Q1 2024 Flywire Corporation Earnings Call

May 7, 2024

Operator: Greetings and welcome to Flywire Corporation's First Quarter 2024 Earnings Conference. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Greetings and welcome to fly Wire Corporation first quarter 'twenty 'twenty four earnings conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference.

Please press Star zero on your telephone keypad as a reminder, this conference is being recorded it is now my pleasure to introduce your host Mr. Hollis VP financial planning and analysis. Thank you. Mr. <unk> you may begin.

Operator: As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Akil Hollis, VP of Financial Planning and Analysis. Thank you, Mr. Hollis. You may begin. Thank you and good afternoon.

Hollis: Thank you and good afternoon.

Akil Hollis: With me on today's call are Mike Massaro, Chief Executive Officer, Rob Orgel, President and Chief Operating Officer, and Cosmin Pitigoi, Chief Financial Officer. Our first quota 2024 earnings press release, supplemental presentation, and, when filed, forms in queue can be found at ir.flywire.com. During the call, we will be discussing certain forward-looking information. However, actual results could differ materially from those contemplated by these forward-looking statements.

Hollis: With me on today's call I'm, Mike Massaro, Chief Executive Officer, Bob Udell, President and Chief operating Officer and Carsten.

Hollis: Politically and financially.

Natural officer.

Hollis: Our first quarter 'twenty 'twenty four earnings press release supplemental presentation, and when filed Form 10-Q can be found at IR <unk> com.

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

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

Akil Hollis: We will also be discussing certain non-GAAP financial measures. Please refer to our press release and SEC filings for more information on the risks regarding these forward-looking statements that could cause actual results to differ materially from the required disclosures and reconciliations related to non-GAAP financial measures. This call is being webcast live and will be available for replay on our website. I would now like to turn the call over to Mike Massaro.

Hollis: We'll be discussing certain non-GAAP financial measures. Please refer to our press release and SEC filings for more information on the risks regarding these forward looking statements that could cause actual results to differ materially and the required disclosures and reconciliations related to non-GAAP financial measures.

Hollis: 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 Mark Massaro.

Michael Massaro: Thank you, Akil, and thank you to everyone that is joining us today. We are pleased to share our Q1 FY24 results with all of you here today, showing strong performance across the business. In a few minutes, Rob Orgel, our president and COO, and Cosmin Pitigoi, our new CFO, will go into greater detail about the quarter. But first, I will start with a few financial highlights from Q1 2024. Revenue Less Ancillary Services was $110.2 million, an increase of 24% year over year. Adjusted gross profit for the quarter was $71.9 million, an increase of 20% year-over-year.

Michael Massaro: Thank you appeal and thank you to everyone that is joining us today, we are pleased to share our Q1 FY 'twenty four results with all of you here today, showing strong performance across the business.

Michael Massaro: In a few minutes, Rob Oracle, our president and CFO and constant <unk>, our new CFO will go into greater detail about the quarter.

Michael Massaro: But first I will start with a few financial highlights from Q1 2024.

Michael Massaro: Revenue less ancillary services was $110 2 million increase of 24% year over year.

Michael Massaro: Adjusted gross profit for the quarter with $71 9 million, an increase of 20% year over year.

Unknown Executive: And adjusted EBITDA was $13 2 million for the quarter, increasing by $6 2 million year over year.

Speaker Change: These Q1 results are a great start to the year for <unk>, Let me start with some of the core fundamentals that continue to drive our strong results.

Michael Massaro: This is nearly a 2x increase since the IPO in 2021. We continue to strengthen all four verticals and numerous sub-verticals. We now have clients in over 50 countries. They have the ability to process payments in over 140 currencies from over 240 countries and territories, providing strong global diversification.

Speaker Change: As a company we have now exceeded over 4000 clients. This is nearly a two.

Speaker Change: <unk> increase since the IPO in 2021, we continue.

Speaker Change: To strengthen all four verticals and numerous sub verticals. We now have clients in over 50 countries the ability to process payments over a 140 currencies from over 240 countries and territories, providing strong global diversification.

Michael Massaro: We also enjoy great revenue diversification with no client generating over 2% of FY23 revenue less ancillary services, and top 10 clients accounting for less than 13% of revenue less ancillary services, all combined with great NRR, logo retention, and LPB to CAC. Our Flymates span across 25 different countries, representing more than 40 nationalities and languages spoken, with a culture centered around execution and ambitious innovation that we believe continues to be a real advantage.

Speaker Change: We also enjoyed great revenue diversification with no client generating over 2% by FY2023 revenue less ancillary services.

Speaker Change: Top 10 clients accounting for less than 13% of revenue less ancillary services also.

Speaker Change: All combined with great NRI logo retention and LTV to CAC.

Michael Massaro: Our fly made span across 25 different countries, representing more than 40 nationalities in languages spoken with a culture centered around execution and ambitious innovation that we believe continues to be a real advantage.

Michael Massaro: We are confident in our revenue momentum this year on a constant currency basis as you will see from the guidance <unk> will review. We also expect adjusted EBITDA margin expansion in line with our prior guidance.

Michael Massaro: Now much has been written in Q1 tightening student visa policies in many key education market.

Michael Massaro: The overall environment and numbers of international students are indeed important factors for Flywire's education business. I want to reiterate my confidence in our ability to navigate these visa changes, highlighting a few key reasons. First, our business has demonstrated resilience throughout other periods of visa-related change, a benefit of having an increasingly global and diversified business. In the UK, for instance, we nearly doubled our higher education revenue in the quarter, growing this market well above the company average, without performance driven by winning new clients in strong NRR.

Michael Massaro: The overall environment and numbers for international students are indeed important factors for <unk> education business.

Michael Massaro: I want to reiterate my confidence in our ability to navigate these visa changes highlighting a few key reasons.

Michael Massaro: First our business has demonstrated resilience throughout other periods of visa related change a benefit of having an increasingly global and diversified business.

Michael Massaro: In the U K for instance, we nearly doubled our higher education revenue in the quarter.

Michael Massaro: Growing this market well above the company average with outperformance driven by winning new clients in strong and IRR.

Michael Massaro: In Canada, a number of our clients say that recent government study permit allocations are better than they previously expected, with a rolling ramp back to normal admissions speed and cadence. Second, we believe in the long-term growth of the international student market. Students wanting an international education will find it somewhere, and we expect the existing Flywire footprint will capture a sizable portion of these payments. Agent partners globally who help students in the application process support this view that students are inclined to adjust their plans as needed to continue their education. We also believe that international students have great value to their host countries and are the lifeblood of many universities and colleges.

Michael Massaro: In Canada.

Michael Massaro: A number of our clients say that recent government study Permian allocations are better than they previously expected with a rolling ramp back to a normal admissions beat and cadence.

Michael Massaro: Second we believe in the long term growth of the international student market.

Michael Massaro: Students wanting in international education will find it somewhere and we expect the existing fly wire footprint will capture a sizeable portion of these payments.

Michael Massaro: Our agent partners globally to help students in the application process.

Michael Massaro: Port This view that students are inclined to adjust their plans as needed to continue their education.

Michael Massaro: We also believe that international students a great value to their host countries.

Michael Massaro: And are the lifeblood of many universities and colleges.

Michael Massaro: Our clients will deal with the re-phasing and period of adjustment but expect, in the long term, the policies we are discussing now will be moderated, and the long-term growth trajectory of international education will continue. Lastly, we are still early in our journey to penetrate our large end markets and are demonstrating strong organic growth in the industries we serve. We also continue to grow with existing clients and win new clients thanks to an effective go-to-market strategy and ongoing product innovation across our business.

Michael Massaro: Our clients will deal with the re phasing in period of adjustment, we'd expect in the long term. The policies. We are discussing now will be moderated and our long term growth trajectory of international education will continue.

Michael Massaro: Lastly, we are still early in our journey to penetrate our large end markets and are demonstrating strong organic growth in the industries we serve.

Michael Massaro: We also continue to grow with existing clients and win new clients. Thanks to an effective go to market strategy and ongoing product innovation across our business.

Michael Massaro: We also made great progress in Q1 against our three-pronged strategy of optimizing our go-to-market capabilities, expanding our Flywire advantage, and strengthening our Flymate community. As for go-to-market, we continue to optimize and invest to support our growth algorithm. As I said last quarter, throughout 2024, we plan to increase our investment in sales and relationship managers by more than 15% in aggregate, Spread Across Verticals and Geography.

Michael Massaro: We also made great progress in Q1 against our three pronged strategy of optimizing our go to market capabilities, expanding our flywheel advantage and strengthening our <unk> community.

Michael Massaro: As for go to market, we continue to optimize and invest to support our growth algorithm.

Michael Massaro: As I said last quarter throughout 2024, we plan to increase our investment in sales and relationship managers by more than 15% in aggregate.

Michael Massaro: Spread across verticals and geographies for.

Michael Massaro: For example, in travel, we are already seeing early returns from this investment. We started the year with strong momentum in our new subvertical of ocean experiences. Investing in a combination of marketing and sales efforts, we opened up some net new travel geographies, allowing our team, for example, to bring on new clients in Chile and Indonesia. Additionally, we continue to see great success in South Africa, another investment market for us, which has seen a 3x increase in clients over the last 12 months.

Michael Massaro: For example in travel we are already seeing early returns from this investment we started the year with strong momentum in our new sub vertical of ocean experiences.

Michael Massaro: Investing in a combination of marketing and sales efforts.

Michael Massaro: We opened up some net new travel geographies, allowing our team for example to bring on new clients in Chile and Indonesia.

Michael Massaro: Additionally, we continue to see great success in South Africa, another investment market for US, which has seen a three <unk> increase in clients over the last 12 months.

Michael Massaro: While expanding our Flywire advantage, we remain focused on product and payment innovation to power our vertical ecosystem. For example, in healthcare, we rolled out integrated patient financing options funded by a third party to augment our powerful affordability. Our clients see this as a clear solution for providers and patients to balance affordability and increase collectability, as our non-recourse patient financing solution gives patients longer payment terms and lower monthly payments to fulfill their financial responsibility.

Michael Massaro: While expanding our flywheel advantage, we remain focused on product and payment innovation.

Michael Massaro: Power our vertical ecosystems.

Michael Massaro: For example in health care, we rolled out integrated patient financing option funded by a third party to augment our powerful affordability suite.

Michael Massaro: Our clients see this as a clear solution for providers and patients to balance affordability and increased collectability.

Michael Massaro: As our nonrecourse patient financing solution gives patients longer payment terms and lower monthly payments to fulfill their financial responsibility one client reported a 16% increase in cash from payment plans at just six months from our integrated financing solution among other benefits.

Michael Massaro: One client reported a 16% increase in cash from payment plans in just six months from our integrated financing solution, among other benefits. We go into more detail about our healthcare business in this quarter's supplement. And we continue to be focused on strengthening and growing our Flymate community. As I've mentioned before, we have a values-driven culture here at Flywire, which is a critical component to maintaining high-performance teams.

Michael Massaro: We go into more detail about our health care business in this quarter supplement.

Michael Massaro: And we continue to be focused on strengthening and growing our <unk> community as I have mentioned before we are a values driven culture here at fly wire, which is a critical component to maintaining high performance teams.

Michael Massaro: Living our values like execution and ambitious innovation empowers Flymates to collaborate and move quickly to solve hard problems for our clients. For example, this was prominently on display this quarter when a team of global flymates came together to sign a full suite deal for a large education institution in the United States. After meetings with our global team of sales, product, legal, and implementation experts, the client was so convinced of the benefits of Flywire that they ended a multi-year relationship and contract.

Michael Massaro: Living our values like execution and ambitious innovation empowered fly mates to collaborate and move quickly to solve hard problems for our clients.

Michael Massaro: For example, this was prominently on display this quarter when a team of global <unk> came together.

Michael Massaro: A full suite deal for a large education institution in the United States.

Michael Massaro: After meetings with our global team of sales product legal and implementation experts. The client was so convinced of the benefits of fly wire that they ended a multi year relationship and contract.

Michael Massaro: Our team is now underway with what is on track to be the company's fastest enterprise-level deployment ever. Our culture is also underpinned by our commitment to giving back to the communities we serve. Last quarter, Flymates from around the world came together to build a school and library for local students and families in Panama through a non-profit partner of ours called School of the World.

Michael Massaro: Our team is now underway with what is on track to be the company's fastest enterprise level deployment ever.

Michael Massaro: Our culture is also underpinned by our commitment to giving back to the communities we serve.

Michael Massaro: Last quarter I made from around the World came together to build a school and library for local students and families in Panama through a nonprofit partner of ours called school the world.

Michael Massaro: Flymates came back with a new sense of perspective on the world, motivation for their work, and fulfillment in their lives. As one Flymate put it, I'm proud that Flywire is a global company with such strong social responsibilities and supports its employees in making the world a better place. The experience left an indelible mark on me, and I learned that my fellow Flymates are endlessly supportive and kind and willing to do whatever it takes to get the job done.

Michael Massaro: Climates came back with a new sense of perspective on the world motivation and their work and fulfillment in their lives.

Michael Massaro: As <unk> put it I'm proud that flower is a global company with such strong social responsibilities and supports its employees and making the world a better place.

Michael Massaro: Experienced left an indelible Mark on me and I learned that my fellow Flatmates are endlessly supportive.

Michael Massaro: Kind and willing to do whatever it takes to get the job done.

Michael Massaro: In closing, we are pleased with how the business performed during the first quarter, underscoring the resilience of our business and winning strategy across our verticals. I would now like to turn the call over to Rob Orgel, our president and COO, to review some operational highlights from the quarter.

Michael Massaro: In closing we are pleased with how the business performed during the first quarter underscoring the resilience of our business and winning strategy across our verticals.

Michael Massaro: I would now like to turn the call over to Rob <unk>, our president and COO to review some operational highlights from the quarter Rob.

Robert Orgel: Thanks, Mike. Good afternoon, everyone. It was another quarter of strong performance for the company, with good results on both revenue and adjusted EBITDA. Our sales, client service, and delivery teams delivered great results during the quarter. Here are just a few of the highlights.

Unknown Executive: Thanks, Mike Good afternoon, everyone. It was another quarter of strong performance for the company with good results on both revenue and adjusted EBITDA are sales client service and delivery teams delivered great results. During the quarter here are just a few of the highlights.

Robert Orgel: We added over 200 new clients, the most we've signed in a single quarter. We saw particular strength in our travel vertical with an all time high projected ARR sign during the quarter. We generated over 20% year over year pipeline growth across all verticals, with B2B and healthcare giving their highest all-time pipeline creation in a single quarter. This strong growth was driven by the continued execution of our five strategic growth pillars.

Unknown Executive: We added over 200, new clients, mostly signed in a single quarter we.

Unknown Executive: We saw particular strength in our travel vertical with an all time high of projected IRR signed during the quarter.

Michael Massaro: We generated over 20% year over year pipeline growth across all verticals with <unk> in health care, giving their highest all time pipeline creation in a single quarter.

Robert Orgel: As a reminder, those pillars include growing with existing clients, adding new clients, expanding our ecosystem through channel partnerships, Expanding to New Industries, Geographies, and Products, and finally Strategic Value Enhancing Acquisitions. I'd like to briefly discuss how we grew across our four verticals during the first quarter in line with those growth pillars. Starting with education, with an estimated TAM of $660 billion, we saw an increase in new clients signed and an increase in our percentage win rate compared to Q1 of last year. For example, we went live with Kukmin University in South Korea, which is a solid growth region for us. Kukmin University is a leading private university founded in 1946 and is the seventh largest university in Seoul.

Michael Massaro: This quarter strong growth was driven by the continued execution of our five strategic growth pillars. As a reminder, those pillars include growing with existing clients.

Michael Massaro: Adding new clients.

Michael Massaro: Expanding our ecosystem through channel partnerships.

Michael Massaro: Expanding to new industries geographies and products and finally strategic value enhancing acquisitions.

Michael Massaro: I'd like to briefly discuss how we grew across our four verticals during the first quarter in line with those growth pillars.

Michael Massaro: Starting with education with an estimated Tam of 660 billion.

Michael Massaro: We saw an increase in new clients signed and an increase in our percentage win rate compared to Q1 of last year.

Robert Orgel: It is home to over 24,000 students. With Kukmin University on board, Flywire now supports several prestigious universities in South Korea, bolstering our position as a leading provider of payment solutions in the Korean higher education market. We also signed our first K-12 school in Korea in Q1, expanding our reach beyond higher education into another active sector of Korean education and a testament to our growing recognition and impact in the region. We also continue to identify new use cases in education where software drives value and payment, and we'll continue to develop solutions to drive growth and value for our clients. For example, we expanded the availability of our third-party invoicing solution, harnessing the power of the Flywire platform to enable sponsors, such as employers, government agencies, or other organizations, to pay students' tuition and fees directly.

Michael Massaro: For example, we went live with Kookmin University in South Korea, which is a solid growth region for us.

Michael Massaro: And University as a leading private university founded in $19 46, and as the seventh largest university and salt.

Michael Massaro: Home to over 24000 students.

Michael Massaro: With Kootenay University onboard slight wire now support several prestigious universities in South Korea.

Michael Massaro: Our position as a leading provider of payment solutions in the Korean higher education market.

Michael Massaro: We also signed our first K through 12 school in Korea in Q1, expanding our reach beyond higher end due to another active sector of Korean education, and a testament to our growing recognition and impact in the region.

Michael Massaro: We also continue to identify new use cases in education, where software drives value in payments and we'll continue to develop solutions to drive growth and value for our clients. For example, we expanded the availability of our third party invoicing solution harnessing the power of the <unk> platform to enable sponsors.

Michael Massaro: As employers government agencies or other organizations, who pay students' tuition and fees directly.

Robert Orgel: Institutions are reporting lower administrative burden, ease of reconciliation, and increased revenue as part of their early benefits. For example, one of our clients, which is a large elite research institution, is leveraging Flywire's third-party invoicing solution to better serve their global student base. They have seen a 70% increase in timely third-party tuition collections after requesting payment via Flywire.

Michael Massaro: Institutions are reporting lower administrative burden ease of reconciliation and increase revenue as part of the early benefits.

Michael Massaro: One of our clients, which is a large elite research institution.

Michael Massaro: Leveraging fly wires third party invoicing solutions to better serve their global student base.

Michael Massaro: You have seen a 70% increase in timely third party tuition collection after requesting payment via <unk>, who we are.

Robert Orgel: And we are helping them manage these for more than 500 unique third-party vendors and organizations. Once again, showing that Flywire has a proven track record of software that drives value and payment and delivers strong NRR. In healthcare, with an estimated TAM of $500 billion, we saw record new pipeline creation, which grew over 100% on a year-over-year basis as we generated momentum with specialty providers in the U.S. During the quarter, we signed several new healthcare clients.

Michael Massaro: And manage these for more than 500 unique third party vendors and organization.

Michael Massaro: Once again, showing that <unk> has a proven track record of software drives value in payment and delivering strong NRI.

Michael Massaro: In health care with an estimated Tam of $500 billion we.

Michael Massaro: We saw a record new pipeline creation, which grew over 100% on a year over year basis, as we generated momentum with specialty providers in the past.

Michael Massaro: During the quarter, we signed several new health care clients, we're continuing to expand with conifer health solutions client United Surgical partners International.

Robert Orgel: We are continuing to expand with Conifer Health Solutions client United Surgical Partners International. USPI is the largest ambulatory network in the United States, with over 480 ambulatory surgery centers and surgical hospitals and over 50 health system partners across 35 states in the US.

Michael Massaro: Spi is the largest ambulatory network in the United States with over 480, ambulatory surgery centers and surgical hospitals and over 50 health system partners across 35 states in the U S. We are.

Robert Orgel: We are currently live with a portion of USPI's network of surgical centers, with more on the way. We also went live with a handful of Oracle Health CommunityWorks clients during the quarter. For example, we went live with Henry County Medical Center, a large CommunityWorks facility providing rehabilitation-focused care in West Tennessee. There are hundreds of CommunityWorks hospitals on the Oracle Health platform that are well-suited to become future users of the Flywire Health platform.

Michael Massaro: Currently live with a portion of Uspi's network of surgical centers with more on the way.

Michael Massaro: We also went live with a handful of Oracle health community works clients. During the quarter. For example, we went live with the Henry County Medical Center, a large community works facility, providing rehabilitation focused care and west Tennessee.

Michael Massaro: There are hundreds of community hospitals on the Oracle health platform that are well suited to become future users of the fly wire health platform.

Robert Orgel: In travel, with an estimated PAM of $530 billion, we generated an all-time record of projected ARR signed during a quarter as we brought on new clients across all our sub-verticals. In terms of expanding into new geography, we went live with Cruce Andino, one of South America's oldest travel companies, providing travelers with salient experiences among the lakes and ancient trade routes of the Andes Mountains and our first ever travel client in Chile. Flywire's strategic partnership and integration capabilities with Arch2Travel, a travel software company based in Santiago, Chile, helped us win Cruce Andino.

Michael Massaro: And travel with an estimated Tam of $530 billion.

Michael Massaro: We generated an all time record of projected <unk> signed during the quarter as we brought on new clients across all our sub verticals in.

Michael Massaro: In terms of expanding into new geographies, we went live with Crusade Andina, one of South America's oldest travel companies, providing travelers with stable experience among the links and ancient trade routes of the Andes Mountains, and our first ever travel client in Chile.

Michael Massaro: <unk> strategic partnership and integration capabilities with arch to travel or travel software company based in Santiago, Chile helped us we increased and D&O.

Robert Orgel: Our team is excited to work with new clients and our partners to deepen our local expertise in this corner of the global travel market. As Mike mentioned earlier, we're seeing early success in our ocean experiences sub-vertical and saw strong traction in Japan during their peak ski season in January and February. Finally, in the B2B business, which covers a broad TAM estimated to be about $10 trillion, we increased the average seal size, increased our number of client wins, increased projected ARR compared to Q1 of last year, and had our highest pipeline generation quarter to date for our B2B team.

Michael Massaro: Our team is excited to work with new clients and our partners to deepen our local expertise in this corner of the global travel market as Mike mentioned earlier, we're seeing early success in our ocean experience a sub vertical and saw strong traction in Japan during their peak ski season in January and February.

Michael Massaro: Finally in <unk> business, which covers a broad GM estimated to be about 10 trillion.

Michael Massaro: We increase the average deal size increased our number of client wins.

Michael Massaro: <unk> projected IRR compared to Q1 of last year and had our highest pipeline generation quarter to date for our <unk>.

Robert Orgel: We continue to have great traction with manufacturing and distribution clients, which now represent roughly a quarter of our clients in B2B by providing sophisticated and integrated accounts receivable solutions. Flywire stands out in its ability to tackle the complex payment challenges of distributors and manufacturers with global customer bases, where our combination of international and domestic payments capabilities, our ability to accept card and non-card payments, and our integrated cloud-based payments platform infrastructure enables us to deliver seamless solutions that are a major step forward for many B2B companies still in the early phases of digitizing their financial systems and processes.

