Good afternoon and welcome to the Flywire Corporation First Quarter 2022 Earnings Call. Please note this event is being recorded. I will now turn the conference over to Akil Hollis, VP of IR and FP&A.

Thank you and good afternoon. With me on today’s call are Mike Massaro, Chief Executive Officer; Rob Orgel, President and Chief Operating Officer; and Mike Ellis, Chief Financial Officer. Our first quarter 2022 earnings press release, supplemental presentation and, when filed, associated quarterly report on Form 10-Q can be found at ir.flywire.com. During the call, we will be discussing certain forward-looking information. Actual results could differ materially from those contemplated by these forward-looking statements. We will also be discussing certain non-GAAP financial measures. Please refer to our press release and SEC filings for more information on the risks regarding these forward-looking statements that could cause actual results to differ materially, risk factors associated with our business and required disclosures related to non-GAAP financial measures. This call is being webcast live and will be available for replay on our website. I would now like to turn the call over to Mike Massaro.

Thank you, Akil, and thank you to everyone joining us today. We are excited to share our Q1 2022 results with all of you and appreciate the interest you continue to show in Flywire. In short, 2022 has started out strong for Flywire. In a few minutes, Rob Orgel, our President and COO, as well as Mike Ellis, our CFO, will go into greater detail about our operating and financial performance during the quarter. But first, let me start with a few financial highlights from the quarter. Revenue less ancillary services was $59.3 million, representing year-over-year revenue growth of 47%, driven predominantly by strength in our education and travel businesses. Total payment volume for the quarter increased 46% compared to Q1 2021. Across all our verticals, we added over 130 new clients during the quarter, our most new clients for a quarter as a public company. Flywire was also named to Inc. Magazine’s 2022 Best Workplaces list, further evidence of our focus on strengthening our FlyMate community and being seen as an employer of choice in a highly competitive global marketplace for talent. By now, most of you know that Flywire focuses on high-stakes, high-value payments within industries such as education, healthcare, travel and B2B. Within these industries, digitization is still in the early stages, and payment experiences are fragmented and often difficult for both payer and receiver. Ultimately, we are helping our clients get paid and helping their customers pay seamlessly and easily from all over the world. We expect that the secular trends in these industries, coupled with the inevitable shift toward digitization of payments, positions Flywire very well for growth for years to come. In times like these where there are macroeconomic uncertainties, we believe our solutions are even more critical as our clients need a better way to get paid while removing costly manual activities from their back office. Now I want to spend a few moments discussing the trends we are seeing in each industry that we serve. First, starting with travel, which continues to show positive trends. At the end of Q1, the TSA traveler checkpoint data showed that passenger counts have reached 91% of pre-pandemic volumes measured over the same period in 2019. This is validated by our recent survey report of luxury travelers, 78% of whom said spending on travel now is more important to them than it was before the pandemic started. Our report also showed that more than half of travelers surveyed, 51%, are booking two trips at once to ensure that they get away for that much-needed break. For our education vertical, prominent U.S. colleges and universities are reporting a surge in international applications compared to the past two years, fueled by the easing of pandemic travel restrictions and new policies that allow potential students to apply without SAT or ACT scores. The Washington Post recently reported that the Common Application, an online platform for hundreds of schools, found that as of March 15, 2022, the number of international applicants had grown 34% since 2020, exceeding the 12% rate of growth for U.S. applicants over that same period. Again, these are very favorable trends for Flywire. In healthcare, rising out-of-pocket costs are accelerating the industry’s affordability crisis. According to a new patient experience survey from trade association PhRMA, more than one-fourth of Americans reported medical debt due to a doctor or hospital bill they couldn’t afford. And the average debt was as high as $4,000 per patient. There is an imminent need for hospitals and health systems to continue to invest in technology-driven solutions to make healthcare more affordable. As for our B2B vertical, we continue to see success as many businesses are in need of a solution like ours to automate their accounts receivable. From manager level to CFOs, finance teams know that their processes around AR cost them too much money and time, slow their international expansion and even hold back profitability. In our second annual survey of CFOs and finance professionals, more than 92% of respondents stated their earnings per share would increase if they could figure out a better way to manage the accounts receivable process. We continue to be quite excited about the large opportunities within the industries that we serve here at Flywire, and these positive trends further help our confidence about 2022. Finally, I wanted to spend a few minutes previewing our Analyst Day, which will take place next week on May 19. We will be reviewing our vision and opportunities for Flywire as well as our competitive advantages. We will have a session with our vertical leaders to deepen the understanding of the industries we serve. We will be discussing our key investment areas in detail and how they fit within our many existing growth levers. We will touch on the strength of our FlyMate community and our ongoing ESG efforts. Lastly, we will share financial data points that we believe will be helpful when looking at the business over the long term. We are really excited to see you in person and others virtually next week at our first Analyst Day as a public company. However, since this is our Q1 earnings call, and we are excited to share more about our performance, I would like to turn the call over to Rob Orgel, our President and COO, to share updates on our operating results and growth initiatives during the quarter.

