Mike Massaro - Chief Executive Officer Rob Orgel - President and Chief Operating Officer Mike Ellis - Chief Financial Officer. Akil Hollis - Vice President of Investor Relations, FP&A

Greetings ladies and gentlemen and welcome to Flywire Corporation Second Quarter of 2022 Earnings Call. At this time all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Akil Hollis, Vice President of Investor Relations and FP&A. Thank you.

Thank you, and good afternoon. With me on today’s call are Mike Massaro, Chief Executive Officer; Rob Orgel, President and Chief Operating Officer; and Mike Ellis, Chief Financial Officer. Our second quarter 2022 Earnings Press Release, Supplemental Presentation and, when filed, associated quarterly report on Form 10-Q can be found at www.ir.flywire.com. During the call, we will be discussing certain forward-looking information. Actual results could differ materially from those contemplated by these forward-looking statements. We will also be discussing certain non-GAAP financial measures. Please refer to our press release and SEC filings for more information on the risks, regarding these forward-looking statements that could cause actual results to differ materially. Risk factors associated with our business and required disclosures 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 Massaro.

Thank you, Akil. And thank you, to everyone that is joining us today. We are excited to share our Q2, 2022 results with all of you, and provide more insights on the future of Flywire. We saw strong performance in the second quarter, and in a few minutes Rob Orgel, our President and COO, as well as Mike Ellis, our CFO, will go into greater detail about our operating and financial performance during the quarter, but first, I will start with a few financial highlights. As you will see from our results, we continued to have success in penetrating the significant total addressable market that our education, healthcare, travel and B2B verticals represent. Total payment volume for the quarter increased 49% compared to Q2, 2021. Revenue, less ancillary services was $51.5 million, represent a year-over-year revenue growth of 56%, even despite increasing FX headwind. Adjusted gross profit was $33.2 million in Q2, an increase of 48% year-over-year. Adjusted EBITDA was negative $6.1 million, which was better than internal expectations, driven primarily by stronger revenue growth. Today, we’ll be raising our full year 2022 financial guidance for both revenue, less ancillary services and adjusted EBITDA, which Mike Ellis will share details on later in this call. I am quite proud of the great results we are sharing this quarter, especially at how the business continues to navigate these exceptional macroeconomic times. Of course, none of this would be possible without our amazing FlyMates. And I’d like to take the moment to thank them for all their incredible efforts. I’ll now move on to discuss our industry verticals and trends. While none of us can predict the future, based on the historical, current and expected trends, we believe Flywire is well positioned for continued growth across our verticals. Education and healthcare, have…

Thanks, Mike. And good afternoon, everyone. Our strong results this quarter reflect continued execution of our growth strategies. We saw strength in bringing on new clients with the addition of over 140 new clients in the quarter. This brings our client count to over 2,800, and consistent with our recent quarters, we also had success in getting more payments and payment share by cross selling to existing clients. I’d like to highlight some of our successes across the verticals. Starting today with travel. We continued to see strength in travel, especially in our European clients. As of the end of the second quarter, our EMEA destination management clients have delivered revenue in the first two quarters above our full year expectations for that segment. We continue to see strong new client growth as well as contribution from clients we acquired since the start of the COVID-19 pandemic. In the quarter, we formed a relationship with Travel Connect, which is the parent company of our existing client, Nordic Visitor. They chose to expand their relationship with Flywire based on the quality of service and cost savings for them and their traveling customers, which they saw from our initial deployment. Travel Connect owns six luxury travel brands, which includes five destination management companies and one accommodation provider. We signed an agreement with Travel Connect that will allow us to offer Flywire payments and software services through all of their entities. In the Asia Pacific region, we also saw a meaningful recovery in our clients’ business activity. In June 2022 alone, our APAC travel clients used our solutions to move more money than was moved by Flywire in the region during the entirety of 2021 in this segment. Our APAC clients have also indicated that they are starting to receive deposits for travel…

