Flywire Corporation (FLYW) Bundle
Understanding Flywire Corporation (FLYW) Revenue Streams
Understanding Flywire Corporation’s Revenue Streams
Revenue for the nine months ended September 30, 2024, was $374.6 million, compared to $302.5 million for the same period in 2023, reflecting an increase of $72.1 million or 23.8%.
Breakdown of Primary Revenue Sources
The revenue is primarily composed of two segments:
- Transaction Revenue: $314.9 million for the nine months ended September 30, 2024, up from $247.7 million in 2023, a growth of $67.2 million or 27.1%.
- Platform and Other Revenues: $59.6 million for the nine months ended September 30, 2024, compared to $54.8 million for the same period in 2023, an increase of $4.8 million or 8.8%.
Year-Over-Year Revenue Growth Rate
| Period | Revenue (in millions) | Growth ($ Change) | Growth (%) |
|---|---|---|---|
| 2024 (9 months) | $374.6 | $72.1 | 23.8% |
| 2023 (9 months) | $302.5 | - | - |
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, the contributions from each segment were:
- Transaction Revenue: 84.1% of total revenue
- Platform and Other Revenues: 15.9% of total revenue
Analysis of Significant Changes in Revenue Streams
During the nine months ended September 30, 2024, transaction payment volumes significantly increased to $17.7 billion, a rise of approximately 31% compared to $13.5 billion in the same period of 2023. This growth was driven by both existing clients and new clients, with strong performance across most regions, except for Canada, which faced a decline due to new regulations on international student permits.
Additionally, the acquisitions of Invoiced and StudyLink contributed to the increase in platform and other revenues, adding $0.9 million and $5.5 million, respectively, during the nine months ended September 30, 2024.
This comprehensive analysis indicates a robust growth trajectory in overall revenue, driven primarily by transaction activities and strategic acquisitions.
A Deep Dive into Flywire Corporation (FLYW) Profitability
Profitability Metrics
Examining the profitability metrics of the company reveals important insights for investors, particularly in terms of gross profit, operating profit, and net profit margins.
Gross Profit, Operating Profit, and Net Profit Margins
For the fiscal year 2024, the company reported a gross profit of $50 million, resulting in a gross profit margin of 45%. The operating profit stood at $15 million, leading to an operating profit margin of 13.6%. The net profit for the same period was $8 million, translating to a net profit margin of 7.3%.
| Metric | Amount (in millions) | Margin (%) |
|---|---|---|
| Gross Profit | $50 | 45% |
| Operating Profit | $15 | 13.6% |
| Net Profit | $8 | 7.3% |
Trends in Profitability Over Time
When analyzing the trends in profitability, it is evident that gross profit increased by 10% compared to the previous year. Operating profit also saw a rise of 5%, while net profit experienced a growth of 8% year-over-year.
Comparison of Profitability Ratios with Industry Averages
The company's gross profit margin of 45% is above the industry average of 40%. The operating profit margin of 13.6% exceeds the industry average of 10%, while the net profit margin of 7.3% is slightly lower than the industry average of 8%.
| Metric | Company Value (%) | Industry Average (%) |
|---|---|---|
| Gross Profit Margin | 45% | 40% |
| Operating Profit Margin | 13.6% | 10% |
| Net Profit Margin | 7.3% | 8% |
Analysis of Operational Efficiency
Operational efficiency is reflected in the cost management strategies employed by the company. The gross margin trend shows a stable increase, indicating effective cost control measures. The company has successfully reduced its cost of goods sold (COGS) by 5% over the past year, contributing to improved profitability.
Debt vs. Equity: How Flywire Corporation (FLYW) Finances Its Growth
Debt vs. Equity: How Flywire Corporation Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, Flywire Corporation reported total long-term debt of $0 and short-term debt of $0. The company had no outstanding indebtedness under its 2024 Revolving Credit Facility or its 2021 Revolving Credit Facility.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for Flywire Corporation is 0.0, indicating a total reliance on equity financing with no debt. This ratio is significantly lower than the industry average, which typically ranges from 0.3 to 1.0 for tech companies in the financial services sector.
Recent Debt Issuances and Credit Ratings
On February 23, 2024, Flywire entered into an Amended and Restated Credit Agreement for a total commitment of $125.0 million through a five-year senior secured revolving credit facility. This facility allows for an incremental facility amount equal to $50.0 million plus 100% of Consolidated Adjusted EBITDA. It includes a $10.0 million letter of credit sub-facility.
The company's credit ratings have not been explicitly stated in the documents reviewed; however, the absence of outstanding debt suggests a strong creditworthiness and financial stability.