Thanks, Mike, and good afternoon, everyone. Our strong results this quarter reflected continued execution of our growth strategies. We saw strength in bringing on new clients with the addition of over 130, 20% higher than our best quarter in 2021. This brings our client count to over 2,700. Consistent with our recent quarters, we had a lot of success in cross-selling to existing clients. I’d like to highlight some of our successes across the verticals. Starting with travel, we added a great group of over 40 new clients. Our travel business grew in part because of our new clients but in larger part due to recovering activity levels across the range of our travel clients as COVID restrictions and hesitancy continued to shrink in many areas globally. One indicator of the return of travel is that we have seen our travel clients deliver net revenue retention of greater than 145% this quarter with particularly strong growth among our European destination management clients. These clients believe that summer 2022 will return to normal levels for the first time since the summer of 2019. During Q1 2022, we generated more revenue from our travel clients than we did from all of 2019 or 2020. As an example of a new European destination management client, we added I.D.I. TRAVEL as a travel client. Based in Via Torino, Italy, I.D.I. specializes in carefully planned itineraries for high-end, bespoke stays in Italy and France. They signed with Flywire in early March 2022 and went live in mid-March. They signed with Flywire because of our large global footprint and variety of payment methods. We’re excited by the early results from our relationship with I.D.I. in Italy and France and look forward to further expanding our payment solutions with them. Continuing with healthcare, in addition to the integrations with other health records platforms that I have referenced in prior earnings calls, we are also expanding with clients who are integrated with Epic Systems’ electronic health records platform. For example, we expanded our relationship with CommonSpirit Health, the largest Catholic health system and second largest nonprofit hospital system in the United States. CommonSpirit is headquartered in Chicago, Illinois and operates 140 hospitals and more than 1,500 care sites across 21 states. We most recently expanded our already sizable relationship with CommonSpirit by integrating with our hospitals based in the Texas market. This relationship highlights Flywire’s ability to integrate with large hospital networks using Epic Systems. We saw impressive early results from our healthcare omnichannel engagement initiatives. Our early data with another of our major hospital clients showed how our platform enables an improvement in patient engagement, which in turn favorably impacts patient collections. More specifically, we’ve seen that increased patient log-in page arrivals from email and SMS directly correspond to increased planned sign-ups, payments and ultimately collections. In early single-client data comparing the weekly average pre-omnichannel engagement and post go-live engagement, we saw a greater than 80% uptick in visitors to the log-in page via email, a greater than 50% increase in planned sign-ups via SMS and a greater than 25% increase in digital payments made via email and SMS. We’re incredibly excited to continue our efforts with the omnichannel engagement product as early results show signs of incremental value creation for our clients within our healthcare vertical. Switching to education, we continue to see strong performance across segments and geographies. In the first quarter, we added the University of Connecticut as a new education client. According to U.S. News & World Report, UConn ranks among the top 25 public universities in the U.S. with 14 schools and colleges, four regional campuses and total fall 2021 enrollment of nearly 24,000 undergraduate students and over 8,000 graduate and professional students. UConn selected Flywire to replace an incumbent solution for all domestic and cross-border payments through our comprehensive receivables solution. We look forward to building our relationship with UConn to further improve the payer experience. Also in education, we expanded our relationship with Oxford University. Based