Thank you for standing by. This is the conference operator. Welcome to the Flywire Corporation Third Quarter 2021 Earnings Call. [Operator Instructions]. I would now like to turn the conference over to Akil Hollis, VP, Financial Planning and Analysis. Please go ahead.

Thank you, and good afternoon. With me on today's call are Mike Massaro, Chief Executive Officer; Rob Orgel, President and Chief Operating Officer; and Mike Ellis, Chief Financial Officer. Our third quarter 2021 earnings press release, supplemental presentation and associated Form 8-K can be found at ir.flywire.com. During the call, we will be discussing certain forward-looking information. Actual results could differ materially from those contemplated by these forward-looking statements. We also will be discussing certain non-GAAP financial measures. Please refer to our press release and SEC filings for more information on the risks regarding these forward-looking statements, risk factors associated with our business and required disclosures related to non-GAAP financial measures. This call is being webcast live and will be available for replay on our website. I would now like to turn the call over to Mike Massaro.

Thank you, Akil, and thank you to everyone that is joining us today on our Q3 2021 earnings call, our second as a publicly traded company. We truly appreciate all the interest so many of you have shown in Flywire and getting to know our business as a recently listed public company. The third quarter was another strong quarter for Flywire. Rob Orgel and Mike Ellis will go into great detail later on. But first, let me start with some financial highlights. Revenue less ancillary services year-over-year growth was 67%, with total payment volume increasing 76% compared to Q3 2020. This growth was driven by our successful land-and-expand strategy in the U.K., a strong U.S. education growth in the quarter and the easing of travel restrictions around the world, allowing more travelers to begin to take those long-awaited leisure trips. Adjusted EBITDA for the quarter was $17.6 million, which is an increase of $7.4 million or 73% from last year's third quarter, another great result that truly shows the strength of our unit economics. These great results this quarter have been driven by the continued execution of our multiple growth strategies across industries and geographies. Our performance this quarter is also due to the commitment of over 600 FlyMates around the world who work each and every day to deliver value for our clients. We are so fortunate to have these amazing FlyMates who continue to stay focused and execute exceptionally well in this complex world. Our Q3 results further validate what we have discussed along our journey to become a public company nearly 6 months ago. First, there is a strong need for Flywire's powerful combination of software and payment capabilities, especially for high-stakes, high-value payments. Second, the core markets in which Flywire operates provide a massive opportunity for…

Thanks, Mike, and good afternoon, everyone. As Mike indicated in his opening comments, we had an excellent Q3. Our results this quarter reflected continued execution of our growth strategies. Let me summarize the quarter's success before going into some details. Revenue grew across each of our verticals. New client signings were strong with 94 new customers in the quarter. And we were successful in hiring, bringing our year-to-date total hiring to over 200 FlyMates, adding a globally distributed and highly talented group to the company. I'll now go into a bit more depth on the dimensions of strength across our growth levers in Q3. To begin, we continue to see growth with our existing clients. Our net revenue retention has rebounded strongly in Q3 and for the year-to-date period, achieving levels at or above our performance over the last 3 years. This strength in NRR reflects our success with our clients as they recover from the pandemic as well as the value of our broad product suite. One example of this in the quarter was moving Manchester Metropolitan University, or MMU, from our cross-border solution, which was implemented in 2016, to deploying a fully integrated software suite to improve efficiencies across the campus. MMU, based in the United Kingdom, has over 30,000 students. This is our first full suite fully integrated solution in the U.K. And we are providing broad and deep functionality that spans from online payments, monthly payment plans, accommodation payments and deposits, e-stores and also supporting their on-campus Met Card. We're managing all domestic and international payments for MMU. The ability to meet our clients' needs from simple integrations to our powerful full suite solution, including the full breadth and depth of the MMU solution, illustrates how Flywire's platform lets us serve and grow with our clients.…

