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AvidXchange Announces Third Quarter 2022 Financial Results

–Third quarter 2022 revenue and adjusted EBITDA results ahead of internal forecast driven by transaction growth, efficiencies and operating expense control

–Comparable (quarter over-quarter) third quarter 2022 revenue growth 26.4% led chiefly by sustained transaction growth and transaction yield

–Comparable revenue growth coupled with gross profit expansion aided by transaction yield & operational efficiency as well as operating expense leverage results in lower net losses

–Raising 2022 business outlook

CHARLOTTE, N.C., Nov. 02, 2022 (GLOBE NEWSWIRE) — AvidXchange Holdings, Inc. (Nasdaq: AVDX), a leading provider of accounts payable (AP) automation software and payment solutions for middle market businesses and their suppliers, today announced financial results for the third quarter ended September 30, 2022.

“As we anniversary our first year as a publicly traded company, we are extremely pleased with the consistent execution of our operational and financial strategies. We continue to leverage our investments in our product roadmap to drive revenue growth while taking continuous action on optimizing our operating costs. With the macro-economic backdrop still volatile, we remain cautiously optimistic as we look to close the year on a strong note. We believe our value proposition of accounts payable and payments automation offers significant benefits to our buyer and supplier customers across all economic cycles. With quantifiable ROI on costs and revenues, it should have strong resonance among customers particularly amid these uncertain times,” said Michael Praeger, CEO & Co-Founder of AvidXchange.

Third Quarter 2022 Financial Highlights:

  • Total revenue was $82.4 million, an increase of 26.4% year-over-year, compared with $65.2 million in the third quarter of 2021.
  • GAAP net loss was $(25.4) million, compared with a GAAP net loss of $(35.5) million in the third quarter of 2021.
  • Non-GAAP net loss was $(11.6) million, compared with a Non-GAAP net loss of $(15.3) million in the third quarter of 2021.
  • GAAP gross profit was $47.6 million, or 57.8% of total revenue, compared with $34.3 million, or 52.7% of total revenue in the third quarter of 2021.
  • Non-GAAP gross profit was $53.5 million, or 65.0% of total revenue, compared with $39.5 million, or 60.6% of total revenue in the third quarter of 2021.
  • Adjusted EBITDA was $(3.7) million compared with $(6.0) million in the third quarter of 2021.

A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables following the financial statements in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Measures and Other Performance Metrics.”

Third Quarter 2022 Key Business Metrics and Highlights:

  • Total transactions processed in the third quarter of 2022 was 18.0 million, an increase of 11.9% from 16.1 million in the third quarter of 2021.
  • Total payment volume in the third quarter of 2022 was $18.1 billion, an increase of 29.4% from $14.0 billion in the third quarter of 2021.
  • Transaction yield in the third quarter of 2022 was $4.57, an increase of 12.8% from $4.05 in the third quarter of 2021.

Full Year 2022 Financial Outlook

As of November 2, 2022, AvidXchange anticipates its revised Full Year 2022 revenue and adjusted EBITDA to be in the following ranges (in millions):                                                

    Current
FY 2022 Guidance
Previous
FY 2022 Guidance
 
  Revenue $314.0 – $315.0 $308.0 – $310.0  
  Adjusted EBITDA(1) $(18.0) – $(19.0) $(27.0) – $(29.0)  

      (1)   A reconciliation of adjusted EBITDA to GAAP net loss on a forward-looking basis is not available without unreasonable efforts due to the high variability, complexity and low visibility with respect to the items excluded from this non-GAAP measure.

These statements are forward-looking and actual results may differ materially. Refer to the Forward-Looking Statements safe harbor below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

Earnings Teleconference Information

AvidXchange will discuss its third quarter 2022 financial results during a teleconference today, November 2, 2022, at 10:00 ET. The call will be broadcast simultaneously via webcast at https://ir.avidxchange.com/. Following the completion of the call, a recorded replay of the webcast will be available on AvidXchange’s website. In addition to the conference call, supplemental information is available on the Investor Relations section of AvidXchange’s website at https://ir.avidxchange.com/.

