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AvidXchange Holdings, Inc. (AVDX)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 delivered double-digit revenue growth with pronounced margin expansion: revenue $115.4M (+10.9% YoY), non-GAAP gross margin 74.9% (+350 bps YoY), adjusted EBITDA $26.3M; GAAP diluted EPS $0.02; non-GAAP diluted EPS $0.08 .
  • Management said results exceeded implied internal outlook across revenue, gross margin, EBITDA margin and non-GAAP EPS; macro remained a headwind, but cost discipline and yield expansion drove outperformance .
  • Initial FY25 guide embeds conservative revenue growth given lower interest (float) revenues (~$44M vs $49.7M in 2024) and no political revenues (vs ~$6.6M in 2024): revenue $453–$460M, adjusted EBITDA $86–$91M, non-GAAP EPS $0.25–$0.27 .
  • Balance sheet and capital allocation supportive: cash and marketable securities $389.3M, long-term debt $9.1M; $50M of buybacks executed in 2024 (including $25M in Q4), and term debt paydown completed earlier in 2024 .
  • Potential stock-reaction catalysts: clear line-of-sight to higher margins (path toward ~80% gross margin), Payment Accelerator 2.0 and AvidPay 2.0 scaling, but a cautious FY25 revenue framework (lower float/political) could temper top-line expectations near term .

What Went Well and What Went Wrong

What Went Well

  • Margin expansion: non-GAAP gross margin reached 74.9% (top end of the 72–75% target range) and adjusted EBITDA rose to $26.3M as unit cost initiatives, automation and yield drove efficiency .
  • Yield and monetization: transaction yield increased 6.4% to $5.80; total payment volume rose 10% YoY to $21.9B; management emphasized continued pricing optimization and e-payment mix gains .
  • Strategic progress: ERP/embedded partnerships (AppFolio, M3) showing accelerating engagement and close-rates; Payment Accelerator 2.0 scaling with onboarding times compressed and enrollments more than doubled on a rolling 3-month basis .

What Went Wrong

  • Macro drag persisted: top-of-funnel opportunities down ~2% in 2024; transaction retention below 100%; Q4 total transaction growth slowed to ~4.3% vs 5.2% in Q3 (implies subdued same-store activity) .
  • Interest income declined YoY in Q4 ($12.2M vs $13.7M), and FY25 guide contemplates lower float and no political revenue, dampening reported revenue growth optics despite operational momentum .
  • Vertical softness: HOA underperformed due to spending pauses; Q4 new logo adds slowed around the election cycle, pushing pipeline into 2025 (management expects improvement as year progresses) .

Financial Results

Quarterly Progression (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($M)105.1 112.8 115.4
GAAP Net Income ($M)0.4 4.0 4.7
GAAP Diluted EPS ($)0.00 0.02 0.02
Non-GAAP Net Income ($M)10.7 15.7 17.3
Non-GAAP Diluted EPS ($)0.05 0.07 0.08
GAAP Gross Margin (%)65.3% 67.7% 68.2%
Non-GAAP Gross Margin (%)72.6% 74.5% 74.9%
Adjusted EBITDA ($M)17.5 23.3 26.3

Q4 YoY Comparison

MetricQ4 2023Q4 2024
Revenue ($M)104.1 115.4
GAAP Net Income (Loss) ($M)(4.5) 4.7
Non-GAAP Net Income ($M)9.4 17.3
GAAP Gross Margin (%)64.6% 68.2%
Non-GAAP Gross Margin (%)71.4% 74.9%
Adjusted EBITDA ($M)15.6 26.3
Interest Income in Revenue ($M)13.7 12.2

Q4 2024 Revenue Mix

ComponentQ4 2024 ($M)% of Total
Software Revenue30.9 26.8%
Payment Revenue83.4 72.2%
Interest Income (within Payment)12.2 —
Political Media Revenue2.9 —

Operating KPIs (oldest → newest)

KPIQ2 2024Q3 2024Q4 2024
Transactions (M)19.7 20.2 19.9
Total Payment Volume ($B)20.6 21.5 21.9
Transaction Yield ($/txn)5.33 5.59 5.80

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)FY 2025n/a453.0 – 460.0 Initial
Adjusted EBITDA ($M)FY 2025n/a86.0 – 91.0 Initial
Non-GAAP Diluted EPS ($)FY 2025n/a0.25 – 0.27 Initial
Interest Revenue Assumption ($M)FY 2025—~44.0 (vs $49.7M in 2024) Lower vs 2024
Political Revenue Assumption ($M)FY 2025—$0.0 (vs ~$6.6M in 2024) Lower vs 2024

