Concluding ThoughtsĪt this valuation I think that the valuation looks quite reasonable, with shares trading at 16 times annualized sales while growth rates surpass the 30% marks as of recent. At this valuation, the annualized sales multiple drops to about 16 times sales based on the preliminary third quarter sales numbers. Shares are now trading at $23.50, as this move lower cut the valuation by nearly $300 million, suggesting that the operating asset valuation comes in at around $4 billion. While that in itself is promising, operating losses are seen at around $19 million at the midpoint of the range, which marks some deleveraging on a sequential basis.Īll of this is ahead of a recent pullback since the offering. If we dive deeper into the most recent earnings, we see second quarter sales of nearly $59 million, with quarterly operating losses reported at $16 million.Īs the third quarter has already ended, the company has outlined a preliminary quarterly sales number close to $63 million, which suggests that revenues trend at a quarter of a billion already. As gross margins improved to 60% on the back of sales leverage, operating losses of $32 million narrowed by three million from the same period a year before. Revenue growth accelerated to 33% in the first half of 2021, from $114 million to $228 million per annum.
Some leverage in the expense base, notably general and administrative expenses, as well as a much lower impairment bill, made that operating losses were flattish in dollar terms at $75 million.īased on this revenue number, expectations have been quite elevated, at around 23 times reported sales, yet that is always a bit misleading of course for companies which grow rapidly as annualised sales multiples are typically much lower.
Revenues were up some 24% to $186 million in 2020 as gross margins improved to around 55%. As a result of these lower gross margins, huge overhead and growth plans, the company did post a big operating loss of around $77 million.
Avidxchange cashflow manager software#
The company generated nearly $150 million in revenues in the year 2019 and while this is largely a software play, gross margins were stuck just above the 50% margin level. This implies that the operating assets are valued at around $4.3 billion. With nearly 191.4 million shares outstanding, equity of the company is valued at nearly $4.8 billion at the offer price, a valuation which includes a net cash position of approximately half a billion. This means that the company will see gross proceeds of $550 million with the offering. Management and underwriters of AvidXchange Holdings aimed to sell 22 million shares in a preliminary price range between $21 and $23 per share, as solid demand made that the final price has been set at $25 per share. This number intuitively looks a bit high, but this is not payment processing, but involves more steps in the payment process, and thus is quite compelling to many customers.
Average transaction yields, which are defined as reported revenues divided by the number of transactions processed, came in at around $3.50 in 2021 and actually inched up a bit in the first half of the year. Some $145 billion was spent across the platform, spread over 53 million transactions. Verticals in which the company operates includes real estate, construction, financial services, healthcare services, education and media, among others. The other range of services offered is the cash flow manager integrated with the other services.
It furthermore offers The AvidPay Network, connecting buyers with suppliers. While software and automation solutions have been developed for larger enterprises, and they can afford customization systems, the same does not apply for many small and medium-sized businesses.ĪvidXchange aims to help the middle market, those businesses with revenues between $5 million and a billion, with its AP Automation Software. The SaaS payment provider digitizes and automates these AP flows for 7,000 business (known as buyers) to some 700,000 supplier customers.ī2B accounts payable is still a very paper-intensive and thus labor and time-intensive businesses. The company is a provider of accounts payable, known as AP, automation software and payment solutions for middle market businesses and their supplies. Transforming Middle-Market BusinessĪvidXchange aims to transform how the middle market business receives, manages and pays its bills. While the relative valuations look quite compelling, it is the absolute valuation which makes me quite cautious here despite the huge growth runway for the business. AvidXchange Holdings ( NASDAQ: AVDX) has seen a strong pricing process in its road to go public, as investors have seen disappointing returns on the first day of trading as valuations have been quite demanding.