Flywire experiences growth despite obstacles in the education market during Q1 2024
In a recent announcement, payment solutions provider Flywire has revised its full-year 2024 forecast, citing a shift in expectations and foreign exchange impacts, particularly in its education clients in Canada.
The company's Q1 2024 revenues stood at $114.1 million, marking a 21% year-over-year increase. This growth was primarily driven by Flywire's core business model, which revolves around transaction fees and foreign exchange (FX) margins. The volume of transactions processed through Flywire’s platform and the involvement of multiple currencies in these payments have a direct impact on its revenue.
However, the company's Q4 2024 guidance indicated a slowdown in revenue growth to 12%, which is below the consensus expectation of around 20%. This weaker-than-expected growth, combined with the expensive and cash-consuming acquisition of Sertifi, caused a negative reaction in Flywire's stock price. The acquisition, which consumed about half of Flywire's cash balance, has impacted the company's financial flexibility for the near term.
As a result, Flywire has adjusted its full-year 2024 revenue and EBITDA forecast downward relative to prior expectations. While exact EBITDA figures for 2024 were not detailed, the below-consensus growth and increased acquisition-related expenses suggest margin pressure and potentially lower EBITDA than initially anticipated.
Despite these challenges, Flywire continues to expand its solution portfolio across education, travel, and healthcare verticals, aiming to increase revenue streams via platform fees and bundled services. The Sertifi acquisition is expected to add $35–40 million in revenue in 2025, with a strategic focus on accelerating travel vertical growth.
Flywire anticipates its adjusted EBITDA margin to expand by 320 bps for the full year 2024, with a projected adjusted EBITDA margin of 13-14.5% for the year.
In addition to these developments, Flywire has announced the availability of a free account for accessing extensive research and analysis on cross-border payments globally, including an industry-leading newsletter. This account is open to anyone interested in gaining insights into the world of cross-border payments and staying updated on the latest industry news.
[1] Source: Seeking Alpha - Flywire Q1 2024 Earnings Call Transcript [2] Source: Yahoo Finance - Flywire to Acquire Sertifi for $190 Million in Cash and Stock
In the revised full-year 2024 forecast, Flywire attributes the adjustment to a slowdown in revenue growth and the impact of foreign exchange in its education business in Canada, as well as the expensive acquisition of Sertifi in the technology sector, which has limited the company's financial flexibility for the near term.
Despite the challenges, Flywire is looking to boost its revenues by expanding its solution portfolio in the business sectors of education, travel, and healthcare, aiming to increase revenue streams via platform fees and bundled services, with the Sertifi acquisition expected to add $35–40 million in revenue in 2025, primarily contributing to travel vertical growth.
