Flywire Reports Third Quarter 2021 Financial Results

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Revenue Increased 61% Year-over-Year

Revenue Less Ancillary Services Increased 67% Year-over-Year

Total Payment Volume was $5.3 Billion, up 76% Year-over-Year

Company Updates Fiscal-Year 2021 Outlook

BOSTON, Nov. 09, 2021 (GLOBE NEWSWIRE) -- Flywire Corporation (Nasdaq: FLYW) (“the Company”) a global payments enablement and software company, today reported financial results for its third quarter of 2021.

“We experienced another strong quarter with growth across all areas of our business, resulting in revenue less ancillary services growth of 67% compared to the third quarter of 2020,” said Mike Massaro, CEO of Flywire. “We believe the next decade will bring a wave of digitization across the education, healthcare, travel and B2B industries and that Flywire is uniquely positioned to lead this trend with our powerful combination of software and payments."

Third Quarter 2021 Financial Highlights:

GAAP Results

  • Revenue increased 61% to $67.8 million in the third quarter of 2021, compared to $42.1 million in the third quarter of 2020.
  • Gross margin increased 1.4% in absolute terms to 65.8% in the third quarter of 2021, compared to 64.4%in the third quarter of 2020.
  • Net income was $10.0 million in the third quarter of 2021, compared to $5.2 million in the third quarter of 2020.

Key Operating Metrics and Non-GAAP Results

  • Total Payment Volume increased 76% to $5.3 billion in the third quarter of 2021, compared to $3.0 billion in the third quarter of 2020.
  • Revenue Less Ancillary Services increased 67% to $62.0 million in the third quarter of 2021, compared to $37.2 million in the third quarter of 2020.
  • Adjusted Gross Margin decreased 0.9% in absolute terms to 71.9% in the third quarter of 2021, compared to 72.8% in the third quarter of 2020.
  • Adjusted EBITDA was $17.6 million in the third quarter of 2021, compared to $10.2 million in the third quarter of 2020.

Fiscal-Year 2021 Outlook:

Based on information available as of November 9, 2021, for fiscal year 2021 Flywire expects the following:

  • Revenue of $190 to $193 million
  • Revenue Less Ancillary Services of $174 to $176 million
  • Adjusted EBITDA of $22 to $24 million*

*Flywire has not provided a quantitative reconciliation of forecasted Adjusted EBITDA to forecasted GAAP net income (loss) or to forecasted GAAP income (loss) before income taxes within this earnings release because the company is unable, without making unreasonable efforts, to calculate certain reconciling items with confidence. These items include but are not limited to income taxes which are directly impacted by unpredictable fluctuations in the market price of the company's stock.

Conference Call

The Company will host a conference call to discuss third quarter 2021 financial results today at 5:00 pm ET. Hosting the call will be Mike Massaro, CEO, Rob Orgel, President and COO, and Mike Ellis, CFO. The conference call can be accessed live via webcast from the Company's investor relations website at https://ir.flywire.com/. A replay will be available on the investor relations website following the call.

Key Operating Metrics and Non-GAAP Financial Measures table

We use non-GAAP financial measures to supplement financial information presented on a GAAP basis. We believe that excluding certain items from our GAAP results allows management to better understand our consolidated financial performance from period to period and better project our future consolidated financial performance as forecasts are developed at a level of detail different from that used to prepare GAAP-based financial measures. Moreover, we believe these non-GAAP financial measures provide our stakeholders with useful information to help them evaluate our operating results by facilitating an enhanced understanding of our operating performance and enabling them to make more meaningful period to period comparisons. There are limitations to the use of the non-GAAP financial measures presented here. Our non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.

We use supplemental measures of our performance which are derived from our consolidated financial information, but which are not presented in our consolidated financial statements prepared in accordance with GAAP. These non-GAAP financial measures include the following:

  • Revenue Less Ancillary Services. Revenue Less Ancillary Services represents our consolidated revenue in accordance with GAAP after excluding (i) pass-through cost for printing and mailing services and (ii) marketing fees. We exclude these amounts to arrive at this supplemental non-GAAP financial measure as we view these services as ancillary to the primary services we provide to our clients.

  • Adjusted Gross Margin. Adjusted gross margin represents adjusted gross profit divided by Revenue Less Ancillary Services. Adjusted gross profit represents Revenue Less Ancillary Services less cost of revenue adjusted to (i) exclude pass-through cost for printing services and (ii) offset marketing fees against costs incurred. Management believes this presentation supplements the GAAP presentation of gross margin with a useful measure of the gross margin of our payment-related services, which are the primary services we provide to our clients.

