Flywire Corporation (FLYW) Earnings Call Transcript & Summary

Good afternoon, everybody. I'm Jason Kupferberg, the payments, processors and IT services analyst here at Bank of America. We're continuing on with the second and final day of our 16th Annual Payments Symposium. And we're really excited to have Rob Orgel here from Flywire. He is the COO of the company. And Rob and I were just remarking that it's hard to believe we're going on 3 years since IPO, almost 2 years since the company's Analyst Day post-IPO. I still feel like despite the fact that it has been 3 years, call it, it is always helpful just to level set for those who might be a little less familiar with Flywire, to just give a high-level description of the business and the value proposition. And then we'll go into the fun stuff after that.

Great, greetings everyone.

So yes, if you want to just lead us off, Rob, let's just talk about the high-level value prop and kind of really the problems that you help various businesses solve. So I think it's a pretty unique model.

Very happy to. First of all, thanks, Jason, for having us as part of this and the support for this whole effort over the last couple of years, like I said, almost 3 years as we approach the next earnings call. So the North Star thesis for Flywire as a company is that software drives value in payments. And I'll start by giving sort of my most sort of intuitive explanation of this and then dig into a little more detail. But the easiest way, in a way, is to contrast our positioning and our value position with what is in the companies out there. So you'll -- if you were in one of the payments conferences, you would probably see hundreds, if not thousands, of people who are very focused on sort of the credit card processing part of acquiring. Their objective is sort of maximum volume, minimum complexity and just trying to sort of do volume. We've approached this rather differently with this idea that software drives value in payments. The idea for us is that there's a whole set of industries out there that really aren't served well or adequately by that model and their needs involve a bit more complexity, and that complexity takes two primary dimensions. It's either that their payments are larger. The clients they serve, the payments they collect are larger than are typically well suited for credit cards, so they bring in things like bank transfer; or their payments involve a bit more workflow or complexity or process to them, and that's a degree of complexity that's well served by software. So the 4 verticals that we serve, the original vertical for the company was education, still the largest piece of the company's business, but with meaningful businesses across health care, travel and B2B, which within B2B has some subsegments to it. And the overall proposition for each of those segments is that by doing one relationship, one contract with Flywire, you'll get the full benefit of our software-driven capabilities. You'll get our global payment network, our -- benefits of our team and support model. You don't need to go do multiple contracts on your own, have a relationship with acquirers, another one with a gateway, another one with PCI vendors and audits and all that. One contract with Flywire gets you all of these capabilities and will yield for you a single settlement every day that reconciles to the penny to your back-end system. So all those payments from all around the world, all the payment plans or other sophisticated payment types that we enabled, all settle each day. And just a little bit more on this, like the thing that the company special, what we've sort of put under the umbrella of the Flywire Advantage, really has three main components to it. So the first thing we did is we spent our 10-plus years building out a core payment platform that was really quite differentiated from what you would see in all those other players I described. Because we're taking on asynchronous payments that are things like bank transfers and alternate payment types, because we're dealing with FX, we're talking about a platform that can do all kinds of things on top of what a standard thing would do. Certainly, we can do all the credit card-type capabilities, an auth, a settle, a 3DS, KYC, AML, but when you add in all of these other payment types, it gets sophisticated in all kinds of ways that would not be well handled by other platforms. The second thing we did is we spent over a decade with a team of real global payment experts building out a proprietary global payment network, so picture bank accounts and other relationships all around the world that let us be local in the ways that matter in countries all around the world. So if you're making a payment from China, you'd be leveraging our relationship with Alipay, Tencent, which is WeChat Pay. China UnionPay as well as other payment types that we enable. But picture that as you keep moving around the world, Brazil, it's Boleto and Pix; Vietnam, we have a relationship with a Vietnamese bank that lets us do local bank transfers. I could go on for a while, I won't. But the idea is this global payment network is very differentiated. And then the third piece is we've gone deep in these 4 verticals with the software. So imagine inside education, it means something a little bit different to sit between their student information system and those students or their families that are there as payers. That's one kind of integration that will serve as a certain kind of workflow and functionality. But if you move over to health care, you'll see that the system we'd integrate with now is Epic or Cerner or one of the major EHR systems there, and a payment plan in health care might look very different than it does in education. Same thing with travel, same thing with B2B, where the ERP systems become the background system of record. The payment types look a little bit different. But in each case, we've built out software and integrations that are very much tailored to those verticals. And I'll just say one quick call-out to our teams. The last part of all of this formula of the Flywire advantage is we go to market with very expert teams, right? We're not one to send a health care person into education or any of the other combinations there. Our team tends to be very expert in what they do. They tend to have been years in the industry, experts in payments for that industry and therefore, able to deliver a really high level of service for the industry.

