美国
证券交易委员会
华盛顿特区，邮编：20549
形式
(标记一)
根据1934年《证券交易法》第13或15(D)条规定的季度报告 |
截至本季度末
或
根据1934年证券交易法第13或15（d）条提交的过渡报告 |
的过渡期 到
委员会文件号：
(注册人的确切姓名载于其章程)
(述明或其他司法管辖权 公司或组织) |
(税务局雇主 识别号码) |
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（主要行政办公室地址） |
(邮政编码) |
注册人的电话号码，包括区号：(
根据该法第12(B)条登记的证券：
每个班级的标题
|
交易 符号
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各交易所名称 在其上注册的
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用复选标记表示注册人(1)是否在过去12个月内(或注册人被要求提交此类报告的较短时间内)提交了1934年《证券交易法》第13条或15(D)节要求提交的所有报告，以及(2)在过去90天内是否符合此类提交要求。
用复选标记表示注册人是否在过去12个月内(或在注册人被要求提交此类文件的较短时间内)以电子方式提交了根据S-T规则第405条(本章232.405节)要求提交的每个交互数据文件。
用复选标记表示注册人是大型加速申报公司、加速申报公司、非加速申报公司、较小的报告公司或新兴成长型公司。请参阅《交易法》第12b-2条规则中“大型加速申报公司”、“加速申报公司”、“较小申报公司”和“新兴成长型公司”的定义。
☒ |
加速文件管理器 |
☐ |
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非加速文件服务器 |
☐ |
规模较小的报告公司 |
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新兴成长型公司 |
如果是一家新兴的成长型公司，用复选标记表示注册人是否已选择不使用延长的过渡期来遵守根据《交易所法》第13(A)节提供的任何新的或修订的财务会计准则。☐
通过勾选标记检查注册人是否是空壳公司（定义见《交易法》第120亿.2条）。是的 没有
截至2024年11月4日，注册人已
目录表
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页面 |
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1 |
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第一部分. |
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项目6. |
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关于前瞻性陈述的特别说明
本季度报告中的10-Q表格，以及我们已作出或将作出的口头陈述或其他书面陈述中包含的信息，包含符合1933年《证券法》(修订本)第27A条和1934年《证券交易法》(修订本)第21E条的前瞻性陈述，涉及重大风险和不确定因素。本报告中除历史事实陈述外的所有陈述，包括有关我们未来经营结果和财务状况、业务战略以及未来经营的管理计划和目标的陈述，均为前瞻性陈述。在某些情况下，前瞻性陈述可以通过诸如“相信”、“可能”、“将会”、“可能”、“估计”、“继续”、“预期”、“打算”、“可能”、“将”、“计划”、“目标”、“计划”、“预期”或这些术语的否定或其他类似表述来识别。这些前瞻性陈述包括但不限于关于以下方面的陈述：
1
前瞻性陈述是基于我们管理层的信念和假设以及目前可用的信息。这些前瞻性陈述会受到许多已知和未知的风险、不确定性和假设的影响，包括“风险因素”一节和本季度报告10-Q表其他部分所描述的风险。本季度报告中Form 10-Q的其他部分可能包含可能损害我们的业务和财务业绩的其他因素。此外，我们的运营环境竞争激烈，变化迅速。新的风险因素不时出现，我们的管理层无法预测所有风险因素，也无法评估所有因素对我们业务的影响，或任何因素或因素组合可能导致实际结果与任何前瞻性陈述中包含或暗示的结果不同的程度。
您不应依赖前瞻性陈述作为对未来事件的预测。尽管我们相信前瞻性陈述中反映的预期是合理的，但我们无法保证未来的结果、活动水平、绩效、成就、事件或情况。除法律要求外，我们没有义务在本报告日期后以任何原因公开更新任何前瞻性陈述，也没有义务使这些陈述符合实际结果或我们预期的变化。您应该阅读10-Q表格季度报告以及我们作为本报告附件提交的文件，并了解我们的实际未来结果、活动水平、绩效和成就可能与我们的预期存在重大差异。我们通过这些警示性陈述来限制我们所有的前瞻性陈述。
此外，“我们相信”的声明和类似声明反映了我们对相关主题的信念和观点。这些声明基于截至本报告日期我们可用的信息，虽然我们相信此类信息构成了此类声明的合理基础，但此类信息可能是有限的或不完整的，并且我们的声明不应被解读为表明我们已经对所有潜在可用的相关信息进行了详尽的调查或审查。这些陈述本质上是不确定的，请您不要过度依赖这些陈述。
除非另有说明或除非上下文另有规定，否则本季度报告10-Q表格中所有提及我们的“普通股”均指我们的投票权普通股。
投资者、媒体和其他人应该注意到，我们打算通过提交给美国证券交易委员会(美国证券交易委员会)的文件、我们网站上的投资者关系页面(我们网站(www.flywire.com)上的https://ir.flywire.com)，博客文章、新闻稿、公开电话会议、网络广播和社交媒体渠道，包括我们的X(前身为TwitterFeed)(@flywire)、Facebook页面(https://www.facebook.com/Flywire)和LinkedIn页面(https://www.linkedin.com/company/flywire).)向公众发布重要信息上述渠道披露的信息可被视为重大信息。因此，我们鼓励投资者、媒体和其他人遵循上述渠道，并审查通过这些渠道披露的信息。我们将通过其公布信息的披露渠道列表的任何更新将张贴在我们网站的投资者关系页面上。上述网站的内容未纳入本备案文件或我们提交给美国证券交易委员会的任何其他报告或文件中。这些网站地址仅供非活动文本参考。
2
第一部分金融信息
伊特M 1.财务报表
飞线公司
CONDENSED CONSOLIDATED BALANCE SHEETS
（未经审计）（金额以千计，每股面值和股份金额除外）
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9月30日， |
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12月31日， |
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资产 |
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流动资产： |
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现金及现金等价物 |
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$ |
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$ |
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短期投资 |
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应收账款，扣除备用金#美元 |
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未开票应收账款，扣除备抵美元 |
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应收付款合作伙伴资金 |
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预付费用和其他流动资产 |
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流动资产总额 |
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长期投资 |
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财产和设备，净额 |
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无形资产，净额 |
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商誉 |
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其他资产 |
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总资产 |
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$ |
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$ |
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负债与股东权益 |
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流动负债： |
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应付帐款 |
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$ |
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$ |
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应付客户的资金 |
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应计费用和其他流动负债 |
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递延收入 |
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流动负债总额 |
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递延税项负债 |
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其他负债 |
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总负债 |
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股东权益： |
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优先股，$ |
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投票普通股，美元 |
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无投票权普通股，$ |
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财政部投票普通股， |
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( |
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( |
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额外实收资本 |
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累计其他综合收益 |
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累计赤字 |
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( |
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( |
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股东权益总额 |
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总负债和股东权益 |
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$ |
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$ |
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附注是这些未经审计的简明综合财务报表的组成部分。
3
飞线公司
经营和综合收入（损失）的简明合并报表
（未经审计）（金额以千计，股份和每股金额除外）
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截至9月30日的三个月， |
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截至9月30日的9个月， |
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2024 |
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2023 |
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2024 |
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2023 |
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收入 |
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$ |
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$ |
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$ |
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$ |
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成本和运营费用： |
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支付处理服务成本 |
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技术与发展 |
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销售和市场营销 |
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一般和行政 |
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总成本和运营费用 |
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营业收入(亏损) |
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$ |
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$ |
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$ |
( |
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$ |
( |
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其他收入(支出)： |
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利息支出 |
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( |
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( |
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( |
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( |
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利息收入 |
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外币重新计量的收益（损失） |
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( |
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( |
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其他收入(费用)合计，净额 |
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( |
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所得税拨备前（受益于）的收入（损失） |
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( |
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所得税拨备(受益于) |
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( |
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( |
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净利润（亏损） |
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$ |
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$ |
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$ |
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$ |
( |
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其他全面收益(亏损)： |
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外币折算调整 |
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( |
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( |
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可供出售的未实现收益 |
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其他全面收益(亏损)合计 |
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( |
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( |
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综合收益(亏损) |
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$ |
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$ |
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$ |
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$ |
( |
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归属于普通股股东的净利润（损失）- |
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$ |
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$ |
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$ |
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$ |
( |
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归属于普通股的每股净利润（亏损） |
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$ |
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$ |
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$ |
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$ |
( |
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归属于普通股的每股净利润（亏损） |
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$ |
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$ |
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$ |
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$ |
( |
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加权平均已发行普通股-基本 |
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加权平均已发行普通股-稀释 |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
飞线公司
简明合并股东权益报表
（未经审计）（金额以千计，股份金额除外）
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截至2024年9月30日的三个月 |
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投票 |
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无投票权 |
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财政部投票 |
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其他内容 |
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积累 |
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积累 |
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总 |
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股票 |
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量 |
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股票 |
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量 |
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股票 |
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量 |
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资本 |
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收入 |
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赤字 |
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股权 |
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2024年6月30日余额 |
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$ |
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$ |
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( |
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$ |
( |
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$ |
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$ |
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$ |
( |
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$ |
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发行普通股 |
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— |
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— |
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发行普通 |
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发行普通 |
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— |
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— |
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— |
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回购普通股 |
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— |
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— |
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— |
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— |
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( |
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( |
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— |
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— |
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— |
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( |
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发行库存股 |
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— |
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— |
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— |
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— |
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— |
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外币折算 |
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— |
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的未子索收益 |
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以股票为基础 |
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— |
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净收入 |
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— |
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2024年9月30日余额 |
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$ |
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$ |
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( |
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$ |
( |
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$ |
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$ |
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$ |
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$ |
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截至2023年9月30日的三个月 |
|
|||||||||||||||||||||||||||||||||||||
|
|
|
|
投票 |
|
|
无投票权 |
|
|
财政部投票 |
|
|
其他内容 |
|
|
积累 |
|
|
积累 |
|
|
总 |
|
|||||||||||||||||||
|
|
|
|
股票 |
|
|
量 |
|
|
股票 |
|
|
量 |
|
|
股票 |
|
|
量 |
|
|
资本 |
|
|
(亏损) |
|
|
赤字 |
|
|
股权 |
|
||||||||||
2023年6月30日的余额 |
|
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||||
发行普通股 |
|
|
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|
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|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
的费用 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
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|
— |
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|
|
( |
) |
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|
— |
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|
|
— |
|
|
|
( |
) |
发行普通 |
|
|
|
|
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|
|
— |
|
|
|
— |
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|
|
— |
|
|
|
— |
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|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
发行普通股 |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
发行普通 |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
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|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
发行普通 |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
外币 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
以股票为基础 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
净收入 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
2023年9月30日余额 |
|
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
___________________________
* 所有美元金额均四舍五入，因此，某些金额可能无法使用所提供的四舍五入金额重新计算。
5
|
|
|
|
截至2024年9月30日的九个月 |
|
|||||||||||||||||||||||||||||||||||||
|
|
|
|
投票 |
|
|
无投票权 |
|
|
财政部投票 |
|
|
其他内容 |
|
|
积累 |
|
|
积累 |
|
|
总 |
|
|||||||||||||||||||
|
|
|
|
股票 |
|
|
量 |
|
|
股票 |
|
|
量 |
|
|
股票 |
|
|
量 |
|
|
资本 |
|
|
收入 |
|
|
赤字 |
|
|
股权 |
|
||||||||||
结余 |
|
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||||
发行普通 |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
发行普通 |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
发行普通 |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
发行普通 |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
回购普通股 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
发行库存股 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|||
外币 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
的未子索收益 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
以股票为基础 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
净收入 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
2024年9月30日余额 |
|
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||||
|
|
|
|
截至2023年9月30日的9个月 |
|
|||||||||||||||||||||||||||||||||||||
|
|
|
|
投票 |
|
|
无投票权 |
|
|
财政部投票 |
|
|
其他内容 |
|
|
积累 |
|
|
积累 |
|
|
总 |
|
|||||||||||||||||||
|
|
|
|
股票 |
|
|
量 |
|
|
股票 |
|
|
量 |
|
|
股票 |
|
|
量 |
|
|
资本 |
|
|
损失 |
|
|
赤字 |
|
|
股权 |
|
||||||||||
结余 |
|
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
发行普通 |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
的费用 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
发行普通 |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
发行普通 |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
发行普通 |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
发行普通 |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
外币 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
以股票为基础 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
净亏损 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
2023年9月30日余额 |
|
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
__________________________
* 所有美元金额均四舍五入，因此，某些金额可能无法使用所提供的四舍五入金额重新计算。
附注是这些未经审计的简明综合财务报表的组成部分。
6
飞线公司
简明合并现金流量表
（未经审计）（金额以千计）
|
|
截至9月30日的9个月， |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
经营活动的现金流： |
|
|
|
|
|
|
||
净利润（亏损） |
|
$ |
|
|
$ |
( |
) |
|
将净收入（损失）与以下机构提供的净现金进行调节的调整 |
|
|
|
|
|
|
||
折旧及摊销 |
|
|
|
|
|
|
||
基于股票的补偿费用 |
|
|
|
|
|
|
||
递延合同费用的摊销 |
|
|
|
|
|
|
||
或有对价的公允价值变动 |
|
|
( |
) |
|
|
|
|
递延税项优惠 |
|
|
( |
) |
|
|
( |
) |
坏账准备 |
|
|
( |
) |
|
|
|
|
非现金利息支出 |
|
|
|
|
|
|
||
投资折扣的增加，扣除保费摊销 |
|
|
( |
) |
|
|
|
|
经营性资产和负债的变动，扣除收购： |
|
|
|
|
|
|
||
应收账款 |
|
|
( |
) |
|
|
( |
) |
未开票应收账款 |
|
|
( |
) |
|
|
( |
) |
应收付款合作伙伴资金 |
|
|
( |
) |
|
|
( |
) |
预付费用、其他流动资产和其他资产 |
|
|
( |
) |
|
|
( |
) |
应付客户的资金 |
|
|
|
|
|
|
||
应付账款、应计费用和其他流动负债 |
|
|
|
|
|
|
||
或然代价 |
|
|
|
|
|
( |
) |
|
其他负债 |
|
|
( |
) |
|
|
( |
) |
递延收入 |
|
|
( |
) |
|
|
( |
) |
经营活动提供的净现金 |
|
|
|
|
|
|
||
投资活动产生的现金流： |
|
|
|
|
|
|
||
收购业务，扣除收购现金后的净额 |
|
|
( |
) |
|
|
|
|
购买短期和长期投资 |
|
|
( |
) |
|
|
|
|
短期和长期投资到期和出售的收益 |
|
|
|
|
|
|
||
内部开发软件的资本化 |
|
|
( |
) |
|
|
( |
) |
购置财产和设备 |
|
|
( |
) |
|
|
( |
) |
投资活动所用现金净额 |
|
|
( |
) |
|
|
( |
) |
融资活动的现金流： |
|
|
|
|
|
|
||
公开发行普通股的收益，扣除 |
|
|
|
|
|
|
||
支付与公开发行相关的费用 |
|
|
|
|
|
( |
) |
|
为收购支付的或有对价 |
|
|
|
|
|
( |
) |
|
支付长期债务发行成本 |
|
|
( |
) |
|
|
|
|
员工股票购买计划下发行股票的收益 |
|
|
|
|
|
|
||
行使股票期权所得收益 |
|
|
|
|
|
|
||
回购普通股 |
|
|
( |
) |
|
|
|
|
融资活动提供的现金净额(用于) |
|
|
( |
) |
|
|
|
|
汇率变化对现金和现金等值物的影响 |
|
|
( |
) |
|
|
|
|
现金及现金等价物净(减)增 |
|
|
( |
) |
|
|
|
|
期初现金及现金等价物 |
|
$ |
|
|
$ |
|
||
期末现金和现金等价物 |
|
$ |
|
|
$ |
|
||
附注是这些未经审计的简明综合财务报表的组成部分。
7
飞线公司
简明合并现金流量表
（未经审计）（金额以千计）
|
|
截至9月30日的9个月， |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
现金流量和非现金信息的补充披露 |
|
|
|
|
|
|
||
在应付帐款中购买财产和设备 |
|
|
|
|
|
|
||
在限制股单位结算时发行普通股 |
|
|
|
|
|
|
||
发行普通股以获取保留奖金 |
|
|
|
|
|
|
||
与普通股回购相关的应计消费税 |
|
|
|
|
|
|
||
与公开发行相关的发行成本计入应付账款，应计 |
|
|
|
|
|
|
||
附注是这些未经审计的简明综合财务报表的组成部分。
8
飞线公司
关于凝聚态的注记合并后的财务报表
(未经审计)
注1。业务概述和重要会计政策摘要
Flywire公司(Flywire或本公司)于2009年7月根据特拉华州的法律成立为PeerTransfer公司。2016年，该公司更名为Flywire Corporation。该公司总部设在马萨诸塞州波士顿，业务遍及五大洲16个国家和地区。
Flywire提供了一个安全的全球支付平台，为其客户提供了一个创新和简化的流程，以更具成本效益和效率的方式接收协调的国内和国际支付。该公司的解决方案建立在三个核心要素之上：(I)下一代支付平台，(Ii)专有的全球支付网络，以及(Iii)以其深厚的行业专业知识为后盾的垂直专用软件。
2023年后续公开发行
2023年8月9日，公司作为几家承销商的代表，与高盛有限责任公司签订了一项承销协议，与发售和出售
首次公开发售于2023年8月14日完成，承销商于2023年9月12日部分行使选择权，并额外购买
列报依据和合并原则
随附的未经审计简明综合财务报表包括本公司及其全资附属公司的账目，并已根据美国公认会计原则及美国证券交易委员会有关中期财务报告的适用规则和规定编制。中期未经审核简明综合财务报表按与年度经审核综合财务报表相同的基准编制，管理层认为该等财务报表反映所有调整，其中仅包括对本公司财务状况、经营业绩、全面收益(亏损)、股东权益变动及其现金流量的公允报表所需的正常经常性调整。
截至2024年9月30日的三个月和九个月的经营结果不一定表明截至2024年12月31日的一年、任何其他过渡时期或任何未来一年或任何时期的预期结果。所附的截至2023年12月31日的综合资产负债表来自公司截至2023年12月31日的经审计的综合财务报表。根据公认会计原则编制的年度综合财务报表通常包括的若干资料及附注披露，已在中期未经审核简明综合财务报表中予以精简或遗漏。
这些简明的综合财务报表应与公司截至2023年12月31日的10-k表格年度报告中包括的经审计的综合财务报表和说明一并阅读。
简明综合财务报表包括Flywire及其全资子公司的账目。合并后，所有公司间账户和交易均已注销。
细分市场信息
公司拥有一家 经营和可报告分部。公司的首席运营决策者是首席执行官，他审查合并呈列的财务信息，以做出运营决策、评估财务业绩和分配资源。看到 注2 -收入和确认 有关公司按地理区域划分的收入的信息。
9
预算的使用
根据公认会计原则编制简明综合财务报表时，管理层须作出估计及假设，以影响简明综合财务报表及附注所报告及披露的金额。这些财务报表所反映的重大估计和假设包括但不限于：某些基于股票的补偿奖励的估值、或有对价的估值、已获得的无形资产及其使用年限的估值、应收账款、未开账单的应收账款和可供出售债务证券的信贷损失估计、可供出售债务证券的暂时性减值以外的评估，无形资产和其他长期资产以及经营租赁的递增借款利率。本公司根据过往经验、已知趋势及其他其认为在当时情况下属合理的特定市场因素或其他相关因素作出估计。根据情况、事实和经验的变化，本公司会持续评估其估计。估计的变化被记录在它们被知道的时间段。实际结果可能与这些估计或假设不同。
通货膨胀的影响
在截至2024年9月30日的三个月和九个月内，通货膨胀对公司的现金流和经营业绩没有实质性影响.
信用风险、金融工具和大客户的集中度
可能使公司面临集中信用风险的金融工具主要包括现金、现金等价物、可供出售债务证券投资、应收账款、未开账单的应收账款和来自付款合作伙伴的应收资金。
本公司与管理层认为具有高信用质量的金融机构保持现金和现金等价物。我们的现金等价物包括货币市场基金，这些基金是AAA级的，由美国政府发行的流动性高质量债务证券组成。该公司存放在金融机构的现金和现金等价物超过了联邦存款保险公司(FDIC)#美元的保险限额
为了管理与投资可供出售的债务证券相关的信用风险，公司监测证券发行人的信用评级，并通过限制其在任何一种证券或发行人的持有量来分散其投资。
为了管理与应收账款和未开票应收账款相关的信用风险，本公司保留了信用损失准备金。该津贴是通过应用损失率法确定的，该损失率方法基于使用公司历史损失率的账龄时间表。在确定其估计损失率时，公司还考虑合理和可支持的当前和预测信息，如外部预测、宏观经济趋势或与公司客户群的信用质量相关的其他因素。在截至2024年9月30日和2023年9月30日的三个月和九个月内，公司没有发生任何重大信贷损失。
应收账款来自来自美国和国际客户的收入。重要客户是指占应收账款净额10%或以上的客户，如下表所示：
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9月30日， |
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12月31日， |
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客户端A |
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% |
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* |
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___________________________
*低于总余额的10%。
来自支付伙伴的应收资金主要包括公司全球支付处理伙伴持有的尚未汇给公司的现金。重要的合作伙伴是代表
10
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9月30日， |
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12月31日， |
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||
合作伙伴A |
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* |
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% |
||
合作伙伴B |
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* |
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% |
||
合作伙伴C |
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* |
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% |
||
合作伙伴D |
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* |
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% |
||
合作伙伴E |
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% |
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|
% |
||
______________________
*低于总余额的10%。
截至2024年9月30日和2023年9月30日的三个月和九个月，没有客户帐户
重要会计政策摘要
本公司的重要会计政策在中讨论 注1 -业务概览和重要会计政策摘要 在公司截至2023年12月31日年度10-k表格年度报告中已审计合并财务报表的注释中。除中讨论的投资外，截至2024年9月30日的三个月和九个月内，这些政策没有发生重大变化 注3 -投资.
广告费
广告成本于产生时支销，并计入简明综合经营报表和全面收益（亏损）中的销售和营销费用。截至2024年和2023年9月30日止三个月的广告费用 为$
最近采用的会计公告
截至2024年9月30日及截至该日止期间，并无最近采用的会计准则更新(华硕)这对公司的简明综合财务报表和披露产生了重大影响。
尚未采用的会计公告
以下ASU由财务会计准则委员会发布，但截至2024年9月30日尚未被Flywire采用：
ASU 2023-07，分部报告(主题280)：对可报告分部披露的改进：ASU 2023-07改进了可报告部门的披露要求，主要是通过加强对重大部门费用的披露。ASU 2023-07还加强了中期披露要求，澄清了一个实体可以披露多个分部损益计量的情况，为具有单一可报告分部的实体提供了新的分部披露要求，并包含其他披露要求。ASU 2023-07对Flywire的年度有效期从2024年1月1日开始，过渡期从2025年1月1日开始。允许及早领养。ASU 2023-07应追溯适用于财务报表中列报的以前所有期间。该公司正在评估需要披露的重大支出的增加情况，预计这一标准不会对其运营结果、资产负债表或现金流产生影响。
ASU 2023-09，所得税(专题740)：改进所得税披露：ASU 2023-09要求公共企业实体每年披露特定类别的额外信息，涉及联邦、州和外国所得税的有效税率与法定税率的对账。它还要求更详细地说明费率对账中个别核对项目的影响，只要这些项目的影响超过规定的阈值。此外，ASU 2023-09要求披露已支付的税款，扣除收到的退款，按联邦、州和外国税收分类，并在相关金额超过数量门槛的情况下按特定司法管辖区进一步分类。ASU 2023-09对本公司自2025年1月1日起生效。允许及早领养。ASU 2023-09应在预期的基础上应用。然而，企业可以选择追溯适用这一标准。该公司目前正在评估这一标准对其合并财务报表和披露的影响。
11
ASU 2024-03，损益表-报告全面收入-费用分类披露(分项220-40)：对损益表费用的分类：ASU 2024-03旨在通过在常见的费用标题中提供有关费用类型的更详细信息，来改进费用的披露。ASU要求各实体披露每个相关费用标题中包括的存货、员工薪酬、折旧和无形资产摊销的购置额，以及有关费用标题中未单独按数量分列的剩余金额的定性说明。修正案还要求披露销售费用总额，并在年度报告期内披露实体对销售费用的定义。ASU 2024-03对本公司自2027年1月1日起生效。允许及早领养。ASU既可以前瞻性应用，也可以追溯应用。该公司目前正在评估这一标准对其合并财务报表和披露的影响。
注2. 收入和确认
下表列出了按地理区域和主要解决方案细分的收入。按地理位置对收入进行分类是根据客户居住地的位置确定的。
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截至三个月 |
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九个月结束 |
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(单位：千) |
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2024 |
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2023 |
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2024 |
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2023 |
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初级地理市场 |
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美洲 |
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$ |
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$ |
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$ |
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$ |
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欧洲、中东和非洲地区 |
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APAC |
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总收入 |
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$ |
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$ |
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$ |
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$ |
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||||
大解决方案 |
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||||
交易记录 |
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$ |
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$ |
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$ |
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$ |
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||||
平台和其他收入 |
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||||
总收入 |
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$ |
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$ |
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$ |
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$ |
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||||
与客户的合同余额
下表提供了有关应收账款、未开票应收账款和客户合同的递延收入（以千计）的信息：
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9月30日， |
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12月31日， |
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||
应收账款净额 |
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$ |
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$ |
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未开单应收账款，净额 |
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递延收入-当前 |
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递延收入-非流动 |
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截至2024年9月30日和2023年9月30日的三个月，公司确认了$
剩余履约义务
该公司负有与某些客户未来服务合同相关的履行义务，但尚未确认为收入。截至2024年9月30日，分配给未履行或部分未履行的履行义务（包括递延收入）的交易价格总额约为美元
说明3. 投资
截至2024年9月30日的九个月内，该公司开始投资高评级有价债务证券的多元化投资组合，所有这些证券均被归类为可供出售。剩余期限超过三个月但少于一年以及管理层当时确定的可供出售债务证券
12
用于在一年内为运营提供资金的购买的资金被归类为短期。所有其他可供出售的证券都被归类为长期证券。市值可随时确定的可供出售债务证券按公允价值入账，未实现持有收益和临时亏损计入扣除相关估计税项后的累计其他全面收益的组成部分。
该公司按季度评估其非临时性减值的可供出售债务证券。当公允价值下降被确定为非暂时性时，通过在简明综合经营报表和全面收益(亏损)中计入投资亏损，将投资成本调整为公允价值。投资损益以具体确认为基础计算。该公司审查几个因素以确定亏损是否是非临时性的，例如公允价值下降的持续时间和程度、发行人的财务状况和近期前景、市场状况和趋势，以及公司是否打算或将更有可能被要求在证券预期复苏之前出售，证券可能已经到期。
下表汇总了包括在短期和长期投资中的可供出售债务证券的估计公允价值2024年9月30日（以千计）：
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2024年9月30日 |
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摊销总成本 |
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未实现收益总额 |
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未实现亏损总额 |
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信贷损失准备 |
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应计利息 |
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合计公允价值 |
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短期投资 |
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公司债券 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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|||||
美国政府的义务 |
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* |
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国库券 |
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外国代理证券 |
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* |
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商业票据 |
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资产支持证券 |
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短期投资总额 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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长期投资 |