in the United Kingdom and with over 25,000 undergraduate and postgraduate students, Oxford was ranked as the best university in the world in the Times Higher Education World University Rankings from 2017 through 2022. We expanded the number of colleges within Oxford using Flywire’s education payment solutions, including some colleges that will use our new integrated solutions with WPM, which we acquired in the fourth quarter of 2021. With regard to WPM, we continue to be pleased with both the market interest and on-schedule technology development related to our integrated solution. Finally, in our B2B segment, we continue to grow our customer base and expand with existing customers in this emerging segment. For example, we expanded our relationship with Basis Technologies, formerly known as Centro, which is a leading provider of cloud-based workflow automation and business intelligence software for marketing and advertising. Basis Technologies originally used Flywire to provide local payment options to its international customer base but is now using Flywire for full domestic card acceptance as well as domestic bank transfer. Basis Technologies is using the latest version of our NetSuite bundle, which now supports multiple invoice aggregation into a single, simple payment experience as well as providing prepayment solution options for payers. This added functionality illustrates how Flywire continues to use software to add value to payments as the automation, functionality and deep NetSuite integration are differentiated capabilities provided to Basis Technologies. As Mike previously mentioned, we recently conducted research of finance professionals at B2B companies with $100 million to $1 billion in revenue. They validated what we continue to identify as a key theme in the sector: legacy systems and processes are impeding their growth and profitability. In our survey, we found that global expansion is a priority for businesses, yet 88% of those surveyed said the complexities of collecting cross-border payments impacts their ability to grow internationally. Specifically, 95% say if they could deal with exchange rates in an easier way, they could accelerate their global expansion efforts. Additionally, over 70% of respondents say they lose between 4% and 10% of revenue in an average month due to time wasted because of operational inefficiencies with payment processing. These are the exact issues our solutions are designed to solve for our B2B clients. With us, those stubbornly manual parts of the global receivables process are reduced, their customers benefit from streamlined experiences, and we help our clients free up their time to focus on value-added tasks for their business. Turning to channels, our channel partnerships continued to be a good source of growth for Flywire. For example, during the quarter, we announced a preferred payment partner agreement with Tribal Group, a leading student information system with over 1,400 universities in the EMEA and APAC regions. Our partnership and integration with the Tribal SITS module enables Flywire to provide new and existing university clients with a seamless payment process for every point in education payments. With the addition of Tribal, we are now approaching 50 unique corporate integrations to systems in the education space that are the underpinning of operating schools and universities around the world. We also continued to invest in our global payment network. Flywire successfully implemented Pix, the new payment method promoted by the Brazilian government. According to a February 2021 report published by Americas Market Intelligence, Pix was expected to move 16% of the digital payments volume in Brazil. This development demonstrates Flywire’s ability to continue expanding our payment network in Latin America by adding additional payment methods in the biggest economies in the region, enabling additional payment alternatives for students and businesses. Overall, you can see we had another very active quarter with Flywire’s global team of FlyMates doing great work across our verticals and across the company. I would now like to turn the call over to Mike Ellis, our CFO, to review our results for the first quarter and guidance for the remainder of the year.

