Group 1 - AvidXchange Holdings, Inc. (AVDX) closed at $10.66, reflecting a -0.93% change from the previous day, underperforming the S&P 500's gain of 0.53% [1] - The stock has increased by 4.06% over the past month, outperforming the Computer and Technology sector's decline of 0.75% and the S&P 500's gain of 1.24% [1] Group 2 - The upcoming earnings report for AvidXchange is scheduled for February 26, 2025, with projected EPS of $0.06, indicating a 20% increase year-over-year [2] - Revenue is estimated to be $114.98 million, reflecting a 10.49% increase compared to the same quarter of the previous year [2] Group 3 - Recent modifications to analyst estimates for AvidXchange are crucial as they reflect short-term business trends, with positive revisions indicating optimism about the company's outlook [3] - The Zacks Rank system, which incorporates estimate changes, provides actionable ratings, with AvidXchange currently holding a Zacks Rank of 3 (Hold) [4][5] Group 4 - AvidXchange is currently traded at a Forward P/E ratio of 32.85, which is higher than the industry average Forward P/E of 30.73 [6] - The Internet - Software industry, part of the Computer and Technology sector, has a Zacks Industry Rank of 47, placing it in the top 19% of over 250 industries [6]

Company Performance - AvidXchange Holdings, Inc. closed at $10.71, with a daily increase of +0.47%, underperforming the S&P 500's gain of 0.92% [1] - Over the past month, the company's shares have appreciated by 4.31%, outperforming the Computer and Technology sector's decline of 2.99% and the S&P 500's increase of 0.81% [1] Upcoming Earnings Report - The company is set to release its earnings report on February 26, 2025, with projected earnings per share (EPS) of $0.06, reflecting a 20% increase year-over-year [2] - Revenue is estimated to be $114.98 million, indicating a 10.49% increase compared to the same quarter last year [2] Analyst Estimates and Valuation - Recent changes to analyst estimates for AvidXchange Holdings, Inc. are being monitored, as positive revisions indicate optimism regarding the company's business and profitability [3] - The Zacks Rank system, which assesses estimate changes, currently ranks AvidXchange Holdings, Inc. at 3 (Hold) [5] - The company's Forward P/E ratio is 32.55, which is a premium compared to its industry's Forward P/E of 31.2 [6] Industry Context - The Internet - Software industry, part of the Computer and Technology sector, holds a Zacks Industry Rank of 44, placing it in the top 18% of over 250 industries [6] - The Zacks Industry Rank indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Core Viewpoint - AvidXchange Holdings, Inc. will release its fourth quarter 2024 financial results on February 26, 2025, and will host a conference call to discuss these results [1]. Company Overview - AvidXchange is a leading provider of accounts payable (AP) automation software and payment solutions specifically designed for middle market businesses and their suppliers [3]. - The company's software-as-a-service platform automates AP workflows for over 8,000 businesses and has facilitated payments to more than 1,200,000 supplier customers in the past five years [3].

Group 1 - AvidXchange Holdings, Inc. (AVDX) closed at $10.25, reflecting a +0.84% change from the previous day, outperforming the S&P 500's loss of 0.21% [1] - The company's shares have decreased by 4.51% over the last month, underperforming compared to the Computer and Technology sector's loss of 2.15% and the S&P 500's loss of 1.56% [1] Group 2 - AvidXchange is expected to report an EPS of $0.06, representing a 20% increase year-over-year, with projected revenue of $114.98 million, a 10.49% rise from the same quarter last year [2] - Recent analyst estimate revisions indicate a positive outlook for AvidXchange's business operations and profit generation capabilities [3] Group 3 - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), shows AvidXchange currently holds a Zacks Rank of 3 (Hold) [5] - AvidXchange's Forward P/E ratio is 31.02, which is higher than the industry average Forward P/E of 28.24, indicating a premium valuation [6] Group 4 - The Internet - Software industry, part of the Computer and Technology sector, holds a Zacks Industry Rank of 33, placing it in the top 14% of over 250 industries [6][7]

[PART I—FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) [Item 1. Financial Statements.](index=3&type=section&id=Item%201.%20Financial%20Statements.) This section presents AvidXchange's unaudited consolidated financial statements, including Balance Sheets, Statements of Operations, Cash Flows, and detailed notes on accounting policies and recent events [Unaudited Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Consolidated%20Balance%20Sheets) Balance sheets show decreased total assets and liabilities, mainly from reduced restricted funds, while total stockholders' equity slightly increased Key Balance Sheet Metrics | Metric | As of Sep 30, 2024 (in thousands) | As of Dec 31, 2023 (in thousands) | Change (in thousands) | Percentage Change | |:-----------------------------------|:----------------------------------|:----------------------------------|:----------------------|:------------------| | **Total Assets** | $2,005,049 | $2,483,737 | $(478,688) | -19.3% | | Cash and cash equivalents | $315,324 | $406,974 | $(91,650) | -22.5% | | Restricted funds held for customers | $1,154,280 | $1,578,656 | $(424,376) | -26.9% | | Marketable securities | $78,957 | $44,645 | $34,312 | 76.9% | | **Total Liabilities** | $1,328,251 | $1,827,292 | $(499,041) | -27.3% | | Payment service obligations | $1,154,280 | $1,578,656 | $(424,376) | -26.9% | | Long-term debt | $9,100 | $69,760 | $(60,660) | -87.0% | | **Total Stockholders' Equity** | $676,798 | $656,445 | $20,353 | 3.1% | [Unaudited Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Operations) AvidXchange turned a net loss in 2023 to net income in 