Good day, and welcome to the Flywire Third Quarter of 2024 Earnings Conference Call. All participants will be in a listen-only mode through the duration of the call. After today’s presentation, there will be an opportunity to ask questions. Also, please be aware that today's call is being recorded. I would now like to turn the call over to Masha Kahn, Investor Relations. Please go ahead.

Thank you, and good afternoon. With us on today's call are Mike Massaro, Chief Executive Officer; Rob Orgel, President and Chief Operating Officer; and Cosmin Pitigoi, Chief Financial Officer. Our third quarter 2024 earnings press release, supplemental presentation, and when filed Form 10-Q can be found at ir.flywire.com. During the call, we'll discuss certain forward-looking information. Actual results could differ materially from those contemplated by these forward-looking statements. We'll 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. Unless otherwise stated, all references on this call to revenue, cost of revenue, gross profit and gross margins, sales and marketing expense, technology and development expense and general administrative expense are on a non-GAAP basis. 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, Masha, and thank you to everyone that is joining us today. Before we go into details about the quarter, I want to provide some context on what we have accomplished as a public company and how we are looking towards the future. Since our IPO in 2021, we have doubled the business in terms of revenue and surpassed the revenue, gross profit, and adjusted EBITDA margin objectives we had set at the time of our IPO. We plan to double the revenue yet again over the next several years while improving profitability and the cash flow generation of the company. We expect to accomplish this through a combination of business improvements we have already made and the investments we are making. We now have over 4,000 loyal clients in 50 countries across numerous verticals and subverticals with great revenue diversification. We have more than 1,300 FlyMates focused on execution and building high-performance teams. We have powerful sales and customer success engines in each industry we serve, and we have a robust global payment infrastructure that was able to support nearly a 2x total payment volume spike in Q3 compared to the average volume processed during the first two quarters of this year. Our combination of next-gen payments platform, proprietary global payment network, and vertical-specific software create a powerful value proposition, further strengthened by our efficient go-to-market engine and existing client relationships. I am very proud of our teams, product capabilities, and our ability to prioritize investments to further optimize our cost structure and deliver more value to our clients, their payers, and our shareholders. Our core business is operating well because we are focusing on the things we can control. We are deepening our relationships and seeing revenue growth at existing clients, reducing the small amount of client churn we have, expanding our value proposition, and managing both gross margins and our operating costs to further deliver to the bottom line. We are landing more clients in every vertical around the world. Education continues to prosper well. We see strong growth in travel and B2B, and our healthcare business returned to modest revenue growth during the quarter as well. As well as we're doing, we continue to face a well-understood macro dynamic in our education business, specifically related to limits on foreign students imposed by the Canadian government, with potential future actions by the Australian government. These have put pressure on our revenue growth rate over the last number of quarters despite very strong execution by our team. Even in the face of these headwinds, Flywire continues to grow at scale, helping our clients digitize large and complex payments all over the world. With that context, I am pleased to share our Q3 2024 results, demonstrating continued strong performance across our business. Revenue less ancillary services was $151.4 million, an increase of 29.6% year-over-year. Adjusted gross profit for the quarter was $101.9 million, an increase of 27.2% year-over-year. Adjusted EBITDA was $42.2 million for the quarter, increasing by $14.7 million year-over-year, and adjusted EBITDA margin expanded by nearly 429 basis points year-over-year with strong free cash flow conversion. As a result of our strong growth combined with meaningful operating leverage, Flywire has been and expects to continue to be a Rule of 40 company. We are proud that we have built a durable business where we have been able to drive solid revenue growth, gain market share, expand our total addressable market and deliver innovative solutions to the industries we serve. As we look ahead, our goal is to continue to balance strong top-line growth with margin expansion and deliver strong cash flows and GAAP net income profitability. With that, I will now share some progress we made