Flywire FY Conference Summary Company Overview - **Company**: Flywire (NasdaqGS:FLYW) - **Industry**: Payments and Fintech - **Key Verticals**: Education, Healthcare, Travel, B2B Core Insights and Arguments 1. **Strategic Transformation**: Flywire has evolved from a cross-border, education-focused business to a unified platform integrating software and payments, with significant diversification into travel, healthcare, and B2B sectors [2][3][4] 2. **Profitability and Scale**: The company has achieved nearly 20% margins, with expectations to exceed this in the coming year, indicating improved profitability and operational efficiency [4][11] 3. **Software as a Differentiator**: Flywire emphasizes that its software capabilities are foundational to its competitive edge, allowing deeper integration into clients' systems and enhancing long-term relationships [5][7][8] 4. **Operational Leverage**: The company has seen operational leverage gains, particularly in go-to-market strategies and product engineering, leading to improved margins as revenue scales [9][10][11] 5. **Market Dynamics**: The UK has overtaken the US as Flywire's largest market, contributing approximately 25% of revenue, with the US at 23%. The company is also expanding into continental Europe and Asia [12][14][18] 6. **Growth in Education Vertical**: Despite challenges in the US market, Flywire's education segment continues to grow, with non-big four markets growing faster than the company average [21][29][30] 7. **Domestic Business Expansion**: The domestic business in the US is growing rapidly, with a revenue of approximately $30 million last year, driven by modernization and vendor consolidation in universities [49][55] 8. **Student Financial Services (SFS)**: The SFS platform is a significant growth driver, offering schools a consolidated vendor solution that enhances economic efficiency and client stickiness [60][70][72] 9. **Travel Segment Growth**: Travel now represents a quarter of Flywire's revenue, with significant growth attributed to effective sales strategies and product resonance in the luxury travel market [85][91][101] 10. **B2B and Healthcare Verticals**: B2B is still small but growing rapidly at nearly 70%, while healthcare is expected to ramp up significantly with major clients like Cleveland Clinic [113][118][120] Additional Important Insights 1. **M&A Strategy**: Flywire's M&A strategy focuses on acquiring software companies to monetize payments, which has proven effective in driving growth [4][115] 2. **Market Challenges**: The company faces macroeconomic headwinds, particularly in Canada and the US, but maintains a positive outlook for growth in other regions [30][36][42] 3. **Future Outlook**: Flywire anticipates continued margin expansion and revenue growth, with a focus on maintaining operational efficiency and client retention [128][136] 4. **Stablecoin Partnership**: The partnership with BVNK for stablecoin transactions is seen as an incremental opportunity to expand into new markets and offer clients more payment options [144][150] This summary encapsulates the key points discussed during the Flywire FY Conference, highlighting the company's strategic direction, market performance, and future growth opportunities.

Financial Data and Key Metrics Changes - Revenue less ancillary services for Q2 2025 was $127.5 million, representing a 25% FX neutral growth rate or 27.7% on a spot basis, exceeding guidance [32] - Adjusted gross profit increased to $78 million during the quarter, up 23% year over year, with an adjusted gross margin of 61.1% [34] - Adjusted EBITDA reached almost $17 million for the quarter, resulting in a 13% margin, expanding by 723 basis points year over year [35] Business Line Data and Key Metrics Changes - Transaction revenue saw an 18% year-over-year increase, with a 28% increase in transaction-related payment volume, driven by Certify [33] - Platform and other revenues increased by 84% year over year, primarily due to platform fees and contributions from Certify [34] - Certify contributed $12 million in Q2, adding approximately 12 points of growth [32] Market Data and Key Metrics Changes - Revenue from outside the US, Canada, Australia, and the UK is growing well above the company average, with significant traction in markets like Singapore and Spain [14] - In the EMEA region, major wins included partnerships with institutions such as Bocconi University and Universidad Autonoma de Guadalajara [15][20] - The travel segment is seeing strong early traction, with Certify's revenue growing above 35% year over year [26] Company Strategy and Development Direction - The company is focused on diversifying its revenue mix and expanding client relationships through high-value software contracts [7] - The evolution to launch student financial services as a broader SaaS education platform aims to provide greater revenue visibility and durability [7] - The company is committed to capturing all money flows using industry-tailored software solutions powered by AI [9] Management's Comments on Operating Environment and Future Outlook - Management noted that organizations are increasingly focused on efficiency and return on investment, which aligns with Flywire's