Michael Massaro: We continue to have great traction in manufacturing and distribution clients, which now represent roughly a quarter of our clients and <unk> <unk>.

Michael Massaro: By providing sophisticated and integrated accounts receivable solutions.

Michael Massaro: <unk> stands out in our ability to tackle the complex payment challenges of distributors and manufacturers with global customer basis, where our combination of international and domestic payments capabilities, our ability to accept card and non card payments and our integrated cloud based payments platform infrastructure and <unk>.

Michael Massaro: <unk> us to deliver seamless solutions that are a major step forward for many BBB companies.

Michael Massaro: In the early phases of digitizing their financial systems and processes for.

Robert Orgel: For example, this quarter, we added MoCap, a Missouri-based manufacturer of plastic and rubber components. MoCap transacts in 18 countries outside of the U.S. and will be using Flywire as their exclusive payment platform for both e-commerce and traditional invoice flows.

Michael Massaro: For example, this quarter, we added Mocap and Missouri based manufacturer of plastic and rubber components Mocap transaction in 18 countries outside of the U S and we'll be using <unk> as their exclusive payment platform for both e-commerce and traditional invoice flows.

Robert Orgel: Additionally, we went live with MC3 Group, a computer hardware distributor formed in 2002 with over 4,000 wholesale clients globally. Flywire has helped MC3 expand local payment options for international customers and reduce costs to receive these payments. Stepping out of our verticals and moving towards our efforts towards efficiency and scale, we remain committed to control costs and invest prudently. We continue to prove the scalability of our business model as operating expenses as a percent of revenue continue to fall.

Michael Massaro: Additionally, we went live with MCT group, a computer hardware distributor formed in 2002 with over 4000 wholesale clients globally.

Michael Massaro: <unk> has helped MSC three expand local payment options for international customers and reduce cost to receive these payments.

Michael Massaro: Stepping out of our verticals and moving to our efforts towards efficiency and scale, we remain committed to control costs and invest prudently. We continue to improve the scalability of our business model as operating expenses as a percent of revenue continue to fall in Q1 expenses as a percent of revenue were down six points versus Q1.

Robert Orgel: In Q1, expenses as a percent of revenue were down six points versus Q1 2023 and down five points sequentially. More than half of our hiring this year has been in our go-to-market teams, reflecting Flywire's commitment to revenue and customer growth and also showing that our operational teams are scaling cost effectively. Flywire enjoys operating leverage because of our shared service model around two of the three core elements of the Flywire Advantage.

Michael Massaro: 23, and down five points sequentially.

Michael Massaro: More than half of our hiring this year has been in our go to market teams, reflecting <unk> commitment to revenue and customer growth and also showing that our operational teams are scaling cost effectively.

Michael Massaro: <unk> enjoys operating leverage because of our shared service model around two of the three core elements of the fly wire advantage that is our global payment network is shared by our verticals and our core payments platform as leveraged as part of the solution for each of the verticals as well.

Robert Orgel: That is, our global payment network is shared by our verticals, and our core payments platform is leveraged as part of the solution for each of the verticals as well. We remain vigilant to deliver on top and bottom line growth, reflecting the strength of our business and business model. With that, I will now turn the call over to Cosmin to go over our results for the quarter, as well as discuss guidance for Q2 and 2024. Okay, Cosmin?

Michael Massaro: We remain vigilant to deliver on the top and bottom line growth, reflecting the strength of our business and business model.

Michael Massaro: With that I will now turn the call over to Kosmos to go over our results for the quarter as well as discuss guidance for Q2 and 2024 guardsman.

Cosmin Pitigoi: Thank you, Rob. And good afternoon, everyone. As many of you know, I joined about two months ago, and I'm incredibly excited about the long-term potential of the business, as I will outline shortly, and especially energized by the culture at Flywire. I look forward to helping provide leadership to Flywire through the next phase of growth and to continuing to deliver value for our clients, payers, partners, Flymates, and shareholders. Today, I'll provide an overview of our results for the first quarter and then discuss our outlook for Q2 of the fiscal year.

Kosmos: Thank you Rob and good afternoon, everyone. As many of you know I joined about two months ago and I'm incredibly excited about the long term potential of the business.

Kosmos: Outline shortly.

Kosmos: And especially energized by the culture at <unk>.

Kosmos: Look forward to helping provide leadership to <unk> through the next phase of growth and to continue to deliver value for our clients peers partners primates and shareholders.

Kosmos: Today I'll provide an overview of our results for the first quarter and then discuss our outlook for Q2 and the fiscal year.

Cosmin Pitigoi: As Mike and Rob mentioned, we had a strong start to the year across many of our operating metrics and financials. Payment volumes during the quarter were $7 billion, which represented an increase of 23% compared to Q1 2023.

Kosmos: As Mike and Rob mentioned, we had a strong start to the year across many of our operating metrics and financials.

Kosmos: Payment volumes during the quarter were $7 billion.

Kosmos: Which represented an increase of 23% compared to Q1 2023.

Cosmin Pitigoi: From a modernization standpoint, our spreads have remained relatively consistent and stable over the last several reporting quarters. Revenue Less Ancillary Services was $110.2 million in Q1, representing a 24% growth rate compared to Q1 2023. Our revenue growth rate was driven by increases in transaction payment volume, as well as our study link acquisition, which contributed $2.1 million to platform and other revenue in the quarter. We saw strong growth despite a high single-digit percentage headwind related to our Canadian higher education business.

Kosmos: From a monetization standpoint, our spreads have remained relatively consistent and stable.

Kosmos: Over the last several reporting quarters.

Kosmos: Revenue less than salary services was $110.2 million in Q1.

Kosmos: Presenting a 24% growth rate compared to Q1 2023.

Kosmos: Our revenue growth rate was driven by increases in transaction payment volume as well as our study link acquisition, which contributed $2 $1 million to platform and other revenue in the quarter we.

Kosmos: We saw strong growth.

Kosmos: By a high single digit percentage headwind related to our Canadian higher education business.

Cosmin Pitigoi: Our Q1 revenue minus ancillary services performance compared to our expectations was primarily driven by stronger than expected volumes from UK higher education clients and Stronger Than Estimated growth from new travel accommodation clients in Europe and Asia. FX rates were relatively flat year over year.

Kosmos: Our Q1 revenue less ancillary services performance compared to our expectations was primarily driven by stronger than expected volumes from U K higher education clients.

Kosmos: And stronger than expected growth from new travel accommodation clients in Europe and Asia.

Cosmin Pitigoi: However, FX was a $1.2 million headwind against the guidance we provided for Q1 based on the December 31st exchange rate. During the quarter, transaction revenue increased 26% year-over-year, driven by a 33% increase in transaction payment volume, primarily in our international and U.S. education vertical, as well as travel. Platform and other revenues increased 16% year over year, primarily driven by a 6% increase in platform and other revenue volume, as well as from platform fees that do not carry payment volumes, specifically revenue associated with the contribution from study link. Adjusted gross profit increased $71.9 million during the quarter, 20% above the $59.9 million generated in Q1 2023.

Kosmos: FX rates were relatively flat year over year.

Kosmos: FX was a $1 $2 million headwind against the guidance, we provided for Q1.

Kosmos: Based on December 31 exchange rates.

Kosmos: During the quarter transaction revenue increased 26% year over year.

Kosmos: Driven by 33% increase in transaction payment volume, primarily in our international and U S education vertical as well as travel.

Kosmos: Platform and other revenues increased 16% year over year, primarily driven by a 6% increase in platform and other revenue is volume.

Kosmos: As well as from platform fees that do not carry payment volumes, specifically revenue associated with the contribution from study link.

Kosmos: Adjusted gross profit increased $71 $9 million during the quarter.

Kosmos: 20% above the $59 9 million generated in Q1 2023.

Cosmin Pitigoi: Adjusted gross margin was 65.2% for Q1 2024, down 200 basis points from 67.2% for Q1 2023. The year-over-year change in adjusted gross margin was driven primarily by the strong growth of our transaction revenue versus our platform revenue, particularly from the success of our travel vertical and of our land and expand strategy, where we won US domestic higher education business, both areas where credit cards are more prevalent. As we've highlighted in past quarters, FX shifts occur during settlement of transactions. This quarter, these shifts resulted in losses that impacted our cost of sales.

Kosmos: Adjusted gross margin was 65, 2% for Q1 2024 down 200 basis points from 67, 2% for Q1 2023.

Kosmos: The year over year change in adjusted gross margin was driven primarily by the strong growth of our transaction revenue versus our platform revenue.

Kosmos: Particularly from the success of our travel vertical.

Kosmos: And of our land and expand strategy, where we won U S domestic higher education business.

Kosmos: Both areas, where credit cards are more prevalent.

Kosmos: As we've highlighted in past quarters FX shifts to occur during settlement of transactions.

Kosmos: This quarter. This shift resulted in losses that impacted our cost of sales.

Cosmin Pitigoi: In the prior quarter, these impacts were largely offset by FX hedges, resulting in a mitigated impact on adjusted EBITDA. Just state EBITDA grew to $13.2 million for the quarter, almost double the $7 million generated in Q1 2023. Suggested EBITDA margin was up over 400 bps year-over-year. The increase in adjusted EBITDA was driven by revenue high performance and cost management. With respect to capitalization, as of March 31, 2024, we had $619 million in cash and cash equivalents, no long-term debt, and 122.3 million shares of common stock outstanding.

Kosmos: Prior quarter.

Kosmos: These impacts were largely offset by FX hedges, resulting in a mitigated impact on adjusted EBITDA.

Kosmos: Adjusted EBITDA grew to $13 2 million for the quarter almost double the 7 million generated in Q1 2023.

Kosmos: Adjusted EBITA margin was up over 400 bps year over year.

Kosmos: The increase in adjusted EBITA was driven by revenue outperformance and cost management.

Kosmos: With respect to capitalization as of March 31, 2024, we had $619 million in cash and cash equivalents no long term debt.

Kosmos: $122 3 million shares of common stock outstanding.

Cosmin Pitigoi: Similar to adjusted EBITDA, we have seen strong cash flow generation and growth over the last 12 months. In short, we have ample opportunity to further build on our capital allocation strategy and execution, both organically and inorganically. Moving on to guidance, for full year 2024, we expect revenue less ancillary services to be in the range of $478 million to $498 million, based on spot foreign exchange rates as of March 31st, 2024. This represents a year over year growth rate of 28% at the midpoint. The $8 million reduction at the midpoint from prior guidance is driven by changes in effect.

Kosmos: Similar to adjusted EBITDA, we have seen strong cash flow generation and growth over the last 12 months.

Kosmos: In short we have ample opportunity.

Kosmos: Other build on our capital allocation strategy and execution, both organically and Inorganically.

Cosmin Pitigoi: This is due to the strengthening of the dollar since our last projections based on the spot FX rates as of December 31st, 2023, which reduces our international revenue for a reported newest dollar. Please note that the U.S. dollar has continued to strengthen since March 31st. We expect to deliver full-year 2024 adjusted EBITDA in the range of $64 million to $75 million. At the midpoint of our full-year 2024 guidance range, we expect to generate approximately 320 basis points of adjusted EBITDA margin improvement, which is in line with our prior guidance. Q2 2024 revenue less than salary services is expected to be in the range of $96 million to $104 million.

Kosmos: Moving onto guidance.

Kosmos: For full year 2024, we expect revenue less ancillary services to be in the range of $478 million to $498 million based.

Kosmos: Based on spot foreign exchange rates as of March 31, 2024.

Kosmos: This represents a year over year growth rate of 28% at the midpoint.

Kosmos: The $8 million reduction at the midpoint from prior guidance is driven by changes in FX.

Kosmos: Due to the strengthening of the dollar since our last projections based on the spot FX rates as of December 31, 2023.

Kosmos: Which reduce our international revenue on a reported in U S dollars.

Kosmos: Please note that the U S. Dollar has continued to strengthen since March 31.

Kosmos: We expect to deliver full year 2024, adjusted EBITDA in the range of 64 million to $75 million.

Kosmos: At the midpoint over our full year 2024 guidance range, we expect to generate approximately 320 basis points of adjusted EBITDA margin improvement, which.

Kosmos: Which is in line with our prior guidance.

Kosmos: Q2 of 2024 revenue lessens salary services is expected to be in the range of 96 million to $104 million.

Cosmin Pitigoi: This guidance, relative to our thoughts earlier this year, is primarily impacted by the change in the FX spot rate, as already discussed, and Canada. We expect more of our Canadian higher education revenue to be realized in the second half of the year versus being more evenly distributed, as we previously expected. Rounding out the guidance discussion, we expect Q2 adjusted EBITDA to be in the range of $1 million to $4 million. As a reminder, Q2 has been the lowest quarter for adjusted EBITDA over the past few years due to the seasonality of our business. And we expect that our traditional seasonality will be repeated.

Kosmos: This guidance relative to our thoughts earlier this year is primarily impacted by the changing the FX spot rate.

Kosmos: As already discussed and Canada.

Kosmos: We expect more of our Canadian higher education revenue to be realized in the second half of the year versus more evenly distributed as we previously expected.

Kosmos: Rounding out the guidance discussion, we expect Q2 adjusted EBITDA to be in the range of 1 million to $4 million. As a reminder, Q2 has been the lowest quarter for adjusted EBITDA over the past few years due to the seasonality of our business.

Kosmos: And we expect that our traditional seasonality will be repeated.

Cosmin Pitigoi: In closing, I want to step back and provide my early perspectives on the long-term growth opportunity at Flywire. Starting outside in, it's clear that while Flywire has continued to gain market share given its compelling client value proposition, our four unique verticals are in the very early stages of automating their payment capabilities, with a much more customized approach than other verticals that benefited from standard and legacy payments offerings. So as we look ahead, we have low single-digit penetration in these large verticals, and we believe we're uniquely positioned to continue to capture share, given our software solution.

Speaker Change: In closing I want to step back and provide my early perspectives on the long term growth opportunity of flower.

Speaker Change: Starting outside and it's clear that our flywheel has continued to gain market share given as compelling client value prop or four unique verticals are in very early stages of automating their payments capabilities.

Speaker Change: They're much more customers approach than other verticals that benefited from standard and legacy payments offering.

Speaker Change: So as we look ahead, we have low single digit penetration in these large verticals and we believe we're uniquely positioned to continue to capture share given our software solution.

Cosmin Pitigoi: The opportunity to solve these multidimensional customer problems starts with large, complex cross-border payments but increasingly opens the door to cross-selling into domestic capability. I'm committed to continue to drive internal and external transparency in how we are executing our strategy against our growth algorithm. First, we've talked about the Net Revenue Retention Rate, or NRR, which has been stable over the years. To unpack that, there are two main components.

Kosmos: Opportunity to solve these multi dimensional customer problems starts with large complex cross border payments.

Kosmos: But increasingly opens the door to cross selling into domestic capability.

Kosmos: I'm committed to continuing to drive internal and external transparency and how we are executing our strategy against our growth algorithm.

Kosmos: First we've talked about net revenue retention rate or NR, which has been stable over the years.

Cosmin Pitigoi: First, as I just mentioned, we see high single to low double digit TAM growth in our four verticals based on external factors, including secular trends. Second, we believe we can add meaningful growth from expanding with our existing clients. These two drivers combined have been driving approximately two-thirds of our growth, which has been quite stable over the years.

Kosmos: To unpack that there are two main components first as I just mentioned, we see high single to low double digits Tam growth in our four verticals based on external factors, including secular trends.

Kosmos: Second we believe we can add meaningful growth from expanding with our existing clients.

Cosmin Pitigoi: In addition, roughly one-third of our growth comes from the combination of ramping up last year's client additions and new clients added in a year. On top of this, we can accelerate even further through early innovations, such as our payer services. Finally, we're continuously evaluating strategic value-enhancing acquisitions.

Kosmos: These two drivers combined have been driving approximately two thirds of our growth has been quite stable over the years.

Kosmos: In addition, roughly one third of our growth comes from a combination of ramping last year's client additions.

Kosmos: New clients added in the year.

Kosmos: On top of this we can accelerate even further through early innovations such as our payer service.

Kosmos: Finally, we're continuously evaluating strategic value enhancing acquisitions.

Operator: All of this top-line growth is expected to result in even faster bottom-line growth as we drive productivity through investments in scale, data, systems, and automation. I am excited about the journey ahead as we are clearly still early in solving unique customer problems at scale. Operator?

Kosmos: All of this top line growth is expected to result in even faster bottom line growth as we drive productivity through investments in scale data systems and automation.

Kosmos: Im excited about the journey ahead as we are clearly still early and solving unique customer problems at scale.

Speaker Change: I'll now turn it back over to the operator for questions operator.

Kosmos: Yeah.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your questions from the queue.

Speaker Change: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Information tone will indicate your line is in the question queue you might start to if you would like to move to questions from the queue for participants using speaker equipment. It maybe.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button. One moment, please, while we poll for questions. The first question comes from the line of Dan Perlin with RBC Capital Markets.

Speaker Change: Be necessary to pick up your handset before pressing the star keys.

Speaker Change: One moment please poll for questions.

Speaker Change: The first question comes from the line of Dan Perlin with RBC capital markets. Please go ahead.

Daniel Rock Perlin: Good evening, guys. I just wanted to go back to, you know, the Canadian market issue. Mike, I just want to talk a little bit more, if you could, about just how comfortable you are ultimately with those trends. I mean, understanding how student visas are being used as kind of immigration tools and other things.

Daniel Rock Perlin: Thanks, Good evening guys I just wanted to go back to the Canadian market issue, Mike I, just wanted to talk a little bit more if you could about just how comfortable you are ultimately with the with those trends I mean understanding like student visas are being used as kind of immigration tools and other things and it seems like that was getting a little bit.

Michael Massaro: And it seems like that was getting a little more pervasive. So just maybe remind us the visibility that you have. Part of the second half recovery looks like you got a recapture rate assumption in there. You know, where is that coming from? Is that from your agents, where do you get the visibility there? Just anything incremental there would be. Hey Dan, it's Rob.

Daniel Rock Perlin: Pervasive so just maybe remind us the visibility that you have.

Kosmos: Part of the second half recovery looks like you got a recapture rate assumption in there.

Kosmos: Where is that coming from is that from your agents when you get the visibility there just anything incremental there would be helpful.

Robert Orgel: I'm going to jump in here, and why don't I start by giving you some sort of perspective from the market, from the clients, from my understanding of the regulatory conversations that are happening in Canada. And then we can also get into sort of the guidance piece so that you can have more clarity on that. So, from the last time we talked about Canada, there's considerably more clarity around sort of what's happening for the schools and how they are able to move forward.

Kosmos: Hey, Dan, it's Rob I'm going to jump in here and why don't I start with giving you some of the sort of that perspective from the market from the clients from the understanding of the regulatory.

Unknown Executive: The conversations that are happening in Canada and then.

Unknown Executive: We can also get into sort of the guidance piece. So that you can have clarity on that so from the last time, we all talked about Canada. There is considerably more clarity around sort of what's happening for the schools and how they are able to move forward. So they have clarity on their allocations. They have clarity on the process that they are allowed to use for admitting students.

Unknown Executive: And they are moving forward with what we're calling a ramping of return and what that means is they now are able to pursue what you would call a normal set of activities that leads to enrollments that leads to payments obviously taking into account what are the caps and allocations that they were given under the.

Unknown Executive: Announcements became right around the end of March beginning of April.

Unknown Executive: I was up in Canada, I have spent time talking with our.

Unknown Executive: Our client teams and the general sense of things is that the actual results are sort of less extreme and more manageable than what they feared when they were operating with sort of almost complete uncertainty and so.

Robert Orgel: That leads to enrollment, that leads to payments, obviously taking into account the caps and allocations that they were given under the announcements that came right around the end of March and beginning of April. And I was up in Canada, and I spent time talking with our client teams, and the general sense is that the actual results are sort of less extreme and more manageable than what they feared when they were operating with sort of almost complete uncertainty.

Unknown Executive: That understanding the understanding from talking to our agents about their plans for being able to resume activity gives everybody more comfort for how they move forward. So the way, we do our modeling and I'll hand off the Kaufmann here in just a second is that we built our guidance based on a bottoms up model. So theres been lots of discussion about sort of how do you approach. This we're able to approach it from.

Robert Orgel: And so, you know, that understanding, the understanding from talking to our agents about their plans for being able to resume activity gives everybody more comfort about how they move forward. So the way we do our modeling, and I'll hand off to Cosmin here in just a second, is that we built our guidance based on a bottoms-up model.

Unknown Executive: Essentially a school by school perspective understand their allocations or allocations.

Unknown Executive: And what that will mean relative to their expectations and with that we're able to build up obviously what was summarized at the province level, but we're actually doing it from a bottoms up essentially school by school level inside of our guidance, so with that Tom and you want to.

Robert Orgel: So there's been lots of discussion about sort of how you approach this. We're able to approach it from essentially a school-by-school perspective, understand their allocations, their allocations, and what that will mean relative to their expectations. And with that, we're able to build on, obviously, what was summarized at the province level, but we're actually doing it from the bottom up, essentially school-by-school level under our guidance. So with that, Cosmin, do you want to jump in?

Tom: Hey, Dan Thanks for the question. So let me put some numbers around kind of how we're thinking about the guidance.

Tom: As it relates to Canada. So first off for the full year as we've said that we've maintained the guidance based on a constant currency basis. So the main driver there is FX.

Tom: As we as we think about Canada, you serve hard Rob.

Unknown Executive: Rob talk about it let me just talk about three specific areas that I think were called out. So Q2, a full year and then second half recapture in particular, so for Q2.

Cosmin Pitigoi: So Q2, full year, and then second half recapture in particular. So for Q2, what we're seeing is more of a gradual or a rolling ramp in enrollment, rather than sort of a bounce or a surge. So with that, what we're assuming is roughly a mid-single-digit negative revenue impact in Q2. Second, for the full year, if you recall, we talked about low teams in the past.

Unknown Executive: What we're seeing is more of a gradual we're rolling ramp in enrollment so rather than sort of a bounce of search.

Unknown Executive: So with that or assuming is roughly a mid single digit negative revenue impact in Q2 second for the full year.

Cosmin Pitigoi: What we're seeing now is closer to a mid-teens million revenue impact. So again, you've heard us talk about Q1. Initially, it was sort of mid-single digits, and then we updated everyone to sort of be mid- to high-single-digits in Q1 impact.

Unknown Executive: You'll recall, we talked about low teens in the past what we're seeing now is closer to a mid teens million revenue impact.

Unknown Executive: So again, you've heard US talk about Q1 initially it was sort of mid single and then we updated everyone. So it would be mid to high single digits, Inc. Q1 impact all of those things again as you saw in Q1, we outperformed.

Unknown Executive: So that was the impact in Q1 now to your question on recapture and how we think about second half.

