Q1 2022 Flywire Corp Earnings Call

May 10, 2022

Good afternoon, and welcome to the fly Wire Corporation first quarter 2022 earnings call.

All participants will be in listen only mode.

Should you need assistance. Please signal conference specialist by pressing the star key followed by zero.

After today's presentation there'll be an opportunity to ask questions.

Please note this event is being recorded.

I would like to turn the conference over to kill Hollis VP of IR and F. PNA. Please go ahead.

Thank you and good afternoon with me on today's call are Mike Massaro, Chief Executive Officer, Bob Udell, President and Chief operating Officer, and Mike Ellis Chief Financial Officer, Our first quarter 2022 earnings press release supplemental presentation and when filed associated quarterly report on Form 10-Q can be found at IR <unk> com.

During the call we will be discussing certain forward looking information actual results could differ materially from those contemplated by these forward looking statements.

We will also be discussing certain non-GAAP financial measures.

Please refer to our press release and SEC filings for more information on the risks regarding these forward looking statements that could cause actual results may differ material.

Risk factors associated with our business and required 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 Michelle.

Thank you Mikael and thank you to everyone that is joining us today.

We're excited to share our Q1 2022 results with all of you and appreciate the interest you continue to show in Chihuahua.

In short 2022 has started out strong for fly wire in a few minutes, Rob <unk>, our president and CFO as well as Mike Ellis, Our CFO will go into greater detail about our operating and financial performance during the quarter.

But first let me start with a few financial highlights from the quarter revs.

Revenue less ancillary services was $59 3 million, representing a year over year revenue growth of 47%.

Driven predominantly by strength in our education and travel businesses.

Total payment volume for the quarter increased 46% compared to Q1 2021.

Across all our verticals, we added over 130, new clients during the quarter, our most new clients for a quarter as a public company.

It was also named to Inc. Magazine's 2022, best Workplaces list further evidence of our focus on strengthening our flatbed community and being seen as an employer of choice in a highly competitive global marketplace for talent.

By now most of you know they fly wire focuses on high Stakes high value payments within industries, such as education health care travel and BBB within these industries Digitization is still in the early stages and payment experiences are fragmented and often difficult for both payer and risk.

Sure.

Ultimately, we are helping our clients get paid and helping their customers pay seamlessly and easily from all over the world we.

We expect that the secular trends in these industries, coupled with the inevitable shift towards digitization of payments positioned fly wire very well for growth for years to come.

In times like these where there are macroeconomic uncertainties. We believe our solutions are even more critical as our clients need a better way to get paid while removing costly manual activities from their back office.

Now I want to spend a few moments discussing the trends we are seeing in each industry that we serve.

First starting with travel.

Which continues to show positive trends at the end of Q1, the TSA traveler checkpoint data showed that passenger counts have reached 91% of pre pandemic volumes measured over the same period in 2019.

This is validated by our recent survey report of luxury travelers, 78% of whom said spending on travel now is more important to them than it was before the pandemic started.

AH report also showed that more than half of travelers surveyed 51%.

Or even booking two trips it wants to ensure that they get away for that much needed break.

For our education vertical prominent U S colleges and universities are reporting a surge in international applications compared to the past two years fueled by using a pandemic travel restrictions and new policies that allow potential students to apply without our.

Our ICT scores.

The Washington Post recently reported that the common application an online platform for hundreds of schools found that as of March 15, 2022, the number of international applicants had grown 34% since 2020 exceeding the 12% rate of growth for U S. Applicants over that same period again these are.

Very favorable trends for fly wire.

In healthcare rising out of pocket costs are accelerating the industry's affordability crisis. According to a new patient experience survey from trade Association ph RMA more than a quarter of Americans reported medical debt due to a doctor or hospital bills that they couldn't afford it.

Average debt was as high as $4000 per patient.

There is an imminent need for hospitals and health systems to continue to invest in technology, driven solutions to make health care more affordable.

As for our BTB vertical we continue to see success as so many businesses are in need of a solution like ours to automate their accounts receivable from.

So our manager level, two cfos finance teams know that their processes around AR.

Cost them too much money and time slow their international expansion and even hold back profitability.

In our second annual survey of CFO , and finance professionals or the 92% of respondents stated their earnings per share would actually increase if they could figure out a better way to manage the accounts receivable process.

