Flywire Corporation — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. Flywire provides a global payments platform and vertical-specific software; it reports one operating segment. Unless stated otherwise, amounts below are in U.S. dollars.
Financial performance and liquidity
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | $56.5 million | $37.0 million | $121.1 million | $82.0 million |
| Gross profit / gross margin | $33.2 million / 58.8% | $22.5 million / 60.8% | $72.0 million / 59.5% | $50.1 million / 61.1% |
| Operating loss | $(17.4) million | $(7.6) million | $(24.5) million | $(14.0) million |
| Net loss | $(23.8) million | $(18.1) million | $(33.9) million | $(26.8) million |
| Adjusted EBITDA | $(6.1) million | $(0.1) million | $(4.4) million | $6.9 million |
| Net cash used in operating activities | Not provided for quarter | Not provided for quarter | $(27.6) million | $(13.6) million |
Q2 net loss per share was $(0.22), compared with $(0.35) a year earlier; the weighted-average share count increased substantially following the 2021 IPO. Q2 adjusted gross margin was 64.5%, down from 68.2% a year earlier.
At June 30, 2022, cash and cash equivalents were $360.6 million and restricted cash was $2.0 million. Current assets were $415.4 million and current liabilities $105.9 million. Long-term debt was $25.9 million, unchanged from year-end 2021. Flywire had $24.1 million of additional borrowing capacity under its $50 million revolving facility and was in compliance with its covenants.
Material changes versus comparable periods
- Revenue increased 52.7% in Q2 and 47.7% in the first half year over year. Total payment volume rose 49% to $2.9 billion in Q2 and 47% to $7.0 billion for the six months.
- Q2 transaction revenue rose 71.6% to $41.7 million; platform and usage-based fees rose 16.5% to $14.8 million. For the first half, the respective increases were 59.3% and 21.7%.
- Operating expenses grew faster than Q2 revenue, increasing 66.1% to $73.9 million. Technology and development rose 91.3%, selling and marketing 73.4%, and general and administrative 47.1%, reflecting hiring, stock-based compensation, marketing, and public-company costs.
- Foreign-currency remeasurement losses were $5.3 million in Q2 and $7.6 million in the first half, contributing to other expense. Q2 net loss also included $1.1 million of income tax expense.
- Operating cash outflow increased to $27.6 million in the first half from $13.6 million. Cash, cash equivalents and restricted cash declined $26.8 million during the period.
Outlook, commentary and risks
- Management said existing cash was expected to support working-capital needs and material cash requirements for at least 12 months. It expects to continue investing in technology, sales and marketing, international expansion, and public-company capabilities.
- The filing gives no specific revenue, earnings, or margin guidance. Management expects continued short-term losses and says future profitability is not assured.
- Management describes Q2 as historically the weakest revenue quarter, with education payment timing and business-day counts contributing to seasonality. It reported recovery in payment volume and revenue as economies reopened and global travel resumed.
- Key risks include competition and pricing pressure, reliance on banking and payment partners, foreign-exchange volatility, cybersecurity and fraud, payment regulation and licensing, macroeconomic and geopolitical conditions, and the ability to scale while controlling costs. The company noted that inflation and the Russia-Ukraine conflict had not materially affected results through the reporting date, but could create future risks.
- Flywire acquired Cohort Solutions Pty Ltd. (Cohort Go) on July 13, 2022, after quarter-end, for estimated consideration of $32.2 million, including cash, stock and potential contingent consideration. Purchase accounting was still in progress.
- The company adopted lease accounting standard ASC 842 on January 1, 2022, recognizing right-of-use assets and lease liabilities. Management said disclosure controls were effective as of June 30, 2022; it expected to become a large accelerated filer and cease being an emerging growth company at year-end.
- The filing reports no pending legal matters expected to have a material adverse effect and no material changes in internal control over financial reporting during the quarter.
Investor verification priorities
- Assess whether payment-volume and revenue growth can outpace operating-cost growth and improve gross and adjusted gross margins.
- Track operating cash burn, stock-based compensation, and the timing and use of cash, including the Cohort Go acquisition and remaining contingent consideration.
- Evaluate the persistence and management of foreign-currency losses, particularly exposure to the British pound and cross-border transaction flows.
- Check how seasonality, payment-method mix, client retention and international education and travel activity affect quarterly results.
- Monitor regulatory and licensing compliance, cyber and fraud controls, partner concentration, and readiness for large-accelerated-filer reporting requirements.