Flywire(FLYW) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2025, revenue reached $152.7 million, growing 32.6% on an FX neutral basis, with FX neutral organic growth of 20% excluding Sertifi [23][24] - Adjusted gross profit was $93.7 million, up nearly 24% year-over-year, with an adjusted gross margin of 61.3% [25] - Adjusted EBITDA margin expanded to 16.6%, increasing 190 basis points year-over-year [25] Business Line Data and Key Metrics Changes - Education revenue is primarily driven by enterprise clients, with revenue churn below 1% [7][17] - Travel revenue is growing significantly, with payment volume nearly doubling year-over-year since the Sertifi acquisition [19] - Healthcare solutions are expanding, with new client wins such as Jackson Health System and Cleveland Clinic [20] Market Data and Key Metrics Changes - Approximately 90% of education revenue and over 70% of travel revenue come from enterprise clients [7] - More than 50% of new education clients in 2025 were signed outside traditional Big Four markets, with revenue from these markets growing over 30% year-over-year [18][22] - The company expects U.S. education revenue to grow low single digits, with cross-border revenue modestly down due to visa assumptions [29] Company Strategy and Development Direction - The company is focused on transforming into a more scalable and efficient organization, emphasizing product and platform innovation [11][12] - A unified modular architecture is being developed to increase development velocity and support margin expansion [12] - The strategy includes targeting larger clients and higher value deals, enhancing sales productivity and lifetime value per client [13][22] Management's Comments on Operating Environment and Future Outlook - Management remains prudent regarding macroeconomic conditions, particularly in the U.S. and Australia, with a focus on maintaining strong execution [39][41] - The company anticipates continued growth in 2026, with revenue growth expected to be approximately 15%-21% on an FX neutral basis [27] - Management expects to achieve 24%-25% adjusted EBITDA margin for 2027, supported by disciplined expense management and capital allocation [32] Other Important Information - The company has a strong balance sheet with a $200 million net cash position and has deployed $118 million towards share buybacks [26] - The focus on AI and automation is expected to enhance operational efficiency and support long-term growth [15][26] Q&A Session Summary Question: Insights on U.S. and Australia macro assumptions - Management emphasized a prudent approach to visa assumptions, noting a 30% expected decline in U.S. first-year visas while observing strong retention and higher tuition payments [39][40] Question: Details on SFS and non-Big Four opportunities - Management reported a threefold increase in ARR from SFS, with strong pipeline opportunities, particularly in the U.S. and U.K. [42][44] Question: Growth in larger deals and ARR per transaction - Management confirmed growth in average deal size across various verticals, targeting larger clients and full suite presentations [47][48] Question: M&A opportunities and capital allocation - Management indicated a focus on disciplined capital deployment, including share buybacks and monitoring potential M&A opportunities that fit their core strategy [50][51] Question: Performance in Canada and overall guidance - Management highlighted strong execution in Canada despite visa declines, with expectations for continued growth driven by client wins [54][56] Question: Travel segment outlook and resource allocation - Management expects travel to grow at or above company average, with significant investments in sales and Sertifi expansion [60] Question: Demand for stablecoin and internal use cases - Management confirmed active testing and processing of stablecoin payments, with hopes for future growth in demand [63] Question: Gross margins and domestic payments impact - Management acknowledged temporary pressure on gross margins due to payment processing ramps but expects normalization in the future [67][70] Question: Healthcare segment growth expectations - Management noted positive signals from recent healthcare wins, particularly with Cleveland Clinic, which is expected to enhance market positioning [74] Question: Education growth outside Big Four markets - Management confirmed significant share gains in non-Big Four markets, with a focus on organizing sales teams to capitalize on these opportunities [77]