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公司债券 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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美国政府的义务 |
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* |
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代理债券 |
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资产支持证券 |
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长期投资总额 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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______________________
*
下表总结了截至年剩余合同期限的公司可供出售债务证券的公允价值 2024年9月30日（以千计）：
在一年内到期 |
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$ |
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一年至五年后到期 |
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总投资 |
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$ |
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截至2024年9月30日，大约
13
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2024年9月30日 |
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少于12个月 |
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12个月或更长时间 |
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总 |
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公允价值 |
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未实现亏损总额 |
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公平值 |
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未实现总损失 |
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公平值 |
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未实现总损失 |
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短期投资 |
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公司债券 |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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$ |
( |
) |
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美国政府的义务 |
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* |
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外国代理证券 |
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* |
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短期投资总额 |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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$ |
( |
) |
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长期投资 |
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公司债券 |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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$ |
( |
) |
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美国政府义务 |
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|
|
|
|
* |
|
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|
|
|
|
|
|
|
|
|
||||||
长期投资总额 |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||||
______________________
*
未实现损失尚未确认为收入（损失），因为公司既不打算出售，也不预计公司在收回其摊销成本基础之前更有可能被要求出售这些证券。公允价值下降主要是由于市场利率变化，而不是信贷损失。根据对现有证据的评估，公司不认为任何未实现损失代表暂时性损害以外的情况。
截至2024年9月30日的三个月和九个月内，公司收到现金美元
注意事项4.公允价值计量
根据公认会计原则，某些资产和负债按公允价值列账。公允价值定义为于资产或负债的本金或最有利市场于计量日期在市场参与者之间的有序交易中为资产收取或为转移负债而支付的交换价格(退出价格)。用于计量公允价值的估值技术必须最大限度地利用可观察到的投入，最大限度地减少使用不可观察到的投入。按公允价值列账的金融资产和负债在公允价值层次的下列三个级别之一进行分类和披露，其中前两个级别被认为是可见的，最后一个级别被认为是不可见的：
第1级-相同资产或负债在活跃市场的报价。
第2级-可观察到的投入(第1级报价除外)，例如类似资产或负债活跃市场的报价、相同或类似资产或负债非活跃市场的报价、或可观察到或可由可观察市场数据证实的其他投入。
第3级-市场活动很少或没有市场活动支持的不可观察的投入，对确定资产或负债的公允价值具有重要意义，包括定价模型、贴现现金流方法和类似技术。
本公司现金等价物按公允价值(第1级)列账，按上述公允价值层级厘定。该公司的现金等价物包括货币市场基金，货币市场基金按公允价值使用每股资产净值(NAV)进行计量。货币市场基金是由美国政府发行的流动性高质量的债务证券组成的，评级为AAA。货币市场基金的股份于购买或出售时于资产净值购买及赎回，可按本公司的要求按需要购买或赎回。本公司对可供出售债务证券的投资按公允价值列账，根据公允价值等级中的第二级投入确定，因为报价可用于支持估值。由于这些资产和负债的短期性质，应收账款、应收付款伙伴的资金、未开账单的应收账款、预付费用、应付帐款、应付给客户的资金以及应计费用和其他流动负债的账面价值接近各自的公允价值。本公司的或有代价按公允价值列账，按公允价值层次中的第三级投入厘定。
14
下表列出了截至2011年按经常性公平价值计量的金融资产和负债的公允价值等级 2024年9月30日和2023年12月31日(单位：千)：
|
|
截至9月30日，以资产净值计算， |
|
|
截至2024年9月30日按公允价值计量： |
|
||||||||||||||
|
|
2024 |
|
|
1级 |
|
|
2级 |
|
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3级 |
|
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总 |
|
|||||
金融资产： |
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|||||
现金等价物 |
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|
|||||
货币市场基金 |
|
$ |
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|
$ |
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|
$ |
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|
$ |
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|
$ |
|
|||||
外汇合约 |
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|||||
短期投资 |
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|||||
公司债券 |
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|||||
美国政府义务 |
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国库券 |
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外国代理证券 |
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商业票据 |
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|||||
资产支持证券 |
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|||||
短期投资总额 |
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|||||
长期投资 |
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|||||
公司债券 |
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|||||
美国政府义务 |
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|||||
代理债券 |
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|||||
资产支持证券 |
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|||||
长期投资总额 |
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|
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|
|
|
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|
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|
|
|
|||||
金融资产总额 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
财务负债： |
|
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|
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|
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|
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|
|||||
或然代价 |
|
$ |
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|
$ |
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|
$ |
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|
$ |
|
|
$ |
|
|||||
财务负债总额 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
|||||||||||||||||||
|
|
按截至12月31日的资产净值计算， |
|
|
截至2023年12月31日按公允价值计量： |
|
||||||||||||||
|
|
2023: |
|
|
1级 |
|
|
2级 |
|
|
3级 |
|
|
总 |
|
|||||
金融资产： |
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|||||
现金等价物 |
|
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|
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|
|
|
|
|
|
|||||
货币市场基金 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
外汇合约 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
金融资产总额 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
财务负债： |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
或然代价 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
财务负债总额 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
截至2024年9月30日止九个月和截至2023年12月31日止年度，第1级、第2级或第3级之间没有转移。
或然代价
Invoed Inc.（配音）
与该公司于2024年8月收购Invoided的收入里程碑相关的或有对价的公允价值是使用期权定价模型确定的，而与交叉销售、产品和安全以及信息技术（IT）里程碑相关的或有对价的公允价值是使用基于假设的方法确定的。参阅 注8 -业务合并 了解有关Invoid收购的更多详细信息。
|
|
2024年9月30日 |
贴现率 |
|
|
成功实现的可能性 * |
|
15
_____________________________
*
折现率的增加或减少将分别导致较低或较高的公允价值计量。收入、最大客户、产品和it里程碑预期实现的任何成功概率的增加或减少将分别导致公允价值计量的增加或减少。
学习信息系统有限公司(StudyLink)
与公司2023年11月收购StudyLink的收入里程碑相关的或有对价的公允价值使用期权定价模型确定，与资金运动量、交叉销售和工程实施里程碑相关的或有对价的公允价值使用基于情景的方法确定。参考 注8 -业务合并有关收购StudyLink的更多细节，请访问。
|
2024年9月30日 |
|
2023年12月31日 |
贴现率 |
|
||
成功实现的可能性 * |
|
_____________________________
*
折现率的增加或减少将分别导致较低或较高的公允价值计量。预期实现收入、销量、交叉销售和工程实施里程碑的任何成功概率的增加或减少将分别导致公允价值计量的增加或减少。
或有对价的公允价值变动作为一般和行政费用的一部分列入简明综合业务报表和全面收益(亏损)。
|
|
截至三个月 |
|
|
截至三个月 |
|
|
九个月结束 |
|
|
九个月结束 |
|
||||
期初余额 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
添加 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
||
已付或有对价 * |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
外币折算调整 |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
期末余额 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
*
说明5. 衍生工具
作为公司外币风险管理计划的一部分，公司使用外币远期合同来缓解与外汇汇率波动相关的波动性。该等外币远期合约并未指定为对冲工具。外币远期合同等衍生品交易以名义金额衡量;然而，该金额并未记录在简明综合资产负债表中，并且孤立来看，也不是衍生工具风险状况的有意义的衡量标准。名义金额通常不进行交换，而仅用作确定这些合同下外汇付款价值的基本基础。截至2024年9月30日和2023年12月31日，该公司拥有
16
公司记录所有 以公允价值计入简明合并资产负债表。该公司记录的资产低于美元
注意事项6. 应计费用和其他流动负债
截至呈列日期，应计费用和其他流动负债包括以下内容（以千计）：
|
|
9月30日， |
|
|
12月31日， |
|
||
应计员工薪酬和相关税款 |
|
$ |
|
|
$ |
|
||
应计供应商负债 |
|
|
|
|
|
|
||
应计收入和其他非员工相关税收 |
|
|
|
|
|
|
||
应计专业服务 |
|
|
|
|
|
|
||
经营租赁负债的当期部分 |
|
|
|
|
|
|
||
其他应计费用和流动负债 |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
注意事项7. 财产和设备，净值
截至所列日期，财产和设备净值包括以下内容（以千计）：
|
|
9月30日， |
|
|
12月31日， |
|
||
计算机设备和软件 |
|
$ |
|
|
$ |
|
||
内部使用软件 |
|
|
|
|
|
|
||
家具和固定装置 |
|
|
|
|
|
|
||
租赁权改进 |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
减：累计折旧和摊销 * |
|
|
( |
) |
|
|
( |
) |
|
|
$ |
|
|
$ |
|
||
*
截至2024年和2023年9月30日止三个月各月的财产和设备折旧以及内部软件摊销 为$
该公司资本化了$
截至2024年9月30日和2023年12月31日，内部使用软件的持有价值为美元
注意事项8. 业务合并
发票
2024年8月2日，FlyWire收购了美国公司Invoed的所有已发行和发行股份基于软件即服务（SaaS）的B20亿公司，提供可自动化计费各个方面的应收账款软件，
17
在一个单一的在线平台中进行收款、支付、报告和预测。收购发票旨在加速该公司在其B20亿垂直领域的全球扩张。对发票的收购已作为业务合并入账。
虽然该公司使用其最佳估计和假设作为收购价格分配过程的一部分来对收购日收购的资产和承担的负债进行估值，但其估计和假设有待完善。收购无形资产的公允价值净值采用收益法确定。在进行这些估值时，使用的关键基本判断和假设包括收入和息税前收益增长率、贴现率、技术使用费费率和流失率。公允价值估计基于对未来事件和不确定性的一系列复杂判断，并严重依赖估计和假设。用于确定分配给每一类收购和承担的资产和负债以及资产寿命的估计公允价值的判断可能会对公司的经营业绩产生重大影响。购买会计评估的最终完成可能导致收购资产和承担的负债的估值发生变化，并可能对公司的经营业绩和财务状况产生重大影响。因此，在自收购日期起计最长一年的计量期内，本公司可记录对收购资产及承担的负债作出的调整，并与商誉作出相应的抵销，以反映所收到的有关收购日期存在的事实及情况的额外资料。本公司将收购价格分配期后收购的资产和承担的负债的调整记录在确定调整的期间的公司经营业绩中。任何可能作出的调整都可能是与提出的初值有关的实质性调整。
根据业务合并协议的条款，本公司以估计总购买代价约为$
现金对价，扣除取得的现金后的净额 |
|
$ |
|
|
或有对价的估计公允价值 |
|
|
|
|
总购买对价，扣除所获得的现金 |
|
$ |
|
购买对价包括$
企业合并协议规定或有对价最高可达$
截至2024年9月30日的三个月和九个月内，该公司产生了$
下表汇总了购买对价对购置的资产和承担的负债的初步分配(单位：千)：
现金 |
|
$ |
|
|
预付费用和其他流动资产 |
|
|
|
|
其他资产 |
|
|
|
|
可识别无形资产 |
|
|
|
|
商誉 |
|
|
|
|
收购的总资产 |
|
|
|
|
递延税项负债 |
|
|
|
|
递延收入 |
|
|
|
|
应付账款和应计费用 |
|
|
|
|
承担的总负债 |
|
|
|
|
取得的净资产 |
|
|
|
|
减：购置现金 |
|
|
|
|
净资产，减去收购现金 |
|
$ |
|
18
收购美元产生的善意
下表反映了Invoided已识别无形资产的估计公允价值及其各自的加权平均摊销期。
|
|
估计数 |
|
|
加权- |
|
||
|
|
(单位：千) |
|
|
（年） |
|
||
发达的技术 |
|
$ |
|
|
|
|
||
后天关系 |
|
|
|
|
|
|
||
商品名称/商标 |
|
|
|
|
|
|
||
|
|
$ |
|
|
|
|
||
自收购日期起，Invoided的业绩已计入简明综合财务报表。已开票捐款美元
未经审计的备考财务信息
以下未经审计的备考财务信息显示了该公司截至2024年9月30日和2023年9月30日的三个月和九个月的经营结果，就好像收购发生在2023年1月1日一样。未经审计的备考财务信息仅供参考，并不一定表明如果在该日期进行收购将会发生什么情况。由于合并了发票的收购业务，未经审计的备考信息也不是对未来结果的预测。未经审核的备考资料反映了将本公司的会计政策和某些备考调整应用于本公司的合并历史财务信息和发票的影响。形式上的调整包括：
|
|
截至三个月 |
|
|
截至三个月 |
|
|
九个月结束 |
|
|
九个月结束 |
|
||||||||||||||||||||
|
|
实际 |
|
|
形式上 |
|
|
实际 |
|
|
形式上 |
|
|
实际 |
|
|
形式上 |
|
|
实际 |
|
|
形式上 |
|
||||||||
|
|
(单位：千) |
|
|||||||||||||||||||||||||||||
收入 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
净收益(亏损) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||||||
StudyLink
2023年11月3日，FlyWire通过其澳大利亚子公司FlyWire Pacific Pty Ltd.，收购StudyLink的所有已发行和发行股票，StudyLink是一家总部位于澳大利亚的SaaS教育公司，为教育提供商提供平台，以支持其学生招生系统和流程，包括资格评估、录取生成、招聘代理以及佣金管理和受理处理等功能。收购StudyLink旨在加速公司在澳大利亚高等教育市场的增长，并增强公司对高等教育生态系统中付款人、大学和代理人的价值主张。StudyLink的收购已被视为业务合并。
19
2024年第一季度，本公司完成了采购会计，并记录了一项非实质性营运资本净额调整。
根据业务合并协议的条款，该公司以估计总收购代价约为#美元收购StudyLink
现金对价，扣除取得的现金后的净额 |
|
$ |
|
|
或有对价的估计公允价值 |
|
|
|
|
总购买对价，扣除所获得的现金 |
|
$ |
|
以普通股形式支付的额外款项将基于一名关键雇员的继续雇用；因此，公允价值为#美元。
下表汇总了购买对价对购置的资产和承担的负债的分配情况(单位：千)：
现金 |
|
$ |
|
|
应收账款 |
|
|
|
|
预付费用和其他流动资产 |
|
|
|
|
其他资产 |
|
|
|
|
商誉 |
|
|
|
|
可识别无形资产 |
|
|
|
|
收购的总资产 |
|
|
|
|
递延税项负债 |
|
|
|
|
递延收入 |
|
|
|
|
应付帐款 |
|
|
|
|
应计费用和其他流动负债 |
|
|
|
|
承担的总负债 |
|
|
|
|
取得的净资产 |
|
|
|
|
减：购置现金 |
|
|
|
|
净资产，减去收购现金 |
|
$ |
|
收购美元产生的善意
下表反映了StudyLink已识别无形资产的公允价值及其各自的加权平均摊销期。
20
|
|
公平 |
|
|
加权平均 |
|
||
|
|
(单位：千) |
|
|
（年） |
|
||
发达的技术 |
|
$ |
|
|
|
|
||
客户关系 |
|
|
|
|
|
|
||
商号/商标 |
|
|
|
|
|
|
||
|
|
$ |
|
|
|
|
||
自收购之日起，StudyLink的业绩已包含在简明综合财务报表中。StudyLink贡献了$
未经审计的备考财务信息
以下未经审计的备考财务信息显示了该公司截至2023年9月30日的三个月和九个月的经营结果，就好像收购发生在2022年1月1日一样。未经审计的备考财务信息仅供参考，并不一定表明如果在该日期进行收购将会发生什么情况。由于整合了StudyLink收购的业务，未经审计的备考信息也不是对未来结果的预测。未经审计的备考信息反映了将公司的会计政策和某些备考调整应用于本公司和StudyLink的合并历史财务信息的影响。形式上的调整包括：
|
|
截至2023年9月30日的三个月 |
|
|
截至2023年9月30日的9个月 |
|
||||||||||
|
|
实际 |
|
|
形式上 |
|
|
实际 |
|
|
备考 |
|
||||
|
|
(单位：千) |
|
|||||||||||||
收入 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
净收益(亏损) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
注9. 善意和收购的无形资产
商誉
下表概述了截至呈列日期的善意公允价值变化（单位：千）：
|
|
2024年9月30日 |
|
|
2023年12月31日 |
|
||
期初余额 |
|
$ |
|
|
$ |
|
||
与收购相关的善意 |
|
|
|
|
|
|
||
外币折算调整 |
|
|
|
|
|
|
||
期末余额 |
|
$ |
|
|
$ |
|
||
21
收购的无形资产
收购的须摊销的无形资产包括以下内容（以千美元计）：
|
|
2024年9月30日 |
|
|
|
|
||||||||||
|
|
毛 |
|
|
积累 |
|
|
净载运 |
|
|
加权 |
|
||||
发达的技术 |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|||
后天关系 |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
商号/商标 |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|||
*
**
|
|
2023年12月31日 |
|
|
|
|
||||||||||
|
|
毛 |
|
|
积累 |
|
|
网络 |
|
|
加权 |
|
||||
发达的技术 |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|||
后天关系 |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
商号/商标 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|||
*
截至2024年和2023年9月30日三个月的摊销费用 为$
自.起2024年9月30日，预计未来五年及以后每年无形资产的年度摊销费用如下（单位：千）：
|
|
估计 |
|
|
2024财年剩余时间 |
|
$ |
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
此后 |
|
|
|
|
|
|
$ |
|
|
注意事项10. 债务
2024年循环信贷机制
2024年2月23日，该公司与四家银行就五年期高级担保循环信贷辛迪加贷款（2024年循环信贷融资）签订了经修订和重述的信贷协议，总承诺额为美元
22
摇摆线未偿还的借款时有发生。2024年循环信贷安排由Flywire目前和未来的材料国内子公司提供担保。
2024年循环信贷安排取代了三年期优先担保循环信贷辛迪加贷款(2021年循环信贷安排)#美元。
关于2024年循环信贷安排，本公司产生的债务发行费用为#美元。
2024年循环信贷安排由备用基本利率(ABR)借款或定期担保隔夜融资利率(SOFR)借款组成，由公司选择。
2024年循环信贷安排包含这类融资的惯常正面和负面契诺和限制，其中包括要求公司满足某些财务契诺，并限制公司产生额外债务、支付股息和进行分配、进行某些投资和收购、回购股票和预付某些债务、设立留置权、与关联公司签订协议、修改其业务性质、进行销售回租交易、转让和出售重大资产以及合并或合并的能力。不遵守一项或多项契约和限制可能导致2024年循环信贷安排的全部或部分本金余额立即到期和应付，并导致承诺终止。截至2024年9月30日，该公司遵守了与2024年循环信贷安排相关的所有契约。
2021年循环信贷安排
2021年7月29日，公司与三家银行签订了2021年循环信贷安排，总承诺额为
2021年循环信贷额度由公司选择的DAB贷款或欧洲美元借款组成。
2023年6月23日，公司执行了2021年循环信贷融资的第一修正案，将利率的确定从LIBOR基准利率过渡到SOFR基准利率，自2023年6月30日起生效。
截至2024年9月30日 2023年12月31日，有
截至2024年9月30日和2023年9月30日止三个月各月的利息费用 为$
23
信用证
截至2024年9月30日和2023年12月31日，该公司有一份未偿还且未使用的信用证，金额约为美元
注11.股东权益
优先股
公司于2021年5月28日提交的现行经修订和重述的公司注册证书授权发行
普通股
本公司现行经修订及重述的公司注册证书授权发行
股份回购计划
2024年8月6日，公司宣布了一项高达1美元的股份回购计划
回购计划下的回购可不时通过公开市场购买、私下协商的交易或其他方式进行，包括根据适用的证券法和其他限制，包括根据适用的证券法和其他限制(包括规则100亿.18)，使用根据1934年《证券交易法》(经修订)规则10b5-1符合资格的交易计划。回购股份的时间、价值和数量将由本公司酌情决定，并将基于各种因素，包括对当前和未来资本需求的评估、当前和预测的现金流、本公司的资本结构、资本成本和当前股价、一般市场和经济状况、适用的法律要求以及对本公司信贷安排中可能根据定义的杠杆率限制股票回购的契约的遵守情况。回购计划并不要求公司购买特定数量或任何数量的股份，公司可酌情随时修改、暂停或终止回购计划，而不另行通知。
截至2024年9月30日的三个月和九个月内，公司回购
24
大约$
该公司的所有回购都要缴纳2022年《降低通货膨胀法案》(IRA)规定的1%的消费税。须缴交消费税的股份回购金额减去在该课税年度内发行的任何股份的公平市值。截至2024年9月30日的三个月和九个月，公司应计
库存股
公司可以发行库藏股，用于行使股票期权和授予与股权激励计划有关的限制性股票单位。该公司发行了
综合收益(亏损)
全面收益(亏损)包括期内权益的所有变动，由净收益(亏损)和其他全面收益(亏损)组成。在截至2024年9月30日的公司简明综合资产负债表上报告的累计其他全面收益(AOCI)包括外币换算调整和可供出售债务证券的未实现损益(扣除适用税)。
下表汇总了AOCI在截至2024年9月30日的三个月(单位：千)：
|
|
未实现收益 |
|
|
外币 |
|
|
估计税项 |
|
|
总 |
|
||||
期初余额 |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
改叙前的其他全面收入 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
减：从AOCI重新分类的收益（损失）金额 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
本期其他综合收益净额 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
期末余额 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
下表总结了截至2024年9月30日的九个月AOCI的变化（单位：千）：
|
|
未实现收益 |
|
|
外币 |
|
|
估计税项 |
|
|
总 |
|
||||
期初余额 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
改叙前的其他全面收入 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
减：从AOCI重新分类的收益（损失）金额 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
本期其他综合收益净额 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
期末余额 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
截至2023年9月30日的三个月和九个月AOCI的变化仅包括外币兑换调整。截至2023年9月30日止三个月和九个月AOCI变化请参阅公司简明合并股东权益表。
25
为未来发行保留普通股股份
自.起2024年9月30日，公司保留了用于未来发行的普通股股份如下：
|
2024年9月30日 |
|
|
已发行和未行使的股票期权 |
|
|
|
已发行和未发行的限制性股票单位 |
|
|
|
可根据2021年股权激励计划发行 |
|
|
|
可根据员工股票购买计划发行 |
|
|
|
致力于解决员工保留问题 |
|
|
|
可用于转换无投票权普通股 |
|
|
|
|
|
|
|
注12.基于股票的薪酬
股权激励计划
2021年4月，公司董事会通过，2021年5月，公司股东批准了2021年股权激励计划(2021年计划)。
经修订的本公司2009年股权激励计划(2009年计划)或本公司2018年股权激励计划(2018年计划)不再提供其他奖励；然而，2009年计划和2018年计划下的未偿还奖励将继续受其现有条款的约束。随着2021年计划的建立，如下文进一步讨论的那样，在根据2009年计划或2018年计划授予的任何基于股票的奖励到期、没收、注销或重新获得时，将有同等数量的股票可供根据2021年计划授予。《2021年计划》、《2018年计划》和《2009年计划》统称为股权激励计划。
《2021年计划》规定，授予激励性股票期权、不合格股票期权、股票增值权、限制性股票奖励、限制性股票单位、绩效奖励和其他形式的股权薪酬(统称为股权奖励)。总计
截至2024年9月30日，共有
股票期权
根据2009年计划、2018年计划和2021年计划授予的股票期权一般基于持续服务超过
在截至2024年9月30日的三个月和九个月内，公司没有授予任何购买普通股的选择权。
截至2024年9月30日，有一美元
限售股单位
从2021年开始，公司根据2021年计划向员工和某些非员工董事会成员授予限制性股票单位。截至2024年9月30日的三个月和九个月内，该公司授予的限制性股票单位总计涵盖
26
日期在雇员继续受雇和非雇员董事会成员继续任职的情况下，可获得补助金。
截至2024年9月30日，有一美元
员工购股计划
2021年4月，公司董事会通过并于2021年5月股东批准了2021年员工购股计划(ESPP)，该计划于2021年5月28日生效。ESPP授权根据授予“合格员工”的购买权发行普通股。总计
截至2024年9月30日，共有
在截至2024年9月30日的三个月内，ESPP发售的公允价值是在发售期间开始时使用Black-Scholes期权定价模型在以下假设下估计的：(I)预期期限
截至2024年9月30日，与ESPP有关的未确认补偿支出总额为#美元。
基于股票的薪酬成本
下表汇总了(I)授予员工和非员工董事会成员的股票期权和限制性股票单位以及(Ii)员工购买的ESPP股票的股票薪酬支出，这些股票记录在公司的简明综合经营报表和全面收益(亏损)中。
|
|
截至三个月 |
|
|
截至三个月 |
|
|
九个月结束 |
|
|
九个月结束 |
|
||||
技术与发展 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
销售和市场营销 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
一般和行政 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
基于股票的薪酬总支出 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
2023年11月6日，公司与其前任首席财务官(前CFO)签订了过渡协议。根据过渡协议的条款(包括本公司收到前任CFO的豁免)，本公司同意修订其前任CFO的未行使购股权及受限制股票单位，以(I)加快归属速度，由前任CFO终止聘用本公司之日(离职日期)起计九个月，及(Ii)将其已归属的无限制购股权的行权期由90天延长至离职日期后一年。为了获得这些福利，前首席财务官必须留任到2024年3月31日。由于这一修改，公司确认了额外的补偿费用#美元。
注13. 每股净利润（亏损）
归属于普通股股东的每股基本净利润（损失）是通过归属于普通股股东的净利润（损失）除以本期已发行普通股的加权平均股数来计算的。归属于普通股股东的稀释净利润（损失）是通过根据稀释性证券的潜在影响调整归属于普通股股东的净利润（损失）以重新分配未分配收益来计算的。归属于普通股股东的每股稀释净利润（亏损）是通过归属于普通股股东的稀释净利润（亏损）除以已发行普通股的加权平均股数来计算的，
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包括所有可能稀释的普通股，如果这些股票的影响是稀释的。已发行股权激励奖励的稀释效应通过应用库存股方法稀释后的每股净收益(亏损)来反映。
在公司报告普通股股东应占净亏损期间，普通股股东应占稀释每股净亏损与普通股股东应占基本每股净亏损相同，因为如果稀释性普通股的影响是反摊薄的，则不假设已发行稀释性普通股。该公司公布了截至2024年9月30日的三个月和九个月以及截至2023年9月30日的三个月的普通股股东应占净收益。该公司报告了截至2023年9月30日的9个月普通股股东应占净亏损；因此，普通股股东应占基本每股净亏损与普通股股东应占稀释后每股净亏损相同。
有表决权的普通股和无表决权的普通股的权利，包括清算权和分红权，除表决权外，均相同。由于清算权和股息权相同，未分配收益按比例分配给每一类普通股，因此，由此产生的普通股股东应占每股基本和稀释后净收益(亏损)在个人和合并基础上对有投票权和无投票权普通股都是相同的。
普通股股东的每股基本和稀释后净收益(亏损)计算如下(以千为单位，不包括每股和每股金额)：
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净利润（亏损） |
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归属于普通股股东的净利润（损失）- |
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加权平均已发行普通股-基本 |
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潜在摊薄的股票期权的影响 |
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潜在稀释限制性普通股的影响 |
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加权平均已发行普通股-稀释 |
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每股可归因于普通股的净收益(亏损) |
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每股可归因于普通股的净收益(亏损) |
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由于本应具有反摊薄作用而不包括在稀释后每股净收益(亏损)计算中的流通股潜在摊薄证券如下：
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截至三个月 |
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九个月结束 |
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2024 |
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2023 |
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未归属的限制性股票单位 |
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购买普通股的股票期权 |
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员工购股计划股份 |
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注14.所得税
本公司在过渡期内的所得税拨备(受益)是根据对公司年度有效税率的估计来确定的，该估计值在过渡期内针对某些个别税目进行了调整。公司记录的所得税(福利)准备金为#美元。(
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状态税金。公司记录的所得税(福利)准备金为#美元。(
本公司的有效税率与美国联邦法定税率不同，主要是由于美国估值免税额的变化。本公司从2019年至今接受未来的税务检查；但2018年前产生的结转属性仍可能在联邦、州或地方税务机关审查后进行调整，直到它们在未来一段时间内使用。
公司管理层根据所有可用证据，包括正面和负面证据，评估公司递延税项资产的变现能力。递延税项净资产的实现取决于公司在可预见的未来产生足够的未来应纳税收入的能力。截至2024年9月30日，公司继续维持美国和英国递延税项净资产的全额估值津贴。
注15.承付款和或有事项
法律程序
本公司不时受到各种法律程序和索赔的影响，其结果受到重大不确定性的影响。本公司在确定可能已发生负债且损失金额可合理估计时，记录法律或有事项的应计项目。在作出此等决定时，除其他事项外，本公司会评估不利结果的可能性程度，以及在可能已招致负债的情况下，以及对损失作出合理估计的能力。如果可能发生责任，本公司将披露或有事项的性质，如果可以估计，将提供此类损失的可能金额或损失范围。
截至2024年9月30日，本公司尚未参与任何诉讼，本公司认为，如果判决结果对本公司不利，将个别或整体对其财务状况、经营业绩或现金流产生重大不利影响。
在加强制裁合规职能的过程中，公司启动了一项内部审查，确定了与公司遵守美国财政部外国资产控制办公室(OFAC)颁布的制裁相关的问题，包括可能来自受制裁司法管辖区或受制裁人员的付款。尽管Flywire继续评估这些或其他交易是否构成潜在的违反制裁行为(包括其中某些付款是否可能获得相关制裁条例下的一般许可证或许可证豁免的授权)，但Flywire已自愿向外国资产管制处提交报告，报告明显的违规行为并提供补充信息。Flywire目前正在与OFAC接洽，以解决这些问题。根据迄今完成的内部调查结果，本公司不认为因此事而产生的任何亏损金额将对其业务、财务状况、运营结果或现金流产生重大影响。
赔偿
在正常业务过程中，本公司同意赔偿某些合作伙伴和客户因侵犯某些知识产权、侵犯数据隐私、对财产或个人造成损害或与本公司支付平台或其他合同义务有关或产生的其他责任而提出的第三方索赔。此外，本公司已与其董事会成员及高级管理人员订立弥偿协议，要求本公司(其中包括)就他们作为董事或高级管理人员的身份或服务而可能产生的若干责任作出弥偿。到目前为止，本公司尚未因该等赔偿而产生任何重大成本。本公司并不知悉任何个别或整体未决的赔偿事宜或索偿，预期会对其财务状况、经营业绩或现金流产生重大不利影响，亦未于截至2024年9月30日及2023年12月31日的简明综合财务报表中累积任何与该等债务有关的负债.
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伊特m 2。管理层对财务状况和经营成果的讨论和分析
您应该阅读以下对我们财务状况和运营业绩的讨论和分析，以及我们的简明综合财务报表和本季度报告中其他地方出现的相关注释。本10-Q表格季度报告中包含的一些信息包括涉及风险和不确定性的前瞻性陈述。您应该阅读题为“关于前瞻性陈述的特别注意事项”和“风险因素”的部分，以讨论可能导致实际结果与以下讨论和分析中包含的前瞻性陈述中描述或暗示的结果存在重大差异的重要因素。我们的财年结束于12月31日，我们的财年结束于3月31日、6月30日、9月30日和12月31日。
概述
FlyWire是一家全球领先的支付支持和软件公司。我们的下一代支付平台、专有的全球支付网络和垂直特定软件可以帮助我们的客户获得报酬，并帮助他们的客户轻松付款-无论他们身在世界各地。我们的客户依靠我们提供全球和本地的集成解决方案，并结合了量身定制的发票、灵活的支付选项和高度个性化的全渠道体验。我们相信，通过将支付转化为组织的价值和增长来源，同时以引人入胜、安全、快速和透明的支付体验让客户满意，我们为客户取得了代际进步。
我们的飞线优势 源自三个核心要素：（i）我们的下一代支付平台;（ii）我们专有的全球支付网络;（iii）由我们深厚的行业专业知识支持的垂直特定软件。与我们 飞线优势，除了为客户创建交互式数字支付体验外，我们的目标是通过自动化纸质和基于支票的业务流程来推动客户应收账款功能的转型。因此，实施我们的支付和软件解决方案的客户可以看到数字支付的增加和应收账款的改善、支付计划的注册人数的增加以及客户支持询问的减少。我们帮助客户将其应收账款职能转变为其组织的战略性、价值增强领域。
我们通过各种渠道接触客户，直接渠道是我们的主要市场策略。我们经验丰富的行业销售和关系管理团队带来了专业知识和本地影响力，我们的解决方案结合了高科技和高接触功能，并以24 x7多语言客户支持为支持，从而为客户和客户带来了很高的满意度。此外，我们FlyWire优势的价值也得到了认可，全球金融机构和技术提供商都选择与我们建立渠道合作伙伴关系。这些合作伙伴关系促进了有机推荐和潜在客户创造机会，并增强了我们的间接销售策略。
30
我们的差异化解决方案和高效的市场进入策略相结合，带来了强劲且持续的客户增长。
截至2024年9月30日，我们为全球超过4，000家客户提供服务，不包括从Invoided收购中获得的客户。在教育方面，我们为2，960多个机构提供服务。在医疗保健领域，我们为100多个医疗保健系统提供支持，其中包括截至2023年12月31日按医院规模排名的美国十大医疗保健系统中的四个。截至2024年9月30日，在我们较新的旅行和B20亿支付垂直支付领域，我们的投资组合不断增长，客户数量已超过1，200家。
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我们在世界各地建立了客户基础并扩大了客户的利用率方面的成功使我们能够实现巨大的规模。截至2023年12月31日的一年和截至2024年9月30日的九个月内，我们的总付款量分别超过240亿美元和约228亿美元。截至2023年12月31日和2022年12月31日止年度，我们的收入分别为40310万美元和28940万美元，同期净亏损分别为860万美元和3930万美元。截至2024年9月30日和2023年9月30日的九个月，我们的收入分别为37460万美元和30250万美元，同期净利润（亏损）分别为1880万美元和（990万）万美元。
我们相信，我们业务的增长和经营业绩将取决于许多因素，包括我们增加新客户的能力、扩大现有客户及其客户对我们解决方案的使用、整合我们收购的业务和技术平台以及通过添加新解决方案来增加我们支付和软件功能的广度和深度。虽然这些领域为我们带来了重大机遇，但也带来了挑战和风险，我们必须成功应对这些挑战和风险，以维持业务增长并改善经营业绩。
虽然我们在最近几个时期经历了显著的增长和对我们的解决方案的需求增加，但我们可能在短期内继续蒙受损失，未来可能无法实现或保持盈利。我们的营销重点是寻找线索来发展我们的销售渠道，建立我们的品牌和市场知名度，扩大我们的合作伙伴网络，并在现有客户基础上发展我们的业务。我们相信，从长远来看，这些努力将导致我们的客户基础、收入和利润率的增加。为了有效地管理未来的任何增长，我们必须继续改善和扩大我们的IT和金融基础设施、我们的运营和行政系统和控制，以及我们以有效方式管理员工、资本和流程的能力。此外，我们在我们的市场上面临着激烈的竞争，为了成功，我们需要创新并提供与传统支付解决方案不同的解决方案。我们还必须有效地聘用、留住、培养和激励人才和高级管理人员。还有一些我们无法控制的情况，可能会对我们的业务产生实质性影响，我们需要对此做出反应，包括但不限于汇率的波动。如果我们不能成功应对这些挑战，我们的业务、经营业绩和前景可能会受到不利影响。
截至2024年9月30日，我们有1，314名全职FlyMates，而截至2023年9月30日，全职FlyMates为1，123名，增长了17.0%。
2023年后续公开发行
2023年8月9日，我们与高盛有限责任公司（作为多家承销商的代表）签订了一份承销协议，内容涉及以每股32.00美元的价格要约和出售8，000，000股有投票权普通股（首次发行）。此外，根据承销协议的条款，我们授予承销商购买最多1，200，000股额外普通股的选择权（期权）。
首次发行于2023年8月14日结束，2023年9月12日，承销商部分行使了期权，并以每股32.00美元的价格购买了额外500，000股有投票权普通股（公开发行）。扣除1090万美元的承销折扣和佣金以及110万美元的其他发行成本后，我们从公开发行中获得了26010万美元的净收益。
最近的收购
2024年8月，我们收购了Invoided的所有已发行和发行股份，估计总购买价格约为5230万美元，其中包括约4780万美元的现金对价（扣除收购现金）和高达750万美元的或有对价，收购日期的估计公允价值为450万美元。或有对价代表我们未来可能需要支付的额外付款，具体取决于成功实现收入、交叉销售、产品和安全以及IT里程碑。配音是美国-总部位于SaaS B20亿美元的公司，提供应收账款软件，可在单个在线平台内自动化计费、收款、支付、报告和预测的各个方面。收购Invoided旨在加速我们在B20亿垂直领域的全球扩张。截至2024年9月30日的三个月和九个月内，Invoided贡献了90万美元的平台收入。
2023年11月，我们收购了StudyLink的所有已发行和已发行股份，估计总购买价格约为3550万美元，其中包括约3280万美元的现金对价（扣除收购现金）和高达390万美元的或有对价，收购日期的估计公允价值为270万美元。或有对价代表我们可能被要求在
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未来取决于成功实现收入、销量、交叉销售和工程实施里程碑，其中一部分可根据我们的选择以现金或普通股的形式支付，并受美元与澳元之间汇率波动的影响。以普通股形式支付的额外款项将基于一名关键员工的继续受雇而支付；因此，240万美元的万公允价值，即约84,000股普通股，已被排除在购买对价之外。在截至2024年9月30日的三个月和九个月内，我们分别支出了30美元万和90美元万，作为与保留关键员工相关的基于股票的薪酬。StudyLink是一家总部位于澳大利亚的SaaS教育公司，为教育提供商提供平台，以支持其招生系统和流程，包括资格评估、录取机会生成、招生代理以及佣金管理和录取处理等功能。收购StudyLink旨在加速我们在澳大利亚高等教育市场的增长，并提高我们在高等教育生态系统中对付款人、大学和代理商的价值主张。在截至2024年9月30日的三个月和九个月里，StudyLink分别为万和万贡献了180万美元和550万美元的平台收入。
我们的收入模式
我们从交易以及平台和其他费用中产生收入，如下所述。
交易收入 包括（i）向我们的客户提供的支付处理服务赚取的费用。该费用通常是通过适用于交易总支付价值的费率在每次交易中赚取的，该费率可能会根据支付方式、兑换的货币对以及我们的客户及其客户居住的地理区域而有所不同。支付处理服务还包括每笔交易的固定费用，通常与处理的国内支付相关。它还包括（ii）信用卡服务提供商就营销安排收取的营销费用，我们在这些安排中进行某些营销活动，以提高信用卡提供商的意识并推广某些支付方法，我们认为这些方法是我们向客户提供的支付处理解决方案的辅助。
平台和其他收入 主要包括（i）利用我们的平台优化现金收集和学生申请处理所赚取的费用，其中包括从软件订阅费和基于使用的费用中赚取的收入，（ii）在我们的支付平台上建立支付计划的费用，（iii）与印刷、邮寄和其他服务相关的费用，我们认为这些服务是我们向客户提供的解决方案的辅助服务，（iv）当最终用户购买保险单时，保险提供商的佣金，以及（v）为客户在生息账户中持有的资金赚取的利息收入。在之前的文件中，平台和其他收入被称为基于平台和使用的费用收入。
总支付金额
为了增加客户的收入，我们必须促进客户使用我们的支付平台来处理客户支付给他们的金额。我们的客户使用我们的平台并依赖我们的功能来自动化支付，我们的解决方案上处理的支付量就越大。该指标提供了我们客户的客户在我们的支付平台上完成的交易价值的重要指标，也是我们从客户那里赚取收入的能力的指标。我们将总支付量定义为在给定时期内在我们的支付平台上向客户支付的总金额。
总支付量由交易支付量和平台及其他收入支付量组成。下表列出了我们的总支付量的增长，以及交易支付量与平台和其他收入支付量之间的支付量组合。
|
|
截至9月30日的三个月， |
|
|
|
|
|
|
|
|||||||
(百万美元) |
|
2024 |
|
|
2023 |
|
|
$改变 |
|
|
%变化 |
|
||||
交易支付量 |
|
$ |
8,776.1 |
|
|
$ |
6,660.4 |
|
|
$ |
2,115.7 |
|
|
|
32 |
% |
平台和其他收入支付量 |
|
|
2,234.7 |
|
|
|
2,206.1 |
|
|
|
28.6 |
|
|
|
1 |
% |
支付总额 |
|
$ |
11,010.8 |
|
|
$ |
8,866.5 |
|
|
$ |
2,144.3 |
|
|
|
24 |
% |
|
|
截至9月30日的9个月， |
|
|
|
|
|
|
|
|||||||
(百万美元) |
|
2024 |
|
|
2023 |
|
|
$改变 |
|
|
%变化 |
|
||||
交易支付量 |
|
$ |
17,688.6 |
|
|
$ |
13,514.9 |
|
|
$ |
4,173.7 |
|
|
|
31 |
% |
平台和其他收入支付量 |
|
|
5,139.6 |
|
|
|
5,119.3 |
|
|
|
20.3 |
|
|
|
0 |
% |
支付总额 |
|
$ |
22,828.2 |
|
|
$ |
18,634.2 |
|
|
$ |
4,194.0 |
|
|
|
23 |
% |
33
影响我们业绩的关键因素
提高我们的客户及其客户的利用率
我们将支付平台和全球支付网络货币化的能力是我们商业模式的重要组成部分。如今，我们根据代表客户处理的总付款量收取费用。随着客户在我们的支付平台上处理更多交易以及通过我们的全球支付网络收取更多资金，我们的收入和支付量也会增加。我们的支付平台上处理的平均支付规模的增加也会增加我们的收入。我们影响客户在我们的平台上处理更多交易的能力将对我们的收入产生直接影响。
此外，维持我们的增长需要新客户继续采用我们的平台，并进一步采用支付计划等用例。我们影响客户扩大客户对我们平台使用的能力还取决于我们成功引入新解决方案的能力，例如我们支持国际教育顾问付款的解决方案和我们的B20亿解决方案。
我们平台上的各种业务
我们的收入受到多个因素的影响，包括我们代表客户处理的付款量、我们客户经营的行业、支付和接收付款的货币、支付方式以及我们客户发起的付款计划数量。例如，当我们的客户从事跨境支付流时，我们会认识到更多的交易收入，而跨境支付流可能会根据客户经营的行业而增加或减少。根据我们客户和客户在我们平台上的活动性质，我们赚取的收入类型（交易收入或平台和其他收入）可能会发生变化。
技术与开发以及销售与营销投资
我们对新解决方案和现有解决方案增强进行了大量投资。新的解决方案特性和功能通过各种分销和促销活动推向市场。我们计划继续采用新兴技术，扩大软件集成库，并投资开发更多功能。虽然我们预计与技术和开发相关的费用将会增加，但我们相信这些投资将有助于长期增长和盈利能力。
此外，我们计划继续加大力度，通过全面的营销计划直接向客户推销我们的支付平台和全球支付网络。我们专注于销售和营销支出的有效性，并将继续在未来几个季度保持高效的客户获取，包括根据需要调整支出水平，以应对经济环境的变化。
季节性
我们的经营业绩和经营指标受季节性和波动性的影响，这可能会导致我们的季度收入和经营业绩或对我们业务前景的看法出现波动。我们过去曾经历过收入的季节性波动，并预计将继续经历收入的季节性波动，这种波动可能因地理走廊和垂直而异。例如，受教育旺季的推动，我们第三季度的收入历史上最高。季节性事件会导致一些变化，包括我们教育客户的客户在我们的支付平台上支付学费的时间以及一个月或一个季度的工作日数。我们还经历了某些其他指标的波动，例如处理的交易、总支付量和支付组合。
经济状况和由此产生的消费者支出趋势
宏观层面消费者教育、医疗保健和旅行支出趋势的变化，包括通货膨胀或汇率波动所导致的变化，可能会影响我们平台上处理的量，从而导致我们的收入来源波动。
政府改变对国际学生签证政策的影响
来自我们教育客户的收入，主要包括美国、加拿大、英国、欧洲和亚太地区/澳大利亚受到多个因素的影响，包括世界各地政府组织制定的限制国际学生签证发放的政策。加拿大政府此前宣布将为2024年和2025年的国际学生许可申请设定上限。澳大利亚最近也推迟了
34
处理国际学生签证，并提议在2025年限制国际学生。我们客户机构所在的其他政府可能正在考虑对国际学生签证的发放实施类似的限制。这已经并预计将在短期内继续对我们在适用地区的业务增长产生不利影响。
国际学生签证政策的变化对加拿大和澳大利亚教育市场的影响仍存在一定程度的不确定性。我们继续看到加拿大和澳大利亚教育市场的新客户增长，这提供了一个杠杆来抵消政府对国际学生签证政策的这些变化导致的新入学国际学生增长预期下降的部分影响。在这些与签证相关的政策转变中，我们的业务继续保持强劲，受益于我们在垂直行业、子行业、国家、货币和客户中日益全球化和多元化的足迹。
通货膨胀的影响
截至2024年9月30日的三个月和九个月内，通货膨胀并未对我们的现金流和经营业绩产生重大影响。
多元化的客户组合
我们在教育、医疗保健、旅游和B20亿垂直领域拥有广泛的客户。教育（我们最大的垂直领域）客户的发票和收入依赖于国际入学和学生学校偏好，这些偏好可能会随着时间的推移而波动。
客户沟通和产品解决方案的动态变化
我们对技术和个性化引擎进行了一系列改进，以优化客户提供支付计划并与客户进行有效数字化沟通的能力。同样，我们配置了一些教育支付计划解决方案，以实现非常简化的实施，以支持客户为其学生提出的负担能力解决方案的请求，这些解决方案可以在最少的IT参与下部署。虽然我们继续投资于技术和产品能力，但我们继续通过技术平台提供精简和有效产品的能力可能会影响我们未来保留和赢得新客户的能力。我们相信，我们帮助提高付款负担能力的能力对我们的客户来说变得更加重要，因为缺乏负担能力导致了对更大财务灵活性的需求。
业务连续性
我们有运营亏损的历史，虽然我们在最近几年经历了显著的收入增长，并在之前几个季度实现了GAAP基础上的盈利，但我们不确定我们是否或何时将获得足够高的收入来维持或增加我们的增长，或实现或保持未来的盈利能力。我们还预计未来我们的成本和支出将增加，如果我们的收入不增加，这可能会对我们未来的运营业绩产生负面影响。特别是，我们打算继续投资于员工人数，投入大量资金进一步开发我们的解决方案，包括推出新功能，并扩大我们的营销计划和销售团队，以推动新客户的采用，扩大战略合作伙伴整合，并支持国际和行业扩张。我们的经营业绩也受到我们来自不同收入来源的收入组合的影响，这些收入来源包括交易收入和平台及其他费用收入。我们每个季度收入组合的变化，包括来自跨境或国内货币交易的收入，将影响我们的利润率，我们可能无法充分增长我们的毛利率来实现或维持盈利能力。此外，考虑到我们与某些支付方式(如信用卡)相关的成本高于我们解决方案接受的其他支付方式(如银行转账)，客户客户使用的各种支付方式的组合可能会对我们的利润率产生影响。我们正在通过持续改进来解决运营亏损问题，旨在提高运营效率，并注重成本纪律。我们相信，这些改进，加上强劲的毛利率和运营现金流，将帮助我们实现未来产生正的年度GAAP净收入的目标。
由于涉及以色列的持续冲突，我们继续积极参与劳动力规划，以帮助以色列FlyMates不间断地支持业务，并为FlyMates在以色列实施安全措施。
经营成果的构成部分
收入
正如“我们的收入模型”中所述，我们从交易以及平台和其他费用中产生收入。
35
支付处理服务成本
支付处理服务成本包括处理支付交易所产生的成本，包括银行和信用卡处理费、外币翻译成本、合作伙伴费用、促进这些付款的FlyMates的人员相关费用以及为客户提供实施服务的FlyMates的人员相关费用。我们预计，支付处理服务成本以绝对美元计算将增加，但随着我们继续投资扩大处理业务并扩大收入基础，其占总收入的百分比可能会在不同时期波动。
技术与发展
技术和开发包括（a）与开发我们的解决方案和改进现有解决方案有关的成本，包括开发我们的解决方案时发生的软件和网站开发成本的摊销，这些成本被资本化，并获得了开发的技术，（b）发生的站点运营和其他基础设施成本，（c）与履行合同的资本化成本相关的摊销，（d）人员相关费用，包括工资、股票补偿和其他费用，（e）硬件和软件工程、顾问服务以及与我们的技术平台和产品相关的其他费用，（f）研究材料和设施，以及（g）折旧和维护费用。
我们相信，提供新功能对于吸引新客户和扩大我们与现有客户的关系至关重要。我们希望继续投资扩大我们的解决方案，以增强客户的体验和满意度，并吸引新客户。我们预计我们的技术和开发费用以绝对金额计算将会增加，但随着我们扩大技术和开发团队以开发新的解决方案和对现有解决方案的增强，它们占总收入的百分比可能会在不同时期波动。
销售和市场营销
销售和营销费用包括与人员相关的费用，包括基于股票的报酬费用、销售佣金、所收购客户关系无形资产的摊销、营销计划费用、差旅相关费用以及通过广告、营销活动、合作伙伴关系安排和直接客户收购营销和推广我们的解决方案的成本。
我们的销售和营销工作重点是提高人们对我们的业务、平台和解决方案的认识，创造销售线索以及建立和推广我们的品牌。我们计划通过推动我们的市场营销策略、建立我们的品牌知名度和赞助额外的营销活动来继续投资于销售和营销工作;但是，我们将根据需要调整我们的销售和营销支出水平，并且这可能会随着时期而波动，以应对经济环境的变化。
General and Administrative
General and administrative expenses consist of personnel-related expenses, including stock-based compensation expense for finance, risk management, legal and compliance, human resources and IT functions, costs incurred for external professional services, as well as rent, and facility and insurance costs. We expect to incur additional general and administrative expenses as we continue to invest in our planned growth of our business. We also expect to increase the size of our general and administrative functions to support the growth in the business, and to operate as a public company. As a result, we expect that our general and administrative expenses will increase in absolute dollars but may fluctuate as a percentage of total revenue from period to period.
