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Small-Cap Confidential
Undiscovered stocks that can make you rich

March 1, 2023

FLYW, XMTR and HURN report

Flywire (FLYW) reported Q4 results after the close yesterday that beat expectations on the top and bottom lines. Revenue was up 42% to $73 million (beat by $7.55 million) while GAAP EPS of -$0.01 beat by $0.11. Both Q1 2023 and full-year 2023 guidance came in ahead of consensus, as did adjusted earnings before taxes, depreciation and amortization (EBITDA). The company sees 2023 revenue of $353 - $364 million (+34% at the midpoint) versus consensus of $349 million. Management talked about investing in marketing, in the technology platform and in employees, all of which is seen helping the company continue to grow above 30%. Flywire added 590 clients in Q4 and ended the year at over 3,100 total. The pipeline is up over 100%. Big picture, it was a good quarter and increases my confidence in the growth trajectory this year and next. I see modest price target increases from JPMorgan and Wells Fargo so far this morning. Maintaining buy rating. BUY

Xometry (XMTR) reported early this morning with disappointing Q4 results and 2023 guidance. Starting with the fourth quarter, revenue was up 46% to $98.2 million, a miss of $6.13 million. Adjusted EPS of -$0.29 missed by $0.04. Management guided for 2023 revenue of $470 - $480 million versus expectations closer to $517 million. Recall that in Q3 management talked about sellers being willing to take lower prices than expected and they discussed tweaks (they call it price optimization) they were making to their marketplace algorithm to tighten that up. On the Q4 call this morning, management said they saw sellers continue to be willing to take lower prices throughout the quarter and, to add insult to injury, they saw their largest accounts making fewer orders. In response, management says they are stepping up their efforts to make it easier for customers to work with them. There was more detail on the call, but the bottom line is the company is having challenges and the macro environment isn’t helping. It sounds like they’ll be working on these issues for a while, and that’s driving a loss in confidence in the stock, which several analysts had MUCH higher hopes for leading into this call. XMTR is trading down sharply today and we’re going to take a bath by selling, but that’s what we’ll do. It’s entirely possible that there will be a bounce in the next few trading days so it may make sense to exit the position in a couple of steps to try to capture better pricing. Either way, the bottom line is we’re moving on due to loss of confidence. SELL

Huron Consulting (HURN) reported after the close yesterday, and results came in well ahead of expectations. Revenue of $313.7 million (+26.3%) beat by $31.3 million while adjusted EPS of $1.12 beat by $0.13. Guidance for 2023 revenue of $1.22 - $1.28 billion (+10% at the midpoint) is also ahead of expectations for $1.21 billion. EPS guidance of $3.75 to $4.25 straddles consensus of $3.98. Digging a little deeper, revenue in the digital capability (44% of total revenue) rose 37% to $130.1 million. Management said healthcare (+18%) and education (+44%) remain very strong markets as well. Management sounded very positive on the conference call. Huron is not followed by a lot of analysts, however, Benchmark does follow it and increased its price target from 90 to 95 this morning. Shares of HURN are up about 15% to 81. BUY

Tyler Laundon is chief analyst of the limited-subscription advisory, Cabot Small-Cap Confidential and grand slam advisory Cabot Early Opportunities. He has spent his entire career managing, consulting and analyzing start-up and small-cap companies. His hands-on experience has taught Tyler that the development of a superior business model is the biggest factor in determining a company’s long-term success. Accordingly, his research focuses on assessing the viability of management’s growth strategies, trends in addressable markets and achievement of major developmental milestones.