Greetings, and welcome to the Flywire Corporation, Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Akil Hollis, VP, Financial Planning and Analysis. Thank you, Mr. Hollis. You may begin.

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 2023 earnings press release, supplemental presentation and when filed, Form 10-Q 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 will also 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 that could cause actual results to differ materially and the required disclosures and reconciliations 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 this afternoon. We are excited to share our Q3 2023 results, which show continued strong performance and momentum across the business. We are also pleased to announce the acquisition of StudyLink, an Australian company that specializes in international student application software. I will provide more details on this acquisition in a few minutes. Following my comments, Rob Orgel, our President and COO, as well as Mike Ellis, Our CFO will go into greater detail about our results for the quarter, but I will first share some highlights from Q3. Revenue less ancillary services was $116.8 million during the quarter, representing year-over-year growth of 31%. This represents our highest quarter of revenue less ancillary services ever, and in dollars, approximately $28 million in growth. Adjusted gross profit for the quarter was $80.1 million, an increase of 28% year-over-year, a quarterly record for the company. Adjusted EBITDA was $27.5 million for the quarter, representing a 9.3 million increased in our adjusted EBITDA versus Q3 2022. And this was also a record for the company. This puts revenue less ancillary services year-to-date at 285.3 million, a growth rate of 43% year over year reflecting the strength of our business and effectiveness of our go-to-market strategies in the underlying markets. As a result of this success, we are raising our full year outlook for revenue less ancillary services and adjusted EBITDA on a constant dollar basis. We are once again in an environment where the U.S. dollar has strengthened significantly and this generated a headwind relative to the rates incorporated in our prior guidance, impacting Q3 reported results by approximately $1.4 million. In addition, there were a few other puts and takes for the quarter that Mike Ellis will cover later in…

Thanks, Mike. Good afternoon everyone. It was another quarter of substantial growth for the company. Our sales, client service and delivery teams delivered great results during the quarter. Here are just a few of the highlights. We added over 185 new clients, a new record for the company in the quarter. Those wins reflected the most projected deal value we have ever signed in a quarter. And for the year, we are ahead of our internal plans. We added to our pipeline and significantly increased our new business win rate while decreasing our average sales cycle. The quarter's strong growth was driven by the continued execution of our 5 strategic growth pillars. As a reminder, those pillars include growing with existing clients, adding new clients, expanding our ecosystem through channel partnerships, expanding to new industries, geographies, and products, And finally, strategic value enhancing acquisitions. Starting with growth from existing clients, we went live with our domestic collection management solution at Penn State, a top ranked global university with over 90,000 students at 24 campuses including the online Penn State World Campus. Penn State has used our cross border solution since 2012. Within just a few months of being live with our domestic collection management solution, Penn State has collected millions of dollars of past due receivables and has seen over 1,500 activations of student payment plans. As we mentioned with Wellesley last quarter, we continue to see many schools interested in our collection management solution reflecting their interest in a streamlined process for collecting overdue student tuition bills. We also signed a handful of education clients onto our student financial software in the United States who are all recognized and sizable universities originally using our cross border solution, now taking advantage of our student financial software for their domestic and…

Thank you, Rob. Good afternoon, everyone. Today, I'll provide an overview of our results for the third quarter, and then I will discuss our outlook for Q4 and the full year. Revenue less ancillary services was $116.8 million in Q3, representing a 31.4% growth rate compared to Q3 2022, our largest revenue quarter in Flywire's history. On a constant currency basis, our revenue less ancillary services growth rate for Q3 2023 compared with Q3 2022 was 28.8%. Our revenue growth rate was driven by increases in total payment volume due to strong growth from our international across border payment volumes in our education vertical, particularly with our UK clients. FX rate changes represented a tailwind comparison to Q3 of 2022, but a headwind against the guidance we provided for Q3 and full year on our last earnings call, which was based on prevailing rates as of June 30, 2023. For purposes of comparing our Q3 '23 reported results against our most recent in Q3 guidance. We had an FX headwind that amounted to approximately 1.4 million on Q3 reported results. There were a number of puts and takes related to our revenue less ancillary services during the quarter. On the plus side, we saw continued strength across many parts of the business, including strength in China FX volume trends for our education vertical, positive results from our education clients in the UK and continued strong growth in our travel and B2B businesses. On the negative side, we were impacted by the FX headwind previously mentioned. We also experienced delayed deployments of our solution in both our education and health care vertical. Lastly, while we still saw growth in outbound foreign exchange volume from India, it was lower than expected for our education vertical in the quarter. With respect to payment…

[Operator Instructions] The first question comes from the line of Rob Napoli with William Blair.

