online. My name is Chris Kennedy. I'm a research analyst at William Blair covering the fintech and payments sector. For a complete list of research disclosures and or potential conflicts of interest, please visit our website at williamblair.com. Next up is Flywire from the company. We have the CFO, Cosman Pitigoy, and from investor relations, Masha Khan. The company combines software and payments. The company has diversified over the years. Initially, was focused on simplifying cross-border payments for international students, but it has expanded into domestic payments and other verticals, such as travel and health care, which I'm sure Cosman will talk about. So with that, let me pass it over to Cosman.
Thanks, Kristen. Great to be here again this year. Love the location. Love, you know, sort of meeting everyone here. So thanks for having us. So maybe I'll start with, well, actually, first the disclosure. So as you'll see on our page, any sort of non-GAAP disclosures are reconciled in the appendix. So now that we get that out of the way, maybe I'll start, for those of you who don't know Flywire, I'll start with just picturing two or three examples, which is one is imagine a student from India trying to pay their tuition bills in the UK. Imagine a travel operator in an African luxury safari trying to accept payments from several different payers from Germany. Or imagine you get your hospital bill and you're trying to figure out how do I pay this and how do I make sure both the hospital and the payer gets all of that money reconciled and on time. This is what this company does. It's the most complex and most critical type payments. And a little bit about myself. As Chris said, I'm the CFO here and I also manage a number of parts of the company, big beyond sort of the CFO of the data architecture data engineering team analytics the CIO organization and other parts of the org but I've spent you know over 20 years in companies like eBay PayPal and large companies and I came here because of the vision and what what Mike the CEO and the team have built which is very unique and special these are really the most complex payments you can imagine the largest but also solve a really real operational back-office complexity it is also as you can tell very passionate areas you know when you save money for that vacation or you save money for that tuition you know or or you're you know you're stuck with the hospital bill these are these are the most complex payments so I'll talk a bit about it today but that is basically our mission you know if i was to summarize it is to deliver those world's most important and complex payments and you know when people ask me you know you know why is this so hard it's because that last mile you know you can say well i've solved payments great but is it reconciled into a system of record uh have you made sure that you know you can transfer this much money in a regulated country across a number of different areas and so we've built all of that you know we're built for that complexity and that's what the team has done and so having been in payments and in e-commerce for a long time you always realize that uniqueness of that last step especially for large payments complex ones like this it is very hard to build and it takes a very special kind of culture to build it takes a very special company and so that's why I joined about two and a half years ago
So my mission joining the company was to help it scale.
We want to be, you know, over a billion dollars over time. That's our ambition and continue to be even more profitable and generate more cash over time.
So that is kind of how we think about the business and what I've sort of joined to do.
So a little bit about the business. We are in four different verticals. And what you'll see is they all kind of have very, you know, key similarities. One is they all have massive TAMs. Second, there's long-term structural growth to all of them, and there's that complexity that cuts across all of them. So first, education. That is kind of our, if you will, our origin story. And so education is not just cross-border, as kind of where we started in cross-border education, but now increasingly both domestic and cross-border. We are the only player in, certainly in the U.S., but globally, that does both domestic and cross-border education payments. Many do either one of those two things, but not at the scale, and we'll talk more about that in a minute. In travel, we think of it as both luxury or multi-day bespoke type travel, but also now we're in hospitality. So think of, you know, scheduling a wedding or an off-site event. We also manage those payments, which, again, have an operational complexity to it. And then the other two verticals are B2B and healthcare. So we are, you know, again, we've expanded into other verticals that look very much similar to the ones that we were in before. Now, so we've asked, like, what, you know, what do you mean by built for complexity? So think of it as the stuff that other people avoid, we really go all in, and that's usually that last mile. If you've ever planned a trip, it's easy to say, here's the itinerary. Okay, now who's going to go and actually book those payments and make sure that that payment gets the right, you know, end point. The same with education, you know, the example for the educational institution, it's one thing to say, we got the money for that tuition. We got it from the student. It reached the school. Now, who's going to book it in the back end? So we've built the system, and the team here built it for a purpose. So the global payments network that we built was because there was nothing in place. And, you know, as people say, well, isn't there a payment system in place? Not if you're trying to receive money locally in all these different countries, and you're agnostic to what type of payment you're willing to intake. just it was not there so the team actually had to build this locally build the global payments network so that's the first thing second again those of you been in payments for a while there's a regulatory complexity here that is not just today and it's been building it continues to build I don't I don't see the regulatory you know a framework that most countries have getting any easier anytime soon that just keeps growing so we've already built we're already built for that regulatory complexity and that's already a competitive moat and just going to continue building on top of it so with every regulation that comes out our compliance teams are our risk teams which some of them I also manage risk for the company it's it takes a day-to-day sort of tackle on the ground have having to have people in all these locations to really be able to execute within