Thank you, Rob. Good afternoon, everyone. Today, I will be discussing our non-GAAP financial metrics for our second quarter of 2022, including revenue less ancillary services, adjusted gross profit, adjusted gross margin and adjusted EBITDA. For our financial results prepared in accordance with U.S. generally accepted accounting principles, please read the preliminary and unaudited financial statements included within our earnings release and the unaudited financial statements that will be included in our quarterly report on Form 10-Q when filed with the SEC. Revenue less ancillary services for Q2, 2022 was $51.5 million, representing a 56% increase compared to Q2, 2021. Our revenue growth rate was driven by an increase in total payment volume, particularly due to strong performance from our international cross border payment volumes in our education and travel verticals. We processed $2.9 billion in total payment volume during Q2, 2022, which was an increase of 49% from the $1.9 billion we processed during Q2, 2021. Specifically, transaction revenue increased 72% compared to Q2, 2021, driven by a 63% increase in transaction payment volume. Platform and usage-based fee revenue increased 14% compared to Q2, 2021, driven by a 24% increase in platform and usage-based payment volume, with the platform revenue growth still being partially offset by the loss of a client in the healthcare vertical last year, which was discussed during our prior calls and is not yet fully lapped. As mentioned by Rob, a few minutes ago, we expect recently on-boarded new healthcare clients to contribute to platform and usage-based fee revenue growth in the second half of the year. Moving on to adjusted gross profit, we generated $33.2 million in adjusted gross profit in Q2, 2022, representing a 48% increase compared to Q2, 2021. That resulted in an adjusted gross margin of 64.5%, which was lower compared…

Thank you, sir. [Operator Instructions] The first question comes from Bob Napoli of William Blair.

Hi! Thank you. Good afternoon! Nice job on the quarter, good results. So just would like to get some clarification on the upside versus your guidance. How much of that came organically versus any other contribution? Maybe give some color on the contribution of Cohort Go, WPM, you know so if you could just unpack the upside if you would.

Sure, thanks Bob. I’m going to let Mike Ellis handle it.

Hey Bob! Thanks for the question. So essentially we increased our annual revenue guidance by approximately $11.5 million. The breakdown of that comes from $5 million from our Q2 revenue out performance, the remaining comes from $5.5 million from contributions from the recent acquisition of Cohort Go, and again, that represents about 5.5 months of the year given the acquisition closed in the middle of July. And then the final amount is another $1 million from expected continued strong organic revenue growth, offset by continued FX headwinds. And just with respect to Cohort Go, I just want to highlight that there’s been some inquiries around their revenue projections that have been seen in some publications that happened or that were published prior to our acquisition, and we wanted to kind of avoid confusion around those numbers. But for clarity, any forecast that you might have seen prior to our acquisition in the press were in fact in Australian dollars. And number two, those forecasts were from a private company, and they were projections made at the beginning of their full year. So just for clarity purposes, to give you a little bit of sense of how we unpack the revenue and what we’ve included. But certainly, an organic beat that we expect and that’s why we raised our guidance, which is included in there.

Great, thank you. And then this has been a very high investment year for the company and you’ve had very good momentum in the business. What should we expect as we go into 2023 on investment as – I mean I would imagine that the investment levels as relative to revenue may moderate some. Can you keep the momentum growing in the business with some moderation in the investment levels versus this year?

Bob, this is Rob, and I’ll jump in and take that one, but thanks for that question and I can tell just from the way you phrased it, that your understanding very much matches our expectations for how things will unfold going forward. So we called out that this was a significant investment year for the company, both across go-to-market as well as R&D. We’re excited about those investments and I’d remind everyone, those are intended to sort of long-term investments with long-term return. But as we grow the company just as you say, we do see scalability across multiple of our functions and we would expect to see some moderation in that hiring pace as we continue to grow the revenue line.

Great! And the momentum in the business, I guess that’s the big question, is just the top line momentum you know has some moderation of investment levels.