  • Adjusted EBITDA. Adjusted EBITDA represents EBITDA further adjusted by excluding (i) stock-based compensation expense, (ii) the impact from the change in fair value measurement for contingent consideration associated with acquisitions, (iii) the impact from the change in fair value measurement of our preferred stock warrants, (iv) other income (expense), net, (v) acquisition related transaction costs, and (vi) employee retention costs, such as incentive compensation, associated with acquisition activities. Management believes that the exclusion of these amounts to calculate Adjusted EBITDA provides useful measures for period-to-period comparisons of our business.

These non-GAAP financial measures are not meant to be considered as indicators of performance in isolation from or as a substitute for revenue, gross margin or net loss prepared in accordance with GAAP and should be read only in conjunction with financial information presented on a GAAP basis. Reconciliations of Revenue Less Ancillary Services, Adjusted Gross Margin and Adjusted EBITDA to the most directly comparable GAAP financial measure are presented below. We encourage you to review these reconciliations in conjunction with the presentation of the non-GAAP financial measures for each of the periods presented. In future fiscal periods, we may exclude such items and may incur income and expenses similar to these excluded items. We have not provided a quantitative reconciliation of forecasted Adjusted EBITDA to forecasted GAAP net income (loss) or to forecasted GAAP income (loss) before income taxes within this earnings release because the Company is unable, without making unreasonable efforts, to calculate certain reconciling items with confidence. These items include but are not limited to income taxes which are directly impacted by unpredictable fluctuations in the market price of the Company's stock.  

About Flywire

Flywire Corporation (Nasdaq: FLYW) is a global payments enablement and software company. Flywire combines its proprietary global payments network, next-gen payments platform and vertical-specific software to deliver the most important and complex payments for its clients and their customers.

Flywire leverages its vertical-specific software and payments technology to deeply embed within the existing A/R workflows for its clients across the education, healthcare and travel vertical markets, as well as in key B2B industries. Flywire also integrates with leading ERP systems, so organizations can optimize the payment experience for their customers while eliminating operational challenges.

Flywire supports over 2,450 clients with diverse payment methods in more than 140 currencies across 240 countries and territories around the world. The company is headquartered in Boston, MA, USA with global offices. For more information, visit www.flywire.com. Follow Flywire on TwitterLinkedIn and Facebook.

Safe Harbor Statement

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding our future operating results and financial position, our business strategy and plans, market growth, and our objectives for future operations. Flywire intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terms such as, but not limited to, “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “target,” “plan,” “expect,” or the negative of these terms, and similar expressions intended to identify forward-looking statements. Such forward-looking statements are based upon current expectations that involve risks, changes in circumstances, assumptions, and uncertainties. Important factors that could cause actual results to differ materially from those reflected in Flywire's forward-looking statements include, among others, Flywire’s future financial performance, including its expectations regarding Revenue, Revenue Less Ancillary Services, and Adjusted EBITDA. Risks that may cause actual results to differ materially from these forward looking statements include, but are not limited to: political, economic, legal, social and health risks, including the COVID-19 pandemic and subsequent public health measures that may affect Flywire’s business or the global economy; beliefs and objectives for future operations; Flywire’s ability to develop and protect its brand; Flywire’s ability to maintain and grow the payment volume that it processes; Flywire’s ability to further attract, retain, and expand its client base; Flywire’s ability to develop new solutions and services and bring them to market in a timely manner; Flywire’s expectations concerning relationships with third parties, including strategic partners; the effects of increased competition in Flywire’s markets and its ability to compete effectively; future acquisitions or investments in complementary companies, products, services, or technologies; Flywire’s ability to enter new client verticals, including its relatively new B2B sector; Flywire’s expectations regarding anticipated technology needs and developments and its ability to address those needs and developments with its solutions; Flywire’s expectations regarding litigation and legal and regulatory matters; Flywire’s expectations regarding its ability to meet existing performance obligations and maintain the operability of its solutions; Flywire’s expectations regarding the effects of existing and developing laws and regulations, including with respect to payments and financial services, taxation, privacy and data protection; economic and industry trends, projected growth, or trend analysis; Flywire’s ability to attract and retain qualified employees; Flywire’s ability to maintain, protect, and enhance its intellectual property; Flywire’s ability to maintain the security and availability of its solutions; the future market price of Flywire’s common stock; and other factors that are described in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of Flywire's Prospectus dated May 25, 2021, and Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, which are on file with the Securities and Exchange Commission (SEC) and available on the SEC's website at https://www.sec.gov/. Additional factors may be described in those sections of Flywire's Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, expected to be filed with the SEC in the fourth quarter of 2021. The information in this release is provided only as of the date of this release, and Flywire undertakes no obligation to update any forward-looking statements contained in this release on account of new information, future events, or otherwise, except as required by law.