Thank you, Rob. Good afternoon, everyone. Today, I will be discussing our non-GAAP financial metrics for our first quarter of 2022, including revenue less ancillary services, adjusted gross profit, adjusted gross margin and adjusted EBITDA. For our financial results prepared in accordance with U.S. generally accepted accounting principles, please read the preliminary and unaudited financial statements included within our earnings release and the unaudited financial statements that will be included in our Form 10-Q when filed with the SEC. Revenue less ancillary services for Q1 2022 was $59.3 million, representing a 47% increase compared to Q1 2021. Our revenue growth rate was driven by an increase in total payment volume, particularly due to strong performance from our international cross-border payment volumes in our education and travel verticals. We processed $4.2 billion in total payment volume during Q1 2022, which was an increase of 46% from the $2.9 billion we processed during Q1 2021. We experienced revenue and total payment volume growth across all regions, verticals and revenue types when compared to Q1 2021. Specifically, transaction revenue increased 50% compared to Q1 2021, driven by a 46% increase in transaction payment volume. Platform and usage-based fee revenue increased 36% compared to Q1 2021, driven by a 45% increase in platform and usage-based payment volume. As a result of our revenue growth, we generated $38.8 million in total adjusted gross profit, representing a 41% increase compared to Q1 2021. Adjusted gross margin for the quarter was 65.5%, in line with our model-driven expectations for Q1 2022. Comparing Q1 2022 versus Q1 2021, our vertical mix drove transaction revenue to grow faster than our platform revenue, which has software-like adjusted gross margins. Within transaction revenue, our payment method mix for the quarter included more credit cards, which generate lower adjusted gross margins. While the payment method mix varied, the Q1 net spread in our transaction revenue generated from our pricing and cost structure remained consistent with the average net spread over the last two years. While we expect these mix dynamics to continue through the first year of 2022 due to the seasonal trends of our business, during the second half of the year, we expect the adjusted gross margin to move higher as seen in prior years, resulting in full year 2022 adjusted gross margin near but slightly below full year 2021. Moving on to operating expenses. Technology and development expenses were $11.0 million for Q1 2022, an increase of 47% over the $7.5 million incurred during Q1 2021. This increase was primarily the result of our hiring activities during 2021, where we increased the number of FlyMates within our technology and development teams by over 50%. Selling and marketing expenses were $17.6 million for Q1 2022, an increase of 48% over the $11.9 million incurred during Q1 2021. This increase was due to a number of factors. First, personnel costs accounted for 78% of the increase due to our hiring efforts over the past year, where we added over 100 new FlyMates within the sales, marketing and product functions. Sales commissions also contributed to our increase in personnel costs due to strong sales effectiveness and driving new ARR. Second, we continued to invest in our global marketing initiatives to drive client acquisition and payer engagement. Incremental marketing costs contributed approximately 16% of the year-over-year increase. And finally, we spent more in travel costs as the abatement of COVID-related travel restrictions allowed for two important things to occur: first, our globally dispersed teams were finally able to come together and collaborate in person on our 2022 goals and plans; and second, our sales teams were able to conduct in-person and on-site visits with our clients and prospects after approximately two years of COVID-impacted restrictions. General and administrative expenses were $18.8 million during Q1 2022, an increase of 18% over the $15.9 million incurred during Q1 2021. Many factors impacted this increase during Q1 2022, but the primary factors driving the increase were: one, our hiring activities, where we increased the number of FlyMates by over 40% in these departments; and two, incremental costs associated with operating as a public company, which consisted primarily of professional fees and insurance costs. These increases were offset by a 53% decrease in stock-based compensation expense due to the secondary transaction with employee stockholders, which occurred during Q1 2021 prior to our initial public offering. Adjusted EBITDA for the quarter was $1.8 million, in line with our expectations for Q1 2022. Adjusted EBITDA decreased $5.2 million compared to the $7.0 million we generated during Q1 2021. The year-over-year decrease in adjusted EBITDA was the result of our hiring, where we increased the number of FlyMates by over 50% during the past year as well as increased costs from operating as a public company and travel-related costs, both of which increased significantly over Q1 of 2021. With respect to capitalization, as of March 31, 2022, we had $365.7 million in cash and cash equivalents and $25.9 million in long-term debt. As of March 31, 2022, we had 106.4 million shares of common stock outstanding, which is slightly different than the weighted average shares outstanding used to calculate net loss per share due to the timing of our IPO. Moving on to guidance for full year 2022, as we are an increasingly international company, we continually monitor risk factors globally. We currently have minimal exposure to the impacts from the difficult circumstances in Ukraine, but our thoughts are with those in that country. We will continue to monitor these events and their potential impact on our business as they unfold. That said we have raised our guidance for revenue less ancillary services to be in the range of $249 million to $257 million, which results in an annual revenue growth rate of 40% at the midpoint. Our full year 2022 expectations reflect our confidence in the growth of our existing clients across all of our verticals, the ramp-up of the clients we added during 2021 and contributions from clients we signed during 2022. With respect to adjusted EBITDA, we have raised our full year 2022 guidance to be in the range of $10 million to $14 million, reflecting our current view about continued growth and execution in the business alongside continuation of our previously announced growth and investment plans. With respect to guidance for Q2 2022, revenue less ancillary services is expected to be in the range of $45 million to $48 million, which represents a year-over-year revenue growth rate of 41% at the midpoint as we enter our seasonally lowest quarter of the year. This seasonality does have an impact on adjusted EBITDA on a quarterly basis due to the fixed cost nature of our personnel and pay increases implemented during Q1 2022, which will have a full quarter impact during Q2 2022. Specifically, Q2 2022 will generate negative adjusted EBITDA, but this seasonally low quarter has been reflected in our full year 2022 adjusted EBITDA guidance. In conclusion, we are pleased with our Q1 2022 financial results and overall business performance, and we continue to look forward to the rest of 2022. With that, I’d like to turn the call over to the operator for questions.

