PAY Payfare Inc

First quarter reporting positive net profit of $2.9MM or $0.06 per share in Q4 2022 with record Adj. EBITDA¹ of $3.6MM and Operating Cash Flow of $6.4MM

TORONTO, March 22, 2023 /PRNewswire/ - Payfare Inc. ("Payfare" or the "Company") (TSX: PAY), a leading fintech powering instant payout and digital banking solutions for the gig workforce, today announced the filing of its Financial Statements and Management's Discussion and Analysis ("MD&A") for the quarter and year ending December 31, 2022. A comprehensive discussion of Payfare's financial position and results of operations are provided in the MD&A, which is filed on SEDAR under Payfare's profile and can be found at www.sedar.com.

Q4 2022 Highlights:

• Revenue of $38.4 million in Q4 2022, representing a $21.8 million (+131%) increase over Q4 2021 and a $3.5 million (+10%) increase over Q3 2022.
• Gross profit of $8.3 million in Q4 2022, up $5.8 million (+230%) compared to Q4 2021 and up $1.4 million (+20%) compared to Q3 2022.
• First quarter reporting positive net profit of $2.9 million or $0.06 per share in Q4 2022 compared to a net loss of ($4.6 million or $0.10 per share) in Q4 2021 and a net loss of ($0.8 million or $0.02 per share) in Q3 2022.
• Record Adjusted EBITDA¹ expansion to $3.6 million in Q4 2022, a $6.0 million (+248%) increase over Q4 2021 and a $2.3 million (+171%) increase over Q3 2022.
• Record Operating Cash Flow generation of $6.4 million in Q4 2022, up $10.6 million over Q4 2021 and up $2.6 million over Q3 2022.
• Total gross dollar value (Total GDV)¹ in Q4 2022 was $2.4 billion, an increase of $1.4 billion (+137%) over Q4 2021 and $0.3 billion (+13%) over Q3 2022.
• Ended Q4 2022 with 1,053,872 active users¹, an increase of 542,100 (+106%) compared to active users as at December 31, 2021. This was primarily due to the significant growth of the DoorDash program and steady gains in the Lyft & Uber ride-sharing programs.
• DasherDirect App by Payfare was once again ranked # 1 in December 2022 amongst all US Finance Apps by UnitQ, a product quality monitoring platform which conducts rankings based on user feedback data from app store reviews and social media.

Full Year 2022 Highlights:

• Revenue of $129.9 million in 2022, representing a $88 million (+210%) increase over 2021.
• Gross profit of $25.9 million in 2022, up $20.4 million (+372%) compared to 2021.
• Net loss of ($2.9 million or $0.06 per share) in 2022 was a significant improvement compared to a net loss of ($21.4 million or $0.49 per share) in 2021.
• Record Adjusted EBITDA¹ expansion to $4.4 million in 2022, a $14.4 million (+144%) increase over 2021.
• Record Operating Cash Flow generation of $7.9 million in 2022, up $22.6 million over 2021.
• Total gross dollar value (Total GDV)¹ in 2022 was $7.9 billion, an increase of $5.2 billion (+196%) over 2021.
• Payfare believes the market price of Common Shares may not, from time to time, fully reflect their value and that repurchasing shares under the Normal Course Issuer Bid (NCIB) program can be an attractive use of capital. The Company has repurchased 1,194,800 Common Shares to date at an average cost of $4.54 per share.
• Payfare launched "Paid App by Payfare" in 2022 to an initial cohort of new partners and is continuing to execute on a dedicated go-to-market strategy to convert a strong pipeline of new opportunities, with the goal of generating material revenue in 2023.
• Announced the launch of merchant funded cash back rewards program with Cardlytics and the enhancement of Payfare's digital banking solution with the addition of early direct deposit for cardholders who elect to add their banking account associated with their Payfare-powered card as a payout option for other gig platforms and earnings.
• Launched new, enhanced cash back rewards on gas purchases for U.S. Lyft drivers using a Lyft Direct debit card powered by Payfare. As of September 28, 2022 Lyft drivers can earn up to 8% cash back on every gas purchase in accordance with their driver tier, which has since driven meaningful growth in Lyft Direct users.
• Subsequent to year-end, Payfare announced a partnership with Upside, a retail technology company, to integrate Upside promotions directly in the DasherDirect app powered by Payfare. DasherDirect cardholders in the U.S. can now take advantage of Upside promotions at 50,000 gas and food retailers nationwide.

2023 Strategic Objectives:

• Payfare has issued 2023 revenue and Adjusted EBITDA¹ guidance of $185 million - $195 million (mid-point +46% over 2022) and $21 million - $24 million (mid-point +415% over 2022), respectively.
• The Company is actively working on winning several new significant white label partnerships, including potential international expansion with existing partners. In addition, the roll out of Paid App by Payfare continues to present meaningful growth opportunities.
• Payfare has made progress with its existing gig platform and banking partners to launch credit products for its user base, such initiatives to be announced over the course of 2023.
• Partner with new merchants to expand Payfare's compelling suite of cashback and loyalty rewards for cardholders.
• Expand into new business verticals, including Earned Wage Access for full time employees.