Yes. Yes. No, I mean, the combination of the domain expertise along with the verticalized software and obviously, the payments network is a pretty powerful combination. So thanks for outlining that. Just thinking back to your Analyst Day in the spring of 2022, you had talked about a medium-term outlook for, I think, roughly 30% revenue growth. And your initial guidance for 2024 is calling for that 30% top line growth. How would you encourage us to think about the building blocks of that 30%?

Yes. As we are approaching our 3-year mark or 2 years from the Analyst Day, the building blocks have actually been amazingly consistent, very, very consistent, although we did call out sort of an additional building block we'd ask people to consider, especially those that are trying to build out models and so on around the company. So the first thing, first and foremost, for us, certainly been noted by many that the NRR for the company, the net revenue retention, is a particularly strong statistic for the company. We've been sort of 120% plus by multiple metrics that we've shared, right? So at the time of IPO, it was a 3-year average of 123%. We called out 2022 as being just a little higher. We called out 2023 as even being a little higher at 125%. So that NRR is sort of built up on our land-and-expand strategy that maybe we'll talk about a little bit more here in a minute, if that's interesting to you, Jason. But that's sort of the first piece. But there's really sort of these other 3 blocks. So NRR in the mid-120s or in the 120 range gets you well on your way to sort of that 30% target growth rate. We then get the benefit of clients that were signed in the prior year, but don't necessarily qualify for that NRR definition. So you sort of expect to see mid-single-digit percentage contribution to growth just from getting the full annualized effect of clients. We did call out in our last earnings that the total clients signed for 2023 was over 700. So you continue to see that number grow year-over-year, and you can see how that full-year effect helps do that. Third block is new clients signed in the current year. So again, if you sort of see that kind of volume of clients being signed, they'll distribute throughout the year. Some of them will be live for more or less of the year, but they'll qualify -- sorry, they'll contribute a bit more to revenue in the period in which they were signed. That's the third block. And then the fourth thing that we did is we called out that sort of consistent with that company strategy that we would have shared with you for the first time, Jason, back at the Analyst Day, is that the payer services piece is starting to become a meaningful element of the company's business. And it doesn't fit tidily into any of those other blocks. So if you think about the payer services we called out in our most recent earnings supplement, that's now a $10 million-plus piece of business, again, doesn't fit into NRR or the other blocks, but also contributes to our annual revenue growth. So just final quick thoughts on this one. Obviously, we do all of this in the context of really great markets. There is a bunch of disclosure in our earnings supplement about the TAMs and our sort of room to run in these very large markets. And then the final point is, I guess, we would say all of this in the context of a company that's very focused on profitable growth, right? So not just growing the revenue but growing the revenue in ways that continue to show leverage in the model, scale in the model. I'm sure not lost on folks that were paying attention on our last call, we ended up far exceeding the initial guidance we gave around overall EBITDA margin expansion for the year. We started in the low 300s and ended up at 540-something basis points, 545 basis points for the year. So good growth algorithm, good profit expansion algorithm.