Our first question will come from Dan Perlin with RBC Capital Markets. You may now go ahead.

Hey, guys. Congratulations on another great quarter. I had a question about new client wins. 130 new clients, that’s a really strong number. I think, Mike, you called out you added 40 in travel. I’m wondering how we should think about the remaining roughly 90. Was that evenly distributed across verticals? And when we think about these 130, and you’re leading a lot of your discussion today starting with travel, is there an expectation these are more sizable clients such that travel is likely to be the most impactful as you build out into 2022?

So I’m happy to jump in here and start this. Dan, thanks for the question. Overall, the quarter looked like other quarters in terms of the distribution, meaning we had a very healthy distribution of wins across the various verticals. Education would have been the largest vertical in terms of wins by account. Travel was particularly strong. We feel we’ve got a great stride in the travel segment. Wins in the other segments as well, so good wins across all four of the businesses. I think the second part of your question was about the significance of the accounts. What we’d say there is they very much follow our historical patterns in terms of size. If anything, we see slightly better average ARR across those clients. So we are very happy with the group we’ve added. Overall, I would say it follows the mix and sizing we’ve historically shared with you.

Okay. And a quick follow-up regarding the domestic education solution you guys are selling. Can you remind us of the go-to-market motion you’ve got there? You called out University of Connecticut, which sounds like it took both cross-border and domestic. Are you finding it easier to go back to your back book of cross-border education clients to win domestic deals, or are clients ready to make a bigger change for both at once and that’s where you’re seeing more near-term success?

So there are a couple of things about domestic to paint the picture. First, focusing on your question about UConn. Previously we announced Stanford. We see a mix of those. It tends to be easier, as you implied, to take an existing client that knows and appreciates Flywire and then land and expand to add domestic payments. That is probably the more common move for us. But UConn is an example that it doesn’t have to be that way; we can take a net new client and add both cross-border and domestic. Internationally, we often offer domestic and international payment as an offering, and it’s even more frequent for us to take on both domestic and international from early on in the relationship. So domestic is working for us both in the U.S. and in our international markets.

Our next question will come from Jason Kupferberg with Bank of America. You may now go ahead.

Hey, guys. This is an analyst for Jason. Thanks for taking my question. Regarding the overall 2022 guidance, you had a strong quarter and raised full year revenue guidance by more than the quarter's outperformance. Is that upside mainly coming from the travel and education verticals? Can you also talk about B2B and healthcare contributions and what is driving the more optimistic outlook for the year?

Yes, thanks for the question. We see confidence across the business, and that flowed through into our full year guidance. We called out education and travel in the prepared remarks and those are definitely where we’re seeing additional upside based on Q1 results. But really, across all sectors we feel good about trends. Global performance across many regions is encouraging, specifically around travel. Those are the big callouts.

Okay. And on the margin piece, can you quantify some of the investments in the business you mentioned, whether on the sales and marketing side or other areas? Have any of those expectations changed for the full year?

