Q3 2021 Flywire Corp Earnings Call

Thank you for standing Boy. This is a conference operator welcome to the Flyway a corporation third quarter of 2021 is that his call. As a reminder, all participants listen only mode. On the conference is being recorded after the presentation there'll be an opportunity to ask questions. During the question cute he may presto than the one on your telephone.

Keep that Genie.

You need assistance during the conference call you May signal al Qaeda by press install in there now.

I'd like to turn the conference over to the Keelhaul is a V P. A natural talent and analysis.

Please go ahead.

Thank you and good afternoon.

With me on today's call, our Mike Massaro, Chief Executive Officer Robert.

Rob or go.

Didn't and Chief operating officer, and Mike M S Chief Financial Officer.

A third quarter of 2021 earnings press release supplemental presentations and associated form 8-K can be found at I R Dot flower dot com.

During the call we will be discussing putting forward looking information.

Actual results could differ materially from those contemplated by these forward looking statements.

We also will be.

<unk> financial measures.

Kids are going to Ah press releases filings for more information on the list.

And statements.

Risk factors associated with our business and.

And required disclosures related to non-GAAP financial measures.

This call is being webcast live and will be available for replay on our website.

I would now like to turn the call over to make myself.

Thank you appeal and thank you to everyone that is joining us today on our Q3 2021 or and each call. Our second is a publicly traded company.

We truly appreciate all the interest so many of your showing Chihuahua and getting to know our business as of recently listed public company. The third quarter was another strong order for fly Rob.

Rob or go and my jealous will go into great detail later on but first let me start with some financial highlights.

Revenue less ancillary services year over year growth was 67 per cent with total payment volume, increasing 76% compared to Q3 2020.

This growth was driven by our successful landed expand strategy in the U K.

A strong U S education growth.

And a quarter and the easing of travel restrictions around the world, allowing more travelers to begin to take those long awaited leisure trips.

[noise] adjusted EBITDA for the quarter was 17.6 million.

Which is an increase of 7.4 million or 73% from last year's third quarter. Another great results are truly shows the strength of our unit economics.

These great results this quarter had been driven by the continued execution up on multiple growth strategies across industries and geographies.

Our performance. This quarter is also due to the commitment of over 600 fly mates around the world who work each and every day to deliver value for our clients. We are so fortunate to have these amazing fly mates, who continue to stay focused and execute exceptionally well in this complex world.

R Q3 results further validate what we've discussed along our journey to become a public company yearly six months ago [noise] first there's a strong need for flowers powerful combination of software and payment capabilities, especially for high Stakes high value payments.

Second the core markets, and which fly wire operates provide a massive opportunity for longterm growth industries like education health care travel business payments are massive parts of the global economy, representing nearly 12 trillion of addressable market.

These sectors are complex they've been poorly served by incumbent payment solutions, providing fly where a great opportunity to modernize the payment flows within these sectors over the next decade.

That's why why are our mission is simple we help our clients get paid and their customers pay with these from anywhere in the world.

This combination of software technology platform and payment network.

Or fly wire advantage is truly a differentiated offering that uniquely positions fly wired for success and these massive addressable markets.

With flour, our clients do more than just track money and collect payments they integrate our software into their existing back office systems and processes, just blaze fly wire functionality to their customers via their web sites and mobile applications.

Will ever great payment experiences with value added services like modern invoice presented flexible payment plans seamless local and global payment method and much much more.

So while clients benefit from operational efficiencies. They also are able to delight their customers with a digital engagement platform throughout the entire payment experience.

We've been at this for more than 10 years and in that time, we've achieved significant scale and reach as of quarter and.

We accept and settle payments and over 240 countries and territories and did over 140 currencies today, we deliver some of the most important and complex payments for more than 2450 customers around the world.

And as many of you have noted our business has numerous defensible modes, such as are deeply embedded industry specific software are proprietary global payment networks that enables fly wire to mitigate the complexities around move onto money for our clients.

And our unique go to market approach, ensuring that we have to go a great team of experts from the industry that we serve engaging with our clients and our prospects.

We believe the next decade will bring a wave of digitization across the industries, we serve and that flight wires uniquely positioned to lead this trend with our powerful combination of software payments and our people.

Not only do we believe that fly white is uniquely positioned to the market, but we continue to see positive trends in the industries, where we operate ineducation, where we serve private and public universities colleges boarding schools language in vocational programs all around the world, we see strong demand for our solutions providing flexibility.

To students families to pay their tuition and fees overtime and with a preferred payment method is truly top of mind for institutions.

And two three or education quiet saw continued returned to normalcy as vaccination rates increased and students returned to campus just supplied to international students as well.

This summer even with the uncertainty around the Delta variance American consulates issued almost as many visas for international students as during the same period in 2019.

In this positive macro environment for education domestically and internationally, our software continued to drive value consistent with our company's thesis in focus.

In a recent survey of finance professionals at U S education institutions conducted by payments Dot com more than 80 per cent of Bursaries at four year universities said flexible payment plans tailored to individual students can be attractive alternatives to traditional paper based payments or.

Our strength and our domestic solutions and the global nature of our education business physician goes well for the future.

In health care, providing more consumer friendly and digital first payment options continues to be a priority for hospitals and health systems. We recently commissioned a survey of more than 2000 consumer patients in the United States are data found that 65% of Americans, who paid their medical bills online for the first time during the pandemic.

Plan to continue to make payments online going forward.

In addition to the great benefits for consumers streamlined payment experience can have a dramatic impact on the financial help the hospital or health system. We've.

We recently completed a total economic impact report with Forrester research to measure the return on investment of deploying fly wire. Their research found it fly work and help our clients achieve 318% R. O Y over three years and see a payback period in less than six months.

Our travel clients continue to see growth as borders open back up and restrictions east.

United States announce it is reopening to fully vaccinated air travelers from around the world starting in early November and bigger band that's been in place for 18 months.

In addition, the United States also said it will lift restrictions for travelers in from Canada, and Mexico, allowing fully vaccinated for nationals to travel ending the ban on non essential travelers that was in place since March 2020.

As we approached the holidays are recent research suggests the travelers plain to spend more money and stay longer.

In a recent survey of more than 800 frequent travelers, 65% said, they would expect to take a longer vacation than usual post pandemic.

75% said, they will seek a remote destination.

But they would not be around large groups of people.

And dinner BTB business, where we support technology companies as a key target subsegment, we're seeing demand for our solutions as more businesses realize the digital payments are an integral part of the customer experience at our recent fly wire forwarded it 42% of business responded cited improving the customer experience at.

The top payment strategy priority for them, followed by automation security and international expansion.

Speaking with the fly water afford event, we were so glad to see so many of you at our inaugural event, where we brought together business professionals for a wide variety of industries as well as leaders in Fintech in banking to discuss the future from payments to crypto and much much more it was clear from the event the digitize paint.

Ants are becoming table stakes across every industry no longer just in retail antique Congress. The feedback from me event was very positive in our team is well underway and planning similar events in the future.

I would now like to turn the call over to Rob Wargo, Our President and C. O O to review some operational highlights from the quarter in the context of our growth strategy.

Rob.

Thanks, Mike and good afternoon, everyone as Mike indicated in his opening comments, we had an excellent Q3 are results. This quarter reflected continued execution of our growth strategies.

Summarize the quarters success before going into some details revenue grew across each of our vertical.

New clients signings were strong with 94, new customers in the corner.

And we were successful in hiring bringing our year to date total hirings over 200 climate.

Adding a globally distributed and highly talented group to the company.

I will now go into a bit more depth on the dimensions of strength across our growth lovers in Q3.

To begin we continued to see growth with our existing clients.

Net revenue retention has rebounded strongly into three and for the year to date period, achieving levels at or above our performance over the last three years. This strength in N. R. R. Let's our success with our clients as they recover from the pandemic as well as the value of our brought products weep.

One example of this in the quarter was moving Manchester Metropolitan University or M. M. U from our cross border solution, which was implemented in 2016 to deploying a fully integrated software suite to improve efficiencies across the campus and.

And M U based in the United Kingdom has over 30000 students. This is our first full sweep fully integrated solution in the U K and we are providing broad and deep functionality that spans from online payments monthly payment plans accommodation payments and deposits E stores and also supporting their on campus.

[noise] met cart, we're managing all domestic and international payments for M. M U.

The ability to meet our clients needs from simple integrations two are powerful so sweet solution, including the full breadth and depth of the M. M use solution illustrates how fly wires platform lots of serve and grow with our clients.

Obviously, we appreciate forward thinking universities like and then you that are driving new innovative ways of working.

And U S higher education, we've expanded our presence at northeastern University really edition of payment plans for both international and domestic students. This top 50 University. According to U S News and World Report was originally signed as a cross border client in 2016, and we are pleased with our expanding relationship with them.

With this great added incentive capabilities were supporting.

To illustrate our ability to expand with clients in our health care vertical fly wire is deployed broadly across the banner health system, including 30 of banners acute care hospitals, 50, urgent care centers and hundreds of health care centers and clinics.

Banner health is using fly wires Preservice point of service and post service solutions, allowing their patients to pay their medical bills easily in this quarter. We've expanded with banner help to include their 16, Wyoming locations, including two hospitals in 14 clinics and expansion, we expect will help more better patients.

And also delivered great results for banner.

And are emerging Btb's segment, we have benefited from the expansion of our clients as they recover from the pandemic and as they increase their use of our services. For example, an existing advertising technology client has recently committed to use fly wire as their single digital accounts receivable solution for all customers after beginning with our.

Ross border solutions. They are now rolling out our domestic receivables capabilities. Our expectation is that this will allow us to increase our revenue in this account, while providing a high RLI service and simplifying their accounts receivable function.

As we move to our second growth lover. We also continued to with new clients at a rapid rate the quarter was especially strong in education and travel representing the majority of the new clients in the quarter.

And travel we have continued to invest in client acquisition. Despite the impacts of Covid and are especially happy to add clients like Nordic visitor, which is a large D. M C. In Iceland, where we completed an enterprise level deployment. We replaced all payment options are now the only way to pay Nordic visit her.

Another travel when during the quarter was a large residential accommodations company in Australia, and New Zealand, highlighting the segment breath and global nature of our travel business.

We added many new clients in the education space as well, including wins across multiple geographies. An example of competitive when is our exclusive agreement to manage cross border payments for the University of Portsmouth, a top ranked university in the UK hosting about 25000 students, including around 6000 and.

National students.

We also recently went live with a cross border product at Vanderbilt University, a top 15 University. According to U S News 2021 report.

Located in Nashville, Tennessee, The school has a student body of about 13500 of which approximately 1500 students are international.

Our ability to process, both foreign currencies G U S dollars as well as domestic wires were important and securing the client.

And our <unk> segment, we continue to build momentum, we're finding great interest in our ability to help the enterprise simplify accounts receivable get paid faster and reduce the cost of the entire receivable process.

Based on acceleration, we're seeing it in B b, including a strong start to signings and expected a R. R. In queue for we are continuing to expand our investment in our team and our pursuit of beta be opportunities.

In total we added over 300, new clients year to date as of September 30th with continued success and all verticals in Q3.