"We are extremely proud to announce our first positive earnings quarter along with record growth in Adjusted EBITDA and Operating Cash Flow in the fourth quarter," said Marco Margiotta, CEO and Founding Partner of Payfare. "Looking forward to 2023 we couldn't be more excited about the growth opportunities ahead. We have a significant user base of over 1 million active cardholders, a monumental achievement in its own right, that presents material new monetization opportunities to supplement our existing product shelf." 

Conference Call

Management will host a conference call on Thursday March 23, 2023, at 8:30 a.m. ET to discuss these results. A short presentation in connection with the conference call will be made available on the Company's website at https://corp.payfare.com/investors/. Management will also host a live question and answer session on the conference call with analysts.

To access the conference call, please dial (416) 764-8658 or 1-888-886-7786. Please call the conference telephone number 10-15 minutes prior to the start time so that you are in the queue for an operator to assist in registering and patching you through.

An archived recording of the conference call will be available until April 23, 2024. To listen to the recording, call (416) 764-8692 or 1-877-674-7070 and enter passcode 719995 #.

About Payfare (TSX:PAY)
Payfare is a global financial technology company powering digital banking and instant payment solutions for today's gig workforce. Payfare partners with leading platforms and marketplaces, such as Uber, Lyft and DoorDash, to provide financial health for their workforce.

¹Non-IFRS and Supplementary Financial Measures

This press release contains references to "active users", "Total GDV" and "Adjusted EBITDA" which are not measures prescribed by International Financial Reporting Standards (IFRS). These supplementary financial measures are provided as additional information to complement IFRS measures by providing a further understanding of our results of operations from management's perspective, to provide investors and security analysts with supplemental measures to evaluate the financial performance of the Company and highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. Management also uses non-IFRS and supplementary financial measures to facilitate operating performance comparisons from period to period, prepare annual operating budgets and strategic business plans and to evaluate and price potential acquisitions. Accordingly, non-IFRS and supplementary financial measures should not be considered in isolation or as a substitute for analysis of our financial information reported under IFRS. Such measures do not have any standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other corporations. The non-IFRS and supplementary financial measures are not subject to standard industry definition and our definitions and method of calculation may differ from other issuers and therefore may not be comparable to similar measures presented by other issuers.

The Company determines the number of users to its services based on active users. "Active users" represent users who have loaded earnings on their card in the period. "Total GDV" is defined as the aggregate dollar amount of active user earnings and direct deposits loaded on their payment card during the period.

"EBITDA" means net income (loss) before amortization and depreciation expenses, foreign exchange loss (gain), amortization of deferred income, finance and interest costs (income) and provision for income taxes.

"Adjusted EBITDA" adjusts EBITDA for stock-based compensation expense, transactional gains or losses on assets, asset impairment charges, loss on extinguishment of debts, gains or losses from changes in fair value of derivative financial instruments and contingent consideration liabilities measured at fair value through profit or loss, gains or losses from disposals of equipment, net income or loss from equity accounted investees and income tax expense or recovery, restructuring costs and non-recurring expense items. Non-recurring expense items are transactions or events which management believes will not re-occur within the foreseeable future and includes legal and professional fees related to acquisition and going public transaction. The table below reconciles net loss to EBITDA and Adjusted EBITDA for the years ended December 31, 2022 and 2021.

Additional information on these measure may be found under the heading "Definitions – IFRS, Additional GAAP and Non-GAAP Measures" in the MD&A for the years ended December 31, 2022 and 2021 which is available under Payfare's profile on SEDAR at www.sedar.com and is incorporated by reference to this press release.

Forward-Looking Information

This press release contains forward-looking information within the meaning of applicable securities legislation, which reflects Payfare's current expectations regarding future events as of the date hereof. Such forward-looking information may include but are not limited to statements regarding growth opportunities ahead in 2023 including international expansion, guidance information for 2023, the ability to deploy capital opportunistically, funding the launch of new products and other strategic growth opportunities, actively working on winning new white label partnerships, credit product development, and possible expansion into new business verticals which include Earned Wage Access for full time employees. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Payfare's control, that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks include the factors discussed under the "Risk Factors" section in Payfare's MD&A for the year ended December 31, 2022. Other factors that could cause actual results or events to differ materially include the inability of Payfare to launch and market its new programs or platforms that are planned in a timely manner, the lack of experience or resources to enter into Earned Wage Access vertical, Payfare's inability to manage the increased volume of new cardholder sign-ups, active users or transactions, the decline in third party ranking of Payfare's mobile apps, the impact of inflation and rising costs of goods and services on Payfare's business model which may impact management's expectations on active user growth in the year 2023 and beyond, the imposition of new restrictions related to the COVID-19 pandemic, Payfare's ability to finance and support new programs and platforms, and a general decline in the credit markets, gig economy or confidence in the banking sector in North America. Accordingly, readers should not place undue reliance on forward-looking information. The purpose of guidance contained in this news release is solely to outline management's current expectations and outlook for its 2023 financial performance, and not to forecast or project future results. Readers are cautioned that such guidance is not appropriate for any other purpose Payfare does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.

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SOURCE Payfare