Cosmin Pitigoi: All of those things, again, as you saw in Q1, we outperformed, and so that was the impact in Q1. To your question on recapture and how we think about the second half, that, as you see in our supplement materials, we wanted to make sure that we added a lot more transparency on this point. So what we have right now as far as recapture in international students going to countries outside of Canada is a mid-single-digit million-dollar revenue in the second half.

Unknown Executive: That <unk>.

Unknown Executive: As you see it in our supplemental materials, we wanted to make sure that we add a lot more transparency on this point so while we have right now as far as the recapture in international students going to countries outside of Canada is a mid single digit million revenue.

Cosmin Pitigoi: So that is international students going into those other countries. So again, as we step back, we feel good about the range that we have around the midpoint and also just that Canada will be a growth market for us as we get through some of these external events. Great, that's super helpful.

Unknown Executive: And second half so that is international is doing is going into those other countries. So again as we step back we feel we feel good about the range that we have around the midpoint and also just that Canada will be a growth market for us as we get through some of these external events.

Daniel Rock Perlin: Just quickly, Cosmin, since I've got you here, maybe, you know, as you say, you've been there for a couple of months now. FX definitely plays a big swing factor in a lot of different areas for the company. And I'm just wondering, as you think forward about like, philosophically, how you want to present guidance and maybe numbers or KPIs, have you given any thought to other, other ways in which to do that, FX-neutral guidance, you know, etc. Just anything around what you might be thinking would be helpful there as well. Yeah, of course.

Speaker Change: Great. That's super helpful. Just quickly Cosmos as I've got you there maybe.

Cosmos: As you say you've been there for a couple of months now FX definitely plays a big swing factor in a lot of different areas for the company and I'm. Just wondering as you think forward about philosophically, how you want to present guidance and maybe numbers or Kpis have you given any thought to other other ways in which to do that FX neutral.

Speaker Change: <unk> et cetera, just anything around what you might be thinking would be helpful. There as well thanks.

Cosmin Pitigoi: And that was probably one of the first things I heard when I came in, and I come from sort of a background of talking about FX neutral or constant currency growth rates. So that's something that we will be looking to build and be able to start looking at going forward. So that is, in principle, how we think about the true kind of growth of the business outside of the noise of FX, especially, you know, as you think about our business. As you know, more than half of our revenue is outside the US.

Speaker Change: Yes of course and that that was probably one of the first things I heard when I when I came in and I come from sort of a background of talking about FX neutral or currency.

Speaker Change: <unk> constant currency growth rates.

Speaker Change: So thats something that we will be looking to build and be able to start looking at that going forward. So that is in principle, how we think about the true kind of growth of the business outside of the noise of FX.

Cosmos: Especially.

Cosmos: As you think about our business as you know more than half of our revenues outside the U S.

Cosmin Pitigoi: So obviously, that's going to have a pretty large impact. So maybe since I realized that we have a big FX factor here for a full year, I can just unpack that for you quickly, in terms of how we think about currencies. So we have four big currencies, you know, that are, you know, the biggest components; then it's the Canadian dollar, the Aussie dollar, the British pound, and the euro. As we look across those, remember, when we gave guidance earlier this year, that was based on a rate as of December 31. If you look across those currencies, the dollar actually weakened significantly last year into December 31.

Cosmos: So obviously, that's going to have a pretty large impact.

Cosmos: So maybe since I realize we have.

Unknown Executive: Big FX factor here for full year I can just unpack that for you quickly in terms of how we think about currencies. So we have.

Unknown Executive: For big currencies.

Unknown Executive: That are the biggest component then it's the Canadian dollar the Aussie dollar the British pound and the Euro as you as we look across those remember when we gave guidance earlier. This year that was based on a rate as of December 31st if you look across those currencies the dollar actually we.

Unknown Executive: And significantly into last year into December 31 than what we saw throughout the rest of the quarter.

Cosmin Pitigoi: Then what we saw throughout the rest of the quarter was a gradual strengthening of the dollar. And in some cases, some of those currencies, by the time we ended the quarter, were better by one to sort of 4%, three to 4%. So all of that has created that $1.2 million of pressure in Q1. Now, since that was gradual, that was sort of the impact on Q1. As you look to Q2, Q3, Q4, again, right now, our guidance is based on rates as of March 31. And, of course, actually, the dollar has strengthened a little bit versus that time.

Unknown Executive: Is a gradual strengthening of the dollar in some cases some of those currencies by the time, we ended the quarter.

Unknown Executive: They're sort of better by one to sort of 4% three 3% to 4%. So all of that has created that one $2 million of pressure in Q1 now since that was gradual analysis or the impact on Q1 as you look to Q2 Q3, Q4 again right now.

Unknown Executive: Our guidance is based on rates as of March 31.

Unknown Executive: And of course actually the dollar.

Cosmin Pitigoi: But as you can imagine, if it was $1.2 million in Q1, and those rates gradually move throughout the quarter, that becomes almost double the headwind as you look through every quarter going forward. Again, these are things that, hopefully, as we move to an FX-neutral growth rate focus in terms of our guidance and how we calculate and present that, I think will help neutralize some of this noise. But for now, again, being sort of an international business, that is something that does impact the numbers.

Unknown Executive: And a little bit versus at that time, but as you can imagine if it was $1 2 million in Q1 and those rates gradually move throughout the quarter that becomes almost double the headwind as you look through every quarter going forward. Again. These are these are things that hopefully as we move toward an FX neutral growth rate focus.

Unknown Executive: In terms of our guidance on how we.

Unknown Executive: Calculated and present that I think will help neutralize some of this noise, but for now again being a.

Unknown Executive: Sort of an international business that is something that does impact the numbers, but however, as you saw we were able to offset a lot of this with.

Cosmin Pitigoi: But, as you saw, we were able to offset a lot of this by ensuring that we keep to sort of our margins and also maintain our commitments for the year as far as the top line is concerned. Does that help?

Daniel Rock Perlin: Excellent. Yep. No, that's very helpful.

Unknown Executive: And on ensuring that we keep to sort of our margins and also we maintained our <unk>.

Unknown Executive: Commitments for the year as far as top line.

Speaker Change: Does that help excellent yes, no thats very helpful. Thank you so much.

William Alfred Nance: Thank you. The next question comes from the line of Will Nance with Goldman Sachs. Please go ahead.

Unknown Executive: Thank you next question comes from the line of will Nance with Goldman Sachs. Please go ahead.

William Alfred Nance: Hey guys, maybe I'll start with a more numerical question just on the point of FX, just to make sure we're all kind of level setting on the same thing. I kind of glanced quickly at what FX rates have done quarter to date. I know you're using the 1Q quarter in spot rates in the guidance, and it seems like, you know, the FX rate kind of magnitudinally, and I'm eyeballing this, is kind of like roughly half of what we saw over the course of the quarter.

William Alfred Nance: Hey, guys.

William Alfred Nance: I'll start with a more numerical questions just on the point of FX just to make sure. We're all kind of level setting on the same thing kind of glance quickly at what FX rates have done quarter to date I know youre using the <unk>.

William Alfred Nance: <unk> quarter in spot rates in the guidance.

William Alfred Nance: And it seems like.

William Alfred Nance: The FX rate kind of magnitude really at my volume. This is kind of like roughly half of what we saw over the course of the quarter.

William Alfred Nance: But maybe you could help put a finer point on if we were to use current FX rates instead of FX rates at the end of the quarter, what would be the incremental impact to the revenue guide relative to, I think you said $8 million or so, the adjustment to the full year guide from the 1Q group? Yeah, so I would say, right now, if you so we actually did see the dollar weaken just a little bit in the last few days.

William Alfred Nance: But maybe you could help put a finer point on if we were to use permit FX rates instead of FX rates at the end of the quarter, what would be the incremental impact to the revenue guide relative to I think you said $8 million or so.

William Alfred Nance: Adjusted for the full year guide for the <unk> movements.

Speaker Change: Yes, so I would say right now if you. So we actually did see the dollar weakened just a little bit the last few days. So if you were to look and I'll sort of as of even today, there's a little bit of pressure, but I would say, it's in kind of the very low single digits for the full year.

William Alfred Nance: So if you were to look, you know, sort of as of even today, there's a little bit of pressure, but I would say it's in kind of the very low single digits for the full year, sort of sub almost, you know, around a million or less. So, you know, it's a very small sort of immaterial impact, but it is, it is pressure. It's just not really material.

William Alfred Nance: And I'll sort of sub almost around $1 million or less so.

William Alfred Nance: It's a very small sort of immaterial impact, but it is pressure is just.

William Alfred Nance: Not it's not really material, so again lesser of less than $1 million I'd say for the full year somewhat evenly spread throughout the quarter throughout.

Cosmin Pitigoi: So again, less than 1 million, I would say for the full year, somewhat evenly spread throughout the quarters. Okay, that's helpful. And then maybe just a bigger picture question. I think you mentioned TAM growth around high single to low double digits. I'm wondering if you can unpack that between sort of pricing and kind of tuition and price increases, that sort of thing, on college campuses around the world, and then how much of that comes from sort of the growth in the number of international students across the different geographies. And I ask because that second part seems to be the point that's more debated right now, just given all of the immigration controls going up around the world. So I'm just curious.

William Alfred Nance: Throughout the quarters got it got.

Speaker Change: Got it Okay. That's helpful. And then maybe just a bigger picture question.

William Alfred Nance: You mentioned, the Tam growth around high single to low double digits. I'm wondering if you can unpack that between sort of pricing and kind of tuition price increases that sort of thing.

William Alfred Nance: I'll call it cancers around the world and then how much of that comes from sort of the growth in the number of international students across the different geographies and I ask that second part seems to be the point that's that's.

William Alfred Nance: The beta right now just given all of the immigration controls going up around the world. So I'm just curious.

William Alfred Nance: You know, what kind of growth in international students are you expecting over the years? And then when you look at the components of NRR in the education business, what is the kind of same-store sales per student contributing to that NRR? Hey, well, sure, I'll jump in and take that.

William Alfred Nance: What kind of growth in international students are you expecting over the years and then when you look at UV components of NRI in the education business. What is the kind of same store sales on the number of students contributing to that Enron.

Robert Orgel: So you know, again, if you look over international students since the last couple of decades, right, you'll see kind of a low single digit, low mid single digit variation if you'd normalize out for the COVID period. And so that I would say is our broad view of international student growth over time. And then when you kind of break down some of the information that's in the supplement, you know, I think when you think through just where we're seeing growth, right, there's obviously going to be industry-based dynamics that help drive it, right. So whether that's, you know, tuition increases, again, you're going to see relatively modest growth there. But, you know, I always joke that I've never seen a tuition bill go down, and I have four kids.

Speaker Change: Hey, well sure I'll jump in and take that so again, if you look over international since the last couple of decades, right Youll see kind of a low single digit low mid single digit variation if you had normalized.

Speaker Change: <unk> out for the Covid period.

Speaker Change: And so that I would say is our broad.

Speaker Change: Our view of international student growth over time.

Speaker Change: And then when you kind of break down some of the information Thats in the supplement.

Speaker Change: When you think through.

Speaker Change: Just where were seeing growth rate there is obviously going to be.

Speaker Change: Industry based dynamics that that helped drive it right. So whether that sito tuition increases again, youre going to see relatively modest growth there, but I always joke ive never seen a tuition bill go down.

Robert Orgel: So again, you're going to have some component of average transaction size increase over time; you're going to see a growth in international students. And the other thing I just tell you to remember, especially in the education vertical, is just that land and expand strategy being a huge area for TAM expansion for us there. That's a significant part of that TAM and kind of the explanation of the single digits, where we are today and the opportunity we have embedded in that customer base.

Speaker Change: And I've got four kids, so again youre going to have some component of.

Speaker Change: Average transaction size increase over time, youre going to see any growth of international students and the other thing I'd just tell you to remember, especially education vertical is just that land and expand strategy being a huge area for Tam expansion for us there.

Speaker Change: That's a significant part of.

Speaker Change: That of that Tam and kind of the explanation of the single digits, where we are today and the opportunity we have embedded in that customer base, so hopefully that alternative family.

Speaker Change: So what you heard me describe to us where a lot of these players maybe are behind a lot of these clients are behind on vertical theyre behind sort of the curve in terms of adopting.

Speaker Change: More automated.

Speaker Change: Sort of payment solutions. So we do see that also now picking up and a lot a lot of them sort of whether it's because of.

Robert Orgel: So hopefully that helps. So we do see that also now picking up, and a lot of them, sort of, whether it's because of, you know, looking for cost savings or automation capabilities. We do see that tailwind from the efforts of all of these verticals. If you can name any 1 of them, they are really looking to save money.

Speaker Change: Looking for cost savings, our automation capabilities, we do see that tailwind from the efforts of all of these verticals.

Speaker Change: If you Couldnt you can name any one of them are really looking to save money and so a lot of it is around automation and theyre going to be looking for a customized software solutions. So we play right into that space. So I think thats.

William Alfred Nance: And so a lot of it is around automation, and they're going to be looking for customized software solutions. So we play right into that space. I think that's, you know, so on top of that secular growth, we come in with a very sort of targeted solution for them. Thank you. The next question comes from the line of Darrin Peller with Wolf Research. Please go ahead.

Speaker Change: So on top of that secular growth.

Speaker Change: We come in with a very sort of targeted solution for them.

Speaker Change: Thank you next question comes from the line of Darrin Peller with Wolfe Research. Please go ahead.

Speaker Change: Yes.

Darrin David Peller: Guys, thank you. Look, I just want to be clear for everyone. I mean, it sounds like you're trying to make the point that it's 100% guidance change associated with purely FX, as you say, constant currencies on change, and then maybe Canada. But nothing else is impacting the business from what you can see. So number one, I just want to make sure that right, there's nothing else impacting. And then maybe just beyond the timing on Canada RAM, if you could just remind us, the components of the re-acceleration, just the implied growth rates, obviously accelerate by a few hundred basis points or more in the second half of the year. So again, just year over year, not forgetting about seasonality, would be helpful. Thanks, guys. Yeah, so maybe I'll start.

Darrin David Peller: Guys. Thank you.

Darrin David Peller: Look I just wanted to be clear for everyone. I mean, it sounds like you are trying to make the point that it is 100% guidance change associated with purely FX. Since you said constant currency is unchanged and then maybe Canada.

Darrin David Peller: But nothing else is impacting the business from what you could see so number one I just wanted to make sure that right. There is nothing else impacting and then maybe just beyond the timing on Canada ramp if you could just remind us.

Darrin David Peller: The components of the re acceleration just the implied growth rates, obviously accelerated by a few hundred basis points or more in the second half of the year. So again just year over year not forgetting about seasonality.

Speaker Change: Would be helpful. Thanks, guys.

Cosmin Pitigoi: And so, first off, in terms of Q2 impact, we talked about FX. That's a portion of it. Second, it is Canada, and so we're seeing that impact, again, as we discussed earlier. In addition, there are a number of other puts and takes across the portfolio that have been affected, but I would say the softness in the healthcare business is also the other reason, which ties into your sort of second question around first half to second half acceleration.

Speaker Change: Yes, so maybe let me start.

Speaker Change: And so first first off in terms of Q2 impact so.

Speaker Change: Talked about FX.

Speaker Change: That's a portion of the second it is Canada.

Speaker Change: And so we're seeing that impact again as we discussed earlier.

Speaker Change: In addition, there are a number of other puts and takes across the portfolio that impact that but I would say.

Speaker Change: Softness in the.

Speaker Change: The health care business is also the other reason, which ties into your sort of second question around the first half to second half acceleration. So some of that acceleration in the health care business.

Cosmin Pitigoi: So some of that acceleration in the healthcare business builds into how to think about, if you look at the implied growth rates first half to second half, if we were to unpack that, you see about a sort of a mid-single digit acceleration from first half to second half. A large portion of that is Canada, and again, we've disclosed the numbers there. Another portion of it is healthcare recovering in the second half.

Speaker Change: Builds into the how to think about if you look at the implied growth rate first half the second half he can.

Speaker Change: To unpack that you see about a sort of a mid single digit acceleration from first half to second half.

Darrin David Peller: A large portion of that.

Darrin David Peller: Is Canada and and again serve as.

Darrin David Peller: We can disclose the numbers there.

Darrin David Peller: Another portion of it is health care recovering in the second half and then third we do see strength in the business across a number of different areas with new client signings.

Cosmin Pitigoi: And then third, we do see strength in the business across a number of different areas, with new client signings and just overall strength in some of our other faster-growing verticals, and that is driving a good portion of the rest of that sort of mid-single digit acceleration from first half into second half. And again, we feel comfortably that we've captured a lot of that. Obviously, there is a wide range of possibilities, as I think everyone is looking into the second half as an uncertain macro environment, but overall, we feel like we've captured those components. Guys, if you want, I can just jump in.

Darrin David Peller: And just overall strength in some of our other faster growing verticals and that is driving.

Darrin David Peller: And a good portion of the rest of that sort of a mid single digit acceleration from first half first half into second half and again, we feel comfortable with captured a lot of that obviously, it's a wide range of possibilities as I think everyone's looking into the second half as the uncertain macro environment, but overall, we feel like we've captured.

Darrin David Peller: <unk> components.

Speaker Change: I can just jump in.

Robert Orgel: Rob is speaking with just a little bit of color and flavor because we want to make sure we put that sort of healthcare comment in perspective. So that acceleration in the second half is really two things going on. One is just the good lives of clients that go live in the second half. The second part is that there has been this thing, you'll see it disclosed in our queue, where there was an incident in the healthcare industry where Change Healthcare, as many of you know, had a cyber incident. That cyber incident, again, far away from Flywire, nothing to do with Flywire. But the consequence of that event was that a lot of hospitals were delayed in their ability to issue their patient bills.

Darrin David Peller: Rather speaking, but just a little bit of color and flavor because we wanted to make sure we put that sort of health care comment in perspective, so that acceleration in the second half is really two things going on one is just good go lives are clients that go live in the second half.

Darrin David Peller: The second part is that there has been this thing youll see it disclosed in our Q, where there was an incident in the healthcare industry, where change healthcare as many of you know had a cyber incident that cyber incident again far away from flyway or nothing to do with <unk>, but the consequence of that event was that a lot of the hospitals were delayed in their ability to <unk>.

Darrin David Peller: Out their patient bills and if you remember were primarily involved in helping them collect the patient responsibility portion of their bills. So what you saw based on sort of the the events that happened that had our hospitals to delay some of their billing was that we see this push from Q from the first half of the year really into the second half of the year and so.

Robert Orgel: And if you remember, we're primarily involved in helping them collect the patient responsibility portion of their bills. So what you saw, based on sort of the events that happened that had our hospitals delay some of their billing, was that we saw this push from the queue from the first half of the year really into the second half of the year. And so that is sort of a natural accelerant in the second half that it's not, it's not as big as a bunch of the other things we've talked about.

Darrin David Peller: That is sort of a natural accelerant in the second half that.

Darrin David Peller: It's not as big as a bunch of the other things we've talked about but just as youre trying to put together the pieces that help you understand the growth in the second half that's one of the.

Robert Orgel: But just as you're trying to put together the pieces that help you understand growth in the second half, that's one of them. That's helpful, Rob. Guys, just a very quick word on the new customer ads being so strong, 200, broad-based travel, was it across segments? Was it, you know, education? A little more color would be great.

Speaker Change: That's helpful. Rob I was just a very quick word on the new customer adds being so strong 200.

Speaker Change: Broad based travel will hit across segments with education with a little more color there would be great.

Darrin David Peller: Yeah, I can jump in with that one as well, Derek. So, you know, for this quarter, travel was the winner in terms of the most counts, but only beat out education by a little bit. If you remember our Q4, we said, education beat out travel. So they're pretty close in that mix.

Unknown Executive: Yes, I can jump in with that one as well so.

Unknown Executive: So if you for this quarter travel was the winner in terms of the most count.

Unknown Executive: But only beat out education by a little bit if you remember our Q4, we said education beat out travel so they are pretty close on that metric.

Unknown Executive: Comment that.

Unknown Executive: <unk> added a good number of clients health care added I think the same number of clients that they added in the prior.

Unknown Executive: Q1 period, and so overall travel one out and have all had a great quarter, but education, well was very strong as well.

Robert Orgel: I would comment that, you know, B2B added a good number of clients, healthcare added, I think, the same number of clients that they added in the prior Q1 period. And so overall, you know, travel won out, and travel had a great quarter, but education was very strong as well. Screwed You Here.

Speaker Change: That's great to hear.

Christopher Nathaniel Svensson: Thanks, guys. Thank you. The next question comes from the line of Nate Svensson with Deutsche Bank. Please go ahead.

Unknown Executive: Thank you next question comes from the line of neat Swenson with Deutsche Bank. Please go ahead.

Christopher Nathaniel Svensson: Hi guys, thanks for the question. I wanted to clarify something you said earlier. So you call that a lesson?

Neat Swenson: Hi, guys. Thanks for the question I wanted to clarify something you said in response to one of Dan's questions earlier, so you've called out of less extreme impact in Canada in terms of the number of permits being issued and with originally feared but at the same time you just move to the full year guide from a low teens impact.

Neat Swenson: Impact so I'm just trying to understand what the Delta is there that's causing it to be worse for the full year is it that the first half of the year is worse than you would expected that lower recapture assumptions or is it just more uncertainty on sort of the timing of when that revenue comes through.

Christopher Nathaniel Svensson: So I'm just trying to understand what the delta is there that's causing it to be worse for the full year. Is it that the first half of the year is worse than you would expect it? Is it lower recapture assumptions? Or is it just more uncertainty on sort of the timing of when that revenue comes? So this is Rob. I can jump in.

Robert Orgel: So again, that commentary about perception was, you know, trying to give people an understanding that there is more confidence in Canada, that they now know how to proceed. They now know how to proceed with their, you know, more standard processes, they do still need to work inside the cap, and they still need to go through this ramp and comply with the new rules. Keep in mind that Q1 is behind us, right? So in terms of that effect in Q1, having grown slightly, that's what explains the expansion from low teens to mid teens. Okay, so all due to one cue being worse than expected.

Unknown Executive: This is Rob I can jump in so again that that commentary about the perception was trying to give people an understanding that there is more confidence in Canada that they now know how to proceed. They now know how to proceed with there.

Unknown Executive: As you know more standard processes, they do still need to work inside the cap and they still need to undergo this ramp and comply with the new rules keep in mind that Q1 is behind US right. So in terms of that effect in Q1, having grown slightly.

Unknown Executive: What explains the expansion from low teens to mid teens.

Speaker Change: Okay. So all due to <unk> being worse than expected got it yes.

