0000950170-22-009879.txt : 20220513 0000950170-22-009879.hdr.sgml : 20220513 20220513163414 ACCESSION NUMBER: 0000950170-22-009879 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 93 CONFORMED PERIOD OF REPORT: 20220331 FILED AS OF DATE: 20220513 DATE AS OF CHANGE: 20220513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Flywire Corp CENTRAL INDEX KEY: 0001580560 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 270690799 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-40430 FILM NUMBER: 22923366 BUSINESS ADDRESS: STREET 1: 141 TREMONT STREET, SUITE 10 CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 617-329-4524 MAIL ADDRESS: STREET 1: 141 TREMONT STREET, SUITE 10 CITY: BOSTON STATE: MA ZIP: 02111 FORMER COMPANY: FORMER CONFORMED NAME: peerTransfer Corp DATE OF NAME CHANGE: 20130701 10-Q 1 flyw-20220331.htm 10-Q 10-Q
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ROC

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2022

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

Commission File Number: 001-40430

 

FLYWIRE CORPORATION

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

27-0690799

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

141 Tremont St #10

Boston, MA

02111

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (617) 329-4524

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

 

Voting common stock, $0.0001 par value per share

FLYW

The Nasdaq Stock Market LLC
(Nasdaq Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of May10, 2022, the registrant had 101,226,518 shares of voting common stock, $0.0001 par value per share, outstanding and 5,988,378 shares of non-voting common stock $0.0001 par value per share, outstanding.

 

 

 


 

Table of Contents

 

 

 

Page

 

Special Note Regarding Forward-Looking Statements

2

 

 

 

PART I.

FINANCIAL INFORMATION

4

Item 1.

Financial Statements (Unaudited)

4

 

Condensed Consolidated Balance Sheets

4

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

5

 

Condensed Consolidated Statements of Convertible Preferred Stock, Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

6

 

Condensed Consolidated Statements of Cash Flows

7

 

Notes to Condensed Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

25

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

40

Item 4.

Controls and Procedures

41

 

 

 

PART II.

OTHER INFORMATION

42

Item 1.

Legal Proceedings

42

Item 1A.

Risk Factors

42

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

82

Item 3.

Defaults Upon Senior Securities

82

Item 4.

Mine Safety Disclosures

82

Item 5.

Other Information

82

Item 6.

Exhibits

83

Signatures

84

 

 


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, as well as information included in oral statements or other written statements made or to be made by us, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve substantial risks and uncertainties. All statements other than statements of historical fact contained in this report, including statements regarding our future results of operations and financial condition, business strategy, and plans and objectives of management for future operations, are forward-looking statements. In some cases, forward-looking statements may be identified by words such as “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “target,” “plan,” “expect,” or the negative of these terms or other similar expressions. These forward-looking statements include, but are not limited to, statements concerning the following:

our future financial performance, including our expectations regarding our revenue, cost and operating expenses, including changes in technology and development, selling and marketing and general and administrative expenses (including any components of the foregoing), gross profit and our ability to achieve, and maintain, future profitability;
our business plan and our ability to effectively manage our growth;
our cross-border expansion plans and ability to expand internationally;
anticipated trends, growth rates, and challenges in our business and in the markets in which we operate;
the sufficiency of our cash and cash equivalents to meet our liquidity needs;
political, economic, legal, social and health risks, including the COVID-19 pandemic and subsequent public health measures that may affect our business or the global economy;
beliefs and objectives for future operations;
our ability to develop and protect our brand;
our ability to maintain and grow the payment volume that we process;
our ability to further attract, retain, and expand our client base;
our ability to develop new solutions and services and bring them to market in a timely manner;
our expectations concerning relationships with third parties, including strategic partners;
the effects of increased competition in our markets and our ability to compete effectively;
future acquisitions or investments in complementary companies, products, services, or technologies;
our ability to enter new client verticals, including our relatively new business-to-business sector;
our expectations regarding anticipated technology needs and developments and our ability to address those needs and developments with our solutions;
our expectations regarding litigation and legal and regulatory matters;
our expectations regarding our ability to meet existing performance obligations and maintain the operability of our solutions;
our expectations regarding the effects of existing and developing laws and regulations, including with respect to payments and financial services, taxation, privacy and data protection;
economic and industry trends, projected growth, or trend analysis;
our ability to attract and retain qualified employees;

2


 

our ability to maintain, protect, and enhance our intellectual property;
our ability to maintain the security and availability of our solutions;
the increased expenses associated with being a public company; and
the future market price of our common stock.

Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, including risks described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Other sections of this Quarterly Report on Form 10-Q may include additional factors that could harm our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in, or implied by, any forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements, events, or circumstances. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report or to conform these statements to actual results or to changes in our expectations. You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this report with the understanding that our actual future results, levels of activity, performance, and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

Unless otherwise noted or unless the context provides otherwise, all references in this Quarterly Report on Form 10-Q to our “common stock” refers to our voting common stock.

