Q2 2025 Flywire Corp Earnings Call

Hello everyone and welcome to the Flywire. Second quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session to participate. You will need to press star 1, 1 on your telephone. You will then hear a message. Advising. Your hand is raised.

To withdraw, your questions simply press star 1 1 again, please note. This event is being recorded. Now is my pleasure to turn the call over to the vice president of investor relations. Masha, Khan, please proceed.

Our second quarter, 2025 earnings, press release, supplemental, presentation. And when filed form 10, you can be found at iww

During the call, we'll be discussing certain forward-looking information, actual results could get some maturity from those contemplated by the department working statements. We'll also be discussing certain non-gaap Financial measures. Please refer to our press release and SSD filings for more information on the risks regarding this forward-looking statements that could cause actual results to different materially and 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 m.

Thank you Marcia. As we look across our end markets education, travel Healthcare and B2B a clear theme emerges organizations are more focused than ever on efficiency return on investment and platform consolidation. And this is why our clients choose Flywire. They come to us for deep industry, understanding tailored Solutions with proven measurable outcomes.

That move their business forward. This client Centric approach and our Relentless execution have delivered, our strong Q2 2025 results and strategically positioned us for sustained. Growth in the quarters ahead.

Our strong performance is a testament to our core DNA of Flywire and our commitment to leading in and seeing opportunities. Not challenges. It is what powered us through the travel shifts of 2020. And it's what's driving us. Now, as we embrace the evolving, education, landscape, while building on our powerful, momentum across travel, B2B and Healthcare.

This is a direct reflection of our leadership and fly mates.

Who are committed to creating value for our clients every single day.

The structural Trends across our business such as invoice to cash automation. Global education, Healthcare patient, affordability and luxury travel remain. Not only intact but resilient and growing as complexity increases so, does the need for modern flexible technology in a trusted advisor who can drive Real Results. That is what Flywire provides.

At a global level.

Where you're not just navigating headwinds. We are turning them into opportunities. By diversifying, our Revenue mix and expanding client relationships with high value software contracts.

Our Evolution to launch the Student Financial Services offering as a broader software as a service education platform is a prime example, providing greater Revenue visibility and durability. While helping our clients modernize and drive Roi.

Simultaneously. We are embedding a performance mindset throughout our operations using data and AI to unlock productivity and scale.

The results speak for themselves.

Our payment platform upgrades have delivered major cost savings and performance gains now handling 3x, the volume with 25% better efficiency,

Machine learning-based algorithms now automate over 90% of bank transfers.

Doc verify automates Document Handling for complex Global markets and our hybrid AI support model resolves. 40% of payer inquiries automatically

This is a business built for scalable cost efficient growth.

On the product front. Our teams are delivering, we have added 20%, more features year-over-year with Geo expansion and innovation in key areas like unique Integrations. With aggressive unit Force, platform in the UK, education Market improved account, creation, flows to increase repeat usage, and drive cross-border, transaction growth an AI powered document verification for cross border transactions to improve completion rates.

The results are clear, strong client wins, and expansions New, Vertical capabilities, and continued double-digit organic growth.

Re remain focused on long-term high margin growth across our Global markets.

We are still in the early Innings of a multi vertical transformation. 1 that is grounded in innovation.

Our goal is to capture all money flows using industry, tailored software solutions that are powered by Ai and guided by our high-performance values driven culture.

We are Relentless operators, Builders and problem solvers who measure success by the value. We create for our clients.

That mindset has enabled us to scale globally, innovate quickly, and consistently win against Legacy incumbents.

I'm also incredibly excited about the momentum we're seeing with certify. It's a perfect example of how we execute m&a at Flywire.

we identify great vertical software, that complements our platform and unlocks meaningful payment, monetization

Certify, gives us a strong foothold in hospitality and events a segment, right? For modernization.

The early traction is exciting. We're already driving value for clients and accelerating crosselle efforts and building towards a global go to market opportunity.

The Synergy between certifies workflow software and our global payment capabilities is exactly the kind of powerful combination that is core to the Flywire model.

Flywire is a business built for the long term. Resilient free cash flow generator and positioned for long-term growth.

Thank you to our fly mates, for your dedication, creativity and passion, and thank you to our clients investors and partners. Who continue to believe in fly, wires vision and value.

Rob will now go into more detail about our strong competitive momentum across each industry.

Good afternoon everyone. I'm excited to share some standout highlights from Q2 reflecting the strength of our education business and our continued Global execution across. All our verticals as Mike noted momentum remains strong

Across all verticals. We signed nearly 200 new clients and that's not counting the added certify Properties, or invoiced software accounts signed

in global education, we set a new record in quarterly, projected ARR signs fueled by larger, more strategic deals, and growing demand for our integrated end-to-end education Solutions,

Fly wires leveraging, its Global presence to capitalize on the International Education Trend. We're expanding beyond the Big 4 English-speaking markets where nearly 40% of international students now choose alternative destinations and this trend could persist in this Dynamic sector.

Revenue from outside the US Canada, Australia and the UK are growing, well, above our company average.

In France, Japan, Mexico, Switzerland and Germany driving growing Geographic diversification.

Let me give you a few examples on how we continue to win new clients and further diversify in our education business in the Amia region. We delivered major wins with institutions such as University. Dad, ostia de Madrid and lien and Bond University Italy's top, ranked institution and globally. Ranked number 3 for MBA.

