Flywire Corporation

Welcome to Flywire Corporation's second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A brief 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, Ms. Alison McLeod. Chief Marketing Officer. Thank you, Ms. McLeod. You may begin.

Thank you and good afternoon. With us on today's call are Mike Massaro, Chief Executive Officer, Rob Orgel, President and Chief Operating Officer, and Cosmin Pitigoy, Chief Financial Officer. Our second quarter 2024 earnings press release, supplemental presentation, and when filed, Form 10-Q can be found at ir.gov. 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-GAAP financial measures. Please refer to our press release and SEC filings for more information on the risks regarding these forward-looking statements that could cause actual results to differ materially and the required disclosures and reconciliations related to non-GAAP financial measures. This call is being webcast live and will be available for replay on our website. I would now like to turn the call over to Mike Massaro.

Thank you, Alison, and thank you to everyone that is joining us today. We are pleased to share our Q2 2024 results with all of you here today, demonstrating continued strong performance across the business. Concurrent with sharing our Q2 results today, we will also be discussing the announced acquisition of Invoiced, an award-winning accounts receivable software as a service platform for the B2B industry, a share buyback program to return capital to shareholders as part of our commitment to driving long-term shareholder value, and how we are dealing with the revenue headwinds related to the ongoing Canadian government actions involving student study permits, both operationally and in terms of our forecast. Rob Orgel, our President and COO, and Coughlin Pitigoy, our CFO, will go into greater detail later in this call. But first, I will start with a few financial highlights from the quarter. Revenue left ancillary services was $99.9 million, an increase of 26% year-over-year. Adjusted gross profit for the quarter was $63.4 million, an increase of 26% year-over-year. Adjusted EBITDA was 5.8 million for the quarter, increasing by 5.9 million year-over-year. An adjusted EBITDA margin expanded nearly 600 basis points year-over-year with strong free cash flow conversion. As we are past the halfway point of the year, I want to underscore the strong business fundamentals that position Flywire for sustained growth and success. First, we have significant growth potential within our existing accounts, and given the depth of our solutions, can pull multiple levers to add more value to our clients. We frequently use our land and expand strategy to grow our business. For example, winning a large cross-border payments client and then solving other payment challenges for them, like domestic payments, is one way we expand with clients while being deeply embedded into their ecosystems. Second, we continue to drive great diversity of revenue across verticals, subsectors, countries, currencies, and clients. We are not a one vertical company. Consistent with our plan to broaden beyond education, travel has grown into our second largest vertical by revenue less ancillary services, reinforcing our ability to strategically diversify our business. And consistent with our plans, we are not a U.S. only revenue company. We are capturing the market opportunity around the world, driving significant revenue from other geographic regions. And third, we are now and will continue to consistently convert adjusted EBITDA to free cash flow, while achieving strong revenue growth and expanded adjusted EBITDA margins. We believe our strength and ability to excel in all these areas sets Flywire apart from other businesses. All this being said, we continue to believe that our current valuation does not properly reflect the sizable market opportunity in front of us, our offering that uniquely combines software and payments, and our thoughtful approach to efficiency and scale. So today, we are announcing a share repurchase program of $150 million, as we believe that our existing liquidity and projected free cash flow generation allows us to continue making organic investments to grow our core, as well as strategic acquisitions, while also giving us the opportunity to return capital to shareholders. Tosmin will share more details on the share repurchase program later in this call. Returning to operating performance, we have continued to make progress in our three strategic investment areas, optimizing our go-to-market capabilities, expanding our Flywire advantage, and strengthening our FlyMate community. First, on our go-to-market capabilities, we continue to optimize and invest in our growth algorithm. Our increased investment in sales and relationship management is paying off in our B2B vertical, where in Q2, we increased our year-over-year client wins by 38% and generated an over 100% increase in pipeline value creation compared to Q2 last year. B2B is vast, but we are focused on sub-segments of the market. For example, in Q2, we had great traction within insurance, thanks to a combination of in-person events, digital acquisition, and direct sales outreach. In addition, here at Flywire, we believe our successful M&A track record complements our strong organic growth. Today, we announced the acquisition of Invoiced, an award-winning accounts receivable software-as-a-service platform, and we are thrilled to be welcoming a talented group of new Flymates to our global