offerings [5] - The company remains confident in the long-term value of international education despite current visa approval challenges [40] - Management anticipates a mid to high single-digit headwind to organic revenue growth due to visa declines in major markets [43] Other Important Information - The company repurchased approximately $5 million of its shares and expanded its revolving credit facility from $125 million to $300 million [39] - The company is investing in data infrastructure, AI, and automation to enhance productivity and scale [36] - Stock-based compensation expenses are expected to be in the 12% to 13% range for the year, with expectations to trend down as revenue grows [37] Q&A Session Summary Question: Insights on full-year guidance - Management indicated that the strong Q2 results were offset by expected U.S. weakness in the latter half of the year, maintaining a cautious outlook [49][50] Question: Growth profile over the next three to five years - Management expressed excitement about the diversified growth and the potential to double the business, emphasizing strong unit economics [58][60] Question: Trends in the UK business - Management highlighted strong performance in the UK, with significant opportunities for revenue growth through deeper integrations and new product offerings [82][84] Question: U.S. education growth outlook amidst visa challenges - Management noted that domestic growth is offsetting international softness, with strong demand for the student financial services product [92][95]

Financial Data and Key Metrics Changes - Revenue less ancillary services was $128.7 million in Q1 2025, representing a 16.8% year-over-year growth rate or 18.6% on an FX neutral basis [40] - Adjusted gross profit increased to $82.5 million during the quarter, up 14.6% year-over-year, with an adjusted gross margin of 64% [43] - GAAP net loss was $4.2 million, representing a year-over-year improvement of approximately $2 million [45] Business Line Data and Key Metrics Changes - Transaction revenues increased by 14% year-over-year, driven by a 28% increase in transaction-related payment volume [41] - Platform and other revenues increased by 35% year-over-year, primarily driven by platform fees and contributions from Certify [42] - The U.S. education business had its most successful quarter in terms of signed ARR from full suite SFS deals, securing five new deals in Q1 [30] Market Data and Key Metrics Changes - The UK education segment is now the largest market for the company, experiencing strong growth driven by the launch of new products [72] - Australia and Canada are expected to see high 20% year-over-year declines in education revenue due to market uncertainties [51] - The travel vertical continues to see strong momentum, with notable new clients and significant growth opportunities [34] Company Strategy and Development Direction - The company is focused on streamlining its structure and optimizing investments across products and geographies to drive efficiency [11] - A digital transformation initiative is underway to enhance data analytics and system capabilities, leveraging AI for operational efficiency [14] - The company aims to capitalize on the growing demand for international education and expand its footprint in emerging markets [22] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenging macro environment but expresses confidence in the company's performance and future growth [5] - The company is proactively monitoring visa trends and adjusting strategies to capture additional payment flows in the U.S. education sector [28] - Management expects U.S. education revenue growth to be in the low single digits, with a cautious outlook due to geopolitical tensions [48] Other Important Information - The company repurchased 3.6 million shares for approximately $49 million under its stock repurchase program [45] - Certify contributed $4.7 million since acquisition, exceeding initial expectations [41] - The company is maintaining its full-year 2025 revenue guidance for FX neutral revenue growth in the range of 10% to 14% excluding Certify [50] Q&A Session Summary Question: FX guidance and growth expectations - The CFO explained the expected slowdown in Q2 due to Canadian payment timing and the anticipated acceleration in the second half of the year [57][60] Question: Impact of international student demand on sales cycles - The CEO noted that there has been no decline in demand, and clients are looking for ways to improve their technology [61][64] Question: Growth in the UK market - The CFO confirmed that the UK is now the largest market for education, with strong growth driven by new product offerings [72] Question: Sources of upside in revenue growth - The CFO highlighted travel as the number one driver of growth, with Australia also showing better-than-expected performance [78][80] Question: Competitive positioning in education - The CEO stated that the company continues to compete based on product performance and is not seeing aggressive price competition [95][96] Question: Operational review and margin implications - The CEO discussed ongoing efforts to streamline operations and the potential for margin expansion through cost savings [99]