Flywire Corp (FLYW) FY 2024 MD&A

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes appearing elsewhere in this Annual Report on Form 10-K. Some of the information contained in this Annual Report on Form 10-K includes forward-looking statements that involve risks and uncertainties. You should read the sections titled “Special Note Regarding Forward-Looking Statements” and “Risk Factors” for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Our fiscal year end is December 31, and our fiscal quarters end on March 31, June 30, September 30, and December 31.

Overview

Flywire is a leading global payments enablement and software company. Our next-gen payments platform, proprietary global payment network and vertical-specific software help our clients get paid and help their customers pay with ease—no matter where they are in the world. Our clients rely on us for integrated solutions that are both global and local, and combine tailored invoicing, flexible payment options, and highly personalized omni-channel experiences. We believe we make generational advances for our clients by transforming payments into a source of value and growth for their organizations while delighting their customers with payment experiences that are engaging, secure, fast, and transparent.

Our Flywire Advantage is derived from three core elements: (i) our next-gen payments platform; (ii) our proprietary global payment network; and (iii) our vertical-specific software backed by our deep industry expertise. With our Flywire Advantage, we aim to power the transformation of our clients’ accounts receivable functions by automating paper and check-based business processes in addition to creating interactive, digital payment experiences for their customers. As a result, clients who implement our payments and software solutions can see increased digital payments and improved accounts receivable, higher enrollment in payment plans, and a reduction in customer support inquiries. We help our clients turn their accounts receivable functions into strategic, value-enhancing areas of their organizations.

We reach clients through various channels, with our direct channel being our primary go-to-market strategy. Our industry-experienced sales and relationship management teams bring expertise and local reach, and our solution combines high-tech and high-touch functions backed by 24x7 multilingual customer support, resulting in high client and customer satisfaction. In addition, the value of our Flywire Advantage has been recognized, with global financial institutions and technology providers choosing to form channel partnerships with us. These partnerships promote organic referral and lead generation opportunities and enhance our indirect sales strategy.

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The combination of our differentiated solution and efficient go-to-market strategy has resulted in strong and consistent client growth.

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Rapid domestic and international payments volume growth. We have grown our total payment volume by approximately 24% period-over-period from $24.0 billion during the year ended December 31, 2023 to $29.7 billion during the year ended December 31, 2024. We have grown our total payment volume by approximately 33% period-over-period from $18.1 billion during the year ended December 31, 2022 to $24.0 billion during the year ended December 31, 2023.

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Expanded global payments network. We have continued to add to the capabilities of our payment network by means of new local bank accounts and payment partners, and have expanded our global reach to over 240 countries and territories and more than 140 currencies.

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Strong dollar-based net retention. For the year ended December 31, 2024, our annual net dollar-based retention rate was approximately 114%. For the year ended December 31, 2023, our annual net dollar-based retention rate was approximately 125%. For the year ended December 31, 2022, our annual net dollar-based retention rate was approximately 124%. We calculate the annual net dollar-based retention rate for a given year based on the weighted average of the quarterly net dollar-based retention rates for each quarter in that year. We calculate the quarterly net dollar-based retention rate for a given quarter by dividing the revenue we earned in that quarter by the revenue we earned from the same clients in the corresponding quarter of the previous year. Our calculation of quarterly net dollar-based revenue rate for a given quarter only includes revenue from clients that were clients at the beginning of the corresponding quarter of the previous year.

As of December 31, 2024, we serve approximately 4,500 clients around the world, excluding clients acquired from the Invoiced acquisition. In education, we serve more than 3,100 institutions. In healthcare, we power more than 100 healthcare systems, including four of the top 10 healthcare systems in the United States ranked by hospital size as of December 31, 2024. In our travel and B2B verticals, we have a growing portfolio of approximately 1,300 clients as of December 31, 2024.

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Our success in building our client base around the world and expanding utilization by our clients’ customers has allowed us to achieve significant scale. We enabled over $29.7 billion and over $24.0 billion in total payment volume during the years ended December 31, 2024 and 2023, respectively. We generated revenue of $492.1 million, $403.1 million and $289.4 million for the years ended December 31, 2024, 2023 and 2022, respectively, and incurred net income of $2.9 million for the year ended December 31, 2024 and net losses of $8.6 million and $39.3 million for the years ended December 31, 2023 and 2022.

We believe that the growth of our business and our operating results will be dependent upon many factors, including our ability to add new clients, expand the usage of our solutions by our existing clients and their customers, integrate the businesses and technology platforms that we acquire and increase the breadth and depth of our payments and software capabilities by adding new solutions. While these areas present significant opportunities for us, they also pose challenges and risks that we must successfully address in order to sustain the growth of our business and improve our operating results.

While we have experienced significant growth and increased demand for our solutions over recent periods, we may continue to incur losses in the short term and may not be able to achieve or maintain profitability in the future. Our marketing is focused on generating leads to develop our sales pipeline, building our brand and market awareness, scaling our network of partners and growing our business from our existing client base. We believe that these efforts will result in an increase in our client base, revenues, and improved margins in the long term. To manage any future growth effectively, we must continue to improve and expand our IT and financial infrastructure, our operating and administrative systems and controls, and our ability to manage headcount, capital, and processes in an efficient manner. Additionally, we face intense competition in our markets, and to succeed, we need to innovate and offer solutions that are differentiated from legacy payment solutions. We must also effectively hire, retain, train, and motivate qualified personnel and senior management. There are also circumstances beyond our control which can materially impact our business that we need to respond to, including, but not limited to fluctuations in exchange rates. If we are unable to successfully address these challenges, our business, operating results, and prospects could be adversely affected.

We had approximately 1,250 full-time FlyMates as of December 31, 2024, compared to approximately 1,200 full-time FlyMates as of December 31, 2023.

2023 Follow-On Public Offering

On August 9, 2023, we entered into an underwriting agreement (Underwriting Agreement) with Goldman Sachs & Co. LLC, as representative of the several underwriters (Underwriters), in connection with the offer and sale of 8,000,000 shares of voting common stock, at a price to the public of $32.00 per share (the Primary Offering). In addition, pursuant to the terms of the Underwriting Agreement, we granted the Underwriters an option to purchase up to 1,200,000 additional shares of common stock (the Option).

The Primary Offering closed on August 14, 2023 and on September 12, 2023, the Underwriters exercised the Option in part and purchased an additional 500,000 shares of voting common stock at a price to the public of $32.00 per share (the Public Offering). We received $260.1 million in net proceeds from the Public Offering, after deducting underwriting discounts and commissions of $10.9 million and other offering costs of $1.1 million.

Recent Acquisition

In August 2024, we acquired all of the issued and outstanding shares of Invoiced for an estimated total aggregate purchase price of approximately $51.7 million, consisting of approximately $47.2 million in cash consideration, net of cash acquired and up to $7.5 million of contingent consideration, with an estimated fair value of $4.5 million on the date of acquisition. The contingent consideration represents additional payments that we may be required to make in the future dependent on the successful achievement of revenue, cross-selling, product and security and IT milestones. During the year ended December 31, 2024, we made a payment of contingent consideration of $1.1 million based on Invoiced's successful and timely achievement of the contracted milestones. Invoiced is a U.S.-based SaaS B2B company that provides accounts receivable software that automates all aspects of billing, collections, payments, reporting and forecasting within a single online platform. The acquisition of Invoiced was intended to accelerate our global expansion in our B2B vertical. Invoiced contributed $2.4 million in platform revenue during the year ended December 31, 2024.