As we move to our third primary growth lever our channel partnerships also continue to be a great source of growth for the company.

During the quarter, we announced our new partnership with standby, formerly known as Ontario systems, a leading provider of enterprise work flow automation software for accounts receivable management.

<unk> focus is on accelerating revenue recovery and health care business and government markets for context.

It drives results for over 600, a hospital networks, including five of the 15 largest systems in the US while also serving eight of the 10 largest accounts receivable recovery companies. They also serve numerous state and municipal governments across the United States as a result of the partnership Finbar's health care customers will have access.

To a new digital patient engagement solution powered by fly wire all as part of an integrated solution was bitten by then will help increase health care receivable collections at decreased cost.

We're also thrilled with our server partnership and currently have multiple healthcare clients in late stages of integration through that relationship.

In addition fly wire is this years winner for centers partner collaboration no more which is in recognition of our ongoing collaboration westerner and for our successful contributions to ongoing partner and sales support.

We also continue to add partners around the world that are providers of core student information systems and the education space. We signed a partnership agreement on are actively launching new client integrations with adapt prior.

Primary student information system in South Africa.

This increases our number of global partners and integrations into education space, just 35 at the end of the corner.

Lastly, we continue to see a large and significantly underserved opportunity for clients internationally that can benefit from our services.

During the quarter, we expanded our education services to add initial clients and hungry in Thailand, as well as continuing to build our presence in Latam, where we've seen growth in terms of traditional campus based higher education as well as some very exciting Latam based online focused education providers.

As you can see on top of the encouraging trends, Mike mentioned earlier, when you're enjoying success across all areas of our business.

I would now like to turn the call over to Michaelis, our CFO to review our results for the third quarter and guidance for the remainder of the year.

Right.

Thank you Rob good afternoon, everyone. Today I'll be discussing are non-GAAP financial metrics for our third quarter of 2021, including revenue less ancillary services adjusted gross margin and adjusted EBITDA for our financial results prepared in accordance with U S. Generally accepted accounting principles. Please read the financial statements included within our earnings release.

In a Form 10-Q when filed with the SEC.

Revenue loss Angela services for the quarter was $62.0 million, which represented a 67% growth rate compared to the third quarter of 2020, which was driven by an increase in our total payment point as.

As a reminder, Q3 and Q1 are historically, our strongest quarters of the year.

This revenue growth exceeded our expectations due to very strong performance across the business, including all of our vehicles and across all of our major geography's. While the business was broadly strong we'd call out in particular, the strength of our U K and U S based education business, which benefited from excellent performance from new clients launched so far during two.

Thousand and 21, and and an accelerating recovery from Covid across higher education. In addition, we continue to see improvement in the travel industry benefiting our clients and our revenue.

As Mike mentioned, we processed 5.3 billion in total payment volume during the quarter, an increase of 76% from the 3.0 billion, we processed during the third quarter of 2020.

We experienced revenue in total payment volume growth across all regions when compared to Q3 2020, and we achieved strong growth in both transaction and platform and usage based payment volume and revenue during the quarter spit.

Specifically transaction revenue increased 76% compared to the third quarter of 2020, driven by a 92% increase in transaction payment volume.

Forming usage based fee revenue increased 32% compared to the third quarter of 2020 due to a 52% increase in platform and usage based payment volume.

Adjusted gross margin was 71.9% for the quarter, which represented a decrease of 90 basis points compared to the 72.8% reported for the third quarter of 2020.

So this was an increase in adjusted gross margin on a sequential quarter basis. This decrease in comparison to Q3 2020 was due to changes in our revenue mix and smaller ethics gains in Q3 2021 compared to Q3 2020 in the aggregate we generate a very strong adjusted gross margin given the 67 <unk>.

Sent revenue growth achieved during the quarter.

We manage our business based on three key performance indicators revenue less ancillary services adjusted gross margin and adjusted EBITDA and we are pleased with a reported results for the quarter.

While not a T K P. I revenue less ancillary services as a percentage of total payment volume was slightly lower in Q3 2020, driven in part by two reasons number one payment method mix, where bank transfers were more widely used for transaction payments and number two or expansion within domestic education consist.

Isn't with our strategy, a winning more domestic clients within our platform and usage based revenue stream.

Changes in payment method mix as well as changes in vertical mix payment size and currency pairs processed may impact the percentage obtained from quarter to quarter when dividing revenue like ancillary services by total payment volume set another way those changes are outputs, reflecting the composition of the business in the quarter and that percentage will be impacted by what.

There and how we grow the key point is that our platform and proprietary global payments network allows us to support many payment types for several verticals across many currencies that all have strong economic supply water.

Moving onto operating expenses technology and development expenses were seven $8 million, an increase of 28% over the 6.1 million incurred during the third quarter of 2020.

This increase was the result of our hiring activities. During the trailing 12 months ended September 30th 2021, where we increase the number of flying needs within our technology and development departments by 31%.

Selling and marketing expenses were 12.5 million, an increase of 64% over the 7.6 million incurred during the third quarter of 2020. This.

This increase was primarily due to a number one are hiring efforts as we added 48, new fly inmates within these departments. During the trailing 12 months ended September 30th 2021 and number two.

Your sales commissions due to a favorable revenue results.

General and administrative expenses were $14.7 million, an increase of 60% over the 9.2 million incurred during the third quarter of 2020.

Many factors impacted our general and administrative costs incurred during the quarter, but the primary factors included are hiring activities incremental costs associated with operating as a public company, including professional services and insurance costs and charges associated with stock based compensation.

Adjusted EBITDA for the quarter was $17 $6 million compared to the 10.2 million generated during the third quarter of 2020. This improvement was due to the contribution from our incremental adjusted gross margin driven by the 67% revenue less ancillary services grocery realized during the quarter, partially offset by increased compensate.

Related costs as we invest in our technology product and sales and marketing teams as well as increased cost associated with operating as a public company. This exceeded expectations due to higher than expected revenue growth that stable margins.

Moving to the balance sheet with respect to capitalization as of September 30th 2021, we had $449.1 million in cash and cash equivalents and $25 9 million in long term debt as of September 30th 2021, we had $104 9 million shares of common stock outstanding.

Based on our financial results for the third quarter of 2021 and current trends we are updating a full year of 2021 guidance.

For 2021, we expect revenue less ancillary services to be in the range of $174 million to 176 million and we expect adjusted EBITDA to be in the range of $22 million to $24 million as with prior quarters. This range assumes no further unforeseen COVID-19 related impacts, which could influence the remainder of 2021.

To summarize we had a very strong quarter with respect to our revenue growth, which we achieve that stable adjusted gross margins. We were pleased with our ability to generate 17.6 million and adjusted EBITDA during the quarter, but we will continue to pursue growth opportunities and invest meaningfully and future quarters to drive revenue growth I would now like to turn the call back.

Over to Mike to wrap things up before taking your questions.

Thanks, Mike we believe here at fly wire that we have a clear and compelling value proposition that will continue to help us with we've built a business that has exceptional unit economics highly defensible business model and we could not be more excited about the future.

We'd like to wrap up by thinking over 600 fly mates or team members around the world. We have an outstanding group of people made even stronger by the over 200, new additions that have joined us so far this year.

Global nature flexible work environment, and fast paced growth positions as well as an employer of choice in this challenging choice.

We continue to be able to hire amazing tell it around the world representing many cultures and backgrounds. We all deeply believe in our mission to deliver the world's most important and complex payments.

With that I'd like to turn the call over to the operator for questions operator.

We will now begin the question and answer session to join the question queue. You May Presta, then one on your telephone keypad, you'll hear a tone acknowledging your request.

Speaker phone please pick up your handset before pressing any keys to Victoria question piece <unk>, good too will pose for a moment as cold as join the queue.

The first question comes from Bob happily with William Blur. Please go ahead.

Hi, Thank you very much and congratulations on.

Great results.

Well done so.

So.

Just looking at the profitability that you generated.

In the quarter and as we think about 2022 and 2023 I mean, you're well ahead of Ah any expectations that we had I think for the full year of 2023, and I know the third quarter as a.

Seasonally stronger quarter for you, but how should we think about.

The the the profitability of the business.

Versus investments, obviously, you ever performed and I know you are investing aggressively for growth how should we think about balancing.

Can the the cheek.

Yeah. Thanks. Thanks, Bob This is Michael go first.

I I'd say, a few things one obviously again, it's a great great quarter results and you see the flow through through the business model.

Which again, we're really proud of one thing I just highlight we are looking for growth investments pretty much everywhere you see the number of flights were hiring we've aggressive hiring plans throughout the year and into 2022.

So we're looking for those grilled levers continually expect us to pull the trigger on those.

At the same time, it's a very healthy business. So.

Expect us to keep investing in growth don't expect us to be transitioning to to focusing on EBITDA.

It is and where we're going to go it's going to be continued investment within product within go to market.

With across all industries across all Geography's. So I I would say that's the best best we can give you obviously happy to share more with more details later.

That maybe a follow up to just so in in the education business M. M. You you transferred your transitioning to domestic test, Texas, a and M. Northeastern.

On when we think about clients the revenue per client what does Ah I guess incrementally on those education clients. When you make that type of a transition what does that mean to revenue and then can you give any color on like the average revenue per client by segment or just some color on how people.

Will we get that question, a lot and how thinking about modeling your business and.

The client growth in revenue per point.

Yes, hi, Rob here so thanks for the question.

What you see it from the expansion of domestic in these accounts is a real revenue multiplier for us. So we as you know when we're serving in the cross border capacity, where only serving.

Some percentage of relatively smaller percentage of the overall population on campus. When we moved during the domestic we have the opportunity really to serve the entire campus community and that really resulted in a revenue multiplier for us as they take advantage of things like the payment plans and the other capabilities that we that we extended the university. So it's a revenue multiplier.

For US you see the revenue per account go up very meaningful.

Yeah, and Bob the only thing I would add to what Rob said is just really encouraged by what we're seeing in pipeline as well right. These new capabilities that we didn't have years ago right. That's what's helping drive that great and there are a number that we've talked about before.

Great. Thank you congratulations.

The next question comes from Dan, calling with all P. C capital markets. Please go ahead.

Thanks, and good evening, everyone and fantastic results I had a question on education in particular.

Really trying to understand I get parse out the difference between how much of the outperformance came from the education vertical that's really just bouncing back and I guess, partially are we at Normalised levels look at going back to 2019, which it sounds like maybe we are based on the visa comment versus.

Versus kind of the incremental new cohorts or extensions that maybe you were just even talking about on the domestic side with Bob.

But there's this is Rob speaking.

It's really a very healthy combination of both again it was a great quarter performance in the education vertical as well as across each of the vertical if you hone in on the education piece, what you'll see is that we are benefiting from very good growth in the new clients. So you'll you'll see is that they are.

Performing very well north of 20, and even the 21 cohort are contributing meaningfully to the success that we just reported for the quarter, but if you look back across all the cohorts and as you know, we often talk about the cohorts going all the way back several years. Those cohort also grew very well. So I think what you see here is both a combination of.