About AvidXchange™

AvidXchange is a leading provider of accounts payable (“AP”) automation software and payment solutions for middle market businesses and their suppliers. AvidXchange’s software-as-a-service-based, end-to-end software and payment platform digitizes and automates the AP workflows for more than 8,000 businesses and it has made payments to more than 825,000 supplier customers of its buyers over the past five years. To learn more about how AvidXchange is transforming the way companies pay their bills, visit www.AvidXchange.com

Forward-Looking Statements
This press release may contain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.  In this context, forward-looking statements generally relate to future events or our future financial or operating performance and often contain words such as: “anticipate,”  “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “future,” “likely,” “may,” “should,” “will” and similar words and phrases indicating future results. The information presented in this press release related to our expectations of future performance, including guidance for our revenue and adjusted EBITDA for the full year 2022, statements related to our product roadmap and cost optimization efforts, the opportunities for rapid and quantifiable ROI on costs and revenue for our customers, the resilience of our business mode, and other statements that are not purely statements of historical fact, are forward-looking in nature.  These forward-looking statements are made on the basis of management’s current expectations, assumptions, estimates and projections and are subject to significant risks and uncertainties that could cause actual results to differ materially from those anticipated in such forward-looking statements. We therefore cannot guarantee future results, performance or achievements. 

Factors which could cause actual results or effects to differ materially from those reflected in forward-looking statements include, but are not limited to, the risk factors and other cautionary statements described, from time to time, in AvidXchange’s filings with the Securities and Exchange Commission (“SEC”), including, without limitation, AvidXchange’s Annual Report on Form 10-K and other documents filed with the SEC, which may be obtained on the investor relations section of our website (https://ir.avidxchange.com/) and on the SEC website at www.sec.gov.  Any forward-looking statements made by us in this press release are based only on information currently available to us and speak only as of the date they are made, and we assume no obligation to update any of these statements in light of new information, future events or otherwise unless required under the federal securities laws.

Non-GAAP Measures and Other Performance Metrics

To supplement the financial measures presented in our press release and related conference call in accordance with generally accepted accounting principles in the United States (“GAAP”), we also present the following non-GAAP measures of financial performance: Non-GAAP Gross Profit, Adjusted EBITDA, and Non-GAAP Net Loss.

A “non-GAAP financial measure” refers to a numerical measure of our historical or future financial performance or financial position that is included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP in our financial statements. We provide certain non-GAAP measures as additional information relating to our operating results as a complement to results provided in accordance with GAAP. The non-GAAP financial information presented herein should be considered in conjunction with, and not as a substitute for or superior to, the financial information presented in accordance with GAAP and should not be considered a measure of liquidity. There are significant limitations associated with the use of non-GAAP financial measures. Further, these measures may differ from the non-GAAP information, even where similarly titled, used by other companies and therefore should not be used to compare our performance to that of other companies.

We have presented Non-GAAP Gross Profit, Adjusted EBITDA, and Non-GAAP Net Loss in this press release. We define Non-GAAP Gross Profit as revenue less cost of revenue excluding the portion of depreciation and amortization and stock-based compensation expense allocated to cost of revenues. We define Adjusted EBITDA as our net loss before depreciation and amortization, impairment and write-off of intangible assets, interest income and expense, income tax expense, stock-based compensation expense, transaction and acquisition-related costs expensed, change in fair value of derivative instrument, non-recurring items not indicative of ongoing operations, and charitable contributions of common stock. We define Non-GAAP Net Loss as net loss before amortization of acquired intangible assets, impairment and write-off of intangible assets, stock-based compensation expense, transaction and acquisition-related costs expensed, change in fair value of derivative instrument, non-recurring items not indicative of ongoing operations, provision for income taxes and charitable contributions of common stock.