in Q3 against our three-pronged strategy of optimizing our go-to-market capabilities, expanding our Flywire advantage in strengthening our FlyMate community. First, on our go-to-market capabilities. We believe we have a data-driven and disciplined approach to how we optimize revenue growth and efficiency across sales, marketing, and customer success. We prioritize high ROI marketing activities, ensuring our investments directly support revenue growth across our verticals. All of this rigor helps drive strong revenue growth, logo retention, pipeline development, and new client signings, and at the same time a reduction in average deal cycle time. This approach strengthens our confidence in scaling strategic investments across sales and marketing within diverse verticals and regions. By testing and optimizing initiatives in one market and expanding proven successes into another while adapting only for the essential local operating requirements, we have a proven playbook that helps us optimize our impact and ensure efficient growth across geographies. Last quarter, we held our inaugural client conference in the United States, modeled on the success of our conference in the UK. We brought together more than 100 colleges and universities, reinforcing the significant ROI our full suite solution is delivering to institutions who use it to manage billing, one-time payments, payment plans, and past due collections. This event further highlighted the growth potential within our existing clients who are already using our cross-border solution and are increasingly focused on the value we can deliver from our full suite domestic offering. The focused efforts of our teams to integrate and cross-sell our offerings are yielding substantial results in the U.S. market, which Rob will detail shortly. In addition to our go-to-market investments, we've also made great progress expanding our Flywire advantage. We remain focused on delivering product and payment innovation to power the vertical ecosystems in which we operate. In Q3, we enabled $11 billion in total payment volume across multiple payment types, including local bank transfers, credit and debit cards, and alternative payment methods. The majority of our payment volume is not card-related and is completed over our global payment network, a significant differentiator for Flywire. Ultimately, we want to allow payers to use any and all payment options available to them in any country, allow them to transparently choose the one that they want, and provide it to them with great value informed by cost, speed, reliability, and trust. We want this transaction to complete over our global network, in the most efficient and effective way possible and do so at healthy margins for Flywire. Here are just some of the ways we strengthened our global payment network and payment acceptance capabilities this quarter in the APAC region specifically. We went live with our second banking partner in Vietnam, Vietnam International Bank, which augments our existing bank transfer offering and expands our presence in Vietnam, our fifth largest payer market by foreign exchange money moved. The integration provides a fully digital payment experience for payers, and our API integration with this bank increases payment processing and delivery speeds. Crossing over to Singapore, we further enhanced our payment capabilities and are working with a leading university client to roll out dynamic QR codes in instant local currency bank transfers through PayNow. These types of local banking partnerships alongside our enhancements to payment acceptance capabilities further strengthen our global banking network and solidify our competitive advantage for processing large complex payments, both internationally and domestically. And finally, we continue to focus on strengthening and growing our FlyMate community. Our culture is underpinned by our commitment to building high-performance teams. We believe a cornerstone of our success is equipping our FlyMates with the right tools, training, and other resources necessary to build their careers of a lifetime here at Flywire. Lastly, our thoughts go out to our FlyMates based in Valencia, Spain as they deal with the impacts of the historic flooding that took place just about a week ago. While we have had minimal business impact from the effects of the natural disaster, we continue to work directly with our FlyMates in the region to identify emerging needs and provide support to the local community as they recover. I continue to be inspired each day by the efforts of FlyMates all over the world that dedicate their time and resources to serving others in supporting their local communities. In closing, I am pleased with the results we delivered in the third quarter. Performing well in spite of the headwinds from Canada underscores the resilience of our business, the ingenuity of our people and execution of our unique strategy across industries and geographies. I would now like to turn the call over to Rob Orgel to review some operational highlights from the quarter.