Thank you, Rob. Good afternoon, everyone. Today, I'll be discussing our non-GAAP financial metrics for our third quarter of 2021, including revenue less ancillary services, adjusted gross margin and adjusted EBITDA. For our financial results prepared in accordance with U.S. generally accepted accounting principles, please read the financial statements included within our earnings release and our Form 10-Q when filed with the SEC. Revenue less ancillary services for the quarter was $62.0 million, which represented a 67% growth rate compared to the third quarter of 2020, which was driven by an increase in our total payment volume. As a reminder, Q3 and Q1 are historically our strongest quarters of the year. This revenue growth exceeded our expectations due to very strong performance across the business, including all of our verticals and across all of our major geographies. While the business was broadly strong, we would call out, in particular, the strength of our U.K. and U.S.-based education business, which benefited from excellent performance from new clients launched so far during 2021 and an accelerating recovery from COVID across higher education. In addition, we continue to see improvement in the travel industry, benefiting our clients and our revenue. As Mike mentioned, we processed $5.3 billion in total payment volume during the quarter, an increase of 76% from the $3.0 billion we processed during the third quarter of 2020. We experienced revenue and total payment volume growth across all regions when compared to Q3 2020, and we achieved strong growth in both transaction and platform and usage-based payment volume and revenue during the quarter. Specifically, transaction revenue increased 76% compared to the third quarter of 2020, driven by a 92% increase in transaction payment volume. Platform and usage-based fee revenue increased 32% compared to the third quarter of 2020 due to a…

Thanks, Mike. We believe here at Flywire that we have a clear and compelling value proposition that will continue to help us win. We have built a business that has exceptional unit economics, a highly defensible business model, and we could not be more excited about the future. I would like to wrap up by thanking over 600 FlyMates, our team members around the world. We have an outstanding group of people made even stronger by the over 200 new additions that have joined us so far this year. Our global nature, flexible work environment and fast-paced growth positions us well as an employer of choice in this challenging time. We continue to be able to hire amazing talent around the world, representing many cultures and backgrounds. And we all deeply believe in our mission to deliver the world's most important and complex payments. With that, I'd like to turn the call over to the operator for questions. Operator?

[Operator Instructions]. The first question comes from Bob Napoli with William Blair.

Congratulations on great results. Well done. So just looking at the profitability that you generated in the quarter and as we think about 2022 and 2023, I mean, you're well ahead of any expectations that we had, I think, for the full year of 2023. And I know the third quarter is a seasonally stronger quarter for you. But how should we think about the profitability of the business versus investments? Obviously, you overperformed, and I know you're investing aggressively for growth. So how should we think about balancing the 2?

Yes. Thanks, Bob. This is Mike. I'll go first. I'd say a few things. One, obviously, again, great quarter results. And you see the flow-through through the business model, which again, we're really proud of. One thing I'd just highlight, we are looking for growth investments pretty much everywhere. You see the number of FlyMates we're hiring. We have aggressive hiring plans throughout the year and into 2022. So we're looking for those growth levers and continually expect us to pull the trigger on those. At the same time, it's a very healthy business. So expect us to keep investing in growth. Don't expect us to be transitioning to focusing on EBITDA. It isn't where we're going to go. It's going to be continued investment within product, within go-to-market with -- across all industries, across all geographies. So I would say that's the best we can give you. Obviously, happy to share more details later.

Then maybe as a follow-up, just -- so in the education business, MMU, you're transitioning to domestic Texas A&M, Northeastern. Just on -- when we think about clients, the revenue per client, what is the -- I guess incrementally on those education clients, when you make that type of a transition, what does that mean to revenue? And then can you give any color on like the average revenue per client by segment or just some color on how people -- we get that question a lot and how thinking about modeling your business and the client growth and revenue per client.

Yes. Bob, Rob here. So thanks for the question. What you see from the expansion of domestic in these accounts is a real revenue multiplier for us. So we -- as you know, when we're serving in the cross-border capacity, we're only serving some percentage, a relatively smaller percentage of the overall population on campus. When we move to doing the domestic, we have the opportunity really to serve the entire campus community, and that really results in a revenue multiplier for us as they take advantage of things like the payment plans and the other capabilities that we extend to the university. So it's a revenue multiplier for us. You see the revenue per account go up very meaningfully.

