What Happened?
Shares of cross border payment processor Flywire (NASDAQ: FLYW) fell 41.7% in the morning session after the company reported poor fourth-quarter 2024 results: its revenue guidance for next quarter fell significantly short of expectations, and revenue missed Wall Street's estimates.
On the other hand, adjusted EBITDA more than doubled relative to the previous year, narrowly topping analysts' expectations. Looking ahead, Flywire expects first-quarter revenue growth of 10-13% on a constant-currency basis, which implies a slowdown from the 17% increase seen this quarter. Management also announced a restructuring plan impacting 10% of its workforce to improve efficiency and drive profitability. Despite the revenue miss, Flywire is strengthening its travel vertical with the acquisition of Sertifi, which could support future growth in hospitality payments. Overall, this was a weaker quarter: revenue and next-quarter guidance disappointed, but margin expansion and operational improvements helped cushion the downside.
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What The Market Is Telling Us
Flywire’s shares are quite volatile and have had 15 moves greater than 5% over the last year. But moves this big are rare even for Flywire and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 12 months ago when the stock gained 26.4% on the news that the company reported fourth-quarter results that blew past analysts' revenue expectations. The topline results were driven by volume increase due to strong growth in international cross-border payment volumes. Notably, the company observed improved momentum in the education vertical, particularly in the U.K. and from some travel clients. Changes in F.X. rates were also considered a tailwind during the quarter.
Looking ahead, its full-year revenue guidance came in higher than Wall Street's estimates, and free cash flow showed a strong trend.
On the other hand, revenue guidance for the next quarter missed analysts' expectations. The Canadian government's recent decisions to limit applications for international study permits influenced near-term growth projections, with provinces delaying the allocation of study permits to schools until late Q1 or early Q2. Overall, this quarter's results still seemed positive despite some of the anticipated headwinds, and shareholders should feel optimistic.
Flywire is down 46.4% since the beginning of the year, and at $10.78 per share, it is trading 62.6% below its 52-week high of $28.85 from February 2024. Investors who bought $1,000 worth of Flywire’s shares at the IPO in May 2021 would now be looking at an investment worth $307.00.
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