a regulatory complexity of a global payment network and then third as the the software integrations now if you think of all those verticals I just mentioned in each one of those there's a different integration or back end that you know any payment system has to actually tie into so think of for the most part we're selling to CFOs so they're selling to people like me who or ROI-focused, and so I'm going to ask, like, why should I invest in the software? Why should I buy your vendor management software? And for me, as we talk to the CFOs of these for all of our clients, they see the ROI, and we'll talk a bit about that. But tying into that system of record requires us to work with a lot of those vendors. So we have over 100 integrations into those systems of record. So whether you're a school or university in the U.S. or in UK or you're a travel operator, you have different ERPs and systems of record, our software ties directly into that. So you don't have to wonder once that, you know, your entire life savings shows up at the front door of one of these schools, what happens on the back end, you know, our integrations to that system of record matter. And that takes time. you don't build those integrations overnight those are relationships and that's again complexity that we're that we're helping these teams kind of you know move through a little bit about the network so a lot of numbers on this page but you know 240 countries the part that I like you know 6,000 corridors that we're that we've enabled and in 140 currencies and we are agnostic as hard to pay how you pay so you know you think about other players out there who you know are in the space everyone comes at it with their own kind of view they kind of have a hammer and you know hopefully the hammer works for every kind of nail we are sort of agnostic to what how you want to pay locally so we try to be very much local whether you're you know in any one of these countries so that's you know one of the things that obviously separates us from the rest but then we're you know we continue optimizing this network so we don't stand still continue building and and obviously this is one of the ways that we get scale and cost and infrastructure as you can imagine you know being able to manage and this is purpose-built it was not it's a regulatory grade and it's purpose-built for these types of large complex payments which is again a differentiator why we went so you know many people ask well explain to me give me some of the numbers like what are what are these cfos looking at when you try to convince them to um to kind of you know adopt your uh your payment solutions and and you can see here you know one obviously we were you know embed into those mission critical flows we're we're not there to just do payments we are embedded in those workflows so you can see um you know we have a lot of um you know across each of the different verticals we are integrated into the system of record and what happens is you have high 90s retention rate so once a client comes in and sees the kind of ROI and some of the numbers on this page you know kind of tell you these clients stay with us so I'll show you in the next few slides but we have very high retention it's rare almost that one of our clients actually leave us it's almost you know again it's it's kind of a rarity for us which again one of the reasons that attracted me to the opportunity is that our clients truly love us and so we remove that complexity so as if you're the CFO of any one of these or the finance department it is there's a huge savings you can see 40 percent fewer support inquiries you know hours saved and you know 30 percent drop in staff effort for a health care provider these are meaningful kind of impacting metrics if you're especially nowadays when everyone's looking for efficiencies we are that efficiency play for them obviously everyone wants to get paid we are focused on receivables as you as you compare us to other players out there you know there's payables and receivables we're much more the receivable side which again for a CFO for a finance department getting paid is kind of important so we do we do help with that with outside the 360 million dollars in collections and so again very very important part of the kind of the ROI and then we create that durable and expanding economics so again once we see someone come and you know start with us with one of our products they continue growing they stay with us and we have that kind of 90% plus you know retention of those clients so again one one of the ways we look at the business is how many of these clients are actually larger size and how long do they stay with us so just two examples here education and travel which is our two largest verticals you can see you know on education for example and if you define a large client is about a hundred thousand dollars of revenue in the last 12 months for us then you know for education that's about 90% of our clients represent that so and then for you know travel it's just over seventy percent and so those clients you can see fast-growing and they you know you can see at the top turn is less than one percent so it's almost it's almost you know we we almost have no turn at all with those clients so they stay with us they come in and they grow with us and why is because again we kind of keep building on a lot of the products the initial products products that that they come in so how does that work so let me illustrate with two examples again sort of travel and education so first for education if you hear us talk a lot about student financial software SFS it's our sort of way of saying you know going from having just one product with us we're having a full suite of products are going from a cross-border client to a you know full domestic suite of student processing so this is kind of the before so all read across every different team whether it's the students on one side the staff or their collections and then the IT team in the background obviously having multiple systems which you know as a CFO I can tell you I feel all of these you know as we as you manage and so we resolve all of those including the fact that you've got multiple systems to deal with so if you have a domestic software provider for your domestic students and then you have a different one and you know cross-border and you have something else for you know other parts of the different you know different parts of the you know education institution we combine that so vendor consolidation is sort of a trend that we're seeing right now I'm doing that actually at Flywire I'll talk about it a little bit later is simplifying kind of your vendor footprint is actually a pretty good way to save a lot of money but