone's getting the moving pieces there. I thought I heard maybe two separate impacts one around the seasonality and the timing of payments and one around just regulatory changes overall that it's kind of like there was a low teams impact in the numbers for the full year. So I just you know the five million that you called out in the first quarter is that overlapping with the low teams for the full year or these you know is that a timing impact and the low teams is separate and just you know bigger picture in any color on just what kind of assumptions you guys are having to make in the forecasting around this issue and just how you think about the range of outcomes over the course of the year. Thanks.
spk08: Yeah hey Will this is Mike I'll start and I'll probably talk to Rob as we kind of go into how we modeled it. In short you know we've got a history of dealing with certain types of shifts like this and enrollment from different countries. You know we have a large diverse client base you know we're heavily connected to our clients when we see something like Canada we're talking to them we have a massive network of educational agents that are also preparing those applications throughout the year and so we get input from them and as the year goes on you can expect us to talk about the release of permits these study permits as they become more released you expect updates from us throughout the year and also potentially different areas of study right if students you know potentially can't get a permit in a place like Canada they may end up in a different location and again flywire benefits from that from that diversity and so we did call out an impact in Q1 single digit millions and full year low teen millions and I'll let Rob talk about exactly how we structured that.
spk10: Yeah so Will let me just clarify for one thing that I thought was in the middle of your question there those two effects are essentially inclusive meaning when we talked about Q1 having the low sorry the mid single digit millions and then we talked about the full year as low teens do not add those that is cumulative or integrated in terms of just making you understand the effect on the two different periods so the way we got to that measurement obviously we you know have gone and done our work to understand what we hear from our agent community from our client community and based on that we modeled out a series of scenarios so a number that will be relevant for you if you look at the business about 14% of the business is Canadian higher ed and so we work through scenarios about sort of the impact and the recapture and as we went through those sort of informed scenarios that's where we came out at the mid-teen millions sorry sorry the low teens millions for the full year impact.
spk13: Got it that's all very clear and appreciate the detailed answer there and then maybe you know maybe want to follow up on earlier question on some of the NRR dynamics and I guess in particular looking at the cohort slide that you guys provide in the deck you know you guys are seeing kind of mid to high scenes growth in cohorts from seven years ago obviously super impressive just wondering if you could talk about you know specifically what's driving the continued strong growth among some of your back but cohorts I know you touched a lot on a lot of the levers that you guys have just in general but you know for such season ventures to be growing so strong you know any call-outs on kind of what you guys are seeing success on over the past year thanks.
spk10: Yeah maybe the one extra dimension of granularity I could add from from my prior comment is the way to understand this is to understand that we do see growth just based in the core volumes that we see from the cohorts meaning increased student penetration increased payment volume from the offerings that we have all of that as part of the hard work of our relationship managers instilling best practices that our clients our reputation our network all the things that help grow sort of that base what you'll also see is that within obviously a subset of any given year's cohort we managed to do the land and expand meaning a new product or service or going domestic as a as an obvious example but it could be that or our collection management or our e-store all of those will take some of those members of that older cohort and allow us to automatically increase the revenue. Delphi is the example we called out on this earnings call right 2013 client but went full domestic capabilities just now so all of that helps feed the NRR of that longer longer cohort.
spk03: Our next question comes from the line of Jeff Cantwell with Wells Fargo please proceed with your question.
spk04: Hey thanks so much. On the Jeff
spk05: Cantwell's report research I just wanted to make sure on the 2024 guidance Mike can you talk a little bit about do your revenue grows less ancillary services 483 to 509 million can you talk about the volume incremental volume that you're expecting in 2024 whether that's coming from education or your other three verticals and where specifically you're thinking about volume growth across you know domestic versus international it's going to get a flavor for how you are considering where your volumes will be growing in 2024 thanks
spk20: very much. Hi Jeff it's Mike so first off the range that we provided was 483 to 509 million just to clarify the top end of that range. Listen the business and historically has always grown based off of payment volume improvement over time and that's one of the things that we're really proud of the quality of our revenue growth has been exceptional since the beginning of our business and to your point we do expect continued improvement with B2B and travel to continue to contribute to overall growth rate and payment volumes as well as our education business as you know the health care business is predominantly within our platform business and less about transaction volumes in that vertical but so we expect continued really good throughput based on all of the new client signs and again the NRR that we've talked about.