In November 2023, we acquired all of the issued and outstanding shares of StudyLink for an estimated total aggregate purchase price of approximately $35.5 million, consisting of approximately $32.8 million in cash consideration, net of cash acquired and up to $3.9 million of contingent consideration, with an estimated fair value of $2.7 million on the date of acquisition. The contingent consideration represents additional payments that we may be required to make in the

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future dependent on the successful achievement of revenue, volume, cross-selling and engineering implementation milestones, a portion of which can be paid in the form of cash or shares of common stock, at our option, and is subject to exchange rate fluctuation adjustment between the U.S. Dollar and Australian Dollar. Additional payments in the form of shares of common stock will be made based on the continuing employment of a key employee; accordingly, the fair value of $2.4 million, approximately 84,000 shares of common stock, have been excluded from the purchase consideration. During the years ended December 31, 2024 and 2023, we expensed $1.2 million and $0.2 million, respectively, in stock based compensation associated with retention of the key employee. StudyLink is an Australian-based SaaS education company that provides platforms to education providers to support their student admissions systems and processes, including features such as eligibility assessment, offer generation, recruitment agent and commission management and acceptance processing. The acquisition of StudyLink was intended to accelerate our growth in the Australian higher education market and enhance our value proposition to payers, universities and agents in the higher education ecosystem. StudyLink contributed $7.6 million and $1.4 million in platform revenue during the years ended December 31, 2024 and 2023, respectively.

In July 2022, we acquired all of the issued and outstanding shares of Cohort Go for an estimated aggregate purchase price of $23.1 million, which consisted of $17.1 million in cash consideration, net of cash acquired, $4.3 million in shares of common stock and up to $2.2 million of contingent consideration, with an estimated fair value of $1.7 million on the acquisition date. Subsequent to the acquisition date, at each reporting date, the contingent consideration was remeasured and changes in the fair value resulting from a change in the underlying inputs were recognized in general and administrative expense in the consolidated statements of operations and comprehensive loss. Contingent consideration represented additional payments that Flywire was required to make which was dependent upon Cohort Go's achievement of specific post-acquisition milestones and was subject to exchange rate fluctuation adjustment between the U.S. Dollar and Australian Dollar. During the year ended December 31, 2023 and 2022, we paid $1.7 million and $0.5 million, respectively, in contingent consideration based on Cohort Go's successful and timely achievement of contracted milestones. No additional contingent consideration is due or payable with respect to the Cohort Go acquisition. Cohort Go is an Australian-based education payments provider that simplifies the student recruitment process by bringing together students, agents and essential student services such as health insurance into one platform. The acquisition of Cohort Go accelerated the growth of Flywire's agent related revenue and contributed to our global expansion. Cohort Go contributed $14.5 million in transaction revenue and $9.3 million in platform revenue during the year ended December 31, 2024, $16.6 million in transaction revenue and $10.4 million in platform revenue during the year ended December 31, 2023 and $6.4 million in transaction revenue and $3.3 million in platform revenue during the year ended December 31, 2022.

Our Revenue Model

We generate revenue from transactions and from platform and other fees as described below.

Transaction revenue includes fees earned from payment processing services provided to our clients, which is comprised of processing domestic and cross-border transactions. The fee is generally earned on each transaction through a rate applied to the total payment value of the transaction, which can vary based on the payment method, currency pairs being converted and the geographic region in which our clients and their customers reside. Payment processing services also include fixed fees per transaction, which generally relate to domestic payments processed. It also includes marketing fees from credit card service providers for marketing arrangements in which we perform certain marketing activities to increase the awareness of the credit card provider and promote certain methods of payments, which we consider to be ancillary to the payment processing solutions we provide to our clients.

Platform and other revenues primarily include (i) fees earned for the utilization of our platforms to optimize cash collections and student application processing, which include revenue earned from software subscription fees and usage based fees, (ii) fees for the establishment of payment plans on our payment platform, (iii) fees related to printing, mailing, and other services which we consider to be ancillary to the solutions we provide to our clients, (iv) commissions from insurance providers when an end-user purchases an insurance policy, and (v) revenue from interest earned on funds held for customers in interest-bearing accounts. Platform and other revenues has been referred to as platform and usage based fee revenue in prior filings.

Total Payment Volume

To grow revenue from clients we must facilitate the use of our payment platform by our clients to process the amounts paid to them by their customers. The more our clients use our platform and rely upon our features to automate their payments, the more payment volume is processed on our solution. This metric provides an important indication of the value of the transactions that our clients’ customers are completing on our payment platform and is an indicator of our

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ability to generate revenue from our clients. We define total payment volume as the total amount paid to our clients on our payments platforms in a given period.

Total payment volume is comprised of transaction payment volume and platform and other revenues payment volume. The following tables set forth the increase in our total payment volume, and the payment volume mix between transaction payment volume and platform and other revenues payment volume.

Key Factors Affecting Our Performance

Increased Utilization by Our Clients and Their Customers

Our ability to monetize our payments platform and global payment network is an important part of our business model. Today, we charge a fee based on the total payment volume we process on behalf of our clients. Our revenue and payment volume increases as our clients process more transactions on our payment platform and more money is collected through our global payment network. Increased average size of the payments processed on our payment platform also increases our revenue. Our ability to influence clients to process more transactions on our platform will have a direct impact on our revenue.

In addition, sustaining our growth requires continued adoption of our platform by new clients and further adoption of use cases such as payment plans, by our clients’ customers. Our ability to influence our clients to expand their customers’ usage of our platform also depends on our ability to successfully introduce new solutions, such as our solutions to support payments by international education consultants and our B2B solutions.

Mix of Business on Our Platform

Our revenue is affected by several factors, including the amount of payment volume processed by us on behalf of our clients, the industry in which our clients operate, the currency in which payments are made and received, the method of payment and the number of payment plans initiated by our clients’ customers. For example, we recognize more transaction revenue as our clients engage in cross border payment flows which may increase or decrease depending on the industry in which our clients operate. We may experience shifts in the type of revenue we earn (transaction revenue or platform and other revenues) depending on the nature of the activity of our clients and our clients’ customers on our platform.

Investment in Technology and Development and Sales and Marketing

We make significant investments in both new solutions and existing solution enhancement. New solution features and functionality are brought to market through a variety of distribution and promotional activities. We plan to continue to adopt emerging technologies, expand our library of software integrations and invest in the development of more features. While we expect our expenses related to technology and development to increase, we believe these investments will contribute to long-term growth and profitability.

Additionally, we plan to continue to expand efforts to market our payment platform and global payment network directly to our clients through comprehensive marketing initiatives. We are focused on the effectiveness of sales and marketing spending and will continue to be strategic in maintaining efficient client acquisition in the next quarters, including adjusting spending levels as needed in response to changes in the economic environment.

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Seasonality

Our operating results and operating metrics are subject to seasonality and volatility, which could result in fluctuations in our quarterly revenues and operating results or in perceptions of our business prospects. We have experienced in the past, and expect to continue to experience, seasonal fluctuations in our revenue, which can vary by geographic corridor and vertical. For instance, our revenue has historically been largest in the third quarter driven by our education peak season. Some variability results from seasonal events including the timing of when our education clients’ customers make their tuition payments on our payment platform and the number of business days in a month or quarter. We also experience volatility in certain other metrics, such as transactions processed, total payment volume and payment mix.

Economic Conditions and Resulting Consumer Spending Trends

Changes in macro-level consumer spending for education, healthcare and travel trends, including as a result of inflation or fluctuations in foreign exchange rates, could affect the amounts of volumes processed on our platform, thus resulting in fluctuations to our revenue streams.