Interest Expense
Interest expense consists of interest, amortization of debt issuance costs and unused commitment fees on our 2024 Revolving Credit Facility and 2021 Revolving Credit Facility.
On February 23, 2024, we entered into our 2024 Revolving Credit Facility for a total commitment of $125.0 million. The 2024 Revolving Credit Facility replaced the 2021 Revolving Credit Facility of $50.0 million, which were entered into in July 2021, under which $50.0 million was available to Flywire as of December 31, 2023. As of September 30, 2024 and 2023, there was no outstanding indebtedness under the 2024 Revolving Credit Facility or 2021 Revolving Credit Facility.
36
Interest Income
Interest income consists of interest on cash held in interest bearing operating accounts, including money market funds, and investments in available-for-sale debt securities.
Gain (loss) from Remeasurement of Foreign Currency
Gain (loss) from remeasurement of foreign currency consists of gains and losses from the remeasurement of foreign currency transactions into its functional currency.
(Benefit from) Provision for Income Tax
(Benefit from) provision for income taxes consists primarily of foreign and state income taxes. We have historically generated net operating losses (NOL) carryforwards for U.S. Federal and state tax purposes as we expand the scale of our business activities. Changes in the U.S. and foreign tax law may impact our overall (benefit from) provision for income taxes in the future.
We have a valuation allowance on our net U.S. deferred tax assets, including federal and state NOLs and our net U.K. deferred tax assets, including NOL's. We expect to maintain these valuation allowances until it becomes more likely than not that the benefit of our deferred tax assets are realized through future taxable income generated in these jurisdictions.
Results of Operations
Comparison of results for the three months ended September 30, 2024 and 2023
All dollar amounts in the tables below are rounded and as a result, certain amounts may not recalculate using the rounded amounts provided.
The following table sets forth our consolidated results of operations for periods presented:
|
|
Three Months Ended September 30, |
|
|
|
|
|
|
|
|||||||
(dollars in millions) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Revenue |
|
$ |
156.8 |
|
|
$ |
123.3 |
|
|
$ |
33.5 |
|
|
|
27.2 |
% |
Payment processing services costs |
|
|
54.6 |
|
|
|
42.9 |
|
|
|
11.7 |
|
|
|
27.3 |
% |
Technology and development |
|
|
16.7 |
|
|
|
14.6 |
|
|
|
2.1 |
|
|
|
14.4 |
% |
Selling and marketing |
|
|
34.2 |
|
|
|
27.1 |
|
|
|
7.1 |
|
|
|
26.2 |
% |
General and administrative |
|
|
31.1 |
|
|
|
26.9 |
|
|
|
4.2 |
|
|
|
15.6 |
% |
Total costs and operating expense |
|
|
136.5 |
|
|
|
111.4 |
|
|
|
25.1 |
|
|
|
22.5 |
% |
Income from operations |
|
|
20.3 |
|
|
|
11.9 |
|
|
|
8.4 |
|
|
|
70.6 |
% |
Interest expense |
|
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
0.0 |
|
|
|
— |
|
Interest income |
|
|
5.0 |
|
|
|
3.8 |
|
|
|
1.2 |
|
|
|
31.6 |
% |
Gain (loss) from remeasurement of foreign currency |
|
|
5.5 |
|
|
|
(4.2 |
) |
|
|
9.7 |
|
|
|
(231.0 |
)% |
Total other income (expense), net |
|
|
10.3 |
|
|
|
(0.5 |
) |
|
|
10.8 |
|
|
|
(2160.0 |
)% |
Income before (benefit from) provision for income taxes |
|
|
30.6 |
|
|
|
11.4 |
|
|
|
19.2 |
|
|
|
168.4 |
% |
(Benefit from) provision for income taxes |
|
|
(8.3 |
) |
|
|
0.8 |
|
|
|
(9.1 |
) |
|
|
(1137.5 |
)% |
Net income |
|
|
38.9 |
|
|
|
10.6 |
|
|
|
28.3 |
|
|
|
267.0 |
% |
Foreign currency translation adjustment |
|
|
4.9 |
|
|
|
(2.6 |
) |
|
|
7.5 |
|
|
|
(288.5 |
)% |
Unrealized gains on available-for-sale |
|
|
0.7 |
|
|
|
— |
|
|
|
0.7 |
|
|
|
100.0 |
% |
Comprehensive income |
|
$ |
44.5 |
|
|
$ |
8.1 |
|
|
$ |
36.4 |
|
|
|
449.4 |
% |
Revenue
37
Revenue was $156.8 million for the three months ended September 30, 2024, compared to $123.3 million for the three months ended September 30, 2023, an increase of $33.5 million or 27.2%. Revenue is comprised of transaction revenue and platform and other revenues as follows:
|
|
Three Months Ended September 30, |
|
|
|
|
|
|
|
|||||||
(dollars in millions) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Transaction revenue |
|
$ |
134.4 |
|
|
$ |
104.6 |
|
|
$ |
29.8 |
|
|
|
28.5 |
% |
Platform and other revenues |
|
|
22.4 |
|
|
|
18.7 |
|
|
|
3.7 |
|
|
|
19.8 |
% |
Revenue |
|
$ |
156.8 |
|
|
$ |
123.3 |
|
|
$ |
33.5 |
|
|
|
27.2 |
% |
Transaction revenue was $134.4 million for the three months ended September 30, 2024, compared to $104.6 million for the three months ended September 30, 2023, an increase of $29.8 million or 28.5%. The increase in transaction revenue was primarily driven by growth in transaction payment volumes for the three months ended September 30, 2024 from both our existing clients and new clients added during the three months ended September 30, 2024 compared to three months ended September 30, 2023. We experienced strong growth in transaction payment volume across most regions and verticals during the period, excluding Canada, which decreased primarily due to Canada’s international student permit applications cap introduced earlier in calendar year 2024. Transaction payment volume increased approximately 32% during the three months ended September 30, 2024 to $8.8 billion compared to $6.7 billion during the three months ended September 30, 2023.
Platform and other revenues were $22.4 million for the three months ended September 30, 2024, compared to $18.7 million for the three months ended September 30, 2023, an increase of $3.7 million or 19.8%. The increase in platform and other revenues was driven by the Invoiced and StudyLink acquisitions, an increase in healthcare platform products, revenue from interest earned on funds held for customers in interest-bearing accounts, offset by a decrease in revenue for printing and mailing and insurance products. Invoiced and StudyLink contributed $0.9 million and $1.8 million in platform and other revenues during the three months ended September 30, 2024, respectively.
Payment Processing Services Costs
Payment processing services costs were $54.6 million for the three months ended September 30, 2024, compared to $42.9 million for the three months ended September 30, 2023, an increase of $11.7 million or 27.3%. The increase in payment processing services costs is correlated with the increase in total payment volume of 24% over the same period.
Technology and Development
Technology and development expenses were $16.7 million for the three months ended September 30, 2024, compared to $14.6 million for the three months ended September 30, 2023, an increase of $2.1 million or 14.4%%. The increase in technology and development cost was primarily driven by an increase in personnel costs and stock-based compensation expense, offset by a decrease in amortization expense. Personnel costs were $10.6 million for the three months ended September 30, 2024 compared to $8.6 million for the three months ended September 30, 2023, an increase of $2.0 million or 23.3%. The increase in personnel costs was primarily driven by an increase in headcount within our technology and development teams. Stock-based compensation expense was $3.1 million for the three months ended September 30, 2024, compared to $2.4 million for the three months ended September 30, 2023, an increase of $0.7 million or 29.1%. The increase in stock-based compensation is attributable to equity grants awarded to existing and new FlyMates. Amortization of intangible assets was $1.4 million for the three months ended September 30, 2024, compared to $2.0 million for the three months ended September 30, 2023, a decrease of $0.6 million or 30.0%. The decrease in amortization expense was primarily due to a decrease in acquired technology related to a previous acquisition.
Selling and Marketing
Selling and marketing expenses were $34.2 million for the three months ended September 30, 2024, compared to $27.1 million for the three months ended September 30, 2023, an increase of $7.1 million or 26.2%. The increase in selling and marketing expenses was primarily driven by an increase in personnel costs, stock-based compensation expense, professional fees and amortization expense. Personnel costs were $16.1 million for the three months ended September 30, 2024, compared to $13.8 million for the three months ended September 30, 2023, an increase of $2.3 million or 16.7%. The increase in personnel costs was primarily driven by an increase in headcount within our selling and marketing teams. Stock-based compensation expense was $4.7 million for the three months ended September 30, 2024, compared to $3.1 million for the three months ended September 30, 2023, an increase of $1.6 million or 51.6%. The increase in stock-based compensation is attributable to equity grants awarded to existing and new FlyMates. Professional fees were $6.6 million for the three months ended September 30, 2024, compared to $5.5 million for the three months
38
ended September 30, 2023, an increase of $1.1 million or 20.0%. The increase in professional fees was due to increases in third party commissions. Amortization of intangibles was $2.1 million for the three months ended September 30, 2024, compared to $1.2 million for the three months ended September 30, 2023, an increase of $0.9 million or 75.0%. The increase in amortization expense was due to acquired intangible assets related to the StudyLink and Invoiced acquisitions.
General and Administrative
General and administrative expenses were $31.1 million for the three months ended September 30, 2024, compared to $26.9 million for the three months ended September 30, 2023, an increase of $4.2 million or 15.6%. The increase in general and administrative expenses was primarily driven by an increase in stock-based compensation expense and personnel costs. Stock-based compensation expense was $8.7 million for the three months ended September 30, 2024, compared to $5.9 million for the three months ended September 30, 2023, an increase of $2.8 million or 47.5%. The increase in stock-based compensation is attributable to equity grants awarded to existing and new FlyMates. Personnel costs were $11.7 million for the three months ended September 30, 2024, compared to $10.1 million for the three months ended September 30, 2023, an increase of $1.6 million or 15.8%. The increase in personnel costs was primarily driven by an increase in headcount.
Interest Expense
Interest expense remained constant at $0.1 million during each of the three months ended September 30, 2024 and 2023. As of September 30, 2024 and 2023, there was no outstanding indebtedness under the 2024 Revolving Credit Facility or 2021 Revolving Credit Facility. Interest expense consists primarily of amortization of debt issuance costs and unused commitment fees related to our 2024 Revolving Credit Facility and 2021 Revolving Credit Facility.
Interest Income
Interest income was $5.0 million for the three months ended September 30, 2024, compared to $3.8 million for the three months ended September 30, 2023, an increase of $1.2 million or 31.6%. The increase in interest income is primarily attributable to the increase in our cash balance associated with our Public Offering we completed in August and September of 2023.
Gain (loss) from Remeasurement of Foreign Currency
Gain (loss) from remeasurement of foreign currency was $5.5 million for the three months ended September 30, 2024, compared to $(4.2) million for the three months ended September 30, 2023, an increase of $9.7 million or 231.0%. The increase was primarily the result of the remeasurement of foreign currency transactions into the British pound sterling and impact of fluctuations in exchange rates during respective remeasurement periods.
(Benefit from) Provision for Income Taxes
(Benefit from) provision for income taxes was $(8.3) million during the three months ended September 30, 2024, compared to $0.8 million during the three months ended September 30, 2023, a decrease of $9.1 million or 1,137.5%.The income benefit for the three months ended September 30, 2024 was primarily attributable to a non-recurring benefit of $4.9 million relating to the release of a portion of our valuation allowance in the U.S. This release was due to taxable temporary differences recorded as part of the Invoiced acquisition which were a source of income to realize certain pre-existing federal and state deferred tax assets. The benefit is augmented by income tax benefit primarily attributable to activity in our current U.S. federal taxes offset by income tax expense attributable to our foreign operations and U.S. state taxes. The income tax provision for the three months ended September 30, 2023 was primarily attributable to activity in our foreign subsidiaries and current U.S. state taxes. Our effective tax rate was (27.3)% for the three months ended September 30, 2024 compared to 5.8% for the three months ended September 30, 2023.
Comparison of results for the nine months ended September 30, 2024 and 2023
All dollar amounts in the tables below are rounded and as a result, certain amounts may not recalculate using the rounded amounts provided.
The following table sets forth our consolidated results of operations for periods presented:
39
|
|
Nine Months Ended September 30, |
|
|
|
|
|
|
|
|||||||
(dollars in millions) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Revenue |
|
$ |
374.6 |
|
|
$ |
302.5 |
|
|
$ |
72.1 |
|
|
|
23.8 |
% |
Payment processing services costs |
|
|
136.1 |
|
|
|
110.6 |
|
|
|
25.5 |
|
|
|
23.1 |
% |
Technology and development |
|
|
49.3 |
|
|
|
45.1 |
|
|
|
4.2 |
|
|
|
9.3 |
% |
Selling and marketing |
|
|
96.1 |
|
|
|
78.8 |
|
|
|
17.3 |
|
|
|
22.0 |
% |
General and administrative |
|
|
94.6 |
|
|
|
79.6 |
|
|
|
15.0 |
|
|
|
18.8 |
% |
Total costs and operating expense |
|
|
376.1 |
|
|
|
314.0 |
|
|
|
62.1 |
|
|
|
19.8 |
% |
Loss from operations |
|
|
(1.5 |
) |
|
|
(11.5 |
) |
|
|
10.0 |
|
|
|
(87.0 |
)% |
Interest expense |
|
|
(0.4 |
) |
|
|
(0.3 |
) |
|
|
(0.1 |
) |
|
|
33.3 |
% |
Interest income |
|
|
16.6 |
|
|
|
7.7 |
|
|
|
8.9 |
|
|
|
115.6 |
% |
Gain (loss) from remeasurement of foreign currency |
|
|
2.1 |
|
|
|
(3.5 |
) |
|
|
5.6 |
|
|
|
(160.0 |
)% |
Total other income (expense), net |
|
|
18.2 |
|
|
|
3.9 |
|
|
|
14.3 |
|
|
|
366.7 |
% |
Income (loss) before (benefit from) provision for income taxes |
|
|
16.8 |
|
|
|
(7.6 |
) |
|
|
24.4 |
|
|
|
(321.1 |
)% |
(Benefit from) provision for income taxes |
|
|
(2.0 |
) |
|
|
2.3 |
|
|
|
(4.3 |
) |
|
|
(187.0 |
)% |
Net income (loss) |
|
|
18.8 |
|
|
|
(9.9 |
) |
|
|
28.7 |
|
|
|
(289.9 |
)% |
Foreign currency translation adjustment |
|
|
3.7 |
|
|
|
(0.5 |
) |
|
|
4.2 |
|
|
|
(840.0 |
)% |
Unrealized gains on available-for-sale |
|
|
0.6 |
|
|
|
— |
|
|
|
0.6 |
|
|
|
100.0 |
% |
Comprehensive income (loss) |
|
$ |
23.2 |
|
|
$ |
(10.4 |
) |
|
$ |
33.6 |
|
|
|
(323.1 |
)% |
Revenue
Revenue was $374.6 million for the nine months ended September 30, 2024, compared to $302.5 million for the nine months ended September 30, 2023, an increase of $72.1 million or 23.8%. Revenue is comprised of transaction revenue and platform and other revenues as follows:
|
|
Nine Months Ended September 30, |
|
|
|
|
|
|
|
|||||||
(dollars in millions) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Transaction revenue |
|
$ |
314.9 |
|
|
$ |
247.7 |
|
|
$ |
67.2 |
|
|
|
27.1 |
% |
Platform and other revenues |
|
|
59.6 |
|
|
|
54.8 |
|
|
|
4.8 |
|
|
|
8.8 |
% |
Revenue |
|
$ |
374.6 |
|
|
$ |
302.5 |
|
|
$ |
72.1 |
|
|
|
23.8 |
% |
Transaction revenue was $314.9 million for the nine months ended September 30, 2024, compared to $247.7 million for the nine months ended September 30, 2023, an increase of $67.2 million or 27.1%. The increase in transaction revenue was primarily driven by growth in transaction payment volumes for the nine months ended September 30, 2024 from both our existing clients and new clients added during the nine months ended September 30, 2024 compared to nine months ended September 30, 2023. We experienced strong growth in transaction payment volume across most regions and verticals during the period, excluding Canada, which decreased primarily due to Canada’s international student permit applications cap introduced earlier in calendar year 2024. Transaction payment volume increased approximately 31% during the nine months ended September 30, 2024 to $17.7 billion compared to $13.5 billion during the nine months ended September 30, 2023.
Platform and other revenues were $59.6 million for the nine months ended September 30, 2024, compared to $54.8 million for the nine months ended September 30, 2023, an increase of $4.8 million or 8.8%. The increase in platform and other revenues was driven by the Invoiced and StudyLink acquisitions and revenue from interest earned on funds held for customers in interest-bearing accounts, offset by a decrease in revenue for printing and mailing and insurance products. Invoiced and StudyLink contributed $0.9 million and $5.5 million in platform and other revenues during the nine months ended September 30, 2024, respectively.
Payment Processing Services Costs
Payment processing services costs were $136.1 million for the nine months ended September 30, 2024, compared to $110.6 million for the nine months ended September 30, 2023, an increase of $25.5 million or 23.1%. The increase in payment processing services costs is correlated with the increase in total payment volume of 23% over the same period.
40
Technology and Development
Technology and development expenses were $49.3 million for the nine months ended September 30, 2024, compared to $45.1 million for the nine months ended September 30, 2023, an increase of $4.2 million or 9.3%. The increase in technology and development cost was primarily driven by an increase in personnel costs, stock-based compensation expense and software and hosting expenses, partially offset by a decrease in amortization expense. Personnel costs were $30.9 million for the nine months ended September 30, 2024 compared to $27.9 million for the nine months ended September 30, 2023, an increase of $3.0 million or 10.8%. The increase in personnel costs was primarily driven by an increase in headcount within our technology and development teams. Stock-based compensation expense was $8.6 million for the nine months ended September 30, 2024, compared to $6.4 million for the nine months ended September 30, 2023, an increase of $2.2 million or 34.4%. The increase in stock-based compensation is attributable to equity grants awarded to existing and new FlyMates. Software and hosting expenses were $4.3 million for the nine months ended September 30, 2024, compared to $3.7 million for the nine months ended September 30, 2023, an increase of $0.6 million or 16.2%. The increase in software and hosting expenses was primarily due to additional software needs based on headcount growth. Amortization of intangible assets was $4.5 million for the nine months ended September 30, 2024, compared to $5.8 million for the nine months ended September 30, 2023, a decrease of $1.3 million or 22.4%. The decrease in amortization expense was primarily due to a decrease in acquired technology related to a previous acquisition.
Selling and Marketing
Selling and marketing expenses were $96.1 million for the nine months ended September 30, 2024, compared to $78.8 million for the nine months ended September 30, 2023, an increase of $17.3 million or 22.0%. The increase in selling and marketing expenses was primarily driven by an increase in personnel costs, stock-based compensation expense, amortization expense and professional fees. Personnel costs were $48.8 million for the nine months ended September 30, 2024, compared to $41.5 million for the nine months ended September 30, 2023, an increase of $7.3 million or 17.6%. The increase in personnel costs was primarily driven by an increase in headcount within our selling and marketing teams and commissions earned on sales during the period. Stock-based compensation expense was $13.3 million for the nine months ended September 30, 2024, compared to $8.8 million for the nine months ended September 30, 2023, an increase of $4.5 million or 51.1%. The increase in stock-based compensation is attributable to equity grants awarded to existing and new FlyMates. Amortization of intangibles was $5.9 million for the nine months ended September 30, 2024, compared to $3.8 million for the nine months ended September 30, 2023, an increase of $2.1 million or 55.3%. The increase in amortization expense was due to acquired intangible assets related to the StudyLink and Invoiced acquisitions. Professional fees were $15.4 million for the nine months ended September 30, 2024, compared to $14.1 million for the nine months ended September 30, 2023, an increase of $1.3 million or 9.2%. The increase in professional fees was due to increases in third party commissions.
General and Administrative
General and administrative expenses were $94.6 million for the nine months ended September 30, 2024, compared to $79.6 million for the nine months ended September 30, 2023, an increase of $15.0 million or 18.8%. The increase in general and administrative expenses was primarily driven by an increase in stock-based compensation expense and personnel costs, partially offset by a decrease in other costs. Stock-based compensation was $26.5 million for the nine months ended September 30, 2024, compared to $16.2 million for the nine months ended September 30, 2023, an increase of $10.3 million or 63.6%. The increase in stock-based compensation is attributable to equity grants awarded to existing and new FlyMates. Personnel costs were $36.8 million for the nine months ended September 30, 2024, compared to $30.8 million for the nine months ended September 30, 2023, an increase of $6.0 million or 19.5%. The increase in personnel costs was primarily driven by an increase in headcount. Other costs were $3.7 million for the nine months ended September 30, 2024, compared to $5.7 million for the nine months ended September 30, 2023, a decrease of $2.0 million or 35.1%. The decrease in other costs was primary due to hedging losses recorded during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2024.
Interest Expense
Interest expense was $0.4 million for the nine months ended September 30, 2024, compared to $0.3 million for the nine months ended September 30, 2023, an increase of $0.1 million or 33.3%. As of September 30, 2024 and 2023, there was no outstanding indebtedness under the 2024 Revolving Credit Facility or 2021 Revolving Credit Facility. Interest expense consists primarily of amortization of debt issuance costs and unused commitment fees related to our 2024 Revolving Credit Facility and 2021 Revolving Credit Facility.
41
Interest Income
Interest income was $16.6 million for the nine months ended September 30, 2024, compared to $7.7 million for the nine months ended September 30, 2023, an increase of $8.9 million or 115.6%. The increase in interest income is attributable to the increase in our cash balance associated with our Public Offering we completed in August and September 2023.
Gain (loss) from Remeasurement of Foreign Currency
Gain (loss) from remeasurement of foreign currency was $2.1 million for the nine months ended September 30, 2024, compared to $(3.5) million for the nine months ended September 30, 2023, an increase of $5.6 million or 160.0%. The increase was primarily the result of the remeasurement of foreign currency transactions into the British pound sterling and impact of fluctuations in exchange rates during respective remeasurement periods.
(Benefit from) Provision for Income Taxes
(Benefit from) provision for income taxes was $(2.0) million during the nine months ended September 30, 2024, compared to $2.3 million during the nine months ended September 30, 2023, a decrease of $4.3 million or 187.0%. The income tax benefit for the nine months ended September 30, 2024 was primarily attributable to a non-recurring benefit of $4.9 million relating to the release of a portion of our valuation allowance in the U.S. This release was due to taxable temporary differences recorded as part of the Invoiced acquisition which were a source of income to realize certain pre-existing federal and state deferred tax assets and was partially offset by income tax expense attributable to activity in our foreign subsidiaries and current U.S. federal and state taxes. The income tax provision for the nine months ended September 30, 2023 was primarily attributable to activity in our foreign subsidiaries and U.S. state taxes. Our effective tax rate was (12.3)% for the nine months ended September 30, 2024, compared to (28.6)% for the nine months ended September 30, 2023.
Key Operating Metrics and Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared in accordance with generally accepted accounting principles in the United States (GAAP), we use certain non-GAAP financial measures. The following table sets forth our key operating metrics and non-GAAP measures for the periods presented. All dollar amounts are rounded and as a result, certain amounts may not recalculate using the rounded amounts provided.
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
(dollars in millions) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Total Payment Volume |
|
$ |
11,010.8 |
|
|
$ |
8,866.5 |
|
|
$ |
22,828.2 |
|
|
$ |
18,634.2 |
|
Revenue |
|
$ |
156.8 |
|
|
$ |
123.3 |
|
|
$ |
374.6 |
|
|
$ |
302.5 |
|
Revenue Less Ancillary Services |
|
$ |
151.4 |
|
|
$ |
116.8 |
|
|
$ |
361.5 |
|
|
$ |
285.3 |
|
Gross Profit |
|
$ |
100.3 |
|
|
$ |
78.4 |
|
|
$ |
232.7 |
|
|
$ |
185.4 |
|
Adjusted Gross Profit |
|
$ |
101.9 |
|
|
$ |
80.1 |
|
|
$ |
237.3 |
|
|
$ |
190.4 |
|
Gross Margin |
|
|
64.0 |
% |
|
|
63.6 |
% |
|
|
62.1 |
% |
|
|
61.3 |
% |
Adjusted Gross Margin |
|
|
67.3 |
% |
|
|
68.6 |
% |
|
|
65.6 |
% |
|
|
66.7 |
% |
Net Income (Loss) |
|
$ |
38.9 |
|
|
$ |
10.6 |
|
|
$ |
18.8 |
|
|
$ |
(9.9 |
) |
Adjusted EBITDA |
|
$ |
42.2 |
|
|
$ |
27.5 |
|
|
$ |
61.2 |
|
|
$ |
34.3 |
|
For the three months ended September 30, 2024, transaction revenue and platform and other revenues represented 85.7% and 14.3% of our revenue, respectively. For the three months ended September 30, 2024, transaction revenue and platform and other revenues represented 88.0% and 12.0% of our total revenue less ancillary services, respectively. For the three months ended September 30, 2023, transaction revenue and platform and other revenues represented 84.8% and 15.2% of our revenue, respectively. For the three months ended September 30, 2023, transaction revenue and platform and other revenues represented 88.4% and 11.6% of our total revenue less ancillary services, respectively.
