Growth is a key component in AvidXchange Inc.'s outlook for 2022, with executives touting potential market-share gains in the company's first full year as a public entity.
Charlotte-based AvidXchange, an automated payments provider, issued its initial public offering at $25 per share in late 2021, gaining net proceeds of well over $600 million. Industry watchers had for months anticipated the IPO, which brought a roughly $5 billion market cap. Pre-IPO, AvidXchange was one of four local unicorns, or private businesses valued at $1 billion or more.
AvidXchange (NASDAQ: AVDX) holds less than 1% share of its total addressable market and is in the early stages of capping those opportunities, CEO Mike Praeger told analysts on a fourth-quarter earnings call. The firm plans to add industry verticals and enhance its capabilities in existing ones. International growth is also on the table, he said.
"Based on the size, growth, market leadership and long-term profit opportunities we see in the middle-market segment, we believe we can compound our top-line growth organically at a rate of 20%-plus over the next several years," Praeger said. "We're purpose-built for the middle market."
The company processed more than 16 million transactions in the fourth quarter — a year-over-year increase of about 15%. Total payment volume grew 37% to more than $15 billion, including the FastPay acquisition. Referral partnerships increased by 50% in 2021 to more than 180 partners. AvidXchange works with big names, including Bank of America Corp. (NYSE: BAC), Truist Financial Corp. (NYSE: TFC) and U.S. Bancorp (NYSE: USB).
AvidXchange now works with more than 8,000 businesses and has made payments to more than 825,000 suppliers.
One big focus in 2022 is cross-border payments. The firm plans to release those capabilities over the course of the year, Praeger said. There are not large pockets of cross-border demand among its current middle-market clients, he noted.
The company is also looking to further invest in the media industry. AvidXchange acquired FastPay last year, giving it access to more than 70,000 media suppliers. Executives are watching the potential impact of political spending this year. Other newer focus areas are in social services, education and health-care facilities. In 2020, the firm acquired Core Associates, which has ties to the construction industry. AvidXchange's acquisition of BankTEL in 2019 provided access to more than 20% of banks in the United States.
AvidXchange posted a net loss of $72.1 million in the fourth quarter, compared to a net loss of $32.62 million the prior year. Fourth-quarter revenue came to $69.27 million, a 31% increase from the fourth quarter of 2020. Full-year revenue was 34% higher compared to 2020.
For 2021, AvidXchange reported a net loss of $199.65 million, compared to the prior year's net loss of $101.25 million.
Such losses are not unusual for fast-growing companies, and there were expenses related to going public. Total operating expenses increased by 77% year over year, much of that from non-cash compensation costs related to the IPO, said Joel Wilhite, chief financial officer. Expenses were also elevated in the general and administrative, sales and marketing, and research and development categories.
Wilhite said AvidXchange is projecting a break-even point in earnings before interest, taxes, depreciation and amortization, or EBITDA, as the company exits 2024.
"Our momentum going into 2022 is very encouraging. ... We were happy with the quarter from a profitability standpoint," he said. "The 2022 (outlook) for us is based on products we have in the bag today."
AvidXchange executives follow a flywheel model, which 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.
Share prices for AvidXchange are down more than 60% since it joined the market last October. Shares opened at $8.75 per share today and were trading at $7.94 per share as of 2 p.m.