Rob, do you want to cover the breakdown of the investments and then I can double-click on the numbers?

Sure. We have an investment plan we shared previously, and we'll share more at Investor Day. We've focused on go-to-market resources and R&D, although we have growth across all areas as we scale. On sales and marketing, we're excited about results: we added about 100 people in that function, which has driven client acquisition and ARR signings. Those resources take time to return value, but early results are strong. On R&D, we have an ambitious plan and are ramping that team. Overall, investments are in line with our plans and expectations.

Okay. If I could just ask one last one: the 145% net revenue retention for travel was impressive. How does that compare to the overall business and how much of that was specifically travel versus other verticals?

Overall NRR was very healthy and generally in line with our long-term averages. Travel happened to be particularly strong this quarter—driven by more transactions and higher average transaction size, especially in EMEA. But NRR across the business remains healthy.

Our next question will come from Darrin Peller with Wolfe Research. You may now go ahead.

Hey, guys. It’s clear the investments paid off with the record number of customers you're adding—130 versus about 100 per quarter before. I want to dive into margins and investments. You added roughly 100 professionals; is that run rate enough from an engineering standpoint to show operating leverage going forward, or do you need to keep adding at that rate to sustain growth?

I’ll start. The investments are important and we're seeing results in Q1. These are multi-year investments—2023, 2024 and beyond. We expect results in 2022 but are building for the long term. We continue to believe in strong medium- to long-term EBITDA margins and are focused on long-term returns. We could hit those margins sooner, but we're prioritizing the large opportunity and low penetration in our total addressable market. We remain good stewards of capital and will evaluate investments based on ROI.

So philosophically, given the market, is there any change to your view of the long-term horizon to reach certain margin levels, or will you keep investing as you see the opportunity?

The times are not lost on us, but we will continue to invest where it makes sense. We showed flow-through last year and can continue to do so; we’re mindful of G&A and other levers. We have a strong cash position and will remain disciplined. We have a huge opportunity and are trying to balance investing for growth with delivering scale and margin over time.

One quick follow-up: can you help explain the differentiation domestically—why land-and-expand works so well after you get in the door with cross-border?

I believe it comes down to people and technology. Our team are industry experts who understand client pain points and have a strong reputation. But you also need a great product. Many solutions are dated or require piecing together multiple technologies. We offer a complete solution delivered by experts. That combination helps us win large deals like Texas A&M, Stanford, UConn. Industries don’t transform overnight, but these are multiyear opportunities.

Our next question will come from Ashwin Shirvaikar with Citi. You may now go ahead.

Thank you. Given the student admissions data you shared and the traction in travel, should we look for an especially solid Q3? As we think about sequential modeling, is that strength sustainable?

You’re thinking about it the right way. The admissions data is an input to why we feel strong and confident. That will impact Q3 from the U.S. perspective. We also see positive global movement as COVID becomes less impactful. Those trends support a strong second half.

Ashwin, good to hear from you. The admissions data is indicative of what we would expect for a couple of reasons. First, if you think about the client adds Mike and Rob discussed and education driving a good portion of those, getting those signs in the first half of the year means transactions are recognized in the second half. Second, our land-and-expand strategy allows us to generate incremental revenues from client relationships across products, which gives us comfort about Q3. Historically Q3 is our biggest revenue quarter and we expect that to continue for 2022. Based on admissions data and client success, we’re optimistic about the second half of the year from a revenue standpoint.

Got it. And regarding your ability to keep hiring talent, could you comment a bit more?

We have a strong investment in culture and our ability to find talent. We have a global footprint of FlyMates, which is a significant advantage. That global presence helps us flex in different regions. Finding talent is a top priority for us and a focus for our leadership.

Our next question will come from John Davis with Raymond James. You may now go ahead.

Hi, good afternoon. Mike, could you comment on any FX impacts embedded in the full year guide?

Yes. We look to hedge much of that risk out of the business. Mike, do you want to cover if there is anything notable?