I guess -- and first -- I know it's early, we're just going into the fourth quarter. But as we think about your long-term guidance for revenue growth and EBITDA margin expansion, is there anything in the macro or in your business or competitively that has changed that outlook as we think about early 2024?

Hey, Bob, thanks for the question this is Mike. Obviously, we're not guiding full year '24 today, but we continue to be very excited about the path forward. I mean, it all starts with of growth algorithm that we've talked about before, NRR plus growth from prior client deployments plus new wins for the year with that net new revenue added. And we continue to be very confident in the long-term financial targets that we set, revenue growth, EBITDA margin expansion. This is an interesting macro climate. It's clearly turbulent times. But we believe we have a business that has historically been focused on defensive sectors. It's a very well diversified business, geographies, industries. And we continue to think we're very well positioned for the future. So, feel really good.

And then maybe can we get a little more of color on the StudyLink acquisition? I guess, you kind of gave a $1 million. I'm not sure if that -- so we should think about like $4 million or $5 million of annualized revenue? Just what made that attractive to you, Mike?

Yes, sure. Happy to start and then I'll hand it over to Mike Ellis to cover some of the numbers. So, first, I would say when we talk About M&A strategy, we go back to those 3 pillars, the first being accelerate an industry or a vertical that we're in, the second of being adding capability that we believe we can upsell to drive additional NRR of our clients. And the third one being a new geography or new industry. This deal, the StudyLink deal fits within number 1 and number 2. So obviously, we're in the Australian market. We think this is a great way in which we continue to expand in the education industry in that region. And then from second pillar perspective gives us additional software that we believe actually can become a global standard for helping streamline the application process for universities all over the world. And so there is every deal we have done and we think we've got a good track record of this also has a clear synergy. This deal fits having multiple clear synergies, first of which is unmonetized volume that you heard us talk about in the announcement. This software sits next to unmonetized volume, nearly $1 billion, as we've said. And we think that number grow significantly. And as I mentioned, we think this software has an opportunity to do a lot more outside of the Australia market. If you think of Flywire's footprint across the UK, the U.S., Canada as being the other 3 largest markets for international education. This Software is not in those markets yet. And so that's really the combination of synergies that we see. We've known the team for years and have partnered with them in various ways. And we think between our client base, between our team, and our payment network, we're going to see similar results to the synergies we've already seen in the other 2 deals we pursued. Mike, I'll let you double click, if you want to double a bit on the numbers, which was part of Bob's question too.

Sure. No problem. So I just saw Bob is about $1 million incremental revenue hitting Q4 and full year 2023 relatively slightly neutral to positive on the adjusted EBITDA line. It's about a $6 million to $7 million revenue business for the full year.

Next question comes from the line of John Davis with Raymond James.

Mike Ellis, just wanted to know if you could comment on the platform revs. We saw a pretty big deceleration there from, I think, 27% to 6% this quarter. Maybe some of it's or go from last year. But just kind of any thoughts there on how we should think about platform revenue going forward?

So platform revenue is really a function of our healthcare business, which we've disclosed in the past as it relates to some of the slowdown that we've seen, it's predominantly driven by this quarter, the late deployments that I highlighted in my previous remarks. But essentially, healthcare is turning the corner for us. We're pretty bullish about the opportunities in the future. But we do have some delayed deployments that really impacted the revenue growth rate for this quarter.

Can you help size us for us, the delays or push outs at all?

Some of those deployments are subject to the IT infrastructure of our clients. The good news is that our pipeline and our ARR signs are strong. We've seen good momentum across all of our verticals, including healthcare. But just some of the deployment requirements based on major large hospital systems can sometimes be outside of our control. I will pass it over to Rob to see if he would like to add something.