Yes. And Bob, the only thing I'd add to what Rob said is just really encouraged by what we're seeing in pipeline as well, right? These new capabilities that we didn't have years ago, right, that's what's helping drive that great NRR number that we've talked about before.

The next question comes from Dan Perlin with RBC Capital Markets.

Fantastic results. I had a question on education in particular, really trying to understand, I guess, parse out the difference between how much of the outperformance came from the education vertical that's really just bouncing back and I guess partially are we at normalized levels when you look at going back to 2019, which it sounds like maybe we are based on the Visa comment, versus kind of the incremental new cohorts or extensions that maybe you were just even talking about on the domestic side with Bob.

This is Rob speaking. It's really a very healthy combination of both. Again, it was a great quarter of performance in the education vertical as well as across each of the verticals. If you hone in on the education piece, what you'll see is that we are benefiting from very good growth in the new clients. So what you'll see is that they are performing very well in both the '20 and even the '21 cohort are contributing meaningfully to the success that we just reported for the quarter. But if you look back across all the cohorts, and as you know, we often talk about the cohorts going all the way back several years, those cohorts also grew very well. So I think what you see here is both a combination of an environment as it relates to COVID that was better than the environment that we might have anticipated many months ago in terms of the ability to get students on campus and fully participating. But what you also see is the success of our execution in terms of bringing more students in contact with different aspects of our platform, different aspects of our software. And with that, you're seeing sort of, I think, really strong execution by our teams and serving those clients. And with that, both the clients benefit and so do we.

Yes. Dan, the only thing I'd add to that is just you're also seeing parts of the world that still aren't back, right? So if you look at places like Australia and New Zealand, still just coming out of some of the pandemic across Asia Pacific, even parts of Europe. So again, I think if you look at geographies, you can also look at subsectors, right? Remember, our definition of education is quite broad. So not only higher education, boarding schools, but also vocational and language programs. Those shorter-term programs, right, they still haven't come back fully, right? So I think our belief has always been '21 into '22 is you're going to see things come back by geographies and by industry and subsector and continues to be true for us.

Yes. No, that's great to hear. I wanted to just go back to the EBITDA margin expansion, the flow-through commentary. I mean the original guidance, I think, was $4 million to $6 million. You guys are now calling for $22 million to $24 million. I mean it was a very impressive quarter. The question is when you have these periods of kind of overperformance, is it just that -- I know you want to invest for growth, but there is a certain level of investment that would be required to kind of tamp down the flow-through in your model. And I'm just wondering, is there anything that you're seeing that would suggest that this investment cycle that you want to kind of ramp for is going to meaningfully increase in the near term? Or should we kind of expect some of this outperformance to the extent that your payment volumes and your top line continue to outperform?

Yes. I'll start and then maybe hand it over to Mike Ellis. So I'd first say, look at the FlyMates number -- record number of FlyMates added, a whole bunch more positions out there being added. As you mentioned, great kind of unit economics that flow right through the business. But look for us to continue to invest aggressively in hiring, right? That is go-to-market. That is product engineering. Go-to-market isn't just sales. It's also client service, again, connecting to that NRR that we've talked about, getting customers to do more with us. So I would say that by far is biggest investment area, but I mean across things like marketing is a huge part of go-to-market, right? A lot of the skill sets we learned in the pandemic around digital engagement, those are areas where we can continue to invest more and more and continue to just do more, right? So there's just kind of opportunity everywhere to do it. But for us, it comes down to people and that investment to go faster. I don't know, Mike, anything you'd add?

