GlobeNewswire Inc | Nov 16, 2021 04:05PM EST

November 16, 2021

CHARLOTTE, N.C., Nov. 16, 2021 (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, 2021.

I am pleased to report that we delivered strong third quarter results highlighted by 37% year-over-year revenue growth and 40% growth in total payment volume. We believe our strong results reflect continued demand for our software enabled, accounts payable automation and payment solutions along with solid execution against our key growth initiatives, said Michael Praeger, CEO & Co-Founder of AvidXchange. We are seeing momentum and continued success of our AvidXchange Business Flywheel and are looking to capture the significant greenfield opportunity that exists in the middle market B2B payments segment.

Third Quarter 2021 Financial Highlights:

-- Total revenue was $65.2 million, an increase of 37% year-over-year, compared with $47.6 million in the third quarter of 2020. -- GAAP net loss was $(35.5) million, compared with a net loss of $(18.0) million in the third quarter of 2020. -- Non-GAAP net loss was $(15.3) million, compared with a non-GAAP net loss of $(14.9) million in the third quarter of 2020. -- GAAP gross profit was $34.3 million, or 53% of total revenue, compared with $22.4 million, or 47% of revenue in the third quarter of 2020. -- Non-GAAP gross profit was $39.5 million, or 61% of total revenue, compared with $26.7 million, or 56% of revenue in the third quarter of 2020. -- Adjusted EBITDA was $(6.0) million compared with $(6.2) million in the third quarter of 2020.

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 2021 Key Business Metrics and Highlights:

-- Total transactions processed in the third quarter of 2021 was 16.1 million, an increase of 17% from 13.7 million in the third quarter of 2020. -- Total payment volume in the third quarter of 2021 was $14.0 billion, an increase of 40% from $10.0 billion in the third quarter of 2020. -- Transaction yield in the third quarter of 2021 was $4.05, an increase of 17% from $3.46 in the third quarter of 2020. -- AvidXchange completed the acquisition of FastPay, a leading provider of payments automation solutions for the media industry. With this deal, AvidXchange expands its portfolio of automated payments technologies and services to middle market companies across the media landscape in the U.S. -- AvidXchange announced the appointment of Joseph Fox as Chief Product Officer to lead the companys overall product strategy and drive more value for customers through accelerated product innovation.

Full Year 2021 Financial Outlook

As of November 16, 2021, AvidXchange anticipates full year 2021 revenue and adjusted EBITDA to be in the following ranges (in millions):

Full Year 2021 Guidance Revenue $244.5M - $245.5M Adjusted EBITDA^(^1) $(30.1)M - $(28.1)M

(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 financial results during a teleconference today, November 16, 2021, at 5:00 PM ET. The conference call can be accessed by dialing 1-833-756-0859 (domestic) or 1-412-317-5749 (international) (Access code: AvidXchange Holdings Inc. call). A replay of the conference call will be available through November23, 2021 at 1-877-344-7529 (domestic) or 1-412-317-0088 (international). The replay passcode is 10160829. The call will also 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 AvidXchanges website. In addition to the conference call, supplemental information is available on the Investor Relations section of AvidXchanges 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. AvidXchanges software-as-a-service-based, end-to-end software and payment platform digitizes and automates the AP workflows for more than 7,000 businesses and it has made payments to more than 700,000 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 StatementsThis 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 2021, as well as 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 managements 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 in registration statements and periodic reports we file with the SEC, including our prospectus as filed with the SEC pursuant to Rule 424(b)(4) on October 14, 2021 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-GAAPMeasures 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, Non-GAAP Net Loss, and Free Cash Flow.

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, Non-GAAP Net Loss, and Free Cash Flow in this press release. We define Non-GAAP Gross Profit as revenue less cost of revenue excluding the portion of depreciation and amortization expense and stock-based compensation expense allocated to our cost of revenues. We define adjusted EBITDA as our net loss before depreciation and amortization of property and equipment, amortization of software development costs, amortization of acquired intangible assets, impairment and write-off of intangible assets, interest income and expense, income tax expense, stock-based compensation expense, transaction and acquisition-related costs expensed, and non-recurring items not indicative of ongoing operations of our business. 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, and non-recurring items not indicative of ongoing operations of our business. We define Free Cash Flow as cash flow from (used) in operating activities less purchase of plant, property and equipment and capitalization of internal-use software costs.

