Greetings, and welcome to the Flywire Corporation, Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Akil Hollis, VP, Financial Planning and Analysis. Thank you, Mr. Hollis. You may begin.

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 third quarter 2023 earnings press release, supplemental presentation and when filed, 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 and the required disclosures and reconciliations 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 that is joining us this afternoon. We are excited to share our Q3 2023 results, which show continued strong performance and momentum across the business. We are also pleased to announce the acquisition of StudyLink, an Australian company that specializes in international student application software. I will provide more details on this acquisition in a few minutes. Following my comments, Rob Orgel, our President and COO, as well as Mike Ellis, our CFO, will go into greater detail about our results for the quarter, but I will first share some highlights from Q3. Revenue less ancillary services was $116.8 million during the quarter, representing year-over-year growth of 31%. This represents our highest quarter of revenue less ancillary services ever, and in dollars, approximately $28 million in growth. Adjusted gross profit for the quarter was $80.1 million, an increase of 28% year-over-year, a quarterly record for the company. Adjusted EBITDA was $27.5 million for the quarter, representing a $9.3 million increase in our adjusted EBITDA versus Q3 2022, and this was also a record for the company. This puts revenue less ancillary services year-to-date at $285.3 million, a growth rate of 43% year-over-year reflecting the strength of our business and effectiveness of our go-to-market strategies in the underlying markets. As a result of this success, we are raising our full year outlook for revenue less ancillary services and adjusted EBITDA on a constant dollar basis. We are once again in an environment where the U.S. dollar has strengthened significantly, and this generated a headwind relative to the rates incorporated in our prior guidance, impacting Q3 reported results by approximately $1.4 million. In addition, there were a few other puts and takes for the quarter that Mike Ellis will cover later in the call, but overall it was a very strong Q3, which we believe demonstrated the strength and breadth of our business. Looking forward, we are also making progress against our three key investment areas which include optimizing our go-to-market efforts, expanding our Flywire Advantage with products and payment innovation, and strengthening and growing our FlyMate community. First, I will dive deeper into our go-to-market efforts. We are pleased to share that we generated our highest quarter to date in terms of new projected revenue signed. This is the result of the optimization of our go-to-market strategy globally where our sales and marketing teams continue to deliver new client wins and expansion with current clients across all verticals. Thanks to ongoing success with vertical-specific events and targeted digital campaigns, by the end of Q3, we calculated our marketing returns to be greater than 10:1 based on pipeline generated to marketing spend, which far exceeds the industry standard of 5:1. In travel specifically, we broke yet another record for bringing in the highest number of net new clients signed and more than doubled travel Q3 revenue year-over-year. Our efficient client acquisition engine helped drive quick sales cycles and increased win rates in the travel vertical. We believe our successful M&A track record complements our strong organic growth. As you know, we announced the acquisition of StudyLink, an application and enrollment software for agents and universities deeply penetrated in the Australian higher ed market. Importantly, we are thrilled to be welcoming a talented group of 60 plus FlyMates into our global team. This deal enhances the StudyLink and Flywire value proposition to our shared stakeholders in the higher ed ecosystem—universities, students, and agents—giving us a great opportunity to expand on each company's existing and successful track records of providing top-tier solutions in Australia. StudyLink provides a cloud-based interface for universities and education agents to structure, streamline, and integrate international applications and enrollment into their admissions process. With StudyLink, we gain the software involved empowering the offer and acceptance in a top four core market for us, as well as accelerating our opportunity to monetize the nearly $1 billion in deposit volume their platform is involved in today, which we will work to grow. The combination of StudyLink and Flywire can capture the entire student payment journey from the first enrollment deposit through the ongoing tuition payments. StudyLink's extensive roster of blue-chip clients presents meaningful growth opportunities for Flywire, and their network of 20,000 agents can help us accelerate growth among education agents and help advance our strategic payables initiative focused on agent commissions. We believe the efficiency and benefits StudyLink brings to universities and education agent ecosystems has the potential to resonate in many more countries beyond Australia and look forward to helping accelerate the expansion of the platform around the world leveraging Flywire's clients, partners, and our global team. We are very excited to share the news today and have added some more details on the acquisition in our earnings