Yes. Two points I would make. First of all, you asked specifically about sort of the impact of the delayed deployment. I mean, that's a 7 figure sum in terms of the impact of those deployments. The second point is just want to make sure people have a sense that as they understand our domestic business, our domestic business as it evolves has contributions both in platform and in the transactional growth line. And so what you'd want to understand is that, that domestic business, as we take on more transactions inside it, and that's true around across our verticals and around the world, some of that growth is showing up in transactional even though it reflects our success with domestic clients.

And then just one more if I could. You have the 185 new clients, obviously very impressive. Mike, wonder if you could just give us some high-level commentary on how that breaks out by vertical? And also what from a kind of expected annual revenue contribution per client what you're seeing is that continuing to grow as you grow the number of clients?

I can jump in and take that one first, J.D. So the number we shared was over 185 clients, client side and across all the verticals. But certainly the lead in that was the travel business, whereas in prior quarters, we signed up a great list of clients into that part of the business. The point that we would tie it to is that it was the best quarter in the company's history in terms of aggregate ARR or deal size that we signed. So these deals are healthy in the size that they represent adding up to that record ARR for a quarter for the company.

Next question comes from the line of Dan Perlin with RBC Capital Markets.

So Mike, I just the StudyLink deal, $6 million to $7 million of revenue, so clearly it's not a big deal. You raised $260 million in the quarter. Can you just talk a little bit about like where you're looking to kind of place these bets? Should we be expecting like a series of smaller deals? I'm not sure what the consideration was, in fact, for this one. So if you wanted to add that, that'd be great. But like, should we be thinking that there's more, just a series of smaller ones that you're kind of strategically going after? Or are there some that could be potentially bigger that this one's kind of just a teaser, I guess, to get started?

Yes, sure. Happy to. So, we continue to look at deals of all sizes, we've mentioned before kind of less than 200, 200 to 600, and 600 plus. Regardless of size, our criteria we talked about before needs to be met, and it needs to be a compelling deal. And so if you kind of look, I think you spoke earlier. I think the StudyLink deal fits very much in that footprint of hitting the pillars being something that we have clear view of synergy too and something that we can consume relatively easily and move forward with those synergies. So again, we don't always control when deals become available, but I can tell you we have a lot of activity underway. We continue to be encouraged with the growing list of potential targets that we see. But you have to have a few things come together. You have to have those, the hitting of the pillars. We talked before as well about the synergies and having a clear path to synergies and why it should be a Flywire deal. And so that's important. You then have culture, you have tech, and all of that has to come together with a reasonable valuation and it has to come together in a way in which the deal is able to be one, right? We can't force anyone to sell their company to us. So that all has to come together. I would say this fit our model. It's something we've known and tracked for a while. And I would expect us to continue to be very active, and more opportunities to come forward in the coming quarters too.

I'll just add that the aggregate purchase price was $34.9 million and then an additional $3.9 million of earn out consideration.

Just quickly, kind of near the end of the quarter, and maybe I should know this, but like WPM, there was some questions whether or not the payment flows were going to come in the third quarter or fourth quarter given the timing of calendar. So can you just confirm either they were in this quarter or they're expected to fall into 4Q? Thank you.

I can jump in on that. Rob speaking. Look, overall, the UK Education business performed really well. It performed really well on the basis of strength from WPM clients that we integrated, it performed really well on the basis of non-WPM related clients. We mentioned the success with UCL in my comments. So the business is really strong and we see good signs to keep us confident that geography will continue to perform well. So don't think that it's really about shift so much as about just strength in the UK Market that helped us perform well there.

The only thing I'd add is also in the comments, we made a comment of. Some deployments delayed going live, right? That was a factor, but it wasn't a massive factor for the quarter. We highlighted the big impacts for the quarter through Mike's comments.

Next question comes from the line of Darrin Peller with Wolfe Research.

The bookings in the new customer adds all sound really constructive and yet the volume growth rates came in shy of what we, I know we in The Street were expecting from a growth rate standpoint. And I know you called out India. I think you said the India inbound volume from India, I should say was a bit slower. And maybe the late implementations had a mild impact. I guess I'm not quite sure if I understood the nuances of what really happened there yet. I know you touched on it. But if you could help us understand a little bit more detail of what actually is going on the volume side and the trends and really your conviction going forward given all this new business you're adding on top of that? And maybe couple that with just remind us on the delayed implementation side, if that had an impact on volume, too?