We believe the use of non-GAAP financial measures, as a supplement to GAAP measures, is useful to investors in that they eliminate items that are either not part of our core operations or do not require a cash outlay, such as stock-based compensation expense. Management uses these non-GAAP financial measures when evaluating operating performance and for internal planning and forecasting purposes. We believe that these non-GAAP financial measures help indicate underlying trends in the business, are important in comparing current results with prior period results, and are useful to investors and financial analysts in assessing operating performance.

Investor Contact:

Subhaash Kumar
[email protected]
813.760.2309

AvidXchange Holdings, Inc.
Unaudited Consolidated Statements of Operations
(in thousands, except share and per share data)

    Three Months Ended September 30,     Nine Months Ended September 30,  
    2022     2021     2022     2021  
Revenues   $ 82,411     $ 65,176     $ 230,175     $ 179,144  
Cost of revenues (exclusive of depreciation and amortization expense)     29,890       25,792       86,676       71,343  
Operating expenses                                
Sales and marketing     20,241       16,118       57,928       44,176  
Research and development     21,997       15,672       62,176       43,225  
General and administrative     24,042       15,564       62,704       45,498  
Impairment and write-off of intangible assets                       574  
Depreciation and amortization     8,365       8,164       24,384       22,334  
Total operating expenses     74,645       55,518       207,192       155,807  
Loss from operations     (22,124 )     (16,134 )     (63,693 )     (48,006 )
Other income (expense)                                
Interest income     2,031       35       2,906       332  
Interest expense     (5,209 )     (4,874 )     (15,261 )     (14,985 )
Change in fair value of derivative instrument           (14,552 )           (14,690 )
Charge for amending financing advisory engagement letter – related party                       (50,000 )
Other expenses     (3,178 )     (19,391 )     (12,355 )     (79,343 )
Loss before income taxes     (25,302 )     (35,525 )     (76,048 )     (127,349 )
Income tax expense     69       2       207       203  
Net loss   $ (25,371 )   $ (35,527 )   $ (76,255 )   $ (127,552 )
Accretion of convertible preferred stock           (5,012 )           (14,417 )
Net loss attributable to common stockholders   $ (25,371 )   $ (40,539 )   $ (76,255 )   $ (141,969 )
Net loss per share attributable to common stockholders, basic and diluted   $ (0.13 )   $ (0.71 )   $ (0.39 )   $ (2.60 )
Weighted average number of common shares used to compute net loss per share attributable to common stockholders, basic and diluted     198,234,392       57,174,627       197,710,104       54,617,200  

AvidXchange Holdings, Inc.
Unaudited Consolidated Balance Sheets
(in thousands, except share and per share data)

    As of September 30,     As of December 31,  
    2022     2021  
Assets                
Current assets                
Cash and cash equivalents   $ 411,081     $ 562,817  
Restricted funds held for customers     927,743       1,242,346  
Marketable securities     97,276        
Accounts receivable, net of allowances of $2,663 and $2,283, respectively     39,716       30,965  
Supplier advances receivable, net of allowances of $1,483 and $1,105, respectively     13,210       11,520  
Prepaid expenses and other current assets     12,573       10,237  
Total current assets     1,501,599       1,857,885  
Property and equipment, net     104,869       106,227  
Operating lease right-of-use assets     5,300       3,278  
Deferred customer origination costs, net     28,342       28,276  
Goodwill     165,921       165,921  
Intangible assets, net     101,523       100,455  
Other noncurrent assets and deposits     5,252       4,261  
Total assets   $ 1,912,806     $ 2,266,303  
Liabilities and Stockholders’ Equity                
Current liabilities                
Accounts payable   $ 16,542     $ 17,142  
Accrued expenses     66,914       56,082  
Payment service obligations     927,743       1,242,346  
Deferred revenue     11,212       9,530  
Current portion of contingent consideration           688  
Current maturities of lease obligations under finance leases     568       670  
Current maturities of lease obligations under operating leases     1,334       1,048  
Current maturities of long-term debt     4,800       4,800  
Total current liabilities     1,029,113       1,332,306  
Long-term liabilities                
Deferred revenue, less current     18,156       20,350  
Contingent consideration, less current portion     70       70  
Obligations under finance leases, less current maturities     61,853       61,172  
Obligations under operating leases, less current maturities     5,019       3,448  
Long-term debt     123,195       119,880  
Other long-term liabilities     3,059       6,022  
Total liabilities     1,240,465       1,543,248  
Commitments and contingencies                
Stockholders’ equity                
Preferred stock, $0.001 par value; 50,000,000 shares authorized, no shares issued and outstanding as of September 30, 2022 and December 31, 2021            
Common stock, $0.001 par value; 1,600,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 198,488,663 and 196,804,844 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively     198       197  
Additional paid-in capital     1,620,949       1,594,780  
Accumulated deficit     (948,806 )     (871,922 )
Total stockholders’ equity     672,341       723,055  
Total liabilities and stockholders’ equity   $ 1,912,806     $ 2,266,303  

