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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________.

Commission File Number: 001-40898

AvidXchange Holdings, Inc.

(Exact name of registrant as specified in its charter)


Delaware	86-3391192
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1210 AvidXchange Lane Charlotte, NC 28206	28206
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (800) 560-9305

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	AVDX	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 31, 2023, the registrant had 202,146,872 shares of common stock, $0.001 par value per share, outstanding.

AvidXchange Holdings, Inc.

Form 10-Q

For the Quarterly Period Ended June 30, 2023

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Unaudited Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022	1
	Unaudited Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022	2
	Unaudited Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2023 and 2022	3
	Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022	4
	Notes to Unaudited Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	32
PART II.	OTHER INFORMATION	33
Item 1.	Legal Proceedings.	33
Item 1A.	Risk Factors.	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	33
Item 3.	Defaults Upon Senior Securities.	34
Item 4.	Mine Safety Disclosures.	34
Item 5.	Other Information.	34
Item 6.	Exhibits.	35
Signatures		36

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

AvidXchange Holdings, Inc.

Unaudited Consolidated Balance Sheets

(in thousands, except share and per share data)


	As of June 30,			As of December 31,
	2023			2022
Assets
Current assets
Cash and cash equivalents	$	337,342		$	350,563
Restricted funds held for customers		1,189,697			1,283,824
Marketable securities		101,008			110,986
Accounts receivable, net of allowances of $4,352 and $3,123, respectively		43,010			39,668
Supplier advances receivable, net of allowances of $1,392 and $1,872 respectively		10,205			10,016
Prepaid expenses and other current assets		11,931			12,561
Total current assets		1,693,193			1,807,618
Property and equipment, net		102,384			103,892
Operating lease right-of-use assets		2,176			2,343
Deferred customer origination costs, net		27,567			28,284
Goodwill		165,921			165,921
Intangible assets, net		91,952			98,749
Other noncurrent assets and deposits		4,236			5,189
Total assets	$	2,087,429		$	2,211,996
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	16,831		$	13,453
Accrued expenses		53,588			73,535
Payment service obligations		1,189,697			1,283,824
Deferred revenue		12,581			12,063
Current maturities of lease obligations under finance leases		346			477
Current maturities of lease obligations under operating leases		1,637			1,380
Current maturities of long-term debt		6,425			6,425
Total current liabilities		1,281,105			1,391,157
Long-term liabilities
Deferred revenue, less current portion		17,014			17,487
Contingent consideration, less current portion		70			70
Obligations under finance leases, less current maturities		62,252			61,974
Obligations under operating leases, less current maturities		3,990			4,657
Long-term debt		75,236			75,912
Other long-term liabilities		3,245			3,295
Total liabilities		1,442,912			1,554,552
Commitments and contingencies
Stockholders' equity
Preferred stock, $0.001 par value; 50,000,000 shares authorized, no shares issued and outstanding as of June 30, 2023 and December 31, 2022		-			-
Common stock, $0.001 par value; 1,600,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 202,113,613 and 199,433,998 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively		202			199
Additional paid-in capital		1,653,911			1,632,080
Accumulated deficit		(1,009,596	)		(974,835	)
Total stockholders' equity		644,517			657,444
Total liabilities and stockholders' equity	$	2,087,429		$	2,211,996

The accompanying notes are an integral part of these unaudited consolidated financial statements.

AvidXchange Holdings, Inc.

Unaudited Consolidated Statements of Operations

(in thousands, except share and per share data)


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Revenues	$	91,154		$	76,561		$	177,976		$	147,764
Cost of revenues (exclusive of depreciation and amortization expense)		30,221			28,979			59,694			56,786
Operating expenses
Sales and marketing		20,076			20,448			40,211			37,687
Research and development		24,740			20,107			47,862			40,179
General and administrative		27,716			19,974			50,343			38,662
Depreciation and amortization		8,878			8,301			17,464			16,019
Total operating expenses		81,410			68,830			155,880			132,547
Loss from operations		(20,477	)		(21,248	)		(37,598	)		(41,569	)
Other income (expense)
Interest income		5,204			655			9,720			875
Interest expense		(3,363	)		(5,075	)		(6,678	)		(10,052	)
Other income (expense)		1,841			(4,420	)		3,042			(9,177	)
Loss before income taxes		(18,636	)		(25,668	)		(34,556	)		(50,746	)
Income tax expense		135			69			205			138
Net loss	$	(18,771	)	$	(25,737	)	$	(34,761	)	$	(50,884	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.09	)	$	(0.13	)	$	(0.17	)	$	(0.26	)
Weighted average number of common shares used to compute net loss per share attributable to common stockholders, basic and diluted		201,559,007			197,864,993			200,734,555			197,443,615

The accompanying notes are an integral part of these unaudited consolidated financial statements.