Yes. A nice kind of algorithm for a new CFO to be inheriting, and you guys did just name a new CFO who's starting soon. I guess, anything you may want to flag in terms of initial thoughts on areas of focus that Cosmin may have? And if you wanted to say maybe a word about his background for those who might not have seen the announcement?

Yes. So a big welcome to Cosmin, who I think now is entering week 2 actually in the company and in the seat. He's going to be a great addition to the team here. So for those who may not have seen that piece of news, Cosmin joins us from PayPal. He was a senior exec for an extended period, ran a team, I think, 400 people or north thereof and held a range of positions there that positions him very well to be helpful to us, going forward. So a quick shout-out to Mike Ellis, who did a wonderful job for the company, saw us from our early days into the -- almost 3 years public. And the idea with Cosmin was to bring somebody in who was sort of really ready to guide us from the -- through the next phase of the company, right, where our public guidance for this year is just a bit below $500 million. We see ourselves as on a path to being a $1 billion revenue company. And Cosmin has sort of that breadth and depth of experience to show us the path on a bunch of those things. So it's been great to welcome him here in these first few days. Like as we look at everything, there are all kinds of places where he's sinking his teeth into. I think you can -- certainly, one thing that he got at PayPal was seeing through the expansion of a truly global business that had implications for things like how you do constant currency reporting, constant currency guidance, things like that. It's something we've been working on and we've been continuing to increase our disclosure consistently in our life as a public company. But I think we still have things that we can do better. And even if you look at the way we're doing it for this quarter, we gave our guidance based on 12/31 rates. You look at where we are right now, there's already sort of $1 million plus of headwind in just constant currency effect, based on what's going on in the current currency markets. I think we look forward to being able to take things like that $1 million number and find ways to be able to present it out more clearly. So we won't be doing that on Cosmin's first months here, but that's the kind of thing that his maturity and experience, I think, will help guide us towards.

Yes. Yes. Absolutely, and that's definitely good to hear. Why don't we dive into the verticals a bit because this is kind of what makes Flywire special, is this verticalized software and domain expertise. And I'll start with education, obviously, by far, your largest segment. Even though it is the largest, the growth, still solid. I mean I think on the U.S. side, education was up 19% last year, non-U.S. up north of 50%. So why don't you walk us through the evolution of the growth strategy in education, and what your main targets are in terms of initiatives for 2024 in this vertical?

Yes, I would love to. So education is a super exciting business for us. One of the really neat things about being in this company is that we do see opportunity everywhere. I think that's particularly true when we're in the education landscape. The company grew from being a sort of one-product-in-one-geography company, right? We started off with cross-border education, serving U.S. higher education. And that's evolved considerably, not just the multi-vertical but the breadth of the offering, the places where we are selling around the world. But I think to try to chapter that under a bigger umbrella would be to try to focus on how we've gone from being sort of a product approach to education to more of an ecosystem approach to education. So ecosystem in education means it's not really just about sort of a school and its student, there's a lot more going on inside that ecosystem. And in particular, when you focus on international education, there's a whole role played by education agents and counselors around the world that also participate in this. So as you think about both domestic tuition, international tuition, the role of agents, other players in the ecosystem, you start seeing ways to really provide enormous value to each of these players. So as we go deeper in the market, there are some things that are sort of, what you would call, business-as-usual type growth, right? We obviously want to land new clients. We want to sell our existing suite of products more broadly into those clients, that's a huge opportunity for us. Land and expand is kind of the core way that we've grown and sustained that NRR. We've built new products and introduced new things. We've talked in previous calls about things like collection management that's helping schools with overdue student payments. We've had an eStore, 1098-T, all kinds of things to help serve those. But we're also expanded considerably. So the big expansion over the last year or 2 would have been around serving the agents and the -- sometimes called education advisers or counselors around the world that play a very prominent role in the decision-making and the education journey for students around the world. We now have a whole software platform that is education agent-facing that helps support their needs. And in fact, our most recent acquisition was to kind of go even deeper in that market. So previously, you would say our approach to the ecosystem was really focused around the tuition and the tuition-related payment. With the addition of StudyLink, we actually move into the application and admissions process that governs these students as well. So StudyLink was company with a very strong presence in Australia and a very strong presence in the agent community, essentially linking those together for the application process. And what we've seen is that it's a great opportunity for us to go further into the Australian market. But what we've learned very, very quickly is that it's a platform that makes a ton of sense in other markets around the world as well. So if you go back to my ecosystem theme, as we try to help in places like Canada, places like the U.K., eventually the U.S. as the U.S. becomes more interested potentially in agents, all of that is an opportunity for StudyLink. So the final piece, as we talk about sort of this mission, is payer services, right? And I mentioned before that, that was part of the growth algorithm now. What you'll see in the supplement is, again, the $10 million plus in that business and a road map for us that allows us to present a whole range of payer-type services that go beyond just the -- even the application and tuition process. And that's another exciting opportunity for us. So if you look at sort of what's the -- sort of the big plan for 2024, it's to execute in our core and advance these new initiatives like the StudyLink and the payer services.