Yes. The only thing I would add is that the ramp that we're really talking about is really occurring starting in Q2 of this year and Q3. So we're just starting to make these investments. And what we found is that we're able to really hire some really talented people, and I think Rob said approximately 200 people that we brought on this year, which is the majority coming in, in Q2, Q3. They're just starting to get ramped, and we're ramping our talent acquisition team. So my perspective is that the good results that you're seeing is predominantly driven by driving revenue growth at stable adjusted gross margins. And the smaller point of that is actually the cost savings that we're seeing by maybe not as investing as quickly as we wish we could, but that's going to reverse itself, I think, very quickly coming into Q1 of 2022.

The next question comes from Darrin Peller from Wolfe Research.

Nice job. Can we just follow up a bit on the education side first for a minute given what you guys are seeing in terms of the cross-border dynamic and borders reopening again? I mean you talked about how there could be more in '22. But love to get a better sense of what you think would be the opportunity that's coming from not new customers per se in terms of the universities but actually the cross-border momentum on students. Even if we were back to '19 levels, I imagine we normally should have been notably above that. So what do you think is the normal run rate we have upside for as borders reopen, putting aside just the typical growth of the business? And then also in the current quarter, I know the net retention number was strong for the -- when you look on a trailing basis. But if you can give us a sense of how much of your growth right now is coming from your existing customers, the land-and-expand model versus new customers would be great.

So obviously, it was a great quarter across the existing customers. It's a great quarter in terms of NRR. The underlying sort of momentum drivers for that are a couple, right? So you asked the question, what's going on in sort of the student population generally and cross-border flows. Certainly, this year saw a return relative to last year. But if you look at the trends across the industry, some of which Mike mentioned in his comments, they're still very favorable for expansion of cross-border opportunities for learning for students, right? And again, going back to Mike's comments, remember, education as broadly defined, vocational schools, technical schools, language learning, summer programs and the like, and the second thing being that not all geographies have opened up yet. There are still significant portions of the world where travel has not returned. The idea of welcoming international students has still not sort of opened up the way we've seen it here in the U.S. And so we see macro trend of increasing appetite and passion for growth in student studies. And then we see this opportunity that will be specific to the regions and the segments that we also see as opportunities.

Okay. I mean -- and then in terms of the magnitude of upside in '22 versus what you would normally expect to see just based on reopening and borders reopening or any sense directionally and quantitatively?

It's hard to put a number on that. But I think what we said all along was that we expected and anticipated that this year would see a meaningful recovery towards normalcy with that normalcy being achieved in 2022. I think we saw essentially very much along those lines, right? We've seen a return to normalcy in a number of places, although I think still not all the way there, and then certain markets that are -- segments that are meaningfully behind. And those will hopefully have a chance to be significantly more normal next year as well. So still a lot of upside opportunity.

Okay. Just very quickly on the health care side. I mean you're obviously benefiting from these trends where digital demand continues to grow. Going forward, I mean, some -- COVID may have helped that to some degree, but I think you're seeing that even before. And so I'm just curious what -- during this quarter, any inflections you're seeing or any kind of signs of progress that could be important for us to watch for the next few quarters and into next year?

Our health care growth was really solid for the quarter. Existing accounts displayed really good NRR through Q3. We believe we have the proposition that's the right proposition in this space, right? We are able to go in and solve the challenges of complex integrated health system environments. We're able to integrate with systems like the Cerners and the Epics and MEDITECHs of the world that are sort of native in those environments and deliver a great ROI for the clients, a great experience for their consumers and their payers. So we still view this as early innings in the digitization of health care. And we think that the problem we solve is the hard one, right? And we go and we solve that hard problem, and we believe that will continue to -- there'll be a lot of opportunity for that going forward in the quarters ahead.

Yes. Darrin, the only thing I'd add to what Rob said is we're also enhancing the product, right? So we mentioned in Q2, there continue to be opportunities where by improving the product, improving the capabilities, you're seeing users adopt payments in different ways. You're seeing clients get more benefit, right? So that's the other factor that's going on. Because we have the software and the payment capability combined as we're optimizing that software, you're seeing performance across customers improve as well.

