Flywire (NASDAQ:FLYW) Beats Q1 Sales Targets But Stock Drops 14.9%

Petr Huřťák /
2024/05/07 4:43 pm EDT

Cross border payment processor Flywire (NASDAQ: FLYW) announced better-than-expected results in Q1 CY2024, with revenue up 20.9% year on year to $114.1 million. Revenue guidance for the full year also exceeded analysts' estimates but next quarter's guidance of $103.5 million was less impressive, coming in 3.5% below expectations. It made a GAAP loss of $0.05 per share, down from its loss of $0.03 per share in the same quarter last year.

Is now the time to buy Flywire? Find out by accessing our full research report, it's free.

Flywire (FLYW) Q1 CY2024 Highlights:

  • Revenue: $114.1 million vs analyst estimates of $107.7 million (6% beat)
  • EPS: -$0.05 vs analyst estimates of -$0.03 (-$0.02 miss)
  • Revenue Guidance for Q2 CY2024 is $103.5 million at the midpoint, below analyst estimates of $107.2 million
  • The company dropped its revenue guidance for the full year from $518 million to $505 million at the midpoint, a 2.5% decrease
  • Gross Margin (GAAP): 63.5%, in line with the same quarter last year
  • Free Cash Flow was -$39.61 million, down from $58.83 million in the previous quarter
  • Market Capitalization: $2.48 billion

"We are pleased with our 2024 first quarter results, where we signed more than 200 new clients, the highest the company has signed in a quarter," said Mike Massaro, CEO of Flywire.

Originally created to process international tuition payments for universities, Flywire (NASDAQ:FLYW) is a cross border payments processor and software platform focusing on complex, high-value transactions like education, healthcare and B2B payments.

Payments Software

Consumers want the ability to make payments whenever and wherever they prefer – and to do so without having to worry about fraud or other security threats. However, building payments infrastructure from scratch is extremely resource-intensive for engineering teams. That drives demand for payments platforms that are easy to integrate into consumer applications and websites.

Sales Growth

As you can see below, Flywire's revenue growth has been impressive over the last three years, growing from $44.99 million in Q1 2021 to $114.1 million this quarter.

Flywire Total Revenue

This quarter, Flywire's quarterly revenue was once again up a very solid 20.9% year on year. On top of that, its revenue increased $13.56 million quarter on quarter, a strong improvement from the $22.78 million decrease in Q4 CY2023. This is a sign of acceleration of growth and very nice to see indeed.

Next quarter's guidance suggests that Flywire is expecting revenue to grow 22% year on year to $103.5 million, slowing down from the 50.1% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 24% over the next 12 months before the earnings results announcement.

Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefitting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.

Cash Is King

If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Flywire burned through $39.61 million of cash in Q1 , reducing its cash burn by 74.5% year on year.

Flywire Free Cash Flow

Flywire has generated $57.7 million in free cash flow over the last 12 months, a decent 13.6% of revenue. This FCF margin stems from its asset-lite business model and gives it a decent amount of cash to reinvest in its business.

Key Takeaways from Flywire's Q1 Results

We struggled to find many strong positives in these results. While this quarter's revenue topped Wall Street's estimates, its full-year revenue guidance fell short and its free cash flow was down from the previous quarter. Overall, this was a disappointing quarter for Flywire. The company is down 14.9% on the results and currently trades at $17.5 per share.

So should you invest in Flywire right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.