AvidXchange Holdings, Inc.
Unaudited Consolidated Statements of Cash Flows
(in thousands)

  Nine Months Ended September 30,  
  2022     2021  
Cash flows from operating activities              
Net loss $ (76,255 )   $ (127,552 )
Adjustments to reconcile net loss to net cash used by operating activities              
Depreciation and amortization expense   24,384       22,334  
Amortization of deferred financing costs   1,018       1,018  
Provision for doubtful accounts   3,751       1,075  
Stock-based compensation   23,767       3,109  
Fair value adjustment of contingent consideration         140  
Accrued interest   1,765       811  
Loss on fixed asset disposal   36       3  
Noncash expense on contract modification – related party         50,000  
Impairment and write-off on intangible and right-of-use-assets         574  
Amortization of investments held to maturity   (1,123 )      
Fair value adjustment to derivative instrument         14,690  
Deferred income taxes   162       162  
Changes in operating assets and liabilities              
Accounts receivable   (9,493 )     (3,730 )
Prepaid expenses and other current assets   (2,337 )     (4,254 )
Other noncurrent assets   (1,061 )     (2,593 )
Deferred customer origination costs   (66 )     (2,185 )
Accounts payable   167       (11,640 )
Deferred revenue   (511 )     13,801  
Accrued expenses and other liabilities   6,097       3,401  
Operating lease liabilities   (165 )     (479 )
Total adjustments   46,391       86,237  
Net cash used in operating activities   (29,864 )     (41,315 )
Cash flows from investing activities              
Purchase of short-term investments held to maturity   (310,025 )      
Proceeds from maturity of short-term investments held to maturity   213,872        
Purchases of equipment   (2,677 )     (939 )
Purchases of real estate   (767 )      
Purchases of intangible assets   (20,363 )     (12,582 )
Proceeds from sales of property and equipment         5  
Acquisition of business, net of cash acquired         (45,963 )
Contingent consideration and deferred obligation payments near acquisition date         (1,292 )
Supplier advances, net   (4,699 )     (3,467 )
Net cash used in investing activities   (124,659 )     (64,238 )
Cash flows from financing activities              
Proceeds from the issuance of long-term debt   2,367       2,288  
Principal payments on finance leases   (666 )     (872 )
Proceeds from issuance of common stock   828       2,623  
Proceeds from issuance of common stock under Employee Stock Purchase Plan   602        
Payment of contingent consideration at acquisition date fair value   (344 )      
Payment service obligations   (314,603 )     733,153  
Net cash (used in) provided by financing activities   (311,816 )     737,192  
Net (decrease) increase in cash, cash equivalents, and restricted funds held for customers   (466,339 )     631,639  
Cash, cash equivalents, and restricted funds held for customers              
Cash, cash equivalents, and restricted funds held for customers, beginning of year   1,805,163       390,078  
Cash, cash equivalents, and restricted funds held for customers, end of period $ 1,338,824     $ 1,021,717  
Supplementary information of noncash investing and financing activities              
Right-of-use assets obtained in exchange for new finance lease obligations $ 689     $ 174  
Right-of-use assets obtained in exchange for new operating lease obligations   2,831       877  
Common stock issued in business combination         31,000  
Common stock issued as contingent consideration   344       500  
Initial fair value of contingent consideration and deferred payment obligation at acquisition date         2,672  
Property and equipment purchases in accounts payable and accrued expenses   1       93  
Interest paid on notes payable   8,134       7,619  
Interest paid on finance leases   4,323       5,537  
Options issued in connection with bonus compensation         48  