A an environment as it relates to Covid that was better than the environment that we might have anticipated many months ago in terms of the ability to get students on campus in fully participating but what you also see as the success of our execution in terms of bringing more students.

In contact with different aspects of our platform different aspects of our software and with that you are seeing sort of I think really strong execution by our teams and serving those clients and with that both the client's benefit them threw it away again.

Again, the only thing I would add to that is just you're also seeing parts of the world that still are.

Still aren't back right. So if you look at places like Australia, and New Zealand.

Just coming out of some of the pandemic across Asia Pacific.

Even parts of Europe, So again.

I think if you look at geography as you can also look at Subsectors right remember our definition of education is quite broad so not only higher education boarding schools, but also vocational and language programs. Those shorter term programs right. They still haven't come back fully right. So I think I think our belief has always been 21 into 22.

It is you're going to see things come back by geographies and by industry in sub sector and continues to be true for us.

Yeah, No that's great to hear I wanted to I wanted to just go back to the EBITDA margin expansion of the flow through a commentary I mean, the original guidance I think it was four to 6 million you guys are not call for 22. The 24 I mean, it was a very impressive quarter. The question is.

When you have these periods of kind of Overperformance.

Is it just that I know you want to invest for growth, but there is a certain level of investment that would be required to kind of.

Tamp down the flow through and your model and I'm, just wondering you know [noise].

Is there anything that you are seeing that would suggest that this investment.

Cycle that you want I can a ramp or is going to meaningfully increase in the near term or should we kind of expect you know some of this outperformance to the extent that your payment volumes in your top line continue to outperform thank you.

Yeah, I'll start and then maybe hit it over to Mike Ellis, So I'd per se look at that look at the plan a number a record number of primates added a whole bunch more positions out there being added.

As you know as you mentioned.

Great kind of humid economics that floated by through the business.

But but look for us to continue to invest aggressively in hiring right that is go to market that is product engineering go to market isn't just sales. It's also client service again connecting to that and are are that we've talked about getting customers to do more with us.

So I would say that by far his biggest investment area, but I mean across.

Things like marketing is a huge part of go to market right a lot of the skill sets. We learned in the pandemic around digital engagement those are areas, where we can continue to invest more and more.

And and continued to just do more right. So there is just kind of opportunity everywhere to do it but for US it comes down to people and that investment to go faster, but unlike anything you've done anything I would add is that the ramp that we're really talking about is really occurring starting in Q2 of this year in Q3. So we're just starting to make these investments and what we found.

Is that we are able to really hire some really talented people and I think Rob said approximately 200 people that we brought on this year, which is the majority coming in and Q2 Q3. They are just starting to get ramped and we're ramping our talent acquisition team. So my perspective is that the good result that you're seeing isn't predominant driven by driving revenue growth add stay.

Well adjusted gross margins and the smaller point the back is actually the the cost savings that we're seeing by maybe not is investing as quickly as we wish we could but that's going to.

Reverse itself I think very quickly coming into Q1 of 2022.

Got it thank you.

The next question comes from Darned pillar for Wolf Research. Please go ahead.

Thanks, guys, a nice job, but can we just follow up of it on the on the education side first affirmative given what you guys are seeing in terms of the cross border dynamic and borders reopening again, I mean, you talked about how there can be more than 22, but love to get a better sense of what you think would be the opportunity that's coming from not.

New customers per se in terms of the universities, but actually the cross border momentum on students. Even if we were back to 19 levels I imagine we normally should've been totally above that so what do you think is the normal run right. We have upside for azo as borders reopened putting aside just the typical growth of the business and then also in the current quarter.

I know the net retention number was strong for the when you look on a trailing basis, but if you can give us a sense of how much of your growth in right now is coming from your existing customers landed expand model versus new customers would be great.

So obviously it was a it was a great quarter across the existing customers. It's a great quarter in terms of N. R. R. The underlying sort of.

Momentum drivers for that or a couple right. So you ask the question what's going on in sort of the student population generally in cross border blows certainly this year saw a return relative to last year, but if you look at the trends across the industry some of which Mike mentioned in his comments. They are still very favorable for expansion of cross border.

<unk> for learning for students right and again going back to Mike's comments.

Remember education as broadly defined vocational schools technical schools language learning summer programs and the like and the second thing being that not all geography's have opened up yet there are still significant portions of the world, where where travel is not returned the idea of welcoming internet.

Special students is still not sort of opened up the way we've seen it here in the us and so we see macro trend of increasing appetite and passion for growth in student.

Students studies and then let me see this opportunity there'll be specific to the regions in the segments that we also see as opportunities.

Okay, I mean in that in terms of the magnitude of upside in 22 versus what you would normally expect to see just based on reopening the borders are opening or any any sense directionally.

Hard to put a number on that but I think what we said all along was that we expected and anticipated that this year would see a meaningful recovery towards normalcy with that normalcy being achieved in 2022.

We saw essentially very much along those lines right. We've seen a return to normalcy in a number of places, although I think still not all the way there and then certain markets that are in segments that are meaningfully behind and those will hopefully have a chance to be significantly more normal next year as well. So it's still a lot of still a lot of upside opportunity okay.

Thank you just very quickly on the health care side I mean, you obviously benefiting from these trends were digital demand continues to grow.

Going forward I mean, so much Kobe may have helped that to some degree, but I think you're seeing that even before and so I'm just curious what during this quarter any inflections you are seeing or any kind of signs of progress that can be.

Important for us to watch for the next few quarters of into next year.

Oh.

Healthcare growth was really solid for the quarter existing accounts displayed really good and are are Q3. We believe we have the proposition that the right proposition in this space right. We are able to go in and solve the challenges of complex integrated health system environments were able to integrate with systems like Westerners and.

The epics and <unk> of the world that are sort.

Sort of native in those environments and deliver a great Roy for the clients a great experience for their for their consumers and their payer. So we still view this as early innings in the Digitization of healthcare and we think that the the.

The problem. We saw this is a hard one right and we go and we solve that problem and we believe that will continue to.

There'll be a lot of opportunity for that going forward in the quarter that yeah. Darren the only thing I would add to what Rob that is we're also enhancing the product right. So we mentioned in queue to continue to be opportunities whereby improving the product improving the capabilities yoshii users.

Adopt payments in different ways, you're seeing claims get more benefit right. So that's the other factor that's going on because we have the software in the payment capability combined as we are optimized software you are seeing performance across customers improve as well.

Thanks, Thanks Road.

Okay.

The next question comes from Jason Kupferberg Bank of America. Please go ahead.

Good afternoon, guys just wanted to start with the revenue question I mean, I know, you're you're medium term target I think it's 25, 30% on average and.

I'm sure it will give us more specific guidance next quarter, but.

You're really out doing yourself this year to the tune of over 50% growth.

So just preliminarily does it feel like that range would in theory still be achievable next year. Despite some difficult comps, but recognize that you may still have some you know reopening tailwind at your back still to come.

Yeah. So thanks for the question what I would say is obviously the year is turning out quite well for us will really encouraged as we look at 2022.

What we've said before is everybody should continue to think of us as that compounding growth story right. These industries that were serving really have a digitization trend that we expect over the next.

<unk> to materialize. So we're investing aggressively you're right we will have more details coming in relation to 2022.

But I would just focus on expect us to keep investing expect us to keep focusing on those things that are driving our business today those multiple growth levers right strong pipeline more clients doing more with us.

And growth across all sectors, and again that gives us a great position to start 2022.

And and again can be happy with the results showing up this year, but don't don't have that takeaway for excitement for 2022 as well.

Okay.

And then just as a follow up within your platform I'm wondering if you're seeing any noticeable are notable increase in any particular types of alternative payment methods being adopted.

I think the patterns are pretty consistent for us obviously, it varies a bit by geography.

Invest a lot and having what we consider the relevant local payment capabilities for the different markets in which we serve so being able to have alternatives like Ali pay and we chat pay in China to complement the other payment offerings that we offer in markets like that similarly offerings that are relevant in places like Brazil and others.

That we also invest in but I don't think there's any notable change in the in the patterns across all of those types. Yes, one thing I'd I'd, just maybe highlight as consumers do want choice and so when you see things like what our software goes around.

Payment plans, it allowing different payment plans over time and have them be configurable, we definitely see a trend towards more configurability more choice left with the Payor.

Clients that are are eager to provide great payment experiences in those flexible ways to pay.

They are definitely speeding up their investment in those types of things and I think that's part of why you're seeing so much success in our domestic capability.

Okay, well, thank you for the comments.

The next question comes from Ashwin sure Baker from City. Please go ahead.

Thank you Yeah, let me add my congratulations as well.

<unk> court for guys.

Yes. My my first question is when I can.

Consider the 200 plus clients that you signed.

Year to date could you provide maybe.

A split across the crossword pickles as well as same question with with regards to the pipeline that you see.

And are you noticing any sort of behavior changes amongst these clients faster implementation damps desire to get on board.

Quicker things like that.

Hey, Ashley when its Rob all started here and there and the others may may follow on here, but in terms of customers first.

The pattern represents our historical pattern. So we saw the most customer ads.

Ross Education and traveled with nice contributions from health care in B B as well so growth across all four of the vertical as new customer additions across all of them.

And in terms of those customers are view is that they're very representative of the kinds of customers. We've added historically some sort of similar in size and opportunity. We're very pleased with sort of the the new group that is added to the client roster in terms of pipeline.

It's really been a really strong quarter, we've mentioned the investment and go to market capabilities in our expansion in all those areas and.

And we are seeing a flow through into the strength of the pipeline. So now pipeline is up sort of double digit percentages in terms of the E R or that we see building there and we're very pleased with both the vertical distribution. The geographic distribution really everything about the pipeline is going in the direction that we want to see it.

Mentioned in my comment that we were particularly excited about the growth and be to be and that we're seeing good progress through the quarter, sorry through two three and into this quarter as well and so we really see that pipeline being very healthy and very encouraged by what it.

The opportunities that are represented there.

The implementation.

Not a lot of new there we continue to implement very successfully across the clients. So one of the things that contributed to the success in Q3 with our ability to get a whole bunch of clients lives. So that they could contribute to that so I would say that the ability to deploy and bring customers to revenue is continuing to improve there are certainly.

Range of the stories, depending on some clients that impresses Wodehouse asked me go some that are that solar but the overall delivery capability is improving and of course, that's another area in the company that we're expanding our capability more hiring across the implementation and delivery and support.

Got it got it.

And you kind of you know sort of addressed a part of this question, but let me maybe ask it.

A bit holistically.

And as you'd think of 2022 and given given where we are and I know you you unexpected.

A a a comedy but nowadays more visibility to perhaps the strength of get off.

Of that of that to Cody.

Positive news with regards to vaccine and so on so forth uhm. So as you as you sit here doing your planning process in more detail for 2022.

Are you are you are you thinking primarily.

Opportunities will spend more.

And why should.

The grilled create expectations not made or perhaps the the more near term trends that to be seen.

Rather than sort of be longer term.

Expectations your setup.

So actually Rob again here, we're really focused on investing in the growth rate and that means investing in the new client acquisition investing in new product investing in the execution that was so successful for us with our existing clients this year and.

So we expect that we will continue to build on that and we believe that the kind of and are are in the history that we've.

