Record quarterly profitability, generating net
income of $4.8 million, and Adjusted
net income per share1 of $0.16 in Q3 2023
TORONTO, Nov. 8, 2023
/PRNewswire/ - Payfare Inc. ("Payfare'' or the
"Company") (TSX: PAY) (OTCQX: PYFRF), a leading fintech
powering instant payout and digital banking solutions for
workforces, today announced the filing of its Financial Statements
and Management's Discussion and Analysis ("MD&A") for
the quarter ending September 30,
2023. 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.sedarplus.ca.
Q3 2023 Highlights:
- Increased revenue to a record $47.2
million for the three months ended September 30, 2023, representing a $12.3 million (+35%) increase compared to the
same period in 2022.
- Ended Q3 2023 with 1,211,275 active users1, up
290,593 (+32%) compared to active user1 count as at the
end of Q2 2022. As of October 31,
2023 Payfare had 1,254,848 active users, up 43,573 from the
quarter ended September 30, 2023 as
the company enters the seasonally strong fourth quarter.
- Total gross dollar value (Total GDV)1 in Q3 2023 was
$3.0 billion, an increase of
$0.8 billion (+40%) over Q3
2022.
- Net income of $4.8 million, or
$0.10 per share, for the three months
ended September 30, 2023, up
$5.6 million (+684%), compared to the
same period in 2022.
- Adjusted net income1 of $7.5
million, or $0.16 per share,
for the three months ended September 30,
2023, representing growth of $5.8
million (+337%) over the prior year period.
- Adjusted EBITDA1 of $6.3
million for the three months ended September 30, 2023, reflecting a $5.0 million increase (+373%) compared to the
same period in 2022.
- Free cash flow1 of $3.6
million for the three months ended Sept 30, 2023, which equates to growth of
$0.8 million (+29%) over the prior
year period.
- The Company has issued fourth quarter 2023 revenue and Adjusted
EBITDA1 guidance of $50
million and $7 million,
respectively, and remains on track to meet its full year
guidance.
- In the prior quarter, the Company was successfully selected in
two Request for Proposal (RFP) processes to launch new private
label and embedded finance programs for globally recognized
strategic partners. In the third quarter, Payfare signed a
definitive agreement with one of these partners, an international
big box retailer, to provide earnings payouts to the retailer's
delivery gig workforce in Canada.
Integration and app development remains ongoing with the second
partner client, which Payfare expects to execute a definitive
agreement with in the fourth quarter of 2023.
- Payfare intends to file with the Toronto Stock Exchange ("TSX")
a notice of intention to commence a normal course issuer bid
("NCIB") for its Class A Common Shares ("Shares"). Subject to
acceptance by the TSX, the Company would be permitted under the
NCIB to purchase for cancellation, through the facilities of the
TSX and all available Canadian markets and alternative trading
platforms, up to 5% of the issued and outstanding Shares for a
period of 12 months after the NCIB commences. The exact amount of
Shares subject to the NCIB will be determined on the date of
acceptance of the notice of intention by the TSX.
- Post quarter end, Payfare announced that it is expanding its
partnership with its card processor i2c Inc., to support growth in
new markets including Canada and
the United Kingdom.
"We are proud to achieve record levels of profitability in the
quarter," said Marco Margiotta, CEO
and Founding Partner of Payfare. "In Q3 we were focused on
integration with the two new significant partnerships won in Q2.
Looking ahead, our pipeline of new gig and Earned Wage Access
clients remains robust as we focus on these growth initiatives
heading into 2024".
Conference Call
Management will host a conference call on Wednesday November 8, 2023, at 6:30 p.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 December 8, 2023. To listen to
the recording, call 416-764-8692 or 1-877-674-7070 and enter
passcode 781255.
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", "adjusted net income", "adjusted net income per share",
"EBITDA", "Adjusted EBITDA" and "free cash flow", 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 and direct deposits 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 gain (loss) , amortization
of deferred income, finance and interest income (costs), current
tax expense and change in fair value of derivative liability.
"Adjusted EBITDA" adjusts EBITDA for stock-based compensation
expense, 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 claim
settlements, acquisition, divestiture and going public
transaction.
The table below reconciles net income (loss) to EBITDA and
Adjusted EBITDA for the three and nine months ended September 30, 2023 and 2022.
