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Flywire (NASDAQ:FLYW) Reports Upbeat Q3, Stock Jumps 12.5%


Adam Hejl /
2021/11/09 5:18 pm EST
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Cross border payment processor Flywire (NASDAQ: FLYW) announced better-than-expected results in the Q3 FY2021 quarter, with revenue up 61% year on year to $67.7 million. Flywire made a GAAP profit of $9.99 million, improving on its profit of $5.22 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) Q3 FY2021 Highlights:

  • Revenue: $67.7 million vs analyst estimates of $52.3 million (29.4% beat)
  • EPS (GAAP): $0.08
  • The company lifted revenue guidance for the full year, from $175.5 million to $191.5 million at the midpoint, a 9.11% increase
  • Free cash flow of $36.5 million, up from negative free cash flow of -$750 thousand in previous quarter
  • Gross Margin (GAAP): 67.9%, up from 67.2% same quarter last year

“We experienced another strong quarter with growth across all areas of our business, resulting in revenue less ancillary services growth of 67% compared to the third quarter of 2020,” 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.

Flywire benefits from the broad adoption of financial technology software in an ongoing drive to reduce costs and improve the speed and security of payments, while reducing the friction in cross border payments.

Sales Growth

As you can see below, Flywire's revenue growth has been exceptional over the last year, growing from quarterly revenue of $42 million, to $67.7 million.

Flywire Total Revenue

This was another standout quarter with the revenue up a splendid 61% year on year. On top of that, revenue increased $30.8 million quarter on quarter, a strong improvement on the $8.01 million decrease in Q2 2021, and a sign of acceleration of growth, which is very nice to see indeed.

Analysts covering the company are expecting the revenues to grow 15.8% over the next twelve months, although estimates are likely to change post earnings.

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 400% since the IPO in 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 67.9% in Q3.

Flywire Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.67 left to spend on developing new products, marketing & sales and the general administrative overhead. While it improved significantly from the previous quarter this would still be considered a low gross margin for a SaaS company and we would like to see the improvements continue.

Key Takeaways from Flywire's Q3 Results

With a market capitalization of $4.75 billion Flywire is among smaller companies, but its more than $449.1 million in cash and positive free cash flow over the last twelve months give us confidence that Flywire has the resources it needs to pursue a high growth business strategy.

We were impressed by how strongly Flywire outperformed analysts’ revenue expectations this quarter. And we were also excited to see the really strong revenue growth. Zooming out, we think this was a fantastic quarter that should have shareholders cheering. The company is up 12.5% on the results and currently trades at $49.9 per share.

Flywire may have had a good quarter, so should you invest 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.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

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