Yes, I’ll just jump in Bob, this is Mike. I would say we feel quite confident in the business where we’re sitting. You know as Mike said, not only to beat but to raise organically as well. There’s obviously an uncertain world out there, but we feel really good with the trends we’re seeing. I talked about it in a number of points I made earlier and I think we feel really good about where that leads us for out years, but we’ll continue to make good investments that we think have good returns, and continue to grow the business when we can, but do so with that financial mindset that we talked about at length over the last year.

Thank you.

The next question comes from Dan Perlin of RBC Capital Markets.

Thanks. Good evening and a great quarter. I just wanted to get clarity on the commentary around gross profit. I think you had said 65% to 70%, and then I think you were just kind of trying to clarify that you are going to be towards the mid to lower end of that range. So first, was that, I just wanted to clarify that. And then secondly, if that’s the case, maybe just remind us again why the material ramp, how confident you are in that – the second half of the year relative to the first half?

Yes, thanks Dan. So yes, that’s what we were thinking that the annual range will come in to the mid to the lower part of that range and it really comes down to the outperformance that we’ve seen across our travel verticals and our domestic transactions within our education vertical. That’s been an excellent revenue driver and excellent adjusted gross profit driver for the business. We do expect adjusted gross margins to come in higher in the second half of the year due to the cross-border education business, and as a result of the payment methods typically selected for those larger payments, we do get to enjoy higher adjusted gross margins towards the higher end of that range for that quarter, and we would expect that Q4 would be similar to Q1 and Q2 in numbers, rounding out to around that mid to low end of the range as communicated.

Okay, no, that’s super helpful. And then just a quick follow-up, in the education vertical, you were talking about the Canadian market, you signed five new district school boards, K-12. I’m just wondering – I oftentimes just think mostly of you in terms of universities and such. But in that example, it sounds like you’re making some really good inroads into the K-12 space. So I’m just wondering, are there investments that you’re making in that? Is that just a couple of examples you’re just trying to pull out specifically for this quarter or are there some real initiatives that you put behind it and you’re starting to see some good outcomes. Thank you.

So Dan, this is Rob. I’m happy to start this one off. You know I think we’ve always wanted to make sure people understood the breadth and the diversity of the education space, right? We’ve always talked about that diversity as not being just higher ed, but higher ed plus vocational, plus K-12, plus language schools, plus summer programs and other categories as well. We’ve also described it as a very global business, so there is that diversity and breadth that is part of the strength of the business. Now we do have as part of this go-to-market investment that I described for you earlier, initiatives against a number of these segments that are intended to allow us to accelerate. One in particular was to be able to do more around that sort of K-12 segment. It’s been a business of ours for some time, but by putting some more energy against it, looking to the opportunity to accelerate it, and I’d tell you that we’ve enjoyed success on that, not just in Canada, but in other parts of the world as well.

That’s great. Thank you.

Thanks Dan.

The next question comes from Andrew Bauch of SMBC Nikko.

Hey guys! A nice set of results here. I wanted to unpack one of the comments you had on the call Mike, that the pipeline that you see today is at 2x, where we were last year. So if you could just help us kind of dimensionalize where that is, I’d assume the bulk of it’s in education, but is there opportunities in the domestic side? Are you cross-selling at a higher rate or any way that we can kind of unpack that?

Yes, I would say that – you know I would say that growth is happening across all verticals, so that would be the first comment I would make. I would think that’s also coming from land and expand, which is the domestic strategy that we’ve highlighted numerous times, where we’re going from just doing cross-border services to expanding into more of our product offering in the education vertical; it’s also coming from there. And then I would just also highlight the mention I had earlier as well about pipeline strength and signs coming from overseas in the business from an ARR perspective. You know it’s truly a global business. It’s getting more and more global. As Rob said, it’s also diverse as you get into the industries and the subsectors within those industries, and so I would say all those factors are leading to that exceptional increase to pipeline and super excited about it for the future.

Yes, it’s a pretty exciting opportunity to have that level of visibility. And my follow-up was, I think you said you signed 20 of the WPM clients in the U.K. throughout the quarter or thus far through what, 8 or so months. But is this the kind of pace we can assume as far as the penetration of WPM? I think they have over 170 clients if I’m not mistaken. But just trying to understand if this is what we can kind of expect for that initiative?