For the nine months ended September 30, 2024, transaction revenue and platform and other revenues represented 84.1% and 15.9% of our revenue, respectively. For the nine months ended September 30, 2024, transaction revenue and platform and other revenues represented 86.7% and 13.3% of our total revenue less ancillary services, respectively. For the nine months ended September 30, 2023, transaction revenue and platform and other revenues represented 81.9% and 18.1% of our revenue, respectively. For the nine months ended September 30, 2023, transaction revenue and platform and other revenues represented 86.2% and 13.8% of our total revenue less ancillary services, respectively.
42
For the three months ended September 30, 2024, our total payment volume was approximately $11.0 billion, consisting of $8.8 billion of total payment volume from transactions included in transaction revenue, and $2.2 billion of total payment volume from transactions included in platform and other revenues. For the three months ended September 30, 2023, our total payment volume was approximately $8.9 billion, consisting of $6.7 billion of total payment volume from transactions included in transaction revenue, and $2.2 billion of total payment volume from transactions included in platform and other revenues.
For the nine months ended September 30, 2024, our total payment volume was approximately $22.8 billion, consisting of $17.7 billion of total payment volume from transactions included in transaction revenue, and $5.1 billion of total payment volume from transactions included in platform and other revenues. For the nine months ended September 30, 2023, our total payment volume was approximately $18.6 billion, consisting of $13.5 billion of total payment volume from transactions included in transaction revenue, and $5.1 billion of total payment volume from transactions included in platform and other revenues.
Revenue Less Ancillary Services, Revenue Less Ancillary Services at Constant Currency, Adjusted Gross Profit, Adjusted Gross Margin, EBITDA, Adjusted EBITDA and Non-GAAP Operating Expenses
We use non-GAAP financial measures to supplement financial information presented on a GAAP basis. We believe that excluding certain items from our GAAP results allows management to better understand our consolidated financial performance from period to period and better project our future consolidated financial performance as forecasts are developed at a level of detail different from that used to prepare GAAP-based financial measures. Moreover, we believe these non-GAAP financial measures provide our stakeholders with useful information to help them evaluate our operating results by facilitating an enhanced understanding of our operating performance and enabling them to make more meaningful period to period comparisons. There are limitations to the use of the non-GAAP financial measures presented here. Our non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.
We use supplemental measures of our performance which are derived from our consolidated financial information, but which are not presented in our consolidated financial statements prepared in accordance with GAAP. These non-GAAP financial measures include the following:
43
These non-GAAP financial measures are not meant to be considered as indicators of performance in isolation from or as a substitute for revenue, gross margin or net income (loss) prepared in accordance with GAAP and should be read only in conjunction with financial information presented on a GAAP basis. Reconciliations of Revenue Less Ancillary Services, Adjusted Gross Profit, Adjusted Gross Margin, Revenue Less Ancillary Services at Constant Currency, EBITDA, Adjusted EBITDA and Non-GAAP Operating Expenses to the most directly comparable GAAP financial measure are presented below. We encourage you to review these reconciliations in conjunction with the presentation of the non-GAAP financial measures for each of the periods presented. In future fiscal periods, we may exclude such items and may incur income and expenses similar to these excluded items.
Reconciliations of Non-GAAP Financial Measures
The tables below provide reconciliations of Revenue Less Ancillary Services, Adjusted Gross Profit, Adjusted Gross Margin, Revenue Less Ancillary Services at Constant Currency, EBITDA, Adjusted EBITDA and Non-GAAP Operating Expenses to the most comparable GAAP figure on a consolidated basis for the periods presented. All dollar amounts are rounded and as a result, certain amounts may not recalculate using the rounded amounts provided.
Revenue Less Ancillary Services, Adjusted Gross Profit and Adjusted Gross Margin:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
(dollars in millions) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Revenue |
|
$ |
156.8 |
|
|
$ |
123.3 |
|
|
$ |
374.6 |
|
|
$ |
302.5 |
|
Adjusted to exclude gross up for: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Pass-through cost for printing and mailing |
|
|
(4.2 |
) |
|
|
(5.2 |
) |
|
|
(11.4 |
) |
|
|
(15.4 |
) |
Marketing fees |
|
|
(1.2 |
) |
|
|
(1.3 |
) |
|
|
(1.7 |
) |
|
|
(1.8 |
) |
Revenue Less Ancillary Services |
|
$ |
151.4 |
|
|
$ |
116.8 |
|
|
$ |
361.5 |
|
|
$ |
285.3 |
|
Payment processing services costs |
|
|
54.6 |
|
|
|
42.9 |
|
|
|
136.1 |
|
|
|
110.6 |
|
Hosting and amortization costs within technology and |
|
|
1.9 |
|
|
|
2.0 |
|
|
|
5.8 |
|
|
|
6.5 |
|
Cost of Revenue |
|
$ |
56.5 |
|
|
$ |
44.9 |
|
|
$ |
141.9 |
|
|
$ |
117.1 |
|
Adjusted to: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Exclude printing and mailing costs |
|
|
(4.2 |
) |
|
|
(5.2 |
) |
|
|
(11.4 |
) |
|
|
(15.4 |
) |
Offset marketing fees against related costs |
|
|
(1.2 |
) |
|
|
(1.3 |
) |
|
|
(1.7 |
) |
|
|
(1.8 |
) |
Exclude depreciation and amortization |
|
|
(1.6 |
) |
|
|
(1.7 |
) |
|
|
(4.6 |
) |
|
|
(5.0 |
) |
Adjusted Cost of Revenue |
|
$ |
49.5 |
|
|
$ |
36.7 |
|
|
$ |
124.2 |
|
|
$ |
94.9 |
|
Gross Profit |
|
$ |
100.3 |
|
|
$ |
78.4 |
|
|
$ |
232.7 |
|
|
$ |
185.4 |
|
Gross Margin |
|
|
64.0 |
% |
|
|
63.6 |
% |
|
|
62.1 |
% |
|
|
61.3 |
% |
Adjusted Gross Profit |
|
$ |
101.9 |
|
|
$ |
80.1 |
|
|
$ |
237.3 |
|
|
$ |
190.4 |
|
Adjusted Gross Margin |
|
|
67.3 |
% |
|
|
68.6 |
% |
|
|
65.6 |
% |
|
|
66.7 |
% |
44
|
|
Three Months Ended September 30, 2024 |
|
|
Three Months Ended September 30, 2023 |
|
||||||||||||||||||
(dollars in millions) |
|
Transaction |
|
|
Platform and other revenues |
|
|
Revenue |
|
|
Transaction |
|
|
Platform and other revenues |
|
|
Revenue |
|
||||||
Revenue |
|
$ |
134.4 |
|
|
$ |
22.4 |
|
|
$ |
156.8 |
|
|
$ |
104.6 |
|
|
$ |
18.7 |
|
|
$ |
123.3 |
|
Adjusted to exclude gross |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Pass-through cost for |
|
|
— |
|
|
|
(4.2 |
) |
|
|
(4.2 |
) |
|
|
— |
|
|
|
(5.2 |
) |
|
|
(5.2 |
) |
Marketing fees |
|
|
(1.2 |
) |
|
|
— |
|
|
|
(1.2 |
) |
|
|
(1.3 |
) |
|
|
— |
|
|
|
(1.3 |
) |
Revenue Less Ancillary |
|
$ |
133.2 |
|
|
$ |
18.2 |
|
|
$ |
151.4 |
|
|
$ |
103.3 |
|
|
$ |
13.5 |
|
|
$ |
116.8 |
|
Percentage of Revenue |
|
|
85.7 |
% |
|
|
14.3 |
% |
|
|
100.0 |
% |
|
|
84.8 |
% |
|
|
15.2 |
% |
|
|
100.0 |
% |
Percentage of Revenue Less |
|
|
88.0 |
% |
|
|
12.0 |
% |
|
|
100.0 |
% |
|
|
88.4 |
% |
|
|
11.6 |
% |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Nine Months Ended September 30, 2024 |
|
|
Nine Months Ended September 30, 2023 |
|
||||||||||||||||||
(dollars in millions) |
|
Transaction |
|
|
Platform and other revenues |
|
|
Revenue |
|
|
Transaction |
|
|
Platform and other revenues |
|
|
Revenue |
|
||||||
Revenue |
|
$ |
314.9 |
|
|
$ |
59.6 |
|
|
$ |
374.6 |
|
|
$ |
247.7 |
|
|
$ |
54.8 |
|
|
$ |
302.5 |
|
Adjusted to exclude gross |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Pass-through cost for |
|
|
— |
|
|
|
(11.4 |
) |
|
|
(11.4 |
) |
|
|
— |
|
|
|
(15.4 |
) |
|
|
(15.4 |
) |
Marketing fees |
|
|
(1.7 |
) |
|
|
— |
|
|
|
(1.7 |
) |
|
|
(1.8 |
) |
|
|
— |
|
|
|
(1.8 |
) |
Revenue Less Ancillary |
|
$ |
313.2 |
|
|
$ |
48.2 |
|
|
$ |
361.5 |
|
|
$ |
245.9 |
|
|
$ |
39.4 |
|
|
$ |
285.3 |
|
Percentage of Revenue |
|
|
84.1 |
% |
|
|
15.9 |
% |
|
|
100.0 |
% |
|
|
81.9 |
% |
|
|
18.1 |
% |
|
|
100.0 |
% |
Percentage of Revenue Less |
|
|
86.7 |
% |
|
|
13.3 |
% |
|
|
100.0 |
% |
|
|
86.2 |
% |
|
|
13.8 |
% |
|
|
100.0 |
% |
Revenue Less Ancillary Services at Constant Currency:
|
|
Three Months Ended September 30, |
|
|
Growth |
|
||||||
(dollars in millions) |
|
2024 |
|
|
2023 |
|
|
Rate |
|
|||
Revenue |
|
$ |
156.8 |
|
|
$ |
123.3 |
|
|
|
27 |
% |
Ancillary services |
|
|
(5.4 |
) |
|
|
(6.5 |
) |
|
|
|
|
Revenue Less Ancillary Services |
|
|
151.4 |
|
|
|
116.8 |
|
|
|
30 |
% |
Effects of foreign currency rate fluctuations |
|
$ |
(1.9 |
) |
|
|
— |
|
|
|
|
|
Revenue Less Ancillary Services at Constant Currency |
|
$ |
149.5 |
|
|
$ |
116.8 |
|
|
|
28 |
% |
|
|
|
|
|
|
|
|
|
|
|||
|
|
Nine Months Ended September 30, |
|
|
Growth |
|
||||||
(dollars in millions) |
|
2024 |
|
|
2023 |
|
|
Rate |
|
|||
Revenue |
|
$ |
374.6 |
|
|
$ |
302.5 |
|
|
|
24 |
% |
Ancillary services |
|
|
(13.1 |
) |
|
|
(17.2 |
) |
|
|
|
|
Revenue Less Ancillary Services |
|
|
361.5 |
|
|
|
285.3 |
|
|
|
27 |
% |
Effects of foreign currency rate fluctuations |
|
$ |
(1.2 |
) |
|
|
— |
|
|
|
|
|
Revenue Less Ancillary Services at Constant Currency |
|
$ |
360.3 |
|
|
$ |
285.3 |
|
|
|
26 |
% |
45
EBITDA and Adjusted EBITDA:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(in millions) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net income (loss) |
|
$ |
38.9 |
|
|
$ |
10.6 |
|
|
$ |
18.8 |
|
|
$ |
(9.9 |
) |
Interest expense |
|
|
0.1 |
|
|
|
0.1 |
|
|
|
0.4 |
|
|
|
0.3 |
|
Interest income |
|
|
(5.0 |
) |
|
|
(3.8 |
) |
|
|
(16.6 |
) |
|
|
(7.7 |
) |
(Benefit from) provision for income taxes |
|
|
(8.3 |
) |
|
|
0.8 |
|
|
|
(2.0 |
) |
|
|
2.3 |
|
Depreciation and amortization |
|
|
4.6 |
|
|
|
4.0 |
|
|
|
13.5 |
|
|
|
12.1 |
|
EBITDA |
|
|
30.3 |
|
|
|
11.7 |
|
|
|
14.1 |
|
|
|
(2.9 |
) |
Stock-based compensation expense and related taxes |
|
|
16.4 |
|
|
|
11.6 |
|
|
|
49.0 |
|
|
|
32.3 |
|
Change in fair value of contingent consideration |
|
|
(0.1 |
) |
|
|
— |
|
|
|
(1.0 |
) |
|
|
0.4 |
|
(Gain) loss from remeasurement of foreign currency |
|
|
(5.5 |
) |
|
|
4.2 |
|
|
|
(2.1 |
) |
|
|
3.5 |
|
Indirect taxes related to intercompany activity |
|
|
0.1 |
|
|
|
0.1 |
|
|
|
0.2 |
|
|
|
0.2 |
|
Acquisition related transaction costs (1) |
|
|
0.5 |
|
|
|
— |
|
|
|
0.5 |
|
|
|
— |
|
Acquisition related employee retention costs (2) |
|
|
0.5 |
|
|
|
(0.1 |
) |
|
|
0.5 |
|
|
|
0.8 |
|
Adjusted EBITDA |
|
$ |
42.2 |
|
|
$ |
27.5 |
|
|
$ |
61.2 |
|
|
$ |
34.3 |
|
Reconciliation of GAAP Operating Expenses to Non-GAAP Operating Expenses:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(in millions) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
GAAP Technology and development |
|
$ |
16.7 |
|
|
$ |
14.6 |
|
|
$ |
49.3 |
|
|
$ |
45.1 |
|
(-) Stock-based compensation expense and related taxes |
|
|
(3.1 |
) |
|
|
(2.4 |
) |
|
|
(8.6 |
) |
|
|
(6.7 |
) |
(-) Depreciation and amortization |
|
|
(1.7 |
) |
|
|
(2.1 |
) |
|
|
(5.3 |
) |
|
|
(6.1 |
) |
(-) Acquisition related employee retention costs |
|
|
— |
|
|
|
(0.1 |
) |
|
|
— |
|
|
|
(0.8 |
) |
Non-GAAP Technology and development |
|
$ |
11.9 |
|
|
$ |
10.0 |
|
|
$ |
35.4 |
|
|
$ |
31.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
GAAP Selling and marketing |
|
$ |
34.2 |
|
|
$ |
27.1 |
|
|
$ |
96.1 |
|
|
$ |
78.8 |
|
(-) Stock-based compensation expense and related taxes |
|
|
(4.6 |
) |
|
|
(3.1 |
) |
|
|
(13.6 |
) |
|
|
(9.2 |
) |
(-) Depreciation and amortization |
|
|
(2.1 |
) |
|
|
(1.3 |
) |
|
|
(6.0 |
) |
|
|
(3.9 |
) |
(-) Acquisition related employee retention costs |
|
|
(0.5 |
) |
|
|
— |
|
|
|
(0.5 |
) |
|
|
(0.2 |
) |
Non-GAAP Selling and marketing |
|
$ |
27.0 |
|
|
$ |
22.7 |
|
|
$ |
76.0 |
|
|
$ |
65.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
GAAP General and administrative |
|
$ |
31.1 |
|
|
$ |
26.9 |
|
|
$ |
94.6 |
|
|
$ |
79.6 |
|
(-) Stock-based compensation expense and related taxes |
|
|
(8.7 |
) |
|
|
(6.1 |
) |
|
|
(26.8 |
) |
|
|
(16.4 |
) |
(-) Depreciation and amortization |
|
|
(0.7 |
) |
|
|
(0.6 |
) |
|
|
(2.2 |
) |
|
|
(2.1 |
) |
(-) Acquisition related transaction costs |
|
|
(0.5 |
) |
|
|
— |
|
|
|
(0.5 |
) |
|
|
— |
|
(-) Change in fair value of contingent consideration |
|
|
0.1 |
|
|
|
— |
|
|
|
1.0 |
|
|
|
(0.4 |
) |
Non-GAAP General and administrative |
|
$ |
21.3 |
|
|
$ |
20.2 |
|
|
$ |
66.1 |
|
|
$ |
60.7 |
|
Liquidity and Capital Resources
As of September 30, 2024, our principal source of liquidity is cash and cash equivalents of $565.0 million, short-term available-for-sale debt securities of $116.1 million and the available undrawn balance under our 2024 Revolving Credit Facility of $125.0 million. Cash equivalents is comprised primarily of money market funds and bank deposits. Our short-term available-for-sale debt securities are comprised of corporate bonds, U.S. Government obligations and asset backed securities.
On August 6, 2024, the Company announced a share repurchase program of up to $150 million of outstanding voting and non-voting common stock for an indefinite period as part of the Company’s Repurchase Program. For additional information on our Repurchase Program, see Note 11 - Stockholders’ Equity in our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. During the three and nine months ended September 30, 2024, the Company repurchased 1,291,252 shares of its common stock for an aggregate amount,
46
including commissions and accrued excise tax, of $23.1 million under the Repurchase Program. The repurchased shares are currently being held as treasury stock. As of September 30, 2024, approximately $127.1 million of the originally authorized amount under the Repurchase Program remained available for future repurchases.
On February 23, 2024, we entered into our 2024 Revolving Credit Facility for a total commitment of $125.0 million, which replaced the Revolving Credit Facility of $50.0 that was in effect as of December 31, 2023.
On August 14, 2023 and September 12, 2023, we completed our follow-on public offering which resulted in aggregate net proceeds of $260.1 million, after underwriting discounts and commissions of $10.9 million and other issuance costs of $1.1 million.
We believe that our existing cash will be sufficient to support our expected working capital needs and material cash requirements for at least the next 12 months from the issuance of these condensed consolidated financial statements. Our future capital requirements will depend on many factors, including our revenue growth rate, the timing and the amount of cash received from clients, the expansion of sales and marketing activities, the timing and extent of spending to support development efforts, the price at which we are able to purchase public cloud capacity, expenses associated with our international expansion, the introduction of platform enhancements, and the continuing market adoption of our platform. In the future, we may enter into arrangements to acquire or invest in complementary businesses, products, and technologies. In addition, we have, and may in the future, repurchase shares of our voting and non-voting common stock from time to time under our Repurchase Program. We may be required to seek additional equity or debt financing. In the event that we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, results of operations, and financial condition.
Cash Flows
The following table sets forth a summary of our cash flow information for the periods presented:
|
|
Nine Months Ended September 30, |
|
|||||
(in millions) |
|
2024 |
|
|
2023 |
|
||
Net cash provided by operating activities |
|
$ |
132.9 |
|
|
$ |
20.9 |
|
Net cash used in investing activities |
|
|
(205.6 |
) |
|
|
(5.1 |
) |
Net cash (used in) provided by financing activities |
|
|
(16.6 |
) |
|
|
270.7 |
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
(0.3 |
) |
|
|
0.6 |
|
Net (decrease) increase in cash, cash equivalents |
|
$ |
(89.6 |
) |
|
$ |
287.0 |
|
Operating Activities
Net cash provided by operating activities consists of net income (loss) adjusted for certain non-cash items and changes in other assets and liabilities.
During the nine months ended September 30, 2024, net cash provided by operating activities of $132.9 million was primarily the result of net income of $18.8 million, adjusted for non-cash expenses of $53.4 million, which primarily included stock-based compensation expenses of $48.4 million and depreciation and amortization of $12.7 million, offset by $60.8 million related to changes in our operating assets and liabilities, net of acquisitions.
During the nine months ended September 30, 2023, net cash provided by operating activities of $20.9 million was primarily the result of net loss of $9.9 million, adjusted for non-cash expenses of $43.7 million, which primarily included stock-based compensation expenses of $31.3 million, depreciation and amortization of $11.8 million and provision for uncollectible accounts of $0.5 million, offset by a deferred tax benefit of $0.9 million and $13.0 million related to changes in our operating assets and liabilities, net of acquisitions.
Net cash provided by operating activities was $132.9 million during the nine months ended September 30, 2024, compared to $20.9 million during the nine months ended September 30, 2023. The increase of $112.1 million in our net cash provided by operating activities was primarily related to a net increase in our operating assets and liabilities, net of acquisitions of $60.8 million during the nine months ended September 30, 2024, compared to a net decrease of $13.0 million during the nine months ended September 30, 2023. This increase was driven by an increase in funds payable to clients of $79.2 million compared to the prior year period primarily as a result of the timing of payments to our clients in the applicable period. The timing of payments to our clients will vary from period to period based on when our client’s customer payment for a particular transaction is made and when we are contractually required to remit such payment to
47
our client. This net increase in cash provided by operating activities was also impacted by our operating cash flows from our net income (after adjustments for an increase in non-cash expenses of $9.7 million) which increased by $38.3 million for the nine months ended September 30, 2024, compared to the prior period, reflective of the growth in transaction payment volumes, from both our existing clients and new clients and an increase in interest income as a result of our higher cash balances, offset by increases in our costs and operating expenses, the largest of which was our payment processing services costs.
Investing Activities
During the nine months ended September 30, 2024, cash used in investing activities of $205.6 million was the result of purchase of short-term and long-term investments for $160.6 million, our acquisition of Invoiced for cash purchase consideration of $45.4 million, net of cash acquired, capitalization of internally developed software costs of $4.6 million, and purchase of property and equipment of $0.8 million, offset by the proceeds from the maturity and sale of short and long-term investments of $5.9 million.
During the nine months ended September 30, 2023, cash used in investing activities of $5.1 million was the result of capitalization of internally developed software costs of $4.1 million and purchase of property and equipment of $0.9 million.
Financing Activities
During the nine months ended September 30, 2024, cash used in financing activities of $16.6 million was the result of common stock repurchase of $22.9 million and payments of debt issuance costs of $0.8 million, offset by proceeds from exercise of stock options of approximately $4.0 million and proceeds from issuance of stock under the ESPP of $3.1 million.
During the nine months ended September 30, 2023, cash provided by financing activities of $270.7 million was the result of proceeds from issuance of common stock under public offering of $261.1 million, proceeds from exercise of stock options of $8.5 million and proceeds from issuance of stock under the ESPP of $2.7 million, offset by payments for contingent consideration of $1.2 million related to our acquisition of Cohort Solutions Pty Ltd. in 2022 and payments of costs related to public offering of $0.4 million.
As of September 30, 2024 and 2023, there was no outstanding indebtedness under the 2024 Revolving Credit Facility and the 2021 Revolving Credit Facility.
Critical Accounting Policies
Our condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q are prepared in accordance with GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported revenue generated, and reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
There have been no material changes to our critical accounting policies as compared to the critical accounting policies and estimates described in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K for the year ended December 31, 2023.
Recent Accounting Pronouncements
We have reviewed all recently issued standards and have determined that, other than as disclosed in Note 1 - Business Overview and Summary of Significant Accounting Policies to our unaudited condensed consolidated financial
48
statements appearing elsewhere in this Quarterly Report on Form 10-Q, such standards are not expected to have a material impact on our consolidated financial statements or do not otherwise apply to our operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We have operations both within the United States and globally, and we are exposed to market risks in the ordinary course of our business, including foreign currency fluctuations and the effects of interest rate changes. Information relating to quantitative and qualitative disclosures about these market risks is described below.
Interest Rate Risk
We are exposed to interest rate risk relating to our cash and cash equivalents and available-for-sale debt securities. We hold cash in both non-interest and interest-bearing bank accounts. Our corporate investment portfolio consists primarily of money market funds, which are AAA-rated and comprised of liquid, high quality debt securities issued by the U.S. government, and investments in available-for-sale corporate bonds, U.S. government obligations and asset-backed debt securities. An immediate 10% increase or decrease in interest rates would not have a material effect on our financial position, resulting of operations or cash flows.
We are also exposed to interest rate risk related to our 2024 Revolving Credit Facility. Our 2024 Revolving Credit Facility consists of ABR borrowings or Term SOFR borrowings, at our option.
ABR borrowings bear interest at the ABR plus the applicable rate. Term SOFR borrowings bear interest at the Adjusted Term SOFR for the interest period plus the applicable rate. The ABR rate is based on the greatest of (a) the Prime Rate, (b) the Federal Funds Effective Rate plus 1/2 of 1%, or (c) the Adjusted Term SOFR for a one-month interest period, plus 1%. The Adjusted Term SOFR is equal to the sum of (a) Term SOFR for such interest period, plus (b) the SOFR adjustment of 0.10%. The applicable rate is based upon our consolidated total net leverage ratio as of the most recent consolidated financial information and ranges from 1.0% to 2.5%. The 2024 Revolving Credit Facility incurs a commitment fee ranging from 0.25% to 0.35% based upon our consolidated total net leverage ratio as of the most recent consolidated financial information assessed on the average available commitment.
As of September 30, 2024 and December 31, 2023, there was no outstanding indebtedness under the 2024 Revolving Credit Facility and 2021 Revolving Credit Facility. An immediate 10% increase or decrease in interest rates would not have a material effect on our financial position, results of operations or cash flows.
Information provided by the sensitivity analysis is not a prediction of future events and does not necessarily represent the actual changes that would occur.
Foreign Currency Exchange Risk
For our cross-border payments, we have short term foreign currency exchange exposure, typically between one and four days. Our cross-border payment service allows our client’s customers to use their local currency to pay our clients. When a client’s customer books a cross-border payment in the customer’s local currency, we provide an amount to be paid to the client in that local currency based on the foreign exchange rate then in effect. The client’s customer then has a certain amount of time to complete payment—typically one to four days—that may differ depending on the payment method selected. When our client’s customer makes the payment and we process these funds to our clients through our global payment network, the actual exchange rate may differ from the exchange rate that was initially used to calculate the amount payable by the client’s customer due to foreign exchange rate fluctuations. The amount our client’s customers pay in their local currency is not adjusted for changes in foreign exchange rates between booking the transaction and the date the funds are paid and converted. If the value of the currency used by the client’s customer weakens relative to the currency in which funds are remitted to our clients, we may be required to cover the shortfall in remitted funds. This could have an unfavorable effect on our cash flows and operating results. We have been leveraging our in-house currency hedging algorithms since 2014, including entering into non-deliverable forward foreign currency contracts, to mitigate the volatility related to fluctuations in the foreign exchange rates.
Our cash flows and operating results may also be impacted by fluctuations in foreign currency exchange rates between the U.S. Dollar and various currencies, in particular the British Pound. The value of our revenue and profits in local currencies may be worth more or less in U.S. Dollars due to a strengthening or weakening, respectively, of those currencies against the U.S. Dollar. For example, as the U.S. Dollar weakened against several currencies, including the British Pound, relative to the same quarter in the prior year, these foreign exchange impacts increased our reported
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revenue in U.S. Dollars by approximately $1.9 million compared to the quarter ended September 30, 2023 on a constant currency basis.
Fluctuations in foreign currency exchange rates may also impact the value of assets and liabilities denominated in currencies other than the functional currencies of our entities. Our reporting currency and the functional currency of our subsidiaries, with the exception of our U.K. and Australian subsidiaries, is the U.S. Dollar. The functional currency for our U.K. and Australian subsidiaries is the local currency, or British Pound and Australian Dollar, respectively. Financial statements of our foreign subsidiaries are translated from local currency into U.S. Dollars using exchange rates at the balance sheet date for assets and liabilities, and average exchange rates in effect during the period for revenue and expenses. Resulting translation adjustments are included as a component of accumulated other comprehensive income in our condensed consolidated balance sheets. Gains and losses from the remeasurement of foreign currencies into functional currencies are recognized in the condensed consolidated statements of operations and comprehensive income (loss). A potential change in foreign exchange rates of 10% from such remeasurement would have impacted income (loss) before income taxes by approximately $28.0 million and $19.9 million at September 30, 2024 and December 31, 2023, respectively.
Inflation Risk
Inflation did not have a material effect on our cash flows and results of operations during the three or nine months ended September 30, 2024. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through increase in prices of our product offerings.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation and supervision of our Chief Executive Officer and Chief Financial Officer (our Principal Executive Officer and Principal Financial and Accounting Officer, respectively), have evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2024. The term “disclosure controls and procedures,” as defined in Rules 13a 15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2024, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a- 15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the
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likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may be subject to legal proceedings and claims in the ordinary course of business, including patent, commercial, product liability, employment, class action, whistleblower, and other litigation and claims, as well as governmental and other regulatory investigations and proceedings. In addition, third parties may from time to time assert claims against us in the form of letters and other communications. We are not currently a party to any legal proceedings that we believe to be material, individually or in the aggregate, to our business or condensed consolidated financial statements. The results of any future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.
In the course of enhancing our sanctions compliance function, we initiated an internal review that identified issues related to our compliance with sanctions, including payments that may have originated from sanctioned jurisdictions or sanctioned persons. Although Flywire continues to evaluate whether these or other transactions constitute potential violations of OFAC sanctions (including whether certain of these payments may have been authorized by general licenses or license exemptions under the relevant sanctions regulations), Flywire has made voluntary submissions to OFAC to report apparent violations and provide supplemental information. Flywire is currently engaging with OFAC to resolve these matters. Based upon the results of the internal investigation completed to date, we do not believe that the amount of any loss incurred as a result of this matter would be material to our business, financial condition, results of operations or cash flows.
Item 1A. Risk Factors
Investing in our common stock involves a high degree of risk. Before deciding whether to invest in shares of our common stock, you should consider carefully the risks and uncertainties described below, together with all of the other information in this Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our condensed consolidated financial statements and the accompanying notes included elsewhere in this Quarterly Report on Form 10-Q. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of or that we deem immaterial may also become important factors that adversely affect our business. If any of the following risks actually occur, our business, financial condition, liquidity, operating results, and prospects could be materially and adversely affected. In that event, the market price of our common stock could decline, and you could lose part or all of your investment. See “Special Note Regarding Forward-Looking Statements.”
Risk Factors Summary
The summary of risks below is intended to provide an overview of the risks we face and should not be considered a substitute for the more fulsome risk factors discussed immediately following this summary.
Risks Related to Our Business and Industry
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Risks Related to Our Operations
Risks Related to Our Legal, Regulatory and Compliance Landscape
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Risks Related to Being a Public Company
Risks Related to Ownership of Our Common Stock
Risks Related to Our Business and Industry
We have a history of operating losses and may not achieve or sustain profitability in the future.
We were incorporated in 2009 and although we have generated net income in prior periods, we incurred a net loss in the year ended December 31, 2023, have incurred net losses in the past, and may continue to incur net losses in the future. We generated net losses of $8.6 million and $39.3 million for the years ended December 31, 2023 and 2022, respectively, and net income of $18.8 million during the nine months ended September 30, 2024. In addition, as of September 30, 2024, we had an accumulated deficit of $155.0 million. We have experienced significant revenue growth in recent periods and we are not certain whether or when we will obtain a high enough volume of revenue to sustain or increase our growth or achieve or maintain profitability in the future. We also expect our costs and expenses to increase in future periods, which could negatively affect our future operating results if our revenue does not increase. In particular, we intend to continue to invest in headcount, to expend significant funds to further develop our solutions, including introducing new functionality, and to expand our marketing programs and sales teams to drive new client adoption, expand strategic partner integrations, and support international and product expansion. Our operating results are also impacted by the mix of our revenue generated from our different revenue sources, which include transaction revenue and platform and other fee revenue. Changes in our revenue mix from quarter to quarter, including those derived from cross-border or domestic currency transactions, will impact our margins, and we may not be able to grow our gross margin adequately to achieve or sustain profitability. In addition, the mix of payment methods utilized by our clients’ customers may have an impact on our margins given that our costs associated with certain payment methods, such as credit cards, are higher than other payment methods accepted by our solutions, such as bank transfers. Due to the cross-border nature of much of our business, fluctuations in foreign currency exchange rates, slowdowns in international mobility and other regional considerations may affect our operating results. We will also face increased compliance and security costs associated with growth, the expansion of our client base, and being a public company. Our efforts to grow our business may be costlier than we expect, and we may not be able to increase our revenue enough to offset our increased operating expenses. We may incur significant losses in the future for several reasons, including the other risks described herein, and unforeseen expenses, difficulties, complications, delays, and other unknown events. If we are unable to achieve and sustain profitability, the value of our business and common stock may significantly decrease.
If the assumptions we use to plan our business are incorrect or change in reaction to changes in our markets, or if we are unable to maintain consistent revenue or revenue growth, it may be difficult to achieve and maintain profitability. Our financial results from any prior quarterly or annual periods should not be relied upon as an indication of our future revenue or growth in revenue, gross profit or volume of payments processed.
In addition, we expect to continue to expend substantial management time, financial and other resources on:
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These investments may not result in increased revenue growth in our business. If we are unable to increase our revenue at a rate sufficient to offset the expected increase in our costs, our business, financial position and operating results will be harmed, and we may not be able to achieve or maintain profitability over the long term.
We have a short operating history at our current scale in a rapidly and significantly evolving industry and, as a result, our past results may not be indicative of future operating performance.
We have a short history operating at our current scale in a rapidly and significantly evolving industry that may not develop in a manner favorable to our business. This relatively short operating history makes it difficult to assess our future performance with certainty. You should consider our business and prospects in light of the risks and difficulties we may encounter.
Our future success will depend in large part upon our ability to, among other things:
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If we fail to address the risks and difficulties that we face, including those associated with the challenges listed above as well as those described elsewhere in this section titled “Risk Factors”, our business and operating results will be adversely affected.
If we are unable to retain our current clients, attract new clients and increase the number of our clients’ customers that use our solutions or sell additional functionality to our clients, our revenue growth and operating results will be adversely affected.