Robert Orgel: Got it. Um, yeah, I mean, there's multiple things. I mean, there are multiple dynamics here, but that is the way to understand the overall effect. I mean, the big picture trajectory here is, you know, Q1 is behind us, and they are ramping back for the rest of the year dealing with the new set of rules that they operate under. The follow-up question I had was on your 2Q growth outlook. So, you know, you talked about the impact of FX in Canada, but that's the reason why 2Q is a little lower than you had thought maybe three months ago.

Speaker Change: Yes.

Speaker Change: There is multiple then yes.

Speaker Change: I mean, there's multiple dynamics here, but that is the way to understand the overall effect I mean, the big picture trajectory here is Ah.

Unknown Executive: Q1 is behind us and they are doing their ramping back for the rest of the year dealing with the new set of rules that they operate under.

Speaker Change: Got it I appreciate that the follow up question I had was on your <unk> growth outlook. So you talked about the impact of FX in Canada.

Speaker Change: The reason why <unk>, a little lower than you had thought maybe three months ago, but I guess, just thinking about the growth rate. It looks like by my math, it's about a 10 point range from the low end or the high end of guidance that's wider than you've been guidance typically which is more around call. It six points in the past few quarters. So just wondering what you're seeing across the business.

Robert Orgel: But I guess just thinking about even the growth range, it looks like, by my math, there's about a 10-point range from the low end to the high end of guiding. That's wider than you've been guiding typically, which is more around, call it, 6 points the past few quarters. So just wondering what you're seeing across the business, I guess maybe beyond FX in Canada, that's maybe giving you a little more trepidation as you look to forecast out, I guess, the remaining two months in the quarter. Thanks. Hi, thanks for that question. So it's Cosmin.

Speaker Change: I guess, maybe beyond FX in Canada, that's maybe giving you a little more trepidation as you look to forecast out I guess the remaining two months in the quarter. Thanks.

Christopher Nathaniel Svensson: We're, you know, obviously, there's a number of puts and takes in Q2. And so what we wanted to make sure that we captured some of that. I think part of it, too, is, as you've heard Rob talk about, Canada is, you know, a rolling ramp back. So we want to capture that as we think about the potential kind of range of scenarios. But in general, it's still, you know, I think in terms of the, you know, the midpoint here, we feel relatively good. And, you know, we have, we, you know, obviously, we're a third of the way through the quarter.

Speaker Change: Hi.

Speaker Change: So thanks for that question so as guardsman.

Speaker Change: Obviously, theres a number of puts and takes.

Speaker Change: In Q2, and so what we wanted to make sure that we capture some of that I think part of it too is as you've heard Rob talk about is Canada is.

Speaker Change: As a rolling ramp back so we want to capture that.

Speaker Change: That as we think about the potential kind of a range of scenarios.

Cosmin Pitigoi: And so we're watching all of these trends, but there is still more to go. So we wanted to make sure that we captured the scenarios as we look into the rest of the quarter. Yeah, Nate, this is Mike.

Unknown Executive: But in general it's still.

Unknown Executive: I think in terms of the mid.

Unknown Executive: The midpoint here, we feel we feel relatively good and we have.

Unknown Executive: Obviously, we are a third way through the quarter and so we're watching all of these trends but.

Unknown Executive: So still more to go so we wanted to make sure that we capture the scenarios as we look into the rest of the rest of the quarter. Yes. This is Mike the only thing I'd add is just making sure that.

Michael Massaro: The only thing I'd add is just making sure that, you know, if we had seen a snapback or something in Canada, which we didn't see, right, we, you know, hinted very clearly that we're seeing this kind of return of this rolling return back to a normal cadence of admissions processes. And so that's, you know, what we're trying to cover in our guide. Thanks. I appreciate all the code.

Michael Massaro: We had seen a snapback or something in Canada.

Michael Massaro: Which we didn't see right. We had hinted very clearly that we're seeing this kind of return to this rolling return back to a normal cadence of admission process and so that's what we're trying to cover in our guidance.

Speaker Change: Thanks, I appreciate all the color.

Jeff Cantwell: Thank you. The next question comes from the line of Jeff Cantwell with Seaport Research. Please go ahead.

Speaker Change: Thank you next question comes from the line of Jeff Cantwell with Seaport such please go ahead.

Jeff Cantwell: Hey, thanks so much. I want to see if I'm understanding your commentary and then also if you can clarify anything that needs clarification. You updated us back in March about Canada. And then since then, things got slightly worse in Q1 than initially expected, but the situation is now stabilizing, and there's some unwinding there. So now you're saying on a full year basis, mid-teens revenue impact in Canada, and that's partly offset by some recapture in other countries, and you're calling that mid-single digits. Is that right?

Jeff Cantwell: Okay. Thanks, so much I wanted to see if I'm understanding your commentary on the nostril you can clarify anything that needs clarification.

Jeff Cantwell: You updated us back in March about Canada, and then since then things got slightly worse in Q1 than was initially expected, but the situation is now stabilizing and theres. Some other barring there. So now you are saying on a full year basis mid teens revenue impact in Canada, and that's partly offset by some recapture in other countries and then you called out mid single digits is that right.

Jeff Cantwell: Thanks.

Jeff Cantwell: That's spot on, Jeff. Yes, exactly. Okay, great. And then my follow-up question on that is, how do you come up with the mid-single recapture?

Speaker Change: Yes, that's spot on Jeff, Yes, exactly.

Speaker Change: Okay great.

Speaker Change: And then my follow up on that is how did you come up with the mid single recapture.

Jeff Cantwell: And underneath that, are you seeing any areas right now where situations like Kenner are also developing? Or is the situation globally more stable? In your opinion, are there any Canada?

Speaker Change: And underneath that are you seeing any areas right now where situations like Ken are also developing or is the situation globally more stable in.

Speaker Change: In your opinion other than Canada, and would you be repeal it's fair to say that overall, if you think of how do you expect to see international student numbers going up over the medium to longer term. Thanks.

Jeff Cantwell: And would you feel it's fair to say that overall, if you think ahead, you expect to see international student numbers going up over the medium to longer term? Thanks. Let me start with the modeling question. So, in general, obviously, we have talked to our agents and others to understand how they're planning to help their students find another country if they cannot go to their original destination. So we feel like that's, you know, sort of at a macro level, that's a trend that continues.

Speaker Change: So let me start with the modeling question. So in general obviously, we have we talk to our agents and others to understand how they're planning to help their students find another another country. If they cannot go to their original.

Jeff Cantwell: So, given that, obviously, you know, it's a, it's sort of an estimate, I would say it's based on our experience and conversations with our sort of people on the ground and agents. So that feels like, you know, again, it's well captured within the range of guidance for the year. So we feel we feel good about that. We've sort of captured that, but it's based on our experience. Obviously, it's difficult to estimate exactly what students and behavior patterns and many other sorts of impact.

Speaker Change: Destination, so we feel like Thats sort of at a macro level that that's a trend that continues so given that obviously.

Speaker Change: It's sort of it's an estimate I would say, it's based on our experience in conversations with our with our sort of people on the ground and agents so that that feels like again, it's well capture within the range of guidance for the year. So we feel we feel good about that was sort of capture that but.

Speaker Change: Based on our experience obviously.

Cosmin Pitigoi: So we feel like we've well captured that in our range of expectations for the year. Yeah, and I just say, Jeff, when we look at other markets, I mean, I made some commentary earlier around just the UK strength, as an example. And so again, you know, we see other markets, you know, we know, there's headlines out there. But again, we've continued to see, you know, really good strength. You know, Canada was a pretty unique situation, just in the way in which the permit allocations were not known.

Speaker Change: It's difficult to estimate exactly what.

Speaker Change: Stevens and behavior patterns and many other sort of impacts that we feel like we will capture that in our range of expectations for the year.

Speaker Change: Yeah, and just say, Jeff I mean, when we look at other markets.

Speaker Change: Made some commentary earlier around just the UK strength as an example.

Cosmin Pitigoi: And so again, we see other markets, we know there's headlines out there, but again, we've continued to see really good strength.

Speaker Change: Canada was a pretty unique situation just with the way in which the permit allocations were not known.

Cosmin Pitigoi: Yeah.

Speaker Change: It kind of put a put a delay in that admissions process for the year that obviously impacted Q1, we still outperformed in.

Michael Massaro: And it, you know, it kind of put a delay in that admissions process for the year that obviously impacted Q1. We still outperformed, and, you know, even with that mid to high single-digit impact and millions in Q1 and the million dollar plus FX Edwin in Q1. And so, you know, again, we're looking at the full year with strength and competence, knowing that it is a unique macro environment for us. Okay, great. Thanks very much.

Speaker Change: Even with that mid to high single digit impact millions in Q1, and the $1 billion plus FX headwind in Q1.

Speaker Change: So again, we're looking at the full year with with strength and confidence knowing that it is a unique macro environment for us.

Speaker Change: Okay, great. Thanks very much.

Jeff Cantwell: Thank you. The next question comes from the line of Chris Kennedy with William Blair. Please go ahead.

Speaker Change: Thank you next question comes from the line of Cris Kennedy with William Blair. Please go ahead.

Cristopher David Kennedy: Good afternoon, thanks for taking the question. Rob, you talked about the pipeline in healthcare being up 100% year over year. Can you just talk about the changes in go-to-market strategy that's driving that type of growth in healthcare? Yeah, happy to.

Cristopher David Kennedy: Good afternoon. Thanks for taking the question, Rob you talked about the pipeline and healthcare was up 100% year over year can you just talk about the changes go to market strategy, that's driving that.

Cristopher David Kennedy:

Robert Orgel: Thanks for the question. So, you know, we outlined a couple quarters ago that we were doing a bunch of things to address the performance in that business. So, first and foremost, we did some work inside the team, elected a very strong, sorry, appointed a very strong new head of sales in that business, and I think we're seeing some of the benefits of that. So, the most obvious effect of that shows up in the pipeline, having done the significant growth that we saw over the past period. So, that's probably the number one thing.

Unknown Executive: Yeah happy to thanks for the question so.

Cristopher David Kennedy: We outlined a couple of quarters ago that we were doing a bunch of things to address that.

Unknown Executive: Performance in that business, so first and foremost we.

Unknown Executive: Did some work inside the team did a very strong sorry appointed a very strong new head of sales in that business.

Cristopher David Kennedy: And I think we're seeing some of the benefits of that so that the most obvious effect of that shows up in.

Robert Orgel: Pipeline, having done the significant growth that we saw over the past period. So that's probably the number one thing I think all of that and you can see in the supplement materials that we provided that we've also done quite a bit around the positioning of the business. We were able to show great returns based on the performance of our existing clients. We've got innovation around the integrated finance.

Cristopher David Kennedy: I think all of that, and you can see in the supplementary materials that we provided, that we've also done quite a bit around the positioning of the business. We were able to show great returns based on the performance of our existing clients. We've got innovation around the integrated financing offering. All of that, I'm sure, is helping the sales team in their efforts to drive that pipeline. But I'd point first, you know, I guess I'd point to the combination of all those things as being what's helping drive the pipeline growth. Thanks for taking the question. Thank you. The next question comes from the line of Andrew Bauch with Wells Fargo. Please go ahead.

Andrew Thomas Bauch: <unk> offering all of that I'm sure is helping the sales team in their efforts to drive that pipeline.

Andrew Thomas Bauch: First I.

Cristopher David Kennedy: I guess I'd point to the combination of all those things as being what's helping drive the pipeline growth.

Speaker Change: Great. Thanks for taking the question.

Cristopher David Kennedy: Yeah.

Thank you next question comes from the line of Andrew <unk> with Wells Fargo. Please go ahead.

Andrew Thomas Bauch: Hey, thanks for taking the question. I just wanted to follow up on some of the remarks you made around the education environment and the uncertainty around where the regulatory environment would go. And you characterize it as a reversal of policy. I'm trying to understand what is kind of the, the, barrier we need to clear as far as getting that visibility. Is it just the U.S. election? Are there any other historical patterns that we could look to get a sense of how this, how and when this can kind of dissolve?

Andrew Thomas Bauch: Hey, Thanks for taking the question just wanted to follow up on some of the remarks, you made around the education environment and the uncertainty around where the regulatory environment would go and you characterize as a re phasing of policy and I'm trying to understand what is kind of the the the barrier.

Speaker Change: Need to clear as far as getting that visibility is it just the U S election.

Speaker Change: Are there other any other historical patterns that we can look to to kind of get a sense of like how this how and when this can kind of resolve itself.

Michael Massaro: Yes, Mike, I would say, in general, we've seen changes in government policy for over a decade in different countries around the world. I'd say Canada was somewhat unique because there was a government-issued limitation on their study permits. And so that caused a lot, you know, pretty much all the clients, all the universities out there to not know how many students they should be admitting, which was the impact on Q1.

Speaker Change: Yes, Mike I would say in general.

Speaker Change: We've seen.

Michael Massaro: Changes in government policy for over a decade in different countries around the world.

Speaker Change: I'd say it Canada was somewhat unique because there was a government issued limitation on their study permits and so that caused a.

Speaker Change: Pretty much all of the clients all the all the universities out there to not know how many students they should be admitting.

Michael Massaro: That clarity has come from the government up in Canada. And so again, that's that rolling recovery back. You know, as we look across our business, it's a geographically diverse business, right? It's a sub-vertical diverse business. It's an industry diverse business. We see that as a strength for us in navigating any climate.

Speaker Change: Which is the impact to Q1 that clarity has come from the government up in Canada, and so again, that's that rolling recovery back.

Speaker Change: As we look across our business.

Speaker Change: It's a geographically diverse business right, it's a sub vertical diverse business its an industry diverse business, we see that as a strength for us in navigating any climate I mean, if you look at all types of.

Michael Massaro: I mean, if you look at all types of, you know, geopolitical and macro events last year, you know, we put up 43% growth and 540 basis points of EBITDA margin expansion. Even in Q1 with two headwinds we talked about here, we put up pretty great growth numbers and expansion of EBITDA. So, again, we feel pretty good operating in these environments. You know, we see our business as something that is diverse, and that gives us strength.

Speaker Change: Geopolitical and macro events last year, we put up 43% growth in 540 basis points to EBIT margin expansion, even in Q1 with two headwinds we talked about here, we put up pretty good growth numbers in.

Speaker Change: An expansion of EBITDA. So again, we feel pretty good of operating in these environments. We see our business is something that is diverse and that gives us a strength.

Michael Massaro: And again, it's not uncommon for us over the last 12 plus years of the company to see changes in government policies, changes in macro conditions. And so we're comfortable operating in that environment. I mean, the education business performed well in many areas, right?

Speaker Change: And again, it's not uncommon for us over the last 12 plus years of the company to see changes in government policies changes in macro conditions and so we're comfortable operating in that environment.

Randy: This is Randy.

Randy: Hi, Rob.

Randy: The education business performed well in many areas right, we talked about the U K over performance, we thought or we haven't talked very specifically, Australia grew really really well U S.

Michael Massaro: We talked about the UK overperformance, we haven't talked very specifically, Australia grew really, really well, the US had growth. So all of these are growing well, despite sort of all of these, you know, climate questions that may be out there. China grew really well for us.

Randy: <unk> had growth. So all of these are growing well despite sort of all of these.

Randy: <unk>.

Randy: Questions that maybe out there.

Speaker Change: China grew really well for us so when you look at sort of the macro environment. China is strong in terms of its contribution to the U S growth strong and its contribution to India growth I'm, sorry to UK growth My apologies all all of that is strong.

Michael Massaro: So when you look at sort of the macro environment, China is strong in terms of its contribution to US growth, strong in its contribution to India growth, sorry, to UK growth, my apologies. All of that is strong. Clearly, the stock is... Weighed down by some of these concerns over the last couple of months here. I just wanted to revisit capital allocation. Given the valuation in the stock, you know, in your M&A strategy, you know, how are you thinking about revisiting that strategy going forward and where would you potentially lean? Yeah, I mean, obviously, you'd imagine the board has always had and will continue to have conversations around capital structure.

Michael Massaro: Clearly the stock has been weighed down by some of these concerns over the last couple of months here just wanted to revisit the capital allocation given the valuation in the stock.

Speaker Change: And your M&A strategy, how are you thinking about revisiting that strategy going forward and where would you potentially into.

Speaker Change: Yes.

Speaker Change: Obviously, you would imagine the board has always had and will continue to have conversations around capital structure.

Michael Massaro: You know, we have a track record of doing M&A, we have a strong cash position, and EBITDA generation is also quite strong for the business, so it gives us lots of optionality. So, you know, nothing to report now, but I would say, you know, it's a conversation that happens at the board level and continues to happen. And, you know, we have been comfortable with what we've been seeing in the growth of the pipeline around potential deals.

Speaker Change: We have a track record of doing M&A, we have a strong cash position.

Michael Massaro: EBIT generation is also quite strong for the business. So it gives us lots of Optionality. So.

Michael Massaro: Nothing to report now, but I would say, it's a conversation that happens at the board level.

Speaker Change: It continues to happen.

Michael Massaro: I would also say have been comfortable with what we've been seeing and the growth of pipeline around potential deals at.

Michael Massaro: At the same time, as I've said before, we have strategic pillars, we have a kind of financial discipline around those deals, and we take that all into account as we make investment decisions. Thank you. Mr. Bauch, are you done with your questions? Mr. Botch.

Speaker Change: At the same time as I've said before we've got strategic pillars, we have kind of financial discipline around those deals and we take that all into account as we make investment decisions.

Speaker Change: Appreciate the thoughts Mike.

Andrew Thomas Bauch: Are you done with the questions? I am. Thank you. Thank you. The next question comes from the line of Jason Kupferberg with Bank of America. Please go back. Hi, good afternoon, guys. This is Tyler DuPont on behalf of Jason.

Speaker Change: Mr. <unk> are you done with your question.

Andrew Thomas Bauch: Mr Buch.

Buch: Are you done with your question.

Speaker Change: I am thank you.

Speaker Change: Thank you.

Buch: The next question comes from the line of Jason Kupferberg with Bank of America. Please go ahead.

Jason Alan Kupferberg: Thanks for taking the questions. I wanted to start by just following up on Jeff's question. I know we talked about Canadian visa permits repeatedly on the call.

Buch: Hi, Good afternoon, guys. This is Tyler Dupont on for Jason Thanks for taking the questions.

Tyler Dupont: I wanted to start by just following up on Jeff's question I know, we've talked about Canadian visa permits.

Tyler Dupont: So I want to ask outside of Canada, you know, there's been talk of similar legislation in some shape or form to limit the number of international students in other geographies, particularly the UK and Australia. And given that the UK made a meaningful contribution to the outperformance in the quarter, and you mentioned just in the last question that Australia has also seen strength, which is good to see, you know, how are you seeing education in those regions, how that might be impacted by potential legislation, and just sort of how we should think about growth in those regions if legislation like that does get passed? Yeah, this is Rob.

Tyler Dupont: Heatedly on the call. So I wanted to ask outside of Canada.

Tyler Dupont: Ben talk of similar legislation in.

Tyler Dupont: Some shape or form to limit the number of international students in other geographies, particularly U K Australia.

Tyler Dupont: And given that the UK was a meaningful contribution to the outperformance in the quarter and you mentioned on the last question that Australia has also seen strength.

Tyler Dupont: It just got to see how are you seeing education those regions, how that might be impacted by potential legislation and just sort of how we should think about growth in those regions. If legislation like that does get passed.

Tyler Dupont: I can maybe expand a little bit on my comments from a moment ago about Australia. Look, Australia performed very well, showed very strong growth for us, and grew well above the company growth rate. Australia has a large fan base, you know, lots of students.

Tyler Dupont: Yes. This is Rob I can maybe expand a little bit on my comments from a moment ago about Australia look Australia performed very well showed very strong growth for us grew well above the company growth rate.

Tyler Dupont: Australia is a large tam.

Unknown Executive: Lots of students, we continue to grow both with existing clients and through the addition of new clients.

Robert Orgel: We continue to grow both with existing clients and through the addition of new clients. One thing to call out there is that, as is true in many places, our business skews towards sort of what I call high-quality institutions. And if you look at what was the focus of the regulatory discussion in Australia, it was mostly to address a different audience.

Speaker Change: One thing to call out there is that as is true in many places our business skews towards a sort.

Or what I call sort of high quality institutions, and if you look at what was the.

Andrew Bauch: The focus of the regulatory discussion in Australia. It was mostly to address a different audience. So we've seen very good growth across Australia.

Robert Orgel: So, you know, we've seen very good growth across Australia in our business. And, obviously, we understand that it could be even bigger if there were none of these effects, but we've taken into account all of that when we talk about our guidance. If you look at the UK, UK business has been super strong for us and grew very nicely. And, you know, there have been some policy changes in the UK over the course of the last six or more months.

Robert Orgel: In our business and so.

Robert Orgel: Obviously, we understand that it could be even bigger if there were none of these effects, but we've taken into account all of that when when we talk about our guidance. If you look at the U K and the U K business has been Super strong for US grew very nicely and there have been some policy changes in the UK over the course of the last six or more months.

Robert Orgel: Our business continues to perform really well there, both in terms of adding to existing clients, our land and expand strategy in the UK, as well as activating new clients. Yeah, the only thing I'd add is just, I mean, international students' education is kind of like the blood of a lot of universities and colleges. I mean, they're a huge, positive factor to the countries in which they're studying.

Unknown Executive: Our business continues to perform really well there both in terms of adding to existing clients, our land and expand strategy in the U K as well as activating new clients.

Michael Massaro: And I think you're going to see a shift; you're seeing different policies around the edges to tweak and adjust where those students are going and potentially areas of study and where those will be in different countries around the world. But it's a very positive trend that, you know, students want to travel and they want to further their education, and places want them to come study there. And so I think you're going through some shifting of that. But again, shift like this that we've seen over the last 10 plus years. I understand, Mike. Thanks.

Speaker Change: Yes, the only thing I'd add is just.

Speaker Change: International students education kind of lifeblood of a lot of universities and colleges I mean, there are huge positive factor to the countries in which they are studying in and I think I think youre going to see a shift youre seeing.

Michael Massaro: Different policies around the edges too.

Michael Massaro: To tweak and adjust where those students are going and potentially areas of study and where those will be in different countries around the world, but it is a very positive trend that students want to travel and they want to further education.

Michael Massaro: Places want them to come study, there and so I think youre going through some shifting of that but again shifting like this that we've seen over the last 10 plus years.

Tyler Dupont: And just a really quick one on pre-cash flow, more modeling focused, but just sort of what trends... Are you seeing sort of as we look through 2024 and beyond more qualitatively in that respect, just how should we think about conversion rates or any additional color on free cash flow? Yeah, so obviously, we don't necessarily guide on that. But usually, I would say, you know, your EBITDA margin and EBITDA trends are a good general directional view of how we think about our cash flows.

Speaker Change: Okay understood. Thanks, and just a really quick one on free cash flow more modeling focus, but just sort of what trends are you seeing sort of as we look through 2024 and beyond for quality quantitatively in that respect. It just how should we think about conversion rates or any additional color on free cash flow.