also simplify your IT IT department and stack in the back end so then what does this look like in numbers so just to kind of think about the the TAM here so I'll give you an example because this comes up I know all the time Chris asked me you know how do we think about the the TAM and the size the opportunity so let's talk about the US briefly but in the US you have about 4,000 or so kind of educational institutions we have about a thousand of them that have our cross border so kind of our origin story kind of products of about a thousand of them and then of those thousand we have about 10% of them that have now are kind of our more full suite type product so think of it as a 10% attach rate on those thousand now we have many ways to grow one we can keep adding more cross border clients and so you know you can see we've added you know some some you know in that cross-border business you know but we also the cross sell going from a cross-border client to SFS domestic full full suite client it reduces obviously a lot of vendor kind of you know expansion for them but also it means for us then we're able to get the even more revenue and margin from them so if we go from a cross-border client in education to an SFS client you have a three to five X kind of multiple in revenue two to three X on gross profit and so again we see good expansion it's obviously a huge a huge market for us to go after and that's just in the US outside the US there's less actual sort of you know ingrained competition it's a bit more fragmented so our product is even more differentiated outside the US so we're so we feel really good about kind of the education opportunity if you switch to travel briefly think of travel there's two different parts of our travel business one is the kind of the leg if you call it the legacy travel where we started which is that experience that luxury luxury experiential kind of travel that I talked about we made a acquisition last year certify which is more on the hospitality side so think of again hosting a wedding or an event and nowadays if any of you are going through an offside or wedding you're gonna find probably have to sign a bunch of forms you have to go through all sorts of workflows you probably have to send a wire or do some a bunch of uncomfortable payment opportunities we actually automate a lot of that so it's the same kind of idea where we take the software and monetize the payment so some of the reasons we win you know in our legacy travel and again it's all it's all the stuff that CFOs basically love to hear right it's better economics faster booking faster cash up you know reduce operational complexity on the certified side if last year you saw certify is actually ahead of plan in terms of payment modernization both our certified business and the travel business are growing 30% plus across the year so really strong growth you know above the company average and we see more opportunity there so you know we've already started some you know monetize a good amount of payments but we have another two and a half billion of incremental volume to to go after and then of course we have certifies mostly US so we can go international so a lot of opportunity for us to continue to capitalize on the synergies of the travel business which by the way the travel business now is bigger than what our US education business is where we started so again it's a it's a big opportunity to continue to diversify financial performance I'll just double click a little bit through this but over the last we went IPO 2021 since then we've basically tripled our revenues as you can see on here and also 5x to basically our our EBITDA so both revenue massive growth but also much more you you know, not just profitable on an adjusted EBITDA basis, but actually gap net income profitable. So this year, going from last year around $13 million, gap net income this year, we've said, you know, we're going to three to four X that number. So as we maintain also our dilution quite low. So, you know, sort of real gap EPS growth and free cashflow growth for this business, which is again, coming in, this is kind of the inflection point that I see is the quality of the growth is now equally important to kind of just the growth itself and so it is a great time to walk in as CFO and be able to build on that story and so with that again I think you look at OPEX and so we've made some progress in across all three different areas we're seeing productivity but we can do a lot more so sales and marketing R&D and then GNA all areas where we can obviously continue to drive productivity even before some of the AI kind of capabilities that have now come out in the last six to nine months we saw you know but even more so with that so so maybe in the last ten minutes or so I'll talk through a bit of this transformation effort and journey that we started as a company so when I came in as I said one of the things that I was tasked with is to say listen how do we get to billion dollars or more of revenue but become even more profitable and you know more productive and so as we look as you think through like any company that grows at the rate that you just saw that you're growing organically or through acquisitions you end up with you know a number of systems a number of processes that are usually suboptimal and the data architecture that is usually not necessarily the most efficient if you know So you can imagine every domain in the company creates their own versions of kind of versions of truth. And it's all well intended. And as you buy companies, you end up with different vendors. All of that, every company that's growing fast, anyone that tells you that they have not experienced that is probably not entirely truthful. But having been through those growth phases, that's just kind of the natural sort of opportunity. So how do you fix all that? Well, we fix it the way we've taken the approach, even with our clients. We go where the hard stuff is, which is, and you can see here in the stack, you start at the bottom, and you have to redesign end-to-end processes. You have to redesign, and not just the process, but the people who are doing the process. You have to kind of rethink your organization. You have to rethink how you define every part of the business. And so that's where we started. so we started on this transformation journey internally we call it project adapt but it is basically a multi-year transformation we started late last year and it's you know it's going to be kind of ongoing but it is a bottoms up full redesign of kind of our process our systems and then our data ultimately but also organizationally you've seen us announce a number of organizational changes around it so how does that help you so