AvidXchange Holdings, Inc.
Unaudited Reconciliation of GAAP to Non-GAAP Measures
(in thousands)

  Three Months Ended September 30,     Nine Months Ended September 30,  
  2022     2021     2022     2021  
Reconciliation from Revenue to Non-GAAP Gross Profit and Non-GAAP Gross Margin:                              
Total revenues $ 82,411     $ 65,176     $ 230,175     $ 179,144  
Expenses:                              
Cost of revenues (exclusive of depreciation and amortization expense)   (29,890 )     (25,792 )     (86,676 )     (71,343 )
Depreciation and amortization expense   (4,924 )     (5,068 )     (13,930 )     (14,171 )
GAAP Gross profit $ 47,597     $ 34,316     $ 129,569     $ 93,630  
Adjustments:                              
Stock-based compensation expense   1,010       90       3,130       230  
Depreciation and amortization expense   4,924       5,068       13,930       14,171  
Non-GAAP gross profit $ 53,531     $ 39,474     $ 146,629     $ 108,031  
GAAP Gross margin   57.8 %     52.7 %     56.3 %     52.3 %
Non-GAAP gross margin   65.0 %     60.6 %     63.7 %     60.3 %
                               
Reconciliation from Net Loss to Non-GAAP Net Loss:                              
Net loss $ (25,371 )   $ (35,527 )   $ (76,255 )   $ (127,552 )
Amortization of acquired intangible assets   3,623       3,676       10,952       9,181  
Impairment and write-off of intangible assets                     574  
Provision for income taxes   69       2       207       203  
Stock-based compensation expense   8,718       1,157       23,767       3,109  
Transaction and acquisition-related costs   3       662       280       3,708  
Change in fair value of derivative instrument         14,552             14,690  
Non-recurring items not indicative of ongoing operations (1)   1,343       174       1,286       50,224  
Total net adjustments   13,756       20,223       36,492       81,689  
Non-GAAP net loss $ (11,615 )   $ (15,304 )   $ (39,763 )   $ (45,863 )
                               
Reconciliation from Net Loss to Adjusted EBITDA:                              
Net loss $ (25,371 )   $ (35,527 )   $ (76,255 )   $ (127,552 )
Depreciation and amortization   8,365       8,164       24,384       22,334  
Impairment and write-off of intangible assets                     574  
Interest income   (2,031 )     (35 )     (2,906 )     (332 )
Interest expense   5,209       4,874       15,261       14,985  
Provision for income taxes   69       2       207       203  
Stock-based compensation expense   8,718       1,157       23,767       3,109  
Transaction and acquisition-related costs   3       662       280       3,708  
Change in fair value of derivative instrument         14,552             14,690  
Non-recurring items not indicative of ongoing operations (1)   1,343       174       1,286       50,224  
Adjusted EBITDA $ (3,695 )   $ (5,977 )   $ (13,976 )   $ (18,057 )
                               
Reconciliation from Revenue Growth to Organic Revenue Growth:                              
Revenues $ 82,411     $ 65,176     $ 230,175     $ 179,144  
Less: Revenues from acquisitions (2)   (523 )           (8,671 )      
Organic revenues $ 81,888     $ 65,176     $ 221,504     $ 179,144  
Revenue growth   26.4 %             28.5 %        
Organic revenue growth   25.6 %             23.6 %        
(1) For the three and nine months ended September 30, 2022, includes $1,621 of restructuring costs and a benefit of $308 for a liability release related to the FastPay acquisition that closed in July 2021.  
   
(2) Acquisitions include FastPay and PayClearly, which were not in the prior year comparable periods.  

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