Tyler Dupont: Yes, so obviously, we don't necessarily guide on that but usually I would say.

Tyler Dupont: Our EBITDA margin and EBITDA trends are a good general directional view of how we think about our cash flows.

Tyler Dupont: So I would say that that's probably a good way to kind of think about it again without getting into the specifics or, you know, guidance around free cash flow specifically. Adjusted EBITDA is a good way to think about it. Great, thanks a lot.

Tyler Dupont: So I would say that that's probably a good a good way to think about it again without getting into the specifics are.

Speaker Change: Guidance around free cash flow specifically.

Speaker Change: Adjusted EBITDA is a good is a good way to think about it.

Speaker Change: Great. Thanks, a lot.

Speaker Change: Thank you.

Tyler Dupont: Thank you. We have time for one more question, that is, the next question comes from the line of Tingjing Huang with JPMorgan. Please go ahead.

Speaker Change: We have time for one more question.

Tingjing Huang: The next question comes from the line of Tien Tsin Huang with Jpmorgan. Please go ahead.

Tingjing Huang: Thanks, I know the call is getting long, so thanks for squeezing me in. Just on that, I wanted to ask something separate, not Canada, just on Network Settlement, the Visa MagiCard credit card. Settlement of MDL 1720.

Speaker Change: I think some other calls getting Alonso. Thanks for squeezing me in just on that I'm going to ask something separate that Canada, just on network settlement the visa Mastercard credit card.

Tingjing Huang: I think the interchange reduction is straightforward, but I'm curious to hear your thoughts on surcharging. It feels like that would be a positive for your business. I know there's some of that that happens now, but I guess to the extent that you embrace that or work with your partners or clients, that could be an opportunity. Am I reading that correctly? I know it's early, but we love your...

Speaker Change: Settlement of Mpls 17, Tony I think the interchange reduction is straightforward, but I'm curious to hear your thoughts on on surcharges. It feels like that would be a positive for your business I know theres some of that that happens now, but I guess to the extent that you embrace that or work with your partners or clients that could be an opportunity am I reading that.

Tingjing Huang: Correctly I know, it's early but would love your.

Michael Massaro: Your thoughts, Michael, Rob, and Jim. Yeah, thanks for the question. I would say, in general, I think we're supportive of seeing this kind of come to a resolution. And, you know, we're here to support our clients in whatever way they choose to handle payment transactions. So I think, you know, it'd be probably too soon to say whether these are positive trends for us or not.

Tingjing Huang: Your thoughts, Mike Rob and team.

Speaker Change: Yes, thanks for the question.

Speaker Change: I would say in general I think we are.

Michael Massaro: Supported to see this kind of come to a resolution and we're here to support our clients and however, they choose to.

Michael Massaro: Handle payment transaction, so I think.

Speaker Change: I'd say, probably too soon to say, whether kind of positive trends for us or not but again, we focus on what the customers want to do how they want to deal with those transactional fees and and.

Michael Massaro: But again, we focus on what the customers want to do, how they want to deal with those transactional fees. And, and we can obviously do that and can implement that within our system. But again, we kind of defer to our clients to handle those decisions. Okay, that's fair.

Michael Massaro: And we can obviously do that and can implement that with.

Michael Massaro: In our system, but again kind of defer to our clients to to handle those those decisions.

Tingjing Huang: Now Cosmin, just quickly on the gross margin front, given some of the dynamics, I know there's always seasonality, but anything to lead us on the second quarter and the second half with respect to gross margin? Yeah, so stepping back, I think, you know, you've heard us talk about our gross margins coming down under pressure, mostly because of mix and some of our faster growing businesses with sort of a higher credit card mix. So that's in the range of 100 to 200 bps, sort of down year over year.

Speaker Change: No that's fair Michael can I just quickly on the gross margin front.

Tingjing Huang: Given some of the dynamics I know, there's always seasonality, but anything to lead us to on the second quarter in the second half with respect to gross margin.

Tingjing Huang: Okay.

Michael Massaro: Yes, so stepping back I think you've heard us talk about usually our gross margins coming coming down under pressure, mostly because of mix and.

Speaker Change: Some of our faster growing businesses.

Speaker Change: With sort of higher credit card mix.

Tingjing Huang: So that's in the range of 100 to 200 bps.

Cosmin Pitigoi: Sort of down year over year, what you saw in Q1, just to make sure that would tie back to what we've seen so far Q1 was down 200 bps by about almost half of that was that FX settlement that I talked about and that has an impact on gross margin that is actually offset on opex. So on an adjusted EBITDA basis.

Cosmin Pitigoi: What you saw in Q1, just to tie back to what we've seen so far, Q1 was down 200 bps, but almost half of that was that FX settlement that I talked about. And that is an impact on gross margin that is actually offset by OPEX. So on an adjusted EBITDA basis, we do hedge some of that. So technically, when you look at it for Q1, actually, gross margin was down more like 100 bps.

Cosmin Pitigoi: We do hedge some of that so technically when you look at it for Q1 actually gross margin was down.

Speaker Change: More like 100 bps, but again as you as we look through.

Cosmin Pitigoi: Sort of longer term, we feel like that 100 to 200 bps decline.

Cosmin Pitigoi: It's probably still the right range, but again a lot of moving parts. So it could be closer to the high end of that as we look through the rest of the year.

Speaker Change: Got it thank you.

Tyler Dupont: Yeah.

Cosmin Pitigoi: Yeah.

Speaker Change: Thank you. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.

Michael Massaro: Goodbye.

Cosmin Pitigoi: Yes.

Cosmin Pitigoi: [music].

Speaker Change: Hum.

Cosmin Pitigoi: Yeah.

Cosmin Pitigoi: Okay.

Cosmin Pitigoi: Yes.

Speaker Change: Okay.

Cosmin Pitigoi: Okay.

Speaker Change: Yeah.

Cosmin Pitigoi: Yeah.

Cosmin Pitigoi: Okay.

Cosmin Pitigoi: Yes.

Speaker Change: Hum.

Cosmin Pitigoi: Okay.

Cosmin Pitigoi: [music].

Cosmin Pitigoi: As we look through the sort of longer term, we feel like that 100 to 200 bps decline is probably still the right range. But again, there are a lot of moving parts. So, you know, we could be close to the high end of that as we look through the rest of the year. Got it, hi Ed, thank you. Thank you. This concludes today's teleconference. You may disconnect your lines at this time.

Speaker Change: Greetings and welcome to fly Wire Corporation first quarter 2024 earnings conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference. Please press star.

Operator: Thank you for your participation. Goodbye. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Greetings and welcome to Flywire Corporation First Quarter 2024 Earnings Conference, At this time, all participants are in a listen-only mode. The brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Operator: Zero on your telephone keypad as a reminder, this conference is being recorded it is now my pleasure to introduce your host Mr. Hollis VP financial planning and analysis. Thank you. Mr. <unk> you may begin.

Akil Hollis: Thank you and good afternoon. With me on today's call are Mike Massaro, Chief Executive Officer; Bob Orgel, President and Chief Operating Officer; and Cosmin Pitigoi, Chief Financial Officer. Our first quarter 2024 earnings press release, supplemental presentation, and when filed forms in queue can be found at ir.flywire.com. During the call, we will be discussing certain forward-looking information. However, actual results could differ materially from those contemplated by these forward-looking statements.

Akil Hollis: Thank you and good afternoon.

Akil Hollis: With me on today's call that Mark Massaro, Chief Executive Officer, Bob Udell, President and Chief operating officer, and causing politically Chief Financial Officer.

Akil Hollis: Our first quarter 2024 earnings press release supplemental presentation, and when filed Form 10-Q can be found at IR <unk> com.

Akil Hollis: During the call we will be discussing certain forward looking information.

Akil Hollis: Results could differ materially from those contemplated by these forward looking statements.

Akil Hollis: We'll also be discussing certain non-GAAP financial measures.

Akil Hollis: Is it fair to our press release and SEC filings for more information on the risks regarding these forward looking statements that could cause actual results to differ materially and the required disclosures and reconciliations related to non-GAAP financial measures.

Akil Hollis: We will also be discussing certain non-GAAP financial measures. Please refer to our press release and SEC filings for more information on the risks regarding these forward-looking statements that could cause actual results to differ materially and the required disclosures and reconciliations related to non-GAAP financial measures. This call is being webcast live and will be available for replay on our website. I would now like to turn the call over to Mike Massaro.

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

Michael Massaro: I'd now like turn the call over to Mark Massaro.

Michael Massaro: Thank you, Akil, and thank you to everyone that is joining us today. We are pleased to share our Q1 FY24 results with all of you here today, showing strong performance across the business. In a few minutes, Rob Orgel, our president and COO, and Cosmin Pitigoi, our new CFO, will go into greater detail about the quarter. But first, I will start with a few financial highlights from Q1 2024. Revenue Less Ancillary Services was $110.2 million, an increase of 24% year-over-year. Adjusted gross profit for the quarter was $71.9 million, an increase of 20% year-over-year.

Michael Massaro: Thank you appeal and thank you to everyone that is joining us today, we are pleased to share our Q1 FY 'twenty four results with all of you here today.

Michael Massaro: Strong performance across the business.

Michael Massaro: In a few minutes, Rob Oracle, our president and CFO and constant <unk>, our new CFO will go into greater detail about the quarter.

Michael Massaro: And adjusted EBITDA was $13.2 million for the quarter, increasing by $6.2 million year-over-year. These Q1 results are a great start to the year for Flywire. Let me start with some of the core fundamentals that continue to drive our strong results. As a company, we have now exceeded over 4000 clients. This is nearly a 2x increase since the IPO in 2021. We continue to strengthen all four verticals and numerous sub verticals. We now have clients in over 50 countries, and they have the ability to process payments in over 140 currencies from over 240 countries and territories, providing strong global diversification.

Michael Massaro: But first I will start with a few financial highlights from Q1 2024.

Michael Massaro: Revenue less ancillary services was $110 2 million increase of 24% year over year.

Michael Massaro: Adjusted gross profit for the quarter with $71 9 million, an increase of 20% year over year.

Michael Massaro: And adjusted EBITDA was $13 2 million for the quarter, increasing by $6 2 million year over year.

Michael Massaro: These Q1 results are a great start to the year for fly wire, let me start with some of the core fundamentals that continue to drive our strong results.

Michael Massaro: As a company we have now exceeded over 4000 clients. This is nearly a two X increase since the IPO in 2021, we continue.

Michael Massaro: To strengthen all four verticals and numerous sub verticals. We now have clients in over 50 countries the ability to process payments over a 140 currencies from over 240 countries and territories, providing strong global diversification.

Michael Massaro: We also enjoyed great revenue diversification with no client generating over 2% of FY2023 revenue less ancillary services.

Michael Massaro: Top 10 clients accounting for less than 13% of revenue less ancillary service.

Michael Massaro: All combined with great NRI logo retention and LTV to CAC.

Michael Massaro: We also enjoy great revenue diversification with no client generating over 2% of FY23 revenue less ancillary services and top 10 clients accounting for less than 13% of revenue less ancillary services, all combined with great NRR, logo retention, and LP VitaCac. Our flymates span across 25 different countries, representing more than 40 nationalities and languages spoken, with a culture centered around execution and ambitious innovation that we believe continues to be a real advantage.

Michael Massaro: Our fly made span across 25 different country, representing more than 40 nationalities in languages spoken with a culture centered around execution and ambitious innovation that we believe continues to be a real advantage.

Michael Massaro: We are confident in our revenue momentum this year on a constant currency basis, as you will see from the guidance Cosmin will review. We also expect adjusted EBITDA margin expansion in line with our prior guidance. Now, much has been written in Q1 about tightening student visa policies in many key education markets. The overall environment and numbers of international students are indeed important factors for Flywire's education business. I want to reiterate my confidence in our ability to navigate these visa changes, highlighting a few key reasons.

Michael Massaro: We are confident in our revenue momentum this year on a constant currency basis as you will see from the guidance <unk> been able to review. We also expect adjusted EBITDA margin expansion in line with our prior guidance.

Michael Massaro: Now much has been written in Q1, our tightening of student visa policies in many key education market.

Michael Massaro: The overall environment and numbers for international students are indeed important factors for fly wires education business.

Michael Massaro: I want to reiterate my confidence in our ability to navigate these visa changes highlighting a few key reasons.

Michael Massaro: First, our business has demonstrated resilience throughout other periods of visa-related change, a benefit of having an increasingly global and diversified business. In the UK, for instance, we nearly doubled our higher education revenue in the quarter, growing this market well above the company average, without performance driven by winning new clients in strong NRR. In Canada, a number of our clients say the recent government study permit changes are better than they previously expected, with a rolling ramp back to normal admissions speed and cadence. Second, we believe in the long-term growth of the international student market. Students wanting an international education will find it somewhere.

Michael Massaro: First our business has demonstrated resilience throughout other periods of visa related change a benefit of having an increasingly global and diversified business.

Michael Massaro: In the U K for instance, we nearly doubled our higher education revenue in the quarter.

Michael Massaro: Growing this market well above the company average with outperformance driven by winning new clients in strong and IRR.

Michael Massaro: In Canada.

Michael Massaro: Second we believe in the long term growth of the international student market.

Michael Massaro: Students wanting in international education will find it somewhere and we expect the existing fly wire footprint will capture a sizeable portion of these payments.

Michael Massaro: We expect the existing Flywire footprint will capture a sizable portion of these payments, and our agent partners globally who help students in the application process support this view that students are inclined to adjust their plans as needed to continue their education. We also believe that international students have great value to their host countries and are the lifeblood of many universities and colleges. Our clients will deal with the repositioning and period of adjustment but expect, in the long term, the policies we are discussing now will be moderated, and the long-term growth trajectory of international education will continue.

Michael Massaro: Our agent partners globally to help students in the application process.

Michael Massaro: Port This view that students are inclined to adjust their plans as needed to continue their education.

Michael Massaro: We also believe that international students at a great value to their host countries.

Michael Massaro: And are the lifeblood of many universities and colleges.

Michael Massaro: Our clients will deal with the re phasing in period of adjustment, but expect in the long term. The policies. We are discussing now will be moderated and our long term growth trajectory of international education will continue.

Michael Massaro: Lastly, we are still early in our journey to penetrate our large end markets and are demonstrating strong organic growth in the industries we serve. We also continue to grow with existing clients and win new clients thanks to an effective go-to-market strategy and ongoing product innovation across our business. We also made great progress in Q1 against our three-pronged strategy of optimizing our go-to-market capabilities, expanding our Flywire advantage, and strengthening our Flymate community.

Michael Massaro: Lastly, we are still early in our journey to penetrate our large end markets and are demonstrating strong organic growth in the industries we serve.

Michael Massaro: We also continue to grow with existing clients and win new clients. Thanks to an effective go to market strategy and ongoing product innovation across our business.

Michael Massaro: We also made great progress in Q1 against our three pronged strategy of optimizing our go to market capabilities, expanding our flywheel are advantaged and strengthening our <unk> community.

Michael Massaro: As for going to market, we continue to optimize and invest to support our growth algorithm. As I said last quarter, throughout 2024, we plan to increase our investment in sales and relationship managers by more than 15% in aggregate, spread across verticals and geography. For example, in travel, we are already seeing early returns from this investment. We started the year with strong momentum in our new subvertical of ocean experiences, investing in a combination of marketing and sales efforts. We opened up some net new travel geographies, allowing our team, for example, to bring on new clients in Chile and Indonesia.

Michael Massaro: As for go to market, we continue to optimize and invest to support our growth algorithm.

Michael Massaro: As I said last quarter throughout 2024, we plan to increase our investment in sales and relationship managers by more than 15% in aggregate.

Michael Massaro: Bread across verticals and geographies for.

Michael Massaro: For example in travel we are already seeing early returns from this investment we started the year with strong momentum in our new sub vertical of ocean experiences.

Michael Massaro: Investing in a combination of marketing and sales efforts.

Michael Massaro: We opened up some net new travel geographies, allowing our team for example to bring on new clients in Chile and Indonesia.

Michael Massaro: Additionally, we continue to see great success in South Africa, another investment market for us, which has seen a 3x increase in clients over the last 12 months. Meanwhile, while expanding our Flywire advantage, we remain focused on product and payment innovation to power our vertical ecosystems. For example, in healthcare, we rolled out integrated patient financing options funded by a third party to augment our powerful affordability. Our clients see this as a clear solution for providers and patients to balance affordability and increase collectability. Our non-recourse patient financing solution gives patients longer payment terms and lower monthly payments to fulfill their financial responsibility.

Michael Massaro: Additionally, we continue to see great success in South Africa, another investment market for US, which has seen a three <unk> increase in clients over the last 12 months.

Michael Massaro: While expanding our flywheel advantage, we remain focused on product and payment innovation.

Michael Massaro: Power our vertical ecosystems.

Michael Massaro: For example in health care, we rolled out integrated patient financing option funded by a third party to augment our powerful affordability suite.

Michael Massaro: Our clients see this as a clear solution for providers and patients to balance affordability and increased collectability.

Michael Massaro: One client reported a 16% increase in cash from payment plans in just six months from our integrated financing solution, among other benefits. We go into more detail about our health care business in this quarter's supplement. And we continue to be focused on strengthening and growing our Flymate community. As I've mentioned before, we have a values-driven culture here at Flywire, which is a critical component to maintaining high-performance teams.

Michael Massaro: We go into more detail about our health care business in this quarter supplement.

Michael Massaro: Living our values like execution and ambitious innovation empowers Flymates to collaborate and move quickly to solve hard problems for our clients. For example, this was prominently on display this quarter when a team of Global Flymates came together to sign a full suite deal for a large education institution in the United States. After meetings with our global team of sales, product, legal, and implementation experts, the client was so convinced of the benefits of Flywire that they ended a multi-year relationship and contract.

Michael Massaro: Living our values like execution and ambitious innovation empowered fly mates to collaborate and move quickly to solve hard problems for our clients.

Michael Massaro: For example, this was prominently on display this quarter when a team of global <unk> came together.

Michael Massaro: A full suite deal for a large education institution in the United States after meetings with our global team of sales product legal and implementation experts. The client was so convinced of the benefits of fly wire that they ended a multi year relationship and contract.

Michael Massaro: Our team is now underway with what is on track to be the company's fastest enterprise level deployment ever.

Michael Massaro: Our culture is also underpinned by our commitment to giving back to the communities we serve.

Michael Massaro: Last quarter I made from around the World came together to build a school and library for local students and families in Panama through our nonprofit partners of ours called school the world.

Michael Massaro: Playmates came back with a new sense of perspective on the world motivation and their work and fulfillment in their lives.

Michael Massaro: As <unk> put it I'm proud that flower is a global company with such strong social responsibilities and supports its employees and making the world a better place.

Michael Massaro: Experienced left an indelible mark on me.

Michael Massaro: Learned that my fellow Flatmates are endlessly supportive.

Michael Massaro: And willing to do whatever it takes to get the job done.

Michael Massaro: In closing we are pleased with how the business performed during the first quarter underscoring the resilience of our business and winning strategy across our verticals.

Robert Orgel: I would now like to turn the call over to Rob <unk>, our president and COO to review some operational highlights from the quarter Rob.

Robert Orgel: Thanks, Mike Good afternoon, everyone. It was another quarter of strong performance for the company with good results on both revenue and adjusted EBITDA are sales client service and delivery teams delivered great results. During the quarter here are just a few of the highlights.

Robert Orgel: We added over 200 new clients, the most we've signed in a single quarter. We saw particular strength in our travel vertical with an all-time high of projected ARR signed during the quarter. We generated over 20% year-over-year pipeline growth across all verticals, with B2B and healthcare giving their highest all-time pipeline creation in a single quarter. This strong growth is driven by the continued execution of our five strategic growth pillars. As a reminder, those pillars include growing with existing clients, adding new clients, expanding our ecosystem through channel partnerships, Expanding to New Industries, Geographies, and Products, and finally Strategic Value Enhancing Acquisitions.

Robert Orgel: We added over 200, new clients the most lease signed in a single quarter we.

Robert Orgel: We saw particular strength in our travel vertical with an all time high of projected IRR signed during the quarter.

Robert Orgel: We generated over 20% year over year pipeline growth across all verticals with b to B and health care, giving their highest all time pipeline creation in a single quarter.

Robert Orgel: This quarter strong growth was driven by the continued execution of our five strategic growth pillars. As a reminder, those pillars include growing with existing clients.

Robert Orgel: Adding new clients.

Robert Orgel: Expanding our ecosystem through channel partnerships.

Robert Orgel: Expanding to new industries geographies and products and finally strategic value enhancing acquisitions.

Robert Orgel: I'd like to briefly discuss how we grew across our four verticals during the first quarter in line with those growth pillars. Starting with education, with an estimated TAM of $660 billion, we saw an increase in new clients signed and an increase in our percentage win rate compared to Q1 of last year. For example, we went live with Kukmin University in South Korea, which is a solid growth region for us. Kukmin University is a leading private university founded in 1946 and is the seventh largest university in Seoul.

Robert Orgel: I'd like to briefly discuss how we grew across our four verticals during the first quarter in line with those growth pillars.

Robert Orgel: Starting with the education with an estimated Tam of 660 billion.

Robert Orgel: We saw an increase in new clients signed and an increase in our percentage win rate compared to Q1 of last year.

Robert Orgel: For example, we went live with Kookmin University in South Korea, which is a solid growth region for us.

Robert Orgel: And University as a leading private university founded in $19 46, and as the seventh largest university and salt.

Robert Orgel: Home to over 24000 students with.

Robert Orgel: With Kootenay University onboard Blackwater now support several prestigious universities in South Korea, bolstering our position as a leading provider of payment solutions in the Korean higher education market.

Robert Orgel: We also signed our first K through 12 school in Korea in Q1, expanding our reach beyond higher end due to another active sector of Korean education, and a testament to our growing recognition and impact in the region.

Robert Orgel: We also continue to identify new use cases in education, where software drives value with payments and we'll continue to develop solutions to drive growth and value for our clients. For example, we expanded the availability of our third party invoicing solution.

Robert Orgel: We're seeing the power of the <unk> platform to enable sponsors such as employers government agencies or other organizations to pay students' tuition and fees directly.

Robert Orgel: Institutions are reporting lower administrative burden, ease of reconciliation, and increased revenue as part of their early benefits. One of our clients, which is a large elite research institution, is leveraging Flywire's third-party invoicing solution to better serve their global student base. They have seen a 70% increase in timely third-party tuition collections after requesting payment via Flywire.

Robert Orgel: Institutions are reporting lower administrative burden ease of reconciliation and increase revenue as part of the early benefits.

Robert Orgel: One of our clients, which is a large elite research institution.

Robert Orgel: Leveraging fly wires third party invoicing solutions to better serve their global student base.

Robert Orgel: <unk> seen a 70% increase in timely third party tuition collection after requesting payment via <unk> and we are helping them manage these for more than 500 unique third party vendors and organization.