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.

We define transactions processed as the number of invoice transactions and payment transactions, such as invoices, purchase orders, checks, ACH payments and VCCs, processed through our platform during a particular period. We believe that transactions processed is an important measure of our business because it is a key indicator of the use by both buyers and suppliers of our solutions and our ability to generate revenue, since a majority of our revenue is generated based on transactions processed.

We define total payment volume as the dollar sum of buyers AP payments paid to their suppliers through the AvidPay Network during a particular period. We believe total payment volume is an important measure of our AvidPay Network business as it quantifies the demand for our payment services.

We define transaction yield as the total revenue during a particular period divided by the total transactions processed during such period. We believe that transaction yield is an important measure of the value of solutions to buyers and suppliers as we scale.

Contacts:

Media Contact:Olivia Sorrellsosorrells@avidxchange.com704.615.7603

Investor Contact:ir@avidxchange.com

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, 2021 2020 2021 2020 Revenues $ 65,176 $ 47,600 $ 179,144 $ 133,065 Cost ofrevenues(exclusive ofdepreciation 25,792 20,972 71,343 61,638 andamortizationexpense)Operating expensesSales and 16,118 11,763 44,176 35,279 marketingResearch and 15,672 11,055 43,225 32,156 developmentGeneral and 15,564 10,357 45,498 30,813 administrativeImpairment andwrite-off of - - 574 924 intangibleassetsDepreciationand 8,164 6,953 22,334 20,733 amortizationTotaloperating 55,518 40,128 155,807 119,905 expensesLoss from (16,134 ) (13,500 ) (48,006 ) (48,478 )operationsOther income (expense)Interest 35 613 332 1,590 incomeInterest (4,874 ) (5,039 ) (14,985 ) (15,016 )expenseChange in fairvalue of (14,552 ) - (14,690 ) (6,545 )derivativeinstrumentCharge foramendingfinancingadvisory - - (50,000 ) - engagementletter -related partyOther expenses (19,391 ) (4,426 ) (79,343 ) (19,971 )Loss before (35,525 ) (17,926 ) (127,349 ) (68,449 )income taxesIncome tax 2 58 203 175 expenseNet loss $ (35,527 ) $ (17,984 ) $ (127,552 ) $ (68,624 ) Accretion ofconvertible (5,012 ) (5,577 ) (14,417 ) (15,996 )preferredstockNet lossattributable $ (40,539 ) $ (23,561 ) $ (141,969 ) $ (84,620 )to commonstockholdersNet loss pershareattributableto common $ (0.71 ) $ (0.42 ) $ (2.60 ) $ (1.73 )stockholders,basic anddilutedWeightedaverage numberof commonshares used tocompute netloss per share 57,174,627 55,721,646 54,617,200 48,855,189 attributableto commonstockholders,basic anddiluted

