Canada Revenue Impact
Q: What caused the reduction in Canada revenue guidance?
A: Management explained that the reduction in Canada's revenue guidance is due to decreased student enrollments caused by uncertainty over Canadian visa policies and graduate work permits. While revenue is down approximately 30% year-over-year, the previous guidance had anticipated growth in Canada, leading to a larger relative decrease compared to expectations , ,. They adjusted the guidance to reflect current trends and believe it is balanced, considering the challenges faced in Canada.

Growth in Other Markets
Q: Can growth in other markets offset Canada's weakness?
A: Management expressed optimism that growth in other markets like India, China, the U.K., and Australia will help offset the weakness in Canada. They highlighted strong performance and investments in India, including new bank integrations and partnerships, and noted significant strength in China during Q2. Additionally, the U.K. and Australia markets are performing well, with the latter benefiting from new integrated offerings and client growth.

Invoiced Acquisition Impact
Q: How will the Invoiced acquisition affect growth and margins?
A: Management is excited about the acquisition of Invoiced, an accounts receivable automation company. They see immediate opportunities to monetize the existing several billion dollars of volume on Invoiced's platform by integrating Flywire's payment capabilities. They plan to invest in the business to accelerate growth and expect the integration to start contributing modestly in 2024, with more significant impact in 2025 and beyond. The acquisition is expected to support a strong exit for the year, though significant EBITDA upside was not included in guidance to allow for investment.

Gross Margin Performance
Q: What drove the gross margin outperformance this quarter, and outlook ahead?
A: Gross margin was relatively flat this quarter, despite travel growing quickly, which typically has lower margins. Management attributed the outperformance to factors like a favorable mix of corridors and countries, optimization of payment costs, and positive effects from FX settlements. Looking ahead, they expect gross margins to decline by 100 to 200 basis points per year, consistent with previous expectations.

Net Revenue Retention
Q: How will payer retention affect Net Revenue Retention over the medium term?
A: Management reported that Net Revenue Retention (NRR) remains strong in the low to mid-120% range, consistent with historical performance, excluding the impact from Canada. They are focusing on increasing transactions per payer over their lifetime, with metrics moving in the right direction.

New Client Adds
Q: What is the profile of new client cohorts and their impact on growth?
A: Management reported adding over 200 new clients this quarter, with average Annual Recurring Revenue (ARR) per client increasing compared to prior quarters ,. The new client signings were strong across verticals, particularly in travel and education, and are expected to sustain strong growth trends in the years ahead ,.

Travel Vertical Growth
Q: How is the travel vertical performing and affecting margins?
A: Travel has become Flywire's second largest vertical, experiencing strong growth due to winning deals globally across all subsegments. Although travel typically has lower gross margins due to higher prevalence of credit cards, the company's optimization efforts and favorable mix have helped maintain margins this quarter.

Health Care Trends
Q: What are the trends in the health care vertical?
A: The health care vertical faced challenges with growth being offset by client divestitures and other issues. However, management expects the health care team to return to growth in the second half of the year, aided by wins, expansions, and the success of their integrated financing offering.

Recapture Assumption
Q: What is the visibility on recapturing volume from Canada in other markets?
A: Management does not see clear evidence of recapturing volumes from Canada in other destination markets such as the U.K. and Australia. While these markets are performing strongly, they cannot comfortably attribute this to recapture from Canada.

Regulatory Risks
Q: Are there other potential regulatory risks in markets besides Canada?
A: Management does not anticipate regulatory risks similar to Canada's in other markets. They mentioned positive developments in the U.K., where recent statements have clarified student visa policies, and strong performance in Australia, with no significant regulatory concerns noted.

Implementation Capacity
Q: Do you have enough investment in implementation to support client growth?
A: Management is confident in their ability to onboard new clients efficiently, noting that the implementation team is performing well and time to revenue is satisfactory. They are investing appropriately across sales, implementation, and support teams to ensure clients are deployed effectively, without expecting negative impacts on margins.

Integration Impact on Margins
Q: How will customization and backend integration work affect margins?
A: Management does not foresee any negative impact on margins from customization and integration work required for clients. They have built these processes into their cost structure and continue to improve implementation efficiency, feeling confident about the overall impact on profitability.