To increase our revenue, in addition to acquiring new clients, we must continue to retain existing clients, increase the volume of payments made by our clients’ customers and sell additional functionality to our clients. We expect to derive a significant portion of our revenue from the renewal of existing clients’ contracts and sales of additional features and solutions to existing clients. As the market for our solutions matures, solutions evolve, and competitors introduce lower cost or differentiated products or services that are perceived to compete with our solutions, our ability to attract (and our clients’ ability to attract) new customers and maintain our current client base and clients’ customer usage could be hindered. As a result, we may be unable to retain existing clients or increase the usage of our solutions by them or their customers, which would have an adverse effect on our business, revenue, gross profit, gross margins, and other operating results, and accordingly, on the trading price of our common stock.
As the market for our solutions matures, or as new or existing competitors introduce new products or services that compete with our solutions, we may experience pricing pressure. This competition and pricing pressure could have an adverse effect on our ability to retain existing clients or attract new clients at prices that are consistent with our pricing model, operating budget and expected operating margins. In particular, it has become more common in the education sector for competitors to offer generous revenue sharing arrangements for clients we target. Our business could be adversely affected if clients or their customers perceive that features incorporated into alternative products reduce the need for our solutions or if they prefer to use competitive services. If we are unable to attract new clients and increase the number of our clients’ customers that use our solutions, our revenue growth and operating results will be adversely affected. Further, in an effort to attract new clients and increase usage by their customers, we may need to offer simpler, lower-priced payment options, which may reduce our revenue.
Our ability to sell additional functionality to our existing clients may require more sophisticated and costly sales efforts, especially for our larger clients with more senior management and established accounts receivable solutions. Similarly, the rate at which our clients deploy additional solutions from us depends on several factors, including general economic conditions, the availability of client technical personnel to implement our solutions, and the pricing of additional functionality. If our efforts to sell additional functionality to our clients are not successful, our business and growth prospects would suffer.
Contracts with our clients generally have a stated initial term of three years, are not subject to termination for convenience and automatically renew for one-year subsequent terms. Our clients may negotiate terms less advantageous to us upon renewal, which may reduce our revenue. If our clients fail to renew their contracts, renew their contracts upon terms less favorable to us or at lower fee levels or fail to purchase new solutions from us, our revenue may decline or our future revenue growth may be constrained. In addition, certain of our clients are subject to requirements to issue requests for proposals (RFPs) to open up competition for their ongoing business notwithstanding their satisfaction with our solutions. In order to retain their business, we may be required to accept terms or pricing conditions less favorable to us than would be the case with automatic renewal of an existing contract. Should any of our clients terminate their
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relationship with us after implementation has begun, we would not only lose our time, effort and resources invested in such implementation, but we would also have lost the opportunity to leverage those resources to build a relationship with other clients over that same period of time.
We may experience quarterly fluctuations in our operating results, as well as our key metrics, due to a number of factors which make our future results difficult to predict and could cause our operating results to fall below expectations or our guidance.
Our operating results, and key metrics, may fluctuate due to a variety of factors, many of which are outside of our control. As a result, comparing our operating results on a period-to-period basis may not be meaningful. Our past results should not be relied on as an indication of our future performance. If our operating results or key metrics fall below the expectations of investors or securities analysts or below any guidance we may provide to the market, the price of our common stock could decline substantially.
Our operating results have varied in the past and are expected to continue to do so in the future. In addition to other risk factors listed in this section titled “Risk Factors”, factors that may affect our quarterly operating results, business and financial condition include the following:
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In addition, we may in the future experience fluctuations in our gross and operating margins due to changes in the mix of our domestic and international payments and the mix of payment methods, including an increase in the use of credit cards, and currencies used by our clients’ customers to make payments.
Based upon the factors described above and those described elsewhere in this section titled “Risk Factors”, we have a limited ability to forecast the amount and mix of future revenues and expenses, which may cause our operating results to fall below our estimates or the expectations of public market analysts and investors.
We expect our revenue mix to vary over time, which could affect our gross profit, gross margin and results of operations.
We expect our revenue mix to vary over time due to a number of factors. Shifts in our business mix from quarter to quarter could produce substantial variation in revenue recognized. Further, our gross profit, gross margins and results of operations could be affected by changes in revenue mix and costs, together with numerous other factors, including payment methods and currencies, pricing pressure from competitors, increases in credit card usage on our solutions and associated network fees, changes in payment volume across verticals and the portion of such payment volume for which we perform foreign exchange. Any one of these factors or the cumulative effects of certain of these factors may result in significant fluctuations in our gross profit, gross margin and results of operations. This variability and unpredictability could result in our failure to meet internal expectations or those of securities analysts or investors for a particular period. If we fail to meet or exceed such expectations for these or any other reasons, the market price of our common stock could decline.
If our efforts to attract new clients and increase the number of our clients’ customers that use our solutions are unsuccessful, our revenue growth and operating results will be adversely affected.
Our future growth and profitability will depend in large part upon the effectiveness and efficiency of our efforts to attract new clients and increase the number of our clients’ customers that use our solutions. While we intend to dedicate resources to attracting new clients and increasing the number of our clients’ customers that use our solutions, our ability to do so depends in large part on the success of these efforts and the success of the marketing channels we use to promote our solutions. Our marketing channels include search engine optimization, search engine marketing, account-based direct marketing campaigns, industry events and association marketing relationships. If any of our current marketing channels become less effective, if we are unable to continue to use any of these channels, if the cost of using these channels were to significantly increase or if we are not successful in generating new channels, we may not be able to attract new clients in a cost-effective manner or increase the number of our clients’ customers that use our solutions. If we are unable to recover our marketing costs through increases in the number of clients and in the number of our clients’ customers that use our solutions, or if we discontinue our marketing efforts, it could have a material adverse effect on our business, prospects, results of operations, and financial condition.
If we are unable to expand our direct and channel sales capabilities, grow our marketing reach and increase sales productivity, we may not be able to generate increased revenues.
We believe that our future growth will depend on the continued development of our direct sales force and its ability to obtain new clients and to manage our existing client base. Our ability to increase our client base and achieve broader market acceptance of our solutions will depend to a significant extent on our ability to expand our sales and marketing organizations, and to deploy our sales and marketing resources efficiently. We intend to continue to increase our number of direct sales professionals and to expand our relationships with new strategic channel partners. These efforts will require us to invest significant financial and other resources. New hires require training and take time to achieve full productivity. Similarly, new channel partnerships often take time to develop and may never yield results, as they require new partners to understand the services and solutions we offer, and how to position our value within the market. We cannot be certain that recent and future new hires or partner relationships will become as productive as necessary or that we will be able to hire enough qualified individuals or build effective channel sales in the future. If we are unable to hire, develop, integrate, and retain talented and effective sales personnel, if our new and existing sales personnel are unable to achieve desired
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productivity levels, or if our sales, channel strategy and marketing programs and advertising are not effective, we may not be able to expand our business and grow our revenue, which may harm our business, operating results and financial condition.
Our business could be adversely affected if our clients or their customers are not satisfied with the timing or quality of implementation services provided by us or our partners.
Our business depends on our ability to satisfy our clients and their customers with respect to our solutions as well as the services that are performed to help our clients and their customers use the features and functions of our solutions. Services are usually performed by us, and are also on occasion provided together with a third-party partner. If our clients or their customers are not satisfied with the functionality of our solutions or the services that we or a third-party partner provide, such dissatisfaction could damage our ability to retain our current clients or expand our clients’ or their customers’ use of our solutions. In addition, any negative publicity and reviews that we may receive which is related to our client relationships may further damage our business and may invite enhanced regulatory scrutiny at the federal and state level in the United States as well as internationally.
Our financial and operating results are subject to seasonality and cyclicality.
Our financial and operating results are subject to seasonal trends. For example, the volume of education tuition processed typically increases in the northern hemisphere during the summer and early fall months, as well as at year end, as students and their families seek to pay tuition costs for the fall semester, the spring semester, or the entire academic year, respectively. We expect this seasonality of education tuition processing to continue and expect it to impact the amount of processing fees that we earn and the level of expenses we incur to generate tuition payment volume and process the higher volume activity in a particular fiscal quarter.
We are exposed to fluctuations in foreign currency exchange rates that could materially and adversely affect our results of operations.
A majority of the total payment volume we have historically processed is cross-border payments denominated in many foreign currencies, which subjects us to foreign currency risk. The strengthening or weakening of the U.S. dollar versus these foreign currencies impacts the translation of our net revenues generated in these foreign currencies into the U.S. dollar. For example, as the U.S. Dollar weakened against several currencies, including the British Pound, relative to the same quarter in the prior year, these foreign exchange impacts increased our reported revenue in U.S. Dollars by approximately $1.9 million compared to the quarter ended September 30, 2023 on a constant currency basis. In connection with providing our solutions in multiple currencies, we may face financial exposure if we are unable to implement appropriate hedging strategies, negotiate beneficial foreign exchange rates, or as a result of fluctuations in foreign exchange rates between the times that we set them. We also have foreign exchange risk on our assets and liabilities denominated in currencies other than the functional currency of our subsidiaries. We also incur expenses for employee compensation and other operating expenses at our non-U.S. locations in the local currency. Fluctuations in the exchange rates between the U.S. dollar and other currencies could result in the dollar equivalent of our expenses being higher which may not be offset by additional revenue earned in the local currency. This could have a negative impact on our reported results of operations.
Periods of instability in the Eurozone, including fears of sovereign debt defaults, and stagnant growth generally, and of certain Eurozone member states in particular, have resulted in concerns regarding the suitability of a shared currency for the region, which could lead to the reintroduction of individual currencies for member states. If this were to occur, Euro-denominated assets and liabilities would be re-denominated to such individual currencies, which could result in a mismatch in the values of assets and liabilities and expose us to additional currency risks.
As our international operations continue to operate and grow, our risks associated with fluctuation in currency rates will become greater, and we will continue to reassess our approach to managing this risk, such as using foreign currency forward and option contracts to hedge certain exposures to fluctuations in foreign currency exchange rates. Our use of such hedging practices may not offset any, or more than a portion, of the adverse effects of unfavorable movements in foreign exchange rates. In addition, currency fluctuations or a weakening U.S. dollar can increase the costs of our international operations, and the strengthening U.S. dollar could slow international demand as solutions priced in the U.S. dollar become more expensive.
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Certain of our key performance indicators are subject to inherent challenges in measurement, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business.
We track certain key performance indicators, including metrics such as total payment volume, revenue less ancillary services, adjusted gross profit, adjusted gross margin and adjusted EBITDA, with internal systems and tools and which may differ from estimates or similar metrics published by third parties due to differences in sources, methodologies, or the assumptions on which we rely. Our internal systems and tools have a number of limitations, and our methodologies for tracking these metrics may change over time, which could result in unexpected changes to our key performance indicators, including the metrics we publicly disclose, or our estimates. If the internal systems and tools we use to track these metrics undercount or overcount performance or contain algorithmic or other technical errors, the data we report may not be accurate. While these numbers are based on what we believe to be reasonable estimates for the applicable period of measurement, there are inherent challenges in measuring these metrics across our growing client base. If our key performance indicators are not accurate representations of our business, or if investors, clients or other stakeholders do not perceive our operating metrics to be accurate, or if we discover material inaccuracies with respect to these figures, our reputation may be significantly harmed, and our operating and financial results could be adversely affected.
Our business depends, in large part, on our proprietary network of global, regional and local banking partners.
To grow our business, we will need to maintain and expand our network of global, regional and local banking partners. Our proprietary network of strategic relationships with global, regional and local banking partners is a material asset to our business, which took more than a decade to build. Establishing and maintaining our strategic partner relationships, particularly with our banking partners entails extensive and highly specific efforts, with little predictability and various ancillary requirements. These partners and suppliers have contractual and regulatory requirements and conditions that we must satisfy and continue to comply with in order to continue and grow the relationships. For example, our financial institution partners generally require us to submit to an exhaustive security audit including adherence to AML policies and know-your customer (KYC) procedures. If we are not able to comply with those obligations or if our agreements with our banking partners or our network partners are terminated for any reason, we could experience service interruptions as well as delays and additional expenses in arranging new services, potentially interfering with our existing client relationships or making us less attractive to potential new clients.
In addition, our existing banking partners may at any time and from time to time cease serving certain categories of payments due to perceived risk or similar reasons as well as payments originating from, or being paid to, certain high risk jurisdictions. These partners may also impose additional requirements on Flywire, or with respect to their own internal procedures, as a condition of processing such payments in partnership with us. If we cease to be able to process payments from corridors or within certain of our verticals, or we are unable to comply with new requirements or only at considerable expense, our client relationships and ability to grow our revenue could be adversely affected.
Instability and volatility in the banking and financial services sectors, including bank failures, have increased and may in the future increase uncertainty in the global economy and the risk of a global recession. Volatility in the banking and financial services sectors may adversely impact our bank partnerships and could negatively impact our business. We may face difficulty establishing or maintaining banking relationships due to instability in the global banking system and increasing regulatory uncertainty and scrutiny. If these financial institutions are subject to suspension of operations, receivership, closure or similar action, or if our banking relationships become severely limited or unavailable in a certain country, there could be temporary delays in or unavailability of services in such country that are critical to our or our clients' operations. This could potentially lead to reduced use of our platform and lower payment volume which may adversely impact our business, operating results, and financial condition.
We may not be able to attract new network partners to our existing network of global, regional and local banking partners, which could adversely affect our ability to expand to additional countries and territories and transact in additional currencies. In addition, our potential partners may choose to work with our competitors’ or choose to compete with our solutions directly, which could have an adverse effect on our business, financial position, and operating results. Further, many of our network partners have greater resources than we do and could choose to develop their own solutions to replace or compete with ours. If we are unsuccessful in establishing, growing, or maintaining our relationships with network partners, our ability to compete or to grow our revenue could be impaired, and our results of operations may suffer.
Our growth depends in part on the success of our relationships with other (non-banking) third parties.
We have established relationships with a number of other companies, including financial institutions, processors, other financial services suppliers, channel sales partners, providers of electronic health records (EHR) services,
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implementation partners, technology and cloud-based hosting providers, and others. In order to grow our business, we will need to continue to establish and maintain relationships with these types of third parties, and negotiating and documenting relationships with them requires significant time and resources. Our competitors may be more effective in providing incentives to third parties to favor their products or services. If we are unsuccessful in establishing or maintaining our relationships with third parties, our ability to compete in the marketplace or to grow our revenues could be impaired and our operating results could suffer. Even if our strategic relationships are successful, we cannot assure you that these relationships will result in increased client usage of our solutions or increased revenues.
The markets in which we participate are competitive, and if we do not compete effectively, our operating results could be harmed.
The market for payments solutions is fragmented, competitive, and constantly evolving. Our competitors range from legacy payment methods, such as traditional bank wires, to integrated payment providers that focus on cross-border payments. With the introduction of new technologies and market entrants, we expect that the competitive environment will remain intense going forward. Our competitors that offer legacy payment methods or integrated cross-border payment platforms may develop products that compete with ours. Financial institutions that choose to enter into and compete in our market may have the operating flexibility to bundle competing solutions with other offerings, including offering them at a lower price or for no additional cost to clients as part of a larger sale. In addition, new entrants not currently considered to be competitors may enter the market through acquisitions, partnerships, or strategic relationships. Many of our domestic and foreign competitors have greater resources, experience or more developed customer relationships than we do. For example, foreign competitors may seek to leverage local or common language relationships to cater to potential customers of our clients. There are new market entrants with innovative revenue sharing and other pricing arrangements that are able to attract customers that we compete to serve. Our competitors vary in size, breadth, and scope of the solutions offered. Some of our competitors and potential competitors have greater name recognition, longer operating histories, more established client relationships, larger marketing budgets, and greater resources than us. Our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards, and client requirements. For example, an existing competitor or new entrant could introduce new technology that reduces demand for our solutions.
For these reasons, we may not be able to compete successfully against our current or future competitors, and this competition could result in the failure of our solutions to continue to achieve or maintain market acceptance, any of which would harm our business, operating results, and financial condition.
Our estimates of market opportunity and our ability to capture a meaningful share of this payment volume may prove to be inaccurate, and even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all.
Our market opportunity estimates, including those we have generated ourselves and our ability to capture a meaningful share of this payment volume, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The variables that go into the calculation of our market opportunity are subject to change over time, and there is no guarantee that any payment volumes covered by our market opportunity estimates will materialize in clients using our solutions as anticipated or generate any particular level of revenue for us. Any expansion in our market depends on a number of factors, including the cost, performance, and perceived value associated with our business and those of our competitors. Even if the market in which we compete meets the size estimates and growth forecasted, our business could fail to grow at similar rates, if at all. Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties.
Our clients in the education sector may be adversely affected by decreases in enrollment, pressure on tuition costs, or increased operating expenses, which may reduce demand for our solutions.
We are reliant on our education clients, including colleges, universities and other education-related organizations that include language schools, boarding schools, summer programs, and others, to drive enrollment at their schools and maintain tuition costs. Factors outside of our control will affect enrollments and tuition costs, including the following:
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International cross-border transaction revenue represents a significant part of our revenue; international regulations and restrictions that inhibit cross-border travel and relocation of international students, as well as ongoing political friction between China and the U.S. that have slowed the growth of Chinese students studying in the U.S. and may have resulted in changes in Chinese student education destinations, have had and may continue to have an impact on our revenue growth. More recently, the Canadian government announced it will set a cap on international student permit applications for the years 2024 and 2025, motivated in part by housing shortages. Australia has also recently delayed the processing of international student visas. Other governments where our client institutions are located may be considering similar limitations on the issuance of international student visas. This has and could continue to adversely impact our business, operating results, and financial condition.
In addition, some clients’ customers may find that higher education is an unnecessary investment during uncertain economic times and defer enrollment in educational institutions until the economy grows at a stronger pace, or they may turn to less costly forms of secondary education, thus decreasing our education payment volumes. A significant decrease in the payment volume and resulting revenue from clients and their customers in this market would have an adverse effect on our business, operating results and financial condition.
The healthcare industry is rapidly evolving and the market for technology-enabled payment services that empower healthcare clients and their customers is relatively immature and unproven. If we are not successful in promoting the benefits of our solutions, our growth may be limited.
The market for our payment solutions is subject to rapid and significant changes. The market for technology-enabled payment services that empower healthcare clients and their customers is characterized by rapid technological change, new product and service introductions, increasing patient financial responsibility, consumerism and engagement, the ongoing shift to value-based care and reimbursement models, and the entrance of non-traditional competitors. In addition, there may be a limited-time opportunity to achieve and maintain a significant share of this market due in part to the rapidly evolving nature of the healthcare and technology industries and the substantial resources available to our existing and potential competitors. The market for technology-enabled payment services that empower healthcare clients and their customers is relatively new and unproven, and it is uncertain whether this market will achieve and sustain high levels of demand and market adoption.
In order to remain competitive, we are continually involved in a number of projects to compete with these new market entrants by developing new solutions, growing our client base and penetrating new markets. Some of these projects include the expansion of our integration capabilities and the expansion of our mobile solutions. These projects carry risks, such as cost overruns, delays in delivery, performance problems and lack of acceptance by our clients. Our integration partners may also decide to develop and offer their own patient engagement solutions that are similar to our solutions. In addition, the decisions we make on allocation of engineering resources, reliance on, integration with or discontinuance of, legacy systems or those acquired in acquisition, or the pace at which we remain technologically current within our internal systems and customer payment platforms, may negatively affect the morale of our engineering teams and the payment experiences our clients wish to feature to their customers. We may lose engineering talent or healthcare clients as a result, which could have a material adverse effect on our business and results of operations.
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Our success depends on providing high-quality payment solutions that healthcare clients use to improve their financial and operational performance, allowing them to collect payments and enhance their revenue lifecycle management objectives. If we cannot adapt to rapidly evolving industry standards and technology and increasingly sophisticated and varied healthcare client and customer payment needs, our existing technology could become undesirable, obsolete or harm our reputation. We must continue to invest significant resources in our personnel and technology in a timely and cost-effective manner in order to enhance our existing solutions and introduce new high-quality solutions that existing clients and potential new clients will want. Our operating results would also suffer if our innovations are not responsive to the needs of our existing clients or potential new clients, are not appropriately timed with market opportunity, are not effectively brought to market or significantly increase our operating costs. If our new or modified product and service innovations are not responsive to the preferences of healthcare clients and their customers, emerging industry standards or regulatory changes, are not appropriately timed with market opportunity or are not effectively brought to market, we may lose existing clients or be unable to obtain new clients and our results of operations may suffer.
We believe demand for our payment solutions in the healthcare industry has been driven in large part by more patient responsibility for out-of-pocket spend, a trend towards higher deductibles for health care services, increased digitization in payments, and the tailoring of payment offers and increased patient engagement. Our success also depends to a substantial extent on the ability of our solutions to increase the volume of our clients’ customers payments, and our ability to demonstrate the value of our solutions to our clients. If our existing clients do not recognize or acknowledge the benefits of our solutions or our solutions do not drive payment volume, then the market for our solutions might not develop at all, or it might develop more slowly than we expect, either of which could adversely affect our operating results. A significant decrease in the payment volume and resulting revenue from our clients and their customers in the healthcare industry may have an adverse effect on our business, operating results and financial condition.
In addition, we have limited insight into trends that might develop and affect our healthcare business. We might make errors in predicting and reacting to relevant business, legal and regulatory trends and healthcare reform, which could harm our business. If any of these events occur, it could materially adversely affect our business, financial condition or results of operations.
Finally, our competitors, including major EHR providers, may have the ability to devote more financial and operational resources than we can to developing new technologies and services, including services that provide improved operating functionality, and adding features to their existing service offerings. Relationships with companies in the EHR space and business focused on revenue lifecycle management are critical to leverage if we are to add to our healthcare customer portfolio. However, intense competition and rising costs experienced by certain major EHR providers has resulted, in certain cases, in increased financial strain on these businesses, and in at least one notable instance, an action to seek bankruptcy protection. To the extent we have outstanding amounts owed to us by companies that seek bankruptcy protection or cease operations, it may become difficult for us to be paid in full in a timely manner, if at all. Many of these companies may offer products and services similar to ours and may have greater name recognition, longer operating histories, stronger and more dependent client relationships, larger marketing budgets, and greater resources than us. If successful, their development efforts could render our solutions less desirable, resulting in the loss of our existing clients or a reduction in the fees we generate from our solutions.
Our business serving clients in the travel sector may be sensitive to events affecting the travel industry in general.
Events like regional or larger scale conflicts, war or other military conflict, including the conflicts between Russia and Ukraine, and Israel and Hamas, terrorist attacks, mass shooting incidents, natural disasters, such as hurricanes, earthquakes, fires, droughts, floods and volcanic activity, including events resulting from climate change, and travel-related health events, such as the COVID-19 pandemic, have had a negative impact on the travel industry and affect travelers’ behavior by limiting their ability or willingness to visit certain locations. In addition, the travel industry can be negatively impacted by adverse economic conditions in the United States and globally, including economic slowdown and inflation. We are not in a position to evaluate the net effect of these circumstances on our business as these events are largely unpredictable; however, we believe there has been negative impact to our business due to such events. Furthermore, in the longer term, our business might be negatively affected by financial pressures on or changes to the travel industry. For example, certain jurisdictions, particularly in Europe, have implemented or are considering implementing regulations intended to address the issue of “overtourism” including by restricting access to city centers or popular tourist destinations or limiting accommodation offerings in surrounding areas, such as by restricting construction of new hotels or the renting of homes or apartments. Such regulations could adversely affect travel and the volume of travel related payments that we process for our clients. There are also recent reports in Europe of hostility towards tourists
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that may depress international travel. The United States has implemented or proposed, or is considering, various travel restrictions and actions that could affect U.S. trade policy or practices, which could also adversely affect travel to or from the United States. If such events result in a long-term negative impact on the travel industry, such impact could have a material adverse effect on our business. The payment volume from our travel vertical represents less than 10% of our total payment volume. Because we seek to grow the payment volume and the revenue from this vertical in the future, failure to grow our payment volume and resulting revenue from this industry, may have an adverse effect on our business, operating results and financial condition.
If we are unable to enter or expand new client verticals or sub-verticals, including our relatively new B2B payment vertical, or if our solutions for any new vertical fail to achieve market acceptance, our operating results could be adversely affected and we may be required to reconsider our growth strategy.
Our growth strategy is influenced, in part, on our ability to expand into new client verticals and sub-verticals, including our relatively new B2B payment vertical. The B2B payment vertical represents a relatively new market for us, and we have limited prior experience with the key enterprise resource planning (ERP) platforms that are critical to the B2B payment vertical. Accordingly, our lack of experience in the B2B payment vertical and with the key ERP platforms may result in operational difficulties, which could cause a delay or failure to integrate and realize the benefits of entering into this vertical. In addition, B2B payments carry a higher risk profile than education or healthcare receivables, and we will be required to devote more resources to manage the increased risk inherent in these payments. Banking and other payment services partners may be more reluctant to support B2B payment flows, and countries with currency controls are less likely to permit payments of a B2B nature. The payment volume and resulting revenue from our B2B payment vertical represents, and is expected for the foreseeable future to represent, less than 10% of our total payment volume and revenue. We expect both the payment volume and the revenue from this vertical to grow over time. As such, failure to grow our payment volume and resulting revenue from our B2B payment vertical may have an adverse effect on our business, operating results and financial condition.
We may be unable to identify new verticals or sub-verticals that meet our criteria for selecting industries that our solutions are ideally suited to address. In addition, our market validation process may not support entry into selected verticals due to our perception of the overall market opportunity or of the willingness of market participants within those verticals to adopt our solutions.
Even if we choose to enter new verticals or sub-verticals, our market validation process does not guarantee our success. We may be unable to tailor our solutions for a new vertical or, in the event that we enter a new vertical by way of a strategic acquisition, we may be unable to leverage the acquired platform in time to take advantage of the identified market opportunity, and any delay in our time-to-market could expose us to additional competition or other factors that could impede our success. In addition, any solution we develop or acquire for a new vertical may not provide the functionality required by potential clients or their customers and, as a result, may not achieve widespread market acceptance within the new vertical. To the extent we choose to enter new verticals, whether organically or via strategic acquisition, we may invest significant resources to develop and expand the functionality of our solutions to meet the needs of customers in those verticals, which investments will occur in advance of our realization of revenue from them.
Consolidation in the payment processing or enablement industry could have a material adverse effect on our business, financial condition and results of operations.
Many payment processing or enablement industry participants are consolidating to create larger and more integrated financial processing systems with greater market power. We expect regulatory and economic conditions to result in additional consolidation in the healthcare industry in the future. As consolidation accelerates, the economies of scale of our clients’ organizations may grow. If a client experiences sizable growth following consolidation, it may determine that it no longer needs to rely on us and may reduce its demand for our solutions. In addition, as payment processing providers consolidate to create larger and more integrated systems with greater market power, these providers may try to use their market power to negotiate fee reductions for our solutions. Finally, consolidation may also result in the acquisition or future development by our clients of products and services that compete with our solutions. Any of these potential results of consolidation could have a material adverse effect on our business, financial condition and results of operations.
We may be adversely affected by global economic and political instability.
As we seek to continue to operate and expand our business, our overall performance will depend in part on worldwide economic and geopolitical conditions. Economies domestically and internationally have been affected from time to time by falling demand for a variety of goods and services, restricted credit, poor liquidity, reduced corporate
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profitability, employment pressures in services sectors, volatility in the banking ecosystem or credit, equity and foreign exchange markets, bankruptcies, as well as war, terrorist activity, political or social unrest, civil strife and other geopolitical uncertainty, including the effects of ongoing United States-China and Canada-India diplomatic and trade friction, and the resulting impact on business continuity and travel, supply chain disruptions, inflation, security issues, and overall uncertainty with respect to the economy, including with respect to tariff and trade issues. To the extent that inflationary pressures and other global factors lead to an economic recession, demand for our solutions, our business and financial condition could be negatively impacted. In addition, from time to time we have reduced expenses and needed to restructure or reorganize certain portions of our operations in order to align our business with market conditions and our strategies, any of which can result in near term expense and harm to our growth prospects.
For example, on February 24, 2022, Russian military forces invaded Ukraine, and continued conflict and disruption in the region is likely, and on October 7, 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on the Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. On October 8, 2023, Israel formally declared war on Hamas, and thereafter commenced military operations against Hamas and the armed conflict is ongoing as of the date of this filing, with Israel and Iran recently exchanging missile attacks, and the conflict intensifying in Lebanon. Although the length, impact and outcome of the ongoing conflicts in Ukraine and Israel are highly unpredictable, these conflicts could lead to significant market and other disruptions, including significant volatility in commodity prices and supply of energy resources, instability in financial markets, supply chain interruptions, political and social instability, changes in consumer or purchaser preferences as well as an increase in cyberattacks and espionage.
We are actively monitoring the situations in Ukraine and Israel and assessing any potential impact on our business, but to date have not experienced any material impact. We have no way to predict the progress or outcome of the conflicts in Ukraine and Israel as the conflicts, and any resulting government reactions, continue to develop beyond our control and can quickly change. The extent and duration of the military action, sanctions and resulting market disruptions could be significant and could potentially have a substantial impact on the global economy and our business for an unknown period of time. As the adverse effects of these conflicts continue to develop and potentially spread, both in Europe, the Middle East and through the rest of the world, our customers, and customer behavior, may be negatively impacted, which could negatively affect sales and sales cycles and overall demand for our solutions. Further or prolonged impacts on the global economy could also cause businesses to curtail business expenses, which could hinder our ability to attract new clients or result in a decrease in payment volume. It is not possible to predict the ultimate broader consequences of these conflicts and any of the abovementioned factors could have a material adverse effect on our business, financial condition and results of operations, particularly to the extent the conflict escalates to involve additional countries, further economic sanctions and wider military conflicts. Any such disruptions could also magnify the impact of other risks described in this Quarterly Report on Form 10-Q.
In addition, political instability or adverse political developments and new or continued economic deterioration in any of the countries in which we operate could harm our business, results of operations and financial condition.
Inflation and interest rate increases have and may in the future result in decreased demand for our solutions, increases in our operating costs including our labor costs, constrained credit and liquidity, and volatility in financial markets and the banking ecosystem. During 2023, the United States Federal Reserve raised, and may in the future raise, interest rates in response to concerns over inflation risk. Although the Federal Reserve lowered interest rates by 50 basis points on September 18, 2024, interest rates remain elevated and there continues to be uncertainty in the changing market and economic conditions, including the possibility of additional measures that could be taken by the Federal Reserve and other government agencies, related to concerns over inflation risk. A sharp rise in interest rates could have an adverse impact on the fair market value of securities we may invest in as part of our portfolio investments, which could adversely affect our financial results. In addition, 2024 is a presidential election year in the U.S., and political conditions may contribute to economic uncertainty or volatility, irrespective of electoral outcomes, which could adversely affect our business, results of operations and financial condition.
We have an office in Tel Aviv, Israel. Conditions in Israel, including attacks by Hamas and other terrorist organizations from the Gaza Strip as well as Iran, and Israel’s war against them, may affect our operations.
Because we have an office in Tel Aviv, Israel, our business and operations are directly affected by economic, political, geopolitical and military conditions in Israel. Since the establishment of the State of Israel in 1948, a number of armed conflicts have occurred between Israel and its neighboring countries and terrorist organizations active in the region. These conflicts have involved missile strikes, hostile infiltrations and terrorism against civilian targets in various parts of Israel, which have negatively affected business conditions in Israel.
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On October 7, 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. On October 8, 2023, Israel formally declared war on Hamas, and thereafter commenced military operations against Hamas in Gaza and the armed conflict is ongoing as of the date of this filing, and has resulted in extensive deaths, injuries and kidnapping of civilians and soldiers. Moreover, the clash between Israel and Hezbollah in Lebanon, and the drone attacks by Iran on Israel and Israel’s military response, may escalate in the future into a greater regional conflict.
Although we currently do not expect the ongoing conflict to materially affect our business, financial condition and results of operations, there can be no assurances that further unforeseen events will not have a material adverse effect on our business, financial condition and results of operations in the future.
The Israel Defense Force (IDF), the national military of Israel, is a conscripted military service, subject to certain exceptions. Since October 7, 2023, the IDF has called up more than 350,000 of its reserve forces to serve. It is possible that there will be further military reserve duty call-ups in the future, which may affect our business due to a shortage of skilled labor and loss of institutional knowledge, and necessary mitigation measures we may take to respond to a decrease in labor availability, such as overtime and third-party outsourcing, for example, may have unintended negative effects and adversely impact our business, financial condition and results of operations.
Shelter-in-place and work-from-home measures, government-imposed restrictions on movement and travel and other precautions taken to address the ongoing conflict may temporarily disrupt our employees’ ability to effectively perform their daily tasks.
It is currently not possible to predict the duration or severity of the ongoing conflict or its effects on our business, operations and financial conditions. The ongoing conflict is rapidly evolving and developing, and could disrupt our business and operations, interrupt our sources and availability of supply and hamper our ability to raise additional funds or sell our securities, among others.
Risks Related to Our Operations
We may not be able to scale our business quickly enough to meet our growing client base, and if we are not able to grow efficiently, our operating results could be harmed.
As usage of our solutions grows and we sign additional clients and technology partners, we will need to devote additional resources to improving and maintaining our infrastructure and global payments network and integrating with third-party applications to maintain the performance of our solutions. In addition, we will need to appropriately scale our internal business systems, including client support, our 24x7 multilingual support to clients’ customers and risk and compliance operations, to serve our growing client base.
Any failure of or delay in these efforts could result in interruptions to our solutions, impaired system performance, and reduced client satisfaction, resulting in decreased sales to clients, lower renewal rates by existing clients, the issuance of service credits, or requested refunds, all of which could hurt our revenue growth. If sustained or repeated, these performance issues could reduce the attractiveness of our solutions to clients and their customers and could result in lost client opportunities and lower renewal rates, any of which could hurt our revenue growth, client loyalty, and our reputation. Even if we are successful in these efforts to scale our business, they will be expensive and complex, and require the dedication of significant management time and attention. We could also face inefficiencies or service disruptions as a result of our efforts to scale our internal infrastructure. We cannot be sure that the expansion and improvements to our internal infrastructure will be effectively implemented on a timely basis, if at all, and such failures could adversely affect our business, operating results, and financial condition.