Yes, you know I would say we’re super happy with obviously the success we’ve had. You know so I wouldn’t say that this is either massively ahead of pace or anything behind. I think it’s above our expectations, but I wouldn’t say it’s massively likely to accelerate or slow down. Our goal is to really get out there, continue to tell the story to these clients. They all ultimately need to make their own decision as to when it’s the right time to have the integrated offering. But the more case studies we get out there, the more clients that are talking about this integration, I think it’s going to lead to more and more of those U.K. clients seeing the benefit of the integrated solution, and the team is just doing a great job communicating that value to customers. So super excited about the results, you know beat our projections as to what we were thinking internally, but I think it’s a reasonable pace to continue, but nothing we’re putting in stone.

Got it. I appreciate the color and a nice set of results here.

Thanks again.

The next question comes from Darrin Peller of Wolfe Research.

Hey guys! Nice job today. When we look at the land and expand versus the new clients you’re adding, if you could just help us understand a little more of what you’re seeing there, and then maybe to add on to that, on a vertical-by-vertical basis, are you seeing any evidence and any change in behavior? It just doesn’t sound like there’s any macro changes, but any color would be great on specifically travel, but anything else you are seeing would be great.

You want that one Rob?

Sure, I can start off. So Darrin, you’ve heard us describe sort of land and expand has been pretty fundamental to our strategy. You heard us talk a lot about NRR and LTV to CAC. What I would tell you is that we continue to execute very successfully against that playbook. You know we’re not doing sort of quarter-by-quarter disclosure on NRR, but I can tell you that the NRR is coming in. It came in very strong for the quarter, once again above our three year average and so we continue to do things like the case study that I described for this announcement for URI, similarly for University of Chicago. Both of those are pre-existing clients in other areas where they’ve chosen to expand their opportunity with us or their use of our solutions, so that’s sort of a big part of the Flywire playbook. We continue to do very well with that. Of course, I also mentioned a bunch of net new clients, so we’re continuing to sign up new clients very well and I also mentioned the 140-plus new clients for the quarter. So overall, land and expand, as well as net new clients continues to happen. You are asking in particular about travel and I think the context there or the highlights there are that travel is – obviously, it was particularly strong for us in the quarter. We called that out in our earlier comments. That would translate into both NRR for existing clients, very, very strong in the travel vertical, as well as being very pleased with the pace at which we are getting travel clients live and they are generating good revenue for us and payment volumes that are associated with that revenue.

Yes, the only thing I’d add on there Darrin is just you know if you look at travel, you know really encouraged. I mean we talked a lot at the Analyst Day about how we see opportunities for these vertical ecosystems and to do more for clients. I would say we feel even stronger about that opportunity in places like travel and then if there was a call out for travel, definitely, the team did an amazing job in Europe in particular, right? That definitely kind of came back and came back strong from a travel perspective as a trend.

Alright, that’s helpful. Thanks guys. Can we just revisit for a minute the deals you guys did, both of them actually. In terms of the magnitude of what you can see or the execution you can do on synergies on the top line synergies potentially? Maybe just each one of them would be great to hear more about. I know WPM has opportunities on the volume side shifting over, but I think there’s opportunities on both and I’d love to hear a little more if you can.

Yes, sure. So you know again, I’ll kind of remind folks what we had said at WPM. WPM was a business that was very much a platform and usage-based revenue. It was also a business that I would say was not run for high growth, right, but focused on clients and engagement of those clients and driving value. So the opportunity we see obviously as we’ve talked about before, is monetizing that payment volume and we’ve said that we see multiple billions of dollars of payment volume sitting within that opportunity. And so again, that’s going to materialize over not only ‘22, but ‘23, ‘24 as we get the integrated solution live and as you start to see the full year effect of that volume come through, right. And so really great results with the number of clients who have signed up for that integrated solution, but those are going to get live and you’re going to see the full year effect, which is all great indications for medium and long-term growth at Flywire. On Cohort, again Mike I think was pretty clear as to what to expect through the end of this year. And again, I think if you can make the assumption that we believe both, that is an accretive business for us both on top line and bottom line like we said in the announcement, you know we feel really good about driving synergies there. We’re not doing these deals to cut; we’re doing these deals to grow and invest, right? That’s the type of businesses that we like and so it’s really around growth for us. And the other thing I’d highlight, Cohort is really around not only Asia Pacific, but also those educational agents. We talked about that trend quite a lot at Analyst Day. It’s a major trend inside the education sector and so our education team and business coming together with the Cohort team, really put into it kind of an unmatched class in our opinion on the opportunity ahead of us. And so again, I think that’s going to all materialize over the medium and long term as well. Hopefully that helps.

