Really how we grow existing clients and how we get them to use more and more of Flywire's products and services every year. We'll talk a little bit about what differentiates Flywire here in a minute, but we actually have our own payment infrastructure. And so that took us over 10 years to build our own payment infrastructure, which is one of the most unique parts about Flywire. So three things to really think about when you think about Flywire, how we differentiate. Our core thesis is software-driven value and payments. So we believe in the connection between software and payment technology. Some people will say embedded finance, embedded payments. That's really the connection. Flywire not only has the software, and think of that software as always sitting between our client's system of record, right? They're the biller. They're the receiver of money.
Our software is always sitting between their system of record, bidirectional communication from their system of record, and actually delivering payment experiences to their customer. Whether that customer is a consumer or a business, Flywire doesn't care who the payer is, but we're actually owning that entire interaction with that payer. So everything from communications to presentment of payment options, all the way through the settlement of the funds and updating the system of record. So we're sitting in this really sticky location in between our client's system of record and their customer. On top of that vertical software, we have our own shared set of payment platform. And so the Flywire advantage is really vertical software specific to the industries we serve, a payment platform that is set up with all the shared services. So things like notification, store credit card, convert currency, do a bank transfer.
All of those things are shared services used across the vertical software. And then the third part that differentiates us the most is our own network. And so that is 50+ local bank accounts around the world with redundancy, local and cross-border payment rail, card rail, third-party payment method rail. All of that comes together with Flywire. So one relationship with Flywire allows you to avoid having to string together what could be 5, 6, 7 different payment relationships to get a complete solution. And then the last part that really differentiates us is our vertical expertise. And so if you look at our teams that run our four verticals, which we'll talk about, they are typically 10-, 15-, 20-year veterans in those industries. And so we pair kind of industry-leading technology, our own payment network, and vertical expert teams as we go to market.
If you look at the sectors that we serve today, it's really four sectors: education, healthcare, travel, and business payments. You can look at the growth rates of these sectors. They're quite strong in organic growth themselves. At the bottom, you'll actually see our penetration across these sectors. So you can see even at our size and our scale, we're still very early penetrated when it comes to going after these massive end markets. And if you think of the, in general, the use cases, it would be for education, it's paying a tuition bill, whether that's done domestically, whether it's done cross-border. Flywire is integrated all the way through that entire billing process and is actually clearing the funds and settling the funds for the major universities. Healthcare, it's out-of-pocket spend.
So this is consumers going to maybe have a medical procedure, insurance gets applied, and then there's an out-of-pocket spend component. We're helping four of the top 10 hospitals in the US bill that consumer-based transaction and handle that consumer-based transaction. If you look at travel, mostly centered around luxury travel. So you're going on a family vacation maybe to Europe. You're going on that African safari you've always wanted to go on. It's very likely you're paying through Flywire as you're making that transaction. High-value, complex transaction, typically crossing a border. That's a great use case for our travel business. And then in B2B business payments, it's really pretty much any business that can go and invoice cross-border. So typically $50 million revenue to hundreds of millions of revenue business could be in tech, could be in manufacturing, professional services, insurance.
Anybody that's really invoicing globally is a great target for Flywire. So you've got the vertical software we mentioned. You've got the payment platform. You have the network. [crosstalk]. Then across the top of that, you'll have capabilities that allow us to do both receivables and payables for these clients. So we're helping them receive, but there's also strategic things we can do to help them make payments out as well. For us, we look at this entire ecosystem and say, how do we deliver through more software and our payment infrastructure? How do we deliver more solutions for our clients over time? And how do we help solve all the various areas of money movement that they have when they interact in a business? Next one.
Double-click on the payment network for a minute, just because I know that's a hot topic. It's the vertical software and the platform we mentioned, but then we're literally connecting to top banks around the world, third-party payment methods, PayPal, Venmo, Alipay, WeChat in China, multiple card networks and acquirers, Adyen, First Data, Worldpay, are the three processors we leverage. Our clients don't sign paper with those acquirers. Only one set of paper with Flywire. Flywire is handling all the payment relationships, whether that's American Express, UnionPay, any of the third-party methods. We control. Think of us as owning the rail to move the money and controlling the switching of the rail through the payment platform, right? So if there's a change or we want to route card transactions in Europe a different way, our clients don't have to make any decision. They don't even know the difference.
