Flywire (NASDAQ:FLYW) Beats Q4 Sales Targets, Stock Jumps 20.4%
Cross border payment processor Flywire (NASDAQ: FLYW) announced better-than-expected results in Q4 FY2023, with revenue up 37.6% year on year to $100.5 million. Revenue guidance for the full year also exceeded analysts' estimates but next quarter's guidance of $113.5 million was less impressive, coming in 1.2% below expectations. It made a GAAP profit of $0.01 per share, down from its profit of $0.02 per share in the same quarter last year.
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Flywire (FLYW) Q4 FY2023 Highlights:
Revenue: $100.5 million vs analyst estimates of $88.73 million (13.3% beat)
EPS: $0.01 vs analyst estimates of -$0.07 ($0.08 beat)
Revenue Guidance for Q1 2024 is $113.5 million at the midpoint, below analyst estimates of $114.9 million
Management's revenue guidance for the upcoming financial year 2024 is $518 million at the midpoint, beating analyst estimates by 6.6% and implying 28.5% growth (vs 40.9% in FY2023)
Free Cash Flow of $58.83 million, up 31% from the previous quarter
Gross Margin (GAAP): 63.4%, up from 59.5% in the same quarter last year
Market Capitalization: $2.93 billion
“Our strong fourth quarter results, which included nearly 43% year over year growth in revenue less ancillary services, capped off an exceptional year for Flywire as we continue to show strong performance across the business,” 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 two years, growing from $51.39 million in Q4 FY2021 to $100.5 million this quarter.
Unsurprisingly, this was another great quarter for Flywire with revenue up 37.6% year on year. However, the company's revenue actually decreased by $22.78 million in Q4 compared to the $38.45 million increase in Q3 2023. Regardless, we aren't too concerned because Flywire's sales seem to follow a seasonal pattern and management is guiding for revenue to rebound in the coming quarter.
Next quarter's guidance suggests that Flywire is expecting revenue to grow 20.3% year on year to $113.5 million, slowing down from the 46.2% year-on-year increase it recorded in the same quarter last year. For the upcoming financial year, management expects revenue to be $518 million at the midpoint, growing 28.5% year on year compared to the 39.3% increase in FY2023.
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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's free cash flow came in at $58.83 million in Q4, up 91.6% year on year.
Flywire has generated $74.61 million in free cash flow over the last 12 months, a solid 18.5% of revenue. This strong FCF margin stems from its asset-lite business model, giving it optionality and plenty of cash to reinvest in its business.
Key Takeaways from Flywire's Q4 Results
We were impressed by how strongly Flywire blew past analysts' revenue expectations this quarter. We were also glad its full-year revenue guidance came in higher than Wall Street's estimates and free cash flow shows a strong trend. On the other hand, revenue guidance for next quarter missed analysts' expectations. Overall, this quarter's results still seemed positive and shareholders should feel optimistic. The stock is up 20.4% after reporting and currently trades at $29.52 per share.
Flywire may have had a good quarter, but does that mean you should invest 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.