Okay. Good stuff. I know you guys called out during the last earnings, some regulatory changes in Canada. Maybe you can just touch on what has actually transpired there. I know you guys were pretty transparent about what you were factoring into your outlook in terms of a headwind there. But why don't we just walk through the pieces so that everyone is on the same page?

Yes. Yes. Let me start with just a quick moment of context, and then we can go to some of the kind of the numbers and the effects. So what was announced in Canada early in January or mid-January was that the government was going to put in place a restriction on the number of new study permit applications. They did all this for reasons that sort of came out of the blue. It wasn't really to do with education per se. It was to do with rental housing affordability in major cities in Canada and essentially a housing crunch, and they wanted to limit the number of students as a means of addressing that housing crunch. And so what they did was they imposed this limit on the number of study permit applications, but they did it in a way that really put the schools in a tough spot in Q1 because they basically said, "We're going to give you more information late Q1 or early Q2 on exactly what the allocations are going to be and exactly what the process is going to be for essentially doling out and submitting those applications and the permits and visas that would sort of be part of the whole process." And so the schools found themselves, in Q1, in a spot where they sort of had to wait on most of their decision-making until these policies became clearer. And really, they were led to expect that to be very late in the quarter or more likely early in Q2. And so what we put out there was that, that was no doubt going to have an effect on our clients and therefore, the number of payments going through us. But a couple of things in particular. First thing we called out was that the effect would be most notable in Q1. And it's, again, because of this kind of challenge that they don't have the clarity they need in order to move forward with the students. We know that everybody expects this to essentially get solved, going forward. There are agents in India and China and places that are sitting on sort of whole piles of applications ready to submit them to Canada, but they can't do that until the process is clarified. So what we called out was that Q1 would be the most impacted quarter, and you would see some of that sort of recapture happen in Q2 as well as you would see some of that recapture happen in other markets as the students that ultimately decided Canada wasn't going to be the place for them or they couldn't get their spot in Canada. There are still young people who want to go get their international education experience. They, with the help of their counselors or on their own, will -- they'll pick the U.K., they'll pick Australia, they may pick the U.S., they will find themselves going in other places. The news that's come out in the last few weeks continues to kind of be along the lines of Canada pushing forward with this. If anything, they put out some news saying they were going to be even sort of stricter about the way they were going to apply their numbers and apply that limit against a slightly more broadly defined population. And so what we've seen from all of this is that sort of on a full-year basis, we're comfortable with the guidance that we put out there, which was that there would be a low-teens millions of dollars impact for the year as we look at Q1, and we see that the sort of things are still pretty gummed up there, I think we would expect to see sort of mid- to high single-digit millions, which is a bit more than the mid-single-digit millions we called out in our original guide. So again, comfortable with the full-year impact that we previously provided, watching the updates very quickly to see sort of how things will fall between -- sort of between the quarters based on the timing of when they announce things. And overall, expecting to see some interesting dynamics of recapture as some of the students will, no doubt, pick places like the U.K., Australia, the U.S. and others.