We continue to be quite excited about the large opportunities within the industries that we serve here at fly wire and these positive trends further helped our confidence about 2022.

Finally, I wanted to spend a few minutes previewing our analyst day, which will take place next week on may 19th.

We will be reviewing our vision and opportunities for fly wire as well as our competitive advantages.

We will have a session with our vertical leaders to deepen the understanding of the industries we serve.

We will be discussing our key investment areas in detail and how they fit within our many existing growth levers.

We will touch on the strength of our <unk> community and our ongoing ESG efforts.

Lastly, we will share financial data points that we believe will be helpful. When looking at the business over the long term.

We are really excited to see you in person and others virtually next week at our first analyst day as a public company.

However, since this is our Q1 earnings call and we are really excited to share more about our performance I would like to turn the call over to Robert <unk>, Our president and COO to share updates on our operating results and growth initiatives during the quarter Rob.

Thanks, Mike and good afternoon, everyone. Our strong results. This quarter reflected continued execution of our growth strategies, we saw strength in bringing on new clients with the addition of over 130, 20% higher than our best quarter in 2021.

This brings our client count to over 2700 and consistent with our recent quarters. We had a lot of success in cross selling to existing clients I would like to highlight some of our successes across the verticals.

Starting today with travel we added a great group of over 40, new clients. Our travel business grew in part because of our new clients, but in larger part due to recovering activity levels across the range of our travel clients as COVID-19 restrictions and hesitancy continued to shrink in many areas globally.

One indicator of the return of travel that we have seen our travel clients delivered net revenue retention of greater than 145% this quarter with particularly strong growth among our European destination management clients. These clients believe that summer 2022.

Turn to normal levels for the first time since the summer of 2019 during.

During Q1 2022, we generated more revenue from our travel clients than we did from all of 2019 or 2020.

As an example of a new European destination management client, we added IDI travel as a travel client.

Based in via Torino, Italy, IDI specializes in carefully planned itineraries for high end bespoke stays in Italy, and France. They signed with fly wire in early March 2022, and went live in mid March they signed with fly wire because of our large global footprint and variety of payment methods. We're excited by the <unk>.

Early results from our relationship with IDI in Italy, and France, and look forward to further expanding our payment solutions with them.

Continuing with healthcare in addition to the integrations with other health records platforms that I have referenced in prior earnings calls. We are also expanding with clients. We're integrated with epic systems Electronic Health Records platform. For example, we expanded our relationship with common spirit health the largest Catholic health system and.

Second largest nonprofit hospital system in the United States.

Common spirit is headquartered in Chicago, Illinois, and operates 140 hospitals and more than 500 care sites across 21 States. We most recently expanded our already sizeable relationship with common spirit by integrating with their hospitals based in the Texas market. This relationship highlights <unk> ability.

<unk> to integrate with large hospital networks using epic systems.

We saw impressive early results from our healthcare Omnichannel engagement initiatives are early data with another of our major hospital clients showed how our platform enables and improvement in patient engagement, which in turn favorably impacts patient collections.

More specifically, we've seen that increased patient login page arrivals from email and SMS directly correspond to increased plant sign ups payments and ultimately collections.

And early single client data comparing the weekly average pre omnichannel engagement and post go live engagement, we saw a greater than 80% uptick in visitors to the login page via email a greater than 50% increase in planned sign ups via SMS and a greater than 25% increase in digital payments.

Via E Mail and SMS, we're incredibly excited to continue our efforts with the Omnichannel engagement product as early results show signs of incremental value creation for our clients within our healthcare vertical.

Switching to education, we continue to see strong performance across segments and geographies in the first quarter. We added the University of Connecticut, as a new education client.

According to U S News and World report Yukon ranks among the top 25 public universities in the U S with 14 schools and colleges for regional campuses and total fall 2021 enrollment of nearly 24000 undergraduate students and over 8000 graduate and professional students Yukon selected fly wire.

To replace an incumbent solution for all domestic and cross border payments through our comprehensive receivable solution. We look forward to building our relationship with Yukon to further improve the player experience.

Also in education, we expanded our relationship with Oxford University.

In the United Kingdom, and with over 25000 undergraduate and postgraduate students, Oxford was ranked as the best University in the World and the times higher Education World University rankings from 2017 through 2022.