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
In CAD
$
|
2023
|
|
2022
|
2023
|
|
2022
|
Net income
(loss)
|
$
4,810,360
|
|
$
(823,855)
|
$ 8,212,761
|
|
$
(5,839,217)
|
Add:
|
|
|
|
|
|
|
Current tax
expense
|
20,874
|
|
-
|
66,242
|
|
-
|
Finance
income
|
795,305
|
|
303,597
|
1,565,277
|
|
492,684
|
Other
income
|
-
|
|
23,153
|
9,397
|
|
96,061
|
Foreign exchange
gain
|
445,690
|
|
63,136
|
20,009
|
|
34,712
|
Amortization of
intangible assets
|
942,531
|
|
354,976
|
2,227,776
|
|
753,295
|
Depreciation of
building, property and equipment
|
17,182
|
|
36,587
|
87,615
|
|
106,557
|
EBITDA
|
4,549,952
|
|
(822,178)
|
8,999,711
|
|
(5,602,822)
|
Adjustments:
|
|
|
|
|
|
|
Restructuring
expense/other
|
706,185
|
|
142,274
|
2,009,504
|
|
142,274
|
Share based
compensation
|
1,040,863
|
|
2,011,292
|
3,078,369
|
|
6,224,194
|
Adjusted
EBITDA
|
$
6,297,000
|
|
$
1,331,388
|
$
14,087,584
|
|
$ 763,646
|
"Adjusted net income" adjusts net income (loss) for share-based
compensation expense, 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 claim
settlements, acquisition, divestiture and going public transaction.
The table below reconciles net income (loss) to Adjusted net income
for the three and nine months ended September 30, 2023 and 2022.
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
In CAD
$
|
2023
|
|
2022
|
2023
|
|
2022
|
Net income
(loss)
|
$
4,810,360
|
|
$
(823,855)
|
$ 8,212,761
|
|
$
(5,839,217)
|
Add:
|
|
|
|
|
|
|
Amortization of
intangible assets
|
942,531
|
|
354,976
|
2,227,776
|
|
753,295
|
Depreciation of
building, property and equipment
|
17,182
|
|
36,587
|
87,615
|
|
106,557
|
Restructuring
expense/other
|
706,185
|
|
142,274
|
2,009,504
|
|
142,274
|
Share based
compensation
|
1,040,863
|
|
2,011,292
|
3,078,369
|
|
6,224,194
|
Adjusted net
income
|
$
7,517,121
|
|
$
1,721,274
|
$
15,616,025
|
|
$
1,387,103
|
"Adjusted net income" per share is calculated as Adjusted
net income divided by the basic weighted average number of shares
outstanding during the period.
The Company defines its free cash flow as cash from operating
activities less cash used in investing activities (including
additions to intangible assets and purchase of building, property
and equipment). The table below reconciles cash from operating
activities to free cash flow for the three and nine months ended
September 30, 2023 and 2022.
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
In CAD
$
|
2023
|
|
2022
|
2023
|
|
2022
|
|
|
|
|
|
|
|
Cash from operating
activities
|
$
5,142,608
|
|
$ 3,766,903
|
$
12,406,175
|
|
$
1,491,992
|
Less: Cash used in
investing activities
|
|
|
|
|
|
|
Purchase of building,
property and equipment
|
(15,495)
|
|
-
|
(19,708)
|
|
(86,407)
|
Additions to
intangible assets
|
(1,506,530)
|
|
(949,998)
|
(4,067,629)
|
|
(2,477,899)
|
Free cash
flow
|
$
3,620,583
|
|
$
2,816,905
|
$
8,318,838
|
|
$
(1,072,314)
|
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 three and nine months ended September 30, 2023 which is available under
Payfare's profile on SEDAR+ at www.sedarplus.ca 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 underlying fundamentals of core
business model, success in two recent RFPs, new partnerships and
product shelf enhancements over the balance of the year, guidance
information for fourth quarter and the full year in 2023, the
launch of new features and partnerships, and expansion into new
business verticals which include Earned Wage Access for full time
employees, the Company's intention to file to commence its NCIB,
the timing thereof, and the number of Shares which may be purchased
under the NCIB. 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 failure to enter into definitive agreements with
parties who have selected Payfare through their RFP processes,
Payfare's ability to finance and support new programs and
platforms, a general decline in the credit markets, gig economy or
confidence in the banking sector in North
America, non-acceptance by the TSX of the Company's notice
application for the NCIB. 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