spk04: Okay great thanks so much and then Mike I just wanted to ask you
spk05: on your obviously we've been very appreciative all that you've contributed to you know fly by over time so I just wanted to get your thoughts on the Azure Leap company and what are your thoughts are on the state of the company and going forward you know obviously you've done a lot on the you know the focus on the margins and so forth so just wanted to get your sense of you know how you are handing things over to Cosmin and if there's anything that Cosmin can contribute on this call as far as you know how he's thinking about going forward just would like to get a sense of you know what the transition is like and then you know how we should think about margins and so forth anything you guys can talk
spk20: about. Thanks very much. This is Mike Ellis so two questions here with respect to your adjusted gross margin question you know we do expect continued revenue mix-shifts over 2024 and I would suggest similar to last year that the range of the AGM should be declining somewhere between 1 and 200 basis points but that's all built into the great adjusted EBITDA throughput that we've guided to at the midpoint for 2024 so again really good business whether it's B2B, travel, education and we'll continue to enjoy those healthy adjusted gross margins. With respect to my view of the business I've said it in my prepared remarks Flywire is well positioned it comes down to the fact that the team is focused on execution and that really cuts across every single Flymate that works for the business and for that it's been an honor and a privilege to be a part of that type of execution mindset and again just given the addressable markets that the company has to go after is really astounding and lots of room to continue to grow and that's why we're confident with this 30% growth forecast in the guidance range. Finally with respect to transitioning to Cosmin I welcome Cosmin to the Flywire team I will be available for him for as long as he needs me to get to understand the business and be able to transition all of the institutional knowledge that I may retain but one thing good about Flywire is there really is no single point of failure there's a lot of redundancy of knowledge across the organization so I am 100% confident that Cosmin will be able to go up get up and running very quickly.
spk03: Our next question comes from the line of Nate Svensson with Deutsche Bank please receive any questions.
spk22: Hi guys thanks for the question and great results so in your prepared remarks you talked about a few drivers of revenue our performance in the quarter that I was hoping we could dive a little deeper on so two things you specifically mentioned were one better monetization of payment volumes and the two better utilization of payment plans so maybe can you give a little more color on what happened in the quarter that led to better monetization rates and then likewise what drove that higher utilization of payment plans in the US in the fourth quarter.
spk10: Hi it's Rob I'll jump in and start here so you know for the most part it was a straightforward really strong performance across the business right so if you looked in education which was I think the focus of your question performed really well that strength was in the UK and the US notably in the US around that payment plan usage but lots of good revenue performance elsewhere as well I think in that payment plan utilization it's around some enhancements we've made in the user experience as well as just the expanding footprint for our domestic platform. In terms of healthcare we had quarterly revenue growth year over year which was good after a few few tough quarters travel B2B performing exceptionally well really growing very nicely and you know in terms of the Ajatya Deepadha it was it was helped mostly by the extra revenue but also by the strong gross margin.
spk22: Got it that's helpful color so the follow-up I had so you know a few weeks ago you announced the new partnership with the state bank of India to help digitize payments in the country and I know so given some of the commentary from last quarter about FX volumes in India there's obviously been a lot of focused on payment choice in that country specifically so I'm hoping you can talk a little bit more about the new partnership and what it means with regards to your ability to capture FX volumes going forward in India and I guess maybe building on that can talk maybe more about similar partnerships you're exploring in other geographies and you had a few comments in your prepared remarks there so any color that would be very helpful.
spk10: Yeah so a couple things so first of all SPI you know one of the very largest Indian banks you know we have done similar partnerships with three of the top banks all part of our strategy for making sure that we deliver a great user experience in India and we really are the easiest way to pay for folks. Overall that combined with the other aspects of our strategy mostly focusing around agents and our servicing of the agent ecosystem all contributed to a really strong quarter for India so India overall for us performed very nicely growth rates sort of in line with overall corporate average and so we view that as a very good result so all part of our strategy to you know continue you know sort of growing that FX volume and continuing to drive impressive growth out of India definitely one of our key markets.
spk08: Yeah Nate the only thing I'd add to that is just obviously we're looking for other ways in which we can go ahead and add more online banking connectivity we believe there's huge potential in digitizing a lot of the flows with banking rails in the future.