supplement posted on our Investor Relations website. As we have said before, we are confident in our track record of strategic and value-add acquisitions and will continue to pursue acquisitions that can help us accelerate our penetration of existing verticals. During Q3, we also continued to expand our Flywire Advantage, our long-term vision to power the ecosystems in our core industries of education, healthcare, B2B, and travel. As a reminder, the Flywire Advantage consists of our next-generation payments platform, our vertical-specific software, and our proprietary global payment network, which combined enable us to deliver product and payment innovation for our clients and payers. Given our ongoing success in the travel industry, we decided to do a deeper dive this quarter and included a few additional slides in the supplement. In travel, we focus on three primary sub-segments: destination management companies, accommodation providers, and tour operators. We estimate that these sub-segments represent a large total addressable market of $530 billion. These subsectors have historically been under-invested in from a software and payments perspective. Before Flywire, our travel clients were typically sending static unsecured PDFs for invoices through disparate and legacy billing, invoicing, and CRM systems. With Flywire, our clients can consolidate their backend infrastructure while upgrading the entire payment experience. We signed more travel clients than ever in the quarter and continued to get clients live faster, thanks to our software and payments capabilities as well as our industry knowledge. This quarter, in particular, many clients acknowledged switching to Flywire from a major payment processor not only because of our ability to lower their payment costs and simplify reconciliation and to deliver superior transaction security, but also because of our first-class customer support. One destination management company told us that they switched to Flywire because we understand the industry much better. The trust our team builds is critical to the success of our long-term client relationships and helps us further integrate into their payment ecosystem. Our split group payment capability capitalizes on the rising trend of group travel and enables our clients to offer group payment experiences itemized, each traveler safely and securely through our dashboard. We also hear from our DMC clients their need for help paying out agents, other suppliers, and vendors. Because we solved the hard challenges with their receivables, they've entrusted us to solve these outgoing payment challenges, and many of them are now in beta with our payables solution. During the incredible growth over the past few years, gross profit spreads on our travel transaction volumes have been healthy and comparable to our overall Flywire gross profit spread and improving over time. We are continuing to explore capabilities that add even more value via software and can drive even more gross profit across this sector. With our winning strategy in travel and our healthy financial profile, we are confidently exploring TAM expansion opportunities in the vertical and present meaningful growth for us. And finally, in the quarter, we continued to strengthen and grow our FlyMate community. Last quarter, I referenced a renewed 5-year vision that we recently laid out for our FlyMates, which details how our financial success will empower us to commit to social impact, learning and growth, and FlyMate engagement. We believe we are on an exciting path to achieving the goals that we've set out for ourselves in these areas. Recently, we rolled out a reimagined management training program, a 3-month immersive experience for first-time people managers. Based on FlyMate feedback, we bolstered the program to include more practical workshops and more executive involvement. I personally led a session within the training and am always fulfilled and inspired by the FlyMates taking part in this program. Committed to providing our FlyMates their career of a lifetime, we also expanded our internal hiring programs to provide FlyMates new development opportunities. Many FlyMates are benefiting from both our global mobility program, which enables them to work on a specific project outside their home country for a temporary period, as well as our one Flywire program, where FlyMates have a first line of sight on new roles within the company, and the full support of their people managers to explore these roles in different departments. These programs empower us to build dynamic, multifaceted teams that can quickly assemble to help our clients and payers. The investments we're making in our FlyMates are important and reflect our view that culture is a strategic asset and a key differentiator for Flywire. This is validated by the recognition we have received. We were most recently named among the Top 20 Most Loved Workplaces in the United States in Newsweek Magazine. Before I hand off to Rob, I wanted to take a moment to acknowledge the tragic loss of life and suffering in Israel and Gaza as a result of the Israel-Hamas conflict. We have a team of FlyMates in Israel and our ongoing focus has been on their safety and well-being. We continue to be in constant contact with them and deeply respect their commitment to each other, to their communities, and to continued service to Flywire and our clients despite very challenging circumstances. I would now like to turn the call over to Rob Orgel, our President and COO, to review our operational highlights from the quarter. Rob?