That pattern is something that we are committed to trying to continue going forward and that will feed the kind of steady, but strong compound growth that Mike Mike referenced earlier.

Anything more particular, there, though please feel free to upon if there's something more particular you want.

Yeah, No I I you know I appreciate the steady, but strong comment I was I was kind of thinking more about it.

Great going from this year to into next and I appreciate the seasonality of the business.

But but my talk process was that the was it the near term should be.

It should be.

Should be much stronger than than certain must be.

Say for example to watch him consensus.

And I want to ask yeah.

Yeah.

Yeah. This is Mike the thing I'd say is you know.

If you think back to even our conversation and a Q2 earnings call in August right. There were things like if you look at Delta variance bikes, there was hospitals and elective procedures. There were certain borders that had restrictions for travel we weren't sure where students would be on campus or visa would be issued so I'd say, we're still in a very dynamic environment.

So I think you know as our team finalize is 2022 planning it is not lost on us that there's a lot of great things going on in the business.

At the same time, hopefully people are getting pushing for us where people that put numbers out there and work hard to execute against him. So.

Got it finished doing our work in queue for and.

And excited about the future.

Future heading towards the only thing I would add that it is Michaela says you have to remember during the Covid pandemic. The most impacted quarters for US we're interact Q2 and Q3 of 2020. So those are the basis that we're going up against we started to see recovery in Q4 of 2020 and that continued in Q1 in 21 three now our current quarter. So just.

So we understand level setting relative to what we think growth maybe for 22.

Thank you I appreciate the relation of comments.

The next question comes from John Davis with Raymond James. Please go ahead.

Hi, Thanks, Good evening guys, Mike maybe just to start off I think you guys talk a lot about me IPO.

Since then about making significant investments for growth, you've obviously done that.

But I think the top line would suggest that maybe those investments are yielding better than expected returns. So maybe just any comments there on how.

How much you've invested in what your expectation loafers, which are Augusta and where they are kind of coming in so far realizes it's still pretty early.

Yeah, Hey, J D. Thanks for the question silver.

Can you think of <unk> two ways right.

Focus again that execution aspect right. There's so much opportunity in the existing client base and executing on clients that have been signed up in addition to that we're making significant investments in new opportunities that exist those can be products those can be geography's as we've talked about before.

Adjustments or enhancements toward go to market strategy.

That land and expand strategy, we've talked about extended extensively not to mention new industries.

The new sub segments of travel the <unk> expansion right. So all of those are significant investment areas for us and we're just getting started in those investments and so the financial position that we're in right now frankly, just emboldens us to invest more in to go faster right.

Complex talent market, we think we differentiate ourselves quite well is way ahead those comments in the opening remarks around talent. We think this market is set up well for us to recruit great talent continue to bring in great New playmates. So we're super excited but you definitely think of us in both those camps of investigate execution in further scaling a business on a global scale.

Doing that quite well as you see the results. In addition to that finding big new opportunities to invest investing significantly.

Okay, great well that's super helpful. In the Navy one for for Michaelis, Yeah, I think if I look at.

This quarter results, obviously they were.

Pretty eye-popping to say the least phillies from a revenue perspective, but if I break it down further volume was quite a bit better than we expected I know you guys don't manage to some observation way that's more of a output, but maybe make any comments on it was that really cause it vertical mix or was a payment tight mix.

The end of the day, obviously the revenue was there but it just curious how we should think about that going forward because volume was quite a bit better but modulation right.

Little bit lower than we expected.

Okay. Thanks, So let me just start off by saying the key point is that the business dynamics are very healthy for firewire right. We saw that with very stable adjusted gross margin and the revenue growth now with respect to modernization right, you'll see a payment method mix shift that similar to Q2 within our transaction payment volume due to the size of.

Amos the seasonality of the business, you'll see it in education, a higher price points typically result in.

Lower monetization rates due to the payment method selected and then when you think about the expansion, which I mentioned in the.

And when I gave my presentation is essentially that you'll get a lower monetization right within your platform and usage based fee revenue due to the land and expand strategy that was actually done in order to develop and expand our domestic offerings. So as more clients, how pay or using domestic solutions yields you'll have different.

Price points payment method, you use that may carry lower monetization rates and that can be seasonal depending on what what period of time, we are on the year, whether it's a payment plan.

Quarter, or it's a full tuition like quarter, so really that's what you're seeing in both of them.

If you look at the decline I think it's approximately six basis points and and a large scheme of things.

Again, not a number we track, but that's not a number that concerns us given the the exceptional growth rate of revenue add that really strong gross margin level. So as you can see that's why we've always said this monetization right as an output it's not a dry rub our business. It's just based on what people select and again, we really strong economics across all of the payment method.

And across both revenue types that really drive that incremental margin that adjusted EBITDA results.

Okay. So.

Semis, it basically Laura monetization right offset by higher gross margin so on on that basis, when you're looking gross profit. Those transactions are are similar to you. It's just really kind of.

Geography of the P&L based off payment date does that bear.

Yeah, that's probably fair.

Okay, Alright, thanks, guys appreciate color.

The next question comes from <unk> from economists reset. Please go ahead.

Hi, Good evening, everyone. Thanks for taking my question I, just wanted to ask about cross border education payments and I'm, just curious how penetrated his fly wire across its existing customer base.

On the cross border side, and you mentioned that the Vanderbilt adopted your cross border offering.

Maybe you could talk about how penetration of a cross border payments for that University might ramp over the next three years, just because it's it's hard to tell as an outsider how these clients ramp over time.

Hey, Ken How're you doing so first of all I'm just a total addressable market. So think of us and that kind of probably six 6 billion plus now couple more billion dollars for the year in that sector and just across board of education in volume and at the same time, you're approaching $100 billion total.

The address about market on just that product right, so plenty of room to grow and expand.

And and as you think about the <unk>.

Ways in which we're expanding that remembered the geography expansion things like Latin America.

Europe doubling down in places like Canada, or the UK, Australia, New Zealand Southeast Asia right from the client acquisition perspective Super important to understand and then in addition to that other products and capabilities. We can go allowed to drive more payment volume right. There's also that sub sector aspect of education I mentioned right part of this is higher education, but then you have.

All other areas of.

Education that we invested right things like the short term programs vocational programs summer programs right. So all of that is about kind of upselling clients to make sure that fly wires deployed where all of that cross border comes from so so really important really important to get those two points. So still feel like we're in the very early innings and in addition to the crowds.

Border business. We're also sitting there going to market with is where I'm going to say.

Mestek internationally right, so really going after the entire amount of payment volume is how we're going to market now globally, even though our operating there for six plus years of the company were really at a cross border only solution. So Robert speaking, specifically about Vanderbilt clubs I won't speak specifically to a school, but just to the experience of really.

Any new school that signs on obviously there are a couple of things going on that all or part of this and are are grow. The fact that you see over time. So there was a specific thing to that first year, which is what they will only have a very partial year. This year, though obviously have an opportunity for a full year next year with multiple semesters of eligibility rather than just one but that only speaks to part of that sort.

Cohort growth trajectory that you see for US obviously, when we talk about the 2017 cohorts growing and all of the prior cohorts growing what that's reflecting is a couple of things. So first even where it's just across border client. We continue to improve their best practices their utilization of our platform, we find more ways to penetrate the campus it might be.

Adding grad schools, adding other kinds of programs within the within the school.

All of that is part of sort of a standard expansion and a very healthy one that we experienced just in cross border, but of course with many of our clients. There is that land and expand it involves their choice to work with us on a broader element of our products sweet so whether that's adding payment plan international payment plans. These stores are collect module or the full.

<unk> then obviously, we are always hoping to to add across almost any account all of that is upside opportunity for us to all of that reflect positively and and the growth curve that you'd see really any client over time.

Okay. That's that's very helpful. Thanks, Thanks for all that detail and then can you remind us how the domestic payments or monetize.

Any of that.

Any of that revenue flow through the transaction revenue in mind or does it flow entirely through platform and usage based.

Based revenue and I got similar almost a similar question like how long does it take to ramp domestic payments at a new client or an existing climb just curious theater thoughts there.

Yeah. It's routes we can so most of that revenue for a fully domestic client will flow through the platform element right. So if you remember we have elements of our pricing model in our economic model, where those fees will accrue inside the platform element there may be parts for that.

We will get added the transaction, but most of it will go on the platform side.

I'll just add this basically three components to a black woman you should base fee revenue you basically have managed a R function that will get a percentage of the are there were actually managing ma'am for or on behalf of our clients. The second component is essentially the establishment and the payments against the payment plans and then the third component is size base license fee. So those are the three components that make up our platform.

Usage basically revenue.

Okay very helpful. Thank you very much.

The next question comes from 10 cents.

Please go ahead.

Okay. Thank you and then the Costco on late so I'll be quick just wanted to ask on on travel I know you want some.

New business there again it sounds like it's just is there a way to think about.

How much potential spend there that you sign that hasn't fully I hadn't realized is like you mentioned borders are gonna open I know there are a lot of eyes on on cross border travel for a lot of reasons in the sector, but just just trying to.

Put some context around how much potential business does on to come for you on the travel side.

Yeah sure.

How are you. So this is Mike I would say remember the sectors were focused on her subsectors inside travel so things like accommodations luxury tour operators destination management companies boutique.

Boutique travel agencies, those kind of large massive sectors of the of the.

The travel industry I would say think of it more as a geographic setback in two ways right, which unfortunately it all complicated you have where our clients that we're signing up throughout the pandemic have been for instance, we haven't slowed down signing up clients throughout Asia throughout Europe.

Latin America.

Erica the us Canada pretty much everywhere and so part of it is about their ability to receive travelers at this point and then in addition to that.

Part of it will also be around where we.

Investing in more capabilities.

Whether it's payment network or areas in which we can drive.

Fuller solution that existing clients right. So those two combinations and I'd say, we've been doing gold's right looking at our Prepandemic travel customer base and making sure we're getting all the payments not just the cross border payments, but cross.

Cross border and more domestic payments or all Geography's, if you will or that.

All their business units using fly lawyer and.

Would say continue to be significant right, it's growing quite rapidly for us. This year, we expect it to grow quite rapidly next year.

It is well past the product market said, it's in high scale mode as a travel sector and we're not slowing down and we're really happy with it a slowdown even during the pandemic.

Kept signing clients in the Nordic Visitor example, that Rob gave one of the top providers and the Nordics in in Iceland for Grunebaum travel and so those accounts are are quite frequent when you look at our pipeline.

Signed client list.

Iceland on my list of places to hit so thanks have a.

Good results.

Pretty awesome that what they are actually used Nordic visit or to take my family, they're tired of the pandemic.

Let's chat about it offline.

Okay.

[noise] edition includes a question and answer session I'd like to kind of conference pack over to Microsoft for any closing remarks.

Well I appreciate everybody's time, thanks for all the thoughtful questions all the time and effort that's going into following fly wire in learning more about flower.

Look forward to continue talking to many of you here over the next few weeks of quarters.

Appreciate everybody's time here Tonight.

This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.

[noise] [noise].

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[music].

[music].

