[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited statements show year-over-year revenue growth, a narrowed net loss, and a slight decrease in total assets [Unaudited Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Consolidated%20Balance%20Sheets) Total assets decreased to $2.12 billion, driven by a reduction in restricted funds held for customers Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $339,932 | $350,563 | | Restricted funds held for customers | $1,226,216 | $1,283,824 | | **Total Assets** | **$2,120,798** | **$2,211,996** | | Payment service obligations | $1,226,216 | $1,283,824 | | **Total Liabilities** | **$1,472,395** | **$1,554,552** | | **Total Stockholders' Equity** | **$648,403** | **$657,444** | [Unaudited Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Operations) Revenues grew 19.7% in Q3 and 20.2% year-to-date, with a significant reduction in net loss for both periods Quarterly Statement of Operations (in thousands) | Metric | Q3 2023 | Q3 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Revenues | $98,680 | $82,411 | +19.7% | | Loss from operations | $(9,629) | $(22,124) | N/A | | Net loss | $(8,091) | $(25,371) | N/A | | Net loss per share | $(0.04) | $(0.13) | N/A | Nine-Month Statement of Operations (in thousands) | Metric | YTD 2023 | YTD 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Revenues | $276,656 | $230,175 | +20.2% | | Loss from operations | $(47,227) | $(63,693) | N/A | | Net loss | $(42,852) | $(76,255) | N/A | | Net loss per share | $(0.21) | $(0.39) | N/A | [Unaudited Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operations improved, while investing activities provided cash due to marketable securities timing Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(10,991) | $(29,864) | | Net cash provided by (used in) investing activities | $226 | $(124,659) | | Net cash used in financing activities | $(57,474) | $(311,816) | | **Net decrease in cash, cash equivalents, and restricted funds** | **$(68,239)** | **$(466,339)** | [Notes to Unaudited Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) Notes detail revenue concentration with two service providers and costs related to a recent cybersecurity incident - The company has a significant revenue concentration, with two service providers for virtual commercial card (VCC) transactions accounting for **14% and 31% of total revenue in Q3 2023**, respectively[20](index=20&type=chunk)[22](index=22&type=chunk) - In April 2023, the company detected a cybersecurity incident and for the nine months ended Sep 30, 2023, it incurred **$5.5 million in response costs** and recorded an insurance recovery receivable of **$1.2 million**[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) Disaggregation of Revenue (in thousands) | Revenue Type | Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | Software revenue | $28,919 | $25,039 | $83,135 | $73,152 | | Payment revenue | $68,485 | $56,645 | $190,894 | $154,694 | | Services revenue | $1,276 | $727 | $2,627 | $2,329 | | **Total revenues** | **$98,680** | **$82,411** | **$276,656** | **$230,175** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses revenue growth driven by payment volume and interest rates, alongside macroeconomic and cybersecurity impacts - Macroeconomic factors like inflation and rising interest rates have had mixed effects, increasing payment revenue from interest on customer funds but also leading to **more volatile and unpredictable sales cycles**[95](index=95&type=chunk) - The company's principal sources of liquidity as of September 30, 2023, are **$339.9 million in cash and cash equivalents**, **$100.6 million in marketable securities**, and **$30.0 million available** under its revolving credit facility[129](index=129&type=chunk) Key Business Metrics | Metric | Q3 2023 | Q3 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Transactions Processed | 19,175,866 | 18,020,165 | +6.4% | | Transaction Yield | $5.15 | $4.57 | +12.7% | | Total Payment Volume (in millions) | $19,627 | $18,108 | +8.4% | [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Q3 revenue grew 19.7%, primarily from payment revenue boosted by interest income, leading to a narrowed net loss - Q3 2023 revenue growth was primarily driven by a **20.9% increase in payment revenue**, which was positively impacted by a **$7.9 million increase in interest earned** on funds held for customers due to rising interest rates[118](index=118&type=chunk) - General and Administrative expenses in Q3 2023 included **$1.9 million in costs related to the cybersecurity incident** (offset by $1.2 million in insurance recoveries) and a **$1.6 million loss contingency** for a potential commercial dispute[119](index=119&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with sufficient cash, marketable securities, and credit facility availability - Net cash used in operating activities for the first nine months of 2023 **improved to $11.0 million from $29.9 million** in the prior year period, mainly due to higher revenue and an improved net loss[132](index=132&type=chunk) Outstanding Debt (in thousands) | Debt Component | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Term loan facility | $63,781 | $65,000 | | Promissory note payable | $18,700 | $18,700 | | **Total principal due** | **$82,481** | **$83,700** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rate fluctuations and concentration with key service providers - The company is sensitive to interest rate changes, as a hypothetical **100 basis point increase** in the Federal Funds rate would have increased interest income on buyer funds by **$8.1 million** during the first nine months of 2023[143](index=143&type=chunk) - A substantial portion of revenue is derived from interchange fees processed by **two VCC service providers**, creating a concentration risk[148](index=148&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were deemed ineffective due to a material weakness in accounting personnel and expertise - The Chief Executive Officer and Chief Financial Officer concluded that **disclosure controls and procedures were not effective** as of September 30, 2023[150](index=150&type=chunk) - A **material weakness in internal control** over financial reporting persists, specifically a lack of sufficient personnel with the appropriate level of accounting knowledge, training, and experience[151](index=151&type=chunk) - Remediation efforts are ongoing, including **hiring a controller with public company experience**, an experienced SEC reporting leader, and other technical accounting resources[152](index=152&type=chunk) [PART II. OTHER INFORMATION](index=36&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings.) The company is not currently party to any material legal proceedings - As of the reporting date, the company is **not involved in any legal proceedings** that are considered individually or in aggregate to be material[153](index=153&type=chunk)[154](index=154&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors.) Risk factors were updated to address the potential material impact of the April 2023 cybersecurity incident - A new risk factor was added to address the cybersecurity incident from April 2023, acknowledging that **data was exfiltrated and posted on the dark web**, including personally identifiable information[156](index=156&type=chunk) - The company warns that the incident could lead to **loss of customers, significant remediation expenses**, and potential liability from governmental investigations or class action litigation[156](index=156&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) No unregistered equity sales occurred, and the planned use of IPO proceeds remains unchanged - The company reported **no material changes to the planned use of proceeds** from its IPO, which generated net proceeds of approximately **$621.1 million**[157](index=157&type=chunk)[159](index=159&type=chunk) [Item 5. Other Information](index=38&type=section&id=Item%205.%20Other%20Information.) The Board adopted a new clawback policy to comply with Nasdaq listing standards - The Board adopted a **clawback policy for erroneously awarded compensation** to comply with new Nasdaq listing standards[160](index=160&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): November 08, 2023 AvidXchange Holdings, Inc. (Exact name of Registrant as Specified in Its Charter) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: ☐ Written communication ...