We expanded the number of colleges within Oxford, using fly wires education payment solutions, including some colleges that will use our new integrated solutions with WPM, which we acquired in the fourth quarter of 2021 with.

With regard to WPM, we continue to be pleased with both the market interest and on schedule technology development related to our integrated solution.

Finally in our <unk> segment, we continue to grow our customer base and expand with existing customers. In this emerging segment. For example, we expanded our relationship with basis technologies, formerly known as central which is a leading provider of cloud based workflow automation and business intelligence software for marketing and advertising.

Basis technologies, originally used fly wire to provide local payment options to its international customer base, but is now using fly wire for full domestic card acceptance as well as domestic bank transfer.

<unk> technologies is using the latest version of our net suite bundle, which now supports multiple invoice aggregation into a single simple payment experience as well as providing prepayment solution options for payers.

This added functionality illustrates how fly wire continues to use software to add value to payments as the automation functionality and deep net suite integration, our differentiated capabilities provided the basis technologies.

As Mike previously mentioned.

We recently conducted research of finance professionals at <unk> companies with $100 million to $1 billion in revenue.

They validated what we continue to identify as a key theme in the sector legacy systems and processes are impeding their growth and profitability.

And our survey we found that global expansion is a priority for businesses yet 88% of those surveyed said the complexities of collecting cross border payments impacts their ability to grow internationally, specifically, 95% say, if they could deal with exchange rates and an easier way they could.

Right their global expansion efforts.

Additionally, over 70% of respondents say they lose between 4% and 10% of revenue in an average month due to time wasted because of operational inefficiencies with payment processing.

These are the exact issues our solutions are designed to solve for our <unk> clients with us those stubbornly manual parts of the global receivables process or reduced their customers benefit from streamlined experiences and we help our clients free up their time to focus on value added tasks for their business.

Turning to channels, our channel partnerships continued to be a good source of growth for fly wire for example, during the quarter, we announced a preferred payment partner agreement with <unk> group, a leading student information system with over 1400 universities in the EMEA and APAC regions.

Our partnership and integration with the <unk> sits module enables fly wire to provide new and existing university clients with a seamless payment process for every point in education payments with the addition of travel we are now approaching 50 unique corporate integrations to systems in the education space that are the underpinning of <unk>.

Operating schools and universities around the world.

We also continue to invest in our global payment network.

Why are successfully implemented picks the new payment method promoted by the Brazilian government.

According to a February 2021 report published by Americas market Intelligence report picks was expected to move 16% of the digital payments volume in Brazil. This development demonstrates <unk> ability to continue expanding our payment network in Latin America by adding additional payment methods and the biggest economies in.

The region, enabling additional payment alternatives for students and businesses.

Overall, you can see we had another very active quarter with <unk> global team of <unk> doing great work across our verticals and across the company.

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

Thank you Rob good afternoon, everyone today I'll be discussing our non-GAAP financial metrics for our first quarter of 2022, including revenue less ancillary services adjusted gross profit adjusted gross margin and adjusted EBITDA.

Our financial results prepared in accordance with U S. Generally accepted accounting principles. Please read the preliminary and unaudited financial statements included within our earnings release and the unaudited financial statements that will be included in our Form 10-Q, when filed with the SEC.

Revenue less ancillary services for Q1, 2022 was $59 3 million, representing a 47% increase compared to Q1 2021, our revenue growth rate was driven by an increase in total payment volume, particularly due to strong performance from our international cross border payment volumes in our education and travel verticals.

We processed $4 2 billion and total payment volume during Q1, 2022, which was an increase of 46% from the $2 9 billion, we processed during Q1 2021.

We experienced revenue and total payment volume growth across all regions verticals and revenue types when compared to Q1 2021, specifically transaction revenue increased 50% compared to Q1 2021, driven by a 46% increase in transaction payments volume platform a usage based fee revenue increased 30.

6% compared to Q1 2021, driven by a 45% increase in platform and usage based payment volume as a result of our revenue growth, we generated $38 8 million and total adjusted gross profit representing a 41% increase compared to Q1 2021.

Adjusted gross margin for the quarter was 65, 5% in line with our model driven expectations for Q1 2022.