Thank you expanding boy. This is the conference operator welcome to the fly Wire Corporation third quarter 2021 earnings call.

As a reminder, all participants are in listen only mode and the conference is being recorded.

After the presentation there'll be an opportunity to ask questions. During the question queue. You May Press Star then one on your telephone keypad.

If you need assistance during the conference call you May signal, an operator by pressing star in there now.

Now I'd like to turn the conference over to kill Hollister V. P of natural planning and analysis.

Please go ahead.

Thank you and good afternoon.

With me on today's call are Mark Massaro, Chief Executive Officer, Rob.

Rob I'll go first.

Didn't and Chief operating Officer, and Mike Ellis Chief Financial Officer.

Our third quarter 2021 earnings press release supplemental presentation and associated form 8-K can be found that I already got plywood dot 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 also will be discussing non-GAAP financial measures.

Please refer to our press release and SEC filings for more information from the basic facts. These forward looking statements.

Factors associated with our business and require disclosure 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 Mcdonnell.

Thank you appeal and thank you to everyone that is joining us today on our Q3 2021 earnings call.

Our second as a publicly traded company.

We truly appreciate all the interest so many of you have shown in Chihuahua and getting to know our business is our recently listed public company. The third quarter was another strong quarter for fly wire Rabago and Mike Ellis will go into great detail later on but first let me start with some financial highlights.

Revenue less ancillary services year over year growth was 67% with total payment volume, increasing 76% compared to Q3 2020.

This growth was driven by our successful land and expand strategy in the U K.

A strong U S education growth.

In the quarter and the easing of travel restrictions around the world, allowing more travelers to begin to take those long awaited leisure trips.

Adjusted EBITDA for the quarter was $17 6 million.

Which is an increase of $7 4 million or 73% from last year's third quarter. Another great results are truly shows the strength of our unit economics.

These great results this quarter had been driven by the continued execution of our multiple growth strategies across industries and geographies.

Our performance. This quarter is also due to the commitment of over 600 flights around the world who work each and every day to deliver value for our clients. We are so fortunate to have these amazing fly mates, who continue to stay focused and execute exceptionally well and this complex world.

Our Q3 results further validate what we've discussed along our journey to become a public company nearly six months ago. First there is a strong need for flowers powerful combination of software and payment capabilities, especially for high Stakes high value payments.

Second the core markets in which fly wire operates provide a massive opportunity for long term growth industries like education health care travel and business payments are massive parts of the global economy, representing nearly 12 trillion of addressable market.

These sectors are complex and have been poorly served by incumbent payment solutions, providing fly where a great opportunity to modernize the payment flows within these sectors over the next decade.

That's why wire our mission is simple we help our clients get paid and their customers pay with ease from anywhere in the world. This.

This combination of software technology platform and payment network.

Our fly wire advantage is truly a differentiated offering that uniquely positioned fly wire for success in this massive addressable markets.

With fly where our clients do more than just track money and collect payments they integrate our software into their existing back office systems and processes displace why wire functionality to their customers via their web sites and mobile applications.

Labour Great payment experiences with value added services like modern invoice presentment flexible payment plans seamless local and global payment methods and much much more.

So while clients benefit from operational efficiencies. They also are able to delight their customers with a digital engagement platform throughout the entire payment experience.

We've been at this for more than 10 years and in that time, we've achieved significant scale and reach as of quarter end we.

We accept and settle payments and over 240 countries and territories and in over 140 currencies today, we deliver some of the most important and complex payments for more than 2450 customers around the world.

And as many of you have noted our business has numerous defensible moats, such as our deeply embedded industry specific software our proprietary global payment network that enables fly wire to mitigate the complexities around the movement of money for our clients.

And our unique go to market approach, ensuring that we have a great team of experts from the industries that we serve engaging with our clients and our prospects.

We believe the next decade, it will be a wave of digitization across the industries we serve.

<unk> is uniquely positioned to lead this trend with our powerful combination of software payments and our people.

Not only do we believe that fly wire is uniquely positioned in the market, but we continue to see positive trends in the industries, where we operate in education, where we serve private and public universities colleges boarding schools language and vocational programs all around the world, we see strong demand for our solutions providing flexibility.

To students families to pay their tuition and fees over time and with a preferred payment method is truly top of mind for institutions.

Q3, our education client saw continued returned to normalcy as vaccination rates increased and students returned to campus just applied to international students as well.

This summer even with the uncertainty around the Delta variant American console, it's issued almost as many visas for international students as during the same period in 2019.

In this positive macro environment for education domestically and internationally, our software continue to drive value consistent with our company's thesis and focus in a recent survey of finance professionals at U S education institutions conducted by payments Dot com more than 80% of <unk> at four year universe.

Cities said flexible payment plans tailored to individual students can be attractive alternatives to traditional paper based payments.

Our strength in our domestic solutions and the global nature of our education business positions us well for the future.

In health care, providing more consumer friendly and digital first payment options continues to be a priority for hospitals and health systems. We recently commissioned a survey of more than 2000 consumer patients in the United States. Our data found that 65% of Americans, who paid their medical bills online for the first time during the pandemic.

Plan to continue to make payments online going forward.

In addition to the great benefits for consumers streamline payment experience can have a dramatic impact on the financial help the hospital or health system. We recently completed a total economic impact report with Forrester research to measure the return on investment of deploy fly wire.

Our research found that fly where it can help our clients achieve 318% ROI over three years and see a payback period in less than six months.

Our travel clients continue to see growth as borders open back up and restrictions ease.

That did states announce it is reopening to fully vaccinated air travelers from around the world starting in early November.

Andy Good band that's been in place for 18 months.

In addition, the United States also said it will lift restrictions for travelers in from Canada, and Mexico, allowing fully vaccinated foreign nationals to travel ending the ban on non essential travelers that was in place since March 2020.

As we approach the holidays. Our recent research suggests the travelers plan to spend more money and stay longer.

A recent survey of more than 800 frequent travelers, 65% said they would expect to take a longer vacation than usual post pandemic, 75% said they will seek a remote destination.

They would not be around large groups of people.

And then our <unk> business, where we support technology companies as a key target subsegment, we are seeing demand for our solutions as more businesses realize that digital payments are an integral part of the customer experience at our recent fly wire forward events, 42% of business responded cited improving the customer experience at the.

Top payment strategy priority for them, followed by automation security and the international expansion.

Speaking of the fly water afford event, we were so glad to see so many of you at our inaugural event, where we brought together business professionals for a wide variety of industries as well as leaders in Fintech and banking to discuss the future from payments to crypto and much much more it was clear from the event the digitize.

These payments are becoming table stakes across every industry no longer just in retail and E. Commerce. The feedback from the event was very positive and our team is well underway and planning similar events in the future.

I would now like to turn the call over to Rob <unk>, our president and COO to review some operational highlights from the quarter in the context of our growth strategy.

Rob.

Thanks, Mike and good afternoon, everyone as Mike indicated in his opening comments, we had an excellent Q3. Our results. This quarter reflected continued execution of our growth strategies.

Summarize the quarter's success before going into some details revenue grew across each of our verticals new client signings were strong with 94, new customers in the quarter.

And we were successful in hiring bringing our year to date total hirings over 200, <unk>, adding a globally distributed and highly talented group to the company.

I'll now go into a bit more depth on the dimensions of strength across our growth levers in Q3.

To begin we continued to see growth with our existing clients.

Our net revenue retention has rebounded strongly in Q3 and for the year to date period, achieving levels at or above our performance over the last three years. This strength in NRI reflects our success with our clients as they recover from the pandemic as well as the value of our broad product suite.

An example of this in the quarter was moving Manchester Metropolitan University or MMU from our cross border solution, which was implemented in 2016 to deploying a fully integrated software suite to improve efficiencies across the campus.

And then you based in the United Kingdom has over 30000 students. This is our first full suite fully integrated solution in the U K and we are providing broad and deep functionality that spans from online payments monthly payment plans accommodation payments and deposits east stores and also supporting their on campus.

Net card.

Managing all domestic and international payments for Matthew.

The ability to meet our clients' needs from simple integrations to our powerful full suite solution, including the full breadth and depth of the MMU solution illustrates how <unk> platform lets us serve and grow with our clients.

Obviously, we appreciate forward thinking universities like and then you that are driving new innovative ways of working.

In U S higher education, we've expanded our presence at northeastern University through the addition of payment plans for both international and domestic students. This top 50 University. According to U S News and World Report was originally signed as a cross border client in 2016, and we are pleased with our expanding relationship with them.

With this great add incentive capabilities, we're supporting.

Illustrate our ability to expand with clients in our health care vertical fly wire is deploy broadly across the banner health system, including 30 of banners acute care hospitals, 50, urgent care centers and hundreds of health care centers and clinics.

Banner Health is using fly wires pre service point of service and post service solutions, allowing their patients to pay their medical bills easily in this quarter. We've expanded with banner health to include their 16, Wyoming locations, including two hospitals in 14 clinics and expansion, we expect will help more banner patients.

And also delivered great results for banner.

In our emerging <unk> segment, we have benefited from the expansion of our clients as they recover from the pandemic and as they increase their use of our services. For example, an existing advertising technology client has recently committed to use <unk> as their single digital accounts receivable solution for all customers after begin.

With our cross border solutions. They are now rolling out our domestic receivables capabilities. Our expectation is that this will allow us to increase our revenue in this account, while providing a high ROI service and simplifying their accounts receivable function.

As we move to our second growth lever. We also continued to win new clients at a rapid rate the quarter was especially strong in education and travel representing the majority of the new clients in the quarter.

In travel we have continued to invest in client acquisition. Despite the impacts of Covid and are especially happy to add clients like Nordic visitor, which is a large DMC in Iceland, where we completed an enterprise level deployment. We replaced all payment options are now the only way to pay Nordic visitor.

Other travel win during the quarter was a large residential accommodation company in Australia, and New Zealand, highlighting the segment breadth and global nature of our travel business.

We added many new clients in the education space as well, including wins across multiple geographies and example of competitive win as our exclusive agreement to manage cross border payments for the University of Portsmouth, a top ranked university in the UK hosting about 25000 students, including around 6000 intern.

National students.

We also recently went live with our cross border product at Vanderbilt University, a top 15 University. According to U S News 2021 report.

<unk> in Nashville, Tennessee, The school has a student body of about 13500 of which approximately 1500 students are international.

Our ability to process, both foreign currencies to us dollars as well as domestic wires were important and securing the clients.

In our <unk> segment, we continue to build momentum we are finding great interest and our ability to help the enterprise simplify accounts receivable get paid faster and reduce the cost of the entire receivable process.

Based on the acceleration, we're seeing in <unk>, including a strong start to signings and expected in.

In Q4, we are continuing to expand our investment in our team and our pursuit of <unk> opportunities in.

In total we added over 300, new clients year to date as of September 30, with continued success in all verticals in Q3.

As we move to our third primary growth lever our channel partnerships also continue to be a great source of growth for the company during the quarter, we announced our new partnership with <unk>, formerly known as Ontario systems, a leading provider of enterprise workflow automation software for accounts receivable management.

<unk> focus is on accelerating revenue recovery and health care business and government markets for context.