Research and Development Research and development efforts focus on the development of new products and business intelligence tools or the enhancements of existing products and applications, as well as large scale infrastructure projects that improve the underlying architecture of our technology. The main contributors of research and development costs are (i) personnel related expenses, including fringe benefits, short- and long-term incentive plans and stock-based compensation expense, and (ii) fees for out ...

Financial Data and Key Metrics Changes - Total revenue for Q2 2023 was $91.2 million, representing a year-over-year increase of 19.1% compared to Q2 2022 [25][9] - Non-GAAP gross margins expanded to 68.3%, up 460 basis points year-over-year [27][10] - Adjusted EBITDA was approximately $3 million, a significant improvement from a loss of $4.7 million in Q2 2022 [30][10] - GAAP net loss was $18.8 million, an improvement from a loss of $25.7 million in the prior year [30][10] Business Line Data and Key Metrics Changes - Software revenues increased by 12.6% to $27.2 million, accounting for 29.9% of total revenue [26][10] - Payment revenue rose by 22.6% to $63.2 million, making up 69.4% of total revenue [26][10] - Total transaction yield increased to $4.84, up 9.5% from $4.42 in Q2 2022 [25][10] Market Data and Key Metrics Changes - The company reported a 70% year-over-year growth in top-of-funnel buyer opportunities across various verticals, including construction, financial services, and healthcare [12][10] - The commercial office sub-sector of the real estate vertical showed signs of softness, while multi-family and student housing remained strong [12][10] Company Strategy and Development Direction - The company aims to achieve a medium-term Rule of 40 objective of 20% organic revenue growth and 20% adjusted EBITDA by 2025 [5][10] - A focus on enhancing e-payment penetration and reducing reliance on paper checks is a key strategy, with over 50% of suppliers still using checks [39][10] - New product innovations, such as the Invoice Accelerator 2.0 and lien waiver management solutions, are expected to drive future growth [20][10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the volatile macroeconomic backdrop but expressed confidence in the long-term growth opportunities within the middle market [23][10] - The company raised its full-year 2023 revenue guidance to a range of $368 million to $370 million, reflecting strong performance and interest revenue growth [32][10] Other Important Information - The company ended the quarter with a strong cash position of $438.3 million against total debt of $82.9 million [31][10] - Recent promotions within the company include John Feldman as Chief Operating Officer and Doug Anderson as Chief Product Officer, aimed at strengthening operational capabilities [21][22][10] Q&A Session Summary Question: Can you elaborate on the financial monetization flywheel? - Management discussed the importance of attracting and retaining buyer customers and expanding transaction yield, emphasizing multiple monetization events per transaction [34][36][38] Question: What contributed to the strong incremental margins? - Management highlighted gross margin expansion and operational efficiency as key contributors, with a focus on minimizing growth in operating expenses [41][42] Question: How are macro impacts affecting revenue expectations? - Management noted ongoing caution in spending and moderate invoice sizes, with expectations for current conditions to persist through the year [45][46] Question: What is the long-term outlook for the real estate vertical? - Management clarified that while commercial office markets face challenges, other segments like multi-family and student housing are performing well, indicating potential for future growth [50][52] Question: Can you differentiate between float revenue and core revenue guidance? - Management indicated that the revenue guidance increase was driven by a combination of continued moderation in spending and a slight uptick in float revenue [54][55] Question: How does the company view competition in the market? - Management noted that new entrants typically focus on small businesses, while the company remains focused on the middle market with specialized solutions [58][60] Question: What are the expectations for gross margins in the second half? - Management expects continued gross margin expansion but cautioned that it may not be linear, projecting a full-year expansion in the range of 200 basis points [63][64] Question: What is the path to achieving the 20% EBITDA target? - Management outlined several components, including multiple monetization events, conversion of paper checks to e-payments, and strong product innovation as key drivers [66][68]

