• Revenue: $115.4 million in Q4 2024, up 10.9% year-over-year.
• Non-GAAP Gross Margin: 74.9% in Q4 2024, up 350 basis points from the previous year.
• Adjusted EBITDA: $26.3 million in Q4 2024, compared to $15.6 million in Q4 2023.
• Net Income: GAAP net income of $4.7 million in Q4 2024, compared to a net loss of $4.5 million in Q4 2023.
• Non-GAAP Diluted Earnings Per Share: $0.08 in Q4 2024, up from $0.05 in Q4 2023.
• Transaction Yield: $5.80 per transaction in Q4 2024, up 6.4% from $5.45 in Q4 2023.
• Software Revenue: $30.9 million in Q4 2024, up 6.4% year-over-year.
• Payment Revenue: $83.4 million in Q4 2024, up 12.3% year-over-year.
• Cash Position: $389.3 million in cash and marketable securities at year-end 2024.
• Share Repurchase: $25 million worth of shares repurchased in Q4 2024, totaling $50 million for the year.
• 2025 Revenue Outlook: Expected to be in the range of $453 million to $460 million.
• 2025 Adjusted EBITDA Outlook: Expected to range between $86 million and $91 million.
• 2025 Non-GAAP Diluted EPS Outlook: Expected to be between $0.25 and $0.27.

• Warning! GuruFocus has detected 3 Warning Sign with AVDX.

Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• AvidXchange Holdings Inc (NASDAQ:AVDX) exceeded expectations across all core financial metrics, including revenues, gross margin, and EBITDA margin.
• The company achieved significant non-GAAP gross and adjusted EBITDA margin expansion, with gross margins reaching almost 75% and EBITDA margins nearly 23%.
• AvidXchange Holdings Inc (NASDAQ:AVDX) repurchased $25 million worth of shares in Q4 2024, demonstrating confidence in its long-term business prospects.
• The company has strong free cash flow generation and disciplined capital allocation, contributing to its robust financial position.
• AvidXchange Holdings Inc (NASDAQ:AVDX) is making strides in AI and automation, which are expected to drive further efficiency and margin expansion.

Negative Points

• The macroeconomic environment remains challenging, impacting top-of-funnel customer engagement and buyer logo growth metrics.
• Overall top-of-funnel opportunities were down roughly 2%, partly due to changes in the go-to-market strategy and macroeconomic conditions.
• The HOA vertical underperformed expectations due to macro headwinds, with a slowdown in spending by HOA Boards.
• Retention rates are below the company's historical norms, with volume retention being sub-100%, indicating macroeconomic pressures.
• The company's growth trajectory has been below target due to the macro environment, affecting its ability to achieve the Rule of 40 target.

Q & A Highlights

Q: Can you provide an update on the gross margin expansion and operational expenses control? A: Michael Praeger, CEO, explained that the company is targeting an 80% gross margin, driven by sourcing strategies, standardization, and AI-led automation. While there is still room for improvement, the trajectory may not be linear due to scaling as revenue growth accelerates.

Q: Could you elaborate on the new financial services partnership and its impact on paper checks? A: Praeger highlighted that the partnership leverages specialty networks to eliminate paper checks, aiming to maximize electronic payments. This strategy is part of a broader effort to reduce paper check usage and enhance electronic payment adoption.

Q: What macroeconomic headwinds are expected in 2025, and how will they affect revenue growth? A: Joel Wilhite, CFO, noted that the 2025 guidance considers a reduction in political and float revenues. The company anticipates low single-digit transaction growth and sub-100% retention, with Payment Accelerator and new payment methods contributing to growth.

Q: Are there any recent trends or concerns affecting the 2025 outlook? A: Wilhite stated that January's volumes and transaction growth aligned with expectations, indicating no incremental concerns. The company remains optimistic about growth resuming despite macroeconomic uncertainties.

Q: How does AvidXchange plan to accelerate new logo additions and address potential market saturation? A: Praeger emphasized the importance of new channel partnerships and a strong pipeline of deals. The company aims for 10%+ new logo growth, leveraging partnerships like AppFolio and M3 to drive engagement and sales.

Q: What are the expectations for Payment Accelerator's contribution to growth? A: Praeger described Payment Accelerator as a significant growth driver, with the 2.0 version seeing increased supplier adoption. The company expects the business to double in 2025, contributing meaningfully to revenue growth.

Q: How is AvidXchange utilizing AI in its operations and products? A: Praeger explained that AI is integral to product innovation and operational efficiency. It enhances invoice processing, payment delivery, and customer care, contributing to gross margin expansion and profitability.

Q: What are the key verticals driving growth, and how do they impact the 2025 guidance? A: Praeger identified real estate, financial services, and media as strong performers, while HOA faced challenges. The guidance assumes continued macroeconomic trends, with potential upside if conditions improve.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.