So obviously, the volumes grew well, biggest quarter ever and we saw growth across our domestic business, we saw growth across FX and international business. And we continue to add these good clients, as you say, that are growing FX business as well as strength on things that don't have the associated volume. Keep in mind that some of the revenue growth comes from things like the student insurance business that don't have the time and associated volume with them. But overall, we're really pleased with volume growth and the fact that these new clients bring on sort of good FX volume as well as good time domestic volume. And we continue to view that as tracking in line.

There was a comment made about India slowing down. And just to be clear, I mean the comps were fairly materially easier. So I guess, maybe just a better understanding of what's happening in the market around volume trends on a quarter by quarter basis or a vertical by basis would be really helpful. And then just quickly, from a financial question standpoint, just the FX. Can you just touch on that? I don't know what FX impact was on the volume side also.

So the main thing that we called out in our comments was that India had lower FX volume than we had anticipated in our forecast. So again, India FX revenue grew, India FX volume grew, but relative to the expectations that we had, it was a little bit softer. So that affected a number of our geographies. But again, only part of what's overall a very favorable picture of growth across the EDU business and growth in FX.

Next question comes from the line of Jason Kupferberg with Bank of America.

Good afternoon, guys. This is Tyler DuPont on for Jason. Thanks for taking the questions. Just to start with a more numbers heavy question here. Since the updated guidance. There's a few moving pieces to it. I just wanted to make sure I'm thinking about this the right way. It looks like revenue left ancillary was lowered by around $2 million at the midpoint on a full year basis. But if you add back the 3.8 from FX and you subtract out the $1 million from StudyLink. Looks like the guide has essentially ticked up by roughly $800,000 or so, on an organic constant currency valuation basis. So I guess, just first of all, is that the right way to think about it? And secondly, if you can provide any clarity on what you've seen evolving over the past few months from a demand perspective and how that translated into the updated guidance? Any clarity there would be helpful.

Sure. It's Mike Ellis. So your understanding of the optimism we see relative to Q4 and our full year guidance. You've addressed that mathematics appropriately. It is $0.8 million that we added to Q4, and $1.6 million for the full year impact associated with it. So it's a good result as it relates to the optimism of the business. Now when you talk about the trends that we're seeing, some of it has to do with the fact that we are very excited about what we've seen in our educational clients across Europe and the UK, as well as our travel business growing quite nicely. So we remain bullish about Q4 and full year. And the math that you shared relative to the guidance was in fact accurate.

And then just to double click on education. I wanted to ask about the domestic payments business within education. I know it's an area of focus, but I'm just curious if you can provide an update on the success of onboarding educational institutions into domestic payments, both within the U.S. and internationally? I know during the prepared remarks, it sounded like there were a few clients that expanded into the service offering in the U.S. How would you compare that strategy, that land and expand strategy, versus international educational institutions? Are there any institutions that are going domestic directly and then going to foreign later? Just sort of how we should be thinking about pricing, take rate dynamics, anything there?

Well, first, let me just talk about the success with clients. So as you heard in my comments, we shared that we had signed, multiple clients in Q3 to the domestic student financial software offering that's our SFS offering that added million of dollars of deal value to the quarter. And obviously, we look forward that being a business that stays with us for a long time. So in terms of the success of SFS in the quarter, felt very good about that and hoping to carry that momentum forward with all the work we're doing around our go-to-market motions for SFS here in the U.S. The bigger picture of all this is that as a company, we've developed capabilities around domestic that are relevant all around the world. And the comment I made a couple of minutes ago was that that success domestically as we move around the world is allowing us to monetize domestic volumes in many countries is and that is becoming a more meaningful part of our revenue stream. It's a very good economics to us. The only thing that maybe a bit of a surprise or not surprise for all of you, but just understand that, that will show up in transactional revenue, whereas our SFS software shows up predominantly in platform revenue.

Next question comes from the line of Tien-tsin Huang with JPMorgan.

I just wanted to clarify with the deployment being delayed and some comments on the sales cycle. Is that just a cyclical issue? Is it a resourcing issue? Or are you seeing clients maybe looking to lower the total cost of ownership of how they engage with you?