Comparing Q1 2022 versus Q1 2021, our vertical mix drove transaction revenue to grow faster than our platform revenue, which has software like adjusted gross margins within transaction revenue our payment method mix for the quarter included more credit cards, which generate lower adjusted gross margins, while the payment method mix varied.

The Q1 net spread in our transaction revenue generated from our pricing and cost structure remained consistent with the average net spread over the last two years, while we expect these mix dynamics to continue through the first year of 2022 due to the seasonal trends of our business.

During the second half of the year, we expect the adjusted gross margin to move higher as seen in prior years, resulting in full year 2022, adjusted gross margin near but slightly below full year 2021.

Moving onto operating expenses technology and development expenses were 11 points here 1 million for Q1 2022, an increase of 47% over the $7 5 million incurred during Q1 2021. This increase was primarily the result of our hiring activities during 2021, where we increase the number of <unk>.

Within our technology and development teams by over 50%.

Selling and marketing expenses were $17 6 million for Q1 2022, an increase of 48% over the $11 9 million incurred during Q1 2021. This increase was due to a number of factors first personnel cost accounted for 78% of the increase due to our hiring efforts over the past year, where we added over 100 move.

<unk> rates within the sales marketing and product functions.

Sales commissions also contributed to our increase in personnel costs.

Along sales effectiveness and driving new <unk>.

Second we continued to invest in our global marketing initiatives to drive client acquisition and payer engagements.

Incremental marketing costs contributed approximately 16% of the year over year increase and finally, we spent more in travel cost as the abatement of Covid related travel restrictions allowed for two important things to occur.

First our globally dispersed teams, we're finally able to come together and collaborate in person all of 2022 goals and plans and second our sales teams were able to conduct in person and onsite visits with our clients and prospects. After approximately two years of COVID-19 impacted with Switzerland.

Administrative expenses were $18 $8 million during Q1 2022, an increase of 18% over the $15 9 million incurred during Q1 2021.

Many factors impacted this increase during Q1 2022, but the primary factors driving this increase were number one our hiring activities, where we increase the number of flights by over 40% in these departments and number two incremental costs associated with operating as a public company, which consisted primarily of professional fees and insurance costs.

These increases were offset by a 53% decrease in stock based compensation expense due to the secondary transaction with employee stockholders, which occurred during Q1 2021 prior to our initial public offering.

Adjusted EBITDA for the quarter was $1 8 million in line with our expectations for Q1 2022, adjusted EBITDA decreased $5 2 million compared to the 7.0 million. We generated during Q1 2021 the year over year decrease in adjusted EBITDA was the result of our hiring where we increased the number of flying rates by over 50%.

During the past year as well as increased cost from operating as a public company and travel related costs, both of which increased significantly over Q1 of 2021.

With respect to capitalization as of March 31, 2022, we had $365 7 million in cash and cash equivalents and $25 9 million in long term debt.

As of March 31, 2022, we had $106 4 million shares of common stock outstanding which is slightly different than the weighted average shares outstanding used to calculate net loss per share due to the timing of our IPO.

Moving on to guidance for full year 2022.

As we are increasingly international company, we continually monitor risk factors globally. We currently have minimal exposure to the impacts from the difficult circumstances in Ukraine, but our thoughts are with those in that country. We will continue to monitor these events and their potential impact on our business that will unfold that said, we have raised our guidance for revenue less ancillary services.

And the range of $249 million to $257 million, which results in an annual revenue growth rate of 40% at the midpoint, our full year 2022 expectations reflect our confidence in the growth of our existing clients across all of our verticals the ramp up of the clients. We added during 2021 and contributions from <unk>.

Lyons, we signed during 2022 with.

With respect to adjusted EBITDA, we have raised our full year 2020 guidance to be in the range of 10 million to $14 million, reflecting our current view about continued growth and execution in the business alongside continuation of our previously announced growth in investment clients.

With respect to guidance for Q2 2022 revenue like the ancillary services is expected to be in the range of $45 million to $48 million, which represents a year over year revenue growth rate of 41% at the midpoint as we enter our seasonally lowest quarter of the year.

Seasonality does have an impact on adjusted EBITDA on a quarterly basis due to the fixed cost nature of our personnel and pay increases implemented during Q1, 2022, which will have a full quarter impact. During Q2, 2022, specifically Q2 2022 will generate negative adjusted EBITDA with this seasonally low.