spk03: Our next question comes from the line of Darren Peller with Wolf Research please proceed with your question.
spk23: Guys hey maybe just start off with a strength you've been seeing in customer ads which obviously has been coming in I think it's around 170 180 clients or customers per quarter the last couple of quarters clearly higher than it was you know for quarter as well before that so just a bit more of an understanding as to the verticals around it and if some of them are smaller customers perhaps in the travel side or you know anything else that makes up that that strength and then if there's any also also just any changes in the sort of vintage analysis then another way if there's like a translation of revenue from those at a different pace it'd be good to know. Thanks guys.
spk10: Hey Darren, Rob here so you know this was another really strong quarter 170 plus clients signed in this case education actually got the top of the table in terms of driving the most client wins so just beat out travel by a little bit but in this case a really strong quarter for the education team alongside a strong quarter for travel nice ads and B2B and health care as well. On the deal size the average deal size just slightly lower than what you've seen across our sort of historical average but only just slightly and again strong and in a very good range so we're pretty happy with all of those results in terms of the numbers and the deal size lots of good sized deals in there too. We're also feeling really good about our investments in the -to-market right so you're seeing these numbers come in strong and the thing that we are very bullish on is that we are seeing very good efficiency as we invest in -to-market so when we look at the turn on that investment in sales we're seeing them get productive faster we're seeing win rates be higher we have a very favorable ratio in terms of their contract value they get signed in the first year relative to their costs so they are delivering well over there you know a nice multiple of their salary in terms of contract value wins in that first period and if you look over at the RM side which is the other side of our investment and -to-market you know we're assigning out you know substantial you know growth targets for RMs as they get assigned out into the field on our accounts and we feel really good about those results too.
spk23: That's great that's great that's great it's good to hear that it's a diverse set of you know cross segments and then just a quick question on the CFO side or the financial side first Mike congrats and all the best and then Cosman congrats to you too and welcome but when we think about the guidance for it's about 300 bits of margin expansion this year I think it's closer to the low end of the 300 to 600 bits that you typically have called out but I know last year you also kind of started off lower and ended up with over 500 bits of margin expansion so I just I guess we're just trying to figure out if there's an element of just starting off the year the right way and providing for some upside or is this really something about the model that might might lead that to be the case this year.
spk09: Yeah I'll take that one this is Mike so you know what I would say is I think you've seen
spk08: a bit of a track record from us like we as we look to set out for a year you know we want to look at you know how the year builds as we look into revenue we also have control over our cost dynamics as we've proven I think over the last couple of years I think as Cosman comes in I don't you know I don't think you're gonna see a significant shift in how we look at that I think you're gonna see us continue to look at every bit of spend we have internally to the company make sure we feel like we're good and on when it comes to our top line numbers and we're going to invest in the business and in a I think in an efficient way as people have seen from us so hopefully people are taken away it looks very similar and that way we may be a bit boring but we think we're delivering great results.
spk03: Our next question comes from the line of Jason Kofferberg with Bank of America please receive your question.
spk14: Hi good afternoon this is Tyler DuPont on for Jason thanks for taking the questions I wanted to start by asking about changes in the Canadian environment it sounded like any prepared remarks that some of the 4Q beat was due to a pull forward in Canadian payments can you maybe just quantify how much if any of the single digit millions that isn't going to be in one queue was pulled forward into into 4Q versus move forward into later quarters and then also just when looking on a go-forward basis how we should be
spk09: sure hey Tyler it's Mike
spk08: Massaro I would say you can you can think of that as a kind of single digit sorry single million dollar kind of impact from a pull forward perspective so definitely not kind of anywhere near the number for kind of full Q1 in Q4 really what it was was a dynamic where students new regulations were changing and as they had the opportunity to already were getting on a permit they were sure to pull the trigger on that permit where they may have had time in the in the first half of the year to make that decision as well so they were actually making their payment a bit early because they had access to a permit that had already been issued so that's really the dynamic we saw it wasn't a huge impact to Q4 wasn't a huge pull forward for Q1 but we did call it out.
