Flywire Corporation

Good day, and welcome to the Flywire third quarter of 2024 earnings conference call. All participants will be in a listen-only mode for the duration of the call. And should you need any assistance today, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. And to withdraw a question, please press star, then two. Also, please be aware that today's call is being recorded. I would now like to turn the call over to Masha Khan, Investor Relations. Please go ahead.

Thank you, and good afternoon. With us in today's call are Mike Massar, Chief Executive Officer, Rob Wargill, President and Chief Operating Officer, and Cosmin Pitigoy, Chief Financial Officer. Our third quarter 2024 earnings press release supplemental presentation, and when filed, Form 10-Q can be found at ir.flywire.com. During the call, we'll be discussing certain forward-looking information. Actual results could differ materially from those contemplated by this forward-looking statement. We'll 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. Unless otherwise stated, all references on this call to revenue, cost of revenue, gross profit and gross margins, sales and marketing expense, technology and development expense, and general administrative expense are on non-GAAP basis. 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, Masha, and thank you to everyone that is joining us today. Before we go into details about the quarter, I want to provide some context on what we have accomplished as a public company and how we are looking towards the future. Since our IPO in 2021, we have doubled the business in terms of revenue and surpassed the revenue, gross profit, and adjusted EBITDA margin objectives we had set at the time of our IPO. We plan to double the revenue yet again over the next several years while improving profitability and the cash flow generation of the company. We expect to accomplish this through a combination of business improvements we have already made and the investments we are making. We now have 4,000 plus loyal clients in 50 countries across numerous verticals and sub-verticals with great revenue diversification. And we have more than 1,300 flymates focused on execution and building high performance teams. We have powerful sales and customer success engines in each industry we serve. And we have a robust global payments infrastructure that was able to support the nearly 2x total payment volume spike in Q3 compared to the average volume process during the first two quarters of this year. Our combination of next gen payments platform, proprietary global payment network, and vertical specific software create a powerful value proposition. further strengthened by our efficient go-to-market engine and existing client relationships. I am very proud of our team's product capabilities and our ability to prioritize investments to further optimize our cost structure and deliver more value to our clients, their payers, and to our shareholders. Our core business is operating well because we are focusing on the things we can control. We are deepening our relationships and seeing revenue growth at existing clients. We are reducing the small amount of client churn we have. We are expanding our value proposition, and we are managing both gross margins and our operating costs to further deliver to the bottom line. We are landing more clients in every vertical around the world. Education continues to prosper well. We see strong growth in travel and B2B, and our healthcare business returned to modest revenue growth during the quarter as well. As well as we're doing, we continue to face a well-understood macro dynamic in our education business, specifically related to limits on foreign students imposed by the Canadian government with potential future actions by the Australian government. These have put pressure on our revenue growth rate over the last number of quarters, despite very strong execution by our team. Even in the face of these headwinds, Flywire continues to grow at scale. helping our clients digitize large and complex payments all over the world. With that context, I am pleased to share our Q3 2024 results with all of you, demonstrating continued strong performance across our business. Revenue-less ancillary services was $151.4 million, an increase of 29.6% year over year. Adjusted gross profit for the quarter was 101.9 million, an increase of 27.2% year-over-year. Adjusted EBITDA was 42.2 million for the quarter, increasing by 14.7 million year-over-year, and adjusted EBITDA margin expanded by nearly 429 basis points year-over-year, with strong free cash flow conversion. As a result of our strong growth combined with meaningful operating leverage, Flywire has been and expects to continue to be a Rule of 40 company. We are proud and we have built a durable business where we have been able to drive solid revenue growth, gain market share, expand our total addressable market, and deliver innovative solutions to the industries we serve. As we look ahead, our goal is to continue to balance strong top-line growth with margin expansion and deliver strong cash flows and gap net income profitability. With that, I will now share some progress we made in Q3 against our three-pronged strategy of optimizing our go-to-market capabilities, expanding our Flywire advantage, and strengthening our FlyMate community. First on our go-to-market capabilities. We believe we have a data-driven and disciplined approach to how we optimize revenue growth and efficiency across sales, marketing, and customer success. We prioritize high ROI marketing activities. ensuring our investments directly support revenue growth across our verticals. All of this rigor helps drive strong revenue growth, logo retention, pipeline development, and new client signings, and at the same time, a reduction in average deal cycle time. This approach strengthens our confidence in scaling strategic investments across sales and marketing within diverse verticals and regions. by testing and optimizing initiatives in one market and expanding proven successes into another, while adapting only for the essential local operating requirements. We have a proven playbook that helps us optimize our impact and ensure efficient growth across geographies. Last quarter, we held our inaugural client conference in the United States, modeled on the success of our conference in the UK. We brought together more than 100 colleges and universities reinforcing the significant ROI our full suite solution is delivering to institutions who use it to manage billing, one-time payments, payment plans, and past due collections. This event further highlighted the growth potential within our existing clients who are already using our cross-border solution and are increasingly focused on the value we can deliver from our full suite domestic offering. The focused efforts of our teams to integrate and cross-sell our offerings are yielding substantial results in the U.S. market, which Rob will detail shortly. In addition to our go-to-market investments, we've 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. In Q3, we enabled $11 billion in total payment volume across multiple payment types, including local bank transfers, credit and debit cards, and alternative payment methods. The majority of our payment volume is not card related and is completed over our global payment network, a significant differentiator for Flywire. Ultimately, we want to allow payers to use any and all payment options available to them in any country, allow them to transparently choose the one that they want, and provide it to them with great value informed by cost, speed, reliability, and trust. We want this transaction to complete over our global network in the most efficient and effective way possible and do so at healthy margins for Flywire. Here are just some of the ways we strengthen our global payment network and payment acceptance capabilities this quarter in the APAC region specifically. We went live with our second banking partner in Vietnam, Vietnam International Bank, VIB, which augments our existing bank transfer offering and expands our presence in Vietnam. our fifth largest payer market by FX money moved. The integration provides a fully digital payment experience for payers, and our API integration with VIB increases payment processing and delivery speeds. Crossing over to Singapore, we further enhanced our payment capabilities and are working with a leading university client to roll out dynamic QR codes and instant local currency bank transfers through PayNow. These types of local banking partnerships alongside our enhancements to payment acceptance capabilities further strengthens our global banking network and solidifies our competitive moat for processing large, complex payments, both internationally and domestically. And finally, we continue to focus on strengthening and growing our FlyMate community. Our culture is underpinned by our commitment to building high performance teams. We believe a cornerstone of our success is equipping our flymates with the right tools, training, and other resources necessary to build their careers of a lifetime here at Flywire. Lastly, our thoughts go out to our flymates based in Valencia, Spain, as they deal with the impact of the historic flooding that took place just about a week ago. While we have had minimal business impact from the effects of the natural disaster, we continue to work directly with our flymates in the region to identify emerging needs and provide support to the local community as they recover. I continue to be inspired each day by the efforts of flymates all over the world that dedicate their time and resources to serving others and supporting their local communities. In closing, I am pleased with the results we delivered in the third quarter. Performing well in spite of the headwinds from Canada underscores the resilience of our business, the ingenuity of our people, and execution of our unique strategy across industries and geographies. I would now like to turn the call over to Rob Orgel to review some operational highlights from the quarter. Rob? Thanks, Mike.