AvidXchange Inc.'s stock price dropped sharply for the second day in a row, despite posting second-quarter earnings on Wednesday that exceeded analysts' revenue expectations for a fourth consecutive period.
Charlotte-based AvidXchange (NASDAQ: AVDX), an automated payments provider, posted a net loss of $18.8 million in the second quarter, a decrease from $25.7 million in the same period a year ago. Second-quarter revenue came to $91.2 million, a 19.1% jump from $76.6 million in the prior year.
AvidXchange posted a net loss of nine cents per share in the latest quarter, compared to 13 cents per share a year ago. Zacks Equity Research analysts had estimated a loss of five cents per share for the second quarter, which was adjusted for non-recurring items.
Share prices for AvidXchange closed at $11.10 Aug. 2, down roughly 10.8% from the previous day's close at $12.45. Today, the company's stock dropped roughly 3.5%, trading at $10.72 as of 1 p.m. Its stock closed at $9.24 per share at the start of 2023 and was $7.88 a year ago.
According to CNBC, the S&P 500 dipped lower today as earnings season continues. Stocks entered "sell-off mode" on Wednesday after Fitch Ratings downgraded its debt grade for the U.S.
AvidXchange's revenue growth was mostly driven by the combination of new buyer invoice and payment transactions, coupled with a year-over-year increase in transaction yield, said Joel Wilhite, CFO at AvidXchange, during the company's second-quarter earnings call yesterday.
"Of course, we are mindful of the volatile macroeconomic backdrop and the potential further short-term impacts on our business," said Mike Praeger, CEO and co-founder at AvidXchange, during the call. "However, we believe we are still in the very early innings of a significant long-term opportunity to drive impactful value for our customers, create future growth opportunities for our team members and allot both short-term and long-term value for our shareholders."
AvidXchange welcomes John Feldman, Doug Anderson to C-suite roles
The company also promoted John Feldman to chief operating officer, and Doug Anderson joined AvidXchange as chief product officer. Feldman will be based in Charlotte and Anderson will sit in San Francisco. They will both report to Dan Drees, president of the company.
In his new role, Feldman will continue to lead the transformation of the company's service and fulfillment operations focused on standardization, sourcing and automation. He joined AvidXchange in 2019 and previously served as senior vice president of operations. He formerly spent three decades in the financial services industry at big institutions such as Charlotte-based Bank of America Corp. (NYSE: BAC) and Capital One Financial Corp. (NYSE: COF).
Anderson, with two decades of experience, will be responsible for leading the company's product strategy and innovation. His prior careers focused on product strategy, management, design, analytics and operations at scale. Prior to joining AvidXchange, he served as chief product officer at Pacaso, where his leadership was instrumental in creating a patented platform for second home ownership.
Where AvidXchange sees growth opportunities
AvidXchange first went public through an initial public offering at $25 per share in late 2021. The company gained net proceeds of well over $600 million. Prior to its IPO, AvidXchange was one of four local unicorns, a term for private businesses valued at $1 billion or more.
For the last three years, AvidXchange executives have followed a flywheel model that outlines how it will achieve growth. The model has four components — delivering accounts payable automation software, maximizing processed transactions, growing e-payments penetration and using data to drive value.
"One of the things that the flywheel does is it allows us to continue to monetize the same transaction multiple times," Praeger said. "We're up to five to six different monetization events that we can have in a single transaction."
An example of that model is AvidAnalytics, which the company launched in February. The solution offers buyer customers tailored reporting methods to help improve spend management and drive stronger results and efficiency for AvidXchange. Praeger said the flywheel helps its transaction yield to expand.
He said component three of its flywheel, growing e-payments penetration, provides the greatest opportunity for the company, as it still has over 50% of its suppliers that utilize paper checks.
"The revenue of the payment network for a check is zero," Praeger said. "When we flip it to be an electronic supplier, ... the revenue goes to $8 to $10, on average, per transaction. So that's a really big opportunity for us within the existing base before we even add new buyer customers and supplier customers to the flywheel."
AvidXchange raises full-year revenue outlook
The company revised its full-year revenue guidance for 2023 to a range of $368 million to $370 million, compared to $363 million to $368 million previously.
AvidXchange processed nearly 18.8 million transactions in the second quarter — a year-over-year increase of about 8.7%. Total payment volume gre 12.6% to $18.7 billion in the three-month period ending June 30, compared to $16.6 billion a year ago.
Total operating expenses came to $81.4 million in Q2, an increase from $68.8 million a year earlier. Much of that was a result of the company's transition to a public company.