So just to pick up that last piece in the last few weeks, I guess, to the extent the scope has maybe widened a little bit, you alluded to, which I think was more to encompass K-12 potentially instead of just higher ed. But it sounds like despite that, you still feel okay with what you talked about on a full-year basis that low-teens millions.

That's right. That's right.

Okay. I just want to make sure we got all the pieces there because I know these regulatory changes can come out of nowhere and...

Yes. I mean it's every day, right? So there was even a little piece of news this morning that some of the provinces are starting to give clarity about how to move forward. So on the one hand, you've got this dynamic of the overall impact, and now -- and then you've got this timing question, and you start to see things free up. So we will see things free up, we will see things move forward, but the effects on Q1 and for the year, as I described them.

Okay. All right. No, that's very clear. Tell us about another facet that I think we've observed in terms of the education strategy. And some of the success there was originally, the model was really focused on those cross-border payments, the international students traveling. It seems like you've had a lot of traction, particularly in the last, I'll call it, a couple of years within attaching domestic tuition payments to some of those customers that started with you on the international and cross-border side. Where are we kind of in that journey and understanding the economics -- like, we aren't the same for domestic versus international, but still it's incremental volume, and it seems like it's part of land and expand? So I would love to just hear about how that's gone. And what the pipeline for more of those opportunities look like?

Yes, yes. So in a way, this is sort of a testament to the whole sort of software drives value and payments. We started as this cross-border company. The clients came to us and said, "We really like what you do. Can you just move all the money for us?" and that was the beginning of sort of the initiative to be able to support domestic. So we now support domestic payments not only here in the U.S. but in a great many of the markets around the world that we serve. I'll kind of focus my comments mostly on the U.S. market because I think, Jason, that's kind of [ crux ] of the question. But people should understand, we can now do domestic in a great many places, and it's good business for us around the world. So in the U.S., domestic really means being able to take on doing all of the money movement. So we've announced sort of a whole slew of clients over the course of earnings call, sort of Stanford, Texas A&M, UConn and others, that have worked with us on both types of payments. So what that means is we're helping them with things like payment plans, we're helping with onetime payments here in the U.S., we're helping them with their cross-border, and we're providing sort of the whole web interface that is facing their students and the parents. And when we do that, it's a significant revenue multiplier for us. So we've only managed to penetrate what I'd call sort of low- to mid-single-digit percentage of our customers, let alone the overall customer opportunity that would include all the prospects out there. So we're very early in sort of the penetration of that domestic U.S. opportunity, but we love it. It's a revenue multiplier for us. It gets us deeper into the clients. And I think the last part of your question was just around sort of the economics of domestic. So overall, it's a very good business for us. Now the specific characteristics of it tend to be that it's a lower monetization rate, right? So these are big payments for which we get some very nice margin business, but the monetization rate is lower. Obviously, when you're doing sort of foreign exchange and all that on a cross-border payment, you wouldn't expect to get the same monetization rate on a domestic payment. But where you administer a payment plan, where you accept a onetime payment, all of those are things we monetized very well at very high and healthy margins for us. And again, back to the testament to software drives value in payments, like companies that aren't doing like real software value, don't see the kinds of transaction economics that we enjoy.

For sure. Well, let's pivot over to travel and to B2B. And travel has been remarkable. I mean, coming out of the pandemic, obviously, you've seen some really explosive growth there. But just to start, walk us through because I think you've kind of have an interesting travel story, right? It's kind of some specialized niches within travel. So kind of lay that out for us. Where are we in kind of from Flywire's perspective, kind of normalization, right? There was a surge of travel post-COVID, and it seems like that's lasted a lot longer than pretty much anyone thought it would. But are you seeing signs of normalization? Maybe we can start there.