2024, driven by strong revenue growth, improved interest income, and reduced interest expense Key Consolidated Statements of Operations Metrics | Metric (in thousands) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | YoY Change (3M) | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | YoY Change (9M) | |:------------------------------------------|:--------------------------------|:--------------------------------|:----------------|:-------------------------------|:-------------------------------|:----------------| | Revenues | $112,772 | $98,680 | 14.3% | $323,502 | $276,656 | 16.9% | | Cost of revenues | $30,429 | $30,767 | -1.1% | $91,188 | $90,461 | 0.8% | | Income (loss) from operations | $1,255 | $(9,629) | N/A | $(4,955) | $(47,227) | N/A | | Interest income | $5,837 | $5,100 | 14.4% | $18,378 | $14,820 | 24.0% | | Interest expense | $(2,614) | $(3,428) | -23.7% | $(9,274) | $(10,106) | -8.1% | | Net income (loss) | $4,047 | $(8,091) | N/A | $3,474 | $(42,852) | N/A | | Basic EPS | $0.02 | $(0.04) | N/A | $0.02 | $(0.21) | N/A | | Diluted EPS | $0.02 | $(0.04) | N/A | $0.02 | $(0.21) | N/A | [Unaudited Consolidated Statements of Changes in Stockholders' Equity](index=4&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity increased from December 2023 to September 2024, driven by net income and stock-based compensation, offset by share repurchases Key Stockholders' Equity Metrics | Metric (in thousands) | Balances at Dec 31, 2023 | Balances at Sep 30, 2024 | Change | |:-----------------------------------|:-------------------------|:-------------------------|:-------| | Common Stock (shares) | 204,084,024 | 205,517,689 | 1,433,665 | | Common Stock (value) | $204 | $205 | $1 | | Additional Paid-in Capital | $1,678,401 | $1,695,279 | $16,878 | | Accumulated Deficit | $(1,022,160) | $(1,018,686) | $3,474 | | Total Stockholders' Equity | $656,445 | $676,798 | $20,353 | - During the nine months ended September 30, 2024, the company repurchased and retired **3,104,312 shares** of common stock for **$25.1 million**[6](index=6&type=chunk) [Unaudited Consolidated Statements of Cash Flows](index=6&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow significantly improved to a net provision in 2024, while investing activities shifted to a net use, and financing activities saw a substantial increase in net cash used Key Consolidated Statements of Cash Flows Metrics | Cash Flow Activity (in thousands) | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | Change | |:----------------------------------|:-------------------------------|:-------------------------------|:-------| | Net cash provided by (used in) operating activities | $43,482 | $(10,991) | $54,473 | | Net cash (used in) provided by investing activities | $(51,656) | $226 | $(51,882) | | Net cash used in financing activities | $(507,852) | $(57,474) | $(450,378) | | Net decrease in cash, cash equivalents, and restricted funds held for customers | $(516,026) | $(68,239) | $(447,787) | [Notes to Unaudited Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section details AvidXchange's accounting policies, financial instrument valuations, revenue recognition, debt, equity, and other significant financial events [1. Formation and Business of the Company](index=8&type=section&id=1.%20Formation%20and%20Business%20of%20the%20Company) AvidXchange Holdings, Inc., formed in 2021, provides AP automation software and payment solutions for middle-market businesses in North America - AvidXchange Holdings, Inc. was incorporated in Delaware on January 27, 2021, and completed a reorganization in July 2021, making AvidXchange, Inc. a wholly-owned subsidiary[9](index=9&type=chunk) - The company specializes in accounts payable (AP) automation software and payment solutions for middle-market businesses and their suppliers across North America, serving industries like real estate, construction, financial services, and healthcare[9](index=9&type=chunk) [2. Summary of Significant Accounting Policies](index=8&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This section outlines AvidXchange's key accounting policies, including consolidation, estimates, revenue concentration, restructuring, and accounting for various financial items - A significant portion of revenue (**25% in Q3 2024, 22% in 9M 2024**) is derived from interchange fees on virtual commercial cards (VCC) processed by one service provider, indicating concentration risk[12](index=12&type=chunk)[14](index=14&type=chunk) - The company completed a restructuring plan in Q2 2024, incurring **$1.16 million** in severance costs for the nine months ended September 30, 2024, included in general and administrative expenses[15](index=15&type=chunk) - AvidXchange has largely transitioned to a money transmitter license model, recognizing restricted funds held for customers and corresponding payment service obligations on its balance sheet, which amounted to **$1.15 billion** as of September 30, 2024[20](index=20&type=chunk)[21](index=21&type=chunk) [3. Revenue from Contracts with Customers](index=10&type=section&id=3.%20Revenue%20from%20Contracts%20with%20Customers) AvidXchange's total revenues increased significantly for both the three and nine months ended September 30, 2024, primarily driven by payment revenue Revenue by Type | Revenue Type (in thousands) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | YoY Change (3M) | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | YoY Change (9M) | |:----------------------------|:--------------------------------|:--------------------------------|:----------------|:-------------------------------|:-------------------------------|:----------------| | Software revenue | $30,664 | $28,919 | 6.0% | $90,266 | $83,135 | 8.6% | | Payment revenue | $80,697 | $68,485 | 17.8% | $230,082 | $190,894 | 20.5% | | Services revenue | $1,411 | $1,276 | 10.6% | $3,154 | $2,627 | 19.7% | | **Total revenues** | **$112,772** | **$98,680** | **14.3%** | **$323,502** | **$276,656** | **16.9%** | Contract Liabilities and Capitalized Costs | Metric (in thousands) | As of Sep 30, 2024 | As of Dec 31, 2023 | Change | |:--------------------------|:-------------------|:-------------------|:-------| | Accounts receivable, net | $56,102 | $46,689 | $9,413 | | Contract liabilities | $25,471 | $27,593 | $(2,122) | | Remaining performance obligation (Total) | $35,325 | $35,434 | $(109) | | Capitalized sales commissions and implementation costs (9M) | $9,496 | $8,422 | $1,074 | [4. Net Income (Loss) Per Share](index=13&type=section&id=4.