Contacts
Media:
Sarah King
Sarah.King@Flywire.com 

Prosek Partners
pro-flywire@prosek.com 

Investor Relations:
ICR
flywireir@icrinc.com 

 
 
Unaudited Condensed Consolidated Statement of Operations
(Amounts in thousands, except share and per share amounts)
        
        
 Three Months Ended Nine Months Ended
 September 30, September 30,
  2021   2020   2021   2020 
Revenue$67,788  $42,086  $149,755  $98,552 
Costs and operating expenses:               
Payment processing and services costs 21,724   13,777   50,937   36,254 
Technology and development 7,752   6,079   22,203   17,805 
Selling and marketing 12,540   7,640   35,377   24,342 
General and administrative 14,676   9,172   44,167   32,985 
Total costs and operating expenses 56,692   36,668   152,684   111,386 
Income (loss) from operations 11,096   5,418   (2,929)  (12,834)
Other income (expense):               
Interest expense (542)  (584)  (1,792)  (1,860)
Change in fair value of preferred stock warrant liability -   9   (10,757)  (245)
Other income (expense), net (214)  (4)  (508)  72 
Total other expenses, net (756)  (579)  (13,057)  (2,033)
Income (loss) before provision for income taxes 10,340   4,839   (15,986)  (14,867)
(Benefit from) provision for income taxes 346   (382)  818   (7,791)
Net income (loss) 9,994   5,221   (16,804)  (7,076)
Foreign currency translation adjustment (343)  192   (80)  (81)
Comprehensive income (loss) 9,651   5,413   (16,884)  (7,157)
Net income (loss) attributable to common stockholders - basic and diluted 9,994   1,157   (16,817)  (7,086)
Net income (loss) per share attributable to common stockholders - basic 0.10   0.06   (0.28)  (0.39)
Net income (loss) per share attributable to common stockholders - diluted 0.08   0.04   (0.28)  (0.39)
Weighted average common shares outstanding - basic 104,486,136   18,644,502   59,667,434   18,163,078 
Weighted average common shares outstanding - diluted 118,445,907   27,286,944   59,667,434   18,163,078 
        


Unaudited Condensed Consolidated Balance Sheets
(Amounts in thousands, except share amounts)
    
    
 September 30, December 31,
 2021
 2020
    
Assets   
Current assets:   
Cash and cash equivalents449,130  104,052 
Restricted cash4,000  5,000 
Accounts receivable, net of allowance for doubtful accounts of $26 and $481, respectively12,949  11,573 
Unbilled receivables1,760  1,698 
Funds receivable from payment partners21,896  22,481 
Prepaid expenses and other current assets10,208  3,754 
Total current assets499,943  148,558 
Property and equipment, net8,690  5,101 
Intangible assets, net63,379  68,211 
Goodwill44,632  44,650 
Other assets6,340  4,922 
Total assets622,984  271,442 
Liabilities, Convertible Preferred Stock, Redeemable Convertible Preferred Stock
and Stockholders’ Equity (Deficit)
   
Current liabilities:   
Accounts payable12,799  5,436 
Funds payable to clients66,855  59,986 
Accrued expenses and other current liabilities18,531  14,991 
Deferred revenue1,330  1,227 
Contingent consideration7,580  6,740 
Total current liabilities107,095  88,380 
Deferred tax liabilities657  481 
Contingent consideration, net of current portion  5,760 
Preferred stock warrant liability  1,932 
Long-term debt25,933  24,352 
Other liabilities1,587  2,129 
Total liabilities135,272  123,034 
Commitments and contingencies (Note 14)   
Convertible preferred stock (Series A, B, B1, B1-NV, C and D), $0.0001 par value; 0     
and 62,915,394 shares authorized at September 30, 2021 and December 31, 2020,
respectively; 0 and 54,208,461 shares issued and outstanding at September 30, 2021
and December 31, 2020, respectively; liquidation preference of $0 and $110,716 at
September 30, 2021 and December 31, 2020, respectively
  110,401 
Redeemable convertible preferred stock (Series E-1, E-2, F-1 and F-2), $0.0001 par value; 0     
and 16,023,132 shares authorized at September  30, 2021 and December 31, 2020,
respectively; 0 and 11,239,920 shares issued and outstanding at September 30, 2021 and
December 31, 2020, respectively; liquidation preference of $0 and $150,000, respectively
at September  30, 2021 and December 31, 2020
  119,769 
    