We enable the transfer of large sums of funds to our clients daily, and are subject to the risk of errors, which could result in financial losses, damage to our reputation, or loss of trust in our brand, which would harm our business and financial results.
For the year ended December 31, 2023, we processed over $24.0 billion in payments on our solutions, compared to approximately $18.1 billion for the year ended December 31, 2022. For the nine months ended September 30, 2024, we processed approximately $22.8 billion in payments on our solutions. We have grown rapidly and seek to continue to grow, and our business is subject to the risk of financial losses as a result of chargebacks for client-related losses, credit losses, operational errors, software defects, service disruption, employee misconduct, security breaches, or other similar actions or errors in our solutions. As a provider of accounts receivable and other payment solutions, we enable the transfer of
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funds to our clients from their customers. Software errors in our solutions, including as a result of ordinary course updates to our software and systems, and operational errors by our FlyMates and business partners may also expose us to losses. In our business model, subject to certain exceptions, we function as a merchant of record in connection with the receipt of payments by our clients’ customers, which subjects us to chargeback risk in the event a client’s customer cancels or otherwise does not receive the services for which such customer paid. Although our client contracts allow us to pass such chargeback risk to our client, if a client has gone out of business, we are unable to collect on the chargeback and will bear the economic loss, which can negatively impact our business.
Moreover, our trustworthiness and reputation are fundamental to our business. As a global payments enablement and software company, the occurrence of any credit losses, operational errors, software defects, service disruption, employee misconduct, security breaches, or other similar actions or errors in our solutions could result in financial losses to our business and our clients, loss of trust, damage to our reputation, or termination of our agreements with strategic partners, each of which could result in:
There can be no assurance that the insurance we maintain to cover losses resulting from our errors and omissions will cover all losses or our coverage will be sufficient to cover our losses. If we suffer significant losses or reputational harm as a result, our business, operating results, and financial condition could be adversely affected.
Our management of our operating funds and client funds may be reliant on a limited number of our banking partners and other financial institutions.
As to certain verticals that we may choose to serve, as well as in selected geographical locations, our network of banking and other financial institution partners may be limited. As a result, although we seek to distribute financial and credit risk among multiple financial institutions, from time to time there may be a concentration of operating funds or client fund flows among a more limited number of financial institution partners. These partners are generally heavily regulated by national and local governments, and in some locations may be involved in a multitude of related businesses or part of larger, higher-profile financial conglomerates. These partners and suppliers are often subject to strict regulatory requirements and enforcement actions or may experience failures to satisfy capital adequacy conditions that result in a suspension of operations, seizure of assets or closure, which could materially impact the safeguarding of our operating funds or client funds. If we are not able to access our own funds or if client funds were in any way impacted, we could be adversely impacted, including by experiencing reputational damage and claims for restitution, potentially interfering with our existing client relationships or making us less attractive to potential new clients.
Our marketable securities portfolio is subject to credit, liquidity, market, and interest rate risks that could cause its value to decline significantly and materially adversely affect our business, financial condition, results of operations, and prospects.
We maintain an investment portfolio of marketable securities. These investments are subject to general credit, liquidity, market, and interest rate risks that can affect the income that we receive from our investments, the net realizable value of our investments, and our ability to sell them, which may be exacerbated by market downturns or events that affect global financial markets. As a result, we may experience a significant decline in value or loss of liquidity of our investments, which could materially adversely affect our business, financial condition, results of operations, and prospects. We attempt to mitigate these risks through diversification of our investments and continuous monitoring of our portfolio’s overall risk profile, but the value of our investments may nevertheless decline. To the extent that we increase the amount of our security investments in the future, these risks could be exacerbated.
Volatility in the banking and financial services ecosystems may impact our bank partnerships and relationships, which could adversely affect our operations and liquidity.
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Instability and volatility in the banking and financial services ecosystems, including limited liquidity, defaults, non-performance or other adverse developments that affect the banking ecosystem, or concerns or rumors about any such events or other similar risks, has and may in the future increase uncertainty in the global economy and the risk of a recession. Volatility in the banking and financial services sectors may impact our bank partnerships and relationships, which could adversely affect our operations and liquidity.
Our cash equivalents include money market funds, which are AAA-rated and comprised of liquid, high-quality debt securities issued by the U.S. government. Our access to our cash and cash equivalents and client funds could be significantly impacted in volatile markets given our concentration in government money market funds or impaired by the financial institutions with which we have arrangements directly, if such financial institutions are facing liquidity constraints or failures. We regularly maintain cash balances at third-party financial institutions in excess of the Federal Deposit Insurance Corporation (FDIC) insurance limit. A failure of a depository institution to return these deposits, or if a depository institution is subject to other adverse conditions in the financial or credit markets, could further impact access to our invested cash or cash equivalents and could adversely impact our operating liquidity, financial performance and ability to recover or repay client funds. If one or more of our bank partners were to fail and enter receivership proceedings, we may not be able to withdraw our or our clients' funds in excess of FDIC insurance limits, or may not be able to withdraw such funds in a timely manner, which could adversely affect our brand, business and results of operations, and may lead to regulatory or other claims or litigation, which may be costly to address.
In addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all. Any material decline in available funding or our ability to access our cash and cash equivalents could adversely impact our ability to meet our operating expenses, result in breaches of our contractual obligations or result in violations of federal or state wage and hour laws, any of which could have material adverse impacts on our operations and liquidity.
If we are unable to maintain or expand our ability to offer a variety of local and international payment methods for our clients to make available to their customers, or if we fail to continue to grow and develop preferred payment choices, our business may be materially and adversely affected.
The continued growth and development of our proprietary global payments network will also depend on our ability to anticipate and adapt to changes in client and customer behavior. For example, behavior may change regarding the use of credit and debit card transactions, including the relative increased use of cash, crypto-currencies, other emerging or alternative payment methods and credit card systems that may include strong regional preferences that we or our processing partners do not adequately support. Any failure to timely integrate emerging payment methods into our solutions, anticipate behavior changes, or contract with payment processing partners that support such emerging payment technologies could cause our clients to use our solutions less, resulting in a corresponding loss of revenue, in the event such methods become popular among their customers.
The number and variety of the payment methods we offer or currencies we are able to service may not meet client expectations, or the costs borne by our clients’ customers in completing payments may become unsuitable. Accordingly, we may need to change our pricing strategies or reduce our prices, which could harm our revenue, gross profit, and operating results.
We utilize a number of payment providers to clear and settle transactions for our clients, including payments providers such as China UnionPay Co. Ltd. and Adyen N.V. If the services provided by these partners become unavailable due to extended outages or interruptions or because they are no longer available on commercially reasonable terms or prices, or due to regulatory restrictions or for any other reason, our expenses could increase and our ability to process certain payments could be materially interrupted, all of which could harm our business, financial condition, and results of operations. In addition, our agreements with these providers include certain terms and conditions. These providers have broad discretion to change their terms of service and other policies with respect to our business, and those changes may be unfavorable to us. Therefore, we believe that maintaining successful partnerships with these payment providers is critical to our success.
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We, our strategic partners and our clients obtain and process large amounts of personal and sensitive data. Any real or perceived improper or unauthorized use of, disclosure of, or access to such data could harm our reputation as a trusted brand, as well as have a material adverse effect on our business.
We, our strategic partners and our clients, and the third-party vendors that we use, obtain and process large amounts of sensitive data, including personally identifiable information, also referred to as “personal data,” and other potentially sensitive data related to our clients, their customers and each of their transactions, as well as a variety of such data relating to our own workforce and internal operations. We face risks, including to our reputation as a trusted brand, in the handling and protection of this data, and these risks will increase as our business continues to expand to include new solutions and technologies.
We are responsible for data security for ourselves and for third parties with whom we partner and under the rules and regulations established by the payment networks, such as Visa, Mastercard and American Express, and debit card networks and by industry regulations and standards that may be promulgated by organizations such as the National Automated Clearing House Association (NACHA), which manages the governance of the Automated Clearing House (ACH) network in the United States. These third parties include our distribution partners and other third-party service providers and agents. We and other third parties collect, process, store and/or transmit personal and sensitive data, such as names, addresses, social security numbers, credit or debit card numbers and expiration dates, driver’s license numbers and bank account numbers. We have ultimate liability to the payment networks and to our customers for our failure or the failure of third parties with whom we contract to protect this data in accordance with Payment Card Industry Data Security Standard (PCI DSS) and network requirements. The loss, destruction or unauthorized modification or disclosure of merchant or cardholder data by us or our contracted third parties could result in significant fines, sanctions, claims, litigation and proceedings or actions against us by the payment networks, governmental entities, clients, client customers or others and damage our reputation.
Similarly, there are existing regulatory regimes designed to protect the privacy of categories of personal or otherwise sensitive data. Relevant U.S. federal privacy laws include the Family Educational Rights and Privacy Act (FERPA), the Gramm-Leach-Bliley Act (GLBA), and Health Insurance Portability and Accountability Act (HIPAA). We also are subject to stringent contractual obligations relating to the handling of such data, including obligations that are more restrictive than legally required. For example, under HIPAA, the information we collect during the payment experience may include protected health Information (PHI), and as such, we are considered a “business associate” of the U.S. healthcare clients we serve, and we are required to enter into a business associate agreement (BAA) with these clients. The BAAs largely mirror some of the statutory obligations contained in HIPAA, but many contain additional contractual undertakings that give these clients additional remedies in the event of a breach of our obligations to protect the confidentiality of the client’s PHI or otherwise meet our contractual obligations. Privacy laws impose a variety of compliance burdens on us and our clients, such as requiring notice to individuals of privacy practices, providing individuals with certain rights to prevent the use and disclosure of protected information, and also imposing requirements for safeguarding and proper destruction of personal information through the issuance of data security standards or guidelines. Privacy laws grant audit rights to our regulators and those of our clients. Any unauthorized disclosure of PHI or other data we are obligated to protect by regulation or contract could result in significant fines, sanctions, or requirements to take corrective action and could materially adversely affect our reputation and business.
Threats may derive from human error, fraud, or malice on the part of employees or third parties, or from accidental technological failure. For example, certain of our FlyMates have access to personal and sensitive data that could be used to commit identity theft or fraud. Concerns about security increase when we transmit information electronically because such transmissions can be subject to attack, interception, or loss. Also, computer viruses can be distributed and spread rapidly over the Internet and could infiltrate our systems or those of our contracted third parties. Denial of service or other attacks could be launched against us for a variety of purposes, including interfering with our solutions or to create a diversion for other malicious activities. These and other types of actions and attacks could disrupt our delivery of solutions or make them unavailable. Any such actions or attacks against us or our contracted third parties could impugn our reputation, force us to incur significant expenses in remediating the resulting impacts, expose us to uninsured liability, result in the loss of our bank sponsors or our ability to participate in the payment networks, increase our risk of regulatory scrutiny and the costs associated with such scrutiny, subject us to lawsuits, fines or sanctions, distract our management, or increase our costs of doing business.
We and our contracted third parties could be subject to security breaches by hackers. Our encryption of data and other protective measures may not prevent unauthorized access to or use of personal and sensitive data. A breach of a system may subject us to material losses or liability, including payment network fines, assessments and claims for unauthorized purchases with misappropriated credit, debit or card information, impersonation, or other similar fraud claims. A misuse of such data or a cybersecurity breach could harm our reputation and deter clients and their customers
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from using electronic payments generally and our solutions specifically, thus reducing our revenue. In addition, any such misuse or breach could cause us to incur costs to correct the breaches or failures, expose us to uninsured liability, increase our risk of regulatory scrutiny and the costs associated with such scrutiny, subject us to lawsuits, and result in the imposition of material penalties and fines under state and federal laws or by the payment networks. The insurance coverage we maintain to cover cyber risks may be insufficient to cover all losses. In addition, a significant cybersecurity breach of our systems or communications could result in payment networks prohibiting us from processing transactions on their networks or the loss of our bank sponsors that facilitate our participation in the payment networks, either of which could materially impede our ability to conduct business.
Additionally, it is also possible that unauthorized access to sensitive customer and business data may be obtained through inadequate use of security controls by our customers, suppliers or other vendors. While we are still not currently aware of any impact that the SolarWinds supply chain attack had on our business, the scope of the attack is still undetermined. Therefore, there is residual risk that we could experience a security breach arising from the SolarWinds supply chain attack.
We have administrative, technical, and physical security measures in place, and we have policies and procedures in place to both evaluate the security protocols and practices of our vendors and to contractually require service providers to whom we disclose personal data to implement and maintain privacy and security measures. However, we cannot provide assurance that the contractual requirements related to security and privacy that we impose on our service providers will be followed, or that those requirements, or our internal measures, will be adequate to prevent the unauthorized use or disclosure of data. If our privacy protection or security measures or those of the previously mentioned third parties are inadequate or are breached as a result of third-party action, employee or contractor error, malfeasance, malware, phishing, hacking attacks, system error, software bugs or defects in our solutions, trickery, process failure, or otherwise, and, as a result, there is improper disclosure of, or someone obtains unauthorized access to or extract funds or sensitive information, including personally identifiable information, on our systems or our partners’ systems, or if we suffer a ransomware or advanced persistent threat attack, or if any of the foregoing is reported or perceived to have occurred, our reputation and business could be damaged. Recent high-profile security breaches and related disclosures of personal and sensitive data by large institutions suggest that the risk of such events is significant, even if privacy protection and security measures are implemented and enforced. If personal or sensitive information is lost or improperly disclosed or threatened to be disclosed, we could incur significant costs associated with remediation and the implementation of additional security measures, including costs to deploy additional personnel and protection technologies, train employees, and engage third-party experts and consultants. In addition, we may incur significant liability and financial loss and may be subject to regulatory scrutiny, investigations, proceedings, and penalties and our reputation may be harmed. Additional risks will emerge to the extent we incorporate artificial intelligence in our solutions. Artificial intelligence algorithms or automated processing of data may be flawed, and datasets may be insufficient or may use third party artificial intelligence with unclear intellectual property rights or interests. Inappropriate or controversial data practices by us or others could subject us to lawsuits, regulatory investigations, legal and financial liability, or reputational harm. Additionally, our use of artificial intelligence may create additional cybersecurity risks or increase cybersecurity risks, including risks of security breaches and incidents.
Under our terms of service and our contracts with strategic partners and clients, if there is a breach of payment information that we store, we could be liable for their losses and related expenses. Additionally, if our own confidential business information were improperly disclosed, our business could be materially and adversely affected. A core aspect of our business is the reliability and security of our solutions. Any perceived or actual breach of security, regardless of how it occurs or the extent of the breach, could have a significant impact on our reputation as a trusted brand, cause us to lose existing partners or clients, prevent us from obtaining new partners, clients or customers, require us to expend significant funds to remedy problems caused by breaches and implement measures to prevent further breaches, and expose us to legal risk and potential liability including those resulting from governmental or regulatory investigations, class action litigation, and costs associated with remediation, such as fraud monitoring and forensics. Any actual or perceived security breach at a company providing services to us or our clients could have similar effects.
We cannot be certain that our insurance coverage will be adequate for data handling or data security liabilities actually incurred, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including our financial condition, operating results, and reputation.
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Cyberattacks and security vulnerabilities can disrupt our business and harm our competitive position.
Cyber incidents have been increasing in sophistication and frequency and can include third parties gaining access to employee or customer data using stolen or inferred credentials, computer malware, viruses, spamming, phishing attacks, ransomware, card skimming code, and other deliberate attacks and attempts to gain unauthorized access. Providers of payment and accounts receivable software have frequently been targeted by such attacks and due to the wars in the Ukraine and Gaza and continued political uncertainty involving Russia and Ukraine, and Israel and Hamas, respectively, and potentially other regions of Europe and the Middle East, there is an increased likelihood that escalation of tensions could result in cyberattacks that could either directly or indirectly impact our operations. Because of this, we face additional cybersecurity challenges, including threats to our own IT infrastructure or those of our clients, our customers’ clients, and/or third-party providers, that may take a variety of forms ranging from stolen bank accounts, business email compromise, client employee fraud, account takeover, or check fraud, to “mega breaches” targeted against payment and accounts receivable software, which could be initiated by individual or groups of hackers or sophisticated cyber criminals using any of the methods described above. A cybersecurity incident or breach could result in disclosure of confidential information and intellectual property, or cause production downtimes and compromised data. We have in the past experienced cybersecurity incidents of limited scale, and we may in the future experience other data security incidents or breaches affecting personally identifiable information or other confidential business information. We may be unable to anticipate or prevent techniques used in the future to obtain unauthorized access or to sabotage systems because they change frequently and often are not detected until after an incident has occurred. As we increase our client base and our brand becomes more widely known and recognized, third parties may increasingly seek to compromise our security controls or gain unauthorized access to our sensitive corporate information or our clients’ (or our clients’ customers’) data.
In February 2024, Change Healthcare (a part of UnitedHealth Group (UHG)) reported that it had been subject to a cyberattack, which resulted in electronic payments and medical claims not being processed by UHG through its claims clearinghouse. Providers that we serve have now come back online or have switched to other methods of submission in response to this cyberattack and its lingering effects. As a result, adverse effects of this cyberattack are not expected to continue impacting businesses involved in patient payments in the third and fourth quarter of 2024. Any continuation of these or other impacts caused by this or other cyberattacks may negatively affect our financial position, results of operations and cash flows.
Our business policies and internal security controls may not keep pace with these evolving threats. Despite the internal control measures, and security procedures we employ to safeguard our systems, we may still be vulnerable to a security breach, intrusion, or loss or theft of personal or sensitive data, which may harm our business, reputation and future financial results. The lost revenue and containment, remediation, investigation, legal and other costs could be significant and may exceed our insurance policy limits or may not be covered by insurance at all. Further, we may be subject to regulatory enforcement actions and litigation that could result in financial judgments or the payment of settlement amounts and disputes with insurance carriers concerning coverage. In addition, sufficient insurance coverage may become increasingly expensive to maintain as incidents increase globally.
Our risk management efforts may not be effective to prevent fraudulent activities by our customers, FlyMates or other third parties, which could expose us to material financial losses and liability and otherwise harm our business.
Our software provides payment facilitation solutions for a large number of our clients and their customers. We are responsible for performing KYC reviews of our clients, sanctions screening their customers, and monitoring transactions for fraud. We have been and may continue to be targeted by parties who seek to commit acts of financial fraud using techniques such as stolen identities and bank accounts, compromised business email accounts, employee or insider fraud, account takeover, false applications, and fake invoicing. We may suffer losses from acts of financial fraud committed by our clients, our clients’ customers and purported customers, our FlyMates and payment partners or third parties.
The techniques used to perpetrate fraud are continually evolving and we may not be able to identify all risks created by new solutions or functionality. Our risk management policies, procedures, techniques, and processes may not be sufficient to identify all of the risks to which we are exposed, to enable us to prevent or mitigate the risks we have identified, or to identify additional risks to which we may become subject in the future. Furthermore, our risk management policies, procedures, techniques, and processes may contain errors or our FlyMates or agents may commit mistakes or errors in judgment as a result of which we may suffer large financial losses. The software-driven and highly automated nature of our solutions could enable criminals and those committing fraud to steal significant amounts of money accessing our solutions. As greater numbers of our clients' customers use our solutions, and we serve clients in industries that are at higher risk for fraudulent activity, our exposure to material risk losses from a single client, or from a small number of
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clients, will increase. In addition, our clients or their customers may suffer losses from acts of financial fraud by third parties posing as us through account takeover, credential harvesting, use of stolen identities and various other techniques, which could harm our reputation, consume significant time of our compliance, security and client relations teams to investigate and remediate, or prompt us to reimburse our clients for such losses in order to maintain client business relationships.
Our current business, the changing and uncertain economic, geopolitical and regulatory environment, and our anticipated domestic and international growth will continue to place significant demands on our risk management and compliance efforts. As our business grows and becomes more complex, we will need to continue developing and improving and investing in our risk management infrastructure, policies, procedures, techniques, and processes. As techniques used to perpetrate fraud on our solutions evolve, we may need to modify our solutions to mitigate fraud risks. As our business grows and becomes more complex, we may be less able to forecast and carry appropriate reserves in our books for fraud related losses. Further, these types of fraudulent activities targeting our solutions can also expose us to civil and criminal liability, governmental and regulatory sanctions as well as potentially cause us to be in breach of our contractual obligations to our clients and partners.
If we fail to adapt and respond effectively to rapidly and significantly changing technology, evolving industry standards, changing regulations, and changing business needs, requirements, or preferences, or if we fail to continue to grow and develop our payments solutions, our business may be materially and adversely affected.
Our future success depends in large part on the continued growth and development of our payments solutions. If such activities are limited, restricted, curtailed or degraded in any way, or if we fail to continue to grow and develop our payments solutions, our business may be materially and adversely affected. The market for payments enablement solutions is relatively new and subject to changes in technology, regulatory regimes, industry standards, payment methods, regulations and client and customer needs. Rapid and significant technological changes, evolving industry standards, changing regulations and business needs continue to confront the verticals in which we operate, including developments in digital banking, open banking, mobile financial apps, as well as developments in cryptocurrencies and in tokenization (e.g., replacing sensitive data such as payment card information) with symbols (tokens) to keep the data safe), blockchain, and artificial intelligence, including machine learning. The success of our business will depend, in part, on our ability to adapt and respond effectively to these changes through methods which include launching new solutions and incorporating new technologies, such as generative artificial intelligence, into our solutions.
The success of any new product and service, or any enhancements or modifications to existing solutions, depends on several factors, including the timely completion, introduction, and market acceptance of such solutions, enhancements, and modifications. Our engineering and software development teams operate in different locations across the globe (including teams in Spain, Romania, the United States, Israel and Australia), which can create logistical challenges. If we are unable to effectively coordinate with our global technology and development teams to enhance our solutions, add new payment methods or develop new solutions that keep pace with technological and regulatory changes to achieve market acceptance, or if new technologies emerge that are able to deliver competitive solutions that are more effective, secure, convenient or cost effective than our solutions, our business, operating results, and financial condition would be adversely affected. Furthermore, modifications to our existing solutions or technology will increase our technology and development expenses. Any failure of our solutions to operate effectively with existing or future network solutions and technologies could reduce the demand for our solutions, result in clients or clients' customer dissatisfaction and adversely affect our business.
Artificial intelligence presents risks and challenges that can impact our business including by posing security risks to our confidential information, proprietary information, and personal data.
Issues in the development and use of artificial intelligence, combined with an uncertain regulatory environment, may result in reputational harm, liability, or other adverse consequences to our business operations. As with many technological innovations, artificial intelligence presents risks and challenges that could impact our business. We may adopt and integrate generative artificial intelligence tools into our systems for specific use cases reviewed by legal and information security. Our vendors may incorporate generative artificial intelligence tools into their offerings without disclosing this use to us, and the providers of these generative artificial intelligence tools may not meet existing or rapidly evolving regulatory or industry standards with respect to privacy and data protection and may inhibit our or our vendors’ ability to maintain an adequate level of service and experience. If we, our vendors, or our third-party partners experience an actual or perceived breach or privacy or security incident because of the use of generative artificial intelligence, we may lose valuable intellectual property and confidential information and our reputation and the public perception of the effectiveness of our security measures could be harmed. Further, bad actors around the world use increasingly sophisticated methods, including the use of artificial intelligence, to engage in illegal activities involving the theft and
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misuse of personal information, confidential information, and intellectual property. Any of these outcomes could damage our reputation, result in the loss of valuable property and information, and adversely impact our business.
Changes to payment card networks fees or rules could harm our business.
We are required to comply with Mastercard, American Express, and Visa payment card network operating rules and the rules of other regional card (such as China UnionPay or Japan Credit Bureau (JCB)) or payment providers, in connection with our solutions. We have agreed to reimburse our merchant acquirers for any fines they are assessed by payment card networks as a result of any rule violations by us. We may also be directly liable to the payment card networks for rule violations. The payment card networks set and interpret the card operating rules. The payment card networks could adopt new operating rules or interpret or reinterpret existing rules that we or our processors might find difficult or even impossible to follow, or costly to implement. For example, the card networks could adopt new rules or reinterpret existing rules to substantially modify how we offer credit card payment methods to our clients, or impose new fees or costs (including demanding a cash reserve from Flywire) that could negatively impact our margins. Card networks also could modify security or fraud detection methodologies that could have a downstream impact on our business, and force us to change our solutions, payment experience or security protocols, which may increase our operating costs. We also may seek to introduce other card-related solutions in the future, which would entail additional operating rules. As a result of any violations of rules, new rules being implemented, or increased fees, we could lose our ability to offer certain cards as a payment method to our clients’ customers, or such payments could become prohibitively expensive for us or for our clients. Additionally, from time to time, card networks, including Visa and Mastercard, increase the fees that they charge processors. We could attempt to pass these increases along to our clients and their customers, but this strategy might result in the loss of clients to our competitors who do not pass along the increases. If competitive practices prevent us from passing along the higher fees to our clients and their customers in the future, we may have to absorb all or a portion of such increases, which may increase our operating costs and reduce our profit margins. If we are unable to offer credit cards as a payment method to our clients’ customers, our business would be adversely affected.
If we do not or cannot maintain the compatibility of our solution with evolving software solutions used by our clients, or the interoperability of our solutions with those of our third-party payment providers, payment networks and key software vendors, our business may be materially and adversely affected.
Our solutions integrate with ERP systems, such as Ellucian Company, L.P. in education, Epic Systems Corporation in healthcare, Rezdy Pty Ltd in travel and Oracle Corporation in B2B payments. We automatically synchronize suppliers, clients, client customers, invoices, and payment transactions between our solutions and these systems. This two-way sync eliminates duplicate data entry and provides the basis for managing cash-flow through an integrated solution for accounts receivable, and payments.
In addition, we are subject to certain standard terms and conditions with these partners. These partners have broad discretion to change their terms of service and other policies, and those changes may be unfavorable to us. Therefore, we believe that maintaining successful partnerships with these providers is critical to our future success.
We also rely on our proprietary global payment network comprised of leading global, regional and local banks and technology and payment partners. If we do not or cannot maintain the interoperability of their products or services or the products or our key software vendors that are integral to our solutions, our business may be materially and adversely affected. These third parties periodically update and change their systems, and although we have been able to adapt our solutions to their evolving needs in the past, there can be no guarantee that we will be able to do so in the future. In particular, if we are unable to adapt to such changes, we may not be able to utilize these strategic partners and we may lose access to large numbers of clients as a result.
If any of the third party software providers change the features of their application programming interfaces (APIs), discontinue their support of such APIs, restrict our access to their APIs, or alter the terms governing their use in a manner that is adverse to our business, we will not be able to provide synchronization capabilities, which could significantly diminish the value of our solutions and harm our business, operating results, and financial condition.
If we fail to maintain, protect and enhance our brand, our ability to expand our client base will be impaired and our business, operating results, and financial condition may suffer.
We believe that further developing, maintaining, protecting and enhancing our brand domestically and on a global basis is important to support the marketing and sale of our existing and future solutions to new clients and to attracting additional and strategic partners. Successfully further developing, maintaining and enhancing our brand will depend largely on the effectiveness of our marketing and demand generation efforts, our ability to provide reliable and seamless
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solutions that continue to meet the needs of our clients and their customers at competitive prices, our ability to maintain our clients’ trust, our ability to continue to develop new functionality, solutions, and our ability to successfully differentiate solutions from competitive solutions. Our brand promotion activities may not generate client awareness or yield increased revenue, and even if they do, any increased revenue may not offset the expenses we incur in building our brand. If we fail to successfully promote and maintain our brand or if we incur excessive expenses in this effort, our business could suffer.
The introduction and promotion of new solutions, as well as the promotion of existing solutions, may be partly dependent on our visibility on third-party advertising platforms, such as Google, LinkedIn, Facebook, or X. Changes in the way these platforms operate or changes in their advertising prices, data use practices or other terms could make the maintenance and promotion of our products and services and our brands more expensive or more difficult. If we are unable to market and promote our brands on third-party platforms effectively, our ability to acquire new clients would be materially harmed.
Harm to our brand can arise from many sources, including failure by us or our partners and service providers to satisfy expectations of service and quality; inadequate protection or misuse of sensitive information; fraud committed by third parties using our solutions; compliance failures and claims; litigation, regulatory and other claims; errors caused by us or our partners; and misconduct by our partners, service providers, or other counterparties. In addition, negative statements about us can cause and have caused a decline in the market price of our common stock, divert our management’s attention and resources, and could cause other adverse impacts to our business. Partners with whom we maintain relationships could engage in behavior or use their platforms to communicate directly with our clients and their customers in a manner that reflects poorly on our brand and such behavior or communications may adversely affect us. Further, negative publicity or commentary regarding the partners who are, or are perceived to be, affiliated with us may also damage our reputation, even if the negative publicity or commentary is not directly related to us. Any negative publicity about the industries we operate in or our company, the quality and reliability of our solutions, our risk management processes, changes to our products and services, our ability to effectively manage and resolve customer complaints, our privacy, data protection, and information security practices, litigation, regulatory activity, policy positions, and the experience of our customers with us, our products or services could adversely affect our reputation and the confidence in and use of our solutions. If we do not successfully maintain, protect or enhance our brands, our business could be materially and adversely affected.
If we lose key members of our management team or are unable to attract and retain executives and employees we need to support our operations and growth, our business may be harmed.
Our success and future growth depend upon the continued services of our management team and other key employees. Our Chief Executive Officer, Michael Massaro, and our President and Chief Operating Officer, Rob Orgel, are critical to our overall management, as well as the continued development of our solutions, strategic partnerships, culture, relationships with financial institutions, and strategic direction. From time to time, there may be changes in our management team resulting from the hiring or departure of executives and key employees, which could disrupt our business. Our senior management and key employees are employed on an at-will basis. We appointed Cosmin Pitigoi as our new Chief Financial Officer effective March 2024. This or other changes in our senior management may be disruptive to our business, and, if we are unable to manage an orderly transition, our business may be adversely affected. We currently have “key person” insurance on our Chief Executive Officer, Michael Massaro, but not for any other members of our management team. Certain of our key employees have been with us for a long period of time and have fully vested stock options or other long-term equity incentives that are or may become valuable and are publicly tradable subject to Rule 144 limitations, which may reduce the incentive for each of these key employees to remain at our Company. We cannot ensure that we will be able to retain the services of any members of our senior management or other key employees or that we would be able to timely replace members of our senior management or other key employees should any of them depart. The loss of our Chief Executive Officer, or our President and Chief Operating Officer, or one or more of our senior management, or other key employees could harm our business, and we may not be able to find adequate replacements.
The failure to attract and retain additional qualified personnel could prevent us from executing our business strategy and growth plans.
To execute our business strategy, we must attract and retain highly qualified personnel. Competition for executive officers, software developers, compliance and risk management personnel and other key employees in our industry and locations is intense and increasing, especially in the U.S., where wage inflation has been increasing. We compete with many other companies for software developers with high levels of experience in designing, developing, and managing payment systems, as well as for skilled legal and compliance and risk operations professionals. Many of the companies with which we compete for experienced personnel have greater resources than we do and can frequently offer such
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personnel substantially greater compensation than we can offer. If we fail to identify, attract, develop and integrate new personnel, or fail to retain and motivate our current personnel, our growth prospects would be adversely affected.
If we cannot maintain our company culture as we grow, our success and our business may be harmed.
We believe our culture has been a key contributor to our success to date and that the critical nature of the solutions that we provide promotes a sense of greater purpose and fulfillment in our FlyMates. Any failure to preserve our culture could negatively affect our ability to retain and recruit personnel, which is critical to our growth, and to effectively focus on and pursue our corporate objectives. As we grow and develop the infrastructure of a public company, we may find it difficult to maintain these important aspects of our culture. If we fail to maintain our culture, our business and competitive position may be adversely affected.
Our sales cycles may be long and vary.
We devote significant resources to establish relationships with new clients and deepen relationships with existing clients. The sales cycles of our solutions tend to vary depending on the client industry sector which may make forecasting more complex and uncertain.
In addition, sales and sale cycles may be based in part or entirely on factors, or perceived factors, not directly related to the features of our solutions, including, among others, a client or prospective client’s projection of business growth, uncertainty about economic conditions (including as a result of increased inflationary conditions, recession concerns and the escalation of hostilities between Russia and Ukraine, and Israel and Hamas), capital budgets, anticipated cost savings from the implementation of our solution, potential preference for internally-developed software solutions, perceptions about our business and solutions, more favorable terms offered by potential competitors, and previous technology investments. Mid-market and large enterprises tend to have more complex operating environments than smaller businesses, making it often more difficult and time-consuming for us to demonstrate the value of our solutions to prospective clients. The decision to use our solutions may also be an enterprise-wide decision, and require us to provide greater levels of education regarding the use and benefits of our solutions, which may result in additional time, effort, and money spent on our sales cycle without any assurance that our efforts will be successful in generating any sales. Often, major hospital systems and national or state higher education systems will solicit service offers by issuing RFPs, which are generally a time- and resource-intensive process, with no assurances of being selected as a vendor after the RFP process is completed. Additionally, large enterprises typically have longer implementation cycles, especially hospital and education systems, require greater product functionality and scalability and a broader range of services, demand that vendors take on a larger share of risks, sometimes require longer testing periods that delay general availability of our solutions, and expect greater payment flexibility from vendors. All of these factors can add further risk to business conducted with these clients. If we fail to realize an expected sale from a large end-client in a particular quarter or at all, our business, operating results, and financial condition could be materially and adversely affected.