Impacts Resulting From Government Changes to International Student Visa Policies

Revenue from our education clients, which primarily includes clients in the United States, Canada, U.K., Europe, and Asia Pacific/Australia, is affected by several factors, including policies enacted by government organizations around the world that cap the issuance of international student visas. In January 2024, the Canadian government announced what at the time appeared to be a temporary intake cap on international student permit applications to stabilize new growth for a period of two years. This cap – intended to address Canada’s housing shortage, overburdened health systems, and rising costs of living – has reportedly reduced the number of international students coming to Canada by about 40% since implementation. Building on these changes, the Immigration, Refugees, and Citizenship Canada (IRCC) announced in January 2025 that new study permits for international students will be reduced by 10% from the 2024 target of 485,000 to 437,000 in 2025 and 2026. When first instituted by the IRCC, the cap initially excluded students enrolled in master’s and PhD programs, but recent reports indicate that the 2025 and 2026 study permit intake cap will include master’s and doctoral students. Additionally, in November 2024, Canada ended its Student Direct Stream (SDS) program for expedited international student visa processing, and international students applying to study in Canada no longer need to prepay tuition to apply for a study permit. These limitations have resulted in a corresponding reduction in payment flows, which had an adverse effect on our business in the fourth quarter of 2024 and which we anticipate will continue to impact our Canada revenues in 2025.

Similarly, since late 2023, the Australian government has taken similar actions to tighten international student visa rules, including an increase in the amount of minimum savings that international students would need to have in order to obtain a visa, raising the standards of the English language proficiency requirements for student and graduate visas, a 125% increase in the visa fee for international students, and the imposition of a ban for holders of visitor visas and students holding temporary graduate visas from applying for a student visa while in Australia. In August 2024, the Australian government announced the setting of a national planning level to apply from January 1, 2025 and which is intended to limit the number of new overseas student places available in Australia – including a ceiling of 270,000 international students for calendar year 2025. However, in December 2024, the government announced a change of course, instead implementing a system to introduce two categories of student visa processing: “high priority” and “standard priority”, with all international education providers to receive high priority processing up to 80% of their indicative international student cap. After reaching 80%, the providers will receive standard priority processing. These new Australian government policies, including university quotas, slower visa processing, higher fees, and stricter financial and language requirements, has had an adverse impact on our business in the fourth quarter of 2024 and we anticipate will continue to impact our Australian revenues in 2025.

Other governments where our client institutions are located, including in the U.S., may introduce measures from time to time to manage the growth of the international student population in their respective countries, which may have adverse effects on our business. Our U.S. market saw slower growth in the fourth quarter of 2024 due to shifting visa trends. In addition, there are reports that the new executive administration in the U.S. is likely to closely scrutinize applications for international student visas, adding to uncertainty around the number of students coming to the U.S. to study in the near future. Delays in issuances of visas or visa denials may discourage prospective international students from choosing U.S. institutions as places for study. The existing rules and any introduction of new rules further limiting the attractiveness of international study by the governments of countries where our client institutions are located has and is expected in the near term to continue to adversely impact the growth of our business in the applicable regions.

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There is still a degree of uncertainty in terms of the impact the changes to international student visa policy will have on our U.S., Canadian and Australian education markets. We continue to see growth in new customers in our U.S., Canada and Australia education markets, providing a lever to offset some of the expected decline in new incoming international student growth resulting from these government changes to international student visa policies. Our business continues to remain strong amid these visa-related policy shifts, benefiting from our increasingly global and diversified footprint across verticals, sub-sectors, countries, currencies and clients.

Impact of Inflation

Inflation did not have a material effect on our cash flows and results of operations during the year ended December 31, 2024.

Diversified Mix of Clients

We have a wide range of clients across our education, healthcare, travel and B2B verticals. Volumes and revenue from clients in education, our largest vertical, rely on international enrollments and student school preferences, which can fluctuate over time.

Dynamic Changes to Client Communication and Product Solutions

We initiated a series of refinements to our technology and personalization engine to optimize our clients’ ability to offer payment plans and communicate effectively and digitally with their customers. Similarly, we configured some of our education payment plan solutions for a very streamlined implementation in support of our clients’ requests for affordability solutions for their students that could be deployed with minimal IT involvement. While we continue to invest in our technology and product capabilities, our ability to continue providing streamlined and effective products through our technology platform may impact our ability to retain and win new clients in the future. We believe that our ability to help increase payment affordability has become more critical to our clients as the lack of affordability drives the need for more financial flexibility.

Business Continuity

We have a history of operating losses and while we have experienced significant revenue growth in recent years and achieved profitability on a GAAP basis in prior quarters, 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 strategically invest in headcount, 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 industry 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. We are addressing operating losses by making continued improvements designed to create operating efficiencies and a focus on cost discipline. We believe these improvements along with strong gross margins and cash flows from operations will help us achieve our goal of generating positive annual GAAP net income in the future.

With the ongoing conflict involving Israel, we continue to engage in active workforce planning to help Israeli FlyMates support the business without interruption and implement safety measures for FlyMates in Israel.

Components of Results of Operations

Revenue

We generate revenue from transactions and from platform and other fees as described under “Our Revenue Model”.

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Payment Processing Services Costs

Payment processing services costs consist of costs incurred to process payment transactions which include banking and credit card processing fees, foreign currency translation costs, partner fees, personnel-related expenses for our FlyMates who facilitate these payments and personnel related expenses for our FlyMates who provide implementation services to our clients. We expect that payment processing services costs will increase in absolute dollars but may fluctuate as a percentage of total revenue from period to period, as we continue to invest in scaling our processing operations and grow our revenue base.

Technology and Development

Technology and development includes (a) costs incurred in connection with the development of our solution and the improvement of existing solutions, including the amortization of software and website development costs incurred in developing our solution, which are capitalized, and acquired developed technology, (b) site operations and other infrastructure costs incurred, (c) amortization related to capitalized cost to fulfill a contract, (d) personnel-related expenses, including salaries, stock based compensation and other expenses, (e) hardware and software engineering, consultant services and other costs associated with our technology platform and products, (f) research materials and facilities, and (g) depreciation and maintenance expense.

We believe delivering new functionality is critical to attract new clients and expand our relationship with existing clients. We expect to continue to make investments to expand our solutions in order to enhance our clients’ experience and satisfaction, and to attract new clients. We expect our technology and development expenses to increase in absolute dollars, but they may fluctuate as a percentage of total revenue from period to period as we expand our technology and development team to develop new solutions and enhancements to existing solutions.

Selling and Marketing

Selling and marketing expenses consist of personnel-related expenses, including stock-based compensation expense, sales commissions, amortization of acquired client relationship intangible assets, marketing program expenses, travel related expenses and costs to market and promote our solutions through advertisements, marketing events, partnership arrangements, and direct client acquisition.

We focus our sales and marketing efforts on generating awareness of our business, platform, and solutions, creating sales leads, and establishing and promoting our brand. We plan to continue investing in sales and marketing efforts by driving our go-to-market strategies, building our brand awareness, and sponsoring additional marketing events; however, we will adjust our sales and marketing spend level as needed, and this may fluctuate from period to period, in response to changes in the economic environment.

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 five-year senior secured revolving credit syndication loan (2024 Revolving Credit Facility) and three-year senior secured revolving credit syndication loan (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 December 31, 2024 and 2023, there was no outstanding indebtedness under the 2024 Revolving Credit Facility or 2021 Revolving Credit Facility.