Thanks, Mike. It was another strong quarter of growth and adjusted EBITDA performance for the company. We have added more than 200 clients across all four core verticals, with new clients in the travel vertical modestly outnumbering those added in education. Healthcare returned to growth for Q3 compared to last year's Q3, and we continue to focus on go-to-market scale and efficiency in Q3 and saw year-over-year improvements in both pipeline creation and average deal length across the business. This quarter's results were driven by the continued execution of our five strategic growth pillars, which include growth with existing clients, new client wins, expansion to new industries, geographies and products; and finally, growth from our strategic value-enhancing acquisitions. Let me show how these pillars worked across our verticals. I'll start with education, our largest vertical. As most of you know, Q3 has typically been our seasonally largest quarter tied to it being the peak tuition period in the U.S., UK, and several other major student education markets. This Q3 included strength across multiple geographies, products, and education subsectors and also showed resilience in the face of several notable pressures tied to visa and immigration policy shifts. Most notably, the UK was a major growth market, and the strength in the UK came from a broad range of source countries. Our U.S. and UK growth, combined with growth in many emerging destination markets, all reflect the increasing diversity of our client base, increased resilience to changes in student country preferences, and the impact of our agent and overall growth strategy. To go even further into the underlying strength of the business in our UK Higher Education segment, revenue growth accelerated this quarter on a year-over-year basis. Note that approximately one-third of the UK education revenue added year-over-year was driven by new customers, and roughly the other two-thirds coming from existing clients, showing our ability to drive revenue with existing and new clients. A few examples include recent go-lives with clients such as the University of Manchester and deeper ERP integrations that help drive share gains with existing clients such as City, University of London. Our product has been shown to deliver strong ROI to universities and is highly differentiated in the market, helping sustain a strong win rate and higher share gains. In our U.S. Education segment, nearly 1,000 institutions in the U.S. rely on Flywire to streamline the cross-border tuition payment experience for their international students. Flywire's full suite solution, including our domestic tuition payment platform, addresses some of the most challenging issues in domestic payments such as managing dynamic payment plans and past due collections, which are important components of our full suite solution. This quarter, we went live with one of the largest private accredited art and design schools in the nation. We initially signed with this institution back in 2014 for our cross-border payments processing solution and went live with our full suite student financial services solution during this quarter to help automate back-office reconciliation efforts that previously required a lot of manual effort by staff. Overall, we continue to see a long runway of existing cross-border only clients to add to our domestic payment offerings. With that, I'll pivot towards our Canadian and Australian education market segments. Canada remains a very challenging international student market for both Canadian higher education institutions and for Flywire. Recent developments don't suggest a prompt recovery in international student growth in Canada. Canada and India continue to have tense political dialogue, and Canada is continuing down the path of restrictive immigration policies. It is hard to predict how many of the available seats within the caps will actually get filled by international students and in which periods. So we are taking a long view on Canada and continue to work hard to serve existing clients, expand our client footprint by winning more Canadian institutions, and expand our product footprint in that market. In the absence of better news that builds demonstrated momentum with student volumes, we are preparing for 2025 revenue in Canada to be relatively flat with 2024. There are headlines about caps and immigration policy emerging from Australia as well. The Australian education market is smaller for us compared to Canadian education. Overall, Australian education is a high single-digit percentage of our revenue, which includes our legacy higher education cross-border revenue and revenue related to our acquisitions of StudyLink and Cohort Go. Yet we are seeing early moderation in the revenue growth rate, and we are watching Australian developments closely. We will provide guidance for our expectations for 2025 next quarter. Now moving on to Travel. We have the travel vertical expertise, client support know-how, and integrations into commonly used travel-specific ERP systems of record that allow us to win against or replace both local and regional payment processors as well as some of our larger vertical agnostic competitors in the space. During the quarter, several of the new clients signed came from Flywire replacing direct competitors in the travel vertical. For example, we signed Ansova Travel, a luxury travel provider based in Ho Chi Minh City, Vietnam, that creates customized journeys through Vietnam, Cambodia, Laos, and Thailand. Ansova chose to replace their prior payments provider with Flywire due to our travel vertical expertise and dedicated client support team. Since going live during the quarter, the client has exceeded our expectations around platform utilization, and we look forward to continuing to support their growth. We are also seeing momentum moving upmarket in terms of signing larger projected ARR clients. For example, this quarter, we signed Karma Group, a luxury accommodations provider with over 40 properties across Asia and Europe that was attracted by Flywire's efficient flows, strong ERP integrations, cross-border network, and split payment functionality. Flywire is starting to get brand recognition and referrals in this luxury accommodation subvertical. Overall, we remain excited about the opportunities in the travel vertical as we are still in the early innings of our growth journey. In healthcare, I'll highlight the return to modest year-over-year revenue growth this quarter, thanks to both new clients and deepening partner relationships. We expanded our relationship with our client, Banner Health, to manage payments across the health system's extensive footprint of over 30 sites. To help Banner provide an improved patient experience and a consolidated billing experience among other operational benefits, we worked together on a new integrated solution called Banner One that brings some of their affiliated partner practices onto the Flywire platform. This allows Banner patients to view and pay more of their bills associated with their care in one place, which previously required separate log-ins. Prior to this new initiative, Banner has already seen a 38% reduction in bad debt expense as a percentage of net revenue since going live with Flywire solution. Finally, moving to our B2B vertical. This quarter, we saw organic revenue growth well above the corporate average on a year-over-year basis, albeit off of a smaller base compared to our other verticals. Our strategy involves a focus on subverticals, believing that this focus and subject matter expertise can help us expand and win faster in the subverticals. We continue to have great traction within the insurance subvertical of B2B from a combination of in-person events, digital acquisition, and direct sales outreach. For example, this quarter, we brought on new clients, including Redbridge, an insurance, reinsurance, and consulting services provider focused on Latin America and the Caribbean. Through a single integration, Redbridge utilizes Flywire to offer dozens of local payment options to their members and agents while significantly reducing manual work throughout the billing and collections process. This collaboration strengthens Flywire's insurance market positioning while paving the way for expanded use cases with Redbridge across their insurance business segments. We also saw integration progress following last quarter's acquisition of Invoiced. We have introduced a fully integrated software and payment solution to clients and prospects, and we are able to sell software, payments, or the integrated software and payment solution. We have our first client live and transacting on the joint solution, and we have built an active pipeline of more than 50 businesses that we expect to start to close in the coming months. I will now turn the call over to Cosmin to provide an update on our financial performance this quarter.

