Flywire (FLYW) and Xometry (XMTR) Report
Today’s CPI reading showed inflation moderating a little (not a huge surprise) and the market has, so far, loved the result. The Nasdaq has been up over 2% in the early going.
I had intended to upgrade FLYW to a BUY SECOND HALF (from BUY HALF) and XMTR to BUY (from HOLD) because both management teams delivered very good results. However, XMTR has been up as much as 30% this morning while FLYW has been up over 15%. These are terrific moves! However, given the magnitude of the moves thus far, we’re going to stick with our current ratings on these names. I just don’t know how this day is going to end up and don’t want to encourage buying into a massive rally. We’ll give these names a few days to chill out and go from there.
On to the updates …
Flywire (FLYW) reported very solid Q2 results after the close yesterday that beat on the top line and slightly missed on the bottom line. Full-year revenue guidance was increased.
Revenue of $56.5 million grew 53% and beat by $8.9 million. EPS of $0.22 missed by $0.06. Revenue less ancillary services (marketing fees from credit card service providers and printing and mailing services) grew 56% to $51.5 million. Payment volume grew 49% to $2.9 billion. Adjusted gross profit margin was 64.5%, down slightly from 68.2% in the year-ago quarter. Foreign exchange and higher credit card usage (due to more travel mix) have had a slight impact on margin. The company added 140 new clients (2,800 total now) and revenue retention is trending above the three-year average.
Management gave full-year revenue guidance of $283 - $294 million (an increase of $14.5 million and more than the Q2 beat, also reflects some contribution from Cohort acquisition) and revenue less ancillary services guidance of $260 - $269 million (an increase of $11.5 million). Full-year adjusted EBITDA guidance is $13 - $17 million (an increase of $3 million). The Cohort Co. acquisition (closed in July) represents another step to grow education (50 new employees), especially in the APAC region, and should add around $5.5 million in revenue this year.
Management says the pipeline is still growing twice as fast as last year at this time. They also talked about how both education and healthcare (two biggest verticals) tend to be resilient in a slowing/recessionary environment. Travel is continuing to rebound after the pandemic all but shut it down. Management is investing in growth, salesforce, etc.
Short version: it was a good quarter and confidence in the business remains high. Keeping at BUY A HALF
Xometry (XMTR) reported this morning that revenue grew 89% to $95.6 million (beating by $2.5 million). Adjusted EPS was -$0.18 and beat by $0.14. Marketplace revenue was $75.6 million while supplier services revenue was $20 million. Marketplace active buyers grew 40% to 23,942 and accounts with at least $50,000 in spend grew by 76% to 894.
Management updated full-year revenue guidance to a range of $395-$400 million (+81% to +83%). Management is seeing significant increase in active buyers and suppliers and believes new supplier services and the Thomas acquisition will help drive top-line growth as well as gross profit improvements such that adjusted EBITDA will be positive next year (will be -$31 million to -$33 million this year). This report is being extremely well received today. Looking to upgrade to BUY but want to see a little more price stability first. HOLD