It drives results for over 600 hospital networks, including five of the 15 largest systems in the U S. While also serving eight of the 10 largest accounts receivable recovery companies. They also serve numerous state and municipal governments across the United States as a result of the partnership <unk> health care customers will have access.

Two a new digital patient engagement solution powered by fly wire all as part of an integrated solution within buy that will help increase healthcare receivable collections and decreased cost.

We're also thrilled with our Cerner partnership and currently have multiple health care clients in late stages of integration through that relationship.

In addition fly wire is this year's winter for Cerner as partner collaboration award, which is in recognition of our ongoing collaboration with Cerner and for our successful contributions to ongoing partner and sales support.

We also continue to add partners around the world that are providers of core student information systems in the education space. We signed a partnership agreement are actively launching new client integrations with adapt.

Our primary student information system in South Africa.

This increases our number of global partners and integrations in the education space just 35 at the end of the corner.

Lastly, we continue to see a large and significantly underserved opportunity for clients internationally that can benefit from our services.

During the quarter, we expanded our education services to add initial clients in Hungary in Thailand, as well as continuing to build our presence in Latam, where we've seen growth in terms of traditional campus based higher education as well as some very exciting Latam based online focused education providers.

As you can see on top of the encouraging trends Mike mentioned earlier, we are enjoying success across all areas of our business.

I would now like to turn the call over to Mike Ellis, Our CFO to review our results for the third quarter and guidance for the remainder of the year Mike.

Thank you Rob good afternoon, everyone today I'll be discussing our non-GAAP financial metrics for our third quarter of 2021, including revenue less ancillary services adjusted gross margin and adjusted EBITDA for our financial results prepared in accordance with U S. Generally accepted accounting principles. Please read the financial statements included within our earnings release.

Our Form 10-Q, when filed with the SEC.

Revenue less ancillary services for the quarter was 62.0 million, which represented a 67% growth rate compared to the third quarter of 2020, which was driven by an increase in our total payment volume.

As a reminder, Q3 and Q1 are historically, our strongest quarters of the year.

This revenue growth exceeded our expectations due to very strong performance across the business, including all of our verticals and across all of our major geographies. While the business was broadly strong you'd call out in particular, the strength of our U K and U S based education business, which benefited from excellent performance from new clients launched so far during two.

2021, and an accelerating recovery from Covid across higher education. In addition, we continue to see improvement in the travel industry benefiting our clients and our revenue.

As Mike mentioned, we processed $5 3 billion and total payment volume during the quarter, an increase of 76% from the 3.0 billion, we processed during the third quarter of 2020.

We experienced revenue and total payment volume growth across all regions when compared to Q3 2020, and we achieved strong growth in both transaction and platform and usage based payment volume and revenue during the quarter, specifically transaction revenue increased 76% compared to the third quarter of 2020.

Driven by a 92% increase in transaction payment volume.

Platform and usage based fee revenue increased 32% compared to the third quarter of 2020 due to a 52% increase in platform and usage based payment volume.

Adjusted gross margin was 71, 9% for the quarter, which represented a decrease of 90 basis points compared to the 72, 8% reported for the third quarter of 2020.

So this was an increase in adjusted gross margin on a sequential quarter basis. This decrease in comparison to Q3 2020 was due to changes in our revenue mix and smaller FX gains in Q3 2021 compared to Q3 2020 in the aggregate we generate a very strong adjusted gross margin given the 67%.

<unk> revenue growth achieved during the quarter.

We manage our business based on three key performance indicators revenue less ancillary services adjusted gross margin and adjusted EBITDA and we are pleased with the reported results for the quarter.

While not a key kpis revenue less ancillary services as a percentage of total payment volume was slightly lower in Q3 2020, driven in part by two reasons number one payment method mix, where bank transfers were widely used for transaction payments and number two our expansion within domestic education consists.

With our strategy of winning more domestic clients within our platform and usage based revenue stream.

<unk> and payment method mix as well as changes in vertical mix payment size and currency pairs processed may impact the percentage obtained from quarter to quarter when dividing revenue less ancillary services by total payment volume set another way those changes are outputs, reflecting the composition of the business in the quarter and that percentage will be impacted by when.

And how we grow the key point is that our platform and proprietary global payments network allows us to support many payment types for several verticals across many currencies that all had strong economics with LIBOR.

Moving onto operating expenses technology and development expenses were $7 8 million, an increase of 28% over the $6 1 million incurred during the third quarter of 2020.

This increase was the result of our hiring activities. During the trailing 12 months ended September 32021, where we increased the number of what needs within our technology and development departments by 31%.

Selling and marketing expenses were $12 5 million, an increase of 64% over the $7 6 million incurred during the third quarter of 2020.

This increase was primarily due to number one our hiring efforts as we added 48, new flying mix within these departments. During the trailing 12 months ended September 32021, and number two higher sales commissions due to a favorable revenue results.

General and administrative expenses were $14 7 million, an increase of 60% over the $9 2 million incurred during the third quarter of 2020.

Many factors impacted our general and administrative cost incurred during the quarter, but the primary factors included our hiring activities incremental costs associated with operating as a public company, including professional services and insurance cost and charges associated with stock based compensation.

Adjusted EBITDA for the quarter was $17 6 million compared to the $10 2 million generated during the third quarter of 2020. This improvement was due to the contribution from our incremental adjusted gross margin driven by the 67% revenue less ancillary services growth rate realized during the quarter, partially offset by increased compensation.

<unk> related costs as we invest in our technology product and sales and marketing teams as well as increased cost associated with operating as a public company. This exceeded expectations due to higher than expected revenue growth at stable margins.

Moving to the balance sheet with respect to capitalization as of September 32021, we had $449 1 million in cash and cash equivalents and $25 9 million in long term debt.

As of September 32021, we had $104 9 million shares of common stock outstanding.

Based on our financial results for the third quarter of 2021 and current trends we are updating our full year 2021 guidance.

For 2021, we expect revenue less ancillary services to be in the range of $174 million to $176 million and we expect adjusted EBITDA to be in the range of $22 million to $24 million as with prior quarters. This range assumes no further unforeseen COVID-19 related impacts, which could influence the remainder of 2021.

To summarize we had a very strong quarter with respect to our revenue growth, which we achieved that stable adjusted gross margins. We were pleased with our ability to generate $17 6 million in adjusted EBITDA during the quarter, but we will continue to pursue growth opportunities and invest meaningfully in future quarters to drive revenue growth I would now like to turn the call back.

Over to Mike to wrap things up before taking your questions.

Thanks, Mike We believe Youre at fly wire that we have a clear and compelling value proposition that will continue to help us win we have built a business that has exceptional unit economics are highly defensible business model and we could not be more excited about the future.

I'd like to wrap up by thanking over 600, <unk> our team members around the world.

We have an outstanding group of people made even stronger by the over 200, new additions that have joined us so far this year.

Global nature flexible work environment, and SaaS base growth positions us well as an employer of choice in this challenging time.

We continue to be able to hire amazing talent around the world, representing many cultures and backgrounds.

All deeply believe in our mission to deliver the world's most important and complex payments.

With that I'd like to turn the call over to the operator for questions operator.

We will now begin the question and answer session.

And the question queue you May Press Star then one on your telephone keypad, you'll hear a COVID-19 acknowledging your request.

Speakerphone, please pick up your handset before pressing any keys.

Your question. Please press Star then two.

Pause for a moment as callers join the queue.

The first question comes from Bob Napoli with William Blair. Please go ahead.

Thank you very much and congratulations on.

Great results.

All done.

So.

Just looking at the profitability that you generated.

In the quarter and as we think about 2022 and 2023 I mean, you're well ahead of any expectations that we had I think for the full year of 2023.

And I know the third quarter or is that.

Seasonally stronger quarter for you, but how should we think about.

Yes.

The profitability of the business.

Versus investments, obviously, you over performed and I know you're investing aggressively for growth. So how should we think about balancing balancing the two.

Yeah. Thanks, Bob This is Mike I'll go first.

I'd say a few things one obviously again, great great quarter results and you see the flow through through the business model.

Which again, we're really proud of one thing I'd just highlight we are looking for growth investments pretty much everywhere you see the number of flights were hiring we've aggressive hiring plans throughout the year and into 2022.

We're looking for those growth levers continually expect us to pull the trigger on those at.

At the same time, it's a very healthy business. So.

Expect us to keep investing in growth don't expect us to be transitioning to focusing on EBITDA. It is where we're going to go it's going to be continued investment within product within go to market.

Across all industries across all geographies.

So.

I would say that's the best best we can give you obviously happy to share more details later.

And then maybe a follow up just.

So in the education business.

MMU you trends, you're transitioning to domestic test, Texas A&M northeastern.

Just on when we think about clients.

The revenue per client what does.

Yes incrementally on those education clients.

When you make that type of a transition what does that mean to revenue and then can you give any color on like the average revenue per client by segment or just some color on how people we get that question a lot and help thinking about modeling your business.

The client growth and revenue per client.

Yes, Hi, Bob Rob here. So thanks for the question.

What you see from the expansion of domestic in these accounts as a real revenue multiplier for us. So we as you know when we're serving in the cross border capacity.

Are we serving.

Some percentage of relatively smaller percentage of the overall population on campus when we move to doing the domestic we have the opportunity really to serve the entire campus community and.

And that really resulted in a revenue multiplier for us as they take advantage of things like the payment plans and the other capabilities that we extended the university. So it's a revenue multiplier for US you see the revenue per account go up very meaningfully yes.

And Bob the only thing I'd add to what Rob said is just really encouraged by what we're seeing in <unk>.

<unk> is well right. These new capabilities that we didn't have years ago right. That's what's helping drive that great and there are a number that we've talked about before.

Great. Thank you congratulations.

That's helpful.

The next question comes from Dan Perlin with RBC capital markets. Please go ahead.

Thanks, and good evening everyone.

And fantastic results.

Had a question on education in particular.

Really trying to understand I guess parse out the difference between how much of the outperformance came from the education vertical that's really just bouncing back.

I guess, partially are we at normalized levels. When you look at going back to 2019, which it sounds like maybe we are based on the visa comment.

First is kind of the incremental new cohorts or extensions that maybe you were just even talking about on the domestic side with Bob.

So there's this is Rob speaking.

It's really a very healthy combination of both again.

Great quarter performance in the education vertical as well as across each of the verticals. If you hone in on the education piece, what Youll see is that we are benefiting from very good growth in the new clients. So what youll see is that they are.

Performing very well in both the <unk> and even the 'twenty one cohort are contributing meaningfully to the success that we just reported for the quarter, but if you look back across all the cohorts and as you know, we often talk about the cohorts going all the way back several years. Those cohort also grew very well. So I think what you see here is both a combination of.

A an environment as it relates to Covid that was better than the environment that we might have anticipated many months ago in terms of the ability to get students on campus and fully participating but what you also see is the success of our execution in terms of bringing more students.

In contact with different aspects of our platform different aspects of our software and with that Youre seeing sort of I think really strong execution by our teams in serving those clients and with that both the clients' benefit and so to wait yes, Dan the only thing I'd add to that is just youre also seeing parts of the world that still are.