The next question comes from Jason Kupferberg from Bank of America.

Just wanted to start with a revenue question. I mean I know your medium-term target, I think, is 25%, 30% on average. And I'm sure it'll give us more specific guidance next quarter, but you're really outdoing yourself this year to the tune of over 50% growth. So just preliminarily, does it feel like that range would in theory still be achievable next year despite some difficult comps? But recognizing you may still have some reopening tailwind that you're back still to come.

Yes. So thanks for the question. What I would say is, obviously, the year is turning out quite well for us. We're really encouraged as we look at 2022. What we've said before is everybody should continue to think of us as that compounding growth story, right? These industries that we're serving really have a digitization trend that we expect over the next decade to materialize. So we're investing aggressively. You're right. We will have more details coming in relation to 2022. But I would just focus on expect us to keep investing, expect us to keep focusing on those things that are driving our business today, those multiple growth levers, right, strong pipeline, more clients doing more with us and growth across all sectors. And again, that gives us a great position to start 2022. And again, I couldn't be happier with the results showing up this year, but don't have that takeaway for our excitement for 2022 as well.

Okay. And then just as a follow-up, within your platform, I'm wondering if you're seeing any noticeable or notable increase in any particular types of alternative payment methods being adopted.

I think the patterns are pretty consistent for us. Obviously, it varies a bit by geography. We invest a lot in having what we consider the relevant local payment capabilities for the different markets in which we serve. So being able to have alternatives like Alipay and WeChat Pay in China to complement the other payment offerings that we offer in markets like that, similarly, offerings that are relevant in places like Brazil and others that we also invest in. But I don't think there's any notable change in the patterns across all of those types.

Yes. One thing I'd just maybe highlight is consumers do want choice. And so when you see things like what our software does around payment plans and allowing different payment plans over time and have them be configurable, we're definitely seeing a trend towards more configurability, more choice left with the payer. And those clients that are eager to provide great payment experiences and those flexible ways to pay, they're definitely speeding up their investment in those types of things. And I think that's part of why you're seeing so much success in our domestic capability.

The next question comes from Ashwin Shirvaikar from Citi.

Let me add my congratulations as well. Solid quarter, guys. I guess my first question is when I consider the 300-plus clients that you signed year-to-date, could you provide maybe a split across verticals as well as same question with regards to the pipeline that you're seeing? And are you noticing any sort of behavioral changes amongst these clients, faster implementation ramps, desire to get onboard quicker or things like that?

Ashwin, it's Rob. I'll start here, and then the others may follow on here. But in terms of customers first, the pattern represents our historical pattern. So we saw the most customer adds across education and travel with nice contributions from health care and B2B as well. So growth across all 4 of the verticals, new customer additions across all of them. And in terms of those customers, our view is that they're very representative of the kinds of customers we've added historically. So sort of similar in size and opportunity. We're very pleased with sort of the new group that is added to the client roster. In terms of pipeline, it's really been a really strong quarter. We've mentioned the investment in go-to-market capabilities and our expansion in all those areas. And we are seeing it flow through into the strength of the pipeline. So that pipeline is up sort of double-digit percentages in terms of the ARR that we see building there, and we're very pleased with both the vertical distribution, the geographic distribution, really everything about the pipeline is going in the direction that we want to see it. I mentioned in my comments that we were particularly excited about the growth in B2B and that we're seeing good progress through the quarter and -- sorry, through Q3 and into this quarter as well. And so we really see that pipeline being very healthy and very encouraged by what -- the opportunities that are represented there. In terms of implementation, not a lot of news there. We continue to implement very successfully across the clients. So one of the things that contributed to the success in Q3 was our ability to get a whole bunch of clients live so that they could contribute to that. So I would say that the ability to deploy and bring customers to revenue is continuing to improve. There are certainly ranges of stories depending on some clients that impress us with how fast we go, some that are a bit slower, but the overall delivery capability is improving. And of course, that's another area in the company that we're expanding our capability, more hiring across implementation and delivery and support.