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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.

(Loss) Gain from Remeasurement of Foreign Currency

(Loss) gain 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 in 2023 and 2024 is primarily driven by foreign and state income taxes and the release of U.S. and foreign valuation allowances, respectively. We have historically generated 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. 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. The Company released its valuation allowance on its net deferred tax assets in the U.K. as of December 31, 2024.

Results of Operations

Comparison of results for the years ended December 31, 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:

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Revenue

Revenue was $492.1 million for the year ended December 31, 2024, compared to $403.1 million for the year ended December 31, 2023, an increase of $89.0 million or 22.1%. Revenue is comprised of transaction revenue and platform and other revenues as follows:

Transaction revenue was $410.2 million for the year ended December 31, 2024, compared to $329.7 million for the year ended December 31, 2023, an increase of $80.5 million or 24.4%. The increase in transaction revenue was primarily driven by growth in transaction payment volumes for the year ended December 31, 2024 from both our existing clients and new clients added during the year ended December 31, 2024, compared to the year ended December 31, 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 year ended December 31, 2024 to $23.2 billion compared to $17.7 billion during the year ended December 31, 2023.

Platform and other revenues was $81.9 million for the year ended December 31, 2024, compared to $73.4 million for the year ended December 31, 2023, an increase of $8.5 million or 11.6%. The increase in platform and other revenues was primarily 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 $2.4 million and $7.6 million in platform and other revenues during the year ended December 31, 2024, respectively.

Payment Processing Services Costs

Payment processing services costs were $177.5 million for the year ended December 31, 2024, compared to $147.3 million for the year ended December 31, 2023, an increase of $30.2 million or 20.5%. The increase in payment processing services costs is correlated with the increase in total payment volume of approximately 24% over the same period.

Technology and Development

Technology and development expenses were $66.6 million for the year ended December 31, 2024, compared to $62.0 million for the year ended December 31, 2023, an increase of $4.6 million or 7.4%. 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 $42.1 million for the year ended December 31, 2024, compared to $38.5 million for the year ended December 31, 2023, an increase of $3.6 million or 9.4%. The increase in personnel costs was primarily driven by an increase in headcount within our technology and development teams. Stock-based compensation expense was $11.7 million for the year ended December 31, 2024, compared to $9.3 million for the year ended December 31, 2023, an increase of $2.4 million or 25.8%. The increase in stock-based compensation is attributable to an increase in equity grants awarded to existing and new FlyMates. Amortization of intangible assets were $6.2 million during the year ended December 31, 2024, compared to $7.8 million for the year ended December 31, 2023, a decrease of $1.6 million or 20.5%. The decrease in amortization expense was primarily due to an increase in acquired technology's useful lives.

Selling and Marketing

Selling and marketing expenses were $129.4 million for the year ended December 31, 2024, compared to $107.6 million for the year ended December 31, 2023, an increase of $21.8 million or 20.3%. The increase in selling and marketing expenses was primarily driven by an increase in personnel costs, stock-based compensation, amortization expense, professional fees and marketing costs. Personnel costs were $66.3 million for the year ended December 31, 2024, compared to $57.0 million for the year ended December 31, 2023, an increase of $9.3 million or 16.3%. 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 was $18.0 million for the year ended December 31, 2024, compared to $12.0 million for the year ended December 31, 2023, an increase of $6.0 million or 50.0%. The increase in stock-based compensation is attributable to an increase in equity grants awarded to existing and

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new FlyMates. Amortization of intangible assets were $8.1 million during the year ended December 31, 2024, compared to $5.1 million for the year ended December 31, 2023, an increase of $3.0 million or 58.8%. The increase in amortization expense was due to a full year of amortization expense related to the acquired intangible assets of StudyLink and amortization expense related to the acquired intangible assets of Invoiced. Professional fees were $21.2 million for the year ended December 31, 2024, compared to $18.5 million for the year ended December 31, 2023, an increase of $2.7 million or 14.6%. The increase in professional fees was primarily due to increases in third party commissions. Marketing costs were $8.2 million for the year ended December 31, 2024, compared to $7.1 million for the year ended December 31, 2023, an increase of $1.1 million or 15.5%. The increase in marketing costs was due to increased marketing initiatives and hosted events.

General and Administrative

General and administrative expenses were $125.8 million for the year ended December 31, 2024, compared to $107.6 million for the year ended December 31, 2023, an increase of $18.2 million or 16.9%. The increase in general and administrative expenses was primarily driven by an increase in stock-based compensation, personnel costs and other costs. Stock-based compensation was $35.3 million for the year ended December 31, 2024, compared to $22.5 million for the year ended December 31, 2023, an increase of $12.8 million or 56.9%. The increase in stock-based compensation is attributable to an increase in equity grants awarded to existing and new FlyMates. Personnel costs were $47.9 million for the year ended December 31, 2024, compared to $42.4 million for the year ended December 31, 2023, an increase of $5.5 million or 13.0%. The increase in personnel costs was primarily driven by an increase in headcount. Other costs were $7.0 million for the year ended December 31, 2024, compared to $5.1 million for the year ended December 31, 2023, an increase of $1.9 million or 37.3%. The increase in other costs is primarily due to indirect taxes recorded during the period.

Interest Expense

Interest expense was $0.5 million for the year ended December 31, 2024, compared to $0.4 million for the year ended December 31, 2023, an increase of 0.1 million or 25.0%. As of December 31, 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 $21.4 million for the year ended December 31, 2024, compared to $13.3 million for the year ended December 31, 2023, an increase of $8.1 million or 60.9%. The increase in interest income is attributable to the increase in our cash balance primarily associated with our Public Offering we completed in August and September 2023.

(Loss) Gain from Remeasurement of Foreign Currency

Loss from remeasurement of foreign currency was $11.8 million for the year ended December 31, 2024, compared to a gain of $4.2 million for the year ended December 31, 2023, an increase of $16.0 million or 381.0%. The increase was primarily the result of the remeasurement of foreign currency intercompany loans and impact of fluctuations in exchange rates during respective remeasurement periods.

(Benefit from) Provision for Income Taxes

Benefit from income taxes was $1.0 million during the year ended December 31, 2024, compared to a provision for income taxes of $4.2 million during the year ended December 31, 2023, a decrease of $5.2 million or 123.8%. The income tax benefit for the year ended December 31, 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 offset by income tax expense attributable to our foreign operations and U.S. state taxes. The income tax expense for the year ended December 31, 2023 was primarily attributable to income taxes related to our profitable foreign subsidiaries and U.S. state taxes. Our effective tax rate was (55.9)% for the year ended December 31, 2024, compared to (96.8)% for the year ended December 31, 2023.

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Comparison of results for the years ended December 31, 2023 and 2022

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:

Revenue

Revenue was $403.1 million for the year ended December 31, 2023, compared to $289.4 million for the year ended December 31, 2022, an increase of $113.7 million or 39.3%. Revenue is comprised of transaction revenue and platform and other revenues as follows:

Transaction revenue was $329.7 million for the year ended December 31, 2023, compared to $224.2 million for the year ended December 31, 2022, an increase of $105.5 million or 47.1%. The increase in transaction revenue was primarily driven by growth in transaction payment volumes for the year ended December 31, 2023 from both our existing clients and new clients added during the year ended December 31, 2023 compared to the year ended December 31, 2022. We experienced strong growth in transaction payment volume across all regions and verticals during the period. Transaction payment volume increased approximately 44% during the year ended December 31, 2023 to $17.7 billion compared to $12.2 billion during the year ended December 31, 2022. Our marketing services revenue increased as a result of our payments partners using more of our marketing services during the year ended December 31, 2023, compared to the year ended December 31, 2022.