Thank you, Rob, and good afternoon, everyone. First, I'd like to thank our clients, partners, and employees for helping us deliver another strong quarter. Today, I'll provide an overview of our results for the third quarter and then discuss our outlook for Q4 and the fiscal year. We beat the high end of our revenue range and our adjusted EBITDA guidance and are raising our full year revenue and adjusted EBITDA margin expectations despite the external macro headwind. At the midpoint, we are a Rule of 40 company, defined as revenue less ancillary services growth plus adjusted EBITDA margin. Turning to our performance this quarter, starting with revenue. Revenue less ancillary services was $151.4 million in Q3, representing a 29.6% year-over-year growth rate despite a high single-digit percentage point headwind related to our Canadian higher education business. Q3 revenue came in above expectations, beating our midpoint, driven primarily by two factors. First, the education vertical was stronger compared to our expectations during the peak tuition season, in particular, from a strong UK performance. As noted before, while we try to anticipate the timing of Q3 versus Q4 in tuition payments, there are small shifts in seasonality every year, with this year seeing a stronger-than-expected Q3 timing. Second, foreign exchange rates created a tailwind of approximately $2.5 million during the quarter as the U.S. dollar continued to weaken versus the June 30 spot rates. We continue to see strong volume growth with total payment volumes during the quarter reaching $11 billion, nearly double the average TPV of the prior two quarters and growing 24% year-over-year, driven by a strong education peak season reflecting the strength and scale of our platform and operational capabilities. From a monetization standpoint, our spreads have remained relatively consistent and in line with the last several reporting quarters. Looking at the two components of our revenue, transaction revenue is primarily based on fees as a percent of transaction value, while platform and other revenues consist largely of fees earned from software subscription and usage-based fees. Starting with transaction revenue, we saw a 28.9% year-over-year increase driven by a 32% increase in transaction-related payment volume, primarily in our international education subvertical as well as our travel vertical. Platform and other revenues increased to 34.8% year-over-year, primarily driven by the platform fees that do not carry payment volumes, specifically revenue associated with the contribution from StudyLink of $1.8 million and Invoiced acquisition of $0.9 million. Platform-related payment volumes of $2.2 billion were up 1% year-over-year as some of our platform revenues include software revenues that do not have associated TPV volumes. Adjusted gross profit increased to $101.9 million during the quarter, up 27.2% year-over-year. Adjusted gross profit margin was 67.3% for Q3 2024, which is a decline of about 130 basis points compared to Q3 2023. Business mix continues to put downward pressure with travel and B2B growing faster with the more prevalent use of credit cards, partially offset by stronger trends across our main education corridors and continued payment cost optimization. Note that FX shifts that occurred during settlement of transactions, such as the negative impact this quarter, are largely offset by FX hedges, which are booked in operating expenses, resulting in a mitigated impact on adjusted EBITDA. Adjusted EBITDA was $42.2 million for the quarter compared to $27.5 million in Q3 2023. Adjusted EBITDA margin was up 429 basis points year-over-year. Let me unpack how we balance driving top-line growth with long-term productivity and incremental margins by optimizing all of our operations and support functions. We're looking at operating expenses, both as a percent of revenue less ancillary services and percent of adjusted gross profit, both in the quarter and also of the trailing twelve months to account for seasonality. And setting long-term best-in-class productivity targets across our key metrics. First, starting with sales and marketing spend of $27 million in Q3 represented 17.8% of revenue and 26.5% of gross profit, improving by 160 basis points and 184 basis points year-over-year, respectively. We continue to invest in our go-to-market capabilities, especially across travel and B2B verticals while at the same time streamlining our go-to-market functions to improve our LTV to CAC metrics. Second, general and administrative spend of $21.3 million in Q3 represented 14.1% of revenue and 20.9% of gross profit, improving by 323 basis points and 432 basis points year-over-year, respectively. As we invest in our data capabilities, we expect to continue to optimize and drive productivity across our customer funnel and automation in our operational and functional areas. Finally, our technology and development spend of $11.9 million in Q3 represented 7.9% of revenue and 11.7% of gross profit, respectively, improving by 70 basis points and 81 basis points year-over-year as we continue to gain scale in our platform and engineering productivity. To close out the income statement in Q3, GAAP net income was $38.9 million, improving year-over-year by approximately $28.3 million. Q3 includes an income tax benefit of approximately $8.3 million based on full-year tax estimates and a mid-single-digit million foreign exchange gains on intercompany balances, which we don't expect to recur in Q4. Our balance sheet remains strong. We ended the quarter with $721.5 million of cash, cash equivalents, and investments with no outstanding debt. Turning to capital allocation. We continue generating strong cash flows in the third quarter and repurchased 1.3 million shares for roughly $23 million, inclusive of commissions under our share repurchase program. We utilized $45 million net of cash acquired for the acquisition of Invoiced. Our capital allocation priorities remain the same. We'll continue investing organically, seeking strategic acquisitions, and execute our buyback opportunistically to take advantage of short-term dislocations in our equity value as we focus on executing and building long-term value for our shareholders. Moving on to guidance. For full year 2024, we're flowing through the Q3 beat and holding Q4 in line with the prior midpoint of guidance across revenue and adjusted EBITDA. On an FX-neutral basis across the second half, we're approximately in line with our prior revenue guidance midpoint. For full year 2024, we expect revenue to be in the range of $479 million to $485 million based on spot foreign exchange rates as of September 30, 2024. This represents a year-over-year growth rate of approximately 26% at the midpoint. For 2024, we're raising the low end of our full year adjusted EBITDA outlook in the range of $76 million to $80 million. At the midpoint, our full year 2024 guidance, we expect to generate approximately 520 basis points of adjusted EBITDA margin improvement on a year-over-year basis. This improvement reflects OpEx efficiencies and cost discipline across the teams, allowing us to look ahead towards sustained GAAP net income profitability as we exit into next year and beyond. Shifting to Q4 2024, revenue and adjusted EBITDA remain approximately in line with our prior midpoints of guidance. Revenue is expected to be in the range of $118 million to $124 million. A few puts and takes as guidance context for Q4 include a benefit of approximately $2 million, mostly from the Invoiced acquisition, and a very low single-digit million dollars FX tailwind year-over-year. And as noted, we did see a stronger Q3 seasonality versus expectations across the second half of 2024. We expect Q4 adjusted EBITDA to be in the range of $15 million to $19 million, implying about a 600 basis points margin increase at the midpoint on a year-over-year basis. In closing, we are agile and disciplined in terms of managing our costs. We remain optimistic about our product differentiation, the diversity of our business model, profitable growth opportunities across all our verticals, and our ability to deliver significant shareholder value. As Mike said, our ambition remains to double the size of our revenue over the next several years, continuing to be a Rule of 40 company with strong cash flow generation while pivoting to sustaining GAAP net income profitability. I'll now turn it back over to the operator for questions.