Still aren't back right. So if you look at places like Australia, New Zealand.

Still just coming out of some of the pandemic across Asia Pacific.

Even parts of Europe, So again I.

I think if you look at geographies you can also look at Subsectors right remember our definition of education is quite broad and so not only higher education boarding schools, but also vocational and language programs. Those shorter term programs right. They still haven't come back fully right. So I think I think our belief.

<unk> has always been 'twenty one into 'twenty two it is youre going to see things come back by geographies and by industry and sub sector and continues to be true for us.

Yes, now thats, great to hear I wanted to.

Wanted to just go back to the EBITDA margin expansion and the flow through commentary I mean, the original guidance I think it was $4 million to $6 million you guys are not call for 'twenty to 'twenty four I mean, it was a very impressive quarter. The question is.

When you have these periods of kind of over performance.

Is it just that I know you want to invest for growth, but there is a certain level of investment that would be required to kind of.

Tamped down.

Flow through in your model and I'm just wondering.

No.

Is there anything that youre seeing that would suggest that this investment.

Cycle that you want to kind of ramp or is it going to meaningfully increase in the near term or should we kind of expect some of this outperformance to the extent that your payment volumes in your top line continue to outperform thank you.

Yes, I'll start and then maybe hand, it over to Mike Ellis.

I would first say look at that look at deploying a number of record number of flights added whole bunch more positions out there being added.

As you know as you mentioned.

Kind of unit economics that flows right through the business.

But look for us to continue to invest aggressively in hiring rates that is go to market that is product engineering.

Go to market isn't just sales. It's also client service again connecting to that end, our our that we've talked about getting customers to do more with us.

So I would say that by far is our biggest investment area, but across.

Things like marketing is a huge part of go to market right a lot of the skill sets. We learned in the pandemic around digital engagement those are areas, where we can continue to invest more and more.

And continued to just do more right. So there is just kind of opportunity everywhere to do it but for US it comes down to people and that investment to go faster Mike anything you'd add another thing I would add is that the ramp that we're really talking about is really occurring starting in Q2 of this year in Q3. So we're just starting to make these investments and what we found.

Is that we're able to really hire some really talented people and I think Rob said approximately 200 people that we brought on this year, which is the majority coming in in Q2 Q3, Theyre just starting to get ramped and we are ramping our talent acquisition team. So my perspective is that the good results that youre seeing is predominantly driven by driving revenue growth at stake.

Adjusted gross margins and the smaller point of that is actually the cost savings that we're seeing by maybe not as investing as quickly as we wish we could but thats going to.

Reverse itself I think very quickly coming into Q1 of 2022.

Got it thank you.

The next question comes from Darrin Peller from Wolfe Research. Please go ahead.

Thanks, guys and nice job, but can we just follow up a bit on the on the.

Asian side first permitted given what you guys are seeing in terms of the cross border dynamic and borders reopening again, I mean, you talked about how there can be more in 'twenty, two but love to get a better sense of what you think would be the opportunity that's coming from new customers per se in terms of the universities, but actually the cross border momentum on students even if we were.

Back to 19 levels I imagine, we normally should have been notably above that so what do you think is the normal run rate, we have upside for agile as borders reopen putting aside just the typical growth of the business and then also in the current quarter.

I know the net retention number was strong for the when you look on a trailing basis, but if you can give us a sense of how much of your growth right now is coming from your existing customers the land and expand model versus new customers would be great.

So obviously it was it was a <unk>.

Late quarter across the existing customers, it's a great quarter in terms of the underlying sort of.

Momentum drivers for that are a couple right. So you ask the question whats going on in sort of the student population generally and cross border flows certainly this year saw a return relative to last year, but if you look at the trends across the industry some of which Mike mentioned in his comments, there's still very favorable for expansion of cross border opportunities.

As for learning for students right and again going back to Mike's comments.

Remember education as broadly defined vocational schools technical schools language learning summer programs and the like and the second thing being that not all geographies that have opened up yet there is still significant portions of the world where travel has not returned the idea of welcoming <unk>.

So students is still not sort of opened up the way we've seen it here in the U S and so we see macro trend of increasing appetite and passion for growth in student.

Students studies and then we see this opportunity that'll be specific to the regions and the segments that we also see as opportunities.

Okay, and then in terms of the magnitude of upside in 'twenty two versus what you would normally expect to see just based on reopening and borders reopening or any sense directionally.

<unk>.

It's.

Hard to put a number on that but I think what we said all along was that we expected and anticipated that this year would see a meaningful recovery towards normalcy with that normalcy being achieved in 2022, I think we saw essentially very much along those lines right. We've seen a return to normalcy in a number of places although.

Still not all the way there and then certain markets that are in segments that are meaningfully behind and those will hopefully have a chance to be significantly more normal next year as well so still a lot of still a lot of upside opportunity.

Thank you just very quickly on the healthcare side I mean, you are obviously benefiting from these trends where digital demand continues to grow.

Going forward I mean somewhat COVID-19 may have helped that to some degree, but I think youre seeing that even before and so I'm just curious what during this quarter or any inflections, youre seeing or any kind of signs of progress that could be.

Important for us to watch for the next few quarters and into next year.

Our health care growth was really solid for the quarter existing accounts displayed really good NR through Q3, we believe we have the proposition that the right proposition in this space. We are able to go in and solve the challenges of complex integrated health system environments, we're able to integrate.

<unk> systems like the centers and the FX and <unk> of the world that are.

Sort of native in those environments and deliver a great ROI for the clients a great experience for their for their consumers and their payers. So we still view this as early innings in the Digitization of healthcare and we think that the <unk>.

We saw this is the hard one Greg and we go in we solve that problem and we believe that will continue to.

There'll be a lot of opportunity for that going forward in the quarters ahead, yeah Darrin the only thing I'd add to what Rob said is we're also enhancing the product right. So we mentioned in Q2 continue to be opportunities where by improving the product improving the capabilities you are seeing.

Users.

Adopt payments in different ways, you're seeing claims get more benefit right. So that's the other factor that's going on because we have the software and the payment capability combined as we're optimizing that software you are seeing performance across customers improved as well.

Thanks, Rob.

The next question comes from Jason Kupferberg from Bank of America. Please go ahead.

Good afternoon, guys just wanted to start with the revenue question I mean, I know your medium term target I think is $25, 30% on average and I'm sure. It will give us more specific guidance next quarter, but.

You really are doing yourself this year to the tune of over 50% growth.

Just preliminarily does it feel like that range would in theory still be achievable next year. Despite some difficult comps, but recognize that you may still have some.

Reopening tailwind at your back still to come.

Yes. So thanks for the question what I would say is obviously.

A year is turning out quite well for us we're really encouraged as we look at 2022.

What we've said before is everybody should continue to think of us as that compounding growth story right. These industries that we're serving really have a digitization trend that we expect over the next <unk>.

Need to materialize so.

Investing aggressively you are right, we will have more details coming.

In relation to 2022.

But I would just focus on expect us to keep investing expect us to keep focusing on those things that are driving our business today those multiple growth levers right strong pipeline more clients doing more with us.

Growth across all sectors.

Again that gives us a great position to start 2022.

And and again couldn't be happier with the results showing up this year, but don't don't have that takeaway for our excitement for 2022 as well.

Okay.

Okay.

And then just as a follow up within your platform I'm wondering if youre seeing any noticeable or notable increase in any particular types of alternative payment methods being adopted.

I think the patterns are pretty consistent for us obviously, it varies a bit by geography.

Invest a lot in having what we consider the relevant local payment capabilities for the different markets in which we serve so being able to have.

Alternatives like Ali and Wechat pay in China to complement the other payment offerings that we offer in markets like that similarly offerings that are relevant in places like Brazil, and others that we also invest in but I don't think theres any notable change in the.

Patterns across all of those types, yes, one thing I'd, just maybe highlight as consumers do want choices. So when you see things like what our software does around.

Payment plans at allowing different payment plans over time and have them be configurable, we're definitely seeing a trend towards more configure ability more choice left with the payer.

And those clients that are eager to provide great payment experiences in those flexible ways to pay.

Theyre definitely speeding up their investment and those types of things and I think thats part of why you're seeing so much success in our domestic capability.

Okay, well, thank you for the comments.

The next question comes from Ashwin <unk> from Citi. Please go ahead.

Thank you.

Yeah, Let me add my congratulations as well.

Solid quarter guys.

I guess my first question is when I.

Consider the Tinder plus clients that you signed.

Year to date.

Could you provide maybe.

Our split across across verticals.

As well as same question with regards to the pipeline that Youre seeing.

And are you noticing any.

Sort of behavioral changes amongst these clients faster implementation damps desire to get onboard.

Quick or things like that.

Ashwin, it's Rob I'll start here and then the others may follow on here, but in terms of customers first.

The pattern represents our historical pattern. So we saw the most customer adds across education and travel with nice contributions from health care and B to B as well so growth across all four of the verticals new customer additions across all of them.

In terms of those customers. Our view is that they are very representative of the kinds of customers. We've added historically, so sort of similar in size and opportunity. We're very pleased with sort of the the new group that has added to the client roster in terms of pipeline.

It's really been a really strong quarter, we've mentioned the investment in go to market capabilities and our expansion in all those areas.

And we are seeing it flow through into the strength of the pipeline. So that pipeline is up sort of double digit percentages in terms of the IRR that we see building there and we're very pleased with both the vertical distribution. The geographic distribution really everything about the pipeline is going in the direction that we want to see it.

And in my comment that we were particularly excited about the growth in <unk> and that we're seeing good progress through the quarter and sorry through Q3 and into this quarter as well and so we really see that pipeline being very healthy and very encouraged by it.

The opportunities that are represented there in terms of implementation.

Not a lot of news there we continue to implement very successfully across the clients. So one of the things that contributed to the success in Q3 with our ability to get a whole bunch of clients' lives. So that they could contribute to that so I would say that the ability to deploy and bring customers to revenue is continuing to improve.

There are certainly rain.

The ranges of stories, depending on some clients that impressed us with how fast we go some that are a bit slower, but the overall delivery capability is improving and of course thats. Another area in the company that we're expanding our capability and more hiring across implementation and delivery and support.

Got it got it.

And you kind of sort of addressed a part of this question, but let me maybe ask it.

A bit holistically.

And as you think of 2022 and given given where we are and I know you are unexpected.

Cody, but nowadays more visibility to perhaps the strength of that.

Of that of that to Coty.

Positive news with regards to vaccines and so on so forth.

So as you as you sit here doing your planning process in more detail for 2022.

Are you.

Are you thinking primarily.

Opportunity so spend more.

And why should the growth rate expectations, not meda or perhaps the.

The more near term trends that we've seen.

Rather than sort of the longer term.

Expectation do setup.

So ashwin, Rob again here, we're really focused on investing in the growth rate and that means investing in the new client acquisition and investing in new products investing in the execution that was so successful for us with our existing clients. This year and so we expect that we will continue to.

Build on that and we believe that the kind of NR and the history that we have.

That pattern is something that we're committed to trying to continue going forward and that will feed the kind of steady, but strong compound growth that Mike referenced.