Spain continues to gain traction as a top destination for international students and Flywire is well positioned with deep client relationships and recent wins.

In Mexico, we went live with University, dad Unova serving 12,000 students across campuses and were selected exclusively by also known as UAG to manage, all digital payments for its 17,000 students.

In Asia, we expanded our relationship with the Singapore Institute of Management adding domestic payment capabilities to our existing cross border solution.

Across, Singapore, Malaysia, South Korea, and Japan. We doubled new client wins and nearly quadrupled signed ARR. Year-over-year clear evidence of growing Regional demand for our platform.

Institutions are increasingly, consolidating vendors and seeking more value across the student life cycle. And Flywire is the partner, they have turned to our breadth of global and domestic payment capabilities combined with deep Integrations into admissions student information systems and agent. Networks is differentiated in the market, we help institutions streamline operations, accelerate tuition collections manage risk and deliver a seamless student experience.

Now, let me go into more detail on our Big 4, Education markets.

On us education over the past few years. We built an Enterprise sales motion. That's now hitting its stride. We believe we have the right leadership product and go to market strategy in place and we've seen the results stronger win rates. Larger strategic deals and continued expansion into both 2-year and 4-year institutions.

In Q2 alone, we welcome 4 more New Student Financial Services clients who chose to consolidate. All student payments with Flywire. Bringing the total to 9 signed year to date. We are excited about significant cross-sell opportunities. Within our broad Us, customer base, positioning Flywire, to capture all of the universities tuition payments.

Higher ed institutions here, how their peers using our SFS platform improved tuition Collections and working capital Cycles while also significantly reducing call center Staffing and decreasing incoming calls by up to 90%.

In the face of the financial, headwinds universities are experiencing High, Roi projects are prioritized. And that is when Flywire shines,

we're also signing clients. We've long quartered for cross border payments with the most, recent example, being Princeton, which finally came on board in Q2 and is now live.

We believe we've innovated faster than our competitors. And that's driving our continued wins. Our software is evolving rapidly to match the modern student life cycle from recruitment through on campus, invoicing, to post-graduate, debt management and institutions have responded.

Our collection management solution is highly effective automating, manual processes and consistently boosting payment plan utilization by over 50%. When we replace previous providers,

Changes to Federal loan programs are resurfacing issues around affordability, creating a good selling environment for Flywire as we enable schools to offer. Flexible interest-free installment plans making education more affordable for students.

Our collections management product acts as a foot in the door for us offering self-service options. Streamlining, internal Collections and simplifying. External agency placement all while facilitating conversion to full SFS clients.

Moving on to UK, education fly wires demonstrating strong momentum in the UK driven by the strength of our Student Financial software and the expansion of our broader education platform.

4, SFS design Partners successfully went live ahead of peak season. Marking our first implementations in the UK Market, with real-time student invoices, for their accounts which are then linked to fly wires payment capabilities.

We also introduced a new product for managing us loans for students studying in the UK Market.

And outbound excess balance payments.

It's designed to help, UK universities navigate, the US Federal alone. Landscape reduce regulatory burdens and help manage us students.

Flywire has already signed 8 UK clients during the quarter with more contracts in the pipeline.

This product and platform progress, Builds on the strong Foundation we've established with UK institutions.

We continue to grow our client base with cross border. Go lives at the University of Edinburgh and the University of St. Andrews, while also driving meaningful domestic upsells with clients like the University of hartfordshire

We're increasing the share of total payment volume flowing through Flywire and delivering better student and institutional outcomes as a result.

While the UK has seen active discussions around visa and policy developments the changes to date are far less dramatic than what we've seen in markets like Canada or Australia. These shifts have not materially, altered our Outlook or trajectory we remain focused on supporting both existing and new institutions as they modernize their financial systems and scale to meet Rising student demand

Moving to Canada and Australia.

Despite macro headwinds in Canada, we are focused on adding domestic volumes, deepening relationships, and winning new clients. A prime example is our strategic win with the Ontario University Application Center, a 3-year, exclusive cross-border and domestic partnership with a projected total ARR over $1 million.

We are also expanding our footprint at existing institutions like Simon Fraser University, which is now adding domestic payments to its cross-border offering.

Momentum in the K through 12 segment continues as well. Further broadening our base and reinforcing the value of fly wires. Platform across education segments in Canada.

In Australia, Edith Cowan University went live during the quarter, a significant RFP win, that included, the successful launch of both our cross border and domestic payment offerings. We also signed study linked with the University of Western Australia. A member of the prestigious group of 8 further reinforcing our traction with top tier institutions,

In a very recent development, there were new announcements coming out of the Australian government this week that speak to a modest increase in student visas for 2026 over 2025 levels, as well as a planning framework and policy directives for sustained growth going forward. The announcements were applauded by multiple representatives of the Australian Education Center.

Overall, it was a very successful quarter for the education business.

Moving on to travel.

Fly wires expansion and Market penetration. And travel is driven by our competitive advantages support for industry specific workflows, lower costs, and a simpler Consolidated system.

Clients like tanah gajah Ubud a 5-star luxury Wellness Resort in Bali and Borneo. Ecotours, a tour operator in Indonesia choose Flywire for these benefits along with strong support and our growing reputation solidifying, fly wires position and potential for continued growth.

We're already seeing strong early traction with certify, which is strategically aligned with our travel vertical.

We're activating cross-sell opportunities, expanding globally, and unlocking new payment flows, all from a previously under-monetized base.