We will now begin the question-and-answer session. Our first question today will come from Darrin Peller with Wolfe Research. Please go ahead with your question.

Hey, guys, thank you. Maybe just start off with, first of all, the customer adds continue to trend well. And so maybe if you could help us understand the 200-plus adds, breaking it down by some category verticals you're seeing traction, whether it's travel or education still. And obviously, just reminding us what's driving those new adds? And then maybe just a little more color on the subsegment strength. Again, obviously, the nuances on the government impacts from Australia and Canada, but putting that aside, I mean, how the growth is really trending in the education side would be helpful. Thank you.

Yeah. Darrin, I can jump in and start with that. So let me start with your point on the customers and then talk a little bit more broadly about the verticals. So as you called out, once again, another quarter with over 200 net new additions. For each of the past couple of calls, I've outlined whether it was EDU or travel that came out on the top, as the numbers have been relatively close for a sequence of quarters. This time, travel came out slightly above EDU, but if you look in both of them, we saw the kind of diversity that we like across the client wins. So focusing first on the travel, they were across our subsegments and nicely distributed. If you look in EDU, they were distributed across our subsegments, but also very broadly distributed geographically, right, wins in the Americas, wins in Europe, and wins across the Asia Pacific region. Healthcare, it's always a much smaller number of deals, but positive deals there. And we did call out in my comments that the B2B wins were actually up notably over Q3 in the prior year. So overall, the other question you often ask is around ARR. Average ARR per deal was down just a bit, but still feeling good about where we are on our progress for the year. If you add up progress over the last couple of quarters plus these results for Q3. So if you look at that, that was the customer count and a little bit of analysis there.

That's encouraging to hear, especially on the healthcare side. I appreciate that. And just thinking about the opportunities and what you see in the market from a regulatory landscape standpoint, I mean, anything you can help us with understanding in terms of incremental risks or you think we have a pretty good handle on where things are now from what we saw the last couple of quarters already. Just anything new, I guess, on your side?

I will highlight some key points from my comments. The discussion revolves mainly around Canada and Australia. In Canada, we are seeing political stress linked to the India to Canada corridor, and the Canadian government is maintaining a fairly strict policy that limits student admissions. As a result, there has been significant demand destruction, leading to fewer student applications and opportunities against the cap. Despite this, we are successfully acquiring new clients and expanding our presence in Canada, so the impact appears stable. However, we anticipate that the same-store sales might still suffer due to this demand destruction when we compare our expectations for next year to this year. Turning to Australia, the situation is quite different. While Canada contributes only a small percentage of our revenue, Australia makes a mid- to high single-digit contribution. The challenges in Australia are not as severe as those in Canada. We expect the growth rate there to moderate. This year, it was above the corporate average, and we project it to align with or fall below the corporate average next year, but we still consider it a growth market for us.

And Darrin, this is Mike. I'll just jump in, and I'll cover the U.S. As I know there's a lot of questions probably coming out around just the U.S. administrative change. I think there have been positive comments, time to continue to watch what policy could evolve. But there's been positive comments around supporting legal immigration, potentially even green card ownership for international students, which would be a positive. The U.S. is the number one market. And as you look at places like Canada and Australia potentially being restrictive, I think the U.S. has an opportunity to grow. And obviously, we're going to watch that market closely as well just in the global numbers of international students.

And our next question will come from John Davis with Raymond James. Please go ahead.

Good afternoon, guys. Cosmin and Mike, I just wanted to put together two of your comments in the release and in the prepared remarks. Cosmin, you talked about continuing to be a Rule of 40 company. And then Mike, I think you said you expect to double the business over the next several years. But given margin guidance this year is about 16% and what your mid-term targets are, we can think about margins probably being in the 20-ish percent range next year. So I think doubling the business over the next, call it, three years would imply kind of mid-20s growth. But just any comments on how we should think about the growth algorithm of the business from here, understanding you've got some headwinds from Australia heading into '25?