team. The deal augments Flywire's B2B payment solution with workflow automation software, purpose-built for mid-market companies to streamline the entire AR process. In addition to the experienced team, with Invoice, we gain AR automation software involved in invoicing, communicating with payers, and reconciling payments to ERP systems. We are also gaining the opportunity to monetize several billion dollars of domestic and international payment volume that is managed annually by the Invoice platform. The combination of Invoice AR automation software with Flywire's proprietary global payment network, which supports diverse payment methods in more than 140 currencies across 240 countries and territories around the world, is expected to provide the B2B industry with a full suite software and payment solution that streamlines workflows for finance departments. Invoiced, client-based, presents meaningful growth opportunities for Flywire. We believe their software will significantly accelerate our product roadmap and add greater value to our B2B clients. We also believe invoice software as a service platform has the long-term potential to resonate across our verticals as well. And we look forward to scaling it with the support of Flywire's clients, partners, and our global team. We are very excited to share this news today and have added more details on the acquisition in our earnings supplement posted on our investor relations website. Cosmin will also go into more detail about the financials of this deal shortly. As we have said before, we are confident in our track record of strategic and value-add acquisitions and will continue to pursue acquisitions that fit our strategy. In addition to both organic and inorganic go-to-market investments, we have also made great progress expanding our flywire advantage. we remain focused on delivering product and payment innovation to power the vertical ecosystems in which we operate. One example is the recent expansion of our capabilities in India to streamline and digitize student loan payments for Indian students studying abroad. Through our partnership with HDFC Cradilla, India's largest private loan provider, Flywire enables Indian payers to seamlessly and digitally disperse their education payments in Indian rupees for the loans that are funded and managed by HDFC Cradilla. This This innovative approach helps us capitalize on the large market opportunity around Indian student loans, which we estimate to be approximately $3 billion in annual payment volume. It also builds on our ongoing momentum in India, a key outbound market for us. As a reminder, we have recently established direct integrations to three of India's largest banks, including State Bank of India, HDFC Bank, and ICICI Bank. We've invested in more local payer support, now offered in eight Indian languages around the clock across a number of familiar channels. And we've expanded our network of education agents and counselors who are becoming increasingly important in placing Indian students in overseas colleges and universities. And finally, we continue to focus on strengthening and growing our FlyMate community. We pride ourselves on having a culture of collaboration to solve hard problems for our clients. We showcased these strengths when we hosted our annual Flywire Advisory Board meeting with some of our top clients throughout Australia and New Zealand. This year's event was distinctive as it was the first time Flywire and StudyLink clients came together in a summit format. The event reinforced not only the respect our clients have for their Flywire partnership, but also the significant growth potential within our existing accounts and the multiple levers we had to grow those clients and add more value to them. The partnership amongst our teams to integrate and cross-sell our offerings are yielding substantial results in our Australian education market, which Rob will go into great detail about. Our culture is also underpinned by our commitment to giving back to the communities we serve. This past April, we came together as a company to host our first ever Environmental Awareness Month, which was a combination of educational programming, volunteering, and philanthropy focused on Flywire's commitment to climate action. Throughout the month, We organized eight Fly Better Days across our global offices with more than 100 fly maids volunteering their time and energy to give back to their local communities. This all coincided with our new sponsorship for the Adventure Travel Conservation Fund, which enables Flywire to support community-led conservation efforts in tourist destinations around the world. The energy, enthusiasm, and dedication of our fly maids is truly special, and we are proud of our collective efforts and the positive impact our teams have made. Before I close, I wanted to briefly acknowledge the speculative rumors that circulated last week regarding Flywire. I believe it is evident based on our results and actions announced today that we are focused on executing and growing this business, and that we have confidence in our ability to drive shareholder value. We will end, as always, with a Q&A session, but I am not going to further comment or take questions on last week's rumors. Overall, we are very pleased with how the business performed during the second quarter, underscoring the resilience of our business and winning strategy across our industries. I would now like to turn the call over to Rob Orgel to review some operational highlights from the quarter.