Stockholders’ (deficit) equity:   
Preferred stock, $0.0001 par value; 10,000,000 and 0 shares authorized as of     
September 30, 2021 and December 31, 2020, respectively; and none issued
and outstanding as of September 30, 2021 and December 31, 2020,
respectively
   
Voting common stock, $0.0001 par value; 2,000,000,000 and 146,898,270 shares     
authorized as of September 30, 2021 and December 31, 2020, respectively,
101,201,466 shares issued and 98,883,744 shares outstanding as of
 September 30, 2021; 22,240,872 shares issued and 19,923,150 shares outstanding
 as of December 31, 2020
10  2 
Non-voting common stock, $0.0001 par value;10,000,000 and 0 shares authorized     
as of September 30, 2021 and December 31, 2020, respectively; 5,988,378 and 0
issued and outstanding as of September  30, 2021 and December 31, 2020,
respectively
1   
Treasury Stock, 2,317,722 shares as of September 30, 2021 and December 31, 2020, held at cost(748) (748)
Additional paid-in capital603,319  16,970 
Accumulated other comprehensive loss(294) (214)
Accumulated deficit(114,576) (97,772)
Total stockholders’ equity (deficit)487,712  (81,762)
Total liabilities, convertible preferred stock, redeemable convertible
  preferred stock and stockholders’ (deficit) equity
622,984  271,442 


Unaudited Condensed Consolidated Statement of Cash Flows
(Amounts in thousands)
  
 Nine Months Ended
 September 30,
  2021
   2020
 
Cash flows from operating activities:       
Net loss$(16,804) $(7,076)
Adjustments to reconcile net loss to net cash used in operating activities:       
Depreciation and amortization 6,571   5,031 
Stock-based compensation expense 15,538   2,860 
Amortization of deferred contract costs 179   265 
Change in fair value of preferred stock warrant liability 10,758   245 
Change in fair value of contingent consideration 2,072   4,576 
Deferred tax provision 137   (8,547)
Bad debt expense 90   332 
Non-cash interest expense 171   196 
Other 158   - 
Changes in operating assets and liabilities, net of acquisitions:   
Accounts receivable (1,467)  (3,873)
Unbilled receivables (62)  12 
Funds receivable from payment partners 585   5,019 
Prepaid expenses and other assets (7,419)  (3,079)
Funds payable to clients 6,869   (24,846)
Accounts payable, accrued expenses and other current liabilities 10,903   2,543 
Contingent consideration (3,212)  (693)
Other liabilities (364)  (121)
Deferred revenue 102   (410)
   Net cash provided by (used in) operating activities 24,805   (27,566)
Cash flows from investing activities:   
Purchases of property and equipment (5,229)  (1,812)
Asset acquisition, net of cash acquired -   (79,401)
Acquisition of businesses, net of cash acquired (119)  - 
   Net cash provided by (used in) investing activities (5,348)  (81,213)
Cash flows from financing activities:   
Proceeds from initial public offering, net of underwriting discounts and commissions 268,694   - 
Payment of costs related to initial public offering (4,860)  - 
Proceeds from issuance of long-term debt 25,933   4,167 
Payment of long-term debt issuance costs (418)  (172)
Repayment of long-term debt (25,000)  (4,167)
Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs 59,735   119,755 
Proceeds from exercise of warrants 294   - 
Contingent consideration paid for acquisitions (3,800)  (1,307)
Proceeds from exercise of stock options 4,098   606 
   Net cash provided by (used in) financing activities 324,676   118,882 
Effect of exchange rates changes on cash and cash equivalents (55)  (148)
Net (decrease) increase in cash, cash equivalents and restricted cash  344,078   9,955 
Cash, cash equivalents and restricted cash, beginning of period  109,052   86,027 
Cash, cash equivalents and restricted cash, end of period $453,130  $95,982 