Their settlement stays the same, and we're routing a percentage or all of our card volume a different way over an existing rail we already have. Global coverage. Like I said, 100+ accounts, 50+ countries. That also has baked into it redundancy. And so again, we control the switching of that. We have the economics enabled in that switching as well. So again, that $24 billion is really our volume that we can use to go and negotiate, lower our cost basis, drive more value to our clients through that network. Just two more slides, and we'll wrap it up. So first, the growth algorithm. This is really important for people to understand coming up on our, I guess, third year of being public. This growth algorithm has been something that we continue to point to. It starts with NRR.
It's that net revenue retention at the point of IPO that was a three-year average around 123%. We actually have, this last year, had 125% net revenue retention. So you start with that net revenue retention. On top of that, you're layering on the ramp, the full-year effect of clients that went live in the prior year. So remember, as we're associated to a billing process, we may go live in a Q1 or a Q2. We have high visibility as to what that Q1 or Q2 volume was we missed. And we have very high predictability for that next year, right? Because again, it's a billing function, less kind of e-commerce, less unknown transaction volume. It's typically recurring invoicing-type volume. And so you layer on top a very strong ramp for customers from the prior year signs.
You add on in-year customers who are new to be signed, and you get a partial year of those clients going live, and that adds to it. Then on top of that, we've rolled up a whole series of services that in our last earnings call we highlighted as over $10 million of annualized revenue around payer services. So there's things attached to the payment that we can actually provide as value-added services to the payer. That business, which we just started a couple of years ago, is already over $10 million of revenue. So the growth equation is really those series of steps up until what we put out there. We also highlighted our cohort growth, which is quite strong. You can see this dating back all the way to FY 2017.
What you'll notice in this cohort, as a cohort area starts, you'll notice that next year is obviously larger than the other year, right? So as I said, you get kind of a partial year effect in that first year. And then as you're rolling out, your cohorts are growing. We're even seeing growth all the way back in some of our oldest cohorts. In this last quarter, we actually had a client, I think it was back in the 2017 cohort, that actually upgraded to a whole another set of payment processing capability with us driving additional NRR. So still seeing growth in even those earliest cohorts because of that combination of software-driving value in different use cases, as well as the network economics. And then lastly, just the strong financial performance of the business. You see payment volume, gross profit, revenue less ancillary, and adjusted EBITDA.
All right. Thanks, Mike. So we're going to jump into a quick fireside here, and then we'll take some audience questions at the end. So Mike, just wanted to double-click on NRR 125 last year. Your education is not a high-growth end market. So maybe just talk about the drivers and how we get to that 120+.
Yeah. So when we start out, right, we're in this kind of strategic spot sitting at the billing point for our clients, typically helping solve a challenge. And there's different drivers behind that NRR. That's part of the reason it's such a stable and reliable metric. So think of a major university, for instance. You may get deployed at the undergrad program. You didn't get deployed at the law school. You didn't get deployed at maybe the MBA program or medical school, right? You may get a university that has different campuses around the world. A school like BU has a campus up in Canada as well. And so you may get deployed in one area. NYU has a campus in Shanghai. And so you may get deployed in one of these areas, and you have a functional expansion opportunity or a geographic expansion opportunity.
You then have additional products that you can roll in. So for the first seven years of our education. And so, of course, we're going back to all those clients and saying, "No, we actually can process all your receivables, all the domestic receivables and the cross-border receivables." So schools like Stanford, Texas A&M, UVA are actually doing all the tuition payments now with Flywire. So you get a functional, geographic, and product expansion opportunity are just some of the key ones. The network is also something that you add. Every time we enhance the network, add a new payment method, add a new currency pair, it adds NRR across all our customer bases. So all of those things layered together help drive that number. It's not one thing. It's not like one thing of pricing or something that's driving NRR.
It's all these other kind of core metrics inside the company.
Well, that's super helpful. So if we think about new logo growth, right, you signed 700 new clients last year, was up from 600 the prior year. I think that's a lot of travel, a lot of education. I think last quarter you said education overtook travel. But what's the value prop and why are you having so much success in kind of growing that number off a larger base?
Yeah. I think the core, all of us that understand payments, I think you have to realize it's quite complicated for clients who are trying to get paid, right? And so you go into a major university, go into a business, their CFO isn't looking to manage all those payment relationships, right? They don't want to go sit down and negotiate with Amex and figure out what third-party methods and have a primary acquirer and a secondary acquirer and have which bank's going to clear ACH and which is my fallback bank in case that ACH fails and have my IT team string it all together, right? We're delivering to them world-class software, and that software is coming with all the payment methods, right? And so they can go and run their hospital. They can go run their university. They don't have to worry about getting paid.