Thanks, Mike. Good afternoon everyone. It was another quarter of substantial growth for the company. Our sales, client service, and delivery teams delivered great results during the quarter. Here are just a few of the highlights. We added over 185 new clients, a new record for the company in the quarter. Those wins reflected the most projected deal value we have ever signed in a quarter. And for the year, we are ahead of our internal plans. We added to our pipeline and significantly increased our new business win rate while decreasing our average sales cycle. The quarter's strong growth was driven by the continued execution of our five strategic growth pillars. As a reminder, those pillars include growing with existing clients, adding new clients, expanding our ecosystem through channel partnerships, expanding to new industries, geographies, and products, and finally, strategic value-enhancing acquisitions. Starting with growth from existing clients, we went live with our domestic collection management solution at Penn State, a top-ranked global university with over 90,000 students across 24 campuses, including the online Penn State World Campus. Penn State has used our cross-border solution since 2012. Within just a few months of being live with our domestic collection management solution, Penn State has collected millions of dollars of past due receivables and has seen over 1,500 activations of student payment plans. As we mentioned with Wellesley last quarter, we continue to see many schools interested in our collection management solution reflecting their interest in a streamlined process for collecting overdue student tuition bills. We also signed a handful of education clients onto our student financial software in the United States who are all recognized and sizable universities originally using our cross-border solution, now taking advantage of our student financial software for their domestic and international students. As a reminder, these are complex enterprise sales motions. And while Q3 isn't a typical buying season, our teams and our solution were compelling such that we were able to close deals with these institutions. This underscores our ability to land and expand key accounts in education and we remain confident in our ability to capture more domestic payments in the U.S., a market which we estimate to include $240 billion in domestic tuition volume annually. We also had many new clients go live across the verticals. In education, we went live with University College London or UCL, which is consistently ranked as one of the Top 10 Universities in the World for QS World University Rankings. Founded in 1826, UCL has over 39,000 students from across 150 countries. UCL implemented our one door solution which includes implementing our full domestic and cross-border offering concurrently. We won UCL through a competitive RFP process independently of any preexisting WPM relationship. Flywire was selected due in part to our proven integration capabilities with vertically focused cloud-based ERP systems serving the broader education vertical. For example, we are integrated with StarRez, a cloud-based resident and property management platform used by colleges and universities like UCL to run their online housing systems. Our investments in expanding our integration capabilities with market-leading ERP systems are paying off and continue to differentiate us versus most payment providers. We had a strong quarter of travel in terms of new client wins including Le Collectionist, a luxury villa accommodations provider founded in 2009 with villa rentals across 30 destinations and over 1800 properties around the world. The client is leveraging Flywire's solution to manage security deposits and collect the balance due payments for their villa rentals. Carrying forward one of our key themes, our competitive differentiation and value add in the travel sector stems from our innovative software capabilities and integrations with leading vertical-specific ERP systems which provide us with the competitive edge to win new business against much larger companies providing standardized payments processing capabilities without the deep vertical software integrations. We recently completed an integration with SION, a software platform that tracks and manages commissions for travel agencies. With the SION integration, we were able to sign with one of the largest host travel agencies in the U.S. market. Within our B2B vertical, we are seeing momentum within the insurance sub-vertical. In addition to Best Doctors Insurance or BDI that we highlighted on our prior earnings call, we're pleased to announce that we went live with Clifford Allen Associates or CAA which is a division of Global Benefits Group or GBG, a global insurance administration company. Flywire is a payment option offered by CAA with over 200 private secondary school clients across 35 states in the U.S. They chose to work with us given our robust software and payments capabilities to track and reconcile complex international payments flows. We look forward to continuing to build the relationship. Within our healthcare vertical, we went live with Centra Health, a regional healthcare system based in Virginia serving a population of over 500,000 residents. Centra Health has 4 hospitals and a large medical group in Central Virginia. We're helping Centra and their patients by consolidating billings between their physicians and hospitals. We have so far created nearly 2,000 payment plans for Centra and for the payment plan collections during the quarter, about 75% of those have been self-service in nature. Robert Boos, Vice President of Revenue Cycle Management at Centra had this to say about working with Flywire. 'This has been the most successful revenue cycle management project I've done over the course of my 30 years in the business.' While presenting the Flywire Solution and early results to my Board of Directors, I actually received a standing ovation. I speak regularly of my conviction that we are delivering great results for our healthcare clients. And Centra is a great example. We also continue to grow via channel partnerships. We entered into several strategic partnerships in healthcare. We partnered with one of the top 5 banks in the U.S., whose healthcare financial services division is one of the largest resources for nonprofit healthcare providers. This bank selected Flywire to replace their incumbent patient payment solution and will act as a reseller of Flywire's suite of software and payment solutions to their healthcare clients throughout the U.S. market. We're excited to offer their healthcare clients enhanced product functionality over their prior solution including our payment plan affordability product. We also partnered with FinThrive, an end-to-end revenue cycle management company with more than 3,000 healthcare system clients throughout the U.S. For FinThrive, we will integrate with their patient access technology which enables payments and payment plans pre-service, and FinThrive will resell Flywire's full suite of services for post-service to bundle with their end-to-end RCM offerings. Our partnership with TRUE North in education helped us sign multiple new clients including West Vancouver Schools or WVS, a top-performing K-12 public school district comprising 14 elementary and 3 secondary schools in British Columbia. WVS was previously using a competitor's offering and switched to Flywire's cross-border, domestic, and outgoing payment solutions. Our partnership with TRUE North continues to see strong action in the Canadian non-higher education segment, and we expect more wins over the coming quarters. Another strategic lever of growth is expansion to new industries, geographies, and products. We're excited to announce our recent growth within the European public sector higher ed sub-vertical. We currently count several public educational institutions across Spain, Finland, Lithuania, and France as clients, and we see several more coming on board throughout the next year. We are primarily working to help these public universities solve their cross-border payment needs. For example, within France, we signed an exclusive agreement with a public research university which has over 80,000 students, of which around 10,000 are international. The university is using our cross-border payments offering. We're excited by the progress with some of Europe's most significant public sector educational institutions, which will continue to expand beyond our initial activity concentrated in the private sector language schools and other markets. Additionally, we continue to add new payment methods. Previously, we announced our acceptance of payments made through real-time payment or RTP networks such as PIX in Brazil and UPI in India. This quarter, we enabled iDEAL, the most popular RTP network in the Netherlands with the highest market share of online transactions. The payments team that operates iDEAL and is supported by all major Dutch banks allows consumers to complete transactions online using their bank credentials in a safe and secure way. As we grow, we remain mindful of our spending and desire to scale. As a company whose costs are primarily personnel, we are thoughtful about who and where we hire new FlyMates. Compared to Q3 2022, we've seen our salaries and related expenses drop over 500 basis points as a percentage of our revenue less ancillary services. In doing that, we continue to invest in go-to-market to support future growth while also driving efficiency through paced hiring in all our internal operational functions. This contributed to our adjusted EBITDA overperformance in Q3, and we continue to look for ways to drive greater operating leverage in our business. With that, I would like now to hand the call over to Mike Ellis, our CFO.