spk14: Okay great that's helpful Mike appreciate the color and then just as a follow-up I wanted to ask briefly about potentially an update on the client implementation delays mentioned on the last call I know it's only around a half dozen or so but have you seen those contracts start yet and have you seen any incremental delays outside of those six I just sort of trying to level set what what we've seen last quarter versus you know what we expect for 2024.
spk10: Yep Rob here so the vast majority of that revenue opportunity has gone live and so we had overall a great quarter in terms of deployments across all the verticals if you look at the year we will have gotten in the neighborhood of 700 clients live if you look at sort of the status of things right now feel very good about the status of projects that have gone live on time as expected through
spk06: Q4.
spk03: Our next question comes from the line of Andrew Jeffrey with Truis please proceed with your question.
spk07: Hi pardon me appreciate taking the question I just wanted to be clear and I don't need to belabor the point on the guidance by my math it looks like the midpoint of the range is about 27% sort of organic somewhere in that neighborhood recognizing sort of get the puts and takes in Canada I guess does the was some of those payments that were pulled forward into 4Q kind of normalizing for that or is Canada in the entirety of the Delta between what otherwise would have been faster organic revenue growth and it sounds that you have some levers that could accelerate it namely some of the performance in in gravel and better India payment monetization I just wanted to make sure I'm understanding that correctly and I've got a quick follow-up.
spk20: Yeah your organic number is relatively right and if you not withstanding the Canadian impact we would be right about that 30% so we're pretty confident about the 30% growth rate. Okay that's
spk29: really
spk20: clear.
spk08: Yeah Andrew you had a question of kind of other areas I mean obviously you know as we look to the year it's early in the year but you know we think we have lots of opportunity across all our verticals so you can imagine we're we're putting our effort in to to offset any impacts that Canada could have and I expect to continue to execute like they have the last many many years.
spk07: Okay thank you and then I appreciate the deep dive into education in the slides this quarter particularly on slides 14 and 16 I wonder if I can ask the the capabilities on 16 you call out are really notable and soon to be client facing and then you discuss product expansion one of the levers is agent portal adoption and I education has come up especially as it relates to cross-border payments can you elaborate a little bit on how much of sort of the the growth and existing customers comes from sort of agent education and and and how the agents sort of help students get progress through the workflows and as a result maybe monetize some of those expanding software solutions that question makes sense of the agent angle lever for growth and penetration of existing customers.
spk10: So agents are an important presence in a number of the outbound student markets right so certainly India, China, Vietnam they they they play a sizable role and for certain inbound markets they play a sizable role Australia is most notable and we've mentioned before 75% of inbound students to Australia have benefited from the assistance of an education agent or an education counselor so for our part the software that we're providing and I'll start pre study link and then I'll add the study link part the capabilities that we're providing are to help them essentially facilitate that portion of their experience around making sure that all the payments work properly right so the counselors doing a bunch of things and they're using the flywire portal which may be integrated into the rest of their software to facilitate those payments so we really help provide value to the student and to the agent and everything around the payment and with study link what we added as Mike mentioned in his comment was the ability for that agent to use essentially a flywire platform starting even earlier in the process with the submission of the application managing the admissions decision and then leading to the payment so we're taking on more and more of that lifecycle again on a global basis it's still far you know it's still not the majority of payments it's still a smaller fraction than that but for us it's a great opportunity to further penetrate
spk06: these very large markets
spk03: our next question comes from the line of John Davis with Raven James please receive your question
spk17: hey good evening guys excellent follow-up on Darren's question on on new logo growth so if you look at 2023 in our honor of 125 I think organic growth was about 39% so 14 points from new logos 700 new clients maybe talk a little bit about how you think about NRR and new logo growth going into 24 and also how much growth you get in year I mean you signed up 700 new clients this year how much growth you will get in the year you sign up a client like what percentage of that revenue do you get like kind of in year versus kind of the annualization the following year
spk10: so when we've done our analysis into sort of those two elements of the growth algorithm sorry greetings JD when you when you look into the into the allocation between those two or the split what you see is that it's relatively balanced to slightly on the larger side is the contribution of from full year effect of clients signed the prior year so that's the slightly bigger half of that portion the other piece being the client in year and so that that's I think the allocation that you're
spk06: looking for
spk17: okay great and then Rob maybe just on the health care and like health care down one percent how do we think about the re-acceleration of that business kind of thoughts just bigger picture on health care and what you think you that business can grow longer term
