IPO news: What to look for when AvidXchange goes public this week

The technology industry is seeing several companies lining up to make their market debut. One such candidate who is set to go public this week is AvidXchange Holdings Inc. Here are a few points to know about this software firm’s IPO:

IPO details

AvidXchange Holdings Inc. is scheduled to go public on Wednesday, October 13. The company will begin trading on NASDAQ under the ticker symbol AVDX. It will offer 22 million shares at a price range of $23 to $25 to raise $528 million. The IPO will be managed by a group of underwriters led by Goldman Sachs and JPMorgan.

Company intro

AvidXchange provides accounts payable (AP) automation software and payment solutions for middle market businesses and their suppliers. Its Software-as-a-Service-based end-to-end software and payment platform digitizes and automates the AP workflows for more than 7,000 businesses and it has made payments to more than 700,000 supplier customers of its buyers over the past five years.

The company sells its solutions through a hybrid go-to-market strategy that includes direct and indirect channels. Its customers operate across a variety of verticals including real estate, construction, financial services, healthcare facilities, social services and education. AvidXchange processed approximately 58 million transactions in the last 12 months, as of Q2 2021, representing over $145 billion in spend under management across its platform.

Financials

AvidXchange generated revenues of $185.9 million in 2020, which was up 24.3% from 2019. Gross profit increased to $85.4 million from $62.6 million in 2019. Gross margin amounted to 45.9% in 2020 versus 41.9% in 2019. Net loss in 2020 was $101.2 million compared to $93.5 million in 2019.

Market opportunity

AvidXchange sees significant opportunity for digital transformation within the B2B payments market. A recent study by PYMNTS.com found that 46% of AP professionals would like to implement digital AP automation solutions while another study from MarketsandMarkets estimates that the AP automation market will grow 11% annually by 2024.

The company estimates that its current addressable market includes approx. 435,000 US middle market businesses and represents a significant and underserved revenue opportunity for future growth. These are primarily businesses with between $5 million and $1 billion in annual revenue or those that manage large volumes of AP.

AvidXchange also sees vast opportunity in supplier invoice finance. Its solutions help suppliers accelerate invoices for early payment, manage supplier payment preferences, and forecast future cash flows. The company estimates the total addressable market opportunity for these solutions to be more than $20 billion in additional whitespace opportunity, bringing its total addressable market to north of $40 billion.

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