Yeah. I'll start, and Cosmin will probably jump in and talk a little bit about just how people should think about the framework. Obviously, we think we put up some pretty good numbers so far for this year. I mean, near 26% growth. That's with a $30 million headwind that was unexpected. Obviously, really strong record of expanding margins continued year-on-year for us. And so I think anybody can kind of add what that headwind is into our number and see where our growth rate would have been. It would have been also even better than we're doing here, but we're doing that with a pretty significant headwind. We mentioned in some of the comments, and Rob mentioned just in his last answer, there's no snapback we're expecting coming from Canada. It's likely to improve over time. So obviously, we're not guiding for '25 yet, but I think people should consider us a Rule of 40 company with increasing EBITDA margin expansion, as you said, within our prior range. I'll let Cosmin maybe unpack a little more of the framework.

Thank you, JD. To consider our outlook for next year, it’s crucial to focus on the long-term goal of the Rule of 40 and to maintain solid revenue growth. This year provides a good foundation. Starting with revenue, we achieved a 26% increase in Q4, which is consistent with the full year. As I mentioned, about two percentage points of that growth came from inorganic sources and around a low single-digit percentage from foreign exchange fluctuations, which played a larger role in Q4. Looking ahead, I plan to provide guidance based on FX-neutral figures next year. On an organic, FX-neutral basis, we anticipate growth in the low 20% range or higher. Overall, we had strong growth throughout the year. Regarding margins, our adjusted EBITDA margin for this year is 16%. Historically, we have aimed for a growth of 300 to 600 basis points, and as we approach next year, we feel comfortable starting at the lower end of that range while ensuring continued investment in various areas. We are on track with the Rule of 40, and even with an 8-point headwind this year, we are performing well. We aren't providing guidance for 2025 right now, as we want to navigate the December peak season first, but I feel optimistic about our current position as a business. Despite various challenges, our team is executing effectively, which leaves me excited about the future.

Okay. Great. And then just as a quick follow-up. Mike, a little bit on capital allocation. Obviously, you have $600 million, $700 million of cash on the balance sheet. Maybe talk a little bit about the M&A pipeline and how you guys think about M&A versus buyback kind of given where the stock is trading?

Yeah, sure. And even following up to your other question. Obviously, M&A is an accelerant to what we just talked about as well as you look forward, not something we're including in those numbers. So I think if you look at just capital allocation, I mean, we put $70 million into investment in Q3, right, between Invoiced plus the buyback program. Again, we feel like we're in a unique position to be able to invest in our business still significantly, continue to evaluate and potentially execute M&A, and then be aggressive with our buyback. Again, the M&A pillars still hold true for us. How do we accelerate existing industry solutions we're in? How do we find additional solutions that we think can help drive NRR, further existing client relationships and upsells, and potentially where to expand into new industries or geographies? The challenging part is you've got to find a company that doesn't take you off your technology vision, doesn't take you off your growth and profitability trajectory, that culturally fits, and that actually has some level of logic in the way it wants to be valued. And you have to be able to execute all that when it comes to M&A. So we think we're in a great spot for it having pulled off the Invoiced acquisition, which continues to grow well in Q3, having done $23 plus million of buyback, and we're in a good position to be able to continue to do all three of those things.

And our next question will come from Tim Chiodo with UBS. Please go ahead.

This is Pat Ennis on for Tim. Thanks for taking the question. I heard your prepared remarks on the strength from the U.K. education vertical, which is definitely encouraging. Wanted to revisit the WPM acquisition briefly. Could you maybe just update us on where you are in terms of implementations there with the roughly 170 university and college clients they had? I believe the last we heard was around 55 clients as of Q2 2023? And then just as a follow-up, is most of the opportunity now there that remains on the domestic education payment side outside of growing with existing customers?

Yeah, this is Rob. I'll start, and others may chime in. So I think it's important to understand sort of what WPM did and what WPM didn't do, right? So WPM was helpful for us in terms of its ability to help us establish relationships with more institutions. But the business itself was essentially a relatively flat revenue business. All of the growth has come from implementing Flywire capabilities inside a set of institutions there. As we described all along, that was an evolutionary path where we expected we would start with the ability to do cross-border. We would move from there to being able to increasingly do domestic and it's gone exactly as we would have expected in that regard with the opportunity for us to keep going. So we've increasingly picked up domestic. We are implementing what we call our one-door strategy of trying to move more and more of the payment volume for each of these schools and continuing to bring new software capabilities from Flywire into the market. And so that is the sort of dynamic that has generated the positive results in the UK. So we're certainly increasing our footprint. My comment was that of the growth in this past quarter that two-thirds of it came from growing with existing clients, one-third from new clients, and we believe we've got lots of new clients to go and lots of growth to continue to achieve within the installed base.

And our next question will come from Nate Svensson with Deutsche Bank. Please go ahead.