Platform and other revenues was $73.4 million for the year ended December 31, 2023, compared to $65.2 million for the year ended December 31, 2022, an increase of $8.2 million or 12.6%. The increase in platform and other revenues was attributable to increased usage by our clients and new clients signed during the year ended December 31, 2023, compared to the year ended December 31, 2022.

Payment Processing Services Costs

Payment processing services costs were $147.3 million for the year ended December 31, 2023, compared to $107.9 million for the year ended December 31, 2022, an increase of $39.4 million or 36.5%. The increase in payment processing services costs is correlated with the increase in total payment volume of approximately 33% over the same period as well as increased use of credit cards, which have higher processing costs.

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Technology and Development

Technology and development expenses were $62.0 million for the year ended December 31, 2023, compared to $50.3 million for the year ended December 31, 2022, an increase of $11.7 million or 23.3%. The increase in technology and development cost was primarily driven by an increase in personnel costs and stock-based compensation expense. Personnel costs were $38.5 million for the year ended December 31, 2023, compared to $32.1 million for the year ended December 31, 2022, an increase of $6.4 million or 19.9%. The increase in personnel costs was primarily driven by an increase in headcount within our technology and development teams. Stock-based compensation expense was $9.3 million for the year ended December 31, 2023, compared to $4.9 million for the year ended December 31, 2022, an increase of $4.4 million or 89.8%. The increase in stock-based compensation is attributable to equity grants awarded to existing and new FlyMates.

Selling and Marketing

Selling and marketing expenses were $107.6 million for the year ended December 31, 2023, compared to $78.5 million for the year ended December 31, 2022, an increase of $29.1 million or 37.1%. The increase in selling and marketing expenses was primarily driven by an increase in personnel costs, professional fees, stock-based compensation, marketing costs, and amortization expense. Personnel costs were $57.0 million for the year ended December 31, 2023, compared to $44.5 million for the year ended December 31, 2022, an increase of $12.5 million or 28.1%. 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. Professional fees were $18.5 million for the year ended December 31, 2023, compared to $10.2 million for the year ended December 31, 2022, an increase of $8.3 million or 81.4%. The increase in professional fees was due to increases in third party commissions. Stock-based compensation was $12.0 million for the year ended December 31, 2023, compared to $7.9 million for the year ended December 31, 2022, an increase of $4.1 million or 51.9%. The increase in stock-based compensation is attributable to equity grants awarded to existing and new FlyMates. Marketing costs were $7.1 million for the year ended December 31, 2023, compared to $5.8 million for the year ended December 31, 2022, an increase of $1.3 million or 22.4%. The increase in marketing costs was due to increased marketing initiatives and hosted events. Amortization of intangible assets were $5.1 million during the year ended December 31, 2023, compared to $3.9 million for the year ended December 31, 2022, an increase of $1.2 million or 30.8%. The increase in amortization expense was due to acquired customer relationships related to the Cohort Go acquisition.

General and Administrative

General and administrative expenses were $107.6 million for the year ended December 31, 2023, compared to $82.9 million for the year ended December 31, 2022, an increase of $24.7 million or 29.8%. The increase in general and administrative expenses was primarily driven by an increase in personnel costs, stock-based compensation, professional fees, change in the fair value of contingent consideration, and software and hosting expenses. Personnel costs were $42.4 million for the year ended December 31, 2023, compared to $33.6 million for the year ended December 31, 2022, an increase of $8.8 million or 26.2%. The increase in personnel costs was primarily driven by an increase in headcount. Stock-based compensation was $22.5 million for the year ended December 31, 2023, compared to $17.5 million for the year ended December 31, 2022, an increase of $5.0 million or 28.6%. The increase in stock-based compensation is attributable to equity grants awarded to existing and new FlyMates. Professional fees were $14.8 million for the year ended December 31, 2023, compared to $11.1 million for the year ended December 31, 2022, an increase of $3.7 million or 33.3%. The increase in professional fees was due to increased legal, consulting and audit fees. Change in the fair value of contingent consideration related to acquisitions was $0.4 million for the year ended December 31, 2023, compared to $(2.8) million for the year ended December 31, 2022, an increase of $3.2 million or 114.3%. The increase in the fair value of contingent consideration was due to an increase in the fair value of contingent consideration related Cohort Go which was paid in the first quarter of 2023. Software and hosting expenses were $8.3 million for the year ended December 31, 2023, compared to $5.6 million for the year ended December 31, 2022, an increase of $2.7 million or 48.2%. The increase in software and hosting expenses was primarily related to increased hosting fees based on payment volumes growth and additional software needs based on headcount growth.

Interest Expense

Interest expense was $0.4 million for the year ended December 31, 2023, compared to $1.2 million for the year ended December 31, 2022, a decrease of 0.8 million or 66.7%. During July 2021, we entered into a Revolving Credit Facility with three banks for a total commitment of $50.0 million. We drew $25.9 million on the Revolving Credit Facility and used the proceeds to early prepay the existing Loan and Security Agreement (LSA) of $25.0 million. During the year ended December 31, 2022, we repaid the $25.9 million outstanding under the Revolving Credit Facility, which resulted in

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no interest expense on debt for the year ended December 31, 2023. Interest expense for the year ended December 31, 2023 consists primarily of amortization of debt issuance cost and debt discount from our previous LSA.

Interest Income

Interest income was $13.3 million for the year ended December 31, 2023, compared to $3.2 million for the year ended December 31, 2022, an increase of $10.1 million or 315.6%. The increase in interest income was due to our investment in interest bearing accounts during the second quarter of 2022, an increase in yield earned from our investment in money market funds as interest rates increased during the year ended December 31, 2023, compared to the year ended December 31, 2022 and an increase in our cash balance.

Gain (Loss) from Remeasurement of Foreign Currency

Gain (loss) from remeasurement of foreign currency was $4.2 million for the year ended December 31, 2023, compared to $(9.2) million for the year ended December 31, 2022, an increase of $13.4 million or 145.7%. The increase was primarily the result of the remeasurement of foreign currency intercompany loans and impact of fluctuations in exchange rates during respective remeasurement periods.

Provision for Income Taxes

Provision for income taxes was $4.2 million during the year ended December 31, 2023, compared to $2.0 million during the year ended December 31, 2022, an increase of $2.2 million or 110.0%. During the year ended December 31, 2023 and 2022, we recorded an income tax expense of $4.2 million and $2.0 million, respectively, which was primarily attributable to income taxes related to our profitable foreign subsidiaries and U.S. state taxes. Our effective tax rate was(96.8)% for the year ended December 31, 2023, compared to (5.4)% for the year ended December 31, 2022.

Key Operating Metrics and Non-GAAP Financial Measures

To supplement our 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.

For the year ended December 31, 2024, transaction revenue and platform and other revenues represented 83.4% and 16.6% of our revenue, respectively. For the year ended December 31, 2024, transaction revenue and platform and other revenues represented 86.1% and 13.9% of our total revenue less ancillary services, respectively.

For the year ended December 31, 2023, transaction revenue and platform and other revenues represented 81.8% and 18.2% of our revenue, respectively. For the year ended December 31, 2023, transaction revenue and platform and other revenues represented 85.8% and 14.2% of our total revenue less ancillary services, respectively.