spk10: so you know we're doing a things to try to accelerate revenue on the health care side so we got we have great conviction in the platform we have great conviction in the team we're not satisfied with the results that we saw in 2023 and neither is that is the team so in terms of things that we're focused on we've been really good about trying to be very clear about how we can target the different segments at the hospital level the large hospitals that have been the core of where we are making sure that we have clear strategies around each of the different EHRs and ways to bring a different set of solutions in based on the needs of that hospital and their setup so it may be the fullest version of our capabilities that is our full platform plus integrated financing that we provide via a partner that's a very compelling offering it may be the offering that we have installed in most of our base which is sort of what you've heard us talk about in the past in terms of everything from pre-service to post-service and we have new capabilities that focus just on payment sort of the straightforward payment processing that is an even lighter lift that makes sense for some of our clients so first thing is making sure we've got sort of that range of offerings in our traditional base the second thing is the sub segments that we started talking about so today I mentioned ortho Nebraska but they're one of a whole sorry category sorry multiple categories of sub segments that are an opportunity for us to take sort of the full power of our software and take it into these sub segments and so that's a very exciting opportunity for us we've allocated some of our sales team to that so between those two and continuing to expand with our existing clients those are the three elements that we are looking to see a return to better growth in 24 for the health care business
spk03: our next question comes from the line of Chris Kennedy with William Blair please resume your question
spk16: good afternoon thanks for taking the question can you give a little bit more color on the payer services initiative I see in the deck over 10 million from the Australian insurance opportunity can you talk about the other opportunities that you have and how big those can if they can move the needle
spk08: yeah hey Chris Mike the sorrow so you know obviously the payer services is something we talked about you know back at our investor analyst day a couple years ago and talked about expanding into these ecosystems that that are that our industries really are surrounded our industries I would say when we got into payer services we had a whole series of initiatives focused on what value add can we provide the payer in these instances and so you start to look at things like insurance which can be bundled at the point of checkout for education there's potential as we mentioned before publicly of bundling something in relation to travel around that same component if you look at how students acquire other services that they may need when studying abroad insurance is just one of the many things that a student or a parent potentially would like to have in Canada we've mentioned things I think called the GIC which is a actual deposit account that's required to get a permit in Canada to study and that has to be funded prior to the issuance of that permit and so again that's something that as you'd imagine we're at a critical point in the flow between the family potentially an educational agent and the university and as you've seen the success in the insurance product in a very short period of time we think we're at a unique position without any marketing dollars really to be spent to put great solutions in front of the payer that can make their experience great and so again that's that's the strategy it's across multiple industries and and we think we're just getting started when it comes to payer services
spk16: Great, thank you and then just real quickly the follow-up can you just give us an update on the FX volume that you had in India that was an issue that was called out in the September quarter did things kind of normalized in the December quarter thanks a lot
spk10: Yeah I think you used a good choice of words there when you said normalized when you when you looked at Q4 versus Q3 the FX percentage was actually up just slightly so we view that as a sort of good healthy result and quite satisfied with the growth in India and
spk06: the FX percent
spk03: Our last question comes from the line of Tian Xin with Tian Xin Wang with JP Morgan please proceed with your question
spk15: Hey good afternoon everyone good to talk to you guys and just just one question I'll close out the call just with the guidance range it looks a little bit wider than than usual any change there and the visibility to call out to get to the upper or the lower end lower end of the guide I know the quarter obviously came in ahead so just trying to better understand the the variance there that's all I had thanks
spk20: Yeah it's Mike Ellis yeah we did expand the revenue guidance it represents basically five percent of the full year guide and given the growth of our revenue amounts we thought it'd be reasonable given the uncertainty specifically around the Canadian regulatory challenges and as we kind of update over the course of the year of course we'll we'll narrow that range as that becomes more clear No change with respect to how we guide
spk06: Perfect thanks Mike
spk03: That is all the time we have for questions I'd like to hand it back for management for closing remarks
spk06: Appreciate everybody's time on
spk09: the call thank you very much and talk to many of you soon
spk03: Ladies and gentlemen this does include today's teleconference thank you for your participation you may disconnect your lines at this time and have a wonderful day
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