Got it. Got it. And you kind of sort of addressed a part of this question, but let me maybe ask it a bit holistically. As you think of 2022 and given where we are, I know you all expected a recovery, but now there is more visibility into perhaps the strength of that recovery positive news with regards to vaccines and so on and so forth. So as you sit here doing your planning process in more detail for 2022, are you thinking primarily opportunities or spend more? And why should the growth rate expectations not mirror perhaps the more near-term trends that we've seen rather than sort of the longer-term expectations you set up?

So Ashwin, Rob again here. We're really focused on investing in the growth, right? And that means investing in the new client acquisition, investing in new product, investing in the execution that was so successful for us with our existing clients this year. And so we expect that we'll continue to build on that. And we believe that the kind of NRR and the history that we've -- of that pattern is something that we're committed to trying to continue going forward, and that will feed the kind of steady but strong compound growth that Mike referenced earlier. Anything more particular there, please feel free to follow on if there's something more particular you want.

Yes. No, I appreciate the steady but strong comment. I was kind of thinking more about exit rates going from this year into next, and I appreciate the seasonality of the business. But my thought process was that the -- was that the near term should be much stronger than certain of the -- than, say, for example, what's in consensus. And I wanted to ask...

Ashwin, yes, this is Mike. The thing I'd say is if you think back to even our conversation on our Q2 earnings call in August, right, there were things like if you looked at Delta variant spikes, there were hospitals and elective procedures. There were certain borders that had restrictions for travel. We are not sure where students would be on campus or Visas would be issued. So I'd say we're still in a very dynamic environment. And so I think as our team finalizes 2022 planning, it's not lost on us that there's a lot of great things going on in the business. At the same time, hopefully, people are getting an impression for us. We're people that put members out there and work hard to execute against them. So we got to finish doing our work here in Q4 and excited about the future ahead in '22.

Yes. The only thing I would add -- this is Mike Ellis. You have to remember, during the COVID pandemic, the most impacted quarters for us were, in fact, Q2 and Q3 of 2020. So those are the bases that we're going up against. We started to see recovery in Q4 of 2020, and that continued in Q1 in '21 through now our current quarter. So just so we understand level setting relative to what we think growth may be for '22.

The next question comes from John Davis with Raymond James.

Mike, maybe just to start off, I think you guys talked a lot about in the IPO and since then about making significant investments for growth. You've obviously done that. But I think the top line would suggest that maybe those investments are yielding better-than-expected returns. So maybe just any comments there on how much you've invested and what your expectations were for those return on investment. And where are they kind of coming in? So far, I realize it's still pretty early.

Yes. JD, thanks for the question. So I would say think of Flywire in 2 ways, right? We're focusing on that execution aspect, right? There's so much opportunity in the existing client base and executing on clients that have been signed up. In addition to that, we're making significant investments in new opportunities that exist. Those can be products. Those can be geographies as we talked about before, adjustments or enhancements to our go-to-market strategy, that land-and-expand strategy we've talked about extensively, not to mention new industries, new subsegments of travel, the B2B expansion, right? So all of those are significant investment areas for us, and we're just getting started in those investments. And so the financial position that we're in right now, frankly, just emboldens us to invest more and to go faster, right? Complex talent market, we think we differentiate ourselves quite well. It's why I had those comments in the opening remarks around talent. We think this market is set up well for us to recruit great talent, continue to bring in great new FlyMates. So we're super excited, but we definitely think of us in both those camps of investing in execution and further scaling a business on a global scale. And we're doing that quite well, as you see in the results. In addition to that, finding big new opportunities to invest in significantly.

Okay. Great. That's super helpful. And then maybe one for Mike Ellis. I think if I look at this quarter's results, obviously, they were pretty eye-popping to say the least, at least from a revenue perspective. But if I break it down further, volume was quite a bit better than we expected. I know you guys don't manage to the monetization rate. That's more of an output. But maybe, Mike, any comments on was that really -- was it vertical mix? Or was it payment-type mix? At the end of the day, obviously, the revenue was there, but just curious how we should think about that going forward because volume was quite a bit better, but monetization rate was a little bit lower than at least we expected.