Earnings Call Themes & Trends

TopicQ2 2024 (Q-2)Q3 2024 (Q-1)Q4 2024 (Current)Trend
AI/AutomationBroadening AI across products and internal ops; milestone GAAP profitability Continued unit-cost efficiencies; top-end non-GAAP gross margin; adj. EBITDA margin 20.7% AI-led automation in payments delivery; virtual card automation ramp; onboarding compression to hours→minutes Accelerating adoption and impact
ERP/Embedded Partnerships“Recently launched integration partnerships” highlighted Partnerships part of growth algorithm AppFolio & M3 showing 2x–4x engagement/close-rate gains; new partners (Buildium, DSOs, Cadence Bank) progressing Building momentum
Macro/RetentionMacro “choppiness” acknowledged Encouraging inflection in transaction retention trends Transaction growth low-single-digit; transaction retention below 100%; January in line with plan Stabilizing at low levels
E-Payment Mix/ChecksPayment 2.0 platform on horizon Pay platform investments continue AvidPay 2.0 ramp; fintech partner to accelerate check-to-e-pay conversion Improving mix, yield tailwind
Payment Accelerator 2.0Launch underway Scaling; part of guide assumptions Enrollments more than doubled (rolling 3 months); aiming parity with v1 in 2025 Rapid scale-up
Vertical Trends——Real estate, financial services, media strong; HOA weak but expected improvement post-election Mixed, with green shoots

Management Commentary

  • “Fourth quarter 2024 results exceeded implied expectations across all of our core financial metrics… despite a challenging macro backdrop” – Michael Praeger, CEO .
  • “Non-GAAP gross margin… at the top end of our 72% to 75%… and adjusted EBITDA margins… almost 23%” .
  • “Marching towards that 80% targeted gross margin number… continue to be aggressive in… sourcing, standardization… and automation led by AI” – CEO .
  • “Software revenue of $30.9M… Payment revenue of $83.4M… Interest revenues were $12.2M… Political media revenue… ~$2.9M” – CFO .
  • “Ended the year with… $389.3M of cash and marketable securities… outstanding note payable $9.1M… utilized $25M of cash to repurchase ~2.3M shares in Q4; $50M in 2024” – CFO .

Q&A Highlights

  • Margin runway: Management reiterated a path toward ~80% gross margin via sourcing, standardization, and AI; expects progress may be non-linear with growth scale effects .
  • Check-to-ePay conversion: New fintech partnership and “extended network” strategy to accelerate paper-check elimination and share monetization with partners .
  • FY25 guide assumptions: Excludes political; float down (~$44M vs $49.7M 2024), implies ~8% core growth at midpoint ex float/political; Payment Accelerator 2.0 and new payment methods contribute ~2 pts of growth in back half .
  • Demand environment: January tracked to plan; election-cycle pause pushed Q4 deals into 2025; robust channel pipeline (AppFolio/M3/others) to drive new logos .
  • Vertical dynamics: Real estate, financial services, media strong; HOA weak but expected to improve through 2025; retention tracked sub-100% amid constrained discretionary spend .

Estimates Context

  • S&P Global Wall Street consensus for Q4 2024 revenue and EPS was unavailable at request time due to an SPGI rate limit. Management stated Q4 results exceeded the company’s implied outlook across core metrics (revenues, gross margin, EBITDA margin, non-GAAP EPS) .
  • Implications: Given FY25 guidance embeds lower float and no political revenue, sell-side models may need to lower reported revenue but could raise margin/EBITDA/EPS trajectories, reflecting sustained unit-cost efficiencies and yield expansion .

Key Takeaways for Investors

  • Margin-led story intact: Non-GAAP gross margin at 74.9% and continued automation/yield levers underpin path to ~80% over time; EBITDA scaling accordingly .
  • Monetization tailwinds: Transaction yield grew to $5.80; AvidPay 2.0 and fintech partnerships should accelerate e-payment penetration and reduce check-processing costs/fraud risk .
  • New growth engines: Payment Accelerator 2.0 scaling quickly with faster onboarding and doubling enrollments; potential to become “next $100M business” over time .
  • Conservative FY25 setup: Guide reflects float/political headwinds and cautious macro/retention; upside if macro stabilizes, channels convert backlogged deals, and new products scale into H2 .
  • Solid balance sheet/capital returns: $389.3M corporate liquidity, minimal debt, buyback capacity under $100M program offers downside support and EPS accretion optionality .
  • Watch metrics: e-payment mix, TPV yield, Payment Accelerator revenue contribution, new logo adds from AppFolio/M3/others, and transaction retention trajectory .
  • Trading lens: Near-term—margin outperformance and buyback support vs cautious revenue guide; Medium-term—product/channel ramps could re-accelerate growth while sustaining margin expansion .