That’s great. It does. I know – just to sneak one in, the FX impact expectations now versus prior, if you could just remind us real quick. I don’t think I heard it before.

Sure. Mike, do you want that?

Sure. So as we disclosed in our most recent press release, we do have some FX headwinds predominantly around a couple of currencies. We’ve built that into our guidance for the full year and we’re talking about single to mid millions relative to the FX headwinds that we’re seeing for the full year, and that breaks up by quarter, relatively not material in Q1 at all and we’re just managing it. But our guidance does in fact assume that the existing currency conversions with these currencies remain stable, where they are today over the remaining period of 2022.

Yes, and I’ll highlight Darrin, obviously with those FX headwinds, if you didn’t have those, you would have seen even higher growth than was reported this quarter. So hopefully, that helps clear that up.

Yeah, absolutely. Thanks guys. I appreciate it.

Thank you. The next question comes from Ashwin Shirvaikar of Citi.

Thank you. Hey Mike, Rob, Mike! Good quarter here. Congratulations!

Thanks Ashwin.

Let me start – Hey! Let me start with maybe 3Q versus 4Q EBITDA. You know the last couple of years the 3Q EBITDA margin has been sort of in the 27%, 28% range. I know you mentioned a couple of moving parts there, you know including the upper part of the range for gross margins. Would the 27%, 28% range for EBITDA be kind of what one should expect? And I think the broader question there is, obviously that would imply that 3Q EBITDA contribution is greater than sort of full year contribution. Is that a pattern one should expect would dissipate, say in the next couple of years as we think of quarterly contribution?

This is Mike Ellis. So just to level set, I believe the 2021 adjusted EBITDA margin was closer to the 12% to 13% range. And what we’ve shared at Analyst Day, you know our initial guidance for 2022 was right around the 5% range for adjusted EBITDA, and we indicated that we think and feel confident based on our revenue profile and growth profile that we could add you know roughly 3% to 4% per year up until getting to a higher adjusted EBITDA percentage. We would expect at least in the short term that the revenue composition and the adjusted EBITDA composition that you’ve seen seasonally, historically, would continue on in the short term. We are – we did provide some level of guidance as it related to adjusted EBITDA that they will both be positive in Q3 and Q4, but I’d urge you to look at the seasonality that we’ve seen historically in Q3 and Q4 to level set those for your own modeling.

Okay, okay. No, I was just wondering with some of these acquisitions and mix changes with travel and B2B and so on and so forth growing, if that was going to change. The other question I had was payment method mix. Could you remind us sort of what it is today and how you would expect that to maybe evolve over time? I know that does have a bearing on where adjusted gross profit lands.

Yes, one thing I’d say on payment method mix, so we talked before, if you look at our broad set of volume, the vast majority of volume being bank transfer. So again that’s the history of the education business and the large sum of the transactions on that side of the business. What does happen throughout the year is you see different average transaction sizes, you also see different payment method mix by vertical, right? So you really have to be looking at that vertical mix for revenue and the payment mix that’s almost inherent in the transaction sizes and/or the industries, sometimes even the geographies that those payments are coming from. So again, the vast majority of transactions via bank methods, again, higher gross margin methods. But again, depending on that type of average transaction value, you could see a different mix of cards or even just the inherent choice of the payer will change the mix of cards or payment method, bank transfers or third-party payment methods within a given industry.