In addition, we may face unexpected deployment challenges with enterprise clients. It may be difficult to deploy our software solutions if a client has unexpected database, hardware or software technology issues, or if a client insists on a more customized or unique solution that is time intensive or that we have little prior experience in delivering. Decisions on timing of deployments may also be impacted by cost and availability of personnel. Any difficulties or delays in the initial implementation could cause clients to reject our solutions or lead to the delay or non-receipt of future orders, in which case our business, operating results and financial condition would be harmed.
We typically incur significant upfront costs in our client relationships, and if we are unable to develop or grow these relationships over time, we are unlikely to recover these costs and our operating results may suffer.
We devote significant resources to establish relationships with new clients and deepen relationships with existing clients. Our sales cycle for our solutions can be variable, typically ranging from three to nine months from initial contact to contract execution. However, there is potential for our sales cycle to extend beyond three to nine months. During the period of our sales cycle, our efforts involve educating our clients about the use, technical capabilities and benefits of our solutions. Our operating results depend in substantial part on our ability to deliver a successful client experience and persuade our clients to grow their relationship with us over time. As we expect to grow rapidly, our client acquisition costs could outpace our build-up of recurring revenue, and we may be unable to reduce our total operating costs through economies of scale such that we are unable to achieve or maintain profitability. Any increased or unexpected costs or unanticipated delays, including delays caused by factors outside of our control, could cause our operating results to suffer.
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If we fail to offer high-quality client support, or if our support is more expensive than anticipated, our business and reputation could suffer.
Our clients and their customers rely on our support services to resolve issues and realize the full benefits provided by our solutions. High-quality support is also important for the expansion of the use of our solutions with existing clients and their customers. We provide multilingual support over chat, email or via telephone. The number of our clients, and the number of their customers utilizing our solutions, has grown significantly and such growth, as well as any future growth, will put additional pressure on our client service organization. If we do not help our clients and their customers quickly resolve issues and provide effective ongoing support, or if our support personnel or methods of providing support are insufficient to meet the needs of our clients and their customers, our ability to retain clients and their customers and acquire new clients and customers could suffer, and our reputation with existing or potential clients could be harmed. Providing an exceptional client experience requires significant time and resources from our client service team. Therefore, failure to scale our client service organization adequately may adversely impact our business results and financial condition.
In addition, as we continue to operate and grow our operations and continue to expand to new jurisdictions, we need to be able to provide efficient client service that meets our clients’ needs globally at scale. In geographies where we sell through our channel partners, if we are unable to provide a high quality client experience tailored to the language and culture of the applicable jurisdiction, our business operations and reputation may suffer.
We may require additional capital to support the growth of our business, and this capital might not be available on acceptable terms, if at all.
We have funded our operations since inception primarily through equity and debt financings, sales of our solutions, and fees. We cannot be certain when or if our operations will generate sufficient cash to fully fund our ongoing operations or the growth of our business. We intend to continue to make investments to support our business, which may require us to engage in equity or debt financings to secure additional funds. Additional financing may not be available on terms favorable to us, if at all. If adequate funds are not available on acceptable terms, we may be unable to invest in future growth opportunities, which could harm our business, operating results, and financial condition. If we incur additional debt, the debt holders would have rights senior to holders of common stock to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends on our common stock. Furthermore, if we issue additional equity securities, stockholders will experience dilution, and the new equity securities could have rights senior to those of our common stock. Because our decision to issue securities in the future will depend on numerous considerations, including factors beyond our control, we cannot predict or estimate the amount, timing, or nature of any future issuances of debt or equity securities. As a result, our stockholders bear the risk of future issuances of debt or equity securities reducing the value of our common stock and diluting their interests.
Our business could be harmed as a result of the risks associated with our acquisitions.
As part of our business strategy, we have in the past and intend to continue to seek to acquire or invest in businesses, products or technologies that could complement or expand our business, enhance our technical capabilities or otherwise offer growth opportunities by providing us with additional intellectual property, client relationships and geographic coverage. The pursuit of potential acquisitions may divert the attention of management and cause us to incur various expenses in identifying, investigating, and pursuing suitable acquisitions, whether or not such acquisitions are completed. In addition, we can provide no assurances that we will be able to find and identify desirable acquisition targets or that we will be successful in entering into a definitive agreement with any one target. In addition, even if we reach a definitive agreement with a target, there is no assurance that we will complete any future acquisition or if we do acquire additional businesses, we may not be able to integrate them effectively following the acquisition or effectively manage the combined business following the acquisition.
Any acquisitions we undertake or have recently completed, including the acquisition of StudyLink in November 2023, and Invoiced in August 2024, will likely be accompanied by business risks which may include, among other things:
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These factors could harm our business, results of operations or financial condition.
In addition to the risks commonly encountered in the acquisition of a business or assets as described above, we may also experience risks relating to the challenges and costs of closing a transaction. The risks described above may be exacerbated as a result of managing multiple acquisitions at once.
Systems failures and resulting interruptions in the availability of our solutions could harm our business.
Our systems and those of our service providers and partners have experienced from time to time, and may experience in the future, service interruptions or degradation because of hardware and software defects or malfunctions, distributed denial-of-service and other cyberattacks, insider threats, human error, earthquakes, hurricanes, floods, fires, and other natural disasters, including events resulting from climate change, war or other military conflict, including an escalation of the conflicts between Russia and Ukraine, and Israel and Hamas, respectively, power losses, disruptions in telecommunications services, fraud, computer viruses or other malware, or other events. Some of our systems are not fully redundant, and our disaster recovery planning may not be sufficient for all possible outcomes or events. In addition, as a provider of payments solutions targeted to highly regulated clients in industries such as education and healthcare, we are subject to heightened scrutiny by regulators that may require specific business continuity, resiliency and disaster recovery plans, and more rigorous testing of such plans, which may be costly and time-consuming to implement, and may divert our resources from other business priorities.
A prolonged interruption in the availability, speed, or functionality of our solutions or payment methods could materially harm our business. Frequent or persistent interruptions in our solutions could cause current or potential clients and their customers to believe that our systems are unreliable, leading them to switch to our competitors or to avoid or reduce the use of our solutions, and could permanently harm our reputation and brand. Moreover, if any system failure or similar event results in damages to our clients or their customers and business partners, these clients, customers or partners could seek significant compensation or contractual penalties from us for their losses, and those claims, even if unsuccessful, would likely be time-consuming and costly for us to address.
We have undertaken and continue to make certain technology and network upgrades and redundancies which are designed to improve the reliability of our solutions. These efforts are costly and time-consuming, involve significant technical risk and may divert our resources from new features and solutions, and there can be no guarantee that these efforts will succeed. Because we are a regulated payments institution in certain jurisdictions, frequent or persistent interruptions could lead to regulatory scrutiny, significant fines and penalties, and mandatory and costly changes to our business practices, and ultimately could cause us to lose existing licenses that we need to operate or prevent or delay us from obtaining additional licenses that may be required for our business.
We use public cloud hosting with Amazon Web Services (AWS) and depend on AWS’ ability to protect their data centers against damage or interruption from natural disasters, power or telecommunications failures, criminal acts, and similar events. Our operations depend on protecting the cloud infrastructure hosted by AWS by maintaining the configuration, architecture, and interconnection specifications, as well as the information stored in these virtual data
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centers and transmitted by third-party internet service providers. In limited occasions, we have experienced service disruptions in the past, and may experience interruptions or delays in our solutions in the future. We may also incur significant costs for using alternative equipment or taking other actions in preparation for, or in reaction to, events that damage the data storage services we use. Although we have disaster recovery plans that utilize various data storage locations, any incident affecting our data storage or internet service providers’ infrastructure that may be caused by fire, flood, severe storm, earthquake, power loss, telecommunications failures, unauthorized intrusion, computer viruses and disabling devices, natural disasters, war or other military conflict, including an escalation of the conflict between Russia and Ukraine, terrorist attacks, negligence, and other similar events beyond our control could negatively affect our solutions. Additionally, in July 2024, a software update by CrowdStrike Holdings, Inc., a cybersecurity technology company, caused widespread crashes of Windows systems into which it was integrated, including certain Windows systems used by our vendors and customers. As of the date of this Quarterly Report on Form 10-Q, we have not experienced any significant impacts as a result of the CrowdStrike software update, but we could in the future experience similar software-induced interruptions to our operations. Any prolonged service disruption affecting our solutions could damage our reputation with current and potential clients, expose us to liability, cause us to lose clients, or otherwise harm our business. In the event of damage or interruption to our solutions, our insurance policies may not adequately compensate us for any losses that we may incur.
In addition, we may experience financial losses due to a number of factors, including:
Our solutions are accessed by many of our clients and their customers, often at the same time. As we continue to expand the number of clients that we serve and solutions that we are able to offer to our clients and their customers, we may not be able to scale our technology to accommodate the increased capacity requirements, which may result in interruptions or delays in service. In addition, the failure of data centers, internet service providers, or other third-party service providers to meet our capacity requirements could result in interruptions or delays in access to our solutions or impede our ability to grow our business and scale our operations. If our third-party infrastructure service agreements are terminated, or there is a lapse of service, interruption of internet service provider connectivity, or damage to data centers, we could experience interruptions in access to our solutions as well as delays and additional expense in arranging new facilities and services.
We also rely on components, applications, and services supplied by third parties, including payment service providers and merchant acquirer partners which subjects us to risks. If these third parties experience operational interference or disruptions, breach their agreements with us, fail to perform their obligations and meet our expectations, or experience a cybersecurity incident, our operations could be disrupted or otherwise negatively affected, which could result in client dissatisfaction, regulatory scrutiny, and damage to our reputation and brand, and materially and adversely affect our business.
In addition, we are continually improving and upgrading our systems and technologies. Implementation of new systems and technologies is complex, expensive, and time-consuming. If we fail to timely and successfully implement new systems and technologies, or improvements or upgrades to existing information systems and technologies, or if such systems and technologies do not operate as intended, this could have an adverse impact on our business, internal controls (including internal controls over financial reporting), results of operations, and financial condition.
Risks Related to Our Legal, Regulatory and Compliance Landscape
We currently handle cross-border and domestic payments and plan to expand our solutions to new clients, to accept and settle payments in new countries and in new currencies, and to increase our global network to allow
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us to offer local and alternative payment methods, creating a variety of operational challenges; additionally, our domestic and international operations subject us to increased risks, which could harm our business.
Our business is subject to risks inherent in conducting business globally, including cross-border payments and domestic payments in the United States and certain other markets. Our handling of domestic and cross-border payments to our clients generates a significant portion of our revenues, with a substantial portion of such revenues coming from payments processed from Asia (including India, China and Korea). We expect that international revenues will continue to account for a significant percentage of total net revenues for the foreseeable future, and that in particular, the proportion of our revenue from Asia will continue to increase. Current events, including the possibility of renegotiated trade deals and international tax law treaties, United States-China and Canada-India diplomatic and trade friction, heightened tensions between China and Taiwan and the escalation of the conflicts between Russia and Ukraine, and Israel and Hamas, respectively, create a level of uncertainty, and potentially increased complexity, for multinational companies. These uncertainties could have a material adverse effect on our business and our results of operations and financial condition. In addition, international operations are subject to various risks which could have a material adverse effect on those operations or our business as a whole, including:
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Foreign operations may also expose us to political, social, regulatory and economic uncertainties affecting a country or region, or to political hostility to investments by foreign or private equity investors. Many financial markets are not as developed or as efficient as those in the United States, and as a result, liquidity may be reduced and price volatility may be higher in those markets than in more developed markets. The legal and regulatory environment may also be different, particularly with respect to bankruptcy and reorganization, and may afford us less protection as a creditor than we may be entitled to under U.S. law. Financial accounting standards and practices may differ, and there may be less publicly available information in respect of such companies.
Restrictions imposed or actions taken by foreign governments could include exchange controls, seizure or nationalization of foreign deposits and adoption of other governmental restrictions which adversely affect the prices of securities or the ability to repatriate profits. For instance, we process a substantial amount of payments from China. The Chinese government imposes controls on the convertibility of the Renminbi the currency of China, into foreign currencies and, in certain cases, the remittance of currency out of China. The Chinese government may at its discretion further restrict access in the future to foreign currencies for current account transactions, or impose regulatory requirements that may require modifications to our business model for our clients' payors located in China. In addition, income received by us from sources in some countries may be reduced by withholding and other taxes. Any such taxes paid by us will reduce the net income or return from such investments. While we will take these factors into consideration in making investment decisions, including when hedging positions, no assurance can be given that we will be able to fully avoid these risks or generate sufficient risk-adjusted returns.
Violations of the complex foreign and U.S. laws, rules and regulations that apply to our cross-border operations may result in fines, criminal actions, or sanctions against us, our officers, or FlyMates; prohibitions on the conduct of our business; and damage to our reputation. Although we have implemented policies and procedures designed to promote compliance with these laws, there can be no assurance that our FlyMates, contractors, or agents will not violate our policies. These risks are inherent in our cross-border operations and expansion, may increase our costs of doing business internationally, and could harm our business.
Payments and other financial services-related regulations and oversight are material to our business. Our failure to comply could materially harm our business.
The local, state, and federal laws, rules, regulations, licensing schemes, and industry standards in the United States and other jurisdictions in which we operate that govern our business include, or may in the future include, those relating to consumer finance and consumer protection, cross-border and domestic money transmission, foreign exchange, payments services (such as money transmission, payment processing, and settlement services), AML and CFT, escheatment, international sanctions regimes, and compliance with the PCI DSS. These laws, rules, regulations, licensing schemes, and standards are enforced by multiple authorities and governing bodies in the United States, including the Department of the Treasury, the Federal Deposit Insurance Corporation, the SEC, Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission, self-regulatory organizations, and numerous state and local regulators and law enforcement agencies. Our clients also have their own regulatory obligations, and they expect our solutions to comply with the regulatory requirements that are applicable to their businesses. For additional discussion about the regulatory environment that we and our clients operate in, please see "Business–Regulation and Industry Standards" in our Annual
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Report on Form 10-K for the year ended December 31, 2023. As we expand into new jurisdictions, the number of foreign laws, rules, regulations, licensing schemes, and standards governing our business will expand as well. In addition, as our business and solutions continue to develop and expand, we may become subject to additional laws, rules, regulations, licensing schemes, and standards. We may not always be able to accurately predict the scope or applicability of certain laws, rules, regulations, licensing schemes, or standards to our business, particularly as we expand into new areas of operations, which could have a significant negative effect on our existing business and our ability to pursue future plans.
Certain of our subsidiaries are registered with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). Our subsidiary Flywire Global Corp. has obtained licenses to operate as a money transmitter (or the statutory equivalent) in 44 U.S. jurisdictions, and is in the process of applying for a license in, to the best of our knowledge, all U.S. states and territories where such licensure or registration is required in order to be able to offer additional business lines in the future. As a licensed money transmitter, we are (and in the states where we are awaiting licensure, will be) subject to obligations and restrictions with respect to the investment of client funds, reporting requirements, bonding requirements, minimum capital requirements, and inspection by state regulatory agencies concerning various aspects of our business. Evaluation of our compliance efforts, as well as the questions of whether and to what extent our solutions are considered money transmission, are matters of regulatory interpretation and could change over time. In addition, there are substantial costs involved in maintaining and renewing our licenses, certifications, and approvals, and we could be subject to fines or other enforcement action if we are found to violate disclosure, reporting, AML, CFT, capitalization, corporate governance, or other requirements of such licenses.
If we fail to predict how a U.S. law or regulation or a law or regulation from another jurisdiction in which we operate will be applied to us, we could be subject to additional licensure requirements and/or administrative enforcement actions. This could also require changes to the manner in which we conduct some aspects of our business or potential product changes, and require us to pay fines, penalties, or compensation to clients for past non-compliance. At the federal level, we are registered as a MSB with FinCEN. For additional discussion of the requirements of our MSB registration, please see "Business – Regulation and Industry Standards" in our Annual Report on Form 10-K for the year ended December 31, 2023. At the state level, we rely on various exemptions from state money transmitter licensing requirements, and regulators may find that we have violated applicable laws or regulations because we are not licensed or registered as a money transmitter in all of the U.S. jurisdictions we service. We believe, based on our business model, that we have valid exemptions from licensure under various state money transmission laws, either expressly as a payment processor or agent of the payee, or pursuant to common law as an agent of the payee. While we believe we have defensible arguments in support of our positions under the state money transmission statutes, we have not expressly obtained confirmation of such positions from the state banking departments who administer the state money transmission statutes. It is possible that certain state banking departments may determine that our activities are not exempt. Any determination that we are in fact required to be licensed under the money transmission statute of a state where we are not yet licensed may require substantial expenditures of time and money to remediate and could lead to liability in the nature of penalties or fines, costs, legal fees, reputational damage or other negative consequences. We could be required to cease operations in some or all of the U.S. jurisdictions we service and where we are not yet licensed, which determination would have a materially adverse effect on our business, including our financial condition, operating results, and reputation. In the past, certain competitors have been found to violate laws and regulations related to money transmission, and they have been subject to fines and other penalties by regulatory authorities.
The adoption of new money transmitter or MSB statutes in jurisdictions or changes in regulators’ interpretation of existing state and federal money transmitter or MSB statutes or regulations could subject us to new registration or licensing requirements. There can be no assurance that we will be able to obtain or maintain any such licenses in all of the jurisdictions we service, and, even if we were able to do so, there could be substantial costs and potential product changes involved in maintaining such licenses, which could have a material and adverse effect on our business. These factors could impose substantial additional costs, involve considerable delay to the development or provision of our solutions, require significant and costly operational changes, or prevent us from providing our solutions in any given market.
The regulatory environment in which we operate is subject to constant change, and new regulations could make aspects of our business as currently conducted no longer possible.
In the future, as a result of the regulations applicable to our business, we could be subject to investigations and resulting liability, including governmental fines, restrictions on our business, or other sanctions, and we could be forced to cease conducting certain aspects of our business with residents of certain jurisdictions, be forced to change our business practices in certain jurisdictions, or be required to obtain additional licenses or regulatory approvals. For example, because a majority of voters in the U.K. approved an exit from the E.U. (commonly referred to as Brexit), we were required to obtain a license from a member state of the European Economic Area (EEA) which would allow us to continue
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to provide our solutions to clients located in the EEA under a principle known as “passporting”. We were able to obtain a license as an authorized payment institution from the Bank of Lithuania in September 2019 and subsequently obtained the right to passport our solutions to other EEA member states.
Government agencies may impose new or additional rules on money transmission, which may increase our costs of doing business, including, but not limited to regulations that:
We are subject to governmental laws and requirements regarding economic and trade sanctions, AML and CFT that could impair our ability to compete in international markets or subject us to criminal or civil liability if we violate them.
We are currently required to comply with U.S. economic and trade sanctions administered OFAC and we have processes in place to comply with the OFAC regulations as well as similar requirements in the foreign jurisdictions in which we already operate. As part of our compliance efforts, we scan our clients and their customers against watch lists promulgated by OFAC and certain other international agencies. Our application can be accessed from nearly anywhere in the world, and if our service is accessed from a sanctioned country or otherwise accessed or used in violation of applicable trade and economic sanctions, we could be subject to fines or other enforcement actions. In the course of enhancing our sanctions compliance function, we initiated an internal review that identified issues related to our compliance with sanctions, including payments that may have originated from sanctioned jurisdictions or sanctioned persons. We have made voluntary submissions to OFAC to report the apparent violations and to provide supplemental information. Flywire is currently engaging with OFAC to resolve these matters. Although the internal investigation completed to date suggests that any loss incurred as a result of this matter would not be material to our business, if OFAC ultimately concludes any violation has occurred in connection with these or other transactions, it could result in penalties, fines, costs, and restrictions on our ability to do business, which could also harm our operating results.
We are also subject to various AML and CFT laws and regulations around the world that prohibit, among other things, our involvement in transferring the proceeds of criminal or terrorist activities. In the United States, most of our solutions are subject to AML laws and regulations, including the BSA, and similar laws and regulations. The BSA, among other things, requires MSBs to develop and implement risk-based AML programs, to report large cash transactions and suspicious activity, and in some cases, to collect and maintain information about clients who use their services and maintain other transaction records. Regulators and third-party auditors have identified gaps in how similar businesses have implemented AML programs, and we could likewise be subject to significant fines, penalties, inquiries, audits,
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investigations, enforcement actions, and criminal and civil liability if our AML program is found to be insufficient by a regulator.
Our business operations in other parts of the world such as the U.K., Lithuania, Canada, Australia, Hong Kong, New Zealand, Indonesia and Singapore are subject to similar laws and requirements. Regulators in the United States and globally continue to increase their scrutiny of compliance with these obligations, which may require us to further revise or expand our compliance program, including the procedures we use to verify the identity of our clients and to monitor transactions on our system, including payments to persons outside of the United States. Regulators regularly re-examine the transaction volume thresholds at which we must obtain and keep applicable records or verify identities of clients, and any change in such thresholds could result in greater costs for compliance. Similarly, as a condition to doing business with us, our banking and other strategic partners also impose ongoing obligations on us related to AML and CFT and sanctions screening. Any failure on our part to maintain the necessary processes and policies to comply with these regulations and requirements, or to adapt our processes and policies to changes in laws, would subject us to penalties, fines, or loss of key relationships which would have a material adverse effect on our business and results of operations. Furthermore, government sanctions imposed with respect to Russia's invasion of Ukraine in early 2022 are impacting our ability to offer our services in the region, and additional sanctions could be imposed in the future. Further instability or tension in Russia, Ukraine, and the surrounding region could also cause us to adjust our operating model, which would increase our costs of operations.
Any actual or perceived failure to comply with governmental regulation and other legal obligations, particularly those related to privacy, data protection, and information security, could harm our business. Compliance with such laws could also result in additional costs and liabilities to us or inhibit sales of our solutions.
Our clients and their customers store personal and business information, financial information and other sensitive information through our solutions. In addition, we collect, store, and process personal and business information and other data from and about actual and prospective clients, their customers, our FlyMates and our service providers and other business partners, as well as their personnel. Our handling of data is subject to a variety of laws and regulations, including regulation by various government agencies, such as the U.S. Federal Trade Commission (FTC), and various state, local, and foreign agencies. Our data handling is also subject to contractual obligations and industry standards.
The U.S. federal and various state and foreign governments have adopted or proposed limitations on the collection, distribution, use, and storage of data relating to individuals and businesses, including the use of contact information and other data for marketing, advertising, and other communications with individuals and businesses. In the United States, various laws and regulations apply to the collection, processing, disclosure, and security of certain types of data, including the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the Gramm Leach Bliley Act, FERPA, HIPAA, and the now in question E.U.-U.S. and Swiss—U.S. Privacy Shield protections, as well as state laws relating to privacy and data security. Additionally, the FTC and many state attorneys general are interpreting federal and state consumer protection laws as imposing standards for the online collection, use, dissemination, and security of data. For example, California enacted the California Consumer Protection Act (CCPA), which took effect on January 1, 2020 and became enforceable by the California Attorney General on July 1, 2020, and broadly defines personal information. The CCPA creates new individual privacy rights for consumers (as that term is broadly defined) and places increased privacy and security obligations on entities handling personal data of consumers or households. The CCPA requires covered companies to provide certain disclosures to California consumers about its data collection, use and sharing practices, provide such consumers with ways to opt-out of certain sales or transfers of personal information, provides for civil penalties for violations, and allows for a new private right of action for data breaches that has resulted in an increase in data breach litigation. It remains unclear, however, how the CCPA will be interpreted. As currently written, it will likely impact our business activities and exemplifies the vulnerability of our business to not only cyber threats but also the evolving regulatory environment related to personal data and protected health information. On August 24, 2022, the California Attorney General announced the entry of a final judgment enforcement action resulting in a fine and settlement under the CCPA, as the defendant was ordered to pay a $1.2 million penalty and, among other things, implement a monitoring and reporting program to demonstrate its ongoing compliance with the CCPA.
Additionally, the California Privacy Rights Act (CPRA), which was passed in November 2020 and became effective on January 1, 2023, imposed additional obligations on companies covered by the legislation and significantly modified the CCPA, including by expanding consumers’ rights with respect to certain sensitive personal information. The CPRA also created a new state agency that will be vested with authority to implement and enforce the CCPA and the CPRA. The effects of the CCPA and the CPRA are potentially significant and may require us to modify our data collection or processing practices and policies and to incur substantial costs and expenses in an effort to comply and increase our potential exposure to regulatory enforcement and/or litigation.
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The laws and regulations relating to privacy and data security are evolving, can be subject to significant change, and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions. The CCPA, in particular, has prompted a number of proposals for new federal and state-level privacy legislation, which could increase our potential liability and adversely affect our business. Several states in the U.S. have proposed or enacted laws that contain obligations similar to the CCPA and CPRA that have taken effect or will take effect in coming years. The U.S. federal government also is contemplating federal privacy legislation. The effects of recently proposed or enacted legislation potentially are far-reaching. Such legislation may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies.
Many of the foreign jurisdictions where we or our clients operate or conduct business, including the E.U., have laws and regulations dealing with the collection, use, storage, and disclosure and other handling (collectively, processing) of personal information, which in some cases are more restrictive than those in the U.S. In addition to regulating the processing of personal information within the relevant jurisdictions, these legal requirements often also apply to the processing of personal information outside these jurisdictions, where there is some specified link to the relevant jurisdiction. For example, we have multiple offices in Europe and serves clients and their customers throughout the E.U., where the General Data Protection Regulation (GDPR) went into effect in 2018. The GDPR, which is also the law in Iceland, Norway, Liechtenstein, and—to a large degree—the U.K., has an extensive global reach and imposes robust obligations relating to the processing of personal information, including documentation requirements, greater control for data subjects (e.g., the “right to be forgotten” and data portability), security requirements, notice requirements, restrictions on sharing personal information, data governance obligations, data breach notification requirements, and restrictions on the export of personal information to most other countries. The solutions that we currently offer subject us to many of these laws and regulations in many of the foreign jurisdictions where we operate or conduct business, and these laws and regulations may be modified or subject to new or different interpretations, and new laws and regulations may be enacted in the future.
Legal developments have created compliance uncertainty regarding some transfers of personal information from the U.K. and EEA to locations where we or our clients operate or conduct business, including the United States and potentially Singapore, particularly with respect to cross-border transfers. Under the GDPR, such transfers can take place only if certain conditions apply or if certain data transfer mechanisms are in place. In July 2020, the Court of Justice of the E.U. ruled in its “Schrems II” decision (C-311/18), that the Privacy Shield, a transfer mechanism used by thousands of companies to transfer data between those jurisdictions and United States (and also used by us), was invalid and could no longer be used due to the strength of United States surveillance laws. In September 2020, the Federal Data Protection and Information Commissioner of Switzerland (where the law has a similar restriction on the export of personal information) issued an opinion concluding that the Swiss-U.S. Privacy Shield Framework does not provide an adequate level of protection for data transfers from Switzerland to the United States pursuant to Switzerland’s Federal Act on Data Protection. We and our clients continue to use alternative transfer strategies, including the European Commission’s Standard Contractual Clauses (SCCs), while the authorities interpret the Schrems II decision and the validity of alternative data transfer mechanisms. The SCCs, though previously approved by the European Commission, have faced challenges in European courts (including being called into question in the Schrems II decision), and may be further challenged, suspended or invalidated for transfers to some or all countries. For example, guidance regarding Schrems II issued by the European Data Protection Board (which is comprised of representatives from every E.U. member state’s top data protection authority) have cast serious doubt on the validity of SCCs for most transfers of personal information to the United States. At present, there are few if any viable alternatives to the Privacy Shield and the SCCs, so such developments may necessitate further expenditures on local infrastructure, changes to internal business processes, changes to clients and clients' customer facing solutions, or may otherwise affect or restrict our sales and operations.
On June 4, 2021, the European Commission released the final Implementing Decision on SCCs (New SCCs) for the transfer of personal data from the E.U. to “third countries” such as the US. The New SCCs will repeal and replace the existing SCCs (dating from 2001, 2004 and 2010) and address the entry into force of the GDPR) and the July 2020 decision of the CJEU in Schrems II, which invalidated the E.U.-U.S. Privacy Shield. The New SCCs broadly follow the draft implementing decision on standard contractual clauses (Draft SCCs) issued by the European Commission on November 12, 2020, but there are some material differences. The Draft SCCs’ significant and extensive new requirements for data importers that act as controllers (for example, obligations to give notice to data subjects and to notify personal data breaches to EU authorities) remain, but have been aligned more closely with the GDPR requirements. While the New SCCs are not immediately in force, compliance with them will be required for new transfer agreements entered into from late September 2021. SCCs then in effect were required to be replaced with the New SCCs by December 27, 2022.
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On July 10, 2023, the European Commission formally approved the new EU-U.S. Data Privacy Framework (the “Framework”), under which European entities will now be able to transfer personal data to Framework participants in the U.S. without having to put in place additional data protection safeguards or use the Standard Contractual Clauses for data transfers. We are in the process of evaluating how we may self-certify as a participating organization with the U.S. Department of Commerce.
E.U. data protection authorities have the power to impose administrative fines for violations of the GDPR of up to a maximum of €20 million or 4% of a corporate family’s total worldwide global turnover for the preceding fiscal year, whichever is higher. Such penalties are in addition to any civil litigation claims by clients, data subjects or other third parties. We believe that the solutions that we currently offer subject us to the GDPR and other laws and regulations relating to privacy, data protection, and information security, and these may be modified or subject to new or different interpretations in the future. We will need to take steps to address compliance obligations in this rapidly evolving legal environment, but we cannot assure you that we will be able to implement changes in a timely manner or without significant disruption to our business, or that such steps will be effective, and we may face the risk of liability and loss of business.
In addition, further to the U.K. exit from the E.U. on January 31, 2020, the GDPR ceased to apply in the U.K. at the end of the transition period on December 31, 2020. However, as of January 1, 2021, the U.K.’s European Union (Withdrawal) Act 2018 incorporated the GDPR (as it existed on December 31, 2020 but subject to certain U.K. specific amendments) into U.K. law (referred to as the U.K. GDPR). The U.K. GDPR and the U.K. Data Protection Act 2018 set out the U.K.’s data protection regime, which is independent from but aligned to the E.U.’s data protection regime. Non-compliance with the U.K. GDPR may result in monetary penalties of up to £17.5 million or 4% of worldwide revenue, whichever is higher. Like the GDPR, the U.K. GDPR restricts personal data transfers outside the U.K. to countries not regarded by the U.K. as providing adequate protection (this means that personal data transfers from the U.K. to the EEA remain free flowing).
On June 28, 2021, the European Commission adopted an adequacy decision under the GDPR, thereby recognizing that the U.K.’s data protection system continues to provide the same protections with respect to personal data as when it was an EU member state, and enabling the continued exchange of personal data between the E.U. and the U.K. The adequacy decision facilitates the implementation of the E.U.-U.K. Trade Cooperation Agreement, which foresaw the need for bilateral data flow and continued cooperation. The adequacy decision does, however, include a ‘sunset clause’, limiting its duration to four years, at which point the European Commission will need to once again review the safeguards in place in the U.K.’s post-Brexit legal system and decide if the adequacy decision may be renewed.
This lack of clarity on future U.K. laws and regulations and their interaction with E.U. laws and regulations could add legal risk, uncertainty, complexity and cost to our handling of E.U. personal information and our privacy and data security compliance programs. It is possible that over time the U.K. Data Protection Act 2018 could become less aligned with the GDPR, which could require us to implement different compliance measures for the U.K. and the E.U. and result in potentially enhanced compliance obligations for E.U. personal data.
In Asia, there has been an increase in both regulation and enforcement of privacy laws. The Act on Protection of Personal Information originally enacted in June 2020 by the Japanese government, was amended and came into effect on April 1, 2022 (Amended APPI). Since the passage of the Amended APPI, a number of implementing regulations and supporting documents have been released, addressing the requirements for transferring personal data outside Japan, notifying security breaches and creating pseudonymous information exempt from certain obligations under the Amended APPI. We have taken steps to address compliance obligations that apply to us under the Amended APPI, but cannot assure you that such steps will be effective, and we may face the risk of increased costs, liability and loss of business.
China (home to the most online users in the world) passed its DSL and its PIPL in 2021. The DSL applies to a wide range of data processing activities including, but not limited to, processing personal information. With extraterritorial scope and severe fines and penalties, these laws are set to impose an increasingly complex and comprehensive legal framework for processing personal information when doing business in China. The PIPL is enforced and administered by the Cyberspace Administration of China and relevant state and local government departments. The law draws from the GDPR, with heavy penalties up to the greater of 5% of the previous year’s revenue (possibly global) or $7.7 million. Chinese authorities have demonstrated a willingness to impose significant fines for violations of PIPL and other privacy laws, as evidenced by enforcement actions against Alibaba Group Holding Ltd and Didi Global Inc. in 2022.
As a reaction to data security concerns, in 2022, the Australian parliament approved a bill to amend the country's privacy legislation, significantly increasing the maximum penalties for companies and data controllers who suffer large-scale data breaches to the greater of: (i) AU$50 million, (ii) three times the value of any benefit obtained through the
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misuse of information, and (iii) 30% of a company's adjusted turnover in the relevant period. Previously, the penalty for severe data exposures was AU$2.22 million, considered by the current parliament to be wholly inadequate to incentivize companies to improve their data security mechanisms. The Office of the Australian Information Commissioner has new regulatory tools and flexibility that should, together with an ongoing focus on funding enforcement, see a more proactive regulator with capacity and capability to investigate and litigate more privacy incidents in Australia.
We have taken steps to address compliance obligations that apply to us under the Amended APPI, the DSL, the PIPL and applicable Australian regulations, but cannot assure you that such steps will be effective, and we may face the risk of increased costs, liability and loss of business.