<unk> has been reflected in our full year 2022, adjusted EBITDA guidance in conclusion, we are pleased with our Q1 2022 financial results and overall business performance and we continue to look forward to the rest of 2022.

That I would like to turn the call over to the operator for questions operator.

We will now begin the question and answer session. So ask a question you May Press Star then one on your telephone keypad, if you're using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.

At this time, we will pause momentarily to some of our roster.

Our first question will come from Dan Perlin with RBC capital markets. You May now go ahead.

Hey, guys congratulations on another great quarter.

A question about new client wins 130, new clients.

It's a really strong number I think Mike you called out you added 40 and travel.

I'm wondering how do we think about the remaining call. It 90, or so is that pretty evenly distributed and when we think about this 130 and you're kind of leading a lot of your discussion today, starting with travel is there like.

Our expectation that these or maybe some of the more sizable clients that travel is likely to be the most impactful as you think about the build out into 2022, so anything around that would be fantastic. Thanks.

Hey, so I'm happy to jump here and sorry, if this is Dan thanks for the question.

Overall the quarter it looks like other quarters in terms of the distribution, meaning we had a very healthy distribution of wins across the various verticals education would have been the largest vertical in terms of wins by account travel was particularly strong we feel we've got sort of a great stride in the in the travel segment.

And the other segments as well so good good wins across all four of the businesses.

I think the second part of your question was sort of a bit about sort of the significance of the account.

What we'd say there is that they also are following very much along the lines of our historical patterns in terms of size if anything we see slightly better in terms of sort of the average IRR across those clients. So.

We would be very we're very happy with the group that we've just added into our client list, but overall I would say it follows the mix and sizing we've historically shared with you.

Okay, and then a quick follow up in relation to.

The domestic education solution you guys are selling can you just remind us kind of a go to market motion you've got there.

You called out I think University of Connecticut, which sounds like it took both down. So my question is you've got a pretty big backlog of cross border education.

Are you finding it a lot easier just to go back to that back book in order to.

So when those types of domestic education deals.

Or are you finding that actually clients are ready to make a bigger change for both.

That's where you're seeing more success near term. Thank you.

I'll take that one as well so.

There's a couple of things about domestic to try to sort of paint the picture of how pleased we are and how well it's going on the domestic side. So the first thing focusing on your question was sort of that U S. Domestic win along the lines of Yukon previous call, we announced Stanford.

We see a mix of those it tends to be easier as you implied that we would take an existing client.

I appreciate fly wire that we'd be able to take that client and due to the land and expand to be able to add the domestic that is probably the more common move for us, but you can't as an example that doesn't have to be that way for here in the U S market and where we can take a net new client.

Agile cross border and domestic only.

The only other point I'd add to this is that sort of contrast that with our experience internationally remember internationally. We are also offering.

And international payment as the offering and I would say internationally, it's probably if anything slightly the opposite it's more frequent for us to come in and be able to take on both domestic and international from early on or even right away in terms of the relationship. So that domestic piece is working for us both in the U S as well as in our international markets.

That's great. Thank you very much.

Thank you.

Okay.

Our next question will come from Jason Kupferberg with Bank of America.

Now go ahead.

Hey, guys. This is Kathy on for Jason. Thanks for taking my question. So just a general kind of question overall for 2022 guidance. Obviously, you guys had a strong quarter, but it looks like you guys are raising our 2022 revenue guidance by more than that though is that upside just mainly coming from the travel and education vertical there may be.

Can you talk a little bit more about the <unk> and the health care piece as well and kind of what is driving your more optimistic outlook.

Yeah. Thank you.

Yes, thanks for the question.

One thing I would just highlight is we see confidence across the business.

And so when you look at that.

I would say that.

Flowed through in how we look at full year full year guidance now so clear.

Clearly, we called out education and travel in the comments and I would say that it's definitely where we're seeing additional upside here.

Based on the results we saw in Q1.

But really across all sectors right, we feel really good about the trends, we're seeing I covered a bit in my prepared remarks, there's good trends across all of these industries, but definitely the callouts or education travel I.

I would also say just.