Yes, the only thing I would add – this is Mike Ellis, is that we’re really committed to driving adjusted gross profit growth. We’ll let the adjusted gross margin come where it is because we’re very confident in the unit economics across our payment methods and our payment types. But as Mike said, as payment method mix, shift as well as you’ve seen in the prior two quarters, revenue from transactions really outpacing our platform and usage based fee revenue, which is also a driver of this adjusted gross margin number that might be from the mid to the low end of the range for the full year. But still really healthy adjusted gross profit growth, which we’re very proud of.

If I can ask a quick clarification on that platform versus transaction, I was assuming some of that at least was a recovery from COVID trends, where transactions might have been lower. Is that fair?

Ashwin, I’m not sure I’m totally following that one. Can you just sort of ask us that one more time in terms of the trend that you’re trying to inquire about?

Yes, you know as Mike mentioned there, the transaction revenue growth has outpaced platform and usage growth by quite a bit, and I was assuming that at least one of the contributors to that was probably sort of a COVID recovery if you will, and I just wanted to confirm if that was true.

Ashwin, I think our view of this is that there’s obviously COVID dynamics that are coming into place in different geographies and different verticals. But overall, what you’re seeing here is just a strong recovery across all of our business units, right? You’re seeing that transaction volume grow across education, across travel, across B2B as well. So while we’re early in some of those segments, they are all growing very nicely. And perhaps there’s some interplay of COVID there, but it’s also a function of new client signings, our land and expand, all the things we’re doing to continue to grow the business in all of those clients.

Yes, I would just add Ashwin, you remember full year effect as well right. So when you end up seeing transaction volume growth, you may have only gotten a certain amount of transactions from a given account that was signed a year prior, right? So relatively low impact on in-year revenue, but also that’s driving transaction growth over time as well.

Understood. Got it guys. Thank you.

The next question comes from John Davis of Raymond James.

Hey! Good afternoon guys. Mike, you made some comments in your prepared remarks about kind of there’s still some education recovery to come. I think the numbers you gave would imply like a 15% or so kind of uplift still that’s not there from education as far as it’s kind of students attending school. So first off, would you expect most of that to come in the third quarter kind of this school year? I already think it’s going to take multi-years, and if so you know it does means you would probably have an NRR number that is above -- kind of, if you go back to 2018, 2019. Do you still kind of have some recovery juice in education?

Hey JD! I think you’re thinking about it the right way. We’ve always said and a lot of you have heard us say it a long time. we’ve always felt this is rolling recovery, right, and I think we even said into 2023, and that continues to play out as true, And to give you some more context on that, think within education right. You know universities in places like Australia and New Zealand didn’t fully recover just based on border policies; Japan was very similar. Certain parts of Southeast Asia, you also have countries, obviously Chinese students who may they had some pretty severe lockdowns that were a part of China. You have boarding schools and language programs which were hit harder inside education globally, just because people weren’t willing to take the risk of cross-border travel for maybe a young teenager or for a short-term class. So those are really a lot of the areas where we think there’s definitely going to be some carry through into ‘23. You know I think your assumptions on that size in my prepared remarks is right on. That will hit NRR, and I think it will help continue to drive really solid NRR numbers, but you know don’t think there’s a guaranteed snapback in Q3 or Q4. We think that’s going to roll into 2023 just based on the geographic peaks within a lot of these markets.

Okay, that’s super helpful. And then maybe one for Mike Ellis, just kind of circling back to some of the comments you made at Investor Day. If we look at – you guys outlined some kind of 300 to 600 basis points of annual margin expansion, but you guys were very clear at the beginning of this year that you kind of had a onetime step-up in some incremental investment. So is it fair to think as we kind of look out into ‘23, that you’re not going to have those repeat, therefore, I guess all else equal, you would see margin expansion kind of outsized in ‘23 from an EBITDA and profitability perspective or anything else that I’m not thinking about, but trying to foot those kind of onetime step-up in expenses and how should we think about the margin trajectory going forward?

