AvidXchange Q1 2025 slides: Revenue growth slows, margins expand as TPG acquisition looms

Introduction & Market Context

AvidXchange Holdings Inc. (NASDAQ:AVDX) released its first quarter 2025 earnings presentation on May 7, showing continued but decelerating growth across key metrics. The B2B payment automation provider reported modest gains in revenue, transactions processed, and payment volume, while maintaining strong gross margins. The presentation also referenced the planned acquisition of AvidXchange by private equity firm TPG, which was previously announced.

The company’s stock jumped 18.9% to $9.75 in premarket trading, suggesting investors responded positively to the results despite the growth slowdown. This reaction marks a significant shift from the previous quarter when the stock fell nearly 18% despite beating earnings expectations.

Quarterly Performance Highlights

AvidXchange reported total revenue of $107.9 million for Q1 2025, representing a 2.2% year-over-year increase from $105.6 million in Q1 2024. This growth rate marks a substantial deceleration from the 21.6% year-over-year growth reported in Q1 2024.

As shown in the following chart of quarterly revenue performance:

The company processed 19.7 million transactions in Q1 2025, up 1.9% from 19.3 million in the same period last year. Total (EPA:TTEF) payment volume reached $20.6 billion, increasing 3.7% year-over-year from $19.9 billion. Both metrics show significantly slower growth compared to the same quarter last year, when transaction volume grew 5.8% and payment volume increased 12.0%.

The key performance metrics for Q1 2025 compared to Q1 2024 are summarized in this highlights slide:

Detailed Financial Analysis

Despite the slowing top-line growth, AvidXchange maintained strong profitability metrics. The company’s Non-GAAP gross profit margin expanded to 73.3% in Q1 2025, an increase of 90 basis points from 72.4% in Q1 2024. This margin expansion demonstrates the company’s ability to maintain pricing power and operational efficiency even as growth moderates.

The quarterly trend in Non-GAAP gross margin is illustrated below:

However, Adjusted EBITDA margin decreased slightly to 16.2% in Q1 2025 from 16.7% in the same quarter last year. According to the presentation, this decline "largely reflects the impact of lower comparable float and political revenue contribution as well as increased investments in opex."

The Adjusted EBITDA margin trend over the past five quarters is shown here:

AvidXchange’s financial position remains solid with $389.3 million in cash and cash equivalents as of Q1 2025, though this represents a decrease from $443.5 million in Q1 2024. The company has significantly reduced its long-term debt to $63.2 million from $76.9 million a year earlier, and finance lease liabilities decreased substantially to $9.1 million from $62.8 million in Q1 2024.

The presentation noted that in August 2024, the company announced a $100 million share repurchase program, with approximately $50 million utilized in Q3 and Q4 of 2024 to repurchase roughly 5.4 million shares in total.

AvidXchange’s business model is visualized through its "flywheel" concept, highlighting the interconnected nature of its key performance metrics:

Strategic Initiatives & Future Outlook

The presentation materials reference the planned acquisition of AvidXchange by TPG, though specific details about the transaction timeline or terms were not provided. This follows a trend of private equity interest in fintech companies with established market positions and recurring revenue models.

The revenue disaggregation data shows that payment revenue continues to be the largest contributor to total revenue at $75.9 million in Q1 2025, a slight increase from $75.2 million in Q1 2024. Software (ETR:SOWGn) revenue grew more substantially to $30.9 million from $29.7 million, while services revenue, though small, increased significantly to $1.1 million from $0.7 million.

Looking ahead, AvidXchange appears positioned to leverage its strong balance sheet for both organic growth and potential acquisitions. The company’s previous earnings call from Q4 2024 mentioned plans to launch new products, including a spend management platform in the second half of 2025 and enhanced AI-driven automation capabilities.

The slowing growth rates across key metrics will likely be a focus for investors and analysts going forward, particularly regarding transaction retention and yield. However, the company’s ability to maintain strong gross margins and its solid financial position provide some cushion as it navigates a more challenging growth environment while preparing for the TPG acquisition.

Full presentation:

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