%20Net%20Income%20%28Loss%29%20Per%20Share) The company reported basic and diluted net income per common share of **$0.02** for both the three and nine months ended September 30, 2024, a significant improvement from prior year losses Net Income (Loss) Per Share Metrics | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:----------------------------------------------------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Net income (loss) attributable to common stockholders (in thousands) | $4,047 | $(8,091) | $3,474 | $(42,852) | | Weighted-average common shares outstanding, basic | 207,235,954 | 202,526,844 | 206,389,565 | 201,338,550 | | Weighted-average common shares outstanding, diluted | 209,015,661 | 202,526,844 | 209,721,858 | 201,338,550 | | Net income (loss) per common share, basic | $0.02 | $(0.04) | $0.02 | $(0.21) | | Net income (loss) per common share, diluted | $0.02 | $(0.04) | $0.02 | $(0.21) | [5. Fair Value Measurements](index=14&type=section&id=5.%20Fair%20Value%20Measurements) The company measures certain financial assets and liabilities at fair value, primarily classifying money market mutual funds as Level 1 and other items as Level 2, with total fair value of assets decreasing from December 2023 to September 2024 Fair Value Measurements | Metric (in thousands) | As of Sep 30, 2024 | As of Dec 31, 2023 | |:----------------------------------------------------|:-------------------|:-------------------| | **Total Assets Measured at Fair Value** | **$63,333** | **$228,581** | | Money market mutual funds (Level 1) | $60,510 | $226,715 | | Rabbi trust-owned life insurance policies (Level 2) | $2,823 | $1,866 | | **Total Liabilities Measured at Fair Value** | **$2,429** | **$2,398** | | Deferred compensation (Level 2) | $2,429 | $2,398 | [6. Marketable Securities](index=15&type=section&id=6.%20Marketable%20Securities) AvidXchange's marketable securities, classified as held-to-maturity, primarily consist of short-term corporate bonds, commercial paper, and U.S. Treasury/agency debt, with net amortized cost increasing significantly Marketable Securities Metrics | Metric (in thousands) | As of Sep 30, 2024 | As of Dec 31, 2023 | Change | |:----------------------|:-------------------|:-------------------|:-------| | Net Amortized Cost | $78,957 | $44,645 | $34,312 | | Gross Unrealized Gains | $83 | $0 | $83 | | Gross Unrealized Losses | $(4) | $(14) | $10 | | Fair Value | $79,036 | $44,631 | $34,405 | - All marketable securities are classified as held-to-maturity and have contractual maturities of less than 13 months as of September 30, 2024[36](index=36&type=chunk) - The company does not recognize an allowance for expected credit losses on marketable securities due to their short-term nature and high credit quality[36](index=36&type=chunk) [7. Intangible Assets and Goodwill](index=17&type=section&id=7.%20Intangible%20Assets%20and%20Goodwill) Total intangible assets, net, decreased due to amortization, despite increased capitalized software development costs, and an impairment and write-off of internally developed software was recorded Intangible Assets and Goodwill Metrics | Metric (in thousands) | As of Sep 30, 2024 | As of Dec 31, 2023 | Change | |:--------------------------|:-------------------|:-------------------|:-------| | Total intangible assets, net | $74,033 | $84,805 | $(10,772) | | Internally developed software, net | $26,283 | $26,816 | $(533) | | Customer relationships, net | $28,703 | $34,911 | $(6,208) | | Technology, net | $12,714 | $15,613 | $(2,899) | | Capitalized software development costs (9M) | $12,939 | $11,898 | $1,041 | | Total intangible amortization expense (9M) | $27,607 | $26,515 | $1,092 | | Impairment and write-off of intangible assets (9M) | $162 | $0 | $162 | [8. Leases and Leasing Commitments](index=19&type=section&id=8.%20Leases%20and%20Leasing%20Commitments) AvidXchange's total lease expense increased for both the three and nine months ended September 30, 2024, primarily driven by higher amortization of right-of-use assets and interest on finance lease liabilities Lease Expense | Lease Expense (in thousands) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:-----------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Amortization of right-of-use assets (Finance) | $538 | $292 | $1,694 | $1,352 | | Interest on lease liabilities (Finance) | $1,658 | $1,647 | $4,966 | $4,934 | | Operating lease expense | $361 | $426 | $1,183 | $1,290 | | Variable lease expense | $109 | $99 | $257 | $206 | | **Total lease expense** | **$2,666** | **$2,464** | **$8,100** | **$7,782** | [9. Debt](index=19&type=section&id=9.%20Debt) AvidXchange significantly reduced its long-term debt by repaying its term loan facility in August 2024, replacing it with a new **$150 million** revolving credit facility, and was in compliance with covenants Debt Metrics | Debt Metric (in thousands) | As of Sep 30, 2024 | As of Dec 31, 2023 | Change | |:---------------------------|:-------------------|:-------------------|:-------| | Term loan facility | $0 | $63,375 | $(63,375) | | Promissory note payable for land acquisition | $13,900 | $13,900 | $0 | | Total principal due | $13,900 | $77,275 | $(63,375) | | Long-term debt (net of current portion and unamortized costs) | $9,100 | $69,760 | $(60,660) | - On August 8, 2024, the company entered into a new 5-year revolving credit facility of **$150 million**, replacing its previous senior secured credit facility and repaying all outstanding term loan amounts[43](index=43&type=chunk) - The company was in compliance with its financial debt covenants as of September 30, 2024[44](index=44&type=chunk) [10. Stockholders' Equity](index=20&type=section&id=10.