AvidXchange Holdings, Inc.

Unaudited Consolidated Statements of Changes in Stockholders’ Equity

(in thousands, except share and per share data)


					Additional			Accumulated			Total Stockholders'
	Common Stock				Paid-in Capital			Deficit			Equity
Balances at December 31, 2022		199,433,998	$	199	$	1,632,080		$	(974,835	)	$	657,444
Exercise of stock options		123,168		-		366			-			366
Issuance of common stock upon vesting of restricted stock units		1,471,826		2		(1	)		-			1
Stock-based compensation expense		-		-		8,661			-			8,661
Stock-based compensation expense for Employee Stock Purchase Plan, or ESPP		-		-		270			-			270
Net loss		-		-		-			(15,990	)		(15,990	)
Balances at March 31, 2023		201,028,992	$	201	$	1,641,376		$	(990,825	)	$	650,752
Exercise of stock options		99,215		-		337			-			337
Issuance of common stock upon vesting of restricted stock units		792,242		1		(1	)		-			-
Issuance of common stock under ESPP		193,164		-		1,178			-			1,178
Stock-based compensation expense		-		-		10,869			-			10,869
Stock-based compensation expense for ESPP		-		-		152			-			152
Net loss		-		-		-			(18,771	)		(18,771	)
Balances at June 30, 2023		202,113,613	$	202	$	1,653,911		$	(1,009,596	)	$	644,517

					Additional			Accumulated			Total Stockholders'
	Common Stock				Paid-in Capital			Deficit			Deficit
Balances at December 31, 2021		196,804,844	$	197	$	1,594,780		$	(871,922	)	$	723,055
Cumulative effect adjustment from adoption of new accounting standard for current estimated credit losses		-		-		-			(1,000	)		(1,000	)
Cumulative effect adjustment from adoption of new accounting standard related to stock-based compensation		-		-		629			(629	)		-
Exercise of stock options		63,118		-		173			-			173
Issuance of common stock upon vesting of restricted stock units		758,701		1		(1	)		-			-
Stock-based compensation expense		-		-		6,595			-			6,595
Stock-based compensation expense for ESPP		-		-		196			-			196
Net loss		-		-		-			(25,147	)		(25,147	)
Balances at March 31, 2022		197,626,663	$	198	$	1,602,372		$	(898,698	)	$	703,872
Exercise of stock options and warrants		89,204		-		252			-			252
Issuance of common stock upon vesting of restricted stock units, net of shares surrendered for taxes		254,908		-		-			-			-
Issuance of common stock for settlement of contingent consideration		20,564		-		344			-			344
Issuance of common stock under ESPP		86,550		-		602			-			602
Stock-based compensation expense		-		-		8,113			-			8,113
Stock-based compensation expense for ESPP		-		-		145			-			145
Net loss		-		-		-			(25,737	)		(25,737	)
Balances at June 30, 2022		198,077,889	$	198	$	1,611,828		$	(924,435	)	$	687,591

The accompanying notes are an integral part of these unaudited consolidated financial statements.

AvidXchange Holdings, Inc.

Unaudited Consolidated Statements of Cash Flows

(in thousands)


	Six Months Ended June 30,
	2023			2022
Cash flows from operating activities
Net loss	$	(34,761	)	$	(50,884	)
Adjustments to reconcile net loss to net cash used by operating activities
Depreciation and amortization expense		17,464			16,019
Amortization of deferred financing costs		220			679
Provision for credit losses		2,125			2,318
Stock-based compensation		19,952			15,049
Accrued interest		1,004			1,184
Loss on fixed asset disposal		-			26
Accretion of investments held to maturity		(2,731	)		(494	)
Deferred income taxes		105			108
Changes in operating assets and liabilities
Accounts receivable		(4,711	)		(5,555	)
Prepaid expenses and other current assets		631			(2,791	)
Other noncurrent assets		1,247			(453	)
Deferred customer origination costs		717			791
Accounts payable		2,925			(2,041	)
Deferred revenue		45			(613	)
Accrued expenses and other liabilities		(20,636	)		(3,975	)
Operating lease liabilities		(242	)		(107	)
Total adjustments		18,115			20,145
Net cash used in operating activities		(16,646	)		(30,739	)
Cash flows from investing activities
Purchase of marketable securities held to maturity		(162,996	)		(254,026	)
Proceeds from maturity of marketable securities held to maturity		175,705			106,770
Purchases of equipment		(526	)