Yes. Thanks. So let me just start off by saying the key point is that the business dynamics are very healthy for Flywire, right? We saw that with very stable adjusted gross margin and the revenue growth. Now with respect to monetization rate, you'll see a payment method mix shift that similar to Q2 within our transaction payment volume due to the size of payments, the seasonality of the business, you'll see that in education, higher price points typically result in lower monetization rates due to the payment method selected. And then when you think about the expansion, which I mentioned in the -- when I gave my presentation, is essentially that you'll get a lower monetization rate within your platform and usage-based fee revenue due to the land-and-expand strategy that we've actually done in order to develop and expand our domestic offerings. So as more clients have payers using domestic solutions, you'll have different price points, payment methods used that may carry lower monetization rates. And that can be seasonal depending on what period of time we are in the year, whether it's a payment plan-type quarter or it's a full tuition-like quarter. So really, that's what you're seeing in both of them. And if you look at the decline, I think it's approximately 6 basis points. And in the large scheme of things, again, not a number we track, but that's not a number that concerns us given the exceptional growth rate of revenue at that really strong gross margin level. So as you can see, that's why we've always said this monetization rate is an output. It's not a driver of our business. It's just based on what people select. And again, really strong economics across all of the payment methods and across both revenue types that really drive that incremental margin and adjusted EBITDA results.

Okay. So if I was to surmise it, basically lower monetization rate offset by higher gross margin. So on a net basis, when you look at gross profit, those transactions are similar to you, it's just really kind of geography of the P&L based on payment type. Is that fair?

Yes, that's probably fair.

The next question comes from Ken Suchoski from Autonomous Research.

I just wanted to ask about cross-border education payments. I'm just curious how penetrated is Flywire across its existing customer base on the cross-border side. And you mentioned that, I think, Vanderbilt adopted your cross-border offering. Maybe you can talk about how penetration of cross-border payments for that university might ramp over the next 3 years just because it's hard to tell as an outsider how these clients ramp over time.

Ken, so first on just the total addressable market. So think of us in that kind of probably $6 billion plus now, a couple more billion for the year in that sector and just in cross-border education and volume. And at the same time, you're approaching $100 billion total addressable market on just that product, right? So plenty of room to grow and expand. And as you think about the ways in which we're expanding that, remember, the geography expansion, things like Latin America, Europe, doubling down in places like Canada, the U.K., Australia, New Zealand, Southeast Asia, right, from a client acquisition perspective, super important to understand. And then in addition to that, other products and capabilities we can roll out to drive more payment volume, right? There's also that subsector aspect of education, I mentioned, right? Part of this is higher education. But then you have all other areas of education that we invested, right, things like the shorter-term programs, the vocational programs, summer programs, right? So all of that is about kind of upselling clients to make sure that Flywire is deployed all where all of that cross-border comes from. So really important to get those 2 points. So still feel like we're in the very early innings. And in addition to the cross-border business, we're also sitting there going to market with, as Rob likes to say, domestic internationally, right? So really going after the entire amount of payment volume is how we're going to market. Now globally, even though our -- operating our first 6-plus years of the company, we're really in a cross-border-only solution. So Rob, I don't know if you want to speak specifically about Vanderbilt.