%20Stockholders%27%20Equity) AvidXchange has authorized **1.6 billion** common shares and **50 million** preferred shares, with over **52 million** common shares reserved for future issuance, and initiated a **$100 million** share repurchase program Common Shares Reserved for Future Issuance (as of Sep 30, 2024) | Common Shares Reserved for Future Issuance (as of Sep 30, 2024) | |:------------------------------------------------------------------| | Outstanding stock options: 7,422,922 | | Restricted stock units: 10,127,567 | | Available for future issuance under stock award plans: 26,812,935 | | Available for future issuance under employee stock purchase plan: 7,948,829 | | **Total common shares reserved for future issuance: 52,312,253** | - In August 2024, the board authorized a **$100 million** share repurchase program, with **$75 million** remaining available as of September 30, 2024[47](index=47&type=chunk) - During the three and nine months ended September 30, 2024, the company repurchased and retired **3,104,312 shares** of common stock for **$25.1 million**[47](index=47&type=chunk) [11. Stock-Based Compensation](index=22&type=section&id=11.%20Stock-Based%20Compensation) AvidXchange's stock-based compensation expense increased for both the three and nine months ended September 30, 2024, reflecting grants under its 2021 Long-Term Incentive Plan and Employee Stock Purchase Plan Stock-Based Compensation Expense (in thousands) | Stock-Based Compensation Expense (in thousands) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:--------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Cost of revenues | $1,615 | $1,109 | $4,399 | $3,437 | | Sales and marketing | $1,364 | $1,212 | $3,915 | $3,747 | | Research and development | $2,944 | $2,976 | $9,526 | $8,175 | | General and administrative | $5,700 | $5,746 | $16,666 | $15,214 | | **Total** | **$11,623** | **$11,043** | **$34,506** | **$30,573** | | ESPP expense | $227 | $186 | $622 | $608 | - As of September 30, 2024, the total unamortized stock-based compensation expense related to unvested RSUs was **$92.16 million**, to be amortized over a weighted average period of 2.8 years[52](index=52&type=chunk) [12. Commitments and Contingencies](index=23&type=section&id=12.%20Commitments%20and%20Contingencies) The company completed its investigation of the April 2023 cybersecurity incident in Q4 2023, with related professional and legal fees significantly decreasing in 2024 - The company completed its investigation of the April 2023 cybersecurity incident in the fourth quarter of 2023[55](index=55&type=chunk) - Professional and legal fees, net of recoveries, related to the cyber incident were **$0.3 million** for the nine months ended September 30, 2024, a significant decrease from **$5.54 million** in the prior year period[55](index=55&type=chunk) [13. Income Taxes](index=23&type=section&id=13.%20Income%20Taxes) AvidXchange's effective tax rate for Q3 2024 was **9.6%** (vs. -1.7% in 2023) and for 9M 2024 was **16.3%** (vs. -0.8% in 2023), driven by current state income taxes and valuation allowance changes Effective Tax Rate | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:--------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Effective tax rate | 9.6% | (1.7)% | 16.3% | (0.8)% | [14. Subsequent Events](index=23&type=section&id=14.%20Subsequent%20Events) Subsequent to September 30, 2024, AvidXchange issued **187,544** common shares under its ESPP and approved a charitable contribution of **165,729** common shares - On October 31, 2024, the company issued **187,544 shares** of common stock under its employee stock purchase plan for **$1.34 million**[57](index=57&type=chunk) - On November 8, 2024, the Board of Directors approved the fourth installment of **165,729 shares** of common stock as a charitable contribution to a philanthropic partner[57](index=57&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section provides management's perspective on AvidXchange's financial condition and results of operations, highlighting revenue growth, key business metrics, and the impact of the macroeconomic environment [Overview](index=24&type=section&id=Overview) AvidXchange, founded in 2000, has grown significantly through organic expansion and strategic acquisitions to serve the AP automation needs of the middle market - AvidXchange was founded in 2000 to address AP automation for the middle market and launched its AvidPay Network in 2012[61](index=61&type=chunk) - The company has experienced substantial growth, both organically and through strategic acquisitions, expanding its market reach[61](index=61&type=chunk) [Our Business and Revenue Model](index=24&type=section&id=Our%20Business%20and%20Revenue%20Model) AvidXchange employs a hybrid go-to-market strategy, combining direct sales with indirect channels, with recurring revenue primarily from software fees and payment transactions - The company uses a hybrid go-to-market strategy, including direct sales and indirect channels through reseller partners and strategic partnerships (e.g., Mastercard, Bank of America, KeyBank)[61](index=61&type=chunk) - Revenues are recurring and primarily generated from software fees from buyers and payment revenue from transactions made to suppliers through the AvidPay Network[61](index=61&type=chunk) Revenue by Type | Revenue Type (in thousands) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:----------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Software revenue | $30,664 | $28,919 | $90,266 | $83,135 | | Payment revenue | $80,697 | $68,485 | $230,082 | $190,894 | | Services