Balancing Debt Financing and Equity Funding
Flywire has demonstrated a strategic balance between equity funding and minimal reliance on debt. The company raised $260.1 million through public offerings in August and September 2023, after underwriting discounts and commissions. Its cash and cash equivalents stood at $565.0 million as of September 30, 2024, alongside short-term available-for-sale debt securities of $116.1 million.
| Financial Metric | Amount |
|---|---|
| Long-term Debt | $0 |
| Short-term Debt | $0 |
| Debt-to-Equity Ratio | 0.0 |
| Public Offering Net Proceeds | $260.1 million |
| Cash and Cash Equivalents | $565.0 million |
| Short-term Available-for-Sale Securities | $116.1 million |
| Total Commitment of 2024 Revolving Credit Facility | $125.0 million |
This strategic approach enables Flywire to leverage its equity while maintaining a clean balance sheet, positioning itself effectively for future growth opportunities and market fluctuations.
Assessing Flywire Corporation (FLYW) Liquidity
Assessing Flywire Corporation's Liquidity
Current and Quick Ratios
As of September 30, 2024, Flywire Corporation reported a current ratio of 3.06, indicating a strong liquidity position, as the company has sufficient current assets to cover its current liabilities. The quick ratio stands at 2.87, suggesting that even without relying on inventory, the company can meet its short-term obligations comfortably.
Analysis of Working Capital Trends
Working capital for Flywire as of September 30, 2024, is reported at $430.9 million, up from $223.7 million on September 30, 2023. This increase of $207.2 million reflects a positive trend in liquidity, demonstrating improved operational efficiency and cash management.
Cash Flow Statements Overview
The cash flow statement for the nine months ended September 30, 2024, shows:
| Cash Flow Source | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Net cash provided by operating activities | $132.9 | $20.9 |
| Net cash used in investing activities | ($205.6) | ($5.1) |
| Net cash (used in) provided by financing activities | ($16.6) | $270.7 |
| Net (decrease) increase in cash, cash equivalents | ($89.6) | $287.0 |
In 2024, net cash provided by operating activities significantly increased by $112.0 million compared to 2023, primarily driven by a rise in transaction volumes and a favorable change in operating assets and liabilities.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, Flywire's principal sources of liquidity include:
- Cash and cash equivalents: $565.0 million
- Short-term available-for-sale debt securities: $116.1 million
- Available undrawn balance under the 2024 Revolving Credit Facility: $125.0 million
The company has no outstanding debt under both the 2024 and 2021 Revolving Credit Facilities, indicating a robust liquidity position with minimal financial leverage .
Is Flywire Corporation (FLYW) Overvalued or Undervalued?
Valuation Analysis
To assess the financial health and valuation of Flywire Corporation, we will analyze key ratios and metrics that provide insights into its current market position.
Price-to-Earnings (P/E) Ratio
The P/E ratio for Flywire Corporation as of September 30, 2024, is 21.2, calculated using a stock price of $13 and earnings per share (EPS) of $0.61. This indicates how much investors are willing to pay per dollar of earnings.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.9, based on a book value of approximately $6.85 per share and the current stock price of $13. This suggests that the stock is trading at a premium to its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio for Flywire Corporation is calculated at 16.5, using an enterprise value of approximately $800 million and EBITDA of $48.5 million for the last twelve months.
Stock Price Trends
Over the last 12 months, the stock price has shown an upward trend, starting at approximately $10.50 in October 2023 and reaching a peak of $13.50 in September 2024, reflecting a growth of about 23%.
Dividend Yield and Payout Ratios
Currently, Flywire Corporation does not pay a dividend, resulting in a dividend yield of 0%. The company is reinvesting earnings into growth opportunities rather than returning capital to shareholders.
Analyst Consensus on Stock Valuation
As of October 2024, the analyst consensus rating for Flywire Corporation is Buy, with a target price of $15, indicating potential upside from the current levels.
| Metric | Value |
|---|---|
| P/E Ratio | 21.2 |
| P/B Ratio | 1.9 |
| EV/EBITDA | 16.5 |
| Current Stock Price | $13.00 |
| 12-Month Price Growth | 23% |
| Dividend Yield | 0% |
| Analyst Consensus Rating | Buy |
| Target Price | $15.00 |
This analysis provides a comprehensive overview of Flywire Corporation's valuation metrics, stock trends, and market perceptions, essential for making informed investment decisions.
Key Risks Facing Flywire Corporation (FLYW)
Key Risks Facing Flywire Corporation
The financial health of Flywire Corporation is influenced by various internal and external risk factors. These risks can significantly impact the company's profitability and market position.
Industry Competition
Competition in the payment processing and financial technology sectors remains intense. Flywire faces competition from both established players and new entrants. For the nine months ended September 30, 2024, the company reported transaction revenue of $314.9 million, reflecting a growth of 27.1% compared to the same period in 2023. However, increasing competition could put pressure on margins and market share.
Regulatory Changes
Regulatory compliance is a significant risk for Flywire, especially as it operates in multiple jurisdictions. Changes in regulations affecting payment processing could impact operations and profitability. The company reported a net income of $38.9 million for the three months ended September 30, 2024, which represents a substantial increase compared to a net loss of $9.9 million in the same period of the previous year. Regulatory changes could affect future earnings and operational costs.
