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AvidXchange (AVDX) stock price drops on earnings miss

By Monte Stewart


AvidXchange online image - Photo: Shutterstock

AvidXchange’s stock price took a hit Tuesday after the US accounts payable company reported an earnings miss.

The price fell more than 7% at one point in after-hours trading after closing down 6.36%, or $23.71, on the Nasdaq Global Select Market.

Revenue rises 36.55%

The Charlotte, North Carolina-based company boosted revenue 36.55% year-over-year to $65.2m (£48.54) from $47.6m but suffered a larger-than-expected loss of $35.5m, which was almost double the loss of $18m in the third quarter of 2020, the company said in its third-quarter earnings report.

“The (revenue) increase was primarily driven by new buyer invoice and payment transactions and increased e-payments to suppliers,” said CFO Joel Wilhite on a conference call with analysts.

The revenues have experienced “modest tailwinds” driven at least in part by a recent uptick in inflation, he added.

Loss attributed to continued investment

Wilhite attributed the loss to Avid’s continued investment in its growth strategy, as seen in higher investment sales, marketing, research and development, and preparations to become a public company.

Avid is now trading around its upsized IPO price range. The company, whose backers include PayPal co-founder Peter Thiel and Canadian pension-fund manager Caisse de dépôt et placement du Québec, went public in October 2021.

Avid reported a loss of 71 cents per share, up 69.05% from 42 cents a year earlier. But analysts polled by Dow Jones had expected the company to post an adjusted per-share loss of 14 cents.

Adjusted earnings before interest, tax, debt and amortisation (EBITDA), decreased 3.23% to $6.2m from $6.0m in the third quarter of 2020.

Total transactions up 17%

Total transactions processed rose 17% to $16.1m from $13.7m a year earlier. The transactions represented a total payment volume of $14bn, which was up 40% from $10bn last year.

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“Overall, our third-quarter results reflect continued strong demand for our software and payment solutions, along with solid execution against our key growth initiatives,” said Avid president and CEO Michael Praeger on the conference call.

“The strong momentum we are seeing in the business gives us confidence in our full-year 2021 financial outlook," Praeger said.

Avid said it expects to generate full-year revenue of $244.5m to $245.5m.

Guidance splits middle

“There’s things we control and there’s things we don’t control, and I think we’re splitting it right down the middle,” said Wilhite, in reference to the guidance, adding the company has “high confidence in where it is sitting."

Founded in 2000, AvidXchange touts itself as a leading provider of accounts-payable automation software and payment services for middle-market companies, which the company defines as companies generating revenue between $5m and $1bn and their suppliers.

Approximately 42% of the business-to-business payment market still uses paper cheques, and Avid believes the actual number of middle-market companies manually approving invoices and using paper cheques is actually much higher, Praeger said.

The middle-market segment is the largest portion of the overall accounts-playable automation and business-to-business payments market. But the middle market uses inefficient solutions that are manual and labour-intensive, he added.

As companies continue to automate payment processes, Avid foresees a total addressable market of more than $40bn, Praeger said.

Read More: Roblox (RBLX) up 7.5% after the company’s first Investor Day

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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