revenue | $1,411 | $1,276 | $3,154 | $2,627 | | **Total revenues** | **$112,772** | **$98,680** | **$323,502** | **$276,656** | [Macroeconomic Environment's Impact on Revenue](index=25&type=section&id=Macroeconomic%20Environment%27s%20Impact%20on%20Revenue) The macroeconomic environment continues to impact AvidXchange's revenue, with customers exhibiting caution in purchasing decisions, affecting payment volumes, amounts, and sales - Tempered spending by prospects and customers impacts payment volumes, payment amounts, payment type mix, and software sales, as well as the number of invoices processed[64](index=64&type=chunk) - Interest income, a component of payment revenue, was positively impacted by higher interest rates earlier in the year but will be negatively impacted by Federal Reserve rate cuts[64](index=64&type=chunk) - The company expects to better gauge sentiment inflections among customer verticals after the uncertainties of the current political cycle and broader macroeconomic environment subside[64](index=64&type=chunk) [Key Financial and Business Metrics](index=25&type=section&id=Key%20Financial%20and%20Business%20Metrics) AvidXchange monitors Transactions Processed, Transaction Yield, and Total Payment Volume as key indicators of business performance, all showing positive year-over-year growth Key Financial and Business Metrics | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | YoY Change (3M) | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | YoY Change (9M) | |:---------------------------------|:--------------------------------|:--------------------------------|:----------------|:-------------------------------|:-------------------------------|:----------------| | Transactions Processed | 20,177,994 | 19,175,866 | 5.2% | 59,228,276 | 56,253,181 | 5.3% | | Transaction Yield | $5.59 | $5.15 | 8.5% | $5.46 | $4.92 | 11.0% | | Total Payment Volume (in millions) | $21,479 | $19,627 | 9.4% | $61,963 | $56,040 | 10.6% | - Transactions processed is a key indicator of solution usage and revenue generation, as a majority of revenue is transaction-based[67](index=67&type=chunk) - Transaction yield measures the value of solutions to buyers and suppliers as the company scales, calculated as total revenue divided by total transactions processed[68](index=68&type=chunk) [Components of Results of Operations](index=25&type=section&id=Components%20of%20Results%20of%20Operations) This section details AvidXchange's revenue sources and cost components, explaining their contribution to financial results and outlining management's expectations for future trends [Revenue](index=25&type=section&id=Revenue) AvidXchange generates revenue from software fees, payment solutions (VCC interchange, AvidPay Direct, Payment Accelerator, and interest on funds held), and services, with payment revenue expected to comprise a larger proportion - Software revenue is primarily derived from fees based on invoice and payment transactions processed, along with recurring maintenance and SaaS fees, typically billed monthly[70](index=70&type=chunk) - Payment revenue sources include interchange fees from Virtual Commercial Cards (VCC), per-transaction fees from AvidPay Direct, fees from the Payment Accelerator product, and interest earned on funds held for buyers pending disbursement[72](index=72&type=chunk) - The company expects total revenue to increase year over year, driven by more transactions and increased adoption of the AvidPay Network, with payment revenue growing as a proportion of total revenue[73](index=73&type=chunk) [Cost of Revenues and Operating Expenses](index=26&type=section&id=Cost%20of%20Revenues%20and%20Operating%20Expenses) Cost of revenues includes personnel, external processing fees, and IT infrastructure, expected to decrease as a percentage of revenue, while operating expenses are detailed across sales & marketing, R&D, and G&A - Cost of revenues includes personnel costs for onboarding, invoice processing, payment operations, and customer service, as well as external expenses for transaction processing (scanning, printing, bank fees) and IT infrastructure[74](index=74&type=chunk)[76](index=76&type=chunk) - Sales and marketing expenses are driven by direct sales force, partner channels, and marketing campaigns, with most sales commissions deferred and amortized over five years[77](index=77&type=chunk) - Research and development efforts focus on new product development and existing product enhancements, with certain internal and external development costs capitalized and amortized over three years[78](index=78&type=chunk) - General and administrative expenses include finance, HR, legal, IT, and information security, and may increase in absolute dollars in the short term to support infrastructure and cybersecurity enhancements[79](index=79&type=chunk)[80](index=80&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) AvidXchange demonstrated strong financial improvement, turning a net loss into net income for both the three and nine months ended September 30, 2024, driven by increased payment revenue, interest income, and reduced interest expense [Comparison of the Three Months Ended September 30, 2024 and 2023](index=29&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20September%2030%2C%202024%20and%202023) For Q3 2024, total revenues increased by **14.3%** to **$112.8 million**, primarily due to a **17.8%** increase in payment revenue, resulting in a net income of **$4.0 million** Three Months Ended September 30, 2024 vs 2023 | Metric (in thousands) | Sep 30, 2024 | Sep 30, 2023 | Change | Percentage Change | |:------------------------------------------|:-------------|:-------------|:-------|:------------------| | Revenues | $112,772 | $98,680 | $14,092 | 14.3% | | Cost of revenues (excl. D&A) | $30,429 | $30,767 | $(338) | (1.1)% | | Sales and marketing | $21,102 | $18,735 | $2,367 | 12.6% | | Research and development | $25,125 | $24,754 | $371 | 