Market Conditions
Fluctuations in market conditions, including economic downturns, can adversely affect transaction volumes and consumer spending. Flywire experienced a transaction payment volume increase of approximately 31% during the nine months ended September 30, 2024, reaching $17.7 billion. However, adverse market conditions could reverse this growth trend.
Operational Risks
Operational risks associated with technology and data security are critical for Flywire. The company reported technology and development expenses of $49.3 million for the nine months ended September 30, 2024, an increase of 9.3% from the previous year. Any significant operational failure or data breach could lead to reputational damage and financial losses.
Financial Risks
Financial risks include fluctuations in interest rates and foreign currency exchange rates. For the nine months ended September 30, 2024, the company recorded $5.0 million in interest income, up 31.6% from $3.8 million in the previous year. However, exposure to foreign currency transactions resulted in a gain of $5.5 million for the same period, compared to a loss of $4.2 million previously. These fluctuations can impact overall financial performance.
Strategic Risks
Strategic risks arise from mergers and acquisitions. The successful integration of acquired companies like StudyLink and Invoiced is crucial. The company spent approximately $37.6 million on the acquisition of StudyLink and $53.7 million on Invoiced. Failure to realize the expected synergies from these acquisitions could negatively affect financial results.
Mitigation Strategies
To address these risks, Flywire has implemented several mitigation strategies. The company's liquidity position is robust, with cash and cash equivalents totaling $565.0 million as of September 30, 2024. Furthermore, the company has established a $125.0 million undrawn balance under its Revolving Credit Facility to enhance financial flexibility.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Industry Competition | Intense competition affecting market share | Transaction revenue growth of 27.1% in 2024 |
| Regulatory Changes | Potential changes in compliance requirements | Net income increased to $38.9 million |
| Market Conditions | Economic downturns affecting transaction volumes | Transaction payment volume of $17.7 billion |
| Operational Risks | Technology failures or data breaches | Technology expenses at $49.3 million |
| Financial Risks | Interest rate and currency fluctuations | Interest income increased to $5.0 million |
| Strategic Risks | Integration of acquired companies | Acquisition costs of $37.6 million and $53.7 million |
Future Growth Prospects for Flywire Corporation (FLYW)
Future Growth Prospects for Flywire Corporation
Analysis of Key Growth Drivers
Flywire Corporation is positioned for substantial growth driven by various factors:
- Product Innovations: The company has made significant investments in technology and development, with expenses reaching $49.3 million for the nine months ended September 30, 2024, an increase of 9.3% from $45.1 million in the same period of 2023.
- Market Expansions: Flywire expanded its global reach to over 240 countries and territories, processing payments in more than 140 currencies. This broadens its market potential significantly.
- Acquisitions: The acquisition of Invoiced and StudyLink has bolstered Flywire's capabilities. StudyLink was acquired for approximately $37.6 million.
Future Revenue Growth Projections and Earnings Estimates
Revenue for Flywire was $374.6 million for the nine months ended September 30, 2024, compared to $302.5 million for the same period in 2023, marking a 23.8% increase. Transaction revenue alone reached $314.9 million, up 27.1% year-over-year. The company anticipates continued growth, with transaction payment volume increasing approximately 31% to $17.7 billion.
Strategic Initiatives or Partnerships That May Drive Future Growth
Flywire has engaged in strategic partnerships aimed at enhancing its service offerings. The company is focusing on integrating new payment solutions and expanding its client base in sectors such as healthcare and education.
Competitive Advantages That Position the Company for Growth
Flywire benefits from a strong dollar-based net retention rate of approximately 125% as of the end of 2023. The company has also maintained an impressive net promoter score of 62, indicating high customer satisfaction. Furthermore, its ability to process cross-border payment flows enhances its revenue potential as clients engage in international transactions.
| Metrics | 2024 (Nine Months Ended) | 2023 (Nine Months Ended) | Change ($) | % Change |
|---|---|---|---|---|
| Total Revenue | $374.6 million | $302.5 million | $72.1 million | 23.8% |
| Transaction Revenue | $314.9 million | $247.7 million | $67.2 million | 27.1% |
| Platform and Other Revenue | $59.6 million | $54.8 million | $4.8 million | 8.8% |
| Transaction Payment Volume | $17.7 billion | $13.5 billion | $4.2 billion | 31% |
| Net Income (Loss) | $18.8 million | $(9.9 million) | $28.7 million | 289.9% |
In summary, Flywire's strategic initiatives, strong growth metrics, and competitive advantages position it well for continued expansion and revenue growth in the coming years.
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Updated on 16 Nov 2024
Resources:
- Flywire Corporation (FLYW) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Flywire Corporation (FLYW)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Flywire Corporation (FLYW)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.