Global performance across lots of regions is really encouraging at this point too.

Specifically around.

The travel business, so those would be big columns.

Okay Awesome and then just on the margin piece can you just talk about quantifying some of the investments in the business that you talked about whether it's on the.

On the marketing side or some other pieces just so you know and have any of those expectations changed for the full year. Thank you.

Brian and maybe cover just cover the breakdown on the investments and then Mike in Doubleclick in the numbers.

Sure I mean, we have.

An investment plan that we shared a little bit about in the last call. We will also be sharing quite a bit more about that in the investor day that we've got coming up here.

We've really focused on go to market resources as well as R&D, although I'd say theres growth really across all.

All elements of the business as we scale into the revenue growth that you've seen US report the last few quarters.

In terms of that sales and marketing, we're probably at least for my part most excited about that just because we're starting to see and feel really good about the results. We've generated there so that investment, which I think we shared it added about 100 people overall in that go to market function inside of the company has not.

Not only delivered well in terms of adding clients, but if we look at the IRR that we signed for the quarter. We felt really good about Q1, sorry, Q1 signings. We felt really good about Q1 pipeline growth that was generated by that go to market team and so overall, we're early in that investment right.

Resources come onboard and you expect there returned to come over a bit of time, but the early results that we're seeing we feel very very good about.

On the R&D front, we have again, an ambitious R&D plan.

We'll be sharing more about some of the new areas for us in the upcoming Investor day, but we are we're ramping that team is sort of the second major area of investment for US overall, the all in line with the with our plans and expectations.

Okay, cool and if I could just with the last one.

The 145 per cent for tableau with pretty impressive I mean can you talk about how that compared to.

The overall business and how that is relative to just the travel piece that you disclosed. Thank you yes.

Yes. So overall NRI was also very healthy generally right in line with our long term averages that we've shared with you overtime, so NRI very healthy.

Across the business travel happened to be particularly strong we sort of called out in my comments.

The general strength of travel in terms of return to travel.

All the dynamics in that are very healthy right, there's more transactions, meaning more travel happening there is a higher average transaction size happening within that part of the business. So we see very healthy growth in growth in terms of.

Average transaction size I'd say, the EMEA region has particularly hot but we saw strength really across the span of our of our travel clients.

Awesome I appreciate the detail and congrats on the quarter. Thanks.

Thanks.

Our next question will come from Darrin Peller with Wolfe Research you May now go ahead.

Hey, guys.

I mean, it's pretty clear that the investments paid off with the number of customers are adding at least 130 record levels versus the average I think it's about 100 per quarter before so it's great to see.

But I do want to dive in a little bit again on the margin and the investments, we're making to deliver on that so you added 100, I think you said 100 professionals that can add up in cost.

Is that does that run rate.

I don't know if you guys hear me, okay, but is that the right run rate to think about where you have enough capacity from an engineering standpoint to show a little more operating leverage going forward now or is that maybe we can see some element of more of a pass through or do you have to keep adding at that rate in your view.

To keep to keep the growth alive.

Yes.

I'll start and folks can jump in I would say.

In general.

The investments, where we continue to pull is really important that we see the result, as we started to see here in Q1, but again. These are really investments we've talked about for 'twenty, three 'twenty four and beyond right.

So I think that's the first the important part.

We will see results through 2022, but again, we were making these investments really for the long term.

One thing I would also just highlight in.

And the way in which we're looking at it is that that.

That leverage that we've talked about before which is <unk>.

Strong EBITDA margins over the medium to long term, we continue to hold that really really true right. We're building this business for the long term and expect it to have kind of.

Industry strong leading.

EBIT margins over the long term so again, we could get there sooner, but we see opportunities to really invest in and that's really what we shared on the last earnings call. What we'll continue to talk about at Investor Day.

And it's great to see the go to market paying off again product and tech people hopefully realize we've scaled now for industries.

Launched four new industries launched additional products, so again very confident in our product and tech investments.

I have a track record of identifying new use cases, deploying new products and driving that land and expand strategy across industry that Rob has talked about so much. So you really feel good about it.

But again, we want people to really remember these are multiyear investments.

And in addition to that.

Doesn't change our view on long term EBIT margins being quite strong.