Investors, the media, and others should note that we intend to announce material information to the public through filings with the Securities and Exchange Commission, the investor relations page on our website, blog posts on our website (www.flywire.com), press releases, public conference calls, webcasts, and our Twitter feed (@flywire). The information disclosed by the foregoing channels could be deemed to be material information. As such, we encourage investors, the media, and others to follow the channels listed above and to review the information disclosed through such channels. Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website. The contents of our website are not incorporated into this filing. We have included our investor relations website address only as an inactive textual reference and do not intend it to be an active link to our website.

3


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

FLYWIRE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited) (Amounts in thousands, except share and per share amounts)

 

 

 

March 31,
2022

 

 

December 31,
2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

365,745

 

 

$

385,360

 

Restricted cash

 

 

4,000

 

 

 

4,000

 

Accounts receivable, net of allowance for doubtful accounts of $101 and
   $
106, respectively

 

 

13,787

 

 

 

12,968

 

Unbilled receivables

 

 

2,211

 

 

 

3,340

 

Funds receivable from payment partners

 

 

19,153

 

 

 

28,286

 

Prepaid expenses and other current assets

 

 

8,725

 

 

 

9,834

 

Total current assets

 

 

413,621

 

 

 

443,788

 

Property and equipment, net

 

 

10,080

 

 

 

9,442

 

Intangible assets, net

 

 

90,542

 

 

 

93,598

 

Goodwill

 

 

84,666

 

 

 

85,841

 

Other assets

 

 

10,638

 

 

 

7,176

 

Total assets

 

$

609,547

 

 

$

639,845

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

8,764

 

 

$

10,242

 

Funds payable to clients

 

 

54,928

 

 

 

71,302

 

Accrued expenses and other current liabilities

 

 

21,588

 

 

 

22,726

 

Deferred revenue

 

 

5,312

 

 

 

5,488

 

Contingent consideration

 

 

656

 

 

 

7,719

 

Total current liabilities

 

 

91,248

 

 

 

117,477

 

Deferred tax liabilities

 

 

8,147

 

 

 

8,401

 

Contingent consideration, net of current portion

 

 

2,644

 

 

 

3,590

 

Long-term debt

 

 

25,939

 

 

 

25,939

 

Other liabilities

 

 

3,452

 

 

 

2,237

 

Total liabilities

 

 

131,430

 

 

 

157,644

 

Commitments and contingencies (Note 15)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 10,000,000 shares authorized as
   of March 31, 2022 and December 31, 2021; and
no shares issued
   and outstanding as of March 31, 2022 and December 31, 2021

 

 

 

 

 

 

Voting common stock, $0.0001 par value; 2,000,000,000 shares
   authorized as of March 31, 2022 and December 31, 2021;
103,409,781
   shares issued and
101,092,059 shares outstanding as of March 31, 2022;
   
102,771,899 shares issued and 100,454,177 shares outstanding as
   of December 31, 2021

 

 

10

 

 

 

10

 

Non-voting common stock, $0.0001 par value; 10,000,000 shares
   authorized as of March 31, 2022 and December 31, 2021;
5,988,378 
   shares issued and outstanding as of March 31, 2022 and December 31, 2021

 

 

1

 

 

 

1

 

Treasury voting common stock, 2,317,722 shares as of March 31, 2022 and
   December 31, 2021, held at cost

 

 

(748

)

 

 

(748

)

Additional paid-in capital

 

 

615,349

 

 

 

609,194

 

Accumulated other comprehensive loss

 

 

(489

)

 

 

(399

)

Accumulated deficit

 

 

(136,006

)

 

 

(125,857

)

Total stockholders’ equity

 

 

478,117

 

 

 

482,201

 

Total liabilities and stockholders’ equity

 

$

609,547

 

 

$

639,845

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4


 

 

FLYWIRE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited) (Amounts in thousands, except share and per share amounts)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Revenue

 

$

64,553

 

 

$

44,991

 

Costs and operating expenses:

 

 

 

 

 

 

Payment processing services costs

 

 

24,253

 

 

 

16,091

 

Technology and development

 

 

10,976

 

 

 

7,522

 

Selling and marketing

 

 

17,608

 

 

 

11,931

 

General and administrative

 

 

18,820

 

 

 

15,914

 

Total costs and operating expenses

 

 

71,657

 

 

 

51,458

 

Loss from operations

 

$

(7,104

)

 

$

(6,467

)

Other expense:

 

 

 

 

 

 

Interest expense

 

 

(218

)

 

 

(621

)

Change in fair value of preferred stock warrant liability

 

 

 

 

 

(954

)

Other expense, net

 

 

(2,327

)

 

 

(411

)

Total other expenses, net

 

 

(2,545

)

 

 

(1,986

)

Loss before provision for income taxes

 

 

(9,649

)

 

 

(8,453

)

Provision for income taxes

 

 

500

 

 

 

199

 

Net loss

 

$

(10,149

)

 