Certify is growing organically and aligning. Well, with our long-term strategy to scale software plus payments opportunities.

Certify pays signature product integrates, with hospitality systems. Like Amadeus Delphi offers tailored workflows, expands the options to include cheaper, AC transfers and provides cost savings on credit card transactions. We believe these features combined with years of built-out software workflows and Integrations, creates a strong technological barrier to entry and a compelling value prop.

Position.

Certifies Revenue, grew above 35% year-over-year compared to Q2 2024 with payments Revenue being the main driver.

Key successes during the quarter include approximately 750 net, new software location wins and product, upgrades and 141 new payment. Sites, signed doubling first half payment volume and sites from 2024.

And we landed at a marquee deal with Caesar's Resorts, starting with digital authorizations, our product to help prevent fraud and digitized, payments processing for card. Not present, transactions.

Execution is in the early Innings but we see very encouraging signs.

A Flywire partner. Referred our first joint deal to certify pay and nearly 12% of certifies. New sales during the quarter, were International validating, certifies product Market, fit beyond the US.

Our go to market teams, are now able to offer travel. Customers a broader product menu, addressing more pain points across more markets and we're just beginning to execute on these synergies.

Moving to B2B, we continue to move fast and expanding our B2B vertical. The first half of this year has been notable for a few accomplishments. All of which paved the way for growth the rest of this year and into the future

First we successfully migrated most of our invoiced clients from previous payment processors and onto fly wires owned platform. Enabling us to monetize volumes that were previously unmodified or lightly monetized.

This enhances client payment capabilities and reporting, boosting Flywire's B2B revenue and gross profit. This aligns with the goal to move all the money.

Second we continue to validate our ability to sell fly wires, B2B solution based on our invoice software as an easier and faster to deploy invoice to cash platform with embedded payments.

We continue to excel at integrating with different Erp systems and getting clients live in a fraction of the time. It would take to do custom-built Solutions.

Take the butcher shop. A Canadian specialty, meat distributor as an example.

Before Flywire managing accounts receivable was a manual time-consuming task. That took the team up to 2 days with fly, wires automated solution, they streamlined, invoicing payments, and collections cutting our management time down to just a few hours, the result a more efficient process, a better customer payment experience and a clear example of how Flywire, modernizes even the most traditional B2B operations.

And for healthcare, we're seeing a real momentum. Take hold during the quarter. We signed Endeavor Health to provide our Advanced payment services across their 9 hospitals and 300 plus care locations in the Chicago area.

This includes our suite of Integrations with epic 1 of the most widely used electronic health record systems in the US to

support all patient payments. We also successfully went live with the first phase of 1 of the largest and most respected Hospital Systems in the country. Our previously announced 8 figure client marking a major milestone for our go to market, execution, and implementation teams.

Our software is helping, large US Health Systems improve, post insurance payment collections, a traditionally underserved and difficult part of the revenue cycle.

With Flywire providers gain, a more efficient compliant and patient-friendly way to manage out-of-pocket balances. Our differentiated approach vertical specific product and momentum with leading institutions position us well to capture share in a healthcare Market. That's hungry for better Solutions.

And now, let me pass this over to Cosman who will take us through financial performance and Outlook.

Good afternoon, everyone. Let me take you through our Q2 2025 financial performance and update you on the outlook for the rest of the year.

Our discipline execution and cost control contributed to a strong. First half performance supported by a differentiated value, prop resonating with our customers, a diversified portfolio, and targeted Investments. All while showing resilience in the face of a dynamic macro environment.

Revenue, Less Than 3 Services was 127.5 million in Q2 representing a 25% FX neutral growth rate or 27.7% on a spot basis, which was about the high end of our guidance.

Certified contributor 12 million in Q2, adding approximately 12 points of growth.

the FX neutral Revenue, outperformance was primarily driven by flowers travel business along with lower than expected macro impact and the pull forward impact in our Australia, education business,

Canada higher education, Revenue results continue to be impacted by macro, headwinds shaving 5 Points of year-over-year growth. During the quarter driven by both continued, demand weakness and SDS program impact

Consists of software, like fees.

Starting with transaction Revenue. We saw an 18% year-over-year increase, approximately 6 percentage points of which were attributable to certify.

This was driven by 28% increase in transaction related payment, volume.

8 percentage points of which were attributable to certify primarily in our education, vertical, as well as travel.

And while the modernization rate overall is coming down, this is a reflection of our strategy to capture all payments, including an increasingly higher share of domestic volumes in the US and UK markets.

Platform and other revenues increased 84% year-over-year primarily driven by platform fees that do not carry payment volumes specifically revenues associated with the contribution from certify of approximately 7.7 million dollars and improvements in our Healthcare business.

Adjusted gross profit increased to $78 million during the quarter, up 23% year-over-year.

Growth margin was 61.1% for Q2 2025 compared to 63.5% in Q2 2024 as business mix from faster growing verticals such as travel and B2B continues to put downward pressure.

Additionally, FX losses on settlement weighed on gross margins. This quarter was partially offset by FX hedges booked in operating expenses.

Resulting in a more mitigated impact on adjusted. Evita.

Adjusted, Evita reached almost $17 million for the quarter, resulting in a 13% margin and an expansion of 723 basis points year over year, which was well above our midpoint guidance.

This performance was primarily driven by lower personnel costs and disciplined operational expenditure.

