Flywire Expands In Travel Payments With Sertifi Deal While Education Headwinds Prompt Strategic Shift: Analyst

JP Morgan analyst Tien-tsin Huang maintained a Neutral rating on Flywire Corp FLYW with a price target of $16, down from $21.

Adjusted revenue of $113 million compared with JP Morgan and Street estimates of $119 million and guidance of $118 million-$124 million, representing 17% FXN growth (versus JP Morgan and Street estimates of 23%), primarily due to headwinds in the Education business, driven by changes to student visa policies in Canada (~$3 million), and adverse FX changes (~$3 million).

Adjusted EBITDA of $17 million came in line with JP Morgan and Street estimates of $16 million and $17 million and guidance of $15 million-$19 million despite the revenue miss. This was supported by efficiencies that drove down operating expenditures and helped adj gross margin of 67% versus JP Morgan and Street estimates of 65% and 64%, beyond favorable FX dynamics that also supported adjusted gross margin.

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Huang’s lowered expectations for 20%+ FXN organic revenue growth in fiscal 2025 proved too optimistic as Flywire issued 10%-14% FXN growth guidance. The most significant delta in his model is a headwind from the deterioration of Canadian and Australian education businesses.

Flywire announced the acquisition of Sertifi, a hotel software provider that automates processes around events, bookings and sales. The acquisition should fit nicely with Flywire’s existing franchise and help accelerate growth in the Travel business. The deal gives Flywire access to new subsegments in the global travel industry and Flywire’s global network can help drive international expansion for Sertifi.

Flywire announced a one-time $7 million-$9 million restructuring charge and the commencement of a business review in 2025, looking to re-position the business for success beyond near-term headwinds in the Education business.

Headwinds continue to build surrounding Canadian and Australian immigration policy in the near term, with management expecting the businesses to drop 30% in 2025. However, the company stressed its confidence that global competition for top student talent should support improvement in the international student market over time, highlighting that UK and EMEA Education markets remain pretty strong. The team noted they are also modeling US business cautiously, given that political dynamics show some signs of visa stress exiting the year.

More education visa headwinds emerged to drive a fourth-quarter miss on sales and 2025 FXN growth guidance of 10%-14% that came in below expectations for 20%+.

Flywire is performing well in areas it can control. Still, visibility remains weak in education for Canada, Australia, and, to a lesser degree, the US as policy changes exacerbated negative revisions to the model.

As a result, the company announced a strategic portfolio review and workforce reduction of ~10%, which helped support the adjusted EBITDA margin outlook (+300bp at mid-point for 2025) in line with prior expectations and hopefully should yield more efficient growth in line with current market conditions. Travel remains a bright spot, and the company is doubling down there by acquiring Sertifi – hotel management software including $3 billion in monetizable payment flow. Huang initially believed the business should be recalibrated as a mid-teens grower versus 20%+ before.

Huang moved his 2025 adjusted revenue estimate to $512 million from $578 million (~11% reduction) and adjusted EBITDA estimate to $98.5 million from $109.5 million (~10% reduction). He similarly reduced the first-quarter 2025 adjusted revenue estimate to $120 million from $131 million, while the adjusted EBITDA estimate for the first quarter of 2025 goes up to $19.6 million from $18.2 million. The analyst now assumed mid-teens revenue growth in the out-years, down from 20+%.

Price Action: FLYW stock is down 40.00% at $10.58 at last check Wednesday.

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