Robert Orgel: Once again, showing that <unk> has a proven track record of software drives value in payment and delivering strong NR.

Robert Orgel: In health care with an estimated Tam of $500 billion we.

Robert Orgel: We saw record new pipeline creation, which grew over 100% on a year over year basis, as we generated momentum specialty providers in the past.

Robert Orgel: During the quarter, we signed several new health care clients, we're continuing to expand with conifer health solutions client United Surgical partners International.

Robert Orgel: We are continuing to expand with Conifer Health Solutions client United Surgical Partners International. USPI is the largest ambulatory network in the United States with over 480 ambulatory surgery centers and surgical hospitals and over 50 health system partners across 35 states in the US.

Robert Orgel: Spi is the largest ambulatory network in the United States with over 480, ambulatory surgery centers and surgical hospitals and over 50 health system partners across 35 states in the U S. We are.

Robert Orgel: We are currently live with a portion of USPI's network of surgical centers, with more on the way. We also went live with a handful of Oracle Health Community Works clients during the quarter. For example, we went live with Henry County Medical Center, a large Community Works facility providing rehabilitation-focused care in West Tennessee. There are hundreds of Community Works hospitals on the Oracle Health platform that are well suited to become future users of the Flywire Health platform.

Robert Orgel: Currently live with a portion of Uspi's network of surgical centers with more on the way.

Robert Orgel: We also went live with a handful of Oracle health community works clients. During the quarter. For example, we went live with the Henry County Medical Center, a large community works facility, providing rehabilitation focused care and west Tennessee.

Robert Orgel: <unk> as a community work hospitals on the Oracle health platform and are well suited to become future users of the fly wire health platform.

Robert Orgel: In travel, with an estimated PAM of $530 billion, we generated an all-time record of projected ARR signed during a quarter as we brought on new clients across all our subverticals. In terms of expanding into new geography, we went live with Cruce Andino, one of South America's oldest travel companies, providing travelers with sailing experiences among the lakes and ancient trade routes of the Andes Mountains and our first ever travel client in Chile. Flywire's strategic partnership and integration capabilities with Arch2Travel, a travel software company based in Santiago, Chile, helped us win Cruce Andino.

Robert Orgel: And travel with an estimated Tam of $530 billion.

Robert Orgel: We generated an all time record of projected <unk> signed during the quarter as we brought on new clients across all our sub verticals.

Robert Orgel: In terms of expanding into new geography, we went live with Crusade Andina, one of South America's oldest travel companies, providing travelers with stable experience among the links and ancient trade routes of the Andes Mountains, and our first ever travel client in Chile.

Robert Orgel: <unk> strategic partnership and integration capabilities with arch to travel or travel software company based in Santiago, Chile helped us we increased and D&O.

Robert Orgel: Our team is excited to work with new clients and our partners to deepen our local expertise in this corner of the global travel market. As Mike mentioned earlier, we're seeing early success in our ocean experiences sub-vertical and saw strong traction in Japan during their peak ski season in January and February. Finally, in the B2B business, which covers a broad TAM estimated to be about $10 trillion, we increased the average deal size, increased our number of client wins, increased projected ARR compared to Q1 of last year, and had our highest pipeline generation quarter to date for our B2B team.

Robert Orgel: Our team is excited to work with new clients and our partners to deepen our local expertise in this corner of the global travel market as Mike mentioned earlier, we're seeing early success in our ocean experience a sub vertical and saw strong traction in Japan during their peak ski season in January and February.

Robert Orgel: Finally in <unk> business, which covers a broad GM estimated to be about 10 trillion.

Robert Orgel: We increase the average deal size increased our number of client wins increased projected IRR compared to Q1 of last year and had our highest pipeline generation quarter to date for our <unk>.

Robert Orgel: We continue to have great traction in manufacturing and distribution clients, which now represent roughly a quarter of our clients and b to b.

Robert Orgel: By providing sophisticated and integrated accounts receivable solutions.

Robert Orgel: <unk> stands out in our ability to tackle the complex payment challenges of distributors and manufacturers with global customer basis.

Robert Orgel: Our combination of international and domestic payments capabilities, our ability to accept card and non card payments and our integrated cloud based payments platform infrastructure enables us to deliver seamless solutions that are a major step forward for many BBB companies.

Robert Orgel: The early phases of digitizing their financial systems and processes for.

Robert Orgel: For example, this quarter, we added Mocap and Missouri based manufacturer of plastic and rubber components Mocap transaction in 18 countries outside of the U S and we'll be using <unk> as their exclusive payment platform for both e-commerce and traditional invoice flows.

Robert Orgel: Additionally, we went live with MC3 Group, a computer hardware distributor formed in 2002 with over 4000 wholesale clients globally. Flywire has helped MC3 expand local payment options for international customers and reduce costs to receive these payments. Stepping out of our verticals and moving towards our efforts towards efficiency and scale, we remain committed to control costs and invest prudently. We continue to prove the scalability of our business model as operating expenses as a percent of revenue continue to fall.

Robert Orgel: Additionally, we went live with MCT group computer hardware distributor formed in 2002 with over 4000 wholesale clients globally.

Robert Orgel: <unk> has helped MSC three expand local payment options for international customers and reduce cost we received these payments.

Robert Orgel: Stepping out of our verticals and moving to our efforts towards efficiency and scale, we remain committed to control costs and invest prudently. We continue to improve the scalability of our business model as operating expenses as a percent of revenue continue to fall in Q1 expenses as a percent of revenue were down six points versus Q1.

Robert Orgel: 23, and down five points sequentially.

Robert Orgel: More than half of our hiring this year has been in our go to market teams, reflecting <unk> commitment to revenue and customer growth and also showing that our operational teams are scaling cost effectively.

Robert Orgel: Why are you enjoying operating leverage because of our shared service model around two of the three core elements of the fly wire advantage that is our global payment network is shared by our verticals and our core payments platform as leveraged as part of the solution for each of the verticals as well.

Robert Orgel: We remain vigilant to deliver on the top and bottom line growth, reflecting the strength of our business and business model.

Robert Orgel: With that I will now turn the call over to Kosmos to go over our results for the quarter as well as discuss guidance for Q2 and 2024 guardsman.

Cosmin Pitigoi: Thank you Rob and good afternoon, everyone. As many of you know I joined about two months ago and I'm incredibly excited about the long term potential of the business.

Cosmin Pitigoi: Outline shortly.

Cosmin Pitigoi: And especially energized by the culture that fly water.

Cosmin Pitigoi: Look forward to help and provide leadership to flour through the next phase of growth and to continue to deliver value for our clients peers partners primates and shareholders.

Cosmin Pitigoi: Today I'll provide an overview of our results for the first quarter and then discuss our outlook for Q2 and the fiscal year.

Cosmin Pitigoi: As Mike and Rob mentioned, we had a strong start to the year across many of our operating metrics and financials.

Cosmin Pitigoi: Payment volumes during the quarter or $7 billion.

Cosmin Pitigoi: Which represented an increase of 23% compared to Q1 2023.

Cosmin Pitigoi: From a monetization standpoint, our spreads have remained relatively consistent and stable.

Cosmin Pitigoi: Over the last several reporting quarters.

Cosmin Pitigoi: Revenue less ancillary services or the <unk>.

Cosmin Pitigoi: <unk> $10.2 million in Q1.

Cosmin Pitigoi: Presenting a 24% growth rate compared to Q1 2023.

Cosmin Pitigoi: Our revenue growth rate was driven by increases in transaction payment volume as well as our study link acquisition, which contributed $2 $1 million to platform and other revenue in the quarter we.

Cosmin Pitigoi: We saw strong growth despite a high single digit percentage headwind related to our Canadian higher education business.

Cosmin Pitigoi: Our Q1 revenue less ancillary services outperformance compared to our expectations was primarily driven by stronger than expected volumes from U K higher education clients.

Cosmin Pitigoi: Stronger than expected growth from new travel accommodation clients in Europe and Asia.

Cosmin Pitigoi: FX rates were relatively flat year over year.

Cosmin Pitigoi: FX was a $1 2 million dollar headwind against the guidance we provided for Q1.

Cosmin Pitigoi: Based on December 31 exchange rates.

Cosmin Pitigoi: During the quarter transaction revenue increased 26% year over year.

Cosmin Pitigoi: Driven by 33% increase in transaction payment volume, primarily in our international and U S education vertical as well as travel.

Cosmin Pitigoi: Platform and other revenues increased 16% year over year, primarily driven by a 6% increase in platform and other revenue is volume.

Cosmin Pitigoi: As well as from platform fees that do not carry payment volumes, specifically revenue associated with the contribution from study link.

Cosmin Pitigoi: Adjusted gross profit increased $71 $9 million during the quarter.

Cosmin Pitigoi: 20% above the $59 9 million generated in Q1 2023.

Cosmin Pitigoi: Adjusted gross margin was 65.2% for Q1 2024, down 200 basis points from 67.2% for Q1 2023. The year-over-year change in adjusted gross margin was driven primarily by the strong growth of our transaction revenue versus our platform revenue, particularly from the success of our travel vertical and of our land and expand strategy where we want us to grow our domestic higher education business, both areas where credit cards are more prevalent. As we've highlighted in past quarters, FX shifts occur during settlement of transactions.

Cosmin Pitigoi: Adjusted gross margin was 65, 2% for Q1 2024 down 200 basis points from 67, 2% for Q1 2023.

Cosmin Pitigoi: The year over year change in adjusted gross margin was driven primarily by the strong growth of our transaction revenue versus our platform revenue.

Cosmin Pitigoi: Particularly from the success of our travel vertical.

Cosmin Pitigoi: And of our land and expand strategy, where we won U S domestic higher education business.

Cosmin Pitigoi: Both areas, where credit cards are more prevalent.

Cosmin Pitigoi: As we've highlighted in past quarters FX shifts to occur during settlement of transactions.

Cosmin Pitigoi: This quarter, these shifts resulted in losses that impacted our cost of sales. In the prior quarter, these impacts were largely offset by FX hedges, resulting in a mitigated impact on adjusted EBITDA, just that EBITDA grew to 13.2 million for the quarter, almost double the 7 million generated in Q1 2023. Adjusted EBITDA margin was up over 400 percent year-over-year. The increase in adjusted EBITDA was driven by revenue outperformance and cost management. With respect to capitalization, as of March 31st, 2024, we had $619 million in cash and cash equivalents, no long-term debt, and 122.3 million shares of common stock outstanding.

Cosmin Pitigoi: This quarter. These shifts resulted in losses that impacted our cost of sales.

Cosmin Pitigoi: Prior quarter.

Cosmin Pitigoi: These impacts were largely offset by FX hedges, resulting in a mitigated impact on adjusted EBITDA.

Cosmin Pitigoi: Adjusted EBITDA grew to $13 2 million for the quarter almost double the 7 million generated in Q1 2023.

Cosmin Pitigoi: Adjusted EBITA margin was up over 400 bips year over year.

Cosmin Pitigoi: The increase in adjusted EBITDA was driven by revenue outperformance and cost management.

Cosmin Pitigoi: With respect to capitalization as of March 31, 2024, we had $619 million in cash and cash equivalents no long term debt.

Cosmin Pitigoi: $122 3 million shares of common stock outstanding.

Cosmin Pitigoi: Similar to adjusted EBITDA, we have seen strong cash flow generation and growth over the last 12 months. In short, we have ample opportunity to further build on our capital allocation strategy and execution, both organically and inorganically. Moving on to guidance, for full year 2024, we expect revenue less ancillary services to be in the range of $478 million to $498 million based on spot foreign exchange rates as of March 31, 2024. This represents a year over year growth rate of 28% at the midpoint. The $8 million reduction at the midpoint from prior guidance is driven by changes in effect.

Cosmin Pitigoi: Similar to adjusted EBITDA, we have seen strong cash flow generation and growth over the last 12 months.

Cosmin Pitigoi: In short we have ample opportunity.

Cosmin Pitigoi: Other build on our capital allocation strategy and execution, both organically and Inorganically.

Cosmin Pitigoi: Moving onto guidance.

Cosmin Pitigoi: For full year 2024, we expect revenue less ancillary services to be in the range of 478 million to $498 million.

Cosmin Pitigoi: Based on spot foreign exchange rates as of March 31, 2024.

Cosmin Pitigoi: This represents a year over year growth rate of 28% at the midpoint.

Cosmin Pitigoi: The $8 million reduction at the midpoint from prior guidance is driven by changes in FX.

Cosmin Pitigoi: This is due to the strengthening of the dollar since our last projections based on the spot FX rates as of December 31, 2023, which reduces our international revenue when reported in U.S. dollars. Please note that the U.S. dollar has continued to strengthen since March 31st. We expect to deliver full-year 2024 adjusted EBITDA in the range of $64 million to $75 million. At the midpoint of our full-year 2024 guidance range, we expect to generate approximately 320 basis points of adjusted EBITDA margin improvement, which is in line with our prior guidance. Q2 2024 revenue less than salary services is expected to be in the range of $96 million to $104 million.

Cosmin Pitigoi: Due to the strengthening of the dollar since our last projections based on the spot FX rates as of December 31, 2020 Street.

Cosmin Pitigoi: Which reduce our international revenue on a reported in U S dollars.

Cosmin Pitigoi: Please note that the U S. Dollar has continued to strengthen since March 31.

Cosmin Pitigoi: We expect to deliver full year 2024, adjusted EBITDA in the range of 64 million to $75 million.

Cosmin Pitigoi: At the midpoint over our full year 2024 guidance range, we expect to generate approximately 320 basis points of adjusted EBITDA margin improvement, which.

Cosmin Pitigoi: Which is in line with our prior guidance.

Cosmin Pitigoi: Q2 of 2024 revenue lessens salary services is expected to be in the range of 96 million to $104 million.

Cosmin Pitigoi: This guidance relative to our thoughts earlier this year is primarily impacted by the changing the FX spot rate.

Cosmin Pitigoi: As already discussed and Canada.

Cosmin Pitigoi: We expect more of our Canadian higher education revenue to be realized in the second half of the year versus more evenly distributed as we previously expected.

Cosmin Pitigoi: Rounding out the guidance discussion, we expect Q2 adjusted EBITDA to be in the range of 1 million to $4 million. As a reminder, Q2 has been the lowest quarter for adjusted EBITDA over the past few years due to the seasonality of our business.

Cosmin Pitigoi: And we expect that our traditional seasonality will be repeated.

Cosmin Pitigoi: And we expect that our traditional seasonality will be repeated. In closing, I want to step back and provide my early perspectives on the long-term growth opportunities at Flywire. Starting outside in, it's clear that while Flywire has continued to gain market share given its compelling client value proposition, our four unique verticals are in the very early stages of automating their payment capabilities, with a much more customer-centric approach than other verticals that benefited from standard and legacy payments offerings.

Cosmin Pitigoi: In closing I want to step back and provide my early perspectives on the long term growth opportunity of flower.

Cosmin Pitigoi: Starting outside and it's clear that both flywheel has continued to gain market share given as compelling client value prop or four unique verticals are in very early stages of automating their payments capabilities.

Cosmin Pitigoi: They're much more customized approach than other verticals that benefited from standard and legacy payments offering.

Cosmin Pitigoi: So as we look ahead, we have low single-digit penetration in these large verticals, and we believe we're uniquely positioned to continue to capture share, given our software solution. The opportunity to solve these multidimensional customer problems starts with large, complex cross-border payments but increasingly opens the door to cross-selling into domestic capabilities. I'm committed to continuing to drive internal and external transparency in how we are executing our strategy against our growth algorithm. First, we talked about the Net Revenue Retention Rate, or NRR, which has been stable over the years. To unpack that, there are two main components.

Cosmin Pitigoi: So as we look ahead, we have low single digit penetration in these large verticals and we believe we're uniquely positioned to continue to capture share given our software solution.

Cosmin Pitigoi: Opportunity to solve these multi dimensional customer problems starts with large complex cross border payments.

Cosmin Pitigoi: But increasingly opens the door to cross selling into domestic capability.

Cosmin Pitigoi: I'm committed to continuing to drive internal and external transparency and how we are executing our strategy against our growth algorithm.

Cosmin Pitigoi: First we've talked about net revenue retention rate or NR, which has been stable over the years.

Cosmin Pitigoi: To unpack that there are two main components first as I just mentioned, we see high single to low double digits Tam growth in our four verticals based on external factors, including secular trends.

Cosmin Pitigoi: Second we believe we can add meaningful growth from expanding with our existing clients.

Cosmin Pitigoi: These two drivers combined have been driving approximately two thirds of our growth has been quite stable over the years.

Cosmin Pitigoi: In addition, roughly one third of our growth comes from a combination of ramping last year's client additions.

Cosmin Pitigoi: New clients added in the year.

Cosmin Pitigoi: On top of this we can accelerate even further through early innovations such as our payer service.

Cosmin Pitigoi: Finally, we're continuously evaluating strategic value enhancing acquisitions.

Cosmin Pitigoi: All of this top line growth is expected to result in even faster bottom line growth as we drive productivity through investments in scale, data, systems, and automation. I am excited about the journey ahead, as we are clearly still early in solving unique customer problems at scale. I'll now turn it back over to the operator for questions. Operator, thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your questions from the queue.

Cosmin Pitigoi: All of this top line growth is expected to result in even faster bottom line growth as we drive productivity through investments in scale data systems and automation.

Cosmin Pitigoi: Im excited about the journey ahead as we are clearly still early installs and unique customer problems at scale.

Cosmin Pitigoi: I'll now turn it back over to the operator for questions operator.

Cosmin Pitigoi: Yeah.

Speaker Change: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

Cosmin Pitigoi: Information tone will indicate your line is in the question queue. You may start to if you would like to move to questions from the queue for participants using speaker equipment. It maybe.

Operator: Be necessary to pick up your handset before pressing the star keys.

Daniel Rock Perlin: One moment please poll for questions.

Operator: The first question comes from the line of Dan Perlin with RBC capital markets. Please go ahead.

Daniel Rock Perlin: Good evening, guys. I just wanted to go back to the Canadian market issue. Mike, I just want to talk a little bit more, if you could, about just how comfortable you are ultimately with those trends. I mean, understanding how student visas are being used as kind of immigration tools and other things.

Daniel Rock Perlin: More pervasive so just maybe remind us the visibility that you have.

Robert Orgel: And it seems like that was getting a little more pervasive. So just maybe remind us the visibility that you have. Part of the second half recovery looks like you got a recapture rate assumption in there. Where is that coming from? Is that from your agents, where you get the visibility there? Just anything incremental there would be. Hey Dan, it's Rob.

Daniel Rock Perlin: Part of the second half recovery looks like you've got a recapture rate assumption in there.

Rob: Where is that coming from is that from your agents, where you get the visibility there just anything incremental there would be helpful.

Robert Orgel: Hey, Dan, it's Rob I'm going to jump in here and why don't I start with giving you some of the sort of that perspective from the market from the clients from the understanding of the regulatory.

Robert Orgel: The conversations that are happening in Canada and then.

Robert Orgel: We can also get into sort of the guidance piece. So that you can have clarity on that so from the last time, we all talked about Canada. There is considerably more clarity around sort of what's happening for the schools and how they are able to move forward. So they have clarity on their allocations. They have clarity on the process that they are allowed to use for admitting students.

Robert Orgel: So they have clarity on their allocations, they have clarity on the process that they are allowed to use for admitting students, and they're moving forward with what we're calling a ramping return. And what that means is they are now able to pursue what you'd call a normal set of activities. That leads to enrollment, that leads to payments, obviously taking into account the caps and allocations that they were given under the announcements that came right around the end of March and beginning of April.

Robert Orgel: And they are moving forward with what we're calling a ramping return and what that means is they now are able to pursue what you'd call a normal set of activities that leads to enrollments that leads to payments obviously taking into account what are the caps and allocations that they were given under the.

Robert Orgel: Announcements became right around the end of March beginning of April.

Robert Orgel: And I was up in Canada, I have spent time talking with our.

Robert Orgel: Our client teams and the general sense of things is that the actual results are sort of less extreme and more manageable than what they feared when they were operating with sort of almost complete uncertainty and so.

Robert Orgel: And I was up in Canada, and I spent time talking with our client teams, and the general sense is that the actual results are sort of less extreme and more manageable than what they feared when they were operating with sort of almost complete uncertainty. And so, you know, that understanding, the understanding from talking to our agents about their plans for being able to resume activity gives everybody more comfort as they move forward. So the way we do our modeling, and I'll hand off to Cosmin here in just a second, is that we build our guidance based on a bottoms-up model.

Robert Orgel: That understanding the understanding from talking to our agents about their plans for being able to resume activity gives everybody more comfort for how they move forward. So the way, we do our modeling and I'll hand off the Kaufmann here in just a second is that we build our guidance based on a bottoms up model. So theres been lots of discussion about sort of how do you approach. This we're able to approach it from.

Cosmin Pitigoi: So there's been lots of discussion about sort of how you approach this. We're able to approach it from essentially a school-by-school perspective, understand their allocations, their allocations, and what that will mean relative to their expectations. And with that, we're able to build on, obviously, what was summarized at the province level, but we're actually doing it from the bottom up, essentially school-by-school level under our guidance. So with that, Cosmin, do you want to jump in?

Cosmin Pitigoi: Essentially a school by school perspective understand their allocations of their allocations.

Cosmin Pitigoi: And what that will mean relative to their expectations and with that we are able to build up obviously what was summarized at the province level, but we're actually doing it from a bottoms up essentially school by school level inside of our guidance so with that Tom do you want to.

Cosmin Pitigoi: Hey, Dan Thanks for the question. So let me put some numbers around kind of how we're thinking about the guidance.

Cosmin Pitigoi: As it relates to Canada. So first off for the full year as we've said that we've maintained the guidance based on a constant currency basis. So the main driver there is FX.

Cosmin Pitigoi: As we as we think about Canada, you serve heard Rob.

Cosmin Pitigoi: Rob talk about it let me just talk about three specific areas that I think were called out. So Q2, a full year and then second half recapture in particular, so for Q2.

Cosmin Pitigoi: So Q2, full year, and then second half, recapture in particular. So for Q2, what we're seeing is more of a gradual or a rolling ramp in enrollment, rather than sort of a bounce or a surge. So with that, what we're assuming is roughly a mid-single-digit negative revenue impact in Q2. Second, for the full year, if you recall, we talked about low teens in the past. What we're seeing now is closer to a mid-teens million revenue impact. So, again, you've heard us talk about Q1. Initially, it was sort of mid-single digits, and then we updated everyone to sort of be mid- to high-single-digits in Q1 impact.

Cosmin Pitigoi: We are seeing is more of a gradual rolling ramp in enrollment so rather than sort of a bounce of search.

Cosmin Pitigoi: So with that or assuming roughly a mid single digit negative revenue impact in Q2 second for the full year.

