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United States securities and exchange commission logo
August 13, 2021
Michael Praeger
Chief Executive Officer
AvidXchange Holdings, Inc.
1210 AvidXchange Lane
Charlotte, NC 28206
Re: AvidXchange
Holdings, Inc.
Draft Registration
Statement on Form S-1
Submitted July 15,
2021
CIK No. 0001858257
Dear Mr. Praeger:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration on Form S-1 submitted July 15, 2021
Prospectus Summary, page 1
1. You disclose that the
growth of your business is dependent upon acquiring new and
retaining your existing
relationships with buyers and suppliers. For each period presented
in your financial
statements, please revise to disclose the exact number of buyers that used
your solution and
suppliers to which you have made payments.
2. You state that in 2020
you processed approximately 53 million transactions with over
$145 billion in spend
under management across your platform. Please define spend under
management, including
an explanation of how this metric relates to revenue and how it is
different from your
total payment volume metric. Provide a cross-reference to your
definition of
transactions processed.
Michael Praeger
AvidXchange Holdings, Inc.
August 13, 2021
Page 2
The Offering, page 16
3. You disclose that shares outstanding exclude 619,524 shares of common
stock issuable
upon the vesting of restricted stock units (RSUs). Please clarify
whether any RSUs have
met the time-based vesting provision such that they will fully vest
upon completion of this
offering due to the satisfaction of your liquidity performance
condition. If so, please tell
us how you concluded that exclusion of such shares from shares
outstanding is
appropriate.
4. We note your disclosures regarding additional common stock issuable
upon conversion of
senior preferred stock. Please explain in further detail the
redemption and conversion
features of this stock and how it will be impacted by this offering.
Tell us whether any
shares of convertible common stock will be issued if you redeem all of
the senior
preferred stock with the proceeds of the offering and, if so, explain.
If not, revise to
clarify the reason for the illustrative disclosures on page 18.
Similarly, explain why you
include an adjustment for both the redemption of senior preferred
stock and the
conversion of convertible preferred common stock to common stock in
the pro forma
column of the Capitalization table. Lastly, revise Note 10 to clarify,
if true, that no shares
of convertible common stock are currently outstanding as such shares
will only be issued
upon conversion of the senior preferred stock or explain.
5. Please clarify whether the holders of your senior preferred stock
retain the option to
convert their shares into convertible common shares or receive a cash
payment in addition
to converting into redeemable preferred stock. Also, clarify whether
convertible common
shareholders may elect to receive a cash payment in lieu of shares.
Summary Consolidated Financial and Other Data, page 19
6. Please revise to include pro forma balance sheet and per share
information demonstrating
the changes to your equity structure that will occur upon completion
of
this offering. Please also include a reconciliation of the various
adjustments impacting
your pro forma per share calculations, such as the conversion of
preferred stock, the
exercise of warrants and the vesting of RSUs upon the offering. Refer
to Article 11-
01(a)(8) of Regulation S-X.
Certain Non-GAAP Financial Measures, page 20
FirstName LastNameMichael Praeger
7. Your measure of unlevered free cash flow appears to exclude net cash
interest payments.
Comapany NameAvidXchange
Please Holdings,
remove this adjustment Inc. that require cash settlement
cannot be excluded
as charges
Augustfrom a non-GAAP
13, 2021 Page 2 liquidity measure per Item 10(e)(1)(ii)(A) of
Regulation S-K.
FirstName LastName
Michael Praeger
FirstName LastNameMichael
AvidXchange Holdings, Inc. Praeger
Comapany
August 13, NameAvidXchange
2021 Holdings, Inc.
August
Page 3 13, 2021 Page 3
FirstName LastName
In connection with our financial statement close process..., page 35
8. Please revise to clarify what remains to be completed in your
remediation plan, if
anything. Also, if the material weakness has not been fully
remediated, revise to disclose
your estimate of how long it will take to complete your plan and any
material costs you
have, or expect to be, incurred.
Market and Industry Data, page 61
9. You state that you have not independently verified the accuracy or
completeness of the
data contained in these industry publications and reports. As this
statement may imply an
inappropriate disclaimer of responsibility with respect to the third
party information,
please either delete this statement or specifically state that you are
liable for such
information.
Management's Discussion and Analysis of Financial Condition and Results of
Operations, page
68
10. We note your references throughout the filing to software, payment and
services revenue
and the impact of these individual revenue streams on your metrics and
results of
operations. Please consider including a breakdown of revenue for each
period presented
in the forepart of the filing to add context to your disclosures here.
Our Business and Revenue Model, page 70
11. You disclose that your net transactions processed rate demonstrates
both retention and
expansion of existing customers. However, your metric excludes
customers who left
between the periods over which you calculate this measure. In this
regard, you state this
metric excludes transactions by customers which were not customers in
both periods. In
light of this, please revise to disclose the reasons why you believe
this measure
demonstrates retention of customers. Also, disclose this metric for
your interim periods as
well as your annual periods. Refer to SEC Release No. 33-10751.