Thank you, Rob. Good afternoon, everyone. Today, I'll provide an overview of our results for the third quarter, and then I will discuss our outlook for Q4 and the full year. Revenue less ancillary services was $116.8 million in Q3, representing a 31.4% growth rate compared to Q3 2022, our largest revenue quarter in Flywire's history. On a constant currency basis, our revenue less ancillary services growth rate for Q3 2023 compared with Q3 2022 was 28.8%. Our revenue growth rate was driven by increases in total payment volume due to strong growth from our international cross-border payment volumes in our education vertical, particularly with our UK clients. FX rate changes represented a tailwind compared to Q3 of 2022, but a headwind against the guidance we provided for Q3 and the full year on our last earnings call, which was based on prevailing rates as of June 30, 2023. For purposes of comparing our Q3 '23 reported results against our most recent in Q3 guidance, we had an FX headwind that amounted to approximately $1.4 million on Q3 reported results. There were a number of puts and takes related to our revenue less ancillary services during the quarter. On the plus side, we saw continued strength across many parts of the business, including strength in China FX volume trends for our education vertical, positive results from our education clients in the UK, and continued strong growth in our travel and B2B businesses. On the negative side, we were impacted by the FX headwind previously mentioned. We also experienced delayed deployments of our solution in both our education and healthcare vertical. Lastly, while we still saw growth in outbound foreign exchange volume from India, it was lower than expected for our education vertical in the quarter. With respect to payment volumes, we processed $8.9 billion during Q3 2023, which represented an increase of 26% from the $7.0 billion processed during Q3 2022. Specifically, transaction revenue less ancillary services increased 36% compared to Q3 2022, driven by a 36% increase in transaction payment volume. Platform and usage-based fee revenue increased 6% compared to Q3 2022, driven by a 4% increase in platform and usage-based payment volume as well as from platform fees that do not carry any associated payment volumes, predominantly from student health insurance referral payer services in Australia. Our platform volume growth reflected modest volume growth in our healthcare and domestic education verticals. We generated $80.1 million in adjusted gross profit during the quarter, representing a 28.0% increase compared to the $62.6 million earned during Q3 2022. Specifically, our adjusted gross margin was 68.6% for Q3 2023, down 180 basis points from the 70.4% as adjusted for Q3 2022. The year-over-year change in adjusted gross margin was driven primarily by strong growth of our transaction revenue versus our platform revenue, particularly from our travel vertical where credit cards are predominant. However, this was offset more than expected by lower transaction costs as we drive scale through our payment network through increased transaction volumes and improved economics with our payment partners. Moving on to operating expenses, technology and development expenses were $14.6 million for Q3 2023, an increase of 9% over the $13.4 million incurred during Q3 2022. The increase was primarily the result of adding FlyMates to the engineering and technology team, which drove increases in employee-related costs, including stock-based compensation, consistent with our investment plan. In addition, we incurred more amortization associated with capitalized project costs. Selling and marketing expenses were $27.1 million Q3 2023, an increase of 25% over the $21.7 million incurred during Q3 of 2022. This increase was mainly driven by investments in go-to-market resources, which drove increases in employee-related costs, including commissions and stock-based compensation. General and administrative expenses were $26.9 million during Q3 2023, an increase of 11% over the $24.2 million incurred during Q3 2022. This year-over-year increase was predominantly due to adding FlyMate support, our general and administrative teams, which drove increases in employee-related costs, including stock-based compensation. In addition, we also encountered more public company costs associated with global compliance and tax. Our GAAP expenses are growing slower than our revenue, which reflects our efforts to grow our business profitably through targeted go-to-market investment while showing scale in our administrative costs. Adjusted EBITDA for the quarter was $27.5 million, an increase of $9.3 million or 51% over the $18.2 million reported for Q3 2022. With respect to capitalization, as of September 30, 2023, we had $638.2 million in cash and cash equivalents following our public offering, no long-term debt, and 121.3 million shares of common stock outstanding, which is slightly different from the weighted average shares outstanding used to calculate net loss per share due to the timing of shares issued during the quarter. Moving on to guidance, which is based on foreign exchange rates as of September 30, 2023. For full year 2023, based on our results for the third quarter and our outlook for the fourth quarter, we expect revenue less ancillary services fees in the range of $372 million to $376 million, representing a year-over-year growth rate of 40% at the midpoint. This reflects the addition of $1.0 million attributable to the StudyLink acquisition and another $1.6 million in Q4 from underlying organic strength in our business, but offset by an estimated $3.8 million in FX headwind impact from less favorable FX when compared to our full year guidance provided in audit, which is based on June 30th rates. As you will recall, a strong dollar results in a reduction in reported revenue less ancillary services from translating our international operations on a local currency basis to a U.S. dollar basis for financial reporting purposes. We expect to deliver full year 2023 adjusted EBITDA in the range of $35 million to $39 million. This represents an increase of $1.0 million at the midpoint of our previously provided guidance. We are not increasing our full year adjusted EBITDA guidance by the full amount of our Q3 outperformance due to the anticipated impact of FX conditions on Q4, as just mentioned. This fiscal year guidance reflects a larger increase in adjusted EBITDA on a constant currency basis and the $1 million increase at the midpoint of the range given the anticipated FX impact on revenue less ancillary services that also will impact adjusted EBITDA. At the midpoint of our full year 2023 guidance range, we expect to generate an over 430 basis point improvement in adjusted EBITDA as a percentage of revenue less ancillary services for the year, higher than the improvement detailed in our guidance last quarter. For Q4 2023, revenue less ancillary services is expected to be in the range of $86.5 million to $90.5 million, which represents a year-over-year revenue growth rate of 30% at the midpoint, which incorporates factors I mentioned with respect to our full year guidance. Specifically, this reflects adding $1.0 million attributable to the StudyLink acquisition and adding another $1.6 million to Q4 due to underlying organic strength in our business, offset by $2.5 million of estimated FX headwind impact when using September 30th rate versus June 30th. We now expect Q4 adjusted EBITDA to be in the range of $1.0 million to $4.0 million, which at the midpoint represents a $1.5 million year-over-year improvement compared to our reported adjusted EBITDA for Q4 2022. We are very pleased with how the business performed during the third quarter. I'll now turn it back over to the operator for questions.