Yes. I can start with that. I think we are largely -- and we've probably already seen a good bit of the signs of normalization of the COVID-particular dynamic, right? So that obviously was well reported last year in terms of even airlines being surprised at robustness of travel this past summer and so on. But that's not really what's -- I mean that's part of certainly been a tailwind and helpful for our business. But the thing that's really been driving our business is our success expanding in our target segments. So we started this travel endeavor with 2 and now 3 meaningful travel segments, and I'll get to the growth segments here in just a second. But we started with travel operators. These were folks like heli-ski operators and other folks that were in sort of operating segments. We added a group called destination management companies or DMCs. If you organized a neat trip and you were putting together a trip where it might be Croatia, a safari, golf adventure, whatever it might be, you might turn to somebody like a destination management company that put together a great trip for you. And they have been a very successful segment for us, and I'll get to why here in just a second. And then the third segment was accommodations provider. So picture sort of corporate-type housing, university-type housing, not just one-off sort of rental things, but sort of these kinds of broader enterprises that benefit from the scale of our kind of software. And in all of these cases, these are companies that benefit again from the strength of our global payment network, right? These are entities that are taking payments from all over the world and delivering -- these are clients all over the world. And so it really plays to Flywire's strength of being able to support that kind of requirement. And -- so we've seen great growth in those. It's a much bigger segment than you would expect. As you think about all of the different kinds of travel out there that are beyond your standard, hotel standard, airline ticket, all of these experiential travel, luxury travel segments add up to a very big market, and we continue to grow with it. So if you look at those three, this year, we've expanded into what we call sort of ocean adventures, so everything that's sort of based out on the water is another huge segment that we hadn't tackled before, as well as niche OTAs. So there's a little slew of OTAs out there that are -- sort of look like the other kinds of companies I've described in terms of benefiting from software, benefiting from integrating into their back-end ERP systems, hugely -- or travel management systems and hugely benefiting from the global payment network. And so those are -- like we said, I think we put out that the business more than doubled the past year, and we expect it to continue to grow very nicely this year as we invest in that team.

And on the B2B side, maybe you can unpack that a little bit for us. I've always felt like that vertical -- I know it's relatively small in the scheme of things, but you guys have a lot of long-term optimism there. Maybe it's been a little bit opaque to the Street. But if you can unpack that maybe with a couple of examples of what you're doing in that vertical and where the growth opportunities are, that would be great.

Happy to. So I happen to have a particular passion for this business, pretty involved in it. So maybe let me just start by being clear about what it is that we're doing for folks because there's a lot of confusion about sort of payments in the B2B space. We are very focused, right? So we're on the receivables side, so a lot of what you hear about sort of B2B payments is on the payable side. We're on the receivable side, helping companies get paid. We view that as way more strategic, way more important to the CFO to make sure that they have set themselves up successfully to collect payment, be paid from around the world and so on. We're doing it for sort of the mid-enterprise segment. So picture sort of $100 million to small billions in revenue, and the key point is there -- is that they're big enough to matter, but not so big as to have solved all of the different kinds of international payment and complex flows that matter for them. It's domestic and international, so it's not just cross-border. We can solve the full money movement for everybody. And we've gone after specific segments that we believe are sort of the most amenable to working with us. So I call out a few. First, being sort of software- and tech-related opportunities, so a whole slew of clients. Picture software companies that are delivering their software around the world but need to collect their revenue from Latin America, from Europe, even Africa, all of these are places where we can help. We've been particularly successful, of late, in the insurance segment. So we like insurance a lot and building out some specific capabilities. But the unique calling cards that we're building out these ERP integrations do allow us to serve a range of verticals, right? So we have a NetSuite connector. We've worked with Salesforce. We just announced in this past earnings call one of our first SAP deployments. And so we are consistent with that Flywire story, building out our position with integrations that sit between the ERP system, that system of record that we don't want to have to change, but we do want to integrate well with, so that we can present the client's information clearly and effectively out to the payers. So the one that we announced most recently, which was this SAP case, was for the Aviation Authority in Europe. They actually collect a set of fees from all global airlines related to travel over European airspace. There's a whole billing and collection process around that, and they saw fit to integrate Flywire to go collect from all of these different B2B streams that come from around the world. As you look over our last couple of earnings calls, you'll see examples from the franchising in restaurant world, you'll see multiple examples from the NetSuite and the insurance world. And again, it's an enormous opportunity for us, but we sort of pick the subsegments so that we can start to go deep with subject-matter experts around things like insurance, things like NetSuite, tech and so on.