1.5% | | General and administrative | $25,769 | $25,002 | $767 | 3.1% | | Other income (expense) | $3,223 | $1,672 | $1,551 | 92.8% | | Net income (loss) | $4,047 | $(8,091) | $12,138 | N/A | - Payment revenue increased by **$12.2 million (17.8%)**, driven by increased electronic payments and higher interest rates on funds held for customers, with interest income from funds held increasing by **$2.0 million**[84](index=84&type=chunk) - General and administrative expenses increased due to a **$1.1 million** increase in credit loss reserve and **$0.8 million** in IT infrastructure costs, partially offset by a **$0.7 million** decrease in cybersecurity incident costs[84](index=84&type=chunk)[86](index=86&type=chunk) [Comparison of the Nine Months Ended September 30, 2024 and 2023](index=30&type=section&id=Comparison%20of%20the%20Nine%20Months%20Ended%20September%2030%2C%202024%20and%202023) For the nine months ended September 30, 2024, total revenues grew by **16.9%** to **$323.5 million**, primarily from a **20.5%** increase in payment revenue, resulting in a net income of **$3.5 million** Nine Months Ended September 30, 2024 vs 2023 | Metric (in thousands) | Sep 30, 2024 | Sep 30, 2023 | Change | Percentage Change | |:------------------------------------------|:-------------|:-------------|:-------|:------------------| | Revenues | $323,502 | $276,656 | $46,846 | 16.9% | | Cost of revenues (excl. D&A) | $91,188 | $90,461 | $727 | 0.8% | | Sales and marketing | $60,799 | $58,946 | $1,853 | 3.1% | | Research and development | $76,037 | $72,616 | $3,421 | 4.7% | | General and administrative | $72,664 | $75,345 | $(2,681) | (3.6)% | | Impairment and write-off of intangible assets | $162 | $0 | $162 | 100.0% | | Other income (expense) | $9,104 | $4,714 | $4,390 | 93.1% | | Net income (loss) | $3,474 | $(42,852) | $46,326 | N/A | - Payment revenue increased by **$39.2 million (20.5%)**, driven by increased electronic payments and a **$10.6 million** increase in interest income from funds held for customers[89](index=89&type=chunk) - General and administrative expenses decreased by **$2.7 million**, primarily due to **$0.9 million** more in cybersecurity insurance recoveries and a **$5.2 million** decrease in cybersecurity incident costs compared to the prior year[90](index=90&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) AvidXchange's liquidity improved significantly, with operating activities providing **$43.5 million** in cash, maintaining **$315.3 million** in unrestricted cash, **$79.0 million** in marketable securities, and a **$150.0 million** revolving credit facility Cash Flow Data (in thousands) | Cash Flow Activity (in thousands) | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:------------------------------------------|:-------------------------------|:-------------------------------| | Net cash provided by (used in) operating activities | $43,482 | $(10,991) | | Net cash (used in) provided by investing activities | $(51,656) | $226 | | Net cash used in financing activities | $(507,852) | $(57,474) | | Net decrease in cash, cash equivalents, and restricted funds held for customers | $(516,026) | $(68,239) | - As of September 30, 2024, principal sources of liquidity include **$315.3 million** in unrestricted cash and cash equivalents, **$79.0 million** in marketable securities, and **$150.0 million** available under the 2024 Amended and Restated Credit Agreement[92](index=92&type=chunk) - The company repaid its term loan facility and reduced total principal debt from **$77.3 million** to **$13.9 million** as of September 30, 2024[96](index=96&type=chunk) - A **$100 million** share repurchase program was authorized in August 2024, with **$25.1 million** in shares repurchased by September 30, 2024[99](index=99&type=chunk)[100](index=100&type=chunk) [Critical Accounting Policies and Estimates](index=34&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) There have been no material changes to AvidXchange's critical accounting policies and estimates compared to those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2023 - No material changes to critical accounting policies and estimates were reported compared to the Annual Report on Form 10-K for the year ended December 31, 2023[103](index=103&type=chunk) [Recent Accounting Pronouncements](index=34&type=section&id=Recent%20Accounting%20Pronouncements) The company adopted ASU No. 2023-01 (Leases) on January 1, 2024, with no financial statement impact, and is assessing ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Expense Disaggregation Disclosures) - ASU No. 2023-01, Leases (Topic 842): Common Control Arrangements, was adopted on January 1, 2024, with no impact on the company's consolidated financial statements[24](index=24&type=chunk) - The company is assessing the impact of ASU 2023-09, Improvements to Income Tax Disclosures (effective 2025), and ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (effective 2026), on its financial statements[24](index=24&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures about Market Risk](index=34&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) [Interest Rate Risk](index=34&type=section&id=Interest%20Rate%20Risk) AvidXchange is exposed to interest rate risk through its investment portfolio and variable rate bank borrowings, with the annualized interest rate on investments increasing to **5.04%** in 9M 2024 - The annualized interest rate earned on the investment of operating cash and funds held for buyers increased to **5.04%** during the first nine months of fiscal year 2024 from **4.39%** during fiscal year 2023[107](index=107&type=chunk) - A **100 basis point** increase in interest rates would increase interest income from operating cash by approximately **$2.9 million** and from buyer funds assets by approximately **$8.1 million** for the first nine months of fiscal year 2024[107](index=107&type=chunk) - The company's exposure to variable