The first question comes from Rob Napoli with William Blair.

I know it's early as we enter the fourth quarter, but as we consider your long-term guidance for revenue growth and EBITDA margin expansion, has anything changed in the macro environment, your business, or your competitors that might affect that outlook as we look ahead to early 2024?

Hey, Rob, thanks for the question. This is Mike. Obviously, we're not guiding full year '24 today, but we continue to be very excited about the path forward. I mean, it all starts with our growth algorithm that we've talked about before—net revenue retention plus growth from prior client deployments plus new wins for the year with that net new revenue added. And we continue to be very confident in the long-term financial targets that we set, revenue growth, EBITDA margin expansion. This is an interesting macro climate. It's clearly turbulent times. But we believe we have a business that has historically been focused on defensive sectors. It's a very well-diversified business across geographies and industries. And we continue to think we're very well positioned for the future. So, we feel really good.

Can you provide more details about the StudyLink acquisition? You mentioned a $1 million figure, but should we consider it to represent around $4 million or $5 million in annualized revenue? What attracted you to this acquisition, Mike?

Yes, sure. Happy to start and then I'll hand it over to Mike Ellis to cover some of the numbers. So, first, I would say when we talk about our M&A strategy, we go back to those three pillars, the first being accelerating an industry or a vertical that we're in, the second being adding capability that we believe we can upsell to drive additional net revenue retention of our clients, and the third one being a new geography or new industry. This deal, the StudyLink deal fits within number one and number two. So obviously, we're in the Australian market. We think this is a great way in which we continue to expand in the education industry in that region. From a second pillar perspective, it gives us additional software that we believe can become a global standard for helping streamline the application process for universities all over the world. And so there is—every deal we have done, we think we've got a good track record of this—also has a clear synergy. This deal fits having multiple clear synergies, first of which is unmonetized volume that you heard us talk about in the announcement. This software sits next to unmonetized volume, nearly $1 billion, as we've said. We think that number will grow significantly. As I mentioned, we think this software has an opportunity to do a lot more outside of the Australian market. If you think of Flywire's footprint across the UK, the U.S., and Canada as being the other three largest markets for international education, this software is not in those markets yet. That's really the combination of synergies that we see. We've known the team for years and have partnered with them in various ways. We think, between our client base, our team, and our payment network, we're going to see similar results to the synergies we've already seen in the other two deals we pursued. Mike, I'll let you double click, if you want to elaborate a bit on the numbers, which was part of Rob's question too.

Sure. No problem. So I just saw Rob—it is about $1 million incremental revenue hitting Q4 and full year 2023, relatively slightly neutral to positive on the adjusted EBITDA line. It's about a $6 million to $7 million revenue business for the full year.

Next question comes from the line of John Davis with Raymond James.

Mike Ellis, just wanted to know if you could comment on the platform revs. We saw a pretty big deceleration there from, I think, 27% to 6% this quarter. Maybe some of it's due to carryover from last year. But just kind of any thoughts there on how we should think about platform revenue going forward?

So platform revenue is really a function of our healthcare business, which we've disclosed in the past. As it relates to some of the slowdown that we've seen, it's predominantly driven by this quarter—the late deployments that I highlighted in my previous remarks. But essentially, healthcare is turning the corner for us. We're pretty bullish about the opportunities in the future. But we do have some delayed deployments that really impacted the revenue growth rate for this quarter.

Can you help size us for us, the delays or push outs at all?

Some of those deployments are subject to the IT infrastructure of our clients. The good news is that our pipeline and our ARR signs are strong. We've seen good momentum across all of our verticals, including healthcare. Just some of the deployment requirements based on major large hospital systems can sometimes be outside of our control. I will pass it over to Rob to see if he would like to add something.

Yes. Two points I would make. First of all, you asked specifically about sort of the impact of the delayed deployment. I mean, that's a seven-figure sum in terms of the impact of those deployments. The second point is just want to make sure people have a sense that as they understand our domestic business, our domestic business as it evolves has contributions both in platform and in the transactional growth line. And so what you'd want to understand is that that domestic business, as we take on more transactions inside it—and that's true across our verticals and around the world—some of that growth is showing up in transactional even though it reflects our success with domestic clients.

And then just one more if I could. You have the 185 new clients, obviously very impressive. Mike, wonder if you could just give us some high-level commentary on how that breaks out by vertical? And also what from a kind of expected annual revenue contribution per client, what you're seeing is that continuing to grow as you grow the number of clients?

I can jump in and take that one first, John. So the number we shared was over 185 clients across all verticals. But certainly, the lead in that was the travel business, whereas in prior quarters, we signed up a great list of clients into that part of the business. The point that we would tie it to is that it was the best quarter in the company's history in terms of aggregate ARR or deal size that we signed. So these deals are healthy in the size that they represent, adding up to that record ARR for a quarter for the company.

Next question comes from the line of Dan Perlin with RBC Capital Markets.

So Mike, I just—the StudyLink deal, $6 million to $7 million of revenue, so clearly it's not a big deal. You raised $260 million in the quarter. Can you just talk a little bit about, like, where you're looking to kind of place these bets? Should we be expecting a series of smaller deals? I'm not sure what the consideration was, in fact, for this one. So if you wanted to add that, that'd be great. But like, should we be thinking that there's a series of smaller ones that you're kind of strategically going after? Or are there some that could be potentially bigger that this one's kind of just a teaser, I guess, to get started?

Yes, sure. Happy to. So we continue to look at deals of all sizes. We've mentioned before kind of less than $200 million, $200 million to $600 million, and $600 million plus. Regardless of size, our criteria we talked about before needs to be met, and it needs to be a compelling deal. If you look, I think you spoke earlier. I think the StudyLink deal fits very much in that footprint of hitting the pillars being something that we have a clear view of synergy too and something that we can consume relatively easily and move forward with those synergies. We don't always control when deals become available, but I can tell you we have a lot of activity underway. We continue to be encouraged with the growing list of potential targets that we see. But you have to have a few things come together. You have to have those—the hitting of the pillars we talked before as well about the synergies and having a clear path to synergies and why it should be a Flywire deal. That's important. You then have culture, you have tech, and all of that has to come together with a reasonable valuation and it has to come together in a way in which the deal is able to be one. We can't force anyone to sell their company to us, so that all has to come together. I would say this fit our model. It's something we've known and tracked for a while. I would expect us to continue to be very active, and more opportunities will come forward in the coming quarters too.

I'll just add that the aggregate purchase price was $34.9 million and then an additional $3.9 million of earn-out consideration.

Just quickly, kind of near the end of the quarter, and maybe I should know this, but like WPM, there was some questions about whether or not the payment flows were going to come in the third quarter or fourth quarter given the timing of calendar. So can you just confirm either they were in this quarter or they're expected to fall into Q4? Thank you.

I can jump in on that. Rob speaking. Look, overall, the UK Education business performed well. It performed well on the basis of strength from WPM clients that we integrated, it performed well on the basis of non-WPM related clients. We mentioned the success with UCL in my comments. The business is really strong and we see good signs to keep us confident that geography will continue to perform well. So don't think that it's really about shift so much as about just strength in the UK Market that helped us perform well there.