And so in some ways, it's almost kind of this value prop that says, "You're not experts in payments. You shouldn't have to be to run your business or your university. We are. Let us handle that for you." And that is a huge win when it comes to the customers, right? And again, remember, this is not the way payments has historically worked. You used to have to go buy software. You had to deploy the software. You then had to get your IT team to implement the software. Then you had to make all your payment decisions, negotiate all those payment terms, integrate all those into your software, right? And then you're still dealing with all the reconciliation in the back office. And so we're coming in and we're solving all of that. So you got less manual reconciliation in the back office.
You're getting less questions from payers. You're lowering costs, typically, and you're delivering a world-class solution to your customer, right? Making it easier for them to pay, driving less questions. So those things together is the macro trend that's, I think, that's helping us. When it comes to go-to-market, we're also, I think, pretty good at it. We're constantly looking at our metrics, our onboarding ramp time for reps. We've reported a couple of times in our last earnings is dropping significantly. We highlighted on our last earnings call, our B2B segment actually has a payback period of within the first year for a new rep brought on to actually pay for themselves in the first year of their own signings, which is a pretty impressive metric. So we are very focused go-to-market people who are using tech to drive top of funnel.
Yeah. I think one of the big opportunities you've talked about is domestic education payments, I think, are a high single-digit % of total revenue. If you look at that $660 billion TAM, obviously, the lion's share of that is domestic volume. So maybe just talk a little bit about how you see that opportunity and how big it could be ultimately as a part of your education business.
Yeah. It's a massive opportunity for us. If we never signed up another customer, you could 3x-5x the company's revenue with never signing a new customer. That's how much upsell opportunity exists in our current base. And again, the reason for that is partially that 7-8 years of running the company with that cross-border-only product. Now we get to go into that customer base and deliver the domestic solution. And when the domestic solution gets delivered, you get a software-based revenue stream and more transactional revenue. And the opportunity is quite massive. Now, outside the United States, we're pretty much getting the receivables from day one.
If you're selling a business or a university outside the United States, we're going in and saying, "Hey, we can do all the receivables, typically, from day one." But inside the US, you're sitting on 1,000+ clients who have just known us as a cross-border processor and are now expanding that opportunity. So it can exponentially increase the volume and the revenue on a given account basis. It also makes you much more, obviously, of a strategic partner for a university when you're touching what is 80% of all the money they collect, which is tuition and fees.
Okay. And then just to touch a little bit on fourth quarter, obviously, nice big 9% revenue beat after a little bit of a soft Q3. So maybe just bucket the upside relative to your expectations. I think came even better than you guys expected.
Yeah. We saw some strength in Canada. We saw continued strength in our travel and B2B business. Again, we feel like we have, I think it was 43% growth year-over-year for the year, pretty great year. I would also say you're seeing growth numbers in addition to putting up EBITDA margin expansion of 550 basis points. And so again, it's a strong business both on the top line as well as from cash flow generation and financial profile. So when it comes to outperformance for us, it will typically be us getting clients live quicker, faster than we had modeled. Occasionally, it will be macro trends that happen. Or there's also a combination of kind of unlocking additional parts of our network, which also help drive revenue in a given quarter. And so all of those can come into what causes outperformance for a quarter.
Right. So we've talked a lot about top line. And I do want to double-click a little bit on the margin expansion. You guys have got it to medium term of 300 to 600 basis points. There aren't a lot of companies growing top line 30+ and expanding margins at that rate. So maybe just talk about incremental margins and how you can leverage your cost base to achieve that.
Yeah. I mean, as you'd seen in one of those charts, 2022 was an investment year for us. And as we had always said since IPO, expect 300-600 basis points EBITDA margin expansion per year. Started last year around 300 on the lower end of that range, finished the year around 550 basis points of EBITDA margin expansion. This year, I think we started that range around 320 basis points. And again, the scaling of our business, a lot of it comes down to the technology that we went through. When I mentioned having one network and having one tech platform, the reason for that is also scale, right? It's a strategic differentiator for us. There's many companies that will have multiple platforms and have the complexities associated with managing those.