For the year ended December 31, 2022, transaction revenue and platform and other revenues represented 77.5% and 22.5% of our revenue, respectively. For the year ended December 31, 2022, transaction revenue and platform and other revenues represented 83.2% and 16.8% of our total revenue less ancillary services, respectively.

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For the year ended December 31, 2024, our total payment volume was over $29.7 billion, consisting of $23.2 billion of total payment volume from transactions included in transaction revenue and $6.5 billion of total payment volume from transactions included in platform and other revenues.

For the year ended December 31, 2023, our total payment volume was over $24.0 billion, consisting of $17.7 billion of total payment volume from transactions included in transaction revenue and $6.3 billion of total payment volume from transactions included in platform and other revenues.

For the year ended December 31, 2022, our total payment volume was approximately $18.1 billion, consisting of approximately $12.2 billion of total payment volume from transactions included in transaction revenue and approximately $5.8 billion of total payment volume from transactions included in platform and other revenues.

Revenue Less Ancillary Services, FX Neutral Revenue Less Ancillary Services, Adjusted Gross Profit, Adjusted Gross Margin, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin 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:

•
Revenue Less Ancillary Services - Revenue Less Ancillary Services represents our consolidated revenue in accordance with GAAP less (i) pass-through cost for printing and mailing services and (ii) marketing fees. We exclude these amounts to arrive at this supplemental non-GAAP financial measure as we view these services as ancillary to the primary services we provide to our clients.

•
FX Neutral Revenue Less Ancillary Services - FX Neutral Revenue Less Ancillary Services represents Revenue Less Ancillary Services adjusted to show presentation on a constant currency basis. The constant currency information presented is calculated by translating current period results using prior period weighted average foreign currency exchange rates. We analyze FX Neutral Revenue Less Ancillary Services to provide a comparable framework for assessing how the business performed excluding the effect of foreign currency fluctuations.

•
Adjusted Gross Profit - Adjusted Gross Profit represents Revenue Less Ancillary Services, less cost of revenue adjusted to (i) exclude pass-through cost for printing services, (ii) offset marketing fees against costs incurred and (iii) exclude depreciation and amortization, including accelerated amortization on the impairment of customer set-up costs tied to technology integration, if applicable. Management believes this presentation supplements the GAAP presentation of gross profit with a useful measure of the gross profit of our payment-related services, which are the primary services we provide to our clients.

•
Adjusted Gross Margin - Adjusted Gross Margin represents Adjusted Gross Profit divided by Revenue Less Ancillary Services. Management believes this presentation supplements the GAAP presentation of gross margin with a useful measure of the gross margin of our payment-related services, which are the primary services we provide to our clients.

•
EBITDA - EBITDA represents our consolidated net income (loss) in accordance with GAAP adjusted to include (i) interest expense, (ii) interest income, (iii) (benefit from) provision for income taxes and (iv) depreciation and amortization.

•
Adjusted EBITDA - Adjusted EBITDA represents EBITDA further adjusted by excluding (i) stock-based compensation expense and related payroll taxes, (ii) the impact from the change in fair value measurement for

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contingent consideration associated with acquisitions, (iii) gain (loss) from the remeasurement of foreign currency, (iv) indirect taxes related to intercompany activity, (v) acquisition related transaction costs and (vi) employee retention costs, such as incentive compensation associated with acquisition activities. Management believes that the exclusion of these amounts to calculate Adjusted EBITDA provides useful measures for period-to-period comparisons of our business.

•
Adjusted EBITDA Margin - Adjusted EBITDA Margin represents Adjusted EBITDA divided by Revenue Less Ancillary Services. Management believes this presentation supplements the GAAP presentation of gross margin with a useful measure of the gross margin of our payment-related services, which are the primary services we provide to our clients.

•
Non-GAAP Operating Expenses - Non-GAAP Operating Expenses represents GAAP Operating Expenses adjusted by excluding (i) stock-based compensation expense and related payroll taxes, (ii) depreciation and amortization, (iii) acquisition related transaction costs, (iv) employee retention costs, such as incentive compensation associated with acquisition activities and (v) the impact from the change in fair value measurement for contingent consideration associated with acquisitions.

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, FX Neutral Revenue Less Ancillary Services, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin 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, FX Neutral Revenue Less Ancillary Services, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin 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:

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FX Neutral Revenue Less Ancillary Services:

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EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin:

(1)
Acquisition related transaction costs consisted of legal and advisory fees incurred in connection with the Invoiced, StudyLink and Cohort Go acquisitions.

(2)
Acquisition related employee retention costs consisted of costs incurred to retain and compensate Invoiced, StudyLink and WPM Group Ltd. (WPM) employees in connection with integration of the business. WPM was acquired on December 14, 2021.

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Reconciliation of GAAP Operating Expenses to Non-GAAP Operating Expenses:

Liquidity and Capital Resources

As of December 31, 2024, our principal source of liquidity is cash and cash equivalents of $495.2 million, short-term available-for-sale debt securities of $115.8 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, treasury bills, foreign agency securities and commercial paper.

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 12 - Stockholders’ Equity in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. During the year ended December 31, 2024, the Company repurchased 2,386,856 shares of its common stock for an aggregate amount of $45.6 million under the Repurchase Program, which includes commissions, $1.4 million of common stock repurchase and $0.5 million of excise tax recorded in accrued expense as of December 31, 2024. The repurchased shares are currently being held as treasury stock. As of December 31, 2024, approximately $104.9 million of the originally authorized amount under the Repurchase Program remained available for future repurchases.

On February 23, 2024, we entered into an Amended and Restated Credit Agreement for a five-year senior secured revolving credit syndication loan with four banks 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 Primary 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 and cash equivalents 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 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

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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.

Contractual Obligations

Contractual obligations consist of operating leases that relate to real estate for our primary facilities.

The following table summarizes our contractual obligations as of December 31, 2024:

Cash Flows

The following table sets forth a summary of our cash flow information for the periods presented:

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 2024, net cash provided by operating activities of $91.5 million was primarily the result of net income of $2.9 million adjusted for non-cash expenses of $72.2 million, which primarily consisted of stock-based compensation expense of $64.9 million and depreciation and amortization of $17.4 million, and the benefit of changes in operating assets and liabilities, net of acquisitions of $16.4 million.

During 2023, net cash provided by operating activities of $80.6 million was primarily the result of net loss of $8.6 million adjusted for non-cash expenses of $62.4 million, which primarily consisted of stock-based compensation expense of$43.7 million and depreciation and amortization of $15.8 million, and the benefit of changes in operating assets and liabilities, net of acquisitions of $26.8 million.

During 2022, net cash provided by operating activities of $5.4 million was primarily the result of net loss of $39.3 million adjusted for noncash expenses of $40.3 million, which primarily include stock-based compensation expense of $30.3 million, depreciation and amortization of $12.3 million and amortization of contract costs of $1.8 million, offset by change in fair value of contingent consideration of $(2.8) million and deferred tax benefit of $(1.7) million, benefited by changes in operating assets and liabilities, net of acquisitions of $4.4 million.