I won't speak specifically to a school but just to the experience of really any new school that signs on. Obviously, there are a couple of things going on that all are part of this NRR growth effect that you see over time. So there's a specific thing to that first year, which is that they'll only have a very partial year this year. They'll obviously have an opportunity for a full year next year with multiple semesters of eligibility rather than just one. But that only speaks to part of that sort of cohort growth trajectory that you see for us. Obviously, when we talk about the 2017 cohorts growing and all the prior cohorts growing, what that's reflecting is a couple of things. So first, even where it's just a cross-border client, we continue to improve their best practices, their utilization of our platform. We find more ways to penetrate the campus. It might be adding grad schools, adding other kinds of programs within the school. All of that is part of sort of a standard expansion and a very healthy one that we experienced just in cross-border. But of course, with -- many of our clients there is that land and expand that involves their choice to work with us on a broader element of our product suite. So whether that's adding payment plans, international payment plans, e-stores, our A/R Collect module or the full domestic suite that obviously we are always hoping to add across almost any account, all of that is upside opportunity for us. And so all of that reflects sort of positively in the growth curve that you see for really any client over time.

Okay. That's very helpful. And then can you remind us how the domestic payments are monetized? Any of that revenue flow through the transaction revenue line? Or does it flow entirely through platform and usage-based revenue? And I guess similar -- almost a similar question, like how long does it take to ramp domestic payments at a new client or an existing client? Just curious to get your thoughts there.

Yes. It's Rob speaking. So most of that revenue a fully domestic client will flow through the platform element, right? So if you remember, we have elements of our pricing model and our economic model where those fees will accrue inside the platform element. There may be parts for -- that will get added to transaction, but most of it will go on the platform side.

Yes. I'll just add. There's basically three components to our platform and usage-based fee revenue. You basically have a managed AR function that will get the percentage of the AR that we're actually managing on behalf of our clients. The second component is essentially the establishment and the payments against payment plans. And then the third component is SaaS-based licenses. Those are the 3 components that make up our platform and usage-based fee revenue.

The next question comes from Tien-Tsin Huang.

Just wanted to ask on travel. I know you've won some new business there again, it sounds like. It's just -- is there a way to think about how much potential spend there that you've signed that hasn't fully been realized as like you mentioned, borders are going to open. I know there are a lot of eyes on cross-border travel for a lot of reasons in this sector. But just trying to put some context around how much potential business that's on the come for you on the travel side.

Yes. Sure, Tien-Tsin. So this is Mike. I would say remember the sectors we're focused on are subsectors inside travel. So things like accommodations, luxury tour operators, destination management companies, the boutique travel agencies, those kind of large, massive sectors of the travel industry. I would say think of it more as a geographic snapback in 2 ways, right, which unfortunately makes it a little complicated. You have where our clients that we're signing up throughout the pandemic have been. For instance, we haven't slowed down signing up clients throughout Asia, throughout Europe, Latin America, Africa, the U.S., Canada, pretty much everywhere. And so part of it is about their ability to receive travelers at this point. And then in addition to that, part of it will also be around where are we investing in more capabilities, whether it's payment network or areas in which we can drive a fuller solution at existing clients, right? So those 2 combinations and I'd say we've been doing both, right, looking at our pre-pandemic travel customer base and making sure we're getting all the payments, not just the cross-border payments but cross-border and more domestic payments or all geographies, if you will, or that we have all their business units using Flywire. And I would say it continues to be significant, right? It's growing quite rapidly for us this year. We expect it to grow quite rapidly next year. It is well past product market fit. It's in high scale mode as a travel sector, and we're not slowing down. And we're really happy we didn't slow down even during the pandemic, just kept signing clients. And the Nordic Visitor example that Rob gave, one of the top providers in the Nordics and in Iceland for inbound travel. And so those accounts are quite frequent when you look at our pipeline and our signed client list.

Iceland's on my list of places to hit. Good results.

Pretty awesome. I went there. I actually used Nordic Visitor to take my family there prior to the pandemic.

We'll have a chat about it off-line. Good quarter here, guys.

This concludes the question-and-answer session. I'd like to turn the conference back over to Mike Massaro for any closing remarks.

Well, I appreciate everybody's time. Thanks for all the thoughtful questions all the time and effort that's going into following Flywire and learning more about Flywire. Look forward to continue talking to many of you here over the next few weeks and quarters, and appreciate everybody's time here tonight.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.