Yes, I’m happy to take that. Thanks for the question. So, you know as we talked about during the Analyst Day, we’re very confident in being able to share that 3% to 6% per year type increase of adjusted EBITDA is what we’re signing up for. And from the standpoint of the investment year, we certainly made a significant investment coming out of COVID towards the end of ’21, which we’re feeling the full year impact in ‘22. I think both Rob and I shared roughly about a $50 million investment year, which we’re continually evaluating for ROI and ensuring that the ROI is there in every dollar that we deploy. It’s a very balanced and disciplined approach. We want to be really good stewards of shareholder capital. And I think when you think about moving into 2023, listen, we’re going to have some SOX compliance and implementation fees that are onetime related in 2022, which may carry over in ‘23, but we’re always looking for scaling and efficiencies within our business and we’ll continue to do that to drive long-term adjusted EBITDA.

Okay, I appreciate all the color. Thanks guys.

The next question comes from Joel Riechers of Trust Securities.

Hi Guys! This is Joel Riechers on for Andrew Jeffrey. I just had a question about Cohort Go, the acquisition. I was wondering if that’s a bit of a one-off or do you think that there’s a little bit more room for M&A in a fragmented market like education payments?

Yes, I appreciate the question. This is Mike. So I would say we’re always – you know we continue to have three – always looking for deals that we think fits our core strategy and thesis. You know M&A pillars we’ve talked about before. What can help accelerate an industry or geography, what can help drive NRR, give us additional capabilities or potentially a third pillar, expand into a new geography or a new industry. Those pillars remain the same. Obviously, our first two deals as a public company have been education-related. We’ll continue to look in all verticals. I don’t have in all honesty, a preference as to one industry or vertical over another. At the same time, we’re kind of picky. You know we want to find great culture fits and both Cohort Go and WPM were companies that we had known for a long time, we had tracked for a long time, we felt there was great opportunity to drive that next level of growth together and so I would expect us to do something similar, look for a great company, not only culture, but technology and market opportunity. That’s really where we look for inorganic. And I would just highlight, you know we feel really good about our organic path ahead, right? So we don’t sit here saying, we need to do inorganic moves to keep growing this business, but we have the cash position to be able to do it.

That’s awesome, thank you. And then just a quick follow-up, are you guys able to provide any color as to what demand looks like for software solutions in healthcare for something like repayment plans and just whether or not you view that as structural or cyclical demand?

Yes, so the healthcare vertical continues to be a good one for us. We had a good Q2 in terms of ARR signings in Q2. I think the environment has become even more focusing for healthcare clients, because of both the sort of the financial pressures that they face, as well as the affordability and financial pressures that their patients face. So our software, you know one of its key benefits from the hospital perspective is that it is helping drive a higher collection rate and lower cost internally. You know they are having the same challenges hiring that lots of folks are, and they have a real imperative to try to automate and reduce costs. As you heard from my comments, we help drive self-service, we help drive patient satisfaction and very importantly, we ultimately help drive more collections. So as the climate remains challenging for healthcare providers in general, I think there’s – you know that’s a dynamic that makes our software even more valuable for them and so we continue to move forward well. We’re especially proud of the results that we deliver in the healthcare space. The ROI of what we do is really, really strong.

Thank you so much guys. And again, congrats on the quarter!

I appreciate that.

The next question comes from Ken Suchoski of Autonomous Research.

Hey! Good evening everyone. Nice job here. Thanks for taking my questions. I wanted to dig into the platform and usage-based fees. It looks like those adjusted revenues were down quarter-over-quarter. Can you just talk about what’s driving the revenue lower in that line? Is it FX or something else? And I think you mentioned that there were some recently on-boarded healthcare clients that will contribute to second half platform revenues. Could you just give us a little detail on those wins? How did those come about? And how much do you expect those wins to contribute to revenue in the second half?

