Company: FLYW
Filing Date: 2025-02-26
Form Type: 10-K
Source: 0000950170-25-027078
Chunk: 6

Company: Flywire Corp
Filing Date: 2025-02-26
Form: 10-K
Item: Item 8
Chunk 6
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 below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Recognition – Transaction Revenue for Cross-Border Transactions

As described in Notes 1 and 2 to the consolidated financial statements, the Company’s transaction revenue relates to fees charged for payment processing services provided to educational institutions, healthcare entities and other commercial entities (each a client), which is comprised of processing domestic and cross-border transactions. Total transaction revenue for the year ended December 31, 2024 was $410.3 million, of which a significant portion related to cross-border transactions. Revenue is recognized when a customer obtains control of the promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.

The principal considerations for our determination that performing procedures relating to recognition of transaction revenue for cross-border transactions is a critical audit matter are a high degree of auditor effort in performing procedures and evaluating audit evidence related to the Company’s revenue recognition for cross-border transactions.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to revenue recognition, including controls over revenue transactions recognized as cross-border transactions. These procedures also included, among others (i) testing revenue recognized for a sample of cross-border revenue transactions by obtaining and inspecting source documents, such as client contracts, cash receipts and cash payments; (ii) testing the revenue recognized for a sample of cross-border revenue transactions near period end by obtaining and inspecting source documents, such as bank statements; and (iii) confirming a sample of balances receivable from third party payment providers outstanding as of December 31, 2024.

Acquisition of Invoiced Inc. – Valuation of Acquired Relationships and Developed Technology

As described in Notes 1 and 9 to the consolidated financial statements, on August 2, 2024, the Company acquired all of the issued and outstanding shares of Invoiced for estimated total purchase consideration, net of cash acquired, of $51.7 million. Of the acquired intangible assets, $18.6 million of acquired relationships and $7.1 million of developed technology were recorded. Management estimates the fair value of acquired relationships under the income approach using the multi-period excess earnings method and estimates the fair value of acquired developed technology under the income approach using the relief-from-royalty method. Determining the fair value of assets acquired is judgmental in nature and can involve the use