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Payfare generated net income of $4.5 million, and Adjusted net income per share1 of $0.17 in Q3 2024
TORONTO, Nov. 6, 2024 /PRNewswire/ - Payfare Inc. ("Payfare" or the "Company") (TSX: PAY) (OTCQX: PYFRF), a leading international Earned Wage Access ("EWA") company powering instant access to earnings 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, 2024. 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 2024 Highlights:
Conference Call
Management will be hosting a conference call on Wednesday, November 6, 2024, at 6:30 PM ET to discuss the Company's financial results for the third quarter of 2024. A short presentation in connection with the conference call will be made available ahead of time 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 (289) 514-5100 or 1-800-717-1738. 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 6, 2024. To listen to the recording, call (289) 819-1325 or 1-888-660-6264 and enter passcode 70127#.
About Payfare (TSX:PAY, OTCQX: PYFRF)
Payfare is a leading, international Earned Wage Access ("EWA") company powering instant access to earnings through an award-winning digital banking platform for today's workforce. Payfare partners with leading e-commerce marketplaces, payroll platforms, and employers to provide financial security and inclusion for all workers.
1Non-IFRS and Supplementary Financial Measures
This press release contains references to "active users", "Total gross dollar value ("Total GDV"), "adjusted net income", "adjusted net income per share", "EBITDA", "Adjusted EBITDA", "free cash flow" and "gross profit", which are not measures prescribed by IFRS Accounting 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 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 gross dollar value ("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 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 regulatory matters, claim settlements, acquisition, divestiture, asset impairment charges and going public transaction.
The table below reconciles net income to EBITDA and Adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023.
Three Months Ended September 30, | Nine Months Ended September 30, | |||||
In CAD $ | 2024 | 2023 | 2024 | 2023 | ||
Net income | $ 4,463,222 | $ 4,810,360 | $ 14,467,608 | $ 8,212,761 | ||
Add: | ||||||
Current tax expense | 34,629 | 20,874 | 84,230 | 66,242 | ||
Finance income | (875,557) | (795,305) | (2,291,157) | (1,565,277) | ||
Other income | - | - | - | (9,397) | ||
Foreign exchange (gain) loss | 528,569 | (445,690) | (447,081) | (20,009) | ||
Amortization of intangible assets | 1,487,379 | 942,531 | 4,153,641 | 2,227,776 | ||
Depreciation of building, property and equipment | 25,734 | 17,812 | 79,733 | 87,615 | ||
EBITDA | 5,663,976 | 4,549,952 | 16,046,974 | 8,999,711 | ||
Adjustments: | ||||||
Restructuring expense/other | 514,924 | 706,185 | 1,563,513 | 2,009,504 | ||
Share based compensation | 1,596,831 | 1,040,863 | 2,766,769 | 3,078,369 | ||
Adjusted EBITDA | $ 7,775,731 | $ 6,297,000 | $ 20,377,256 | $ 14,087,584 |
"Adjusted net income" adjusts net income (loss) for amortization of intangible assets, depreciation of building, property & equipment, 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 regulatory matters, claim settlements, acquisition, divestiture, asset impairment charges and going public transaction.
The table below reconciles net income to Adjusted net income for the three and nine months ended September 30, 2024 and 2023.
Three Months Ended September 30, | Nine Months Ended September 30, | |||||
In CAD $ | 2024 | 2023 | 2024 | 2023 | ||
Net income | $ 4,463,222 | $ 4,810,360 | $ 14,467,608 | $ 8,212,761 | ||
Add: | ||||||
Amortization of intangible assets | 1,487,379 | 942,531 | 4,153,641 | 2,227,776 | ||
Depreciation of building, property and equipment | 25,734 | 17,182 | 79,733 | 87,615 | ||
Restructuring expense/other | 514,924 | 706,185 | 1,563,513 | 2,009,504 | ||
Share based compensation | 1,596,831 | 1,040,863 | 2,766,769 | 3,078,369 | ||
Adjusted net income | $ 8,088,090 | $ 7,517,121 | $ 23,031,264 | $ 15,616,025 |
"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 purchase of building, property and equipment and additions to intangible assets.
The table below reconciles cash from operating activities to free cash flow for the three and nine ended September 30, 2024 and 2023.
Three Months Ended September 30, | Nine Months Ended September 30, | |||||
In CAD $ | 2024 | 2023 | 2024 | 2023 | ||
Cash from operating activities | $ 7,327,321 | $5,300,226 | $ 26,431,141 | $ 14,603,936 | ||
Less: Cash used in investing activities | ||||||
Purchase of building, property and equipment | - | (15,495) | (41,252) | (19,708) | ||
Additions to intangible assets | (1,896,269) | (1,506,530) | (5,497,115) | (4,067,629) | ||
Free cash flow | $ 5,431,052 | $ 3,778,201 | $ 20,892,774 | $ 10,516,599 |
The Company defines "gross profit" as revenue less cost of services.
Additional information on these measures may be found under the heading "Definitions – IFRS, Additional GAAP and Non-GAAP Measures" in the interim MD&A for the three and nine months ended September 30, 2024 which is available under Payfare's profile on SEDAR+ at www.sedarplus.ca and is incorporated by reference to this press release.
Cautionary Statement Regarding Forward-Looking Information
This press release also 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 the Company's future financial conditions, results of operations, plans, objectives, performance or business developments and includes statements on rapid international expansion opportunities and achieving global scale efficiently and effectively, achieving profitability, expansion into the earned wage access vertical for hourly paid employees, the actual timing for the non-renewal and eventual termination of the Company's services agreement with DoorDash and the anticipated material impact on future revenues, earnings, key performance indicators and Non-GAAP measures, potential new EWA programs in both the gig economy and employee verticals and aggregate potential new GDV opportunities being able to mitigate the impact of the non-renewal of the agreement with DoorDash, and the strategic review process to explore and evaluate potential options for the Company to enhance value, support conversion of potential new opportunities and alleviate concentration risks. 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, 2023 and factors discussed from time to time in Payfare's filings with the Canadian Securities Authorities, copies of which can be found under Payfare's profile on the SEDAR+ website at www.sedarplus.ca. Other factors that could cause actual results or events to differ materially include the inability of Payfare to launch its new programs or platforms including for earned wage access in a timely manner, the lack of experience or resources to enter into the EWA vertical, the regulatory uncertainty and constraints around EWA services, the economic viability of new programs and platforms, the inability to scale Payfare's operations to manage the increased volume of new cardholder sign-ups, active users or transactions, loss or termination of existing service agreements with one of its large gig platform clients, the impact of an inflationary recession and rising costs of goods and services on Payfare's business model, Payfare's ability to finance and support new programs and platforms, a general decline in the credit markets or gig economy in North America, cybersecurity incidents or data breaches impacting the Company's operations, reputation, or subjecting the Company to regulatory or legal action, the availability of talent and the retention of employees to support Payfare's plans, industry competitors who may have superior technology or are quicker to take advantage of certain market opportunities, the non-renewal of the agreement with DoorDash being either expedited or delayed in comparison to current expectations, new client opportunities taking longer to execute and therefore delaying the mitigation impacts sought by the Company, and implications from any decisions or outcome from the Company's current strategic review process. Accordingly, readers should not place undue reliance on forward-looking information.
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SOURCE Payfare Inc.