Flywire's Robust Growth and Strategic Partnerships
2024-02-28
Flywire Corporation, a global payment and receivables solutions provider, held its fourth quarter 2023 earnings conference call, featuring key executives including Mike Massaro, the Chief Executive Officer; Rob Orgel, the President and Chief Operating Officer; and Mike Ellis, the Chief Financial Officer. During the call, they discussed the company's financial performance and strategic initiatives.
In the fourth quarter of 2023, Flywire reported impressive financial results. Revenue less ancillary services reached $96.1 million, marking a 43% increase from the previous year. The adjusted gross profit for the quarter was $63.5 million, a 42% rise year over year. Additionally, the adjusted EBITDA for the quarter stood at $7.7 million, a substantial increase of $6.7 million compared to the same period in 2022.
Throughout fiscal year 2023, Flywire achieved several significant milestones. The company experienced a 43% year-on-year growth in revenue less ancillary services and boosted adjusted EBITDA to $42 million, representing 11% of revenue less ancillary services. Flywire onboarded over 700 new clients across all verticals, bringing its total client count to more than 3,800 globally. Moreover, the company processed over $24 billion through its global payment network, reflecting a 33% increase year over year.
Flywire's success in fiscal year 2023 was attributed to its robust partnership strategy. The company strengthened relationships with key partners such as Cerner, FinThrive, WeChat Pay, and three major banks in India. With over 90 partnerships in tech ERP integrations across various verticals, Flywire aims to identify new clients and expedite implementations. The company plans to deepen these partnerships by investing in channel sales teams, integration engineering resources, and developing more certified integrations with partners.
To enhance its go-to-market capabilities and expand its Flywire Advantage, the company intends to increase investment in sales and relationship managers by over 15% across all verticals and geographies. Flywire aims to integrate payments into the existing software and workflow processes of clients, partners, and payers, thereby adding more value to growing ecosystems. Additionally, the company is investing in building a public API to seamlessly integrate its payments platform into clients' existing ERPs or software.
In terms of strategic moves, Flywire acquired StudyLink in 2023, broadening its reach beyond Australia and focusing on the strategic payables opportunity, particularly in the travel and education verticals. The company foresees strong growth, further EBITDA expansion, and positive net income delivery in 2024. Flywire plans to ramp up investment in its go-to-market capabilities, penetrate its total addressable market across all verticals, and expand its partner ecosystem.
Flywire's global payment network plays a pivotal role in addressing specific payable use cases for clients. The company leverages its software framework to resolve specific payable use cases in travel payables volumes and commission payments within the education sector. Flywire is expanding its partner ecosystem in the U.S. investment savings accounts sector by digitally disbursing 529 plan payments to U.S. colleges and institutions.
The FlyMate community is integral to Flywire's success, with the company emphasizing its culture and financial achievements that empower FlyMates to advance their careers. The incoming CFO, Cosmin Pitigoi, brings extensive experience, having most recently served as senior vice president in finance at PayPal.
Flywire's growth algorithm serves as a key driver of its success, with the company focusing on annualizing and growing clients signed in the previous year, recognizing revenue from new clients in the year they are signed, and generating revenue from payer services and other sources not tied to specific clients. The company's long-term growth strategy involves investing in go-to-market capabilities, building go-to-market teams, and seizing opportunities to expand market share.
Looking ahead, Flywire projects its revenue less ancillary services for Q4 2023 at $96.1 million, reflecting a 43% growth rate compared to Q4 2022. The adjusted gross profit for Q4 2023 amounted to $63.5 million, a 42% increase from the same period in 2022. The company anticipates an adjusted EBITDA for full year 2024 in the range of $65 million to $76 million, aiming for margin expansion through robust revenue growth and prudent spending.
Despite anticipated Canadian regulatory changes impacting the seasonality of its business in 2024, Flywire remains optimistic. The company expects revenue less ancillary services for Q1 2024 to range between $106 million and $111 million, with an expected adjusted EBITDA range of $9 million to $11 million.
Flywire continues to maintain a strong net revenue retention rate and focuses on driving organic growth. The company welcomed over 700 new clients in the recent quarter across various verticals. OrthoNebraska, a specialty hospital, witnessed positive outcomes after implementing Flywire's payment solutions, with nearly 80% of all payments processed through the patient self-service portal.
In the healthcare sector, Flywire offers a sophisticated and integrated accounts receivable solution to midmarket enterprise clients. The company's software streamlines payments, manages admissions decisions, and oversees the payment process from application submission to final payment. Flywire facilitates student and agent payments by integrating its platform into the software utilized by counselors, ensuring seamless payment processing throughout the application and admission process.
Flywire's revenue guidance for 2024 ranges from $483 million to $509 million, presenting a substantial growth opportunity. The company anticipates increased volume growth in 2024 from B2B, travel, and education segments. Flywire is concentrating on subsegments within the healthcare industry, such as OrthoNebraska, to propel growth. Additionally, the company is working on a payer services initiative, offering value-added services to payers across various industries.
Despite uncertainties surrounding Canadian regulatory challenges, Flywire provided revenue guidance and plans to adjust it as the challenges evolve. The company remains confident in achieving a 30% growth rate, excluding the impact of Canada. Chief Executive Officer Mike Massaro expressed confidence in the company's growth prospects and welcomed incoming CFO Cosmin Pitigoi to the team.
Flywire expects its adjusted gross margin for 2024 to decline by 100 to 200 basis points. The company aims to bolster its margin through robust revenue growth and disciplined spending. Flywire closely monitors cost dynamics, exercises spending control, and efficiently invests in the business to align with revenue objectives and deliver positive outcomes. The company aims to narrow the guidance range as the impact of Canadian regulatory changes becomes clearer.
In conclusion, Flywire Corporation continues to demonstrate robust growth and success in its global payment and receivables solutions business. With a focus on strategic partnerships, enhancing go-to-market capabilities, and expanding its addressable market, Flywire is well-positioned for sustained growth in the years ahead.