I think it's just the nature of these kinds of more complex deployments when you are looking at the more complex end of the spectrum of what we do, which is most typical of education and healthcare where we are doing some of the bigger projects. We don't get to completely control the time line and sometimes you see these things slip by a little bit. And so the comments we tried to make to put some color and flavor around this. Our sort of modest delays, we expect all of them to go live. The only question will be what portion of the contribution of the year that we met, but they will all go live and we expect they will all be long-term customers for us.

Tien-tsin, the only thing I’d add to that is, obviously, as I have said before, we don't control when our clients do their billing. And as you get closer to that date, if they have any challenges on their end of launching or confidence in their IT systems being ready or who is on standby when they are launching a new system. All those things can lead to modest pushes as examples. And so again, we don't control all of that. But obviously, as Rob said, we expect all these clients to go live continue to just get live, it's just a question of when.

Next question comes from the line of Jeff Cantwell with Seaport Research.

Just wanted to follow-up a little bit on what you're discussing with the EBITDA line and get a feel for -- I mean, obviously, there's a lot of moving parts to how you're thinking about margins going forward. But can you tell us based on what you're seeing right now and how you're feeling about the business, are you thinking more towards the 300 basis point side of your guidance on an annual basis, that's expansion or kind of 600? I just want to give a feel for where your expectations may have shifted based on what you're seeing currently?

Jeff, this is Mike. I'll start. So obviously, if you look at this year and include where we have guided to, you have seen us work up from 300 basis point EBITDA margin expansion closer to that lower end of the range we provided, up to over 420, 430 point increase year-on-year based on where we guided the year to. Again, as we look at 2024, we will look continually at that 300 to 600 range. But I think this year has been a good example of us putting a stake in the ground and then working hard to keep increasing that number as we see the year perform and I think that's the behavior you can expect from us. We've talk a lot about just the investments and seeing opportunity everywhere, we want the ability to keep investing in the business. We think that's the right thing to do, but feel very comfortable with that range we put out there before and you can expect similar motion as we get into talking about '24.

And then, Mike, you've been very targeted with your M&A. And clearly, what you're discussing with StudyLink follows the path of the PM and Cohort Go. I wanted to ask you if you could explain more about how you're thinking about synergies at this point. And part of it is if we go back a couple of quarters with Australia, I seem to remember you started with education there and then you were seeing some cross-sell opportunity. I think it was within health care, if I'm not mistaken on that. But again, I just want to kind of come into this with a fresh set of eyes and think about how you are or how you would describe these synergy opportunities that could occur with StudyLink?

Sure. So I'll talk a little bit about the synergies we see with StudyLink. I mean, first, we referenced the volume, right? So similar to the WPM deal we about, there's unmonetized volume sitting near the software as it relates to that initial kind of deposit and application payment as well as that kind of first year tuition payment that touches that application in Australia. So that obviously is something that's a clear synergy for us. Folks should understand that based on the prior deals we've done. That's a great opportunity for us and we feel very confident about getting to that synergy. If you look at the second one I would put in there is really around just the agent ecosystem. They have over 20,000 agents that they touch. And these educational agents, as we've talked about in our Investor Day, are critical to the international student enrollment process and they actually influence a lot as it comes to that international student and family journey. And so, between the Cohort acquisition, our own capabilities and StudyLink's capabilities, we feel really well positioned to provide more value to that agent ecosystem, which we think will help with growth. And then the third bucket is really around global expansion. As I mentioned, the StudyLink product is really deployed in Australia for Australian universities. And Flywire sits with meaningful share across the other three major markets, for international students and universities that they study at. And so you can imagine having the local the expertise that we talk about with our team, the vertical expertise and what we think is best-in-class software and best-in-class payment network. And so being able to globally expand that opportunity over the coming years is really that third synergy. So we feel really great about all those three. Appreciate the comment that it fits right in the wheelhouse of what we've proven and what we've done. We feel really excited about it and, excited to get the news out there.

Next question comes from the line of Andrew Jeffrey with Truist Securities.