The only thing I'd add is also in the comments, we made a comment on some deployments being delayed going live, right? That was a factor, but it wasn't a massive factor for the quarter. We highlighted the big impacts for the quarter through Mike's comments.

Next question comes from the line of Darrin Peller with Wolfe Research.

The bookings in the new customer adds all sound really constructive and yet the volume growth rates came in shy of what we, I know we in the Street were expecting from a growth rate standpoint. And I know you called out India. I think you said the India inbound volume from India, I should say, was a bit slower. And maybe the late implementations had a mild impact. I guess I'm not quite sure if I understood the nuances of what really happened there yet. I know you touched on it. But if you could help us understand a little bit more detail of what actually is going on the volume side and the trends and really your conviction going forward, given all this new business you're adding on top of that? And maybe couple that with just remind us on the delayed implementation side, if that had an impact on volume too?

So obviously, the volumes grew well, biggest quarter ever. We saw growth across our domestic business; we saw growth across FX and international business. We continue to add these good clients, as you say, that are bringing good FX volume as well as good time domestic volume. Keep in mind that some of the revenue growth comes from things like the student insurance business that don't have the time and associated volume with them. But overall, we're really pleased with volume growth and the fact that these new clients bring on sort of good FX volume as well as good domestic volume. We continue to view that as tracking in line.

There was a comment made about India slowing down. And just to be clear, I mean the comps were fairly materially easier. So I guess, maybe just a better understanding of what's happening in the market around volume trends on a quarter-by-quarter basis or a vertical basis would be really helpful. And then just quickly, from a financial question standpoint, just the FX. Can you just touch on that? I don't know what FX impact was on the volume side also.

So the main thing that we called out in our comments was that India had lower FX volume than we had anticipated in our forecast. So again, India FX revenue grew; India FX volume grew, but relative to the expectations that we had, it was a little bit softer. That affected a number of our geographies. But again, only part of what's overall a very favorable picture of growth across the EDU business and growth in FX.

Next question comes from the line of Jason Kupferberg with Bank of America.

Good afternoon, guys. This is Tyler DuPont on for Jason. Thanks for taking the questions. Just to start with a more numbers heavy question here. Since the updated guidance. There's a few moving pieces to it. I just wanted to make sure I'm thinking about this the right way. It looks like revenue left ancillary was lowered by around $2 million at the midpoint on a full year basis. But if you add back the 3.8 from FX and you subtract out the $1 million from StudyLink, looks like the guide has essentially ticked up by roughly $800,000 or so, on an organic constant currency valuation basis. So I guess, just first of all, is that the right way to think about it? And secondly, if you can provide any clarity on what you've seen evolving over the past few months from a demand perspective and how that translated into the updated guidance? Any clarity there would be helpful.

Sure. It's Mike Ellis. So your understanding of the optimism we see related to Q4 and our full year guidance. You've addressed that mathematics appropriately. It is $0.8 million that we added to Q4, and $1.6 million for the full year impact associated with it. So it's a good result as it relates to the optimism of the business. Now when you talk about the trends that we're seeing, some of it has to do with the fact that we are very excited about what we've seen in our educational clients across Europe and the UK, as well as our travel business growing quite nicely. So we remain bullish about Q4 and the full year. And the math that you shared relative to the guidance was in fact accurate.

And then just to double click on education. I wanted to ask about the domestic payments business within education. I know it's an area of focus, but I'm just curious if you can provide an update on the success of onboarding educational institutions into domestic payments, both within the U.S. and internationally? I know during the prepared remarks, it sounded like there were a few clients that expanded into the service offering in the U.S. How would you compare that strategy, that land and expand strategy, versus international educational institutions? Are there any institutions that are going domestic directly and then going to foreign later? Just sort of how we should be thinking about pricing, take rate dynamics, anything there?

Well, first, let me just talk about the success with clients. As you heard in my comments, we shared that we had signed multiple clients in Q3 to the domestic student financial software offering—that's our SFS offering—that added millions of dollars of deal value to the quarter. Obviously, we look forward to that being a business that stays with us for a long time. In terms of the success of SFS in the quarter, felt very good about that and hoping to carry that momentum forward with all the work we're doing around our go-to-market motions for SFS here in the U.S. The bigger picture of all this is that as a company, we've developed capabilities around domestic that are relevant all around the world. The comment I made a couple of minutes ago was that that success domestically as we move around the world is allowing us to monetize domestic volumes in many countries, and that is becoming a more meaningful part of our revenue stream. It's very good economics to us. The only thing that may be a bit of a surprise—not a surprise for all of you, but just understand that that shows up in transactional revenue, whereas our SFS software shows up predominantly in platform revenue.

Next question comes from the line of Tien-tsin Huang with JPMorgan.

I just wanted to clarify with the deployment being delayed and some comments on the sales cycle. Is that just a cyclical issue? Is it a resourcing issue? Or are you seeing clients maybe looking to lower the total cost of ownership of how they engage with you?

I think it's just the nature of these kinds of more complex deployments when you are looking at the more complex end of the spectrum of what we do, which is most typical of education and healthcare where we are doing some of the bigger projects. We don't get to completely control the timeline and sometimes you see these things slip by a little bit. The comments we tried to make to put some color and flavor around this is our sort of modest delays; we expect all of them to go live. The only question will be what portion of the contribution of the year that we met, but they will all go live, and we expect they will all be long-term customers for us.

Tien-tsin, the only thing I’d add to that is, obviously, as I have said before, we don't control when our clients do their billing. As you get closer to that date, if they have any challenges on their end of launching or confidence in their IT systems being ready or who is on standby when they are launching a new system, all those things can lead to modest pushes as examples. Again, we don't control all of that, but as Rob said, we expect all these clients to go live and continue to just get live—it's just a question of when.