Okay. So it sounds like you've got a lot of different vectors of potential growth there. You're addressing a pretty big TAM across multiple verticals, and there's arguably a lot of corporates that sit in that kind of $100 million to low single-digit billions of revenue.

It's -- I think I called out at the beginning, if I didn't, fastest-growing vertical for us, very exciting. Definitely investing in our go-to-market capabilities, definitely building out more software and integrations to service that market. It's an enormous TAM. And interestingly, what we're competing with there is really quite outdated in terms of the kinds of capabilities, like that world hasn't moved towards digital in any very meaningful way. So our ability to come in and set up sort of the global payment network and the things that we can do for these folks really is an advance over things like the bank capabilities.

Yes. Yes, for sure. Well, let's cover health care, too, because we're going to run out of time, and health care is important also. But I know the growth there was a bit softer last year than it has been in the past and then relative to the other verticals. Maybe just give a quick recap on what drove that last year, what's the outlook for 2024 for health care? How do you plan on kind of reaccelerating things?

Yes, absolutely. So in health care, just to be clear, what we're doing, we help hospitals and other health care institutions get paid for the patient responsibility portion of their bills. So what's after insurance or other payments that come from sort of the third parties, we help hospitals collect what is due to them from patients. It's actually a big and growing amount of their income statement, their balance sheet. And so it has become very important to hospitals to be effective at collecting this money. Again, I have strong conviction that we have a great platform, this. We are the best at helping hospitals sort of maximize their yield on this important receivable for them. Now ultimately, 2023 was not the year we wanted in health care, in very short version, sort of a year where we managed to sort of, in some cases, take two steps forward, but in others, take two steps back. I think the important point is the plan we have for going forward. So we've done a bunch of things to try to get that back to a suitable growth profile. Very tactically, we did make some changes in personnel, sort of new leadership in the sales organization. But more around the strategy, we've done a couple of things to allow the business to look a bit more like our other businesses, meaning multiple opportunities, multiple products, multiple ways to grow. So the first thing is that we have initiated and started to see our first success around a subsegment strategy. So rather than only being focused at the top hospital segment, we've started going after specialty segments as well. So the -- on this last earnings call, we announced OrthoNebraska, which was a is specialty orthopedics entity. Still pretty big entity, lots of facilities, sizable billings and a perfect candidate for our platform. They need all the same capabilities, and we can implement for them in many ways, faster and easier and get them live. So we're excited to be going after segments that include entities like OrthoNebraska. Second thing we did is we've entered some excellent partnerships over the course of last little while. So the one that we called out on the last earnings call was FinThrive. So a very significant player in the health care sort of ecosystem and working with us to provide that digital experience that complements all the rest of their services, already enjoying success in the partnership with them, so the team, the segment strategy, the partner strategy. We have a product element, so we called out earlier, I think, one call back, an offering around integrated financing, so the idea that we could partner with another company, their balance sheet, not ours, but then be able to offer to the hospitals a really innovative way to manage their balance sheet and their receivables using a solution that only Flywire really could deliver, only we could deliver this integrated user experience, but in the background, deliver a really powerful financial solution. So if you look at all of that combined, that's really sort of the engines for growth for the health care business. Now just to be clear, like we don't hold out the health care business as necessarily expecting to be at the overall company growth rate in the near term, like we -- I think sort of high teens is a good objective as opposed to sort of the numbers we talked about at the top of the call in the 30% range. But it's a great gross-margin business. It's a very good contributor to the company. It's a great platform and solution, and we just need to get it back to that growth rate.