So just to follow up I mean, philosophically speaking I understand long term it doesn't change your view might but I mean, just given the market. We're in is there any change whatsoever in terms of what you consider to be the long term horizon of reach certain levels of margins or is it really just important that given the opportunity to continue to invest as you see.

Given that given the opportunities in front of you.

Yes.

I think the times are not lost enough.

The same time we.

Thank you.

It's not unrealistic to see some flow through happen this year, but we're going to we're going to invest.

And again, we can continue to show that the flow through could happened last year.

Can continue to do that we're obviously going to look at things such as G&A and everything else that we can look at to continue to show that scale that we showed last year and hopefully people.

We will look at us and say these investments make sense, we have a quite a cash position, but also we're not a we're not a team that has.

He has taken any investments lately in the past right I think we've been good stewards of capital we will.

Continue to do that based on the ROI on these investments.

And again when do we get there sooner.

Could we get there sooner I think we could but again, we have a huge opportunity super low penetration on this total addressable market and ton of growth ahead. So we're trying to walk that line and hopefully that's clear.

Just one quick follow up if you don't mind one of the questions. We get a lot is to help explain the differentiation domestically why you guys win but why the land and expand work. So why why you are resonating so much with your customers domestically. After you get in the door with cross border often and that clearly seems to be the case that continues.

Yeah.

I always believe it comes down to people.

People and tech.

And so when you look at people and product again, our team I've said this before I mean, it's our industry experts.

We believe that the best of the best within these industries.

And so they understand the pain points of these clients and.

Have great reputations in the industry. So I think that first helps but you have to have a great product and I think no matter, which of these industries you look at.

Again, there is a combination of companies that have tried to either deliver solutions, but theyre very dated or they require you to piece together two or three other types of technology.

Leading payment providers payment relationships banks et cetera, plus the software.

And we're really coming in but something truly unique and different right, we're coming in with something that solves the complete problem modern technology.

Not only sold but delivered by a team of experts.

And again I think people are starting to see that and you don't win big deals like Texas A&M Stanford.

You've got without that opportunity without without clearly demonstrating that so again I think it will take time right. These industries don't.

Don't transform overnight, but these are multiyear strategy for us right.

Great. Thanks, guys.

Yeah.

Our next question will come from Ashwin <unk>.

Sure.

<unk> with Citi you May now go ahead.

Thank you.

Hey, guys.

It's.

Good to hear from you guys and good results.

I guess given the student admissions data that you shared and then.

Did you get detection that youre seeing in travel as well should we look for and especially solid GQ.

And Abbvie.

Think of modeling from a sequential quarter over quarter basis.

Is that sort of.

Strength sustainable.

Down the road is this sort of the question.

Yes, I'll start and then Mike Ellis I'm sure, we'll dive into just make sure.

Everybody has the numbers baseline but.

In general you're thinking about it the right way I mean, obviously, we've referenced some of the Aetna.

Admissions data.

As an input to.

To why we feel so strong and confident that we'll hit in Q3 from the United States perspective, you're right about that Ashwin.

So definitely that is a very encouraging sign I would also say, we generally see positive trends around global movement.

Again, I think we're all well aware there's continues to be COVID-19 spreads but.

Less impactful when people are navigating around them when it comes to travel.

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That is definitely the trend and that's definitely what we're expecting Mike maybe you can just double click on the Q3 numbers in the quarterly seasonality. So everyone has the hesitant demand.

Yes, sure Ashwin good to hear from you. They had missing data is indicative of what we would expect for a couple of reasons I think first and foremost if you think about the client adds that Mike and Robert talked about and education driving a good portion of those.

That's really important to get those signed in the first half of the year. So you get to recognize the transactions in the second half of the year. That's one big piece of it I think also the land and expand strategy that we've taken that has allowed us to show that we can actually generate incremental revenues from our client relationships across all of our products and in education.

It gives us a lot of comfort and optimism around what Q3 will look like as you know from seeing the historical numbers Q3 is always our biggest revenue quarter and we expect that would continue.

Four.

2022, but based on what we're seeing on the emissions data and the success, we're having with our clients signs we're optimistic about what the second half of the year will look like from a revenue standpoint.

Got it got it and in terms of sort of.

The ability to keep hiring talent could you comment a little bit more.

Q1 2022 Flywire Corp Earnings Call

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