Continued execution on profitability,
generating net income of $2.1
million, Adjusted net income per
share1 of $0.10, and Adjusted
EBITDA1 of $4.8
million in Q2 2023
TORONTO, Aug. 9, 2023
/CNW/ - 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 June 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.
Q2 2023 Highlights:
- Increased revenue to a record $46.5
million for the three months ended June 30, 2023, representing a $13.9 million (+43%) increase compared to the
same period in 2022. Payfare remains on track to meet its full year
2023 revenue guidance of $185 million
to $195 million.
- Ended Q2 2023 with 1,188,325 active users1, up
304,074 (+34%) compared to active user1 count as at the
end of Q2 2022 and up 60,865 (+5%) compared to active
users1 count as at the end of Q1 2023.
- Total gross dollar value (Total GDV)1 in Q2 2023 was
$2.9 billion, an increase of
$0.9 billion (+46%) over Q2 2022 and
$0.2 billion (+7%) over Q1 2023.
- Net income of $2.1 million, or
$0.04 per share, for the three months
ended June 30, 2023, up $4.4 million (+191%), compared to the same period
in 2022.
- Adjusted net income1 of $4.6
million, or $0.10 per share,
for the three months ended June 30,
2023, representing growth of $4.2
million over the prior year period.
- Adjusted EBITDA1 of $4.8
million for the three months ended June 30, 2023, reflecting a $4.5 million increase compared to the same period
in 2022. Payfare remains on track to achieve its full year 2023
Adjusted EBITDA1 guidance of $21
million to $24 million.
- Free cash flow1 of $0.6
million for the three months ended June 30, 2023, which equates to growth of
$5.1 million (+113%) over the prior
year period. Free cash flow growth in the quarter was impacted by
the significant increase in cash generated from operating
activities, which was partially offset by a temporary increase in
non-cash working capital consumption and an increase in cash used
in investing activities.
- 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 on its
platform. In the quarter Payfare continued to make significant
progress building integrations with these new strategic partners.
The Company expects to announce the details of these programs with
its partners prior to commercial launch.
- Subsequent to quarter-end, as of July
28, 2023, the Company's Common Shares qualified for trading
in the United States on the OTCQX
Best Market, having been upgraded from the OTC Pink Market. The
shares trade under the symbol "PYFRF" and will facilitate trading
by interested Payfare investors in the
United States.
"We were focused on building new partner integrations in the
second quarter after successfully winning two RFP processes while
expanding profitability," said Marco
Margiotta, CEO and Founding Partner of Payfare. "Our
business development pipeline remains active with opportunities in
the gig economy and Earned Wage Access for regular employers. We
look forward to sharing more as these programs get closer to
commercialization."
Conference Call
Management will host a conference call on Thursday August 10, 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 September 10, 2023. To listen
to the recording, call (416) 764-8692 or 1-877-674-7070 and enter
passcode 855601.
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 (loss)", "adjusted net income (loss) 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 loss (gain), amortization
of deferred income, finance and interest costs (income), current
tax expense and change in fair value of derivative liability.
"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, 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 six months ended June 30, 2023 and 2022.
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
In CAD
$
|
2023
|
|
2022
|
2023
|
|
2022
|
Net income
(loss)
|
$
2,113,525
|
|
$
(2,310,824)
|
$
3,402,401
|
|
$
(5,015,362)
|
Add:
|
|
|
|
|
|
|
Current tax
expense
|
28,099
|
|
-
|
45,368
|
|
-
|
Finance
income
|
(287,090)
|
|
(123,752)
|
(769,972)
|
|
(189,087)
|
Other
income
|
(1,607)
|
|
(32,946)
|
(9,397)
|
|
(72,908)
|
Foreign exchange
loss
|
370,450
|
|
26,998
|
425,681
|
|
28,424
|
Amortization of
intangible assets
|
713,262
|
|
209,038
|
1,285,245
|
|
398,319
|
Depreciation of
building, property and equipment
|
34,917
|
|
36,966
|
70,433
|
|
69,970
|
EBITDA
|
2,971,556
|
|
(2,194,520)
|
4,449,759
|
|
(4,780,644)
|
Adjustments:
|
|
|
|
|
|
|
Restructuring
expense/other
|
688,829
|
|
-
|
1,303,319
|
|
-
|
Share based
compensation
|
1,095,813
|
|
2,485,980
|
2,037,506
|
|
4,212,902
|
Adjusted
EBITDA
|
$
4,756,198
|
|
$
291,460
|
$
7,790,584
|
|
$
(567,742)
|
"Adjusted net income (loss)" adjusts net income (loss) for
share-based compensation expense, amortization and depreciation
expenses, 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, 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 (loss) for the three and six months
ended June 30, 2023 and 2022.
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
In CAD
$
|
2023
|
|
2022
|
2023
|
|
2022
|
Net income
(loss)
|
$
2,113,525
|
|
$
(2,310,824)
|
$
3,402,401
|
|
$
(5,015,362)
|
Add:
|
|
|
|
|
|
|
Amortization of
intangible assets
|
713,262
|
|
209,038
|
1,285,245
|
|
398,319
|
Depreciation of
building, property and equipment
|
34,917
|
|
36,966
|
70,433
|
|
69,970
|
Restructuring
expense/other
|
688,829
|
|
-
|
1,303,319
|
|
-
|
Share based
compensation
|
1,095,813
|
|
2,485,980
|
2,037,506
|
|
4,212,902
|
Adjusted net income
(loss)
|
$
4,646,346
|
|
$
421,160
|
$
8,098,904
|
|
$
(334,171)
|
"Adjusted net income (loss)" per share is calculated as
Adjusted net income (loss) 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 six months ended
June 30, 2023 and 2022.
|
Three months ended
June 30,
|
Six months ended
June 30,
|
In CAD
$
|
2023
|
|
2022
|
2023
|
|
2022
|
|
|
|
|
|
|
|
Cash from operating
activities
|
$
1,945,639
|
|
$
(3,619,877)
|
$
7,263,567
|
|
$
(2,274,911)
|
Less: Cash used in
investing activities
|
|
|
|
|
|
|
Purchase of building,
property and equipment
|
(2,930)
|
|
(13,320)
|
(4,213)
|
|
(86,407)
|
Additions to
intangible assets
|
(1,369,002)
|
|
(879,719)
|
(2,561,099)
|
|
(1,527,901)
|
Free cash
flow
|
$
573,707
|
|
$
(4,512,916)
|
$
4,698,255
|
|
$
(3,889,219)
|
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 six months ended June 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 2023, the launch of new features and partnerships,
and 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 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. 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