John, the FX impacts for our business are relatively small—low hundreds of thousands as it relates to adjusted gross margin—but they could be plus or minus that amount. Our hedging strategies have kept FX impacts minimal and they don’t drive the needle.

Okay. You mentioned gross margins ramping close to but slightly below 2021 levels, implying a material ramp through the rest of the year. What's driving that? Is it mix? You called out credit card mix in Q1—how should we think about the payment method mix driving the adjusted gross margin progression?

Essentially, due to seasonality, we historically see strong cross-border education in Q3 and Q4. Those higher average payment sizes typically get paid via bank transfer rather than credit card, and bank transfers have higher adjusted gross margins. Q1 and Q2 have more credit card utilization, leading to lower margins. We expect the mix to revert in the second half, which is why we see adjusted gross margin near, but slightly below, full year 2021.

Okay, great. Last question: can you provide an update on WPM integration, how that's going, the UK opportunity, and any sizing or team comments?

It continues to go quite well. We recently were in the UK and attended client events; the technical integration is on schedule. Customers have shown interest and are lining up for the integrated solution. WPM had about 100 clients in the UK, and the UK market is a massive opportunity—billions of dollars of payment volume flow through their software, much of which was not monetized. Integrating our network is a clear monetization opportunity. We essentially doubled our team size in the UK by merging the two companies and are hiring on top of that market. We see a multiyear ramp ahead and it’s going well. Some WPM colleagues will be at Investor Day next week.

Okay, thanks, guys.

Our next question will come from Tien-Tsin Huang with JPMorgan. You may now go ahead.

Nice to speak with you. With the record client additions, is that simply a function of a bigger go-to-market team, better sales productivity, or pipeline pull-forward? And with the record wins, is the pipeline being replenished at a similar pace?

Tien-Tsin, not only did we add clients, but we meaningfully expanded pipeline total value. ARR signings were in line with or slightly better than our average ARR size, and pipeline growth was substantial. That’s the dynamic you see when you invest in go-to-market expansion: people come on, build pipelines and convert. We feel our progression is on track and Q1 was a positive note, with pipeline growth healthy and important for future results.

Amazing. One quick follow-up: does this inform thinking about investing more in go-to-market? You mentioned adding sales FlyMates—would you consider accelerating that?

We’re doing two things: we outlined an ambitious investment plan for the year, and we’re still adding sales reps and go-to-market resources. We feel good about the dynamics of the sales force expansion and are investing in skills and training as well as hiring. We believe in the ROI and LTV-to-CAC, so we will continue investing in the sales force while being mindful of the broader market environment.

Our next question will come from Jeff Cantwell with Wells Fargo. You may now go ahead.

Thanks. Can you talk about the competitive environment in education? What gives you confidence you’ll keep winning—how will you continue to penetrate the TAM? Is it more domestic or international opportunity? And any change to volumes you’re seeing? Also, how does net revenue retention in education look now versus a year ago?

Net revenue retention in education continues to be excellent and right in line with our long-term profile. On competition and penetration, our value proposition remains distinctive: software that drives value plus payments. We believe our teams and technology are the best in market. In the U.S. we continue to win clients like UConn and Stanford based on reputation and results. We are innovating with products like A/R Collect and e-store and partnerships like Ascensus for 529 plans, opening more entry points to schools. Internationally we are also growing, including our first public university in Spain. We continue to deepen our relationships and expand globally.

Thanks. As a follow-up, can you tell us more about the Ascensus partnership for 529 college savings plans? How are payment volumes and revenue generated for Flywire there and what might size look like?

It’s part of our portfolio of services that serve both the ecosystem and the school. 529 plans have messy payment flows that are often paper-based. Software can add value there. Working with Ascensus and the plans they support, we can at scale help those plans deliver funds to schools via mechanisms schools already use to receive money from us. For schools that aren’t clients, we’ll work to deliver the money and hope to establish relationships that expand our footprint further.

Our next question will come from Bob Napoli with William Blair. You may now go ahead.

Hi team. This is Spencer James on for Bob Napoli. Congrats on the results. Can you talk about the competition and the solutions you are replacing in travel in particular, and how that compares to education? Also, how might your past success in education inform ramping travel?