if you think of systems so right now if you have several different systems for HR tools for example you have several systems for finance you've you know probably acquired and you've built a bunch of you know different you know Salesforce support systems bringing all those together and creating a unified system across actually is a very powerful tool not just for today but But having done this even 10 years ago, before you had AI agents, imagine being able to build something that an AI agent can navigate at scale. It's not just a new employee or an existing employee that becomes more efficient. You now create basically a record book and a sort of data catalog for an agent to navigate at scale. So every question suddenly you go from insight to action automatically, whereas in the past You sort of had to go, you know, the CEO would ask a question of somebody, somebody would have to go to someone else to find that data and then figure out reconcile three or four different systems and make sure it's right. You kind of start to skip a lot of those levels in the decision making process and so that's what we're doing. So I have this term that I've used for a long time, democratizing certified data, which is imagine a fully detailed data catalog where every definition of every product and every kind of you know any any metric dimension in a company is well defined in terms of your metadata any clients and or so any data is available at scale so now everyone from the CEO to the most junior person in the organization or an AI agent can navigate that and you get an answer pretty much automatically so pretty excited about that and so that's one of the areas that will impact all different parts of the company so the way we think about it impact is across sales and marketing R&D and product in different ways so if you think of sales you should see you know revenue per rep grow you should be able to identify who's your most productive rep what products should they work on in which areas in which markets, even faster. In R&D, you can innovate faster as you can imagine. We've got Claude now for a lot of folks internally. I am the AI exec sponsor. So I actually now code on weekends. You know, it is if you're not having fun with that yet, I can tell you I am my family hates it a little bit. But I do spend a lot of time coding and I've sort of said you know sort of rediscovered the joy of building multi-user apps and so thanks to thanks to cloud for that but I can tell you my team is feeling the pressure and the CFO is coding up multi-user apps based on you know structured and unstructured data it definitely creates a culture of innovation so it is fun to see everyone kind of suddenly the level of innovation in the company is sort of accelerated with that so we're excited about that and look we're obviously we're going to measure ROI. I'm the CFO, so I'm going to look at all this in numbers, but I can tell you the upside is huge from just sort of building that innovation flywheel internally and the productivity flywheel together at the same time. It's really quite exciting. Capital allocation, just to touch on a few things. Not much necessarily changed here, So we're still investing in organic, you know, so organically investing. So whether it's go-to-market growth or the product and R&D, so the SFS or domestic expansion, or you've heard, you know, this transformation project that we have. So all of these are really exciting organic investments that we're going after. And then on the share buybacks, if you look over the last two and a half or so years, we've pretty much spent majority of our cash free cash flow on buyback so we remain you know pretty you know you've heard our ceo say that our biggest opportunity right now if you look at where it's dislocated is our own you know still our own stock so we've been buying back our stock actually we just finished our 50 million dollar buyback commitment that we that we made in earnings so that was that was something that we're done because we still see that see the dislocation and we'll continue to see the opportunity there. So, and then look, we'll look, we'll continue looking at M&A. Obviously the market is still feels, there's, you know, there's some opportunities there, but we're really focused on execution and what we have on our plate right now. So, in closing, you know, I won't go through this slide but huge change from IPO to today. But I would say if I was to draw this slide for another, you know, four or five years, it's going to be even better. So I think we're building on top of true financial quality of growth. We're more diversified, more profitable. We have now consistent free cashflow kind of generation. And again, diversified in a way that even in prior years, we were not, you can see we're more and more diversified with really strong growth, but strong sort of high quality growth, which is, if you look at just in terms of colors, travel 21% last year, and that's again, just we didn't even have a full year of the certified acquisition. It's bigger than that U.S. education at 18% share of the business. And you can see the growth rates, everything's growing quite a fast rate. And this year, again, we're seeing strong growth in education, Despite all the macro noise and all of that, we still see sort of, you know, we saw last year's 12% growth in education, which is sort of our legacy business this year's, you know, not very different from that. So seeing continued growth in education, but in the rest of the businesses, you can see B2B growing at 100%, travel, again 100, but if you actually unpack it, it's about 30 plus percent individually between Certify and our core business. so really strong growth across all of these but the part that we're excited about is and I'll maybe leave you with this is just again that solving that complexity that operational complexity is what differentiates us so it's the stuff in the middle that's the best it's kind of like yeah sandwich we are we are that special sort of sauce that is in the middle that kind of solves that operational complexity with all the stuff that I talked about, the compliance, the FX, you know, handling the FX and settlement, the integrations into the URPs, and being that connection between the payer and those very, very special cases where, whether it's your travel, you know, money that you saved, or where it's the education, you know, all those are key. Obviously, big points in time for people, and then the client obviously gets all the benefits from us. So really, really differentiated, solving complexity with higher financial quality. So thank you. Appreciate it. Appreciate the time.
Great. With that, we'll end it there. There is a breakout upstairs. Thank you, Kazma.