Next question comes from the line of Jeff Cantwell with Seaport Research.

Just wanted to follow-up a little bit on what you're discussing with the EBITDA line and get a feel for—I mean, obviously, there's a lot of moving parts to how you're thinking about margins going forward. But can you tell us based on what you're seeing right now and how you're feeling about the business, are you thinking more towards the 300 basis point side of your guidance on an annual basis, that's expansion or kind of 600? I just want to give a feel for where your expectations may have shifted based on what you're seeing currently?

Jeff, this is Mike. I'll start. If you look at this year and include where we have guided, you have seen us work up from a 300 basis point EBITDA margin expansion closer to that lower end of the range we provided, up to over 420, 430 points increase year-on-year based on where we guided the year to. Again, as we look at 2024, we will look continuously at that 300 to 600 range. But I think this year has been a good example of us putting a stake in the ground and then working hard to keep increasing that number as we see the year perform. I think that's the behavior you can expect from us. We've talked a lot about just the investments and seeing opportunity everywhere; we want the ability to keep investing in the business. We think that's the right thing to do, but feel very comfortable with that range we put out there before and you can expect similar motions as we get into talking about '24.

And then, Mike, you've been very targeted with your M&A. And clearly, what you're discussing with StudyLink follows the path of PM and Cohort Go. I wanted to ask you if you could explain more about how you're thinking about synergies at this point. And part of it is if we go back a couple of quarters with Australia, I seem to remember you started with education there and then you were seeing some cross-sell opportunity. I think it was within healthcare, if I'm not mistaken on that. But again, I just want to kind of come into this with a fresh set of eyes and think about how you are or how you would describe these synergy opportunities that could occur with StudyLink?

Sure. I’ll talk a little bit about the synergies we see with StudyLink. I mean, first, we referenced the volume, right? Similar to the WPM deal we discussed, there’s unmonetized volume sitting near the software as it relates to that initial kind of deposit and application payment, as well as that kind of first-year tuition payment that touches that application in Australia. So that obviously is a clear synergy for us. Folks should understand that based on the prior deals we've done, that's a great opportunity for us, and we feel very confident about getting to that synergy. If you look at the second one I would put in there, it’s really around just the agent ecosystem. They have over 20,000 agents that they touch. These educational agents, as we've talked about in our Investor Day, are critical to the international student enrollment process, and they actually influence a lot when it comes to that international student and family journey. Between the Cohort acquisition, our capabilities, and StudyLink's capabilities, we feel really well positioned to provide more value to that agent ecosystem, which we think will help with growth. The third bucket is really around global expansion. As I mentioned, the StudyLink product is really deployed in Australia for Australian universities. Flywire sits with meaningful share across the other three major markets for international students and universities that they study at. Being able to leverage local expertise, vertical expertise, and what we think is best-in-class software and best-in-class payment network allows us to expand globally over the coming years. So we feel really great about all those three. I appreciate the comment that it fits right in the wheelhouse of what we've proven and what we've done. We feel really excited about it and excited to get the news out there.

Next question comes from the line of Andrew Jeffrey with Truist Securities.

I wonder if I could dig in on Darrin's question just a little bit more around India just for my own edification so I can understand it. When you talk about FX volumes perhaps being a little light, can you separate that out from student visa volume or matriculation results and just maybe the ability and the visibility into both of those items on a go forward basis as you model the business?

So, obviously, India is a major source for international students for sure. In the quarter, we saw volumes grow, revenue grow both FX and what we call domestic revenue out of India. We called out India just because we did see a different payment mix in that volume than what we expected and that had some impact on revenue. Again, there’s good growth coming out of India. The only reason why we called out India was because relative to the expectation that we had in our model, there was even more growth built into that number. So when we look at India, for us, it’s a market where we have invested a considerable amount of energy and attention. That’s part of what’s driven our very successful growth in the Indian market across all of this. All the opportunities there, we’ve invested in our global network, we’ve invested in the agent network. The StudyLink acquisition makes sense in the context of penetrating the India opportunity even more. We’ll keep focusing on making sure we are effective in the Indian market as we have been for years and look forward to good growth there again continuing forward.

Next question comes from the line of James Faucette with Morgan Stanley.

Just wanted to ask back on the education vertical. What that’s looking like in terms of expanding footprint within your existing education partners? I'm just trying to get a sense of how much customization and backend integration work may be required there? And how that impacts our sales cycle and implementation cycle as we think about the land and expand opportunities?

Rob here again. Look, I think part of the great success we've enjoyed and continue to enjoy in education is because we as a company are very good at these integrations. It's been one of our core competencies that we do a great job integrating. In the UK, we have longstanding integration with retrieval. We talked in our most recent call about the winning partner of the year for the integration with Ellucian. I think we've talked about our unique addressing markets like the Spanish market. Around the world, we're somewhere in the neighborhood of 40 to 50 of these integrations that help service the education space. All of those are things that help us—in fact, lower the deployment cycle, increase the pace with which we can sign deals, because those integrations give them confidence that deployment will be successful and that we can deliver on the ROI that we described for them. So again, it's one of the core strengths of the company and helps us go faster. It's part of what drove the wins that we announced in SFS for the U.S. in Q3. It's really a core part of what we do. I think we'll continue to make sure that we are a market leader in those integrations because of all those benefits I described.

And then outside of education, can you give us a sense of what your sales force looks like in terms of how many people you have in education versus healthcare versus travel? And how we should think about the relative growth rates of those different segments or end markets generally on a go-forward basis?

