Flywire(US:FLYW)2024-05-07 21:23PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) The company reported a 20.9% revenue increase to $114.1 million but a wider net loss of $6.2 million in Q1 2024 Condensed Consolidated Balance Sheets Total assets and liabilities decreased, while stockholders' equity saw a slight increase as of March 31, 2024 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $998,715 | $1,079,731 | | Cash and cash equivalents | $619,014 | $654,608 | | Total Liabilities | $201,730 | $293,614 | | Funds payable to clients | $124,111 | $210,922 | | Total Stockholders' Equity | $796,985 | $786,117 | Condensed Consolidated Statements of Operations and Comprehensive Loss Revenue grew year-over-year, but higher total costs and operating expenses led to an increased net loss for the quarter Statement of Operations Highlights (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenue | $114,103 | $94,357 | | Total costs and operating expenses | $120,066 | $100,925 | | Loss from operations | $(5,963) | $(6,568) | | Net loss | $(6,217) | $(3,683) | | Net loss per share | $(0.05) | $(0.03) | Condensed Consolidated Statements of Cash Flows The company experienced a greater net cash outflow from operating activities, resulting in a larger net decrease in cash Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(38,093) | $(20,846) | | Net cash used in investing activities | $(1,514) | $(1,849) | | Net cash provided by financing activities | $2,249 | $1,801 | | Net decrease in cash | $(35,594) | $(22,096) | Notes to Condensed Consolidated Financial Statements Notes detail key accounting policies, the StudyLink acquisition, a new credit facility, and a voluntary OFAC submission - The company's revenue is primarily generated from clients in the Americas (50.7%), followed by EMEA (31.7%) and APAC (17.6%) for the three months ended March 31, 202444 - In November 2023, the company acquired StudyLink for an estimated total purchase consideration of $37.6 million, which contributed $2.1 million in platform revenue during Q1 2024717277 - In February 2024, the company entered into a new five-year senior secured revolving credit facility for $125.0 million, replacing the previous $50.0 million facility878895 - The company identified potential violations of OFAC sanctions and made a voluntary submission in August 2023, but does not believe any resulting loss would be material127 Management's Discussion and Analysis of Financial Condition and Results of Operations Revenue growth was driven by a 23% increase in payment volume, while the net loss widened due to foreign currency effects Key Operating Metrics and Non-GAAP Measures (in millions) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total Payment Volume | $6,952.9 | $5,667.9 | | Revenue | $114.1 | $94.4 | | Revenue Less Ancillary Services | $110.2 | $89.1 | | Adjusted Gross Profit | $71.9 | $59.9 | | Adjusted EBITDA | $13.2 | $7.0 | - Revenue increased by $19.7 million (20.9%) YoY, driven by a $18.9 million (24.8%) increase in transaction revenue due to strong growth in payment volume192193 - The net loss increased by $2.5 million YoY, largely due to a $(4.4) million loss from foreign currency remeasurement compared to a $1.5 million gain in the prior year191202 - The company's principal source of liquidity is $619.0 million in cash and cash equivalents, supplemented by a new, undrawn $125.0 million revolving credit facility204205 Quantitative and Qualitative Disclosures About Market Risk The company is primarily exposed to market risks from foreign currency fluctuations and interest rate changes - The company has short-term foreign currency exchange exposure on cross-border payments and utilizes in-house hedging algorithms to mitigate this risk225226 - A hypothetical 10% change in foreign exchange rates would have impacted loss before income taxes by approximately $15.6 million as of March 31, 2024228 - Interest rate risk exposure comes from cash equivalents and the variable-rate credit facility, under which there was no outstanding debt as of March 31, 2024221224 Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2024230 - No material changes to the company's internal control over financial reporting occurred during the quarter ended March 31, 2024231 PART II. OTHER INFORMATION Legal Proceedings The company is not party to any material legal proceedings but has voluntarily reported potential OFAC sanctions violations - The company is not currently party to any legal proceedings expected to have a material impact on its business or financial statements234 - The company made a voluntary submission to OFAC regarding potential sanctions violations but does not believe this matter will result in a material loss235 Risk Factors Key risks include a history of operating losses, competition, cybersecurity threats, and extensive regulatory compliance - The company has a history of operating losses, incurring a net loss of $6.2 million for Q1 2024, and may not achieve or sustain profitability244 - The business is subject to significant legal and regulatory risks, including complex laws for money transmission, AML, and data privacy, which could lead to fines or penalties390398401 - Operational risks include dependence on banking partners, cybersecurity threats, and the challenge of managing large fund transfers where errors could result in significant losses276317338 Unregistered Sales of Equity Securities and Use of Proceeds The company issued a small number of unregistered common stock shares as part of a settlement during the quarter - In Q1 2024, the company issued 14,166 shares of common stock in a settlement with a former WPM stockholder, exempt from registration under Regulation S and Regulation D475 Other Information The President and COO adopted a Rule 10b5-1 trading plan for the sale of company stock - President and COO Robert Orgel adopted a Rule 10b5-1 trading plan on February 29, 2024, for the sale of up to 285,548 shares of common stock478 Exhibits This section lists all exhibits filed with the report, including credit agreements and officer certifications