I wonder if I could dig in on Darrin's question just a little bit more around India just from my own edification so I can understand it. When you talk about FX volumes perhaps being a little bit light, can you separate that out from student visa volume or matriculation results and just maybe the ability and the visibility into both of those items on a go forward basis as you model the business?

So, obviously, India is a major source for international students for sure. In the quarter, we saw volumes grow, revenue grow both FX and what we call domestic revenue out of India. We called out India just because we did see a different payment mix in that volume than what we expected and that had some impact on revenue. Again, there's good growth coming out of India. The only reason why we called out India was because relative to the expectation that we had in our model, there was even more growth built into that number. So when we look at India, for us, it's a market where we have invested a considerable amount of energy and attention that's part of what's driven our very successful growth in the Indian market across all of this. All of the opportunities there, we've invested in our global network, we've invested in the agent network. And in fact, the StudyLink acquisition makes sense in the context of penetrating the India opportunity even more. And so we'll keep focusing on making sure we are effective in the Indian market as we have been for years and look forward to good growth there again continuing forward.

Next question comes from the line of James Faucette with Morgan Stanley.

Just wanted to ask back on the education vertical. What that's looking like in terms of expanding footprint within your existing education partners? I'm just trying to get a sense of how much customization and backend integration work maybe required there? And how that impacts our sales cycle and implementation cycle as we think about the land and expand opportunities?

Rob here again. Look, I think part of the great success we've enjoyed and continue to enjoy in education is because we as a company are very good at these integrations. It's been one of the core competencies of the company that we do a great job integrating. In the UK, we have longstanding integration with retrieval. We talked in our most recent call about the winning partner of the year for the integration with Ellucian. I think we've talked about universe top to address markets like the Spanish market. And around the world, in we're somewhere in the neighborhood of 40 to 50 of these integrations that help service in the education space. So all of those are things that help us, in fact, our lower the deployment cycle, increase the pace with which we can sign deals, because those integrations give them comfort that deployment will be successful and that we can give them good confidence that the software and the solution will deliver on the ROI that we described for them. So again, it's one of the core strength of the company, helps us go faster. It's part of what was the win the wins that we announced in SFS for the U.S. in Q3. It's really a core part of what we do. And I think we'll continue to make sure that we are a market leader in those integrations because of all those benefits I described.

And then outside of education, can you give us a sense of what your sales force looks like in terms of how many people do you have in education versus healthcare versus travel. And how we should think about the relative growth rates of those different segments or end markets generally on a go forward basis?

We're certainly the most developed in terms of having the largest team on the education business. Obviously, it's the biggest revenue. We talk about internally both in terms of sales team and the broader go-to-market team, which includes our relationship managers, which are very important part of that successful land and expand strategy that you heard us talk about on many calls. So that team continues to grow because of our success growing internationally. Probably, you'd say the fastest growing teams in the company are in travel and B2B. Certainly as a percentage, those are emerging segments for us. We're excited about the growth rates in those businesses and continue to invest there. Probably slower growth on the healthcare side of the team, although where we see particular opportunities, we still add to that team. But in the bigger growth and that team is around travel and B2B.

James, just to add one more in our tiny bit on top of that. I would say in relation to travel, for instance, and in the future, probably B2B, you'll see both kind of that sub segmentation focus and geographic expansion when it comes to team expansion for those, right, following the same playbook that we used for the education business where as we open up new markets, we want to make sure we've got local experts in those markets driving that growth and supporting those clients. And so that's just another flavor for where those dollars are actually going to help those travel and B2B teams expand.

Next question comes from the line of Ken Suchoski with Autonomous Research.

I just want to ask about the 4Q outlook. Could you just provide some more detail on the 4Q gross margin versus OpEx expectations in 4Q and I guess how we should think about getting to that EBITDA outlook for next quarter? Thanks.