We're certainly the most developed in terms of having the largest team in the education business. Obviously, it's the biggest revenue. We talk about this internally both in terms of the sales team and the broader go-to-market team, which includes our relationship managers, which are a very important part of that successful land and expand strategy you've heard us talk about on many calls. That team continues to grow because of our success growing internationally. Probably, you'd say the fastest growing teams in the company are in travel and B2B. Certainly, as a percentage, those are emerging segments for us. We're excited about the growth rates in those businesses and continue to invest there. Probably slower growth on the healthcare side of the team, although where we see particular opportunities, we still add to that team. But in the bigger growth, that team is around travel and B2B.

James, just to add one more tiny bit on top of that. I would say in relation to travel, for instance, and in the future, probably B2B, you'll see both kind of that sub-segmentation focus and geographic expansion when it comes to team expansion for those, right? Following the same playbook that we used for the education business where as we open up new markets, we want to make sure we've got local experts in those markets driving that growth and supporting those clients. That’s just another flavor for where those dollars are actually going to help those travel and B2B teams expand.

Next question comes from the line of Ken Suchoski with Autonomous Research.

I just want to ask about the Q4 outlook. Could you just provide some more detail on the Q4 gross margin versus OpEx expectations in Q4 and I guess how we should think about getting to that EBITDA outlook for next quarter? Thanks.

Hi, Ken. It's Mike Ellis. So I think first thing I want to do is kind of unpack the revenue guidance just so you have a clear look at that. Essentially, we're adding that $1.6 million due to the optimism we expect in Q4 based on the organic growth of the business. We are adding $1.0 million from the StudyLink acquisition and that’s offset by about $2.5 million associated with FX headwinds. That gets to where we are, at the midpoint of the guidance range, but in our estimation, it shows really good optimism related to the organic growth. If you want to take it down to the AGM level, I would suggest that you look at the historical trends of Q4 2022 versus Q3 of 2022 and use that same type of model as you think about forecasting out your Q4 2023 AGM. From an OpEx perspective, listen, we have said all along that our investment thesis is all around go-to-market and then secondarily to that is our technology and engineering teams. I would expect that when you look over a year-over-year basis, you would see relative similar increases for Q4 as it relates to the trend that we saw Q3 over Q3. But again, really pleased with the opportunity to continue to generate EBITDA in Q4 as well. And that midpoint of that range is approximately $2.5 million which again we're pretty with the overall generation of incremental adjusted EBITDA over a year basis, again meeting and beating the expectation of north of 300 that we first gave at the beginning of the year.

And Mike just on that FX point, I mean, what's your expectation around the FX impact in Q4? So not the change versus prior, but just the dollar impact on adjusted revenue in Q4 when you look at the year-over-year trends and I guess can you just remind us about your hedging policy and I guess if you do hedge the currency and I guess which line that flows through in the P&L?

Yes, so first and foremost, the change in revenue as it relates to the FX headwind or tailwind, and we've been really transparent historically about all those have impacted our revenue growth rates is really about the translation of foreign subsidiaries that are dominated in local currencies into U.S. dollar currencies for reporting purposes. That's the majority of the headwind and tailwind that we talk about as it relates to when we say FX impacting or being beneficial to our revenue or our adjusted EBITDA. With respect to your hedging question, that really comes down to a transaction basis. We will, in fact, hedge specific currencies that are appropriate to hedge based on the cost-benefit analysis associated with that. We've had relatively good success on that. If there was anything to call out, it would be showing up in our OpEx, and typically in the G&A line.

And just to make sure I got it. So FX impact in Q4, just on an absolute basis, it seems like a little bit of a headwind year-over-year in Q4?

In Q4, yes, it will be. Yes.

Next question comes from the line of Pat Ennis with Credit Suisse.

Wanted to touch on domestic education and some of the potential indirect benefits of continuing to win business there, especially in the U.S. So as you continue to add clients on the domestic side where you may already be the cross-border payment provider. Is there more opportunity to gain exclusivity where you're out with a competitor in the cross-border business so you can gain greater wallet share on that side as well?

Yes, that's exactly right. Rob speaking here. So there are obviously two benefits to winning the full suite of domestic capabilities. One is that the set of domestic payments that we then power are themselves essentially a revenue multiplier. The other thing is that it does allow you to create really great integrated experiences that also have the effect of bolstering sort of that FX utilization. That is part of why we always talk about these land and expand as being a revenue multiplier. Those are the two things I just described.

And just had a quick follow-up, I was hoping you could contextualize the typical ramping period when you do announce a new win within the cross-education business. I know you focused marketing and education sessions around the Flywire platform in other schools, which helps with awareness over time, but if you can maybe give some directional idea of what the typical utilization ramp looks like over the first few years after an integration is complete?

Yes. We see a significant uptick soon after the go-live, but really based on when the first major billing cycle is, right? What you're always expecting and trying to do is make sure that you get that deployment live in advance of whatever the next major billing cycle is. Obviously, for things like B2B, they tend to be more regular monthly kinds of payments, and for the school deployments, they tend to have lumpier billing associated with semester starts, as you would understand. Our goal is to get them live in advance there. You won't get the full ramp in that year one. You'll see significant progress, and it's a great opportunity in the year one. Typically, what you see is that the ramp happens over the course of the first year or two as you get more and more coverage across an institution. People get used to the new capabilities of the payment plans and you see more and more people taking advantage of them as that's one of the revenue drivers. You get inside that relatively short number of billing cycles, and you will see a very nice ramp.

The only thing I'd add to what Rob said, this is Mike. What you don't get in that year, you have very clear predictability of that because you are really controlling the invoice and kind of know what that kind of full-year effect will be. From a modeling perspective, it's a plus. The only other thing is just the payback period. Almost on no matter what we're deploying, that payback period is usually within the first billing cycle, if not the first year for a client. So again, very strong economics when it comes to the cost of acquisition of the customer in the payback period.

Thank you. Due to time constraints, we are out of time for more questions. So this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.