A couple of weeks ago, I wrote about the hit the stocks of two B2B payments providers, Bill.com and WEX, took when they reported slowing growth and monetization. Last week, AvidXchange met the same fate.
AvidXchange Earnings
AvidXchange beat analyst expectations for Revenue and Earnings Per Share. The company grew 10.9% yearly and had positive net income on a GAAP basis for the first time. Gross margin and operating margin expanded. AvidXchange’s yield per transaction increased 6.4%. The business fundamentals were just fine, nothing blazing, but steady progress. As with the other public B2B payment providers, the problem was not so much in the rear-view mirror; it was out the front windshield, in the guidance the company issued for 2025.
AvidXchange Full Year 2025 Financial Outlook
Here is AvidXchange’s guidance for 2025. 3.2%-4.8% growth at the top line. (The company noted that if it adjusts for revenue from political advertising and lower projected interest income from float, the growth will be closer to 8%, but either way, it’s not a good growth story. Based on the midpoint of the guidance, adjusted EBITDA is also expected to grow by about 4.5%, so no significant change in profitability is forecasted. A skeptical market is pricing it as a stagnant “rule of 25” company with EV/Revenue ratio of a little under 3x–harsh.
More Shoes to Drop?
You might wonder if other B2B payments providers are also experiencing slowdowns and whether you can profit from this insight. The pure-play vendors and those with extensive B2B exposure have already reported earnings. However, a few public companies with lesser exposure to B2B payments may be worth watching. All of them provide helpful segment reporting.
- Repay Technologies (RPAY) will report its Q4 and FY2024 results today, March 3. It is primarily a consumer payments company but reports on a separate business of $45 million in B2B payments.
- Priority Technology Holdings (PRTH) reports its Q4 and FY2024 results on March 6. PRTH has a small B2B payments business bolstered by its acquisition of Plastiq.
- Usio (USIO) is an ultra-micro cap that, like PRTH and RPAY, is on the payment acceptance side of the market, along with payouts, so again, it is not nearly a pure play. By the way, if you are trying to learn about the economics of various payment methods, USIO has a nice, simple investor deck that is illuminating.
If you have other public B2B payments companies to suggest we monitor, please put them in the comments. (I did not comment on Flywire’s nearly 40% drop in stock price this past week, as it is primarily a B2C company specializing in cross-border payments.)
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