Reconciliation of Non-GAAP Financial Measures
(Amounts in millions)
        
 Three Months Ended Nine Months Ended
 September 30, September 30,
  2021   2020   2021   2020 
Revenue$67.8  $42.1  $149.8  $98.6 
Adjusted to exclude gross up for:       
Pass through cost for printing and mailing (5.0)  (4.0)  (13.4)  (12.1)
Marketing fees (0.8)  (0.9)  (1.2)  (1.3)
Revenue Less Ancillary Services$62.0  $37.2  $135.2  $85.2 
Payment processing services Costs 21.7   13.8   50.9   36.3 
Hosting and amortization costs within technology and development expenses 1.5   1.2   4.2   3.4 
Adjusted to:       
Exclude printing and mailing costs (5.0)  (4.0)  (13.4)  (12.1)
Offset marketing fees against related costs (0.8)  (0.9)  (1.2)  (1.3)
Costs of revenue less ancillary services 17.4   10.1   40.5   26.3 
Gross Profit 44.6   27.1   94.7   58.9 
Gross Margin 65.8%  64.4%  63.2%  59.7%
Adjusted Gross Profit 44.6   27.1   94.7   58.9 
Adjusted Gross Margin 71.9%  72.8%  70.0%  69.1%
        
 Three Months Ended Nine Months Ended
 September 30, September 30,
  2021   2020   2021   2020 
Net income (loss) 10.0   5.2   (16.8)  (7.1)
Interest expense 0.5   0.6   1.8   1.9 
Provision for income taxes 0.3   (0.4)  0.8   (7.8)
Depreciation and amortization 2.3   1.8   6.6   5.0 
EBITDA 13.1   7.2   (7.6)  (8.0)
Stock-based compensation expense 2.8   1.0   15.6   2.8 
Change in fair value of contingent consideration 0.5   0.9   2.1   4.6 
Change in fair value of preferred stock warrant liability -   -   10.8   0.3 
Other income (expense), net 0.2   -   0.6   (0.1)
Acquisition related transaction costs -   -   -   1.3 
Acquisition related employee retention costs 1.0   1.1   3.1   3.5 
Adjusted EBITDA 17.6   10.2   24.6   4.4 


 Nine Months Ended
September 30, 2021
 Nine Months Ended
September 30, 2020
(In Millions)
Transaction
 Platform
and
Usage-
Based
Fee
 Revenue
 Transaction
 Platform
and
Usage-
Based
Fee
 Revenue
Revenue$109.7  $40.1  $149.8  $67.1  $31.5  $98.6 
Adjusted to exclude gross up for:                       
Pass-through cost for printing and mailing ---   (13.4)  (13.4)  ---   (12.1)  (12.1)
Marketing fees (1.2)  ---   (1.2)  (1.3)  --   (1.3)
Revenue Less Ancillary Services$108.5  $26.7  $135.2  $65.8  $19.4  $85.2 
Percentage of Revenue 73.2%  26.8%  100%  68.1%  31.9%  100%
Percentage of Revenue less Ancillary Services 80.3%  19.7%  100%  77.2%  22.8%  100%


 Three Months Ended
September 30, 2021
 Three Months Ended
September 30, 2020
(In Millions)
Transaction
 Platform
and
Usage-
Based
Fee
 Revenue
 Transaction
 Platform
and
Usage-
Based
Fee
 Revenue
Revenue$53.0  $14.8  $67.8  $30.7  $11.4  $42.1 
Adjusted to exclude gross up for:                       
Pass-through cost for printing and mailing ---   (5.0)  (5.0)  ---   (4.0)  (4.0)
Marketing fees (0.8)  ---   (0.8)  (0.9)  ---   (0.9)
Revenue Less Ancillary Services$52.2  $9.8  $62.0  $29.8  $7.4  $37.2 
Percentage of Revenue 78.2%  21.8%  100%  72.9%  27.1%  100%
Percentage of Revenue less Ancillary Services 84.2%  15.8%  100%  80.1%  19.9%  100%


 Full Year Guidance
 Low High
Revenue$190.0  $193.0 
Adjusted to exclude gross up for:   
Pass through cost for printing and mailing (15.0)  (16.0)
Marketing fees (1.0)  (1.0)
Revenue Less Ancillary Services$174.0  $176.0 


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