Flywire Corporation — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual filing, not a standalone fourth-quarter report. Flywire provides global payments processing and vertical-specific software, primarily for education and healthcare, with newer travel and B2B businesses.
Financial performance
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $403.1 million | $289.4 million |
| Total payment volume | $24.0 billion | $18.1 billion |
| Gross profit / gross margin | $247.4 million / 61.4% | $174.9 million / 60.4% |
| Adjusted gross profit / margin | $254.1 million / 66.6% | $181.9 million / 68.1% |
| Operating loss | $21.5 million | $30.2 million |
| Net loss | $8.6 million | $39.3 million |
| Adjusted EBITDA | $42.0 million | $14.9 million |
| Cash from operating activities | $80.6 million | $5.4 million |
Revenue increased 39.3%; transaction revenue rose 47.1% to $329.7 million, while platform and usage-based fees grew 12.6% to $73.4 million. Growth reflected higher payment volume across regions and verticals, including existing and new clients. Management reported approximately 125% annual net dollar-based retention, versus 124% in 2022.
Operating expenses rose 32.9% to $424.6 million, led by higher payment processing, sales and marketing, and general and administrative costs. GAAP gross margin improved year over year, but adjusted gross margin fell 1.5 percentage points. Net loss narrowed, aided by higher interest income and a foreign-currency remeasurement gain; the company remained loss-making under GAAP. Adjusted EBITDA is a non-GAAP measure and excludes, among other items, stock-based compensation.
Liquidity, cash flow and debt
At December 31, 2023, cash and cash equivalents were $654.6 million, compared with $349.2 million a year earlier. Current assets were $815.7 million and current liabilities $273.8 million. No debt was outstanding under the $50 million revolver at year-end. On February 23, 2024, Flywire replaced it with a five-year, $125 million senior secured revolving facility; no borrowings were reported in the filing.
Operating cash flow improved substantially, but reflected working-capital movements, including an $86.6 million increase in funds payable to clients and a $51.0 million increase in funds receivable from payment partners. Investing cash outflow was $38.8 million, including $32.8 million for StudyLink, net of cash acquired. Financing cash inflow was $263.4 million, primarily from the 2023 follow-on offering. The filing reports no outstanding indebtedness at year-end.
Material changes, outlook and notable items
- Flywire sold 8.5 million shares in a 2023 follow-on offering at $32 per share, generating $260.1 million in net proceeds.
- In November 2023, it acquired StudyLink, an Australian education software company, for approximately $35.5 million net of cash acquired, plus contingent consideration. StudyLink contributed $1.4 million of platform revenue after acquisition.
- Management expects continued investment in product development, sales, marketing, compliance and international expansion, and stated it expects to incur losses in the short term. The filing provides no specific numerical revenue or earnings guidance.
- Revenue is seasonal, with education payment activity typically affecting quarterly results. Payment mix, including credit-card usage, and cross-border currency movements can affect margins and results.
- Foreign exchange movements reduced FY2023 reported revenue by approximately $1.4 million versus constant currency. A hypothetical 10% exchange-rate change would have affected 2023 pretax loss by approximately $19.9 million, according to the filing.
- Flywire voluntarily reported potential sanctions-related transactions, identified through geolocation screening, to OFAC in August 2023. The company said its investigation to date indicated no material loss, but regulatory consequences remain possible.
- The CFO was transitioning out, with a new CFO expected to join in March 2024. The independent auditor gave unqualified opinions on the financial statements and internal control; StudyLink was excluded from the 2023 internal-control assessment as a recent acquisition.
Key risks and investor verification
- Verify the drivers and sustainability of growth, especially transaction-volume growth, geographic and vertical mix, and retention; education remains the largest vertical.
- Assess margin pressure from payment-method mix and processing costs, and reconcile GAAP results with non-GAAP adjusted EBITDA and adjusted gross margin.
- Review operating cash flow quality and client-fund flows: payment-partner receivables and funds payable to clients are large and can create working-capital volatility.
- Monitor the OFAC review, money-transmitter licensing and other payments, AML and privacy requirements; the company holds licenses in 42 U.S. jurisdictions and describes remaining licensing uncertainty.
- Evaluate exposure to banking and payment partners, cybersecurity and service continuity, foreign exchange, education enrollment and visa policies, and geopolitical disruption, including impacts on its Israel-based engineering operations.
- Track StudyLink integration, contingent consideration, acquisition accounting estimates, and the dilution and stock-based compensation associated with equity issuance.