rate debt decreased significantly, with **$0** outstanding as of September 30, 2024, compared to **$63.4 million** as of December 31, 2023[107](index=107&type=chunk) [Credit Risk](index=35&type=section&id=Credit%20Risk) AvidXchange faces credit risk from investments exceeding FDIC limits, timing of buyer fund payments, and its Payment Accelerator product, mitigated through portfolio diversification and data analytics - The company is exposed to credit risk from cash deposits exceeding FDIC limits and from remitting buyer funds to suppliers before confirming funds are collected from buyers[108](index=108&type=chunk) - Credit risk is mitigated by diversifying the investment portfolio, requiring minimum credit quality ratings for fixed income investments, and managing exposure limits[108](index=108&type=chunk) - The Payment Accelerator product exposes the company to risk if advanced payments are not recouped from buyers; this is mitigated through data analytics for invoice eligibility[108](index=108&type=chunk) [Liquidity Risk](index=35&type=section&id=Liquidity%20Risk) AvidXchange manages liquidity risk by collecting buyer funds in advance of payment obligations, consistently ensuring sufficient funds are available to satisfy all obligations - The company minimizes liquidity risk by collecting buyer funds in advance of payment obligations, ensuring sufficient funds are available to satisfy all obligations[109](index=109&type=chunk) - This practice has consistently maintained the required level of buyer funds assets[109](index=109&type=chunk) [Concentration Risk](index=35&type=section&id=Concentration%20Risk) AvidXchange faces concentration risk from revenue reliance on interchange fees from a few VCC service providers and from holding a majority of buyer funds at a single financial institution - A substantial portion of revenue is derived from interchange fees on VCC transactions processed by two service providers, each contributing over **10%** of total revenue[111](index=111&type=chunk) - Future regulation or changes by payment networks affecting interchange rates could materially impact the company's operating revenues and results[111](index=111&type=chunk) - The majority of buyer funds are maintained in demand accounts at one financial institution, posing a concentration risk, which the company mitigates by monitoring well-capitalized institutions[111](index=111&type=chunk) [ITEM 4. Controls and Procedures.](index=36&type=section&id=ITEM%204.%20Controls%20and%20Procedures.) [Evaluation of Disclosure Controls and Procedures](index=36&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) As of September 30, 2024, AvidXchange's management concluded that its disclosure controls and procedures were effective in ensuring timely and accurate reporting of information required under the Exchange Act - The CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2024[112](index=112&type=chunk) - These controls are designed to ensure information required for SEC reports is recorded, processed, summarized, and reported within specified time periods[112](index=112&type=chunk) [Changes in Internal Control Over Financial Reporting](index=36&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) There were no changes in AvidXchange's internal control over financial reporting during the quarter ended September 30, 2024, that materially affected or are reasonably likely to materially affect these controls - No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2024[112](index=112&type=chunk) [PART II—OTHER INFORMATION](index=36&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) [Item 1. Legal Proceedings.](index=36&type=section&id=Item%201.%20Legal%20Proceedings.) AvidXchange is not currently a party to any legal proceedings that would individually or collectively have a material adverse effect on its business, results of operations, financial condition, or cash flows - The company is not a party to any legal proceedings that would have a material adverse effect on its business[113](index=113&type=chunk) [Item 1A. Risk Factors.](index=36&type=section&id=Item%201A.%20Risk%20Factors.) There have been no material changes to the risk factors previously disclosed in AvidXchange's Annual Report on Form 10-K for the year ended December 31, 2023 - No material changes to risk factors were reported compared to the Annual Report on Form 10-K for the year ended December 31, 2023[114](index=114&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) AvidXchange reported no unregistered sales of equity securities, with IPO proceeds used consistently, and initiated a share repurchase program in August 2024 [Unregistered Sales of Equity Securities](index=36&type=section&id=Unregistered%20Sales%20of%20Equity%20Securities) There were no unregistered sales of equity securities during the reporting period - No unregistered sales of equity securities occurred[114](index=114&type=chunk) [Use of Proceeds](index=36&type=section&id=Use%20of%20Proceeds) The planned use of proceeds from the October 2021 IPO remains unchanged, with a portion invested in short-term, interest-bearing, investment-grade securities - No material changes in the planned use of proceeds from the October 2021 IPO were reported[114](index=114&type=chunk) - A portion of the IPO funds has been invested in short-term, interest-bearing, investment-grade securities[114](index=114&type=chunk) [Purchases of Equity Securities by the Company](index=37&type=section&id=Purchases%20of%20Equity%20Securities%20by%20the%20Company) In August 2024, AvidXchange authorized a **$100 million** share repurchase program, repurchasing **3,104,312 shares** for **$25.1 million** by September 30, 2024, with **$75 million** remaining - In August 2024, the board authorized a **$100 million** share repurchase program[115](index=115&type=chunk) Shares Purchased by the Company | Period | Total Number of Shares Purchased | Average Price Paid Per Share | |:----------------------------------|:---------------------------------|:-----------------------------| | August 1, 2024 - August 31, 2024 | 1,060,000 | $8.10 | | September 1, 2024 - September 30, 2024 | 2,044,312 | $8.03 | | **Total** | **3,104,312** | | - As of September 30, 2024, **$75,000,006** remained available for future share repurchases under the program[116](index=116&type=chunk) [Item 3. Defaults Upon Senior Securities.](index=37&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) This item is not applicable to AvidXchange for the reporting period [Item 4. Mine Safety Disclosures.](index=37&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to AvidXchange for the reporting period [Item 5. Other Information.](index=37&type=section&id=Item%205.