Net cash provided by operating activities was $91.5 million during the year ended December 31, 2024, compared to $80.6 million during the year ended December 31, 2023. The increase of $10.8 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 $16.4 million during the year ended December 31, 2024, compared to a net increase of $26.8 million during the year

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ended December 31, 2023. This increase was driven by an increase in funds receivable from payment partners of $74.8 million, as a result of the timing of collections from our partners in the applicable period, partially offset by a decrease in funds payable to clients of $79.7 million compared to the prior year as a result of the timing of payments to our clients in the applicable period. The timing of collections from our partners will vary from period to period based on when our clients’ customer payment for a particular transaction is made, as well as the customer’s payment method which impacts the timing of settlement of the payment. 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 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 $9.9 million) which increased by $21.3 million for the year ended December 31, 2024, compared to the prior period, reflective of the growth in transaction payment volumes, from both our existing clients and new clients, an increase in interest income as a result of our higher cash balances and higher market interest rates, offset by increases in our costs and operating expenses, the largest of which was our payment processing services costs and an increase in losses from the remeasurement of foreign currency due to foreign currency intercompany loans and impact of fluctuations in exchange rates during respective remeasurement periods.

Net cash provided by operating activities was $80.6 million during the year ended December 31, 2023, compared to $5.4 million during the year ended December 31, 2022. The increase of $75.2 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 $26.8 million during the year ended December 31, 2023, compared to a net increase of $4.4 million during the year ended December 31, 2022. This increase was driven by an increase in funds payable to clients of $37.7 million compared to the prior year primarily as a result of the timing of payments to our clients in the applicable period, partially offset by a decrease in funds receivable from payment partners of $20.1 million, as a result of the timing of collections from our partners 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 our client. The timing of collections from our partners will vary from period to period based on when our clients’ customer payment for a particular transaction is made, as well as the customer’s payment method which impacts the timing of settlement of the payment. This net increase in cash provided by operating activities was also impacted by our operating cash flows from our net loss (after adjustments for an increase in non-cash expenses of $22.0 million) which increased by $52.8 million for the year ended December 31, 2023, compared to the prior period, reflective of the growth in transaction payment volumes, from both our existing clients and new clients, an increase in gains from the remeasurement of foreign currency due to foreign currency intercompany loans and impact of fluctuations in exchange rates during respective remeasurement periods and an increase in interest income as a result of our higher cash balances and higher market interest rates, offset by increases in our costs and operating expenses, the largest of which was our payment processing services costs.

Investing Activities

During 2024, cash used in investing activities of $215.8 million was primarily the result of purchase of short-term and long-term investments for $193.9 million, our acquisition of Invoiced for a purchase consideration of $45.2 million, net of cash acquired and capitalization of internally developed software costs of $5.3 million, offset primarily by the proceeds from the maturity and sale of short and long-term investments of $29.6 million.

During 2023, cash used in investing activities of $38.8 million was the result of our acquisition of StudyLink for a purchase consideration of $32.8 million, net of cash acquired, capitalization of internally developed software costs of $5.0million and purchase of property and equipment for $1.0 million.

During 2022, cash used in investing activities of $24.7 million was primarily the result of our acquisition of Cohort Go for a purchase consideration of $17.1 million, capitalization of internally developed software costs of $5.7 million and purchase of property and equipment for $1.4 million.

Financing Activities

During 2024, cash used in financing activities of $37.6 million was primarily driven by common stock repurchase of $43.7 million, offset primarily by proceeds from the exercise of stock options of $5.6 million and proceeds from the issuance of stock under the ESPP of $3.1 million.

During 2023, cash provided by financing activities of $263.4 million was driven by the proceeds from issuance of common stock in our Primary Offering of $261.1 million, proceeds from the exercise of stock options of $10.4million and proceeds from the issuance of stock under the ESPP of $2.7 million, offset by payments of tax withholdings for net settled

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option exercises of $8.5 million, payments for contingent consideration of $1.2 million and payments of costs related to the Primary Offering of $1.1 million.

During 2022, cash used in financing activities of $24.0 million was driven by the repayment of our Revolving Credit Facility of $25.9 million, payments for contingent consideration of $3.7 million primarily related to the acquisition of Simplee, payments of tax withholdings of $2.6 million for net settled option exercises, offset by proceeds from the exercise of stock options of $7.0 million and proceeds from the issuance of stock under the ESPP of $1.3 million.

As of December 31, 2024 and 2023, there was no outstanding indebtedness under the 2024 Revolving Credit Facility and the 2021 Revolving Credit Facility.

Critical Accounting Policies

Our consolidated financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K are prepared in accordance with GAAP. The preparation of our 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 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.

Our significant accounting policies are described in Note 1 - Business Overview and Summary of Significant Accounting Policies to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. We believe that the following critical accounting policies are most important to the judgments and estimates used in the preparation of our consolidated financial statements.

Intangible Assets, net

Intangible assets consist of acquired developed technology, acquired relationships and trade names and associated trademarks. Intangible assets are recognized at fair value using generally accepted valuation methods deemed appropriate for the type of intangible asset acquired, and reported net of accumulated amortization, separately from goodwill.

We estimate the fair value of acquired developed technology using the relief-from-royalty method, a form of the income approach, which estimates the cost savings that accrue to the owner of an intangible asset who would otherwise have to pay royalties or license fees on revenues earned through the use of the asset. The royalty rate used is based on an analysis of empirical, market-derived royalty rates for similar technology. The fair value of acquired relationships is estimated using the multi-period excess earnings method under the income approach, which represents the total income to be generated by the asset. Under this method, the value of an intangible asset is equal to the present value of the incremental after-tax cash flows attributable solely to the intangible asset. We value trade names and trademarks using the relief from royalty method. The relief-from-royalty method determines the present value of the economic royalty savings associated with the ownership or possession of the trade name or trademark based on an estimated royalty rate applied to the cash flows to be generated by the business. The estimated royalty rate is determined based on the assessment of a reasonable royalty rate that a third party would negotiate in an arm’s-length license agreement for the use of the trade name or trademark.

The useful lives for developed technology are determined based on expectations regarding the evolution of existing technology and future investments. The useful lives for acquired related intangible assets are determined based primarily on forecasted cash flows, which include estimates for the revenues, expenses and customer attrition associated with the assets. The useful lives of definite-lived trademarks and trade names are based on our plans to phase out the trademarks and trade names in the applicable markets.

Intangible assets are amortized using a method that reflects the pattern in which the economic benefits of the intangible asset are expected to be realized over their estimated useful lives ranging from one to fifteen years. No significant residual value is estimated for intangible assets.

The estimated fair values of these intangible assets reflect various assumptions including discount rates, revenue growth rates, operating margins, terminal values, attrition, useful lives and other prospective financial information.

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The judgments made in determining the estimated fair value of intangibles as well as the estimated lives, can materially impact net income or loss in periods subsequent to the acquisition through depreciation and amortization, and in certain instances through impairment charges, if the assets become impaired in the future.

Software Developed for Internal-Use

We capitalize costs incurred in the development of internal-use software during the application development stage including third-party consulting costs and compensation expenses related to FlyMates who devote time to the development of the projects. We also capitalize costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality. Once the additional functionality is available for general use, capitalization ceases and the asset begins being amortized.

We evaluate the useful lives of internal-use software whenever changes in circumstances occur that could impact the recoverability of these assets. Unforeseen circumstances in software development, such as a significant change in the manner in which the software is intended to be used, obsolescence or a significant reduction in revenues due to attrition, could require us to implement alternative plans with respect to a particular effort, which could result in the impairment of previously capitalized software development costs.

Contingent Consideration

Contingent consideration in business combinations is recognized at fair value on the acquisition date.

