Unpacking Q2 Earnings: Flywire (NASDAQ:FLYW) In The Context Of Other Finance and HR Software Stocks
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The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how finance and HR software stocks fared in Q2, starting with Flywire (NASDAQ:FLYW).
Organizations are constantly looking to improve organizational efficiencies, whether it is financial planning, tax management or payroll. Finance and HR software benefit from the SaaS-ification of businesses, large and small, who much prefer the flexibility of cloud-based, web-browser delivered software paid for on a subscription basis than the hassle and expense of purchasing and managing on-premise enterprise software.
The 15 finance and HR software stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 1.6% while next quarter’s revenue guidance was 0.5% below.
The Fed cut its policy rate by 50bps (half a percent) in September 2024, the first in roughly four years. This marks the end of its most pointed inflation-busting campaign since the 1980s. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be assessing whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
Thankfully, finance and HR software stocks have been resilient with share prices up 5.7% on average since the latest earnings results.
Flywire (NASDAQ:FLYW)
Originally created to process international tuition payments for universities, Flywire (NASDAQ:FLYW) is a cross border payments processor and software platform focusing on complex, high-value transactions like education, healthcare and B2B payments.
Flywire reported revenues of $103.7 million, up 22.2% year on year. This print exceeded analysts’ expectations by 3.3%. Overall, it was a strong quarter for the company with full-year revenue guidance exceeding analysts’ expectations.
“Our second quarter results demonstrate resilient performance across the business where we signed more than 200 new clients and grew revenue by 22% and revenue less ancillary services by 26% year-over-year, despite revenue headwinds related to the ongoing Canadian government actions involving student study permits,” said Mike Massaro, CEO of Flywire.
Flywire scored the fastest revenue growth of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 7.3% since reporting and currently trades at $16.49.