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Flywire (NASDAQ:FLYW) Q4 Sales Beat Estimates, Stock Jumps 10.3% On Strong Guidance


Adam Hejl /
2022/03/02 4:32 pm EST
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Cross border payment processor Flywire (NASDAQ: FLYW) reported Q4 FY2021 results beating Wall St's expectations, with revenue up 54.6% year on year to $51.3 million. On top of that, guidance for next quarter's revenue was surprisingly good, being $61 million at the midpoint, 14.9% above what analysts were expecting. Flywire made a GAAP loss of $11.1 million, down on its loss of $4.03 million, in the same quarter last year.

Is now the time to buy Flywire? Access our full analysis of the earnings results here, it's free.

Flywire (FLYW) Q4 FY2021 Highlights:

  • Revenue: $51.3 million vs analyst estimates of $41.1 million (24.8% beat)
  • EPS (GAAP): -$0.11
  • Revenue guidance for Q1 2022 is $61 million at the midpoint, above analyst estimates of $53 million
  • Management's revenue guidance for upcoming financial year 2022 is $271 million at the midpoint, beating analyst estimates by 16.4% and predicting 34.7% growth (vs 52.2% in FY2021)
  • Free cash flow was negative $9.12 million, down from positive free cash flow of $36.5 million in previous quarter
  • Gross Margin (GAAP): 62.5%, down from 65.2% same quarter last year

"Flywire delivered strong results in 2021, with total annual revenue increasing 53% and total annual revenue less ancillary services increasing 58% year-over-year. The demand for domestic and cross-border payments led to another strong quarter of revenue growth, backed by our success in growing existing clients, winning new clients, and expanding our channel partnerships around the world,” 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.

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 exceptional over the last year, growing from quarterly revenue of $33.2 million, to $51.3 million.

Flywire Total Revenue

This was another standout quarter with the revenue up a splendid 54.6% year on year. But the revenue actually decreased by $16.3 million in Q4, compared to $30.8 million increase in Q3 2021. However, the sales also similarly dropped a year ago and management is guiding for revenue to rebound in the coming quarter, which might hint at an emerging seasonal pattern.

Guidance for the next quarter indicates Flywire is expecting revenue to grow 35.5% year on year to $61 million, in line with the 37.5% year-over-year increase in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $271 million at the midpoint, growing 34.7% compared to 52.2% increase in FY2021.

There are others doing even better than Flywire. Founded by ex-Google engineers, a small company making software for banks has been growing revenue 90% year on year and is already up more than 150% since the IPO last December. You can find it on our platform for free.

Profitability

What makes the software as a service business so attractive is that once the software is developed, it typically shouldn't cost much to provide it as an ongoing service to customers. Flywire's gross profit margin, an important metric measuring how much money there is left after paying for servers, licenses, technical support and other necessary running expenses was at 62.5% in Q4.

Flywire Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.62 left to spend on developing new products, marketing & sales and the general administrative overhead. This would be considered a low gross margin for a SaaS company and it has been going down over the last year, which is probably the opposite direction shareholders would like to see it go.

Key Takeaways from Flywire's Q4 Results

With a market capitalization of $2.69 billion Flywire is among smaller companies, but its more than $385.3 million in cash and positive free cash flow over the last twelve months put it in a very strong position to invest in growth.

We were impressed by how strongly Flywire outperformed analysts’ revenue expectations this quarter. And we were also glad that the revenue guidance for the next quarter exceeded analysts' expectations. On the other hand, it was less good to see the pretty significant deterioration in gross margin and despite massively exceeding analyst estimates the revenue guidance for next year indicates a slowdown in growth. Overall, we think this was still a really good quarter, that should leave shareholders feeling very positive. The company is up 10.3% on the results and currently trades at $29 per share.

Should you invest in Flywire right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.