In connection with the acquisition of Invoiced, we entered into an agreement to make certain earn-out payments based on Invoiced's achievement of certain targets related to revenue, cross-selling, product and security and IT milestones established through a period ending December 31, 2025. The fair value of the contingent consideration related to the revenue milestones was determined using an option pricing model and the fair value of the contingent consideration related to the cross-selling, product and security and IT milestones was determined using a scenario-based method that reflect our expectation about the probability of payment based on facts and circumstances that existed at the acquisition closing date. The option pricing model includes significant unobservable inputs such as probability of achieving earn-out revenue thresholds and discount rates. The scenario-based method includes significant unobservable inputs such as the probability of achieving earn-out targets and discount rates. Increases or decreases in any of the probabilities of success in which the revenue, cross-selling, product and security and IT milestones are expected to be achieved would result in higher or lower fair value measurement, respectively. Increases or decreases in the discount rate would result in a lower or higher fair value measurement, respectively.

In connection with the acquisition of StudyLink, we entered into an agreement to make certain earn-out payments based on StudyLink's achievement of revenue, volume, cross-selling and engineering implementation milestones established through a period ending December 31, 2025. The fair value of the contingent consideration related to the revenue milestone was determined using an option pricing model and the fair value of the contingent consideration related to the volume of money movement, cross-selling and engineering implementation milestones was determined using a scenario-based method that reflect our expectation about the probability of payment based on facts and circumstances that existed at the acquisition closing date. The option pricing model includes significant unobservable inputs such as probability of achieving earn-out revenue thresholds and discount rates. The scenario-based method includes significant unobservable inputs such as the probability of achieving earn-out targets and discount rates. Increases or decreases in any of the probabilities of success in which the revenue, volume, cross-selling and the engineering implementation milestones are expected to be achieved would result in higher or lower fair value measurement, respectively. Increases or decreases in the discount rate would result in a lower or higher fair value measurement, respectively.

In connection with the acquisition of Cohort Go, we entered into an agreement to make certain earn-out payments based on Cohort Go's achievement of specific post-acquisition milestones established through a period ending March 31, 2023. The fair value of the contingent consideration was determined using a scenario-based method formed on the likelihoods of achieving each of the milestones. Increases or decreases in any of the probabilities of success in which the specific post-acquisition milestones were expected to be achieved would result in a higher or lower fair value measurement, respectively. Increases or decreases in the discount rate would result in a lower or higher fair value measurement, respectively.

Subsequent to the acquisition date, at each reporting date, the contingent consideration is remeasured and changes in the fair value resulting from a change in the underlying inputs are recognized in general and administrative expense in the consolidated statements of operations and comprehensive loss until the contingent consideration is settled. The maximum amount we would be required to pay related to the Invoiced acquisition is $7.5 million. The maximum amount

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we would be required to pay related to the StudyLink acquisition is $3.9 million. During the year ended December 31, 2024, we made a payment of contingent consideration of $1.1 million based on Invoiced's successful and timely achievement of the contracted milestones. During the year ended December 31, 2023, we made the final Cohort Go payment of contingent consideration of $1.7 million, in the form of cash, based on Cohort Go's successful and timely achievement of the contracted milestones. No additional contingent consideration is due or payable with respect to the Cohort Go acquisition. The fair value of the contingent consideration at December 31, 2024 and 2023 was $5.1 million and $2.9 million, respectively.

Revenue Recognition

We derive revenue from transactions and platform and other revenues.

Transaction Revenue

Our transaction revenue is derived from fees charged for payment processing services provided to educational institutions, healthcare entities and other commercial entities, which is comprised of processing domestic and cross-border transactions. Our services relate to facilitating payments from individuals, such as students and patients, and organizations to clients. Fees charged for payment processing services consists of a rate applied to the monetary value of the payment and can vary based on the payment method, currency pair conversion the transaction is settling in, as well as the geographic region in which the client and the client’s customer resides. Fees received are recorded as revenue in the consolidated statements of operations and comprehensive loss upon completion of the payment processing transaction. We do not recognize the underlying amount of the transaction being settled between client and client’s customer, as revenue or cost of revenue in the consolidated statements of operations and comprehensive loss, as we are not the responsible party for fulfilling the obligation between the client and client’s customer. Therefore, revenue is only recognized for the fee for which we are entitled for processing the payment.

We also earn revenue from fees charged to credit card service providers for marketing arrangements in which we perform certain marketing activities to increase the awareness of the credit card provider and promote certain methods of payment. Consideration under these arrangements include fixed fees and variable fees based on a percentage of transactions processed during the duration of the marketing program.

The money can be wired directly from the client’s customer to us; however, in certain situations when the client’s customer lives in a country where we do not have an active bank account, we use third-party service providers to collect wired funds before remitting the funds to us. The third-party service provider invoices us on a recurring basis with a fee for each payment processed and deposited into our bank account. The fee paid to third-party service providers as well as any foreign exchange banking fees paid by us are reflected in the payment processing services costs line in the consolidated statements of operations and comprehensive loss.

Platform and Other Revenues

Our platform and other revenues primarily include (i) fees earned for the utilization of the Company's platforms to optimize cash collections and student application processing, which include revenue earned from software subscription fees and usage-based fees, (ii) fees for the establishment of payment plans on the Company's payment platform, (iii) fees related to printing, mailing, and other services which are ancillary to the solutions the Company provides to its clients, (iv) commissions from insurance providers when an end-user purchases an insurance policy, and (v) revenue from interest earned on funds held for customers in interest-bearing accounts. Platform and other revenues has been referred to as platform and usage-based fee revenue in prior filings.

Performance Obligations

We use significant judgment on determining the performance obligations in the arrangement based on considerations such as whether the client can benefit from each service on its own or together with other resources that are readily available from third parties or from us and whether each service is distinct in the context of the arrangement, whereby the transfer of the service is separately identifiable from other promises in the contract. In addition, we consider whether the arrangements contain a series of distinct services that are substantially the same and whether they have the same pattern of transfer.

Substantially all of our arrangements represent a single promise to provide continuous access to our platform to perform a series of activities such as payment processing services, cash collection optimization services, marketing, printing and mailing services, on an as-needed basis. As each day of providing these services is substantially the same

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and the client simultaneously receives and consumes the benefits as services are provided, these services are viewed as a single performance obligation comprised of a series of distinct daily services. We satisfy the performance obligation as these services are provided. Revenue is recognized in the month the service is complete.

For those arrangements that include fixed consideration, the fixed component is recognized ratably over the service period while variable consideration is recognized in the period earned.

We consider implementation service an activity to fulfill a contract, rather than a distinct performance obligation as the client does not obtain benefits from the implementation service alone. We charge an immaterial amount for implementation services.

Variable Consideration

Our contracts contain variable consideration as the amount we expect to receive in a contract is based on the occurrence or non-occurrence of future events, such as processing services performed as a transaction-based pricing arrangement. The variable consideration relates specifically to our effort to transfer each distinct daily service, as such we allocate the variable consideration earned to the distinct day in which those activities are performed and we recognize these fees as revenue in period earned, at which point the variable amount is known and it does not require estimation.

Other Revenue Recognition Policies

We incur costs in processing payments which may include banking, credit card processing, foreign currency translation and partner fees. These fees are direct costs incurred in providing payment processing services. The determination of whether we are a principal to a transaction (gross revenue) or an agent (net revenue) can require considerable judgment. Changes in judgments with respect to these assumptions and estimates could impact the amount of revenue recognized. Since we control the payment processing service, we are responsible for completing the payment, bear primary responsibility for the fulfillment of the payment service, and have full discretion in determining the fee charged, we act as a principal. As such, we recognize payment processing fee charged on a gross basis.

Recent Accounting Pronouncements

See Note 1 - Business Overview and Summary of Significant Accounting Policies to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for accounting pronouncements adopted and accounting pronouncements not yet adopted as of December 31, 2024.

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