$

(8,652

)

Foreign currency translation adjustment

 

 

(90

)

 

 

339

 

Comprehensive loss

 

$

(10,239

)

 

$

(8,313

)

Net loss attributable to common stockholders - basic and diluted

 

$

(10,149

)

 

$

(8,657

)

Net loss per share attributable to common stockholders - basic and
   diluted

 

$

(0.10

)

 

$

(0.41

)

Weighted average common shares outstanding - basic and diluted

 

 

106,739,771

 

 

 

21,100,077

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5


 

 

FLYWIRE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited) (Amounts in thousands, except share and per share amounts)

 

 

 

Convertible
Preferred Stock

 

 

Redeemable
Convertible
Preferred Stock

 

 

 

Voting
'Common Stock

 

 

Non-Voting
'Common Stock

 

 

Treasury Voting
Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

Shares

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balances at January 1, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

102,771,899

 

$

10

 

 

 

5,988,378

 

 

$

1

 

 

 

(2,317,722

)

 

$

(748

)

 

$

609,194

 

 

$

(399

)

 

$

(125,857

)

 

$

482,201

 

Issuance of common stock
   upon exercise of stock
   options, net of shares
   withheld

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

617,278

 

— *

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

660

 

 

 

 

 

 

 

 

 

660

 

Issuance of common stock
   upon settlement of restricted
   stock units

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20,604

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation
   adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(90

)

 

 

 

 

 

(90

)

Stock-based compensation
   expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,495

 

 

 

 

 

 

 

 

 

5,495

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,149

)

 

 

(10,149

)

Balances at March 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

103,409,781

 

$

10

 

 

 

5,988,378

 

 

$

1

 

 

 

(2,317,722

)

 

$

(748

)

 

$

615,349

 

 

$

(489

)

 

$

(136,006

)

 

$

478,117

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible
Preferred Stock

 

 

Redeemable
Convertible
Preferred Stock

 

 

 

Voting
'Common Stock

 

 

Non-Voting
'Common Stock

 

 

Treasury Voting
Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

Shares

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Deficit

 

Balances at January 1, 2021

 

 

54,208,461

 

 

$

110,401

 

 

 

11,239,920

 

 

$

119,769

 

 

 

 

22,240,872

 

$

2

 

 

 

 

 

 

 

 

 

(2,317,722

)

 

$

(748

)

 

$

16,971

 

 

$

(214

)

 

$

(97,772

)

 

$

(81,762

)

Issuance of common stock
   upon exercise of stock
   options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,005,574

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

2,404

 

 

 

 

 

 

 

 

 

2,405

 

Issuance of Series F-1
   redeemable convertible
   preferred stock, net of
   issuance costs of $
265

 

 

 

 

 

 

 

 

2,571,936

 

 

 

59,735

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of common stock
   warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

151,518

 

— *

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accretion of redeemable
   convertible preferred stock

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5

)

 

 

 

 

 

 

 

 

(5

)

Foreign currency translation
   adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

339

 

 

 

 

 

 

339

 

Stock-based compensation
   expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,364

 

 

 

 

 

 

 

 

 

10,364

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,652

)

 

 

(8,652

)

Balances at March 31, 2021

 

 

54,208,461

 

 

$

110,401

 

 

 

13,811,856

 

 

$

179,509

 

 

 

 

25,397,964

 

$

3

 

 

 

 

 

 

 

 

 

(2,317,722

)

 

$

(748

)

 

$

29,734

 

 

$

125

 

 

$

(106,424

)

 

$

(77,311

)

__________________________

* amount less than $1

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6


 

FLYWIRE CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited) (Amounts in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(10,149

)

 

$

(8,652

)

Adjustments to reconcile net loss to net cash used in operating
   activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

2,817

 

 

 

2,131

 

Stock-based compensation expense

 

 

5,495

 

 

 

10,364

 

Amortization of deferred contract costs

 

 

72

 

 

 

50

 

Change in fair value of preferred stock warrant liability

 

 

 

 

 

954

 

Change in fair value of contingent consideration

 

 

(70

)

 

 

(23

)

Deferred tax provision

 

 

(53

)

 

 

4

 

Bad debt expense

 

 

20

 

 

 

106

 

Non-cash interest expense

 

 

81

 

 

 

50

 

Other

 

 

 

 

 

149

 

Changes in operating assets and liabilities, net of acquisition:

 

 

 

 

 

 

Accounts receivable

 

 

(839

)

 

 

(3

)

Unbilled receivables

 

 

1,129

 

 

 

1,080

 

Funds receivable from payment partners

 

 

9,133

 

 

 

13,342

 

Prepaid expenses and other current assets

 

 

262

 

 

 

(1,680

)

Funds payable to clients

 

 

(16,374

)

 

 

(28,123

)

Accounts payable, accrued expenses and other current liabilities

 

 

(3,615

)

 

 

(922

)

Contingent consideration

 

 

(4,524

)

 

 

(