Hi, guys. Thanks for taking the question. Cosmin, you talked a lot recently about focusing on things like free cash flow and profitability. And I guess in your prepared remarks, you mentioned sort of sustained GAAP net income goal. So I know it's early days, but maybe you could give us some thoughts on how you're thinking about disclosures or guidance across these metrics as we head into '25. And then kind of following up on JD's question earlier. If I think back to the 2022 Investor Day where you laid out your mid-term growth target, I don't know if you've given any consideration to maybe providing an update to the street on when you see normalized growth, particularly given all the moving pieces in the business in Canada and Australia, et cetera, just to help us draw a line in the sand with regards to the future growth profile from here.

Let me address your first two questions regarding free cash flow and profitability, and then I'll hand it over to Mike for the last part. Starting with free cash flow, we had a solid performance in Q3, and looking at the year, we believe we're on track to achieve net GAAP income profitability as we move into next year. We continue to grow revenue at a good pace and are increasing gross profit. We're also carefully analyzing every line item in our operating expenses and managing them with discipline while applying even more rigor to our metrics. When examining adjusted EBITDA down to free cash flow and net income, we're also monitoring stock-based compensation, which is a significant factor. As we approach the four-year anniversary of our IPO, we're in a reasonable range compared to our peers regarding stock-based compensation as a percentage of revenue. Looking ahead, we expect that percentage to moderate next year. We're effectively managing these components, which boosts our confidence in achieving GAAP net income profitability in the future. Regarding disclosures, we've started to provide more breakdowns this quarter, and you can expect more detailed forecasts linking back to free cash flow and GAAP net income. We're optimistic about how the year is concluding and our outlook for the future.

Yeah, just on the FY '25 and looking forward, obviously, not guiding for next year yet. But you should obviously be looking at this year. And there's no snapback we're expecting for a place like Canada, to kind of come back, right? So that in itself takes you off that 30% number as we've been clear about all year. And I think as we look forward, you can expect that to kind of improve over time from obviously the big reduction down in a market like Canada. And again, we think we're building a pretty great company here with strong Rule of 40 growth and profitability, and that's what we expect for the future.

That's great color, guys. For my follow-up, maybe we can talk about the education business from a higher picture perspective. Obviously, so much time spent discussing Canada and Australia, and obviously, a ton of focus on the U.S. and UK given the size of those markets. But I think Rob in his prepared remarks talked about the strength in emerging destinations. So maybe you could take a step back and talk about some of the areas whether you're currently in or areas for international expansion in the future that you're excited about that maybe could help accelerate growth rates as we think about Flywire's profile in the education business over the medium to long term, whether that's Europe, LATAM, anywhere else you're excited about?

Yeah. Happy to take that. In fact, really welcome the question because we talk so much about these couple of countries. But in fact, the education is a very global opportunity, and we are a very globally capable company with the ability to grow in many places. So we don't talk about the individual countries of Europe so much because individually, they sort of don't rank as high on the table. But collectively, that's a major market and an opportunity where we play very well. If you look in Latin America, we've called out in prior comments, in particular, our interest in Mexico. We believe that's a substantial market and believe we are building and delivering the right capabilities to continue to grow there. And across APAC, whether it's Japan, I guess we talked a bit about Australia, but a number of other markets there are all meaningful opportunities for us to continue. And again, it's the cross-border capabilities, it's the domestic capabilities in some of our emerging products as well.

Thank you. Appreciate it.

And our next question will come from Andrew Bauch with Wells Fargo. Please go ahead.

Thanks for taking the question. You mentioned that the third quarter benefited from more of the education volumes falling into the quarter versus the fourth quarter of last year. And I know some of that was timing around the weekend, could we get a sense of the size of that impact on what was in versus out versus the previous Q4 guide? And then my follow-up will be on the student financial software. I think the deck really lays it out on how you have this holistic approach. And could you kind of compare and contrast the monetization opportunity for institutions that are adopting student financial software versus those that aren't?

Yeah, so this is Mike. You can think of the low single-digit millions. It's around that $1 million or so, around that area that is on that crossover line. Remember, Q3 to Q4, you just have bill due dates that are out on that period of time, right? So that $1 million to $2 million is kind of this line that can cross into Q3 and Q4, just when based on the bill due dates are out, whether people are paying early or paying later for those bills. That's the same dynamic that exists for Q4 into Q1, right? And so as you go back and think of Cosmin's comments around the second half, it's really important to understand when we talk about that second half, you don't always know exactly how that's going to fall into Q3 or Q4. And that same dynamic exists for Q4 and Q1 right now. Our best assumption based on how we see those due dates coming out at our clients, but we don't control when people pay, and we don't control the bill due date for those quarters.

I can discuss the student SFS software and why we are excited about the opportunity it presents. This software acts as a revenue multiplier for the schools that choose to implement it. Schools that adopt the full SFS suite tend to generate multiple revenue streams for us, including software license revenue, payment plan revenue from students, and transaction fees from card payments. All of these contribute to our revenue and maintain healthy margins, which fuels our desire to expand our client base for the full SFS suite. It's worth noting that we currently have low penetration rates in our installed base, reaching only single-digit percentages, which indicates significant growth potential. We felt optimistic about the momentum and energy during our recent Fly Fusion event, where we hosted our first full customer event in the U.S., bringing together a diverse group of clients to showcase our capabilities and the comprehensive solutions we can offer.