Hi! So, Rob here. I’ll start and then I’ll hand off to Mike just in a second to go into the numbers. So yes, just to highlight the comment that I made, we have had multiple deployments in the recent period that we look forward to serving those clients well, and we look forward to the revenue contribution that those will create for us. There was this single client that we referred to as having a meaningful effect that we mentioned way back in the back part of last year and so we had called that out back then and remind folks that still has an ongoing effect in the platform revenue line until we lap that, which will happen later this year.

Okay. Alright, great. And then I guess just as my follow-up, China I guess is coming up a lot more in conversations. Can you just talk about your exposure to China whether by number of students originating from China or revenue from Chinese students? And then obviously there’s a lot of unknowns with this, but maybe you could talk about the risks to the business or maybe the diversity of the business from a high level as China and U.S. tensions increase?

Yes Ken, hey! I’ll take that one. This is Mike. You know I would say a couple of things to remember. Flywire has got you know and obviously China impact really would impact our education business as opposed to other industries or verticals, but – and specifically cross-border education flows obviously. The thing I would call out is Flywire has good clients in over 32 countries, right? So it isn’t really about whether students come to one country or another, but really do they end up in a place where Flywire is servicing those customers. So we’ve seen geopolitical tensions before. If anything continues to escalate there or any change in travel policies, you know our expectation is students from China will go somewhere. They’re not going to not go and study abroad, and if you look at the last two decades of trends of international students studying abroad, there’s been a really consistent – minus the pandemic, there’s been a really consistent growth rate of students studying abroad. And if you look at that number, it’s still a relatively small number when you look at global students. So we feel really good about general trends around international students. You know one of the interesting dynamics is also India has become the number one country of origination for students studying abroad. And so again, that I think has a positive impact, right? Certain policies, travel policies, I think some of the COVID dynamics in China can impact that, but students are going to go abroad. They may end up in Australia, they may end up in New Zealand if there are geopolitical tensions, but that’s why we have a good footprint for Flywire all around the world. So, you know some exposure there in our education cross-border business. But again, we think it’s relatively mitigated based on students still wanting to travel and study.

Okay, thanks Mike. I appreciate the thoughts and congrats on the results.

Thanks Ken.

The final question comes from Jeff Cantwell of Wells Fargo.

Hey! Thanks and congrats on the results. I wanted to follow up on some of the wins that you announced over the past year, and just so you can give us an update, in education particularly with Texas A&M and Stanford and UCONN, is there anything you can talk about as far as how that’s progressing and what we should expect you know for some of these more noteworthy ones you guys have analyzed over the past 12 months or so? Thanks very much.

Yeah, hi Jeff! Rob here, I’ll take that. So obviously, we’re very excited about the domestic business. We’re very excited about each of the client wins that we’ve announced on the last series of calls, right, so we talked about Texas A&M, we talked about Stanford, University of Connecticut. This call, URI and University of Chicago. We also talked about great wins internationally. Folks like MMU that we’ve discussed as well in our prior calls. So the performance of these schools is going really, really well. I mean at some level the best news is that those clients are just happy, content, working with our solution and then getting the benefits that we expected and plan to deliver for them. And so for us, that’s exactly what we want, because these are word-of-mouth industries where when people hear that you’re doing well for their colleagues at a school, they are that much more inclined to want to work with you themselves. So our job, number one is just to do a great job delivering on behalf of these clients, and with that, we continue to see the pipeline grow and the number of opportunities grow, and that’s the playbook we’re executing against.

You know Jeff, the only thing I’d add – this is Mike. It’s just you know our implementation teams have been doing a great job, really scaling with the growth of our business and really this is a global implementation team across all our industries. And so that team not only treating our clients’ great once we sign them on, but getting them live and as Rob said, driving that value. So we feel really good in our ability to do more of that and have a great implementation team behind us.

Okay great! Thanks very much guys and congrats on the results.

Thanks Jeff. We appreciate it.

Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session. I will now turn the call over to Mark Massaro for closing remarks.

I appreciate everyone’s time listening to our Q2, 2022 earnings call, and I’m sure we’ll be talking to many of you quite soon. Thanks very much.

Thank you. Ladies and gentlemen, that concludes today’s conference. Thank you for joining us. You may now disconnect your lines.