By keeping one core tech platform and having one set of payment infrastructure, the verticals can actually go faster in how they go after their market, right? They don't have to worry about how the money's moving. They don't have to worry about things like send an email notification, do a single sign-on interface. All of those things are solved at a platform level. So we're not replicating that functionality at the vertical level. So you get an inherent bit of scale. And then I would just say in the financial and operational side of our business, we're showing great scale. Hiring, I think, even half the pace in which we were hiring the last two years in that part of the business, just helping to show scale and helping to drive scale through automation.
Okay. I did want to touch on Canada for a second. Obviously, they've put some restrictions in cutting student visas by 35%. So I think you guys called out about a 300 basis point headwind. But maybe how do you guys think about it? What you've seen before when governments have taken steps to reduce student.
Yeah. So obviously, been in the business for 13-14 years now. You'll see government policies come and go, especially around student visas and study permits. I would say the thing that we've seen historically is that governments usually quickly realize the amount of economic impact that students, especially cross-border students, have on their local economies. And even though they'll have different programs in place to curb that, use in Canada is specifically around housing. They kind of doubled their international students over two and a half years. And so it put a huge housing burden on certain parts of Canada, certain cities in Canada in particular. And so what they've done is said, "Hey, we're going to pause and lower the amount of visas so that we're putting less pressure on the housing market." For us, we have clients in over 40 countries.
And so our belief, as we said on the call, is that you'll see students redisperse in different parts of Canada as the government wants to help alleviate some of the housing challenge. And then you'll also see students go to different countries as well. And so you'll see those students show up in the United States, maybe into Canada, maybe into Europe, maybe into the UK. And so there is this kind of migrant behavior for students who are going to go study abroad. It isn't always dedicated to one country. Sometimes they'll have applications in two or three countries. And that's the core scenario planning that we did for this year while taking down our guidance, even though it's still above 30.
Right. Yeah. No, I think if we go back and look at last year, the 40% growth, everyone's focused on revenue, revenue, revenue. People have kind of forgotten about the balance sheet. You have $500+ million of cash looking to deploy. So maybe talk a little bit about where you would ideally like to deploy that capital, what verticals, size of deal, just kind of your framework.
Yeah. So we also feel we have a pretty good track record. We've done three deals since being a public company. All three deals have hit high 90% client retention, high 90% employee retention, great IRR profiles on all those deals. And for us, we look and say we have to find a target that fits our core thesis. What can help us go faster in a given industry or market that we're already in? What can either give us an additional capability, typically software capability, that we could drive into our client base, adding more net revenue retention? And the third potential reason we do a deal is, could we go into a new geography or a new industry we're not in yet that we think we could compete well in?
Now, you put those kind of three strategic pillars together with has to have a good financial profile, can't take us off where we're going from a revenue growth or profitability EBITDA perspective, has to be a good culture fit, can't be a tech disaster, right? So you add those in the mix. And then you also have to find companies that are valued at a reasonable level given the market. And so you shake those together. We found three of those deals since two and a half years ago since being public. We've doubled the size of our corp dev team. We think we have good deal flow and feel really good about it. Like you said, we have not only $500 million of cash, we have a new debt facility as well. We have no debt now as a company, but have a larger facility as well.
We have the flexibility to use some combination of cash and debt to do a deal. We're pretty excited about the year ahead, and I think we have a good track record of doing so.
Okay. I think we have a couple of minutes left. I wanted to see if there's any questions in the audience? Go ahead, [crosstalk].
What are your win rates like when you go into B2B or when you go beyond your core and cross-border? There are other competitors. How has that been like? Is it improving, changing?
Yeah. Yeah. So it is improving. RFP win rate is well north of 50%. It's closer to probably 70%+. I would say the incumbent challenge is a different dynamic. So especially in the education sector, where you have incumbents who have legacy agreements, there's this inertia to get them out, right? There's a lot of this kind of fear, uncertainty, doubt of change. And so our biggest competitor in some way is that inside the IT departments, inside the finance departments.
And the way in which we're combating that and having pretty good success is ensuring we've got the best technical integrations possible so that when they're on an Ellucian system in education or a PeopleSoft system or a NetSuite system in B2B, we're going in and saying, "No, no, we have the full integrated kit ready to go and can get you up and running relatively quickly and show confidence around that risk of migration." And so really feel good about the win rates, really feel good about the head-to-head competition rates. The incumbents, sometimes our clients are conservative in nature, and so it takes a little while to convince them, even as an incumbent vendor often delivering value already.
Okay. Well, I think we're out of time, so we'll wrap it there. The breakout session in Cordova 5.
Thanks, all.