We also remain disciplined in our investment and certify integration plans as we drive towards our exciting synergies in the travel business.

We aim to continue achieving meaningful operating leverage by growing non-gaap Opex, significantly lower than gross profit.

Excluding Certify, non-GAAP Opex was slightly down year-over-year in Q2.

Our non-gaap general and administrative costs. As a percent of Revenue, decreased by 560 basis points in the second quarter,

And by approximately 5% versus prior in dollar terms.

as we continue to streamline and automate manual processes,

our significant investments in data infrastructure systems, Ai and automation are already yielding meaningful efficiencies. Enable us to Auto resolve over 40% of customer inquiries and automate more and more kyc and document verification processes.

We're identifying millions in potential savings through our new procurement process and continue to scale through key strategic initiatives.

These include automating digital marketing and travel driving growth through customer referrals in travel and education.

And investing in tools that support efficient upsells.

AI remains Central to our efforts, boosting engineering output and automating customer service, and other support functions.

Together these initiatives enhance productivity scale and support long-term growth.

This year, we're approaching the peak of our post IPO stock based compensation investing schedule.

As a result stock based comp expenses as a percent of Revenue are elevated. But on track to be in the 12th to 13% range for the year.

and if you look at Q2 stock based comp did not grow year-over-year in dollar terms,

Looking ahead as Revenue grows, we expect stock-based comp as a percent of revenues to Trend down over time, aligned with disciplined overall people cost focus and ongoing shift towards a performance-driven culture along with an actual tapering of our IPO related grants.

To close out the income statement. In Q2, we had a gap, net loss of 12 million, representing a year-over-year, Improvement of approximately 1.6 million,

Due to includes a higher income tax provision of approximately 7 million dollars, based on full year tax estimates, which Amplified our loss in the quarter driven by seasonality of our business.

Income results on a full year basis.

We are also improving our balance sheet FX hedging strategies designed to mitigate impact of FX.

And improve consistency of our gaap. Net income and cash flows.

Turning to Capital allocation in the second quarter of 2025 we repurchase the approximately 5 million of Flywire shares.

We have also amended our revolving credit facility expanding it from 100 125 million to 300 million with improved terms and strong partnership from our banking partners.

This enhances our liquidity to support organic Investments, strategic Acquisitions and share repurchases. Additionally, our board of directors approved, a 150 million dollar increase to our share repurchase program to maintain flexibility, managed Solutions, and capitalize on market, dislocations and opportunities arise.

Fly our strong balance sheets and consistent free cash flow conversion positions as well to continue returning Capital to shareholders over time.

Moving to guidance as we look ahead to the peak Q3 season. We continue to closely monitor cross-border Trends, particularly in the US education Market

Recent insights from our University partners and agent Networks.

Indicate, a modest decline, Visa approval rates compared to last year.

Along with more widespread processing delays most notably across key, APAC markets, like China.

While early Q3 results, have not yet reflected a significant impact, the bulk of the quarter remains and these Dynamics May evolve further.

These delays may affect students' ability to arrive in time for the fall semester, leading some, particularly from high-volume markets such as China and India, to defer enrollment or consider alternative destinations. However, our diversified cross-border portfolio and strong global sales execution continue to position us well to capture tuition flows across regions.

we remain confident in the long-term value of International Education, and our strategy to build flexibility across markets and seasons is helping us to navigate shifting conditions, effectively,

Now on to full year Revenue guidance, following a strong Q2 with better than expected Trends in Australia, education and travel sectors.

Balanced by cautious growth. Assumptions in our us education business. We are maintaining our full year 2025 Revenue guidance. For FX neutral Revenue less ancillary Services growth. In the range of 10 to 14% excluding certify,

What certify? We are guiding for 17 to 23% FX Mutual Revenue growth.

As you see in the supplement, this now assumes U.S. Education revenues to be approximately flat.

Australia and Canada education revenues down approximately 20% year-over-year and Healthcare growing in the high single digits with the rest of the business growing above the midpoint of the guide on average.

Based on the data, we are seeing demand in Australia, likely pulled forward towards the March intake and ahead of the July visa fee increases.

We continue to expect soft caps and higher Visa fees to weigh on Australian revenues in the second half of 2025.

In Canada, we continue to see a weak demand environment, despite some encouraging steps to repair relationships within Canada and India.

Putting it all together. We can continue seeing a dynamic environment for international students and we estimate a mid to high single digit headwind to organic Revenue growth. This year resulting from Visa declines in our Big 4 markets, primarily, Canada, us, and Australia, Less impactful in the UK.

In travel the luxury, segment remains strong though. Broader travel market conditions are more mixed. As a result, we're holding our guides for certified Revenue in the range of 35 to 40 million for the year.

On FX with weaker us rates. We now expect the FX impact on full year revenues to be around a positive 2%.

We are raising our margin expansion, guidance by 75 bits, to 200 to 350 bips range due to better cost control through the beginning of the year and inherent operating leverage in our business model.

Acknowledging uncertainty around the peak. Q3, we remain data dependent to continue managing our margin commitments, whilst making strategic Investments necessary to scale the business and deliver on certified deal synergies in the long term.

Shifting to Q3 guidance.

Given the inherent variability in timing between Q3 and Q4, especially around education flows, we tend to look at the second half as a whole.

This helps account for regional shifts. For instance, this year, we could see some us Student Activity push into Q4.

That's part of why our guidance ranges remain wide to allow us for this natural timing variability.