Cosmin Pitigoi: You'll recall, we talked about low teens in the past what we're seeing now is closer to a mid teens million revenue impact.

Cosmin Pitigoi: So again, you've heard US talk about Q1 initially it was sort of mid single and then we updated everyone. So it would be mid to high single digits, Inc. Q1 impact all of those things again as you saw in Q1, we outperformed.

Cosmin Pitigoi: So that was the impact in Q1 now to you.

Cosmin Pitigoi: On recapture and how we think about second half.

Cosmin Pitigoi: That as you see it in our supplemental materials, we wanted to make sure that we add a lot more transparency on this point so while we have right now as far as the recapture in international students going to countries outside of Canada is a mid single digit million dollar revenue.

Cosmin Pitigoi: In second half. So that is international is doing is going into those other countries. So again as we step back we feel we feel good about the range that we have around the midpoint and also just that Canada will be a growth market for us as we get through some of these external events.

Speaker Change: Great No. That's super helpful. Just quickly Cosmos as I've got you there maybe.

Daniel Rock Perlin: As you say you've been there for a couple of months now.

Daniel Rock Perlin: FX definitely plays a big swing factor in a lot of different areas for the company and I'm. Just wondering as you think forward about philosophically, how you want to present guidance and maybe numbers or Kpis have you given any thought to other otherwise which to do that FX neutral guidance et cetera, just anything around what you might be thinking would be helpful. There as well.

Daniel Rock Perlin: Yes.

Cosmin Pitigoi: Yeah, of course. And that was probably one of the first things I heard when I came in, and I come from sort of a background talking about FX neutral or constant currency growth rates. So that's something that we will be looking to build and be able to start looking at that going forward. So that is, in principle, how we think about the true kind of growth of the business outside of the noise of FX, especially, you know, as you think about our business. As you know, more than half of our revenue is outside the US.

Cosmin Pitigoi: Yes of course that was probably one of the first things I heard when I when I came in and I come from sort of a background of talking about FX neutral or currency.

Cosmin Pitigoi: Constant currency growth rates.

Cosmin Pitigoi: So that's something that we will be looking to build and be able to start looking at that going forward. So that is in principle, how we think about the true kind of growth of the business outside of the noise of FX.

Cosmin Pitigoi: Actually.

Cosmin Pitigoi: As you think about our business as you know more than half of our revenues outside the U S.

Cosmin Pitigoi: So obviously, that's going to have a pretty large impact.

Cosmin Pitigoi: So obviously, that's going to have a pretty large impact. So maybe since I realized, you know, we have a big FX factor here for the full year, I can just unpack that for you quickly in terms of how we think about currencies. So we have four big currencies, you know, that are, you know, the biggest components, and they are the Canadian dollar, the Aussie dollar, the British pound, and the euro.

Cosmin Pitigoi: So maybe since I realize we have.

Cosmin Pitigoi: Big FX factor here for full year I can just unpack that for you quickly in terms of how we think about currencies. So we have.

Cosmin Pitigoi: For big currencies.

Cosmin Pitigoi: That are the biggest component then it's the Canadian dollar the Aussie dollar the British pound and the Euro as you as we look across those remember when we gave guidance earlier. This year that was based on a rate as of December 31, if you look across those currencies the dollar actually we.

Cosmin Pitigoi: As we look across those, remember, when we gave guidance earlier this year, that was based on a rate as of December 31. If you look across those currencies, the dollar actually weakened significantly last year into December 31. Then what we saw throughout the rest of the quarter was a gradual strengthening of the dollar. And in some cases, some of those currencies, by the time we ended the quarter, were better by one to sort of 4%, three to 4%. So all of that has created that $1.2 million of pressure in Q1.

Cosmin Pitigoi: And significantly into last year into December 31 than what we saw throughout the rest of the quarter.

Cosmin Pitigoi: Is a gradual strengthening of the dollar in some cases some of those currencies by the time, we ended the quarter.

Cosmin Pitigoi: They're sort of better by one to sort of 4% three 3% to 4%. So all of that has created that one $2 million of pressure in Q1 now since that was gradual nellix or the impact on Q1 as you look to Q2 Q3, Q4 again right now.

Cosmin Pitigoi: Now, since that was gradual, that was sort of the impact on Q1. As you look to Q2, Q3, Q4, again, right now, our guidance is based on rates as of March 31. And, of course, actually, the dollar has strengthened a little bit versus that time.

Cosmin Pitigoi: Our guidance is based on rates as of March 31.

Cosmin Pitigoi: And of course actually the dollar is strong.

Cosmin Pitigoi: When a little bit versus at that time, but as you can imagine if it was $1 2 million in Q1 and those rates gradually move throughout the quarter that becomes almost double the headwind as you look through every quarter going forward. Again. These are these are the things that hopefully as we move toward an FX neutral growth rate focus.

Cosmin Pitigoi: In terms of our guidance on how we.

Cosmin Pitigoi: Calculate and present that I think will help neutralize some of this noise, but for now again being a.

Cosmin Pitigoi: Sort of an international business that is something that does impact the numbers, but however, as you saw we were able to offset a lot of this.

Cosmin Pitigoi: And on ensuring that we keep to sort of our margins and also we maintained our <unk>.

Cosmin Pitigoi: Commitments for the year as far as top line.

Speaker Change: Does that help excellent yes, no thats very helpful. Thank you so much.

Daniel Rock Perlin: Excellent. Yeah. No, that's very helpful.

William Alfred Nance: Thank you. The next question comes from the line of Will Nance with Goldman Sachs. Please go ahead.

Daniel Rock Perlin: Thank you next question comes from the line of will Nance with Goldman Sachs. Please go ahead.

William Alfred Nance: Hey guys, maybe I'll start with a more numerical question, just on the point of FX, just to make sure we're all kind of level setting on the same thing. I kind of glanced quickly at what FX rates have done quarter to date. I know you're using the 1Q quarter in spot rates in the guidance, and it seems like, you know, the FX rate kind of fluctuates magnitudinally, and I'm eyeballing this, it is kind of like roughly half of what we saw over the course of the quarter.

William Alfred Nance: Hey, guys.

William Alfred Nance: <unk> quarter in spot rates in the guidance.

William Alfred Nance: But maybe you could help put a finer point on if we were to use current FX rates instead of FX rates at the end of the quarter, what would be the incremental impact to the revenue guide relative to, I think you said 8 million or so, the adjustments in the full year guide from the 1Q group? Yeah, so I would say, right now, if you think we actually did see the dollar, we can see it just a little bit in the last few days.

William Alfred Nance: And it seems like.

William Alfred Nance: The FX rate kind of magnitude, Italy, and I'm eyeballing. This is kind of like roughly half of what we saw over the course of the quarter.

William Alfred Nance: Adjusted for the full year guide for the <unk> movements.

William Alfred Nance: Yes, so I would say right now if you. So we actually did see the dollar weakened just a little bit the last few days. So if you were to look and I'll sort of as of even today, there's a little bit of pressure, but I would say, it's in kind of the very low single digits for the full year.

William Alfred Nance: And I'll sort of sub almost $1 million or less so.

William Alfred Nance: It's a very small sort of immaterial impact, but it is pressure.

Cosmin Pitigoi: So again, less or less than 1 million, I would say for the full year, somewhat evenly spread throughout the quarters. Got it. Okay, that's helpful. And then, maybe just a bigger picture question. I think you mentioned the TAM growth around high single to low double digits. I'm wondering if you can unpack that between sort of pricing and kind of tuition and price increases, that sort of thing on college campuses around the world, and then how much of that comes from sort of the growth in the number of international students across the different geographies. And I ask because that second part seems to be the point that's more debated right now, just given all of the immigration controls going up around the world. So I'm just curious.

William Alfred Nance: Not it's not really material, so again lesser of less than $1 million I'd say for the full year somewhat evenly spread throughout the quarter.

Cosmin Pitigoi: Throughout the quarters got it.

Speaker Change: Got it Okay. That's helpful. And then maybe just a bigger picture question.

Cosmin Pitigoi: You mentioned, the Tam growth around high single to low double digits. I'm wondering if you can unpack that between sort of pricing and kind of tuition price increases that sort of thing.

Cosmin Pitigoi: I'll call it cancers around the world and then how much of that comes from sort of the growth in the number of international students across the different geographies and I ask that second part seems to be the point that's more of a beta right now just given all of the immigration controls going up around the world. So I'm just curious.

William Alfred Nance: You know, what kind of growth in international students are you expecting over the years? And then when you look at the components of NRR in the education business, what is the kind of same-store sales on the number of students contributing to that? Hey, well, sure, I'll jump in and take that.

Cosmin Pitigoi: What kind of growth in international students are you expecting over the years and then when you look at UV components of NRI in the education business. What is the kind of same store sales on the number of students contributing to that Enron.

Robert Orgel: So, you know, again, if you look over international students since the last couple of decades, right, you'll see kind of a low single digit, low mid single digit variation if you'd normalize out for the COVID period. And so that, I would say, is our broad view of international student growth over time. And then when you kind of break down some of the information that's in the supplement, you know, I think when you think through just where we're seeing growth, right, there's obviously going to be industry-based dynamics that help drive it, right? So whether that's, you know, tuition increases, again, you're going to see relatively modest growth there. But, you know, I always joke that I've never seen a tuition bill go down, and I have 4 kids.

Robert Orgel: <unk> out for the Covid period.

Robert Orgel: And so that I would say is our broad.

Robert Orgel: Our view of international student growth over time.

Robert Orgel: And then when you kind of break down some of the information Thats in the supplement.

Robert Orgel: When you think through.

Robert Orgel: Just where were seeing growth rate there is obviously going to be.

Robert Orgel: Industry based dynamics that that helped drive it right. So whether that tuition increases again, youre going to see relatively modest growth there, but I always joke ive never seen a tuition bill go down.

Robert Orgel: So, again, you're going to have some component of average transaction size increase over time. You're also going to see some growth of international students. And the other thing I just want you to remember, especially in the education vertical, is just that land and expand strategy being a huge area for TAM expansion for us there. That's a significant part of that TAM and kind of the explanation of the single digits where we are today and the opportunity we have embedded in that customer base. So hopefully that helps. I don't know if anybody else does.

Speaker Change: And I've got four kids.

Robert Orgel: Again, youre going to have some component of <unk>.

Robert Orgel: Average transaction size increase over time, youre going to see any growth of international students and the other thing I'd just tell you to remember, especially education vertical is just that land and expand strategy being a huge area for Tam expansion for us there.

Robert Orgel: That's a significant part of that of that Tam.

Robert Orgel: And kind of the explanation of the single digits.

Robert Orgel: Where we are today and the opportunity we have embedded in that customer base. So hopefully that I will turn it off.

William Alfred Nance: I'd say, so what you heard me describe too, is where a lot of these players, maybe a lot of these clients, and verticals are behind sort of the curve in terms of adopting more automated sort of payment solutions. So we do see that also now picking up, and a lot of them, sort of, whether it's because of looking for cost savings or automation capabilities. We do see that tailwind from the efforts of all of these verticals. You can name any 1 of them that is really looking to save money.

Robert Orgel: So what you heard me describe to us where a lot of these players maybe are behind a lot of these clients are behind on vertical theyre behind sort of the curve in terms of adopting.

William Alfred Nance: More automated.

William Alfred Nance: Sort of payment solutions. So we do see that also now picking up and a lot a lot of them sort of whether it's because of.

William Alfred Nance: Looking for cost savings or automation capabilities, we do see that tailwind from the efforts of all of these verticals.

Robert Orgel: And so a lot of it is around automation, and they're going to be looking for customized software solutions. So we play right into that space. So I think that's, you know, on top of that secular growth, we come in with a very sort of targeted solution for them. Thank you. The next question comes from the line of Darrin Peller with Wolf Research. Please go back.

Darrin David Peller: You can you can name any one of them are really looking to save money and so a lot of it is around automation and theyre going to be looking for a customized software solutions. So we play right into that space. So I think thats.

Darrin David Peller: So on top of that secular growth.

Darrin David Peller: We come in with a very sort of targeted solution for them.

Robert Orgel: Thank you next question comes from the line of Darrin Peller with Wolfe Research. Please go ahead.

Robert Orgel: Yes.

Darrin David Peller: Guys. Thank you.

Darrin David Peller: But nothing else is impacting the business from what you can see so number one I just wanted to make sure that right. There is nothing else impacting and then maybe just beyond the timing on Canada ramp if you could just remind us.

Darrin David Peller: The components of the re-acceleration, just the implied growth rates obviously accelerate by a few hundred basis points or more in the second half of the year. So again, just year over year, not forgetting about seasonality, would be helpful.

Speaker Change: It would be helpful. Thanks, guys.

Cosmin Pitigoi: Thanks guys. Yeah, so maybe I'll start. And so first off, in terms of Q2 impact, we talked about effects. That's a portion of it. Second, it is Canada, and so we're seeing that impact, again, as we discussed earlier. In addition, there are a number of other puts and takes across the portfolio that have been affected, but I would say the softness in the healthcare business is also the other reason, which ties into your sort of second question around first half to second half acceleration.

Speaker Change: Yes, so maybe let me start.

Darrin David Peller: And so first first off in terms of Q2 impact so.

Cosmin Pitigoi: Talked about FX.

Cosmin Pitigoi: That's a portion of a second it is Canada.

Cosmin Pitigoi: And so we're seeing that impact again as we discussed earlier.

Cosmin Pitigoi: In addition, there are a number of other puts and takes across the portfolio that impact that but I would say.

Cosmin Pitigoi: Softness in the.

Cosmin Pitigoi: The health care business is also the other reason, which ties into your sort of second question around the first half to second half acceleration. So some of that acceleration in the health care business.

Cosmin Pitigoi: So some of that acceleration in the healthcare business builds into the how to think about if you look at the implied growth rates first half to second half. If we were to unpack that, you see about a sort of a mid-single digit acceleration from first half to second half. A large portion of that is Canada, and again, we've disclosed the numbers there. Another portion of it is healthcare which is recovering in the second half.

Cosmin Pitigoi: Builds into the how to think about if you look at the implied growth rates first half the second half if you can.

Cosmin Pitigoi: To unpack that you see about a sort of a mid single digit acceleration from first half to second half.

Cosmin Pitigoi: A large portion of that.

Cosmin Pitigoi: Is Canada and and again serve as.

Cosmin Pitigoi: We can disclose the numbers there.

Cosmin Pitigoi: Another portion of it is health care recovering in the second half and then third we do see strength in the business across a number of different areas with new client signings.

Cosmin Pitigoi: And then third, we do see strength in the business across a number of different areas, with new client signings and just overall strength in some of our other faster-growing verticals, and that is driving a good portion of the rest of that sort of mid-single digit acceleration from first half into second half. And again, we feel comfortably that we've captured a lot of that. It's a wide range of possibilities, as I think everyone is looking into the second half as an uncertain macro environment, but overall, we feel like we've captured those components. Guys, if you want, I can just jump in.

Cosmin Pitigoi: And just overall strength in some of our other faster growing verticals and that is driving.

Cosmin Pitigoi: And a good portion of the rest of that sort of a mid single digit acceleration from first half first half into second half and again, we feel comfortable with captured a lot of that obviously, it's a wide range of possibilities as I think everyone's looking into the second half as the uncertain macro environment, but overall, we feel like we've captured.

Cosmin Pitigoi: <unk> components.

Speaker Change: Guys, if I can just jump in.

Robert Orgel: Rather, speaking with just a little bit of color and flavor because we want to make sure we put that sort of healthcare comment in perspective. So that acceleration in the second half is really two things going on. One is just good for the lives of clients that go live in the second half. The second part is that there has been this thing, you'll see it disclosed in our queue, where there was an incident in the healthcare industry where Change Healthcare, as many of you know, had a cyber incident. That cyber incident, again, far away from Flywire, nothing to do with Flywire, but the consequence of that event was that a lot of hospitals were delayed in their ability to put out their patient bills.

Speaker Change: Rather speaking, but just a little bit of color and flavor because we wanted to make sure we put that sort of health care comment in perspective, so that acceleration in the second half is really two things going on one is just good go lives of clients that go live in the second half. The second part is that there has been this thing youll see it disclosed in our Q where was it.

Robert Orgel: Incident in the healthcare industry, where change healthcare as many of you know had a cyber incident that cyber incident again far away from flyway or nothing to do with <unk>, but the consequence of that event was that a lot of the hospitals were delayed in their ability to put out their patient bills and if you remember were primarily involved in helping them collect the patient response.

Robert Orgel: And if you remember, we're primarily involved in helping them collect the patient responsibility portion of their bills. So what you saw based on sort of the events that happened that had our hospitals delay some of their billing was that we saw this push from the queue from the first half of the year really into the second half of the year. And so that is sort of a natural accelerant in the second half. It's not as big as a bunch of the other things we've talked about, but just as you're trying to put together the pieces that help you understand growth in the second half, that's one of them.

Robert Orgel: <unk> ability portion of their bills. So what you saw based on sort of.

Robert Orgel: The events that happened that had our hospitals to delay some of their billing was that we see this push from Q from the first half of the year really into the second half of the year and so that is sort of a natural accelerant in the second half that it's not it's not as big as a bunch of the other things we've talked about but just as youre trying to put together the pieces that help you understand growth.

Robert Orgel: In the second half that's one of the.

Robert Orgel: <unk>.

Robert Orgel: That's helpful, Rob. Guys, just a very quick word on the new customer ads being so strong, 200. Was it broad-based travel? Was it across segments? Was it, you know, education? A little more color would be great.

Speaker Change: That's helpful. Rob I was just a very quick word on the new customer adds being so strong 200.

Speaker Change: Based travel were hit across segments, where the education is a little more color there would be great.

Robert Orgel: Yeah, I can jump in with that one as well, Derek. So, you know, for this quarter, travel was the winner in terms of the most counts, but only beat out education by a little bit. If you remember our Q4, we said, education beat out travel. So they're pretty close in that mix.

Speaker Change: Yes, I can jump in with that one as well so.

Speaker Change: So if you for this quarter travel was the winner in terms of the most count.

Speaker Change: But only beat out education by a little bit if you remember our Q4, we said education beat out travel so they are pretty close on that metric.

Speaker Change: Comment that.

Robert Orgel: <unk> added a good number of clients health care added I think the same number of clients that they added in the prior.

Speaker Change: Q1 period, and so overall travel one out and have all had a great quarter, but education, well was very strong as well.

Speaker Change: That's great to hear.

Darrin David Peller: I would comment that, you know, B2B added a good number of clients, healthcare added, I think, the same number of clients that they added in the prior Q1 period. And so overall, you know, travel won out and had a great quarter, but education was very strong as well. That's great to hear. Thanks, guys. Thank you. The next question comes from the line of Nate Svensson with Deutsche Bank. Please go ahead

Speaker Change: Thank you next question comes from the line of neat Swenson with Deutsche Bank. Please go ahead.

Christopher Nathaniel Svensson: Hi guys, thanks for the question. I wanted to clarify something you said earlier. So you call that a lesson?

Christopher Nathaniel Svensson: Hi, guys. Thanks for the question I wanted to clarify something you said in response to one of Dan's questions earlier, so you've called out of less extreme impact in Canada in terms of the number of permits being issued and with originally.

Christopher Nathaniel Svensson: Impact in Canada in terms of the number of permits being issued than was originally feared, but at the same time, you just move the four-year guide from a low-team impact to a mid-team. So I'm just trying to understand what the delta is there that's causing it to be worse for the full year. Is it that the first half of the year is worse than you would expect it to be? Is it lower recapture assumptions, or is it just more uncertainty on sort of the timing of when that revenue will come in? So this is Rob; I can jump in.

Rob: Feared but at the same time, you just move to the full year guide from a low teens impact.

Rob: Impact so I'm just trying to understand what the Delta is there that's causing it to be worse for the full year is it that the first half of the year is worse than you would expected that lower recapture assumptions or is it just more uncertainty on sort of the timing of when that revenue comes through.

Christopher Nathaniel Svensson: So again, that commentary about the perception was, you know, trying to give people an understanding that there is more confidence in Canada that they now know how to proceed. They now know how to proceed with their, you know, more standard processes; they do still need to work inside the cap, and they still need to go through this ramp and comply with the new rules. Keep in mind that Q1 is behind us, right? So in terms of that effect in Q1, having grown slightly, that's what explains the expansion from low teams to mid teams. Okay, so this is all due to one cue being worse than expected.

Christopher Nathaniel Svensson: So this is Rob I can jump in so again that that commentary about the perception was trying to give people an understanding that there is more confidence in Canada that they now know how to proceed. They now know how to proceed with there.

Christopher Nathaniel Svensson: More standard processes, they do still need to work inside the cap and they still need to undergo this ramp and comply with the new rules keep in mind that Q1 is behind US right. So in terms of that effect in Q1, having grown slightly that's what explains the expansion from low teens to mid teens.

Speaker Change: Okay. So all due to <unk> being worse than expected got it.

Robert Orgel: Got it. Um, yeah, I mean, there are multiple guys. I mean, there are multiple dynamics here, but that is the way to understand the overall effect. I mean, the big picture trajectory here is, you know, Q1 is behind us, and they are ramping back for the rest of the year dealing with the new set of rules that they operate under. I appreciate that. The follow-up question I had was on your 2Q growth outlook.

Christopher Nathaniel Svensson: Yes.

Christopher Nathaniel Svensson: There is multiple then yes.

Robert Orgel: I mean, there's multiple dynamics here, but that is the way to understand the overall effect I mean, the big picture trajectory here is.

Robert Orgel: Q1 is behind us and they are doing their ramping back for the rest of the year dealing with the new set of rules that they operate under.

Speaker Change: Got it I appreciate that the follow up question I had was on your <unk> growth outlook. So you talked about the impact of FX in Canada. So that's the reason why <unk> is a little lower than you had thought maybe three months ago, but I guess, just thinking about even the growth range. It looks like by my math, it's about a 10 point range from.

Robert Orgel: So, you know, you talked about the impact of FX in Canada, so that's the reason why 2Q is a little lower than you had thought maybe three months ago. But I guess just thinking about even the growth range, it looks like, by that math, there's about a 10-point range from the low end to the high end of guidance that's wider than you've been guiding typically, which is more around, call it six points the past few quarters.

Robert Orgel: The low end or the high end of guidance, that's wider than you've been guiding typically which is more around call. It six points in the past few quarters. So just wondering what you're seeing across the business I guess, maybe beyond FX in Canada, that's maybe giving you a little more trepidation as you look to forecast out I guess the remaining two months in the quarter. Thanks.

Robert Orgel: So just wondering what you're seeing across the business, I guess maybe beyond FX in Canada, that's maybe giving you a little more trepidation as you look to forecast out, I guess, the remaining two months in the quarter. Thanks.