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

As of As of September December 30, 31, 2021 2020 Assets Current assets Cash and cash equivalents $ 150,944 $ 252,458 Restricted funds held for customers 870,773 137,620 Accounts receivable, net of allowances of 30,135 24,757 $1,907 and $1,769, respectivelySupplier advances receivable, net ofallowances of $808 and $1,099, 11,551 8,855 respectivelyPrepaid expenses and other current assets 13,042 8,626 Total current assets 1,076,445 432,316 Property and equipment, net 83,152 86,872 Operating lease right-of-use assets 3,467 3,139 Deferred customer origination costs, net 26,309 24,124 Goodwill 160,987 105,696 Intangible assets, net 103,753 72,442 Other noncurrent assets and deposits 4,534 1,922 Total assets $ 1,458,647 $ 726,511 Liabilities, Convertible Preferred Stock and Stockholders' DeficitCurrent liabilities Accounts payable $ 17,204 $ 25,418 Accrued expenses 59,573 40,472 Payment service obligations 870,773 137,620 Deferred revenue 8,872 6,309 Current portion of contingent 950 - considerationCurrent maturities of lease obligations 815 1,092 under finance leasesCurrent maturities of lease obligations 1,037 1,147 under operating leasesCurrent maturities of long-term debt 1,000 1,000 Total current liabilities 960,224 213,058 Long-term liabilities Deferred revenue, less current 12,899 1,661 Contingent consideration, less current 70 - portionObligations under finance leases, less 73,383 73,139 current maturitiesObligations under operating leases, less 3,708 3,750 current maturitiesLong-term debt 101,682 98,446 Other long-term liabilities 29,553 14,939 Total liabilities 1,181,519 404,993 Commitments and contingencies Convertible preferred stock, $0.001 parvalue; 40,472,166 shares authorized as ofSeptember 30, 2021 and December 31, 2020;30,081,996 shares issued and 847,042 832,625 outstanding as of September 30, 2021 andDecember 31, 2020; and liquidationpreference of $884,842 as of September 30,2021 and December 31, 2020Stockholders' deficit Common stock, $0.001 par value;340,000,000 shares authorized as ofSeptember30, 2021 and 240,000,000 shares authorizedas of December 31, 2020; 57,600,488 58 50 shares issued and outstanding as ofSeptember 30, 2021 and 50,054,880 sharesissued and outstanding as of December 31,2020Additional paid-in capital 229,853 161,116 Accumulated deficit (799,825 ) (672,273 )Total stockholders' deficit (569,914 ) (511,107 )Total liabilities, convertible preferred $ 1,458,647 $ 726,511 stock and stockholders' deficit

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

Nine Months Ended September 30, 2021 2020Cash flows from operating activities Net loss $ (127,552 ) $ (68,624 )Adjustments to reconcile net loss to net cash used by operating activitiesDepreciation and amortization expense 22,334 20,733 Amortization of deferred financing costs 1,018 843 Provision for doubtful accounts 1,075 802 Stock-based compensation 3,109 852 Fair value adjustment of contingent 140 - considerationWarrants vested in connection with - 101 consulting servicesAccrued interest 811 889 Impairment on intangible and right-of-use 574 997 assetsLoss on fixed asset disposal 3 3 Noncash expense on contract modification - 50,000 - related partyFair value adjustment to derivative 14,690 6,545 instrumentDeferred income taxes 162 136 Changes in operating assets and liabilities Accounts receivable (3,730 ) (2,587 )Prepaid expenses and other current assets (4,254 ) (230 )Other noncurrent assets (2,593 ) 349 Deferred customer origination costs (2,185 ) (2,558 )Accounts payable (11,640 ) 2,039 Deferred revenue 13,801 432 Accrued expenses and other liabilities 3,401 8,416 Operating lease liabilities (479 ) (718 )Total adjustments 86,237 37,044 Net cash used in operating activities (41,315 ) (31,580 )Cash flows from investing activities Purchases of equipment (939 ) (653 )Purchases of land - 25 Purchases of intangible assets (12,582 ) (7,959 )Proceeds from sales of property and 5 - equipmentAcquisition of business, net of cash (45,963 ) - acquiredContingent consideration and deferred (1,292 ) - obligation payments near acquisition dateSupplier advances, net (3,467 ) (1,883 )Net cash used in investing activities (64,238 ) (10,470 )Cash flows from financing activities Proceeds from the issuance of long-term 2,288 3,328 debtPrincipal payments on finance leases (872 ) (1,258 )Proceeds from issuance of preferred and 2,623 321,748 common stockTransaction costs related to issuance of - (1,327 )stockTransaction costs related to issuance of - (19,227 )stock - related partyPayment service obligations 733,153 34,157 Net cash provided by financing activities 737,192 337,421 Net increase in cash, cash equivalents, and 631,639 295,371 restricted funds held for customersCash, cash equivalents, and restricted funds held for customersCash, cash equivalents, and restricted 390,078 276,973 funds held for customers, beginning of yearCash, cash equivalents, and restricted $ 1,021,717 $ 572,344 funds held for customers, end of periodSupplementary information of noncash investing and financing activitiesRight-of-use assets obtained in exchange $ 174 $ 469 for new finance lease obligationsRight-of-use assets obtained in exchange 877 163 for new operating lease obligationsCommon stock issued in business combination 31,000 - Common stock issued as contingent 500 - considerationInitial fair value of contingentconsideration and deferred payment 2,672 - obligation at acquisition dateProperty and equipment purchases in 93 - accounts payable and accrued expensesInterest paid on notes payable 7,619 7,929 Interest paid on finance leases 5,537 5,355 Options issued in connection with bonus 48 - compensation