In travel, competition varies by geography and tends to be local acquirers or manual bank-related payments and wires. Many destination management companies use local acquirers that are not well-equipped to handle lots of foreign transactions and reconciliation. We compete by connecting into their system-of-record, like booking platforms or ERP systems, and providing a solution that removes manual bank payments and wires and accepts multiple payment methods globally while providing unified settlement and reconciliation. That proposition is different from local acquirers and legacy setups.

Lessons from education apply to travel: product-market fit, industry expertise, and execution. We started with one product in education and expanded into segments, countries and additional products. For travel we need deep knowledge of the industry, people on the ground who understand the market, and great product-market fit. We hire sales and client services with travel expertise and execute and iterate. That approach—nailing product-market fit, hiring industry experts, and executing—has worked in education and we’re applying it to travel to drive land-and-expand opportunities and new use cases over time.

Thank you. One follow-up: anything to call out by geography in the pipeline—higher mix in certain regions?

We are seeing growth steadily everywhere: strong strength in EMEA and APAC, Latin America is encouraging, and the U.S. is doing well. We are excited to add physical presence in large markets where we don’t yet have local feet on the ground, and we look forward to placing sales talent in key countries across Latin America and northern Europe.

Our next question will come from Andrew Bauch with SMBC Nikko Securities. You may now go ahead.

Thanks for taking my question. I wanted to drill in on gross margin again. You called out vertical and payment mix as primary drivers. Should we assume the vertical element was travel? If travel outperforms, would that limit upside to gross margin? And what gives you confidence the sequential ramp in margins will happen throughout the remainder of the year, particularly in Q2 which is not a strong education quarter?

To be clear, Q2 is likely to look more like Q1 with mix dynamics, and Q3—our biggest revenue quarter—will see a skew toward bank transfers due to cross-border education, which have higher margins. Some parts of travel show more card mix, which is lower margin, but we are early in all verticals and product innovation can shift mix. Overall, our guidance reflects an expectation to get adjusted gross margin near but slightly below last year driven by seasonality and mix returning in the second half.

Thank you. One more on M&A: are there additional opportunities given market valuations, and what kinds of targets would you pursue?

We continue to evaluate acquisition targets that add to an existing vertical, layer in new capabilities that drive NRR, or expand into new industries. We haven’t seen a massive private market valuation adjustment yet. We’re selective and focus on cultural and client retention—our past deals have high retention—and WPM integration is going well and not limiting our capacity to do more deals. We will pursue targets that fit our strategic pillars.

Our last question will come from Ken Suchoski with Autonomous Research. You may now go ahead.

Hi, good evening. I wanted to ask about the travel recovery you called out. How much room is there to go for travel normalization, and how confident are you that this vertical will further normalize on a same-store sales basis as travel continues to improve? You signed a bunch of travel deals prior to and during COVID so I wanted to understand the upside.

If you look at travel, we didn’t pull our foot off the gas during the pandemic on client adds, and some of the growth reflects those clients performing as the world reopens. There is still a lot of opportunity in travel across sub-sectors—accommodations, luxury tour operators, destination management companies—within our sizable TAM. We’re in early stages, making investments in EMEA, North America and Asia Pacific, and we expect travel to ramp over multiple years beyond post-pandemic normalization. We are excited about the multiyear growth opportunity.

Thanks. One follow-up on the domestic business since it's a big part of the thesis: how penetrated are you on domestic payments and how quickly should that ramp? Also, remind us of the ARPU lift when adding domestic payments.

We are in the very earliest innings of penetrating the domestic opportunity across verticals. On education, we’ve penetrated a small percentage of our total addressable base and it’s similar in travel and B2B—very early with large upside. When we get domestic alongside cross-border, we see a revenue multiplier in accounts. From a network standpoint, the heavy lifting of building a global payment network is leverageable across verticals; there is work to be done for each vertical, but licensure, partner relationships and account setup are largely scaleable across countries and industries.

Thanks. I appreciate it. I’ll see you next week.

This concludes our question-and-answer session. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.