Well said. Let's just spend a minute on the balance sheet, which is very strong, debt-free and the $650 million or more in cash. Just take us through the capital deployment priorities.

Yes. So obviously, we're fortunate to be well positioned in terms of sort of the balance sheet, as you just called it out. We're a company that's done a set of acquisitions over the course of our private and public life. We actually believe we have good skills and ability to do M&A effectively. Look at what we've done with WPM, with Cohort goes, StudyLink, going back even a little further, with the Simplee acquisition. We believe that we can sort of take good assets and make them better inside Flywire, and so the main intention that you would expect is for us to continue to be active in M&A. Now, the trick for us is we've partly been successful because we've been picky. And so we are very selective making sure sort of the fit with strategy makes sense, the fit with culture or the fit with technology, synergy, obviously, the people. And then, of course, they have to be amenable to selling and joining us at a price that makes sense for us as well as for them. So we have been a picky bunch in terms of going after deals. But the environment overall is, I think, one that we feel is amenable to getting deals done, and so we're out there working hard to find the right ones and hope that over the course of the year, we'll be moving forward.

Yes, you've got a good track record there. I think you guys have been pretty consistent since day 1 in terms of articulating really what kinds of targets you're looking for...

The piece that's probably left out there, obviously, is besides all the sort of the tech, culture, strategy fit, we've also, generally speaking, only look for things that are kind of consistent with our financial profile, right, and our financial objective. We've not wanted to go do things that would fundamentally change the ability to be a profitable growth company.

Yes. Yes and speaking of financial targets, I mean you talked about the EBITDA outperformance in 2023 earlier. When I harken back to the Analyst Day in 2022, you talked about get into EBITDA margins of 10% to 20% in 2 to 4 years, you've obviously fulfilled that early. And then you talked about kind of longer term, the potential to get to -- I think, mid-20s plus was the figure that was articulated. So you've made a lot of progress. I guess, where is your confidence level in kind of getting to that longer-term target? And is there any rough time line you would encourage investors to think about for that target? I'm not sure if your guys thinking has evolved on that since Analyst Day.

I think we're right on the journey we anticipated to be on, right? So when we put out that Analyst Day guidance, it was 300 to 600 basis points improvement per year as we march forward on our growth trajectory. And as I think I mentioned earlier, we started out last year, I think, with 320. I think we delivered around 540%. We've -- sorry, I think we started last year at 310. This year, we started at 320. And that's the operating plan that we're operating under, but we continue to hope to add to that. And I think the underlying message we would want to deliver is we're a really strong business model to be able to continue on this journey. Like our underlying transaction economics are really strong. LTV to CAC, as we go out and acquire clients, is really strong. And so as you put all of that together, you can start to take advantage of where there's economies of scale in the company like lots of things in the company along the lines of legal and global payments and finance. And lots of other things sort of scale very nicely, including sales, marketing and other expenses as well. So we feel good about that sort of march with the 300 to 600 basis points cadence and just the destination you described. And get there, we'll decide what's next. But I think that's -- the intention is to keep running the company in a disciplined way. We're investing in growth. We're investing in sales and go-to-market and lots of other things, but doing it in a way that's pretty -- I'd like to think we're doing it in a nice disciplined way that sets us up well for that glide path.

Yes. Yes, and the operating leverage just comes even more so over time as you as you reach towards that $1 billion revenue target that you mentioned in the future. Well, on that note, I think we just ran out of time. A great conversation, I really appreciate all the insights. As always, Rob, thanks for doing this. Thanks, everyone, who joined in. And our next session will be starting in 15 minutes with privately held FedEx. So thank you, everybody.

Thank you, everybody. Appreciate it.