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

Three Months Ended Nine Months Ended September September 30, 30, 2021 2020 2021 2020 Reconciliation fromRevenue to Non-GAAPGross Profit and Non-GAAP GrossMargin:Total revenues $ 65,176 $ 47,600 $ 179,144 $ 133,065 Expenses: Cost of revenues(exclusive ofdepreciation and (25,792 ) (20,972 ) (71,343 ) (61,638 )amortizationexpense)Depreciation andamortization (5,068 ) (4,244 ) (14,171 ) (12,564 )expenseGAAP Gross profit $ 34,316 $ 22,384 $ 93,630 $ 58,863 Adjustments: Stock-basedcompensation 90 49 230 126 expenseDepreciation andamortization 5,068 4,244 14,171 12,564 expenseNon-GAAP gross $ 39,474 $ 26,677 $ 108,031 $ 71,553 profitGAAP Gross margin 52.7 % 47.0 % 52.3 % 44.2 %Non-GAAP gross 60.6 % 56.0 % 60.3 % 53.8 %margin Reconciliation fromNet Loss to Non-GAAP Net Loss:Net loss $ (35,527 ) $ (17,984 ) $ (127,552 ) $ (68,624 )Amortization ofacquired intangible 3,675 2,664 9,181 8,135 assetsImpairment andwrite-off of - - 574 924 intangible assetsProvision for 2 58 203 175 income taxesStock-basedcompensation 1,157 279 3,109 852 expenseTransaction andacquisition-related 662 86 3,708 185 costsChange in fairvalue of derivative 14,552 - 14,690 6,545 instrumentNon-recurring itemsnot indicative of 174 24 50,224 76 ongoing operationsTotal net 20,222 3,111 81,689 16,892 adjustmentsNon-GAAP net loss $ (15,305 ) $ (14,873 ) $ (45,863 ) $ (51,732 ) Reconciliation fromNet Loss to Adjusted EBITDA:Net loss $ (35,527 ) $ (17,984 ) $ (127,552 ) $ (68,624 )Depreciation and 8,164 6,953 22,334 20,733 amortizationImpairment andwrite-off of - - 574 924 intangible assetsInterest income (35 ) (613 ) (332 ) (1,590 )Interest expense 4,874 5,039 14,985 15,016 Provision for 2 58 203 175 income taxesStock-basedcompensation 1,157 279 3,109 852 expenseTransaction andacquisition-related 662 86 3,708 185 costsChange in fairvalue of derivative 14,552 - 14,690 6,545 instrumentNon-recurring itemsnot indicative of 174 24 50,224 76 ongoing operationsAdjusted EBITDA $ (5,977 ) $ (6,158 ) $ (18,057 ) $ (25,708 ) Reconciliation ofCash Used inOperating Activities to FreeCash Flow:Net cash used inoperating $ (222 ) $ (4,964 ) $ (41,315 ) $ (31,580 )activitiesPurchases ofproperty and (595 ) (86 ) (939 ) (653 )equipmentCapitalization ofinternal-use (4,504 ) (2,810 ) (12,582 ) (7,959 )software costsFree Cash Flow $ (5,321 ) $ (7,860 ) $ (54,836 ) $ (40,192 )