What Happened?
Shares of cross border payment processor Flywire (NASDAQ: FLYW) jumped 17% in the afternoon session after the company posted impressive second-quarter financial results that surpassed Wall Street's expectations. The payments company's revenue climbed 27.2% year-over-year to $131.9 million, beating analyst estimates. Adjusted EBITDA, a key measure of profitability, surged to $16.6 million, a substantial increase from $5.8 million in the prior-year quarter. A significant portion of this growth came from the recent acquisition of Sertifi, which added $12.3 million to the revenue total. Following the strong performance, Flywire raised its full-year guidance for its adjusted EBITDA margin, signaling management's confidence.
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What Is The Market Telling Us
Flywire’s shares are quite volatile and have had 15 moves greater than 5% over the last year. But moves this big are rare even for Flywire and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 2 days ago when the stock gained 4.2% on the news that the Software as a Service (SaaS) sector rebounded following the sell-off in the previous trading session as a weaker-than-expected U.S. jobs report increased the probability of a Federal Reserve interest rate cut. The July Nonfarm Payrolls (NFP) report showed the U.S. economy added only 73,000 jobs, significantly below the 110,000 forecast. This, combined with downward revisions for May and June, signaled a cooling labor market to investors. In response, market expectations for a September interest rate cut by the Federal Reserve surged from roughly 40% to over 80%. A potential rate cut is generally favorable for growth sectors like technology and SaaS, as lower rates can increase the present value of their future earnings, boosting stock valuations.
Flywire is down 40% since the beginning of the year, and at $12.06 per share, it is trading 48.3% below its 52-week high of $23.30 from November 2024. Investors who bought $1,000 worth of Flywire’s shares at the IPO in May 2021 would now be looking at an investment worth $343.71.
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