Christopher Nathaniel Svensson: Hi, so thanks for that question. So it's Cosmin, we're, you know, obviously, there's a number of puts and takes in Q2. And so what we wanted to make sure is that we captured some of that. I think part of it, too, is, as you've heard, Rob, talk about, Canada is, you know, on a rolling ramp back, so we want to capture that as we think about the potential kind of range of scenarios. But in general, it's still, you know, I think in terms of the, you know, the midpoint here, we feel relatively good. And, you know, we have, you know, obviously, we're a third of the way through the quarter.

Robert Orgel: Hi.

Speaker Change: So thanks for that question so as guardsman.

Christopher Nathaniel Svensson: Obviously, theres a number of puts and takes.

Christopher Nathaniel Svensson: In Q2, and so what we wanted to make sure that we capture some of that I think part of it too is as you've heard Rob talk about is Canada.

Christopher Nathaniel Svensson: As a rolling ramp back so we want to capture that as we think about the potential kind of a range of scenarios.

Christopher Nathaniel Svensson: But in general it's still.

Mike: I think in terms of the.

Mike: The midpoint here, we feel we feel relatively good and we have.

Mike: Obviously, we are a third way through the quarter and so we're watching all of these trends but.

Cosmin Pitigoi: So still more to go so we wanted to make sure that we capture the scenarios as we look into the rest of the rest of the quarter. Yes. Nate. This is Mike the only thing I'd add is just making sure that.

Michael Massaro: The only thing I'd add is just making sure that, you know, if we had seen a snapback or something in Canada, which we didn't see, right, we hinted very clearly that we're seeing this kind of return of this rolling return back to a normal cadence of admissions. And so that's, you know, what we're trying to cover in our guide. Thanks.

Michael Massaro: We had seen a snapback or something in Canada.

Speaker Change: Thanks, I appreciate all the color.

Jeff Cantwell: Thank you. The next question comes from the line of Jeff Cantwell with Seaport Research. Please go ahead.

Michael Massaro: Thank you next question comes from the line of Jeff Cantwell with Seaport such please go ahead.

Jeff Cantwell: Hey, thanks so much. I want to see if I'm understanding your commentary and then ask if you can clarify anything that needs clarification. You updated us back in March about Canada. And then since then, things got slightly worse in Q1 than initially expected.

Jeff Cantwell: Hey, Thanks, so much I wanted to see if I'm understanding your commentary on the nostril you can clarify anything that needs clarification.

Jeff Cantwell: You updated us back in March about Canada, and then since then things got slightly worse in Q1 than was initially expected, but the situation is now stabilizing and theres. Some other barring there. So now you are saying on a full year basis mid teens revenue impact in Canada, and Thats, partly offset by some recapture in other countries and you called out mid single digits is that right.

Jeff Cantwell: But the situation is now stabilizing, and there's some unbagging there. So now you're saying, on a full year basis, mid-teens revenue impact in Canada, and that's partly offset by some recapture in other countries. And you're calling that mid-single digits. Is that right? That's spot on, Jeff.

Jeff Cantwell: Thanks.

Jeff Cantwell: Yes, exactly. Okay, great. And then my follow-up question on that is, how do you come up with the mid-single recapture?

Jeff Cantwell: Yes, that's spot on Jeff, Yes, exactly.

Jeff Cantwell: Yeah.

Speaker Change: Okay great.

Jeff Cantwell: And then my follow up on that is how do you come up with the mid single recapture.

Jeff Cantwell: And underneath that are you seeing any areas right now where situations like Ken are also developing or is the situation globally more stable.

Jeff Cantwell: And would you feel it's fair to say that overall, if you think ahead, you expect to see international student numbers going up over the medium to longer term? Thanks.

Jeff Cantwell: In your opinion other than Canada, and would you be repeal it's fair to say that overall, if you think of how do you expect to see international student numbers going up over the medium to longer term. Thanks. So.

Cosmin Pitigoi: So, in general, obviously, we have talked to our agents and others to understand how they're planning to help their students find another country if they cannot go to their original destination. So we feel like that's, you know, sort of, at a macro level, that's a trend that continues. So given that, obviously, you know, it's a it's sort of an estimate, I would say it's based on our experience and conversations with our sort of people on the ground and agents.

Cosmin Pitigoi: Destination, so we feel like Thats sort of at a macro level. That's that's a trend that continues so given that obviously.

Cosmin Pitigoi: It's sort of it's an estimate I would say, it's based on our experience in conversations with our with our sort of people on the ground and agents so that that feels like again, it's well capture within the range of guidance for the year. So we feel we feel good about there was a sort of capture that but it's based on our experience.

Cosmin Pitigoi: So that feels like, you know, again, it's well captured within the range of guidance for the year. So we feel we have sort of captured that. But it's based on our experience. Obviously, it's difficult to estimate exactly what students and behavior patterns and many other sorts of impact.

Cosmin Pitigoi: Obviously.

Cosmin Pitigoi: It's difficult to estimate exactly what.

Cosmin Pitigoi: Stevens and behavior patterns, and many other sort of impacts that we feel like we well captured that in our range of expectations for the year.

Michael Massaro: So we feel like we've well captured that in our range of expectations for the year. Yeah, and I just say, Jeff, when we look at other markets, I mean, I made some commentary earlier around just the UK strength, as an example. And so again, you know, we see other markets, you know, we know, there's headlines out there. But again, we've continued to see, you know, really good strength. You know, Canada was a pretty unique situation, just in the way in which the permit allocations were not known.

Cosmin Pitigoi: Yes.

Cosmin Pitigoi: Hey, Jeff I mean, when we look at other markets.

Michael Massaro: Made some commentary earlier around just the UK strength as an example.

Michael Massaro: And so again, we see other markets, we know there's headlines out there, but again, we've continued to see really good strength.

Michael Massaro: Canada is a pretty unique situation just with the way in which the permit allocations were not known.

Michael Massaro: It kind of put a put a delay in that admissions process for the year that obviously impacted Q1, we still outperformed in.

Jeff Cantwell: And it, you know, it kind of put a delay in that admissions process for the year that obviously, you know, impacted Q1. We still outperformed, and, you know, even with that mid to high single-digit impact and millions in Q1, and the million dollar plus FX Edwin in Q1. And so, you know, again, we're looking at the full year with strength and competence, knowing that it is a unique macro environment for us. Okay, great. Thanks very much.

Michael Massaro: Even with that mid to high single digit impact millions in Q1, and the $1 billion plus FX headwind in Q1.

Jeff Cantwell: So again, we're looking at the full year with with strength and confidence knowing that it is a unique macro environment for us.

Speaker Change: Okay, great. Thanks very much.

Cristopher David Kennedy: Thank you. The next question comes from the line of Chris Kennedy with William Blair. Please go ahead.

Jeff Cantwell: Thank you next question comes from the line of Cris Kennedy with William Blair. Please go ahead.

Robert Orgel: Good afternoon, thanks for taking the question. Rob, you talked about the pipeline in healthcare being up 100% year over year. Can you just talk about the changes in global market strategy that's driving that type of growth in healthcare? Yeah, happy to.

Robert Orgel: In healthcare.

Cristopher David Kennedy: Thanks for the question. So we outlined a couple quarters ago that we were doing a bunch of things to address the performance in that business. So first and foremost, we did some work inside the team, elected a very strong, sorry, appointed a very strong new head of sales in that business, and I think we're seeing some of the benefits of that. So the most obvious effect of that shows up in the pipeline, having done the significant growth that we've seen over the past period. So that's probably the number one thing.

Rob: Yeah happy to thanks for the question so.

Robert Orgel: We outlined a couple of quarters ago that we were doing a bunch of things to address that.

Cristopher David Kennedy: Performance in that business, so first and foremost we.

Cristopher David Kennedy: Did some work inside the team did a very strong sorry appointed a very strong new head of sales in that business and I think we're seeing some of the benefits of that so that the most obvious effect of that shows up in.

Cristopher David Kennedy: Pipeline, having done the significant growth that we saw over the past period. So that's probably the number one thing I think all of that and you can see in the supplement materials that we provided that we've also done quite a bit around the positioning of the business. We were able to show great returns based on the performance of our existing clients. We've got innovation around the integrated finance.

Andrew Thomas Bauch: I think all of that, and you can see in the supplementary materials that we provided, that we've also done quite a bit around the positioning of the business. We were able to show great returns based on the performance of our existing clients. We've got innovation around the integrated financing offering. All of that, I'm sure, is helping the sales team in their efforts to drive that pipeline. But I'd point first; I guess I'd point to the combination of all those things. Thanks for taking the question.

Andrew Thomas Bauch: <unk> offering all of that I'm sure is helping the sales team in their efforts to drive that pipeline at that point.

Andrew Thomas Bauch: First.

Andrew Thomas Bauch: I guess I'd point to the combination of all those things as being what's helping drive the pipeline growth.

Speaker Change: Great. Thanks for taking the question.

Andrew Thomas Bauch: Yeah.

Michael Massaro: Thank you. The next question comes from the line of Andrew Bauch with Wells Fargo. Please go ahead.

Andrew Thomas Bauch: Thank you next question comes from the line of Andrew Patch, but Wells Fargo. Please go ahead.

Michael Massaro: Hey, thanks for taking the question. I just wanted to follow up on some of the remarks you made around the education environment and the uncertainty around where the regulatory environment would go. And you characterize that as a rephasing the policy that I'm trying to understand with what is kind of the, The barrier we need to clear as far as getting that visibility, is it just the U.S. election? Are there any other historical patterns that we could look to to clear that? Get a sense of how this how and when this can kind of dissolve.

Andrew Thomas Bauch: Hey, Thanks for taking my question just wanted to follow up on some of the remarks, you made around the education environment and the uncertainty around where the regulatory environment would go and you characterize as a re phasing of policy and I'm trying to understand what is kind of the the the barrier.

Michael Massaro: You need to clear as far as getting that visibility is it just the U S election.

Michael Massaro: Are there other any other historical patterns that we can look to to kind of get a sense of like how this how and when this can kind of resolve itself.

Speaker Change: Yes, Mike I would say in general.

Michael Massaro: We've seen <unk>.

Michael Massaro: As a government policy for over a decade in different countries around the world.

Michael Massaro: I'd say, Canada with somewhat unique because there was a government issued limitation on their study permits and so that caused a lot of pretty much all of the clients all the all the universities out there to not know how many students they should be admitting.

Michael Massaro: Which is the impact to Q1 that clarity has come from the government up in Canada, and so again, that's that rolling recovery back.

Michael Massaro: As we look across our business.

Michael Massaro: It's a geographically diverse business right, it's a sub vertical diverse business its an industry diverse business, we see that as a strength for us in navigating any climate I mean, if you look at all types of.

Michael Massaro: I mean, if you look at all types of, you know, geopolitical and macro events last year, you know, we put up 43% growth and 540 basis points of EBITDA margin expansion, even in Q1 with two headwinds we talked about here. We put up pretty great growth numbers and EBITDA expansion. So again, we feel pretty good operating in these environments.

Michael Massaro: Geopolitical and macro events last year, we put up 43% growth in 540 basis points to EBIT margin expansion, even in Q1 with two headwinds we talked about here, we put up pretty good growth numbers in.

Michael Massaro: An expansion of EBITDA. So again, we feel pretty good of operating in these environments. We see our business is something that is diverse and that gives us a strength.

Michael Massaro: You know, we see our business as something that is diverse, and that gives us strength. And again, it's not uncommon for us over the last 12 plus years of the company to see changes in government policies, changes in macro conditions. And so we're comfortable operating in that environment. I mean, the education business has performed well in many areas, right?

Michael Massaro: And again, it's not uncommon for us over the last 12 plus years of the company to see changes in government policies changes in macro conditions and so we're comfortable operating in that environment.

Randy: This is Randy.

Speaker Change: Hi, Ross.

Michael Massaro: The education business performed well in many areas right, we talked about the U K over performance, we thought or we haven't talked very specifically, Australia grew really really well U S.

Michael Massaro: <unk> had growth. So all of these are growing well despite sort of all of these.

Michael Massaro: <unk>.

Michael Massaro: Questions that maybe out there China grew really well for us. So when you look at sort of the macro environment. China is strong in terms of its contribution to the U S growth strong and its contribution to India growth I'm, sorry to UK growth My apologies all all of that is strong.

Michael Massaro: So when you look at sort of the macro environment, China is strong in terms of its contribution to US growth, strong in its contribution to India growth, sorry, to UK growth, my apologies. All of that is strong. Clearly, the stock is..., way down on some of these concerns over the last couple of months here. I just wanted to revisit capital allocation, given the valuation of the stock, you know, in your M&A strategy. How are you thinking about, you know, revisiting that strategy going forward and where would you potentially lean?

Michael Massaro: And your M&A strategy, how are you thinking about revisiting that strategy going forward and where would you potentially into.

Michael Massaro: Yeah, I mean, ultimately, obviously, the board has always had and will continue to have conversations around capital structure. You know, we have a track record of doing M&A, we have a strong cash position, and EBITDA generation is also quite strong for the business, so it gives us lots of optionality.

Michael Massaro: Yes.

Michael Massaro: Ultimately, obviously you would imagine the board has always had and will continue to have conversations around capital structure.

Michael Massaro: We have a track record of doing M&A, we have a strong cash position EBIT.

Michael Massaro: EBIT generation is also quite strong for the business. So it gives us lots of Optionality. So.

Michael Massaro: Nothing to report now, but I would say, it's a conversation that happens at the board level.

Michael Massaro: So, you know, nothing to report now, but I would say, you know, it's a conversation that happens at the board level and continues to happen. And, you know, we, I would also say, have been comfortable with what we've been seeing in the growth of the pipeline around potential deals. At the same time, as I've said before, we've got strategic pillars, we have a kind of financial discipline around those deals, and we take that all into account as we make investment decisions. Thank you. Mr. Bauch, are you done with your questions? Mr. Butch.

Michael Massaro: <unk> continues to happen.

Speaker Change: We I would also say have been comfortable with what we've been seeing and the growth of pipeline around potential deals.

Michael Massaro: At the same time as I've said before we've got strategic pillars, we have kind of financial discipline around those deals and we take that all into account as we make investment decisions.

Jeffrey Brian Cantwell: I appreciate the thoughts Mike.

Speaker Change: Mr. <unk> are you done with your question.

Andrew Thomas Bauch: Mr Buch.

Jeffrey Brian Cantwell: Are you done with your question.

Speaker Change: Thank you.

Michael Massaro: The next question comes from the line of Jason Kupferberg with Bank of America. Please go ahead.

Tyler Dupont: Hi, Good afternoon, guys. This is Tyler Dupont on for Jason Thanks for taking the questions.

Jason Alan Kupferberg: Thanks for taking the questions. I wanted to start by just following up on Jeff's question. I know we talked about Canadian visa permits. Repeatedly on the call. So I want to ask outside of Canada, you know, there's been talk of similar legislation, in some shape or form, to limit the number of international students in other geographies, particularly the UK and Australia, and given that the UK was a meaningful contribution to the outperformance in the quarter, and you mentioned just on the last question that Australia has also seen strength, which is good to see, how are you seeing education in those regions, how that might be impacted Yeah, this is Rob.

Tyler Dupont: I wanted to start by just following up on Jeff's question I know, we talked about Canadian piece of permits.

Jason Alan Kupferberg: <unk> on the call. So I wanted to ask outside of Canada.

Rob: Ben talk of similar legislation in.

Jason Alan Kupferberg: Some shape or form to limit the number of international students in other geographies, particularly UK Australia.

Rob: And given that the UK was a meaningful contribution to the outperformance in the quarter and you mentioned on the last question that Australia has also seen strength.

Rob: Just got to see how are you seeing education those regions, how that might be impacted by potential legislation and just sort of how we should think about growth in those regions. If legislation like that does get passed.

Jason Alan Kupferberg: Yes. This is Rob I can maybe expand a little bit on my comments from a moment ago about Australia look Australia performed very well showed very strong growth for us grew well above the company growth rate.

Rob: Australia is a large tam lot lots of students we continue to grow both with existing clients and through the addition of new clients.

Rob: One thing to call out there is that as is true in many places our business skews towards.

Robert Orgel: So what I would call sort of high quality institutions and if you look at what was.

Robert Orgel: The focus of the regulatory discussion and Australia. It was mostly to address a different audience. So we've seen very good growth across Australia.

Robert Orgel: In our business and so on.

Robert Orgel: Very nicely and there have been some.

Robert Orgel: Policy changes in the UK over the course of the last six or more months, our business continues to perform really well there both in terms of adding to existing clients, our land and expand strategy in the U K as well as activating new clients.

Robert Orgel: The only thing I'd add is just.

Robert Orgel: International students education kind of lifeblood of a lot of universities and colleges I mean, there are huge positive factor to the countries in which they are studying in and I think I think youre going to see a shift youre seeing.

Michael Massaro: And I think you're going to see a shift; you're seeing different policies around the edges to tweak and adjust where those students are going and potentially areas of study and where those will be in different countries around the world. But it's a very positive trend that students want to travel and they want to further their education, and places want them to come study there. And so I think you're going through some shifting of that.

Michael Massaro: Different policies around the edges too.

Michael Massaro: <unk> want them to come study, there and so I think youre going through some shifting of that but again shifting like this that we've seen over the last 10 plus years.

Michael Massaro: But again, shifting like this that we've seen over the last 10 plus years. I understand, Mike. Thanks. And just a really quick one on pre-cash flow, more modeling focused, but just sort of what trends. Are you seeing sort of as we look through 2024 and beyond more qualitatively in that respect? Just how should we think about conversion rates or any additional color on free cash flow? Yeah, so obviously, we don't necessarily guide on that.

Tyler Dupont: But usually, I would say, you know, your EBITDA margin and EBITDA trends are a good general directional view of how we think about our cash flows. So I would say that that's probably a good way to kind of think about it, again, without getting into the specifics or, you know, guidance around free cash flow specifically. Adjusted EBITDA is a good way to think about it. Great. Thanks a lot.

Speaker Change: Yes, so obviously, we don't necessarily guide on that but usually I would say.

Tyler Dupont: Our EBITDA margin and EBITDA trends are a good general directional view of how we think about our cash flows.

Tyler Dupont: So I would say that that's probably a good a good way to think about it again without getting into the specifics.

Tyler Dupont: Guidance around free cash flow specifically EBIT.

Tyler Dupont: EBITA adjusted EBITDA is a good is a good way to think about it.

Speaker Change: Great. Thanks, a lot.

Speaker Change: Thank you.

Tyler Dupont: Thank you. We have time for one more question, that is, the next question comes from the line of Tingjing Huang with JPMorgan. Please go ahead.

Speaker Change: We have time for one more question.

Tingjing Huang: The next question comes from the line of Tien Tsin Huang with Jpmorgan. Please go ahead.

Tingjing Huang: I think some of the call is getting long. So thanks for squeezing me in just on that I'm going to ask something separate not Canada just on network settlement the visa Mastercard credit card.

Tingjing Huang: I think the interchange reduction is straightforward, but I'm curious to hear your thoughts on surcharging. It feels like that would be a positive for your business. I know there's some of that happening now, but I guess to the extent that you embrace that or work with your partners or clients, that could be an opportunity. Am I reading that correctly? I know it's early, but we love your... your thoughts, Michael, Alton, Jim.

Tingjing Huang: Settlement of <unk> 17 to 20, I think the interchange reduction is straightforward, but I'm curious to hear your thoughts on on surcharges. It feels like that would be a positive for your business I know there's some.

Tingjing Huang: That happens now, but I guess to the extent that you embrace that or work with your partners or clients that could be an opportunity am I reading that correctly I know, it's early but would love your.

Tingjing Huang: Your thoughts, Mike Rob and team.

Michael Massaro: Yeah, thanks for the question. You know, I would say in general that we're, you know, supportive of seeing this kind of come to a resolution. And, you know, we're here to support our clients and however they choose to handle payment transactions. So I think, you know, I'd say it's probably too soon to say whether there are any positive trends for us or not. But again, we focus on what the customers want to do, how they want to deal with those transactional fees, and we can obviously do that and can implement that within our system. But again, kind of defer to our clients to handle those those decisions. Okay, that's fair.

Speaker Change: Yes, thanks for the question.

Speaker Change: In General I think we are.

Michael Massaro: Supported to see this kind of come to a resolution and we're here to support our clients and however, they choose to.

Michael Massaro: Handle payment transaction, so I think.

Michael Massaro: I'd say, probably too soon to say, whether kind of positive trends for us or not but again, we focus on what the customers want to do how they want to deal with those transactional fees.

Michael Massaro: We can obviously do that and can implement that.

Michael Massaro: Within our system, but again kind of defer to our clients to to handle those those decisions.

Tingjing Huang: Now Cosmin, just quickly on the gross margin front, given some of the dynamics, I know there's always seasonality, but anything to lead us on the second quarter and the second half with respect to gross margin? Yeah, so stepping back, I think, you know, you've heard us talk about our gross margins coming down under pressure, mostly because of mix and some of our faster-growing businesses with sort of higher credit card mix.

Speaker Change: Okay, No that's fair and just quickly on the gross margin front.

Tingjing Huang: Even some of the dynamics I know, there's always seasonality but.

Tingjing Huang: Anything to lead us to on the second quarter in the second half with respect to gross margin.

Tingjing Huang: Yeah.

Tingjing Huang: Yes, so stepping back I think you've heard us talk about usually our gross margins coming coming down under pressure, mostly because of mix.

Cosmin Pitigoi: Some of our faster growing businesses.

Cosmin Pitigoi: With sort of higher credit card mix.

Tingjing Huang: So that's in the range of 100 to 200 bps, sort of down year-over-year. What you saw in Q1, just to tie back to what we've seen so far, Q1 was down 200 bps, but almost half of that was that FX settlement that I talked about, and that is an impact on gross margin that is actually offset by OPEX. So on an adjusted EBITDA basis, we do hedge some of that.

Cosmin Pitigoi: So that's in the range of 100 to 200 bps.

Tingjing Huang: Sort of down year over year, what you saw in Q1, just to make sure that would tie back to what we've seen so far Q1 was down 200 bps by about almost half of that was that FX settlement that I talked about and that has an impact on gross margin that is actually offset on opex. So on an adjusted EBITDA basis.

Tingjing Huang: We do hedge some of that so technically when you look at it for Q1 actually gross margin was down.

Tingjing Huang: So technically, when you look at it for Q1, actually, gross margin was down more like 100 bps. Again, as we look through sort of longer term, we feel like that 100 to 200 bps decline is probably still the right range. But again, there are a lot of moving parts, so, you know, it could be closer to the high end of that as we look through the rest of the year.

Tingjing Huang: More like 100 bps, but again as you as we look through.

Tingjing Huang: Sort of longer term, we feel like that 100 to 200 bps decline.

Tingjing Huang: It's probably still the right range, but again a lot of moving parts. So it could be closer to the high end of that as we look through the rest of the year.

Cosmin Pitigoi: Got it, hi Ed, thank you. Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: Got it thank you.

Speaker Change: Thank you. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.

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