As communicated in the last quarter, we expect tougher lapping in Q3 this year, along with a slight pull forward into Q2, as noted earlier. As a result, I expect FX mutual revenue growth, excluding Certify, to be in the 7 to 13% range year over year.

Including certified revenue of 9 to 12 million dollars in Q3.

We expect FX-neutral revenue growth to be in the 132% range year over year.

Note that we are estimating 3 points of FX tailwind and Q3 based on spot rates as of June 30th 2025.

adjusted, Evita margins are expected to continue to expand year via albeit at a slower Pace compared to the first half and we anticipate a 50 to 150 bips margin Improvement in Q3

As we look ahead, we remain grounded in our long-term vision and confident in our ability to adapt. Our expanding presence in sectors like travel, healthcare, and B2B reinforces the strength of our business model. We are not immune to shifts in the education market, but our diversified growth, strong balance sheet, and disciplined approach give us the flexibility to invest strategically.

With a clear strategy, strong execution, and a team that thrives in dynamic environments, we're focused on building durable value over time.

I'll now turn it back over to the operator. For questions, operator.

Thank you so much, a reminder to ask a question, simply press star, 1 1, 1 on your telephone, and wait, for your name to be announced.

To remove yourself press star 1 1 again.

1 moment for our first question, and it comes from the line of John Davis with Raymond James. Please proceed.

Hey, good afternoon, guys. Colin just want to dig in a little bit on on the full year guide obviously strong 2 key results at 500 basis point upside. Um, if I hearing you right, the, the the Australia upside in 1 Cube potentially offset by some us weakness and in the back half. But anything else that play there or or is that simply it and you know maybe some conservatism in the 4q um numbers just just anything else that we're missing there as we think about the full year and the shape of it

Yeah, hey Judy, yeah, thanks for the question. Yes, you're right. Uh, Australia, uh, offset by us is probably the the main component I'd say in terms of the pull forward just to quantify that, uh, for Q2 it was less than about a point out of the 370 basis points, um, of upside versus the midpoint, uh, but, um, that's, that's 1 of the sort of effects of it. And so, other than that, uh, we remain obviously, you know, prudent, uh, transparent and data driven as we as we look at the guide. So, um, again, same, same sort of principles that before and, um, and as you mentioned, yes, you know, travel continues to be a strong, uh, growth driver for us. Um, but um,

Again, we're watching the environment and, uh, being prudent as we look ahead to the rest of the travel season.

Okay, but I think just just to clarify the, you know, any sort of kind of changes in timing Australia us. You know, that's what accounts for kind of the stronger. 2q a little bit lower back half but just to be clear the other verticals whether its B2B Healthcare or travel, your your assumptions for the full year haven't materially changed, is that fair?

That's correct. Yes.

Okay, and then just on margins. Um really nice job on margins year to date, but you know in criminal margins are implied to think be mid to high 20s in the back half versus, you know, low 40s and and the first half I know us weakness can play a little bit there but you know, anything else on on timing of expenses, conservatism just anything else on on margins kind of in the back half relative to the first half

Of the way we think about it for the year, you're sort of in the mid-30s as far as incremental margins. Um, and so yeah, it's a bit more in the first half. Again, some of that there is a little bit of timing. Um, obviously we had our restructuring in q1, um, but you know, continuing to invest against our top priority. So, um, you know, for the most part, you know, we're we're looking to, obviously be very disciplined. Generally going into the Q3 quarter, uh, being our biggest quarter. We want to be disciplined around our Opex and hiring. Um, so, but, you know, for the most part it's it's mostly, um, that is mostly just timing. And, you know, continuing to be very disciplined around our Opex overall,

Okay, appreciate it. Thanks guys.

Thank you. Our next question comes from Chris Kennedy with William Blair please proceed.

Yeah, good afternoon, thanks for all the details and thanks for taking the question. Your business has evolved a lot, is there any way to think about kind of, you know, the the growth profile of fly wires? You think 3 to 5 years out from here?

Yeah. Hey Chris, uh, Mike Misero, you know, I would say that you're writing calls out just how the business has evolved. What gets us excited here is how diversified it's become, right? When you look at just the way in which we have global markets that we're opening up, you look at our travel business, which is now our second-largest business.

Well, north of a hundred million dollars in Revenue, so you know, we get excited to see those different areas. Um, the growth algorithm hasn't really changed, right? So you know you're always looking at nrr, you're adding on top of nrr you're adding that kind of fully your effect. And then you're adding net new client signs which again, continue to come in strong. And so, you know, we continue to be on the mission of of growing this business. In our next Milestone is kind of doubling the business and it's that growth algorithm and I hopefully people are seeing that we continue to prove our ability to grow this business and make sure uh it shows great unit economics at scale and so that's what has us excited. Uh, and those are just organic things that we can do with the business. I think we've also proven our ability to, uh, to identify inorganic opportunities, to further accelerate. So, um, we're quite excited about the future and hopefully people hear from us.

Great, thank you for that and it was great to see 12% of new sales activity at certify, it came from outside of the US. Can you just talk a little bit more about that? Is that specific regions? Specific types of customers? Any more detail would be great. Thank you.

Yeah, uh, it's Rob. I'll I'll jump in on this 1, obviously, we're very excited about certify. Overall, we're excited about the value proposition and how uh, it sort of represents a perfect uh match for us of software, drives value and payments. Uh, and on that International expansion, I think we covered, uh, a bit on prior calls that uh, certifies Pro. You know, primary Investments were around the US. Their primary Investments were around in.