Hi, Ken. It's Mike Ellis. So I think first thing I want to do is kind of unpack the revenue guidance just so you have a clear look at that. Essentially, we're adding that $1.6 million due to the optimism we expect in Q4 based on the organic growth of the business. And we are adding $1 million from the StudyLink acquisition. And that's offset by about $2.5 million associated with FX headwinds. And that gets to where we are the midpoint of the guidance range, but in our estimation it shows really good optimism related to the organic growth. If you want to take it down to the AGM level, I would suggest that you look at the historical trends of Q4 2022 versus Q3 of 2022 and use that same type of model as you think about forecasting out your Q4 2023 AGM. And then from an OpEx perspective, listen, we have said all along that our investment thesis is all around go-to-market and then secondarily to that is our technology and engineering teams. So I would expect that when you look over a year-over-year basis, you would see relative similar increases for Q4 as it relates to the trend that we saw Q3 over Q3. But again really pleased with the opportunity to continue to generate to EBITDA in Q4 as well. And that midpoint of that range is approximately $2.5 million which again we're pretty with the overall generation of incremental adjusted EBITDA over a year basis, again meeting and beating the expectation of north of 300 that we first gave at the beginning of the year.

And Mike just on that FX point, I mean, what's your expectation around the FX impact in 4Q? So not the change versus prior, but just the dollar impact on adjusted revenue in 4Q when you look at the year-over-year trends and I guess can you just remind us about your hedging policy and I guess if you do hedge the currency and I guess which line that flows through in the P&L?

Yes, so first and foremost, the change in revenue as it relates to the FX headwind or tailwind, and we've been really transparent historically about all those have impacted our revenue growth rates is really about the translation of foreign subsidiaries that are dominated in local currencies into U.S. dollar currencies for reporting purposes. That's the majority of the headwind and tailwind that we talk about as it relates to when we say FX impacting or being beneficial to our revenue or our adjusted EBITDA. With respect to your hedging question, that really comes down to a transaction basis. And we will in fact hedge specific currencies that are appropriate to hedge based on the cost benefit analysis associated with that. And so we've had relatively good success on that. And if there was anything to call out, it would be showing up in our OpEx, and typically in the G&A line.

And just to make sure I got it. So FX impact in 4Q, just on an absolute basis, it seems like a little bit of a headwind year-over-year in 4Q?

In Q4, yes, it will be. Yes.

Next question comes from the line of Pat Ennis with Credit Suisse.

Wanted to touch on domestic education and some of the potential indirect benefits of continuing to win business there, especially in the U.S. So as you continue to add clients on the domestic side where you may already be the cross border payment provider. Is there more opportunity to gain exclusivity where you're out with a competitor in the cross border business, so you can gain greater wallet share on that side as well?

Yes, that's exactly right. Rob speaking here. So there are obviously 2 benefits to winning the full suite domestic set of capabilities. One is that the set of domestic payments that we then power are themselves essentially a revenue multiplier. The other thing is that it does allow you to create really great integrated experiences that also have the effect of bolstering sort of that FX utilization. So that is part of why we always talk about these land and expand as being a revenue multiplier. Those are the 2 things I just described.

And just had a quick follow-up, I was hoping you could contextualize the typical ramping period when you do announce a new win within the cross education business. I know you focused marketing and education sessions around the Flywire platform in other schools, which helps with awareness over time, but if you can maybe give some directional idea of what the typical utilization ramp looks like over the first few years after an integration is complete?

Yes. We see a significant uptick soon after the go live, but really based on when the first major billing cycle is, right? So what you're always expecting and trying to do is make sure that you get that deployment live in advance of whatever the next major billing cycle is. And obviously for things like B2B, they tend to be more regular monthly kind of things for the school deployments, they tend to have bigger lumps associated with semester starts and so on, as you'd understand. So our goal is to get them live in advance there. You won't get the full ramp in that year one. You'll see significant progress and it's a great opportunity in the year one. Typically what you see is that the ramp happens over the course of the first year or two as you get more and more coverage across an institution. People get used to the new capabilities of the payment plans and you see more and more people taking advantage of them as that's one of the revenue drivers. But you get inside that relatively short number of billing cycles, you will see a very nice ramp.

And the only thing I'd add to what Rob said, this is Mike. What you don't get in that year, you have very clear predictability of that because you are really controlling the invoice and kind of know what that kind of full year effect will be. And so from a modeling perspective, it's a plus. And then the only other thing is just the payback period. Almost on no matter what we're deploying that payback period is usually within the first bill cycle, if not the first year for a client. So again, very strong economics when it comes to the cost of acquisition of the customer in the payback period.

Thank you. Due to time constraints, we are out of time for more questions. So this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.