%20Other%20Information.) This section discloses trading plans of directors and executive officers, including the termination and adoption of Rule 10b5-1 plans by Angelic Gibson and Michael Praeger in August 2024 Officer Trading Plans | Officer | Action | Date | Trading Agreement | Total Shares to be Sold | Expiration Date | |:---------------------------------------------------|:---------|:-----------|:------------------|:------------------------|:----------------| | Angelic Gibson, Chief Information Officer, Senior Vice President | Terminate | August 29, 2024 | Rule 10b5-1 | 45,000 | Not applicable | | Angelic Gibson, Chief Information Officer, Senior Vice President | Adopt | August 29, 2024 | Rule 10b5-1 | 45,000 | June 30, 2025 | | Michael Praeger, Chief Executive Officer and Chairman of the Board | Adopt | August 27, 2024 | Rule 10b5-1 | 258,883 | May 16, 2025 | [Exhibits.](index=38&type=section&id=Exhibits.) This section lists the exhibits filed with the Form 10-Q, including the Amended and Restated Credit and Security Agreement, certifications, and XBRL documents - Key exhibits include the Amended and Restated Credit and Security Agreement dated August 8, 2024, and various certifications (e.g., 302 and 906 certifications)[118](index=118&type=chunk) [SIGNATURES](index=39&type=section&id=SIGNATURES) The report is duly signed on behalf of AvidXchange Holdings, Inc. by Joel Wilhite, Chief Financial Officer, on November 8, 2024 - The report was signed by Joel Wilhite, Chief Financial Officer, on November 8, 2024[120](index=120&type=chunk)

For the quarter ended September 2024, AvidXchange Holdings, Inc. (AVDX) reported revenue of $112.77 million, up 14.3% over the same period last year. EPS came in at $0.07, compared to $0.03 in the year-ago quarter.The reported revenue represents a surprise of +1.70% over the Zacks Consensus Estimate of $110.89 million. With the consensus EPS estimate being $0.07, the company has not delivered EPS surprise.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall S ...

Core Insights - AvidXchange Holdings reported strong quarterly results, with a stock increase of nearly 14%, outperforming the S&P 500's 2.5% gain [1] Financial Performance - The company achieved a 14% year-over-year revenue growth, reaching nearly $113 million, supported by a 9% increase in total payment volume to $21.5 billion [2] - Non-GAAP net income more than doubled to almost $15.7 million, equating to $0.08 per share, surpassing analyst expectations of $111 million in revenue and $0.07 per share for adjusted net income [3] Future Outlook - AvidXchange raised its full-year revenue guidance for 2024 to a range of $437 million to $439 million, with the lower end slightly increased from the previous $436 million, while maintaining the adjusted per-share earnings forecast at $0.24 to $0.25 [3] - The company is managing to grow despite macroeconomic challenges, indicating strong demand and positive transaction retention trends [4]

AvidXchange Holdings, Inc. (NASDAQ:AVDX) Q3 2024 Earnings Conference Call November 6, 2024 10:00 AM ET Company Participants Mike Praeger - Co-Founder & Chief Executive Officer Joel Wilhite - Chief Financial Officer Subhaash Kumar - Head, Investor Relations Conference Call Participants Dave Koning - Baird Will Nance - Goldman Sachs Ramsey El-Assal - Barclays Sanjay Sakhrani - KBW Andrew Bauch - Wells Fargo Bryan Keane - Deutsche Bank Craig Maurer - FT Partners Jamie Friedman - Susquehanna Darrin Peller - Wol ...

| --- | --- | |-----------------------|-------| | | | | | | | | | | | | | Earnings Presentation | | | | | | Third Quarter 2024 | | | November 6, 2024 | | | --- | --- | |--------------------------------------------------------|-------| | | | | 2 2024 AvidXchange, Inc.: Proprietary & Confidential | | Q3 2024 Highlights* Total Revenue $112.8M $98.7M Q3 24 Q3 23 14.3% Q3 24 Q3 23 Non-GAAP Gross Profit Margin Total Payment Volume 74.5% 70.0% Q3 24 Q3 23 450bps 9.4% Total Transactions Processed 5.2% 20.2M 19.2M Q ...

Core Viewpoint - AvidXchange Holdings, Inc. reported quarterly earnings of $0.07 per share, meeting the Zacks Consensus Estimate, and showing an increase from $0.03 per share a year ago [1]. Financial Performance - The company posted revenues of $112.77 million for the quarter ended September 2024, exceeding the Zacks Consensus Estimate by 1.70%, compared to $98.68 million in the same quarter last year [2]. - Over the last four quarters, AvidXchange has surpassed consensus EPS estimates three times and has also topped consensus revenue estimates three times [1][2]. Stock Performance - AvidXchange shares have declined approximately 31.4% since the beginning of the year, contrasting with the S&P 500's gain of 21.2% [3]. - The current consensus EPS estimate for the upcoming quarter is $0.07 on revenues of $114.78 million, and for the current fiscal year, it is $0.24 on revenues of $438.08 million [7]. Industry Outlook - The Internet - Software industry, to which AvidXchange belongs, is currently ranked in the top 24% of over 250 Zacks industries, indicating a favorable outlook [8]. - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact AvidXchange's stock performance [5].