Thanks for the opportunity. Thanks, guys.

And our next question will come from James Faucette with Morgan Stanley. Please go ahead.

Thanks very much. And sorry if you've already addressed some of this. I'm jumping around. But I wanted to ask in terms of your NRR and retention is that's obviously a massive component of growth, even though a lot of times that doesn't get the attention versus some of the other drivers. Can you just talk about how we should think about the composition of that revenue retention metric right now? And then how we should be anticipating that should evolve over 2025 and beyond long-term? I think that's one of the things that we get a lot of questions from investors on is the durability of that growth?

Let me address the second part first, which is about our net revenue retention (NRR). Historically, we've discussed our NRR and its performance range. We're pleased to report that if we exclude Canada and its effects, NRR for the rest of our business remains within our historical range, just above the 120% mark we've mentioned in past calls. However, including Canada will affect our overall corporate NRR, as anticipated, due to the specific impacts there. Nevertheless, the fundamental drivers of NRR are strong. Without the impact from Canada, the main factors driving NRR include our focus on client adoption, utilization, and best practices, which continue to be crucial. The activities stemming from our investments in agents and networks are performing well and we expect this trend to continue. Another key driver is our product expansion strategy, which we apply across all our verticals. For example, hospitals are utilizing solutions like Banner One and schools are engaging with offerings such as the Art Institute. This product expansion has always been significant and we expect it to remain a primary factor for NRR growth. Additionally, expanding our customer profiles often leads to capturing a segment of their business before gaining access to the full opportunity, which is a prevalent dynamic across our various verticals. We believe these underlying strengths and dynamics of our NRR will continue to thrive moving forward.

That's great. I wanted to touch on the topic of agents. We're hearing that many schools are increasing their direct engagement with them. How does this affect your use of that channel for driving growth? Does it make sense to collaborate with the schools on their increased engagement with agents, or is it better to operate independently?

James, it's Mike. There's a great opportunity for us. I mean, if you think of what Rob had talked about around the StudyLink asset as well as what we've done with agents and payment processing, it's a huge opportunity when it comes to how we're engaging our clients. As we said back in the StudyLink acquisition timeframe, we don't think its limits are in Australia, and there's other geographies in which that product will help schools better connect to the agent community and help drive more student awareness to their university. We think that's going to be a growing need in the market. And so we're excited to have those assets and are already doing it now.

We have time for one more question, and that will come from Andrew Schmidt with Citigroup. Please go ahead.

Hey, guys. Thanks for taking my questions. Good to see the stability and growth here. Maybe I could just go back to SFS. It was really good to see the stat broken out here. If you could just talk about whether you're seeing a higher attach rate on new wins in education, that would be great. And then going back to the base is obviously a big opportunity. Maybe talk about just how the sales motion there has evolved and if there's opportunity to just accelerate the growth and the penetration there. Thanks so much.

Yeah, this is Rob. As I mentioned in one of my comments, we are seeing some acceleration in the pace of those wins, and we're also doing things to try to further that acceleration. We have made changes in our go-to-market team. We feel very good about some of the talent that we have brought in, including sales leadership for that U.S. EDU opportunity. Of course, we feel good about our leadership in other markets as well. The second thing there is efforts like the Fly Fusion event are meaningful in terms of getting people to understand the opportunity. I think there are, for many, an understanding of what we do, but this was a chance to really present those capabilities way more clearly to an audience that can influence the pace of wins. So we feel we're doing a lot in that go-to-market set of motions to increase the pace there and continue to believe that we absolutely have the best platform and technology out there. And so our job and our intention is to go out and make sure people get that, and sign on with Flywire.

Got it. And then maybe just going back to Australia. I appreciate the comments on expecting moderation in growth. But just a finer point on that, does that assume that caps go into place in Australia? Or does it assume the status quo? And then obviously, a big offset, something you guys have leveraged over time is increasing penetration. It still seems like there's a lot of opportunity down there to continue to drive that. So maybe just what the assumptions are behind the moderating growth and then ability to improve the penetration on the other side. Any details around those items would be great. Thank you so much.

Yeah. Good points, both of them. So as things stand currently in Australia, the proposal has not been formally approved. We are working under the assumption that they will move forward with the regulations as proposed and/or that sort of that there will be some implication or impact of the way those regulations are being put forward. So that's sort of the underlying assumption there. But you're right, the other thing about Australia is it's a big opportunity for us to continue to grow. So there's our traditional cross-border business, there's the ability to present StudyLink, and we also have the capabilities that we acquired via Cohort Go. All of those are opportunities to continue to look for places where we can grow the business. StudyLink is a great platform, very popular in Australia and with continuing growth opportunities there and on Flywire core, lots of schools still to sign up.

That’s super helpful. Thank you so much.

And that concludes our question-and-answer session in addition to today's call. We want to thank you for attending today's presentation, and you may now disconnect your lines.