Language uh markets. Uh, they continue to focus primarily on English language markets, but with us, we'll have the chance to uh, not only accelerate that International growth but expand the product platform and capabilities to take this even bigger. So, all of that, uh, is is part of our multi-year plan for certify and and we're very excited about it.

Thank you.

Thank you.

Our next question comes from the line of Dan purlins with RBC Capital markets. Please proceed.

Thanks. Good evening. Um, I wanted to ask a question, you know, you mentioned around Global education and this being a quarter of um kind of new record are signed and 1 of the things that you mentioned was just kind of the regional demand and solutions. So I'm wondering if you could just maybe expand a bit about how you're thinking about, you know, the educational structure changing for your business. Obviously the Big 4 markets, um, are what they are. But it does seem like your ability to continue to, to expand in these Regional markets is um, is starting to play very prominently and I know you talked about Spain and Mexico and other markets in Asia, but anything else, um, you know, structurally about maybe to go to market strategy, there would be super helpful. Thanks.

Particularly strong in APAC. Uh, We've invested in Latin America and we're seeing traction there with really uh, quite exciting deals that that we're adding here. So, uh, our our value prop, uh, resonates very well around the world. Our team is equipped to sell and deliver around the world. Uh, we're a very multilingual crew around this company and it's all going very well.

That's great. That's great. Um, just quickly I wanted to kind of circle back on the um,

The second half. You but that margin expansion and just based, I mean, I might have to run here but based on kind of the implicit high end of the range even still for the full year. That it looks like potentially fourth quarter. Could have margin contraction

for you guys. And so, I'm just wondering like what the investment buckets might be. That would, that would drive that, or is that? Just like you said, you're waiting for the third quarter. Stop at a very big quarter for you guys to kind of uh work its way through to determine whether or not you're going to place those Investments or not.

Um, so the

I think if the implied midpoint should be roughly flat. Um, obviously we raised the entire guy by 75 bips also. So we did flow through some of that we are going into our biggest quarter. Um, and so obviously, we are, you know, we've over-delivered already, you know, through the first half of the year as we have in the past too. Um, and so we want to make sure that we're giving ourselves enough room to navigate the macro, but, um, you know, we feel we feel good about, the, the ranges and exiting the year, into next year. Again, this year, we would be nearly 300 bips expansion again after the last year, um, significant expansion.

So um as I said, in my remarks overall we're going to grow Opex at a lower rate than gross profit. So expect margins to continue growing into the future.

That's great. Yep. No, thank you so much. I appreciate it.

Thank you. Thank you.

Our next question is from Michael Infante with Morgan Stanley. Please proceed

Hey guys, thanks for taking my question. Um, first just on the UK business um and and a little bit of a 2-part question here. Anything you can provide just on recent Trends in, in net, new specifically in the UK and as a follow up to that maybe where you are just in terms of driving. While I share gains in the UK specifically with things like SFS and study link and how much runway you think is left

Yeah, this is Rob. I I'll jump in on that 1. Uh, obviously we're super excited about our performance in the UK over the recent periods. But we're also uh, very bullish on the ability to keep growing in the UK, uh, our strategies. I, I, I think you all have heard from us before is to get more deeply integrated, with the clients, uh, with the objective of moving all the money. Uh, that's the heart of our product strategy. It's a big reason why we invested in the SFS platform and capabilities for the UK. So, uh, you know, we, we've really just gotten started in the UK with SFS type capabilities, or the kinds of deep Integrations. That let us move all the money with with, uh, with the partners there.

So when we deploy SFS, um, you know, we see that as an opportunity to substantially increase the revenue, it's, you know, up to 2 to 3x, uh, you know, depending on sort of the nature of the client. Uh, and so that's an opportunity for us. That's at the very, very beginning of of penetrating that market, but also know that for the UK, we have the broadest product offering we've ever taken to that market, right? We have added uh, payables offering. Uh, we just announced today in the call, the US loans offering. Uh, we have study link where we've started to have some success in the market with study link. And of course, there are additional cross border clients to, uh, to win as well. So, uh, overall uh, we view their as a lot of opportunity and a multi-year growth path ahead for us in the UK.

Thanks Rob, maybe just another follow-up on this table coin uh line in the press release, just anything you can share on. You know the the profile of students that you think would be most applicable for leveraging. Stable coin based payments. I assume those are corridors that either have some level of capital controls or high inflation. And then again, just as a follow-up like anything, any any sense of of, of sort of Education, tpv, share of those types of students. Thank you guys.

Or so months. Um, and I, I would say there's also some possibility around money movement. Uh, you know, I think we run a pretty efficient, uh, set of operations on our side, uh, at our size and scale from cross border money movement. But I think there's always opportunities is there's some pretty interesting technology happening in the space. Um, you know, hopefully what people take from this is, you know, we've always said software drives value and payments and when we look at uh, an innovation, um, uh like this, we look at something that allows us to kind of control the ways in which, uh, people pay and provide additional ways in which we can collect funds, uh, on behalf of our clients. And so, this is just another great example, of that our teams on the front end of, of this, kind of innovation, and we're excited to get moving with this new partnership.

Thanks. Bye.

Thank you. Our next question comes from Nate Venson with Deutsche Bank Securities. Please proceed.