Referenced earlier.

Anything more particular, there please feel free to follow on if Theres something more particular you want.

Yeah no.

Appreciate the steady, but strong comment that I was I was kind of thinking more about <unk>.

<unk> right going from this year into next and I appreciate the seasonality of the business.

But but my thought process was that the was it the near term should be.

It should be.

Should be much stronger Dan.

Then certain must be.

For example, what's in consensus.

And I wanted to ask you ashwin.

Ashwin. This is yes. This is Mike the thing I'd say is you know.

If you think back to even our conversation in our Q2 earnings call in August right. There were things like if you looked at Delta there in spikes there was hospitals in elective procedures. There were certain borders that had restrictions for travel.

There were students would be on campus or visa would be issued so I'd say, we're still in a very dynamic environment and so I think as our team finalized its 2022 planning it's not lost on us that there's a lot of great things going on in the business at.

At the same time, hopefully people are getting any pressure for us where people to put numbers out there and work hard to execute against them. So.

Got it got it finished doing our work in Q4.

And excited about the.

Future head in 2000, the only thing I would add this is Mike Ehlers is you have to remember during the Covid pandemic. The most impacted quarters for US. We're on track to Q2 and Q3 of 2020. So those are the basis that we're going up against we starting to see recovery in Q4 of 2020 and that continued in Q1 and 21 three now our current quarter.

So just so we understand level setting relative to what we think growth may be for 'twenty two.

Thank you I appreciate the additional comments.

The next question comes from John Davis with Raymond James. Please go ahead.

Hey, Thanks, Good evening guys.

Mike maybe just to start off I think you guys talked a lot about in the IPO Amit.

And since then about making significant investments for growth, you've obviously done that.

But I think the top line would suggest that maybe those investments are yielding better than expected returns. So maybe just any comments there on.

How much you've invested in and what your expectation of the workflows, which are an investment where they're kind of coming in so far I realize it's still pretty early.

Yes, Hey, Jamie Thanks for the question, so I would say.

So you can fly two ways right.

Focusing on that execution aspect right. There is so much opportunity in the existing client base and executing on clients that have been signed up in addition to that we're making significant investments in new opportunities that exists those can be products those can be geographies as we've talked about before.

Adjustments or enhancements to our go to market strategy.

That land and expand strategy, we've talked about extensively not to mention new industries.

New sub segments of travel the <unk> expansion right. So all of those are significant investment areas for us and we're just getting started in those investments.

So the financial position that we're in right now frankly, just emboldens us to invest more and to go faster right.

Complex talent market, we think we differentiate ourselves quite well. It's why you had those comments in the opening remarks around talent. We think this market is set up well for us to recruit great talent continue to bring in great New climate. So we're super excited but definitely think of us in both of those camps of investigate execution and further scaling our business on a global scale.

We're doing that quite well as you see in the results. In addition to that finding big new opportunities to invest invest in significantly.

Okay, Great. That's Super helpful. And then maybe one for Mike Ellis, Yes, I think if I look at.

This quarter's results obviously they were.

Pretty eye popping to say the least cities from a revenue perspective, but if I break it down further volume was quite a bit better than we expected I know you guys don't manage to the monetization rate thats more of an output, but maybe Mike any comments on what was that really was a vertical mix or was it payment type mix.

EBITDA today, obviously the revenue was there, but just curious how we should think about that going forward because volume was quite a bit better but monetization rate.

A little bit lower than at least we expected.

Yeah. Thanks, So let me just start off by saying the key point is that the business dynamics are very healthy for our flywheel right. We saw that with very stable adjusted gross margin and the revenue growth now with respect to monetization rate Youll see payment method mix shift.

The Q2 within our transaction payment volumes due to the size of payments the seasonality of the business Youll see it in education are higher price points typically result in.

Lower monetization rates due to the payment method selected and then when you think about the expansion, which I mentioned in the.

And when I gave my presentation is essentially that youll get a lower monetization rate within your platform and usage based fee revenue due to the land and expand strategy that was actually done in order to develop and expand our domestic offerings. So as more clients have payer using domestic solutions yields youll have.

Different price points payment method, you use that may carry lower monetization rates and that can be seasonal depending on whats what period of time, we are in the year, whether it's a payment plan.

Or it's a full tuition like quarter, so really that's what youre seeing in both of them.

If you look at the decline I think it's approximately six basis points and in the large scheme of things again, not a number we track, but that's not a number that concerns us given the.

The exceptional growth rate of revenue bad debt really strong gross margin level. So as you can see that's why we've always said this monetization rate is an output it's not a driver of our business. It just based on what people collect and again really strong economics across all of the payment method and across both revenue types that really drive that.

Rental margins and adjusted EBITDA results.

Okay.

Yes.

<unk> basically lower monetization rate offset by higher gross margin. So on a on that basis. When we look at gross profit. Those transactions are are similar to you. It just really kind of.

Thiago fee of the P&L based off payment, but is that fair.

Yes, that's probably fair.

Okay, Alright, thanks, guys appreciate the color.

The next question comes from Ken <unk> from Autonomous Research. Please go ahead.

Hi, Good evening, everyone. Thanks for taking my question I, just wanted to ask about cross border education payments and I'm. Just curious how penetrated is fly wire across its existing customer base on the cross border side and you mentioned that the Vanderbilt adopted your cross border offering.

Maybe you could talk about how penetration of.

Cross border payments for that University might ramp over the next three years, just because it's hard to tell as an outsider how these clients ramp over time.

Hey, Ken how are you doing so first on just the total addressable market.

So think of us in that kind of probably six 6 billion plus now a couple more 1 billion for the year in that sector and just in cross border education and volume and at the same time youre approaching $100 billion.

Total addressable market on just that product right, so plenty of room to grow and expand.

And as you think about the ways in which we're expanding that remember the geography expansion things like Latin America, Europe, doubling down in places like Canada, The UK, Australia, New Zealand Southeast Asia right from a client acquisition perspective Super important to understand and then in addition to that other products and capabilities we.

Can rollout to drive more payment volume right.

Also that sub sector aspect of education, I mentioned right part of this is higher education, but then you have.

All other areas of.

Education that we invested right things like the shorter term programs the vocational programs summer programs right. So all of that's about kind of upselling clients to make sure that flywheel is deployed where all of that cross border comes from so really important really important to get those two points. So still feel like we're in the very early innings and in addition to the cross border.

Order business, we're also sitting there going to market with is.

I would like to say domestic internationally right. So really going after the entire amount of payment volume is how we're going to market now globally, even though our operating there for six plus years of the company. We're really at a cross border only solution. So Rob I know if youre speaking specifically about Vanderbilt.

I won't speak specifically to our school, but just to the experience of really any new school that signs on obviously there are a couple of things going on that all or part of this NR.

Growth effect that you see over time. So there is a specific thing to that first year, which is that they will only have a very partial year. This year. They will obviously have an opportunity for a full year next year with multiple semesters of eligibility rather than just one but that only speaks to part of that sort of cohort growth trajectory that you see for US obviously, when we talk about the 2017 cohort is growing in all the prior.

Cohorts growing what thats, reflecting is a couple of things so first even where its just a cross border client we continue to improve their best practices their utilization of our platform, we find more ways to penetrate the campus it might be adding grad schools, adding other kinds of programs within the within the school.

All of that is part of sort of a standard expansion and a very healthy one that we experienced just in cross border, but of course with many of our clients. There is that land and expand it involves their choice to work with us on a broader element of our product suite. So whether that's adding payment planned international payment plans. These stores are our collect module or the full <unk>.

Domestic fleet that obviously, we are always hoping to to add across almost any account all of that is upside opportunity for us. So all of that reflects sort of positively in and the growth curve that you'd see for really any client over time.

Okay. That's very helpful. Thanks for all that detail and then can you remind us how the domestic payments or monetize.

Any of that.

Any of that revenue flowed through the transaction revenue line or does it flow entirely through platform and usage.

<unk> revenue and I guess similar almost a similar question like how long does it take to ramp domestic payments at a new client or an existing client just curious to get your thoughts there.

Yeah.

Yes, it's Rob Routs week, so most of that revenue for a fully domestic client will flow through the platform element right. So if you remember we have elements of our pricing model in our economic model, where those fees will accrue inside the platform element there may be parts for that that will get added to transaction, but.

Most of it will go on the platform side, yes, and I'll just add there's basically three components to our platform and usage based fee revenue and you basically have the managed a function.

That will get a percentage of the <unk> that we're actually managing therefore on behalf of our clients. The second component is essentially the establishment and the payments against payment plans and then the third component is our SaaS based license fees. So those are the three components that make up our platform and usage based fee revenue.

Okay very helpful. Thank you very much.

The next question comes from Tencent.

Please go ahead.

Yes.

Okay. Thank you and I'll call. It go on late so I'll be quick just wanted to ask on travel I know you've won some.

New business there again it sounds like.

Is there a way to think about.

How much potential spend there that you've signed that hasnt fully been realized is.

You mentioned borders are going to.

Open I know there are a lot of eyes on on cross border travel for a lot of reasons in this sector, but just trying to.

Put some context around how much potential business that's on the come for you on the travel side.

Yes sure.

How are you. So this is Mike I would say remember the sectors, we're focused on our sub sectors inside travel so things like accommodations.

<unk> tour operators destination management companies, the boot and bootie travel agencies, those kind of large massive sectors of the of the of the travel industry I would say think of it more as a geographic step.

Snapback in two ways right, which unfortunately it all complicated you have where our clients that were signing up throughout the pandemic have been.

For instance, we haven't slowed down signing up clients throughout Asia throughout Europe.

Latin America Africa, the U S, Canada pretty much everywhere.

So part of it is about their ability to receive travelers at this point and then in addition to that.

Part of it will also be around where are we.

Investing in more capabilities.

Its payment network or areas in which we can drive.

Fuller solution that existing clients right. So those two combinations and I'd say, we've been doing both right.

Looking at our pre pandemic travel customer base, and making sure we're getting all the payments not just the cross border payments, but cross border and domestic payments or all geographies. If you will.

We have all of their business units using fly wire and.

I would say continues to be significant right, it's growing quite rapidly for us. This year, we expect it to grow quite rapidly next year.

It is well past product market fit is in high scale mode.

The travel sector, and we're not slowing down and we're really happy we didnt slowdown even during the pandemic just kept signing clients.

Nordic Visitor example, that Rob gave one of the top providers in the Nordics and in Iceland for inbound travel and so those accounts are quite frequent when you look at our pipeline and our sign client list.

Yes.

Excellent.

List of places to hit so thanks, guys good results.

Pretty awesome, what Theyre actually use Nordic visitor to take my family there.

Nick.

Let's chat about it offline.

Good quarter here.

Yes.

This concludes our question and answer session I would like to turn the conference back over to Mike <unk> for any closing remarks.

Well I appreciate everybody's time, thanks for all the thoughtful questions all the time and effort that's going into following fly wire and learning more about fly wire.

Look forward to continue talking to many of you here over the next few weeks or quarters and appreciate.

Everybody's time here Tonight.

This concludes today's conference call you may disconnect your lines.

You for participating and have a pleasant day.