Certain Non-GAAP Financial Measures, page 73
12. Please revise your tabular presentation to present the comparable GAAP
measures with
equal or greater prominence. Refer to Item 10(e)(1)(i)(A) of
Regulation S-K
and Question 102.10 of the Non-GAAP Compliance and Disclosure
Interpretations.
Comparison of the Three Months Ended March 31, 2021 and 2020, page 78
13. Please revise your cost of revenue discussion to quantify the two
remaining factors
contributing to the increase in expenses during the reported periods.
Clarify the nature of
the reconciliation reserve and discuss whether this type of expense is
expected to be
ongoing. Refer to Item 303(a) of Regulation S-K.
Michael Praeger
FirstName LastNameMichael
AvidXchange Holdings, Inc. Praeger
Comapany
August 13, NameAvidXchange
2021 Holdings, Inc.
August
Page 4 13, 2021 Page 4
FirstName LastName
Critical Accounting Policies and Estimates
Common Stock and Derivative Instrument Valuation, page 91
14. Please provide us with a breakdown of the share-based compensation
awards granted to
date in fiscal 2021, including the number of shares awarded at each
grant date and the fair
value of the underlying common stock used to value such awards. To the
extent there
were significant fluctuations in the fair values between valuations,
describe for us the
factors that contributed to these fluctuations, including any
intervening events within the
company or changes in your valuation assumptions or methodology used
to value such
award. To the extent there were any significant award grants after the
most recent balance
sheet date, please ensure you include a quantified discussion of such
awards in your
subsequent event footnote. Refer to ASC 855-10-50-2.
Our Business, page 94
15. We note that 50% of your total revenues in 2020 were derived from
interchange fees
earned on payment transactions processed from one virtual commercial
card service
provider. Please disclose the name of this service provider and
summarize the material
terms of your material agreements with this provider. Additionally,
please file your
material agreements with this provider. See Item 601(b)(10)(ii)(B) of
Regulation S-K.
Principal Stockholders, page 145
16. Please disclose the natural person or persons who exercise the voting
and/or
dispositive powers with respect to the securities owned by entities,
including Caisse de
d p t et placement du Qu bec and Ossa Investments Pte. Ltd.
Description of Capital Stock
Exclusive Forum, page 154
17. Disclosure here states that with respect to any derivative action or
proceeding brought on
your behalf to enforce any liability or duty created by the Exchange
Act or the rules and
regulations thereunder, the exclusive forum will be the federal
district courts of the United
States of America. Disclosure in the risk factor on page 55 states
that the exclusive forum
provision does not apply to Exchange Act claims. Please revise to
reconcile these
disclosures. Additionally, in light of the federal exclusive forum
provision for Securities
Act claims and the fact that Section 22 of the Securities Act provides
for concurrent
jurisdiction for such claims, please revise to state that investors
cannot waive compliance
with the federal securities laws and the rules and regulations
thereunder.
Michael Praeger
FirstName LastNameMichael
AvidXchange Holdings, Inc. Praeger
Comapany
August 13, NameAvidXchange
2021 Holdings, Inc.
August
Page 5 13, 2021 Page 5
FirstName LastName
Consolidated Financial Statements
Note 3. Revenue from Contracts with Customers, page F-20
18. In your results of operations you disclose that Software revenue is
recorded net of
incentives. Please describe for us what these incentives consist of
and how you account
for them.
19. We note that payment revenue includes interest income received from
buyer customer
deposits held during the payment clearing process and fees charged for
Invoice
Accelerator, which appears to be an arrangement where you advance
funds to suppliers
before you receive them from buyers. Please separately tell us the
amount of interest
income and Invoice Accelerator revenues recorded for each reported
period. Also, tell us
how you concluded these revenues were in the scope of ASC 606. Refer
to ASC 606-10-
15-2.
Exhibits
20. Please file the FT Partners Engagement Letter as an exhibit. See Item
601(b)(10) of
Regulation S-K.
General
21. Please provide us with supplemental copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your
behalf have presented or expect to present to potential investors in
reliance on Section
5(d) of the Securities Act, whether or not you retained, or intend to
retain, copies of those
communications.
22. We note that you are a holding company. Please include a diagram that
presents your
post-offering organizational structure.
You may contact Rebekah Lindsey, Senior Staff Accountant, at (202)
551-3303 or
Kathleen Collins, Accounting Branch Chief, at (202) 551-3499 if you have
questions regarding
comments on the financial statements and related matters. Please contact
Mitchell Austin, Staff
Attorney, at (202) 551-3574 or Jan Woo, Legal Branch Chief, at (202) 551-3453
with any other
questions.
Sincerely,
Division of
Corporation Finance
Office of
Technology
cc: Brandon J. Bortner, Esq.