Hi guys, nice results and uh thanks for the question. I did want to ask on the US education growth Outlook I guess specifically around that spread between your new expectation. For F1 visa issuances to be around 20% on the year and then flattish Revenue growth. So I know last year F1 Visa issuances were down, you know, low double digits and you had about a 20 point spread between those F1 Visa issues and revenue growth last year. Looks like that is going to maintain in 2025 I guess I get qualitatively that you know you are gaining more.

Target. Share your growing domestic. You have SFS but hoping for a little more detail on like if you could maybe rank order or size the revenue drivers outside of the international student opportunity, like especially in light it looks like F1 Visa data is getting worse as we're progressing through the year. So just trying to reach out how we get to flat revenue growth in U.S. education. If trends in F1 Visa issuances are worse from here.

Yeah, thanks mate. This coin. So, um, and so overall, as I said, yes, us Revenue, uh, roughly flat. And within that, you have to assume remember. Uh, we said about 75% of the US business is, um, International. The other 25% is domestic. Um, and domestic is, as you know, a growing much faster on the international side. Um, right now the F1 Visa Assumption of around 20%, um, would would result in obviously a second half that is, you know, slightly negative as, as we exit, however, the offset to your question around the domestic side, um, at the moment we, uh, believe, um, it's going to offset that. So a lot of momentum as you've seen in the SFS based on the deals that we've signed, and as we look ahead and the demand for for the product is offsetting that softness on the international side, uh and we've talked through, you know, obviously the the push from the clients is to consolidate.

Vendors and, uh, you know, the value prop is resonating. Um, and so we feel that's, you know, that's helping us overall. But look at at the end of the day, you know, obviously we're, I mean, we're trying to be prudent, um, as we go through the US cycle so far, and, you know, in July and quarter to date us has been sort of in in the range of our expectations. Uh, but we're sort of not quite, um, you know, a third of the way through. Um, and so we, you know, we certainly have, um, you know, we have more ahead of us and then you UK in September. Uh, but so far, you know, if we've seen it kind of in line with what we, what we've done. But again, we just keep in mind too that once you gain, 1 of those SFS domestic clients, that also helps the international side. So there is the multiplier effect, um, you know, as we grow that share overall. So we're excited about the domestic business uh, for multiple reasons there. Uh not just obviously the right now that it's it's able to kind of rock.

Off at some of that International softness.

Yeah, that makes sense. I appreciate the answer. I guess maybe a bigger question on you as education. Obviously have been a ton of headlines on the pressure for around Federal funding. Um focus on International students. You know, there's a new headline every day on schools capitulating to to certain domains. I, I'm just wondering how you think about all everything that's going on with regards to your go, to market in the US. Like, what are your client conversations? Like in this uncertain environment and does it like

We help you in your go to market efforts to highlight the benefits of Flywire solution. I know you mentioned like a record quarter for quarterly ARR. So I I guess the question is, how does how does Flywire step in and help education clients in, in such an uncertain environment?

Navigating this similar time and what they care about is figuring out how to continue to execute, how to continue to automate, how to solve problems, how to deploy solutions, and get strong ROI. That's what they're talking to us about. They see the headlines; everyone in this industry has obviously gotten accustomed to seeing all types of headlines hit every single day. But at the end of the day, our clients are focused on delivering great experiences to students and parents, increasing affordability, solving problems, and making the data work.

At that University, more efficient. That's what our customers, talk to us about every single, uh, every single day. And I think that's what our team gets excited about, is solving real problems for customers, getting outside of headlines, and actually delivering great results for our clients. And so, um, you know, to your point, that gives us a lot of encouragement, right? That's what we're hearing from clients. We're seeing at a global scale and uh, we're going to keep doing that and keep executing.

Thanks Mike.

Thank you. Our next question comes from the line of Jeff kwell with Seaport research, please proceed.

Hey thanks very much. Bye bye.

Hey, Jeff.

Hey, how you doing? Um,

In education, I want to take your temperature overall in the business class. A couple of questions. I think it's fair to say that.

Looking at this coming out, I just want to put some takes here. In terms of what's going on in education, the question I have is, overall, as you look at the business, are you moving past the worst?

It seems to me like there's maybe a modest optimism here.

What are they checking on that? I was hoping you could give us your thoughts on your education and business globally. What are you thinking here about the outlook? Thanks.

So I can start with the financials overall. So as you look at the year um at the shape obviously Q3 you know, implied here is the lowest quarter uh for the year. So then uh with Q4 basically at 12% accelerating from the 10% midpoint in queue Q4 so

Certainly, um, as, as you know, we, you know, we had uh, a big Q3 last year. So lapping that is sort of driving some of this. Um, but Q3 would, you know, would be the lowest for the year and we're exiting at a stronger rate. Um, and of course, you know, as as I you heard me mention overall, we estimate about a mid to high single digit pressure for the year, um, on our, on our results. So, you know, to to some extent, it depends what the assumptions. Are, you know, going forward from that? Some of that is Canada. Some of it is us. Uh, but, you know, to the extent that that's kind of

Could disobey in the future, obviously, that would that would drive the results further, but that's something, of course, we're going to have to be watching but overall, you know, imagine we're we're growing at a pretty healthy rate. Um, and so we don't really need, uh, Tailwind to, you know, to drive kind of faster growth. We just obviously, you know, the headwinds are are putting putting pressure on it. So, uh, that from a financial perspective, you know, the low, the low for the year is Q3 and exiting at a stronger rate which obviously gives us confidence looking ahead.