In addition to government regulation, privacy advocates and industry groups may propose new and different self-regulatory standards that, if adopted, may apply to us, or which clients or clients' customers may require us to adopt. Because the interpretation and application of privacy and data protection laws, regulations, rules, and other standards are still uncertain, it is possible that these laws, rules, regulations, and other actual or alleged legal obligations, such as contractual or self-regulatory obligations, may be interpreted and applied in a manner that is inconsistent with our existing data management practices or the functionality of our solutions. If so, in addition to the possibility of fines, lawsuits and other claims, we could be required to fundamentally change our business activities and practices or modify our software, which could have an adverse effect on our business. Any failure or perceived failure by us to comply with laws, regulations, policies, legal, or contractual obligations, industry standards, or regulatory guidance relating to privacy or data security, may result in governmental investigations and enforcement actions, litigation, fines and penalties, or adverse publicity, and could cause our clients and partners to lose trust in us, which could have an adverse effect on our reputation and business. We expect that there will continue to be new proposed laws, regulations, and industry standards relating to privacy, data protection, marketing, consumer communications, and information security, and we cannot determine the impact such future laws, regulations, and standards may have on our business. Future laws, regulations, standards, and other obligations or any changed interpretation of existing laws or regulations could impair our ability to develop and market new functionality and maintain and grow our client base and increase revenue. Future restrictions on the collection, use, sharing, or disclosure of data, or additional requirements for express or implied consent of our clients, partners, or end users for the use and disclosure of such information could require us to incur additional costs or modify our solutions, possibly in a material manner, and could limit our ability to develop new functionality.
If we are not able to comply with these laws or regulations, or if we become liable under these laws or regulations, we could be directly harmed, and we may be forced to implement new measures to reduce our exposure to this liability. This may require us to expend substantial resources or to discontinue certain solutions, which would negatively affect our business, financial condition, and operating results. In addition, the increased attention focused upon liability issues as a result of lawsuits and legislative proposals could harm our reputation or otherwise adversely affect the growth of our business. Furthermore, any costs incurred as a result of this potential liability could harm our operating results.
We are subject to anti-corruption, anti-bribery, and similar laws, and non-compliance with such laws can subject us to criminal or civil liability and harm our business.
We are subject to the FCPA, the U.K. Bribery Act, U.S. domestic bribery laws, and other anti-corruption laws. Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly to generally prohibit companies, their employees, and their third-party intermediaries from authorizing, offering, or providing, directly or indirectly, improper payments or benefits to recipients in the public sector. These laws also require that we keep accurate books and records and maintain internal controls and compliance procedures designed to prevent any such actions. We maintain operations and serve clients in several countries around the world. Although we do not target government entities as clients, some of our clients may receive funding or other support from local, state, provincial or national governments. As we maintain and seek to increase our international cross-border business and expand operations abroad, we may engage with business partners and third-party intermediaries to market our services and to obtain necessary permits, licenses, and other regulatory approvals. In addition, we or our third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities. We can be held liable for the corrupt or other illegal activities of these third-party intermediaries, our FlyMates, representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities.
While we maintain policies and training programs for our FlyMates related to anti-corruption, anti-bribery and gift giving, and include representations regarding legal compliance in our contracts with vendors and strategic partners, there can be no assurances that these policies, training programs or contractual provisions will be observed or enforceable. We cannot assure you that all of our FlyMates and agents will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible. As we increase our international business, our risks under these laws may increase.
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Detecting, investigating, and resolving actual or alleged violations of anti-corruption laws can require a significant diversion of time, resources, and attention from senior management. In addition, noncompliance with anti-corruption or anti-bribery laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, enforcement actions, fines, damages, other civil or criminal penalties, injunctions, suspension or debarment from contracting with certain persons, reputational harm, adverse media coverage, and other collateral consequences. If any subpoenas are received or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal proceeding, our business, operating results, and financial condition could be materially harmed. In addition, responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees.
In February 2022, following Russia’s invasion of Ukraine, the United States and other countries announced sanctions against Russia. The sanctions by the United States and other countries against Russia to date include restrictions on selling or importing goods, services or technology in or from affected regions, travel bans and asset freezes impacting connected individuals and political, military, business and financial organizations in Russia, severing Russia’s largest bank from the U.S. financial system, barring some Russian enterprises from raising money in the U.S. market and blocking the access of Russian banks to financial markets. The United States and other countries could impose wider sanctions and take other actions should the conflict further escalate. While it is difficult to anticipate the impact the sanctions announced to date may have on us, any further sanctions imposed or actions taken by the United States or other countries, and any retaliatory measures by Russia in response, could increase our costs, reduce our sales and earnings or otherwise have an adverse effect on our operations.
If we fail to adequately protect our proprietary rights, our competitive position could be impaired and we may lose valuable assets, generate less revenue and incur costly litigation to protect our rights.
Our success is dependent, in part, upon protecting our proprietary technology. We rely on a combination of copyrights, trademarks, service marks, trade secret laws, the domain name dispute resolution mechanism, confidentiality procedures, and contractual provisions to establish and protect our proprietary rights. However, effective protection of intellectual property rights is expensive, both in terms of application and maintenance costs, as well as the costs of defending and enforcing those rights, and the steps we take to protect our intellectual property may be inadequate. We do not have patents covering any of our technology and do not actively pursue patents. Any of our trademarks, or other intellectual property rights may be challenged or circumvented by others, or narrowed or invalidated through administrative process or litigation. There can be no guarantee that others will not independently develop similar solutions or duplicate any of our solutions. Furthermore, legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights are uncertain. Despite our precautions, it may be possible for unauthorized third parties to copy our solutions and use information that we regard as proprietary to create solutions that compete with ours.
We pursue registration of copyrights, trademarks, and domain names in the United States and in certain jurisdictions outside of the United States, but doing so may not always be successful or cost-effective. We may be unable or, in some instances, choose not to obtain legal protection for our intellectual property, and our existing and future intellectual property rights may not provide us with competitive advantages or distinguish our solutions from those of our competitors. The laws of some foreign countries may not protect our intellectual property rights to the same extent as the laws of the United States, and effective intellectual property protection and mechanisms may be uncertain or unavailable in those jurisdictions. We may need to expend additional resources to defend our intellectual property in such countries, and the inability to do so could impair our business or adversely affect our international expansion. Particularly given the international nature of the Internet, the rate of growth of the Internet, and the ease of registering new domain names, we may not be able to detect unauthorized use of our intellectual property or take prompt enforcement action. Furthermore, the growing use of generative artificial intelligence presents an increased risk of unintentional and/or unauthorized disclosure or use of our intellectual property rights.
We endeavor to enter into agreements with our FlyMates, consultants and contractors and with parties with whom we do business in order to acquire intellectual property rights developed as a result of service to us, as well as to limit access to and disclosure of our proprietary information. No assurance can be given that our intellectual property related agreements with our FlyMates, consultants, contractors clients, their customers, or strategic partners and others will be effective in controlling access to and distribution of our solutions and proprietary information, potentially resulting in the unauthorized use or disclosure of our trade secrets and other intellectual property, including to our competitors, which could cause us to lose any competitive advantage resulting from this intellectual property. Further, these agreements do not prevent our competitors or partners from independently developing technologies that are substantially equivalent or superior to our solutions. In addition, individuals not subject to invention assignment agreements may make adverse ownership claims to our current and future intellectual property.
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To protect our intellectual property rights, we may be required to spend significant resources to monitor, protect and defend these rights. Litigation may be necessary in the future to enforce our intellectual property rights and to protect our trade secrets. Such litigation could be costly, time consuming, and distracting to management and could result in the impairment or loss of portions of our intellectual property. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of our intellectual property rights. Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our solutions, impair the functionality of our solutions, delay introductions of new features, integrations, and capabilities, result in our substituting inferior or more costly technologies into our solutions, or injure our reputation. In addition, we may be required to license additional technology from third parties to develop and market new features, integrations, and capabilities, and we cannot be certain that we could license that technology on commercially reasonable terms or at all, and our inability to license this technology could harm our ability to compete.
We may in the future be subject to intellectual property disputes, which are costly and may subject us to significant liability and increased costs of doing business.
We may in the future become subject to intellectual property disputes. Lawsuits are time-consuming and expensive to resolve and they divert management’s time and attention. We cannot predict the outcome of lawsuits and cannot assure you that the results of any such actions will not have an adverse effect on our business, operating results, or financial condition. During litigation, we may become subject to provisional rulings, including preliminary injunctions requiring us to cease some or all of our operations. We may decide to settle legal disputes on terms that are unfavorable to us. Furthermore, such disputes, even those without merit, may subject us to an unfavorable judgment that we may not choose to appeal or that may not be reversed upon appeal. In such a situation, we could be required to pay substantial damages or license fees to third party patent owners. In addition, we may also be required to modify, redesign, reengineer, or rebrand our solutions, or stop making, licensing, or providing solutions that incorporate the asserted intellectual property. Alternatively, we may enter into a license agreement to continue practices found to be in violation of a third party’s rights. If we are required, or choose to enter into, royalty or licensing arrangements, such arrangements may not be available on reasonable terms or at all. In addition, we may also be contractually obligated to indemnify our clients in the event of infringement of a third party’s intellectual property rights.
Our use of “open source” software could negatively affect our ability to offer and sell access to our solutions and subject us to possible litigation.
We use open source software in our solutions and expect to continue to use open source software in the future. There are uncertainties regarding the proper interpretation of and compliance with open source licenses, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to use such open source software, and consequently to provide or distribute our solutions. Although use of open source software has historically been free, recently several open source providers have begun to charge license fees for use of their software. If our current open source providers were to begin to charge for these licenses or increase their license fees significantly, this would increase our research and development costs and have a negative impact on our results of operations and financial condition.
Additionally, we may from time to time face claims from third parties claiming ownership of, or seeking to enforce the terms of, an open source license, including by demanding release of source code for the open source software, derivative works or our proprietary source code that was developed using, or that is distributed with, such open source software. These claims could also result in litigation and could require us to make our proprietary software source code freely available, require us to devote additional research and development resources to change our solutions or incur additional costs and expenses, any of which could result in reputational harm and would have a negative effect on our business and operating results. In addition, if the license terms for the open source software we utilize change, we may be forced to reengineer our solutions or incur additional costs to comply with the changed license terms or to replace the affected open source software. Further, use of certain open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or controls on the origin of software or indemnification for third party infringement claims. Although we have implemented policies to regulate the use and incorporation of open source software into our solutions, we cannot be certain that we have not incorporated open source software in our solutions in a manner that is inconsistent with such policies.
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Indemnity and liability provisions in various agreements potentially expose us to substantial liability for intellectual property infringement, data protection, and other losses.
Our agreements with some of our technology partners and certain clients include indemnification provisions under which we agree to indemnify them for losses suffered or incurred as a result of claims of intellectual property infringement, data protection, damages caused by us to property or persons, or other liabilities relating to or arising from our solutions or other contractual obligations. Some of these indemnity agreements provide for uncapped liability and some indemnity provisions survive termination or expiration of the applicable agreement. Large indemnity payments could harm our business, operating results, and financial condition. We may incur substantial liability, and we may be required to cease use of certain functions of our solutions, as a result of intellectual property related claims. Any dispute with a client or technology partner with respect to these obligations could have adverse effects on our relationship with that client or technology partner and other existing or new clients or technology partners, and harm our business and operating results. In addition, although we carry insurance, our insurance may not be adequate to indemnify us for all liability that may be imposed, or otherwise protect us from liabilities or damages with respect to claims alleging compromises of client or clients' customer data, and any such coverage may not continue to be available to us on acceptable terms or at all.
New or revised tax regulations, unfavorable resolution of tax contingencies or changes to enacted tax rates could adversely affect our tax expense.
As a multinational organization, we may be subject to taxation in several jurisdictions around the world with increasingly complex tax laws, the application, interpretation and enforcement of which can be uncertain. Changes in tax laws or their interpretations could result in changes to enacted tax rates and may require complex computations to be performed that were not previously required, significant judgments to be made in interpretation of the new or revised tax regulations and significant estimates in calculations, as well as the preparation and analysis of information not previously relevant or regularly produced. Future changes in enacted tax rates could negatively affect our results of operations.
For example, the Inflation Reduction Act of 2022 includes a minimum tax equal to fifteen percent of the adjusted financial statement income of certain corporations as well as a one percent excise tax on share buybacks, effective for tax years beginning in 2023. When effective, it is possible that the minimum tax could result in an additional tax liability over the regular federal corporate tax liability in a given year based on differences between book and taxable income (including as a result of temporary differences).
The vast majority of states have considered or adopted laws that impose tax collection obligations on out-of-state companies. States where we have nexus may require us to calculate, collect, and remit taxes on sales in their jurisdiction. Additionally, the Supreme Court of the United States ruled in South Dakota v. Wayfair, Inc. et al (Wayfair) that online sellers can be required to collect sales and use tax despite not having a physical presence in the buyer’s state. In response to Wayfair, or otherwise, states or local governments may enforce laws requiring us to calculate, collect, and remit taxes on sales in their jurisdictions. We may be obligated to collect and remit sales and use tax in states in which we have not collected and remitted sales and use tax. A successful assertion by one or more states requiring us to collect taxes where we historically have not or presently do not do so could result in substantial tax liabilities, including taxes on past sales, as well as penalties and interest. The imposition by state governments or local governments of sales tax collection obligations on out-of-state sellers could also create additional administrative burdens for us, put us at a perceived competitive disadvantage if they do not impose similar obligations on our competitors, and decrease our future sales, which could adversely affect our business and operating results.
Relevant foreign taxing authorities may disagree with our determinations as to whether we have established a taxable nexus, often referred to as a “permanent establishment”, or the income and expenses attributable to specific jurisdictions. In addition, these authorities may take aggressive tax recovery positions that the funds flows we process are subject to value added tax or goods and services tax. If disagreements with relevant taxing authorities on other unknown matters were to occur, and our position was not sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitability of our operations.
Our tax returns and positions are subject to review and audit by federal, state, local and international taxing authorities. An unfavorable outcome to a tax audit could result in higher tax expense, thereby negatively affecting our results of operations and cash flows. We have recognized estimated liabilities on the balance sheet for material known tax exposures relating to deductions, transactions and other matters involving some uncertainty as to the proper tax treatment of the item. These liabilities reflect what we believe to be reasonable assumptions as to the likely final resolution of each issue if raised by a taxing authority. While we believe that the liabilities are adequate to cover reasonably expected tax risks, there can be no assurance that, in all instances, an issue raised by a tax authority will be finally resolved at a
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financial amount no more than any related liability. An unfavorable resolution, therefore, could negatively affect our financial position, results of operations and cash flows in the current and/or future periods.
Our ability to use our net operating losses (NOL) to offset future taxable income may be subject to certain limitations.
As of September 30, 2024, we had U.S. federal NOL carryforwards of approximately $50.7 million and state NOL carryforwards of approximately $78.2 million. The federal and material state NOL carryforwards will begin to expire in 2030 and 2024, respectively. In general, under Sections 382 and 383 of the United States Internal Revenue Code of 1986, as amended (Code), a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs and other tax attributes such as research tax credits to offset future taxable income. An “ownership change” pursuant to Section 382 of the Code generally occurs if one or more stockholders or groups of stockholders who own at least 5% of the company’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Future changes in our stock ownership, many of which are outside of our control, could result in an ownership change under Sections 382 or 383 of the Code. Furthermore, our ability to utilize NOLs of companies that we may acquire in the future may be subject to limitations.
During 2022, the Company completed a Section 382 study and as a result of the ownership changes identified, $1.6 million of Flywire’s NOLs and $0.2 million of Simplee’s NOLs will expire unutilized, assuming sufficient taxable income is generated in the future. The Company completed its refresh of the Section 382 study as of June 30, 2024, and there is no additional limitations in using Federal and State NOL carryforwards.
Under the Tax Cuts and Jobs Act enacted in 2017 as modified by the Coronavirus Aid, Relief, and Economic Security Act enacted in 2020, U.S. federal NOL carryforwards generated in taxable periods beginning after December 31, 2017 may be carried forward indefinitely, but the deductibility of such NOL carryforwards in taxable years beginning after December 31, 2020 is limited to 80% of taxable income. In addition, federal NOLs arising in tax years ending after December 31, 2017 can be carried forward indefinitely, but carryback is generally prohibited. NOLs generated in tax years beginning before January 1, 2018 will not be subject to the taxable income limitation, and NOLs generated in tax years ending before January 1, 2018 will continue to have a two-year carryback and twenty-year carryforward period. Deferred tax assets for NOLs will need to be measured at the applicable tax rate in effect when the NOL is expected to be utilized. Similar rules may apply under state tax laws. The changes in the carryforward/carryback periods as well as the new limitation on use of NOLs may significantly impact our valuation allowance assessments for NOLs generated after December 31, 2017.
Risks Related to Being a Public Company
As a public company, we are obligated to develop and maintain proper and effective internal control over financial reporting, and if we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired.
As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the Exchange Act), the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley Act), the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank), the listing requirements of The Nasdaq Global Select Market (Nasdaq), and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time consuming, or costly, and increase demand on our systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and operating results. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. It may require significant resources and management oversight to maintain and, if necessary, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard. As a result, management’s attention may be diverted from other business concerns, which could adversely affect our business and operating results. To comply with these requirements, we may need to hire more employees in the future or engage outside consultants, which would increase our costs and expenses.
As a "large accelerated" filer, we are required, pursuant to Section 404 of the Sarbanes-Oxley Act (Section 404), to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. Effective internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting
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obligations. Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.
This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting and our independent registered public accounting firm will be required to issue an opinion on the effectiveness of our internal control over financial reporting. We expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the auditor attestation requirements of Section 404. Furthermore, we will also have to file a more expansive proxy statement and are subject to shorter filing deadlines, which will require additional time and expense as well.
An independent assessment of the effectiveness of our internal controls could detect problems that our management’s assessment might not. Undetected material weaknesses in our internal controls could lead to financial statement restatements and require us to incur the expense of remediation. We are required to disclose changes made in our internal control and procedures on a quarterly basis. To comply with the requirements of being a public company, we have undertaken and expect to need to continue to undertake various actions, such as implementing new internal controls and procedures, hiring risk professionals, accounting and internal audit staff, and engaging outside consultants, which will increase our operating expenses.
We are actively engaged in the ongoing costly and challenging process of complying with Section 404. We may not be able to complete our evaluation, testing, and any required remediation in a timely fashion. During the evaluation and testing process, if we identify material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective.
If we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion on the effectiveness of our internal control, including as a result of a material weakness, we could lose investor confidence in the accuracy and completeness of our financial reports, which could cause the price of our common stock to decline, and we may be subject to investigation or sanctions by the SEC. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on Nasdaq.
Increased scrutiny from investors and others or changes in regulations regarding our environmental, social, governance, or sustainability responsibilities could result in additional costs or risks and adversely impact our reputation, employee retention, and willingness of partners, clients or our clients’ customers to do business with us.
Investor advocacy groups, certain institutional investors, investment funds, other market participants, stockholders, and consumer groups have focused increasingly on ESG or “sustainability” practices of companies. These parties have placed increased importance on the implications of the social cost of their investments. We have convened a cross-functional working group to further enhance our commitment to sustainability and ESG, and recognize the importance of communicating our progress on ESG to our stakeholders. As part of its responsibilities, our ESG working group is assessing opportunities for communicating progress on our priority initiatives. However, if our ESG practices do not meet (or are viewed as not meeting) investor or other industry stakeholder expectations and standards, which continue to evolve, our brand, reputation and employee retention may be negatively impacted, including based on an assessment of our ESG practices. Any sustainability report that we publish or sustainability disclosure we make may include our policies and practices on a variety of social and ethical matters, including corporate governance, community involvement, environmental compliance, employee health and safety practices, cybersecurity and privacy, human capital management, and workforce equity, inclusion and diversity. It is possible that stakeholders may not be satisfied with our ESG practices or the speed of their adoption. We could also incur additional costs and require additional resources to monitor, report, and comply with various ESG practices. Also, our failure, or perceived failure, to meet the standards included in any sustainability disclosure could negatively impact our reputation, employee retention, and the willingness of our partners, clients or our clients’ customers to do business with us.
In addition, increasing governmental interest in, and public awareness of, the impacts and effects of climate change and greater emphasis on sustainability by federal, state, and international governments could lead to further regulatory efforts to address the carbon impact of housing and travel. In particular, the current regulatory landscape regarding climate change (including disclosure requirements and requirements regarding energy and water use and efficiency), both within the United States and in many other locations where we operate worldwide, is evolving at a pace, and is likely to continue to develop in ways, that require our business to adapt. Many U.S. states, either individually or through multi-state regional initiatives, have begun to address greenhouse gas emissions, including disclosure requirements relating thereto, and some U.S. states have also adopted various ESG-related efforts, initiatives and requirements. As a result,
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governments may enact new laws and regulations and/or view matters or interpret laws and regulations differently than they have in the past, including laws and regulations which are responsive to ESG trends or otherwise seek to reduce the carbon emissions relating to travel and set minimum energy efficiency requirements, which could materially adversely affect our business, results of operations, and financial condition. The legislative landscape continues to be in a state of constant change as well as legal challenge with respect to these laws and regulations, making it difficult to predict with certainty the ultimate impact they will have on our business in the aggregate.
We will continue to incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.
As a public company, we will continue to incur significant legal, accounting, and other expenses as a result of operating as a public company, which increased during 2023 as a result of becoming a "large accelerated" filer. The Sarbanes-Oxley Act, Dodd-Frank, the listing requirements of the Nasdaq, and other applicable securities rules and regulations impose various requirements on public companies. Our management and other personnel devote a substantial amount of time to compliance with these requirements and interacting with public company investors and securities analysts. These obligations and constituents require significant attention from our management team and could divert their attention away from the day-to-day management of our business, which could harm our business, operating results, and financial condition. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. We cannot predict or estimate the amount of additional costs we will incur as a public company or the specific timing of such costs.
Risks Related to Ownership of Our Common Stock
The price of our common stock may be volatile or may decline regardless of our operating performance and you may not be able to resell your shares at or above the price you paid for them.
An active or liquid market in our common stock may not be sustainable. The market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:
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In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies.
Concerns over economic recession, high interest rate and inflation, supply chain delays and disruptions, policy priorities of the U.S. presidential administration and Congress, trade wars, unemployment, or prolonged government shutdown may contribute to increased volatility and diminished expectations for the economy and markets. Additionally, concern over geopolitical issues may also contribute to prolonged market volatility and instability. For example, the conflict between Russia and Ukraine could lead to disruption, instability and volatility in global markets and industries. The U.S. government and other governments in jurisdictions have imposed severe economic sanctions and export controls against Russia and Russian interests, have removed Russia from the SWIFT system, and have threatened additional sanctions and controls. The full impact of these measures, as well as potential responses to them by Russia, is unknown.
Our business and operations could be negatively affected by any pending or future securities litigation or stockholder activism.
From time to time, we may be subject to securities class actions, derivative suits or other securities-related legal actions.
In the past, securities class action litigation have often been brought against a company following a decline in the market price of its securities. In addition, stockholder activism, which could take many forms and arise in a variety of situations, has been increasing recently, and new universal proxy rules could significantly lower the cost and further increase the ease and likelihood of stockholder activism. This risk is especially relevant for us because technology companies have experienced significant stock price volatility in recent years. Volatility in our stock price or other reasons may in the future cause us to become the target of securities litigation or stockholder activism. Securities litigation and stockholder activism, including potential proxy contests, could result in substantial costs, including significant legal fees and other expenses, and divert our management and board of directors’ attention and resources from our business. Additionally, securities litigation and stockholder activism could give rise to perceived uncertainties as to our future, adversely affect our relationships with customers and business partners, adversely affect our reputation, and make it more difficult to attract and retain qualified personnel. Our stock price could also be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any securities litigation and stockholder activism.
Any claims or litigation, even if fully indemnified or insured, could adversely affect our relationships with customers and business partners, damage our reputation, decrease customer demand for our services and make it more difficult to attract and retain qualified personnel, making it more difficult for us to compete effectively. In addition, lawsuits or legal claims involving us may increase our insurance premiums, deductibles or co-insurance requirements or otherwise make it more difficult for us to maintain or obtain adequate insurance coverage on acceptable terms, if at all. Furthermore, while we maintain insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities and is subject to various exclusions, as well as caps on amounts recoverable. Even if we believe that a claim is covered by insurance, insurers may dispute our entitlement to recovery for a variety of potential reasons, which may affect the timing and, if the insurers prevail, the amount of our recovery. Our exposure under these matters may also include our indemnification obligations, to the extent that we have any, to current and former officers and directors against losses incurred in connection with these matters, including reimbursement of legal fees and other expenses.
As a result, pending or future lawsuits involving us, or our officers or directors, could have a material adverse effect on our business, reputation, financial condition, results of operations, liquidity and the trading price of our common stock.
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Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our intellectual property on unfavorable terms to us.
Until such time, if ever, as we can generate substantial revenue, we may finance our cash needs through a combination of equity offerings, government or private party grants, debt financings and strategic partnership agreements. We may seek additional capital through a variety of means, including through strategic partnership arrangements, public or private equity or debt financings, third-party funding and marketing and distribution arrangements, as well as other strategic alliances and licensing arrangements or any combination of these approaches. However, disruptions in the capital markets, particularly with respect to financial technology companies, could make any financing more challenging, and there can be no assurance that we will be able to raise capital on commercially reasonable terms or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation preferences or other rights, powers or preferences that may adversely affect your rights as a stockholder. To the extent that debt financing is available, and we choose to raise additional capital in the form of debt, such debt financing may involve agreements that include covenants limiting or restricting our ability to take certain actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional capital pursuant to collaborations, licensing arrangements or other strategic partnerships, such agreements may require us to relinquish rights to our technologies.
If we are unable to raise additional funds through equity or debt financing or through collaborations or strategic partnerships when needed, we may be required to delay, limit, reduce or terminate the development of our solutions or commercialization efforts.
We may allocate our cash and cash equivalents in ways that you and other stockholders may not approve.
Our management has broad discretion in the application of our cash and cash equivalents. Because of the number and variability of factors that determine our use of our cash and cash equivalents, their ultimate use may vary substantially from their currently intended use. Our management might not apply cash and cash equivalents in ways that ultimately increase the value of your investment. The failure by our management to apply these funds effectively could harm our business. Pending their use, we may invest our cash and cash equivalents in short-term, investment-grade, interest-bearing securities. These investments may not yield a favorable return to our stockholders. If we do not invest or apply our cash and cash equivalents in ways that enhance stockholder value, we may fail to achieve expected financial results, which could cause our stock price to decline.
We cannot guarantee that our repurchase program will be fully implemented or that it will enhance stockholder value, and share repurchases could affect the price of our common stock.
In August 2024, we announced that our Board of Directors authorized a share repurchase program, or the Repurchase Program, pursuant to which we may, from time to time, purchase shares of our Voting and Non-voting common stock for an aggregate purchase price not to exceed $150 million. Repurchases under the Repurchase Program may be made through a variety of methods and are subject to market and business conditions, levels of available liquidity, cash requirements for other purposes, regulatory, and other relevant factors. The timing, pricing, and size of share repurchases will depend on a number of factors, including price, corporate and regulatory requirements, and general market and economic conditions. The Repurchase Program does not obligate us to repurchase any minimum dollar amount or number of shares, and may be suspended or discontinued by our Board of Directors at any time, which may result in a decrease in the price of our common stock.
Repurchases under the Repurchase Program will decrease the number of outstanding shares of our common stock and therefore could affect the price of our common stock and increase its volatility. The existence of the Repurchase Program could also cause the price of our common stock to be higher than it would be in the absence of such a program and could reduce the market liquidity for our common stock. Repurchases under the Repurchase Program will diminish our cash reserves, which could impact our ability to further develop our business and service our indebtedness. There can be no assurance that any share repurchases will enhance stockholder value because the market price of our common stock may decline below the levels at which we repurchased such shares. Any failure to repurchase shares after we have announced our intention to do so may negatively impact our reputation and investor confidence in us and may negatively impact our common stock price. Although the Repurchase Program is intended to enhance long-term stockholder value, short-term price fluctuations could reduce the program’s effectiveness.
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.
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The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us or our business. If industry analysts cease coverage of us, the trading price for our common stock would be negatively affected. If one or more of the analysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about our business, our common stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our common stock price and trading volume to decline.
Sales of substantial amounts of our common stock in the public markets could cause the market price of our common stock to decline.
The price of our common stock could decline if there are substantial sales of our common stock, particularly sales by our directors, executive officers and significant stockholders, or if there is a large number of shares of our common stock available for sale and the market perceives that sales will occur. We had a total of 122,575,857 shares of our voting common stock and 1,873,320 shares of our non-voting common stock outstanding as of September 30, 2024. Other than shares held by directors, executive officers and other affiliates that are subject to volume limitations under Rule 144 under the Securities Act and various vesting agreements, these shares of common stock generally are freely tradable without restrictions or further registration under the Securities Act.
Certain of our stockholders will have rights, subject to some conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or our stockholders, subject to market standoff and lock-up agreements. We registered shares of common stock that we have issued and may issue under our equity incentive plans. These shares will be able to be sold freely in the public market upon issuance, subject to securities laws.
The market price of the shares of our common stock could decline as a result of the sale of a substantial number of our shares of common stock in the public market or the perception in the market that the holders of a large number of shares intend to sell their shares.
The concentration of our stock ownership will likely limit your ability to influence corporate matters, including the ability to influence the outcome of director elections and other matters requiring stockholder approval.
As of September 30, 2024, our current executive officers, directors and the holders of more than 5% of our outstanding voting and non-voting common stock, in the aggregate, beneficially owned a significant percentage of our outstanding voting and non-voting common stock. As a result, these stockholders, acting together, will have significant influence over all matters that require approval by our stockholders, including the election of directors and approval of significant corporate transactions. Corporate actions might be taken even if other stockholders oppose them. This concentration of ownership might also have the effect of delaying or preventing a change of control of our company that other stockholders may view as beneficial.
We do not intend to pay dividends on our common stock and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.
We have never declared or paid any cash dividend on our common stock and do not currently intend to do so for the foreseeable future. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. In addition, our senior secured revolving credit syndication loan currently prohibits us from paying dividends on our equity securities, and any future debt financing arrangement may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on our common stock. Any return to stockholders will therefore be limited to the appreciation of their stock. Therefore, the success of an investment in shares of our common stock will depend upon any future appreciation in their value. There is no guarantee that shares of our common stock will appreciate in value or even maintain the price at which our stockholders have purchased their shares.
Delaware law and provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make a merger, tender offer or proxy contest difficult, thereby depressing the trading price of our common stock.
Our status as a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law (DGCL) may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change of control would be beneficial to our existing stockholders. In addition, our amended and restated certificate of
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incorporation and amended and restated bylaws contain provisions that may make the acquisition of our company more difficult, including the following:
In addition, as a Delaware corporation, we are subject to Section 203 of the DGCL. These provisions may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a certain period of time. A Delaware corporation may opt out of this provision by express provision in its original certificate of incorporation or by amendment to its certificate of incorporation or bylaws approved by its stockholders. However, we have not opted out of this provision.
These and other provisions in our amended and restated certificate of incorporation, amended and restated bylaws and Delaware law could make it more difficult for stockholders or potential acquirors to obtain control of our board of directors or initiate actions that are opposed by our then-current board of directors, including delay or impede a merger, tender offer or proxy contest involving our company. The existence of these provisions could negatively affect the price of our common stock and limit opportunities for you to realize value in a corporate transaction.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the United States will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or FlyMates.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the DGCL, our certificate of incorporation or our bylaws or any action asserting a claim against us that is governed by the internal affairs doctrine. This provision would not apply to claims brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Our amended and restated certificate of incorporation provides further that the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. These choices of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other FlyMates and may discourage these types of lawsuits. Furthermore, the enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that a court could find these types of provisions to be inapplicable or unenforceable. While the Delaware courts have determined that such choice of forum
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provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive-forum provisions, and there can be no assurance that such provisions will be enforced by a court in those other jurisdictions. If a court were to find the exclusive-forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Repurchases of Equity Securities
The following table summarizes the repurchases of voting common stock during the three months ended September 30, 2024 (in thousands, except shares and per share amounts):
Period |
|
Total Number of |
|
|
Average Price Paid |
|
|
Total Number of |
|
|
Approximate Dollar |
|
||||
July 1, 2024 - July 31, 2024 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
August 1, 2024 - August 31, 2024 |
|
|
896,555 |
|
|
$ |
17.78 |
|
|
|
896,555 |
|
|
$ |
134,055 |
|
September 1, 2024 - September 30, 2024 |
|
|
394,697 |
|
|
$ |
17.58 |
|
|
|
394,697 |
|
|
$ |
127,117 |
|
Total |
|
|
1,291,252 |
|
|
|
|
|
|
1,291,252 |
|
|
|
|
||
(1) All shares were repurchased in open market transactions pursuant to a share repurchase program to repurchase up to $150 million of our outstanding voting and non-voting common stock for an indefinite period (the Repurchase Program). The Repurchase Program was authorized by our board of directors and publicly announced on August 6, 2024. Repurchases under the Repurchase Program may be made from time to time through open market purchases, in privately negotiated transactions or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act, in accordance with applicable securities laws and other restrictions, including Rule 10b-18. For additional information on our Repurchase Program, see Note 11 - Stockholders’ Equity in our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
(2) Average price paid per share includes related commissions, but excludes the 1% excise tax accrued on our share repurchases as a result of the Inflation Reduction Act of 2022.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Rule 10b5-1 Trading Plans
During the period covered by this Quarterly Report on Form 10-Q, other than as set forth below, no director or officer of the Company “
On
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Item 6. Exhibits
Exhibit Number |
|
Description |
3.1 |
|
|
3.2 |
|
|
31.1* |
|
|
31.2* |
|
|
32.1* |
|
|
32.2* |
|
|
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema with embedded linkbase documents. |
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
FLYWIRE CORPORATION |
|
|
|
|
|
Date: November 7, 2024 |
|
By: |
/s/ Michael Massaro
|
|
|
|
Michael Massaro |
|
|
|
Chief Executive Officer and Director |
|
|
|
(Principal Executive Officer) |
|
|
|
|
Date: November 7, 2024 |
|
By: |
/s/ Cosmin Pitigoi
|
|
|
|
Cosmin Pitigoi |
|
|
|
Chief Financial Officer |
|
|
|
(Principal Financial and Accounting Officer) |
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