Road Show Presentation Disclaimer Thispresentationmaycontain“forward-lookingstatements”withinthemeaningoftheU.S.PrivateSecuritiesLitigationReformActof1995.Inthiscontext,forward-lookingstatementsgenerallyrelatetofutureeventsorourfuture financialoroperatingperformanceandoftencontainwordssuchas:“anticipate,”“intend,”“plan,”“goal,”“seek,”“believe,”“project,”“estimate,”“expect,”“future,”“likely,”“may,”“should,”“will”andsimilarwordsandphrases indicatingfutureresults.Theinformationpresentedinthispresentationrelate ...

EARNINGS PRESENTATION FIRST QUARTER 2023 FORWARD-LOOKING STATEMENTS This presentation 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 relatetofutureeventsorourfuturefinancialoroperatingperformanceandoftencontainwordssuchas:“anticipate,”“intend,”“plan,”“goal,”“seek,”“believe,”“project,”“estimate,”“expect,”“future,” “likely,” “may,” “should,” “will” and similar words and phrases indi ...

AvidXchange Holdings, Inc. Notes to the Unaudited Consolidated Financial Statements (in thousands, except share and per share data) obligations are comprised of outstanding daily transaction liabilities per state regulatory average daily transaction liability report requirements and other unregulated settlements with payees, which do not constitute a regulatory liability event under reporting requirements. Compensation cost for stock-based awards issued to employees and outside directors, including stock op ...

AvidXchange Holdings, Inc. (NASDAQ:AVDX) Q1 2023 Earnings Conference Call May 3, 2023 10:00 AM ET Company Participants Subhaash Kumar - Head of Investor Relations Mike Praeger - Co-Founder and Chief Executive Officer Joel Wilhite - Chief Financial Officer Conference Call Participants Dave Koning - Robert W. Baird Ramsey El-Assal - Barclays Will Nance - Goldman Sachs Josh Beck - KeyBanc Capital Markets Craig Maurer - FT Partners Brian Kean - Deutsche Bank Timothy Fung - J.P. Morgan James Fawcett - Morgan Sta ...

AvidXchange Holdings, Inc. (NASDAQ:AVDX) Q4 2022 Earnings Conference Call March 1, 2023 10:00 AM ET Company Participants Mike Praeger - Co-Founder & Chief Executive Officer Joel Wilhite - Chief Financial Officer Conference Call Participants Dave Koning - Baird Will Nance - Goldman Sachs Ramsey El-Assal - Barclays Andrew Bauch - SMBC Nikko Securities Bryan Keane - Deutsche Bank Josh Beck - KeyBanc James Faucette - Morgan Stanley Timothy Chiodo - Credit Suisse Brent Bracelin - Piper Sandler Darrin Peller - Wo ...

EARNINGS PRESENTATION FOURTH QUARTER 2022 March 1, 2023 FORWARD-LOOKING STATEMENTS This presentation 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," ...