Got it. Okay, second. Um, can you talk more about your experience? Your plans, your markets like Singapore or Spain, France, Japan, Germany, etc.? Questions: I have our first, you know, how easy is it to expand in those markets for you guys? Second, how much should we expect to see in terms of incremental volume in revenue contribution?

From those for you guys, have a nice call at 12, 12 months, 2 years. I get to the theory that it makes sense to diversify. Give me what's going on in the code for it. But.

You talk more about what's realistic for you guys to execute on. In those markets, looking at...

Thanks.

Yeah, so um, I'll try to tackle that. Jeffy is capable and very effective at selling into those markets, like everywhere you just named. We have clients; we have a product that meets the needs of institutions in those countries. We invest to do, uh, a particularly good job for clients in countries like Singapore. There's a special payment capability.

That we can support same for how uh Korean institutions work just to pick 2, 2, sample markets. Um, but but we are, uh, sort of very effective in those markets. Our value proposition is strong. As I mentioned, our teams are local and multilingual and they are capable of presenting themselves at the top institutions in those countries and, uh, delivering our solution. So we've seen uh, I think you heard my comment in, in my prepared remarks that the, uh, Revenue in those markets are growing at a rate. Well, above the corporate average, uh, we see a lot of opportunity in those markets to, uh, to keep selling. And, uh, we are making sure that, uh, our teams are well equipped to do that.

Got it, got it. Okay, let me just start going back again to the U.S. Um,

Commentary about your domestic land and expand opportunities. Just give them what you're talking about. Can you talk about how incremental you think that is going forward? Um, basically what I'd like to.

Try to understand if you could explain, this is how much the land of expand strategy can add to your modernization rate or your volumes or, or really both frankly.

Yeah. So this this is Rob, I can talk a little bit about sort of the um, you know, the effectiveness of getting that expansion, right? So um, you know the the key thing is that it increases both the revenue and the gross profit. Very meaningfully, right? When we take on the expansion of doing just cross border to doing domestic, we're picking up revenue streams associated with payment plans. We're picking up revenue streams associated with, uh, card payments. Uh, we'll have typically a SAS software license fee. So there's multiple revenue streams that we're adding their, uh, and all of that is, um, is uh, is sort of what drives the result for us. And so we, uh, you know, at this point are still early in the market, like, you know, attach rate for our SFS is still sort of, in the neighborhood of 10%. So there's a lot of opportunity to take that good gross profit uh uh expansion opportunity, to a lot more places.

Thank you. One moment for our next question. It comes from JP Morgan. Please proceed.

Hi, thanks. Good results here and good commentary. I wanted to just put on the record that I am here. I just want to dig in on that. Are you shifting resources dynamically to focus on demand? As you see it, I'm just curious. Things like the non-Big 4 countries, travel sounds like it's been great. Hospitals or healthcare is in effect. I'm just trying to understand where they are, as this is coming from a best change.

Uh, the ARR. Um, I mean, obviously there was one notable callout where we called out the, uh, healthcare client. The sizable healthcare client that we signed in, um, but overall, if you look at the ARR for the quarter, you know, it was travel, uh, led with the most deals, education with the second most deals. Uh, and it looked a lot like the profile of previous, uh, periods. Um, I would say, attention, we are always responding to sort of where we see more opportunity and whether there's a chance to put more sort of go-to-market resource in a place. But, but we're not really moving it around very quickly. We've had a plan; we're executing against the plan, uh, and while we'll always tune it a little bit, uh, that doesn't mean very, very much or dramatic change.

Okay, Bob, thanks for that. Just then, would you characterize Pipeline and...

And sales cycles, any change or shift in client decision-making, that kind of thing.

Yeah, the pipeline is expanding very nicely. We are seeing really strong performance on the pipeline side. I was very impressed with the teams across the verticals' results. In terms of sales cycles, there are no notable changes. We continue to plug away in all the verticals.

Glad to hear it. Thank you.

Thank you so much, and we have time for one more question. This one comes from the line of Timothy Chiodo with UBS. Please proceed.

Great. Thank you for taking the question. Uh, one of the operational review items you highlighted was the alignment of the hiring and compensation strategies. I was hoping you could just put a little bit more detail around the comp changes and what they really entail. If you could do kind of a before and after, just high level, what was the approach before and how is that changing? And if possible, if you could even drill down on that a little bit more for the sales team specifically. Thanks a lot.

Yeah, sure. Uh, happy to. This is Mike. Hey, Tim, uh, you know, we've always been kind of a pay-for-performance culture, uh, but there are always ways to improve that. So I'll give you a couple of simple examples. Um, you know, if you look at, uh, the more senior you get in our organization, the more, uh, tied you are into equity, right? And so just making sure that's, uh, going through the organization, and that, uh, you know, uh, folks in the director or VP positions...

120% ahead of quota. We want them to reach for 150 or 170% of their quota number. And and we want to see great opportunity uh for our fly mates when they when they accomplish those goals. So

You know, it's similar, uh, to what we've done, but we're always looking to refine it. We're always looking to make it better. We're always, uh, looking to make sure that Flymates are incentivized to reach as high as they can reach. And, um, that, uh, executives are aligned with, um, uh, with shareholders.

Thank you very much.

Thank you. This concludes our Q&A session and conference for today. Thank you all for participating, and you may now disconnect.