# EDGAR Filing Document

**Accession Number:** 0001858257
**File Stem:** 0000950170-25-104402
**Filing Date:** 2025-8
**Character Count:** 167808
**Document Hash:** 6bfdb414f1a72a78ef7cf18e5483ef54
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000950170-25-104402.hdr.sgml**: 20250807

**ACCESSION NUMBER**: 0000950170-25-104402

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 75

**CONFORMED PERIOD OF REPORT**: 20250630

**FILED AS OF DATE**: 20250807

**DATE AS OF CHANGE**: 20250806

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** AvidXchange Holdings, Inc.
- **CENTRAL INDEX KEY:** 0001858257
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-PREPACKAGED SOFTWARE [7372]
- **ORGANIZATION NAME:** 06 Technology
- **EIN:** 000000000
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-40898
- **FILM NUMBER:** 251191181

**BUSINESS ADDRESS:**
- **STREET 1:** 1210 AVIDXCHANGE LANE
- **CITY:** CHARLOTTE
- **STATE:** NC
- **ZIP:** 28206
- **BUSINESS PHONE:** 8005609305

**MAIL ADDRESS:**
- **STREET 1:** 1210 AVIDXCHANGE LANE
- **CITY:** CHARLOTTE
- **STATE:** NC
- **ZIP:** 28206

?xml version='1.0' encoding='ASCII'? 10-Q

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

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**FORM** 10-Q

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**(Mark One)**

☒ **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** 

**For the quarterly period ended** **June 30,** 2025

**OR**

☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the transition period from ________________ to ________________.**

**Commission File Number:** 001-40898

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AvidXchange Holdings, Inc.

**(Exact name of registrant as specified in its charter)**

------

---

| | |
|:---|:---|
| Delaware | 86-3391192 |
| **(State or other jurisdiction of incorporation or organization)** | **(I.R.S. Employer Identification No.)** |
| 1210 AvidXchange Lane Charlotte**,** NC **28206** | 28206 |
| **(Address of principal executive offices)** | **(Zip Code)** |

---

**Registrant's telephone number, including area code: (**800**)** 560-9305

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Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol(s)** | **Name of each exchange on which registered** |
| Common Stock, $0.001 par value per share | AVDX | Nasdaq Global Select Market |

---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

---

| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☒ | Accelerated filer | ☐ |
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
| Emerging growth company | ☐ |  |  |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 4, 2025, the registrant had 207,698,753 shares of common stock, $0.001 par value per share, outstanding.

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**AvidXchange Holdings, Inc.**

**Form 10-Q**

**For the Quarterly Period Ended June 30, 2025**

**Table of Contents**

---

| | | |
|:---|:---|:---|
|  |  | &nbsp;&nbsp;&nbsp;**Page** |
| **PART I.** | [<u>FINANCIAL INFORMATION</u>](#balance_sheet) |  |
| Item 1. | [<u>Financial Statements (Unaudited)</u>](#balance_sheet) |  |
|  | [<u>Unaudited Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024</u>](#balance_sheet) | 1 |
|  | [<u>Unaudited Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2025 and 2024</u>](#income_statement) | 2 |
|  | <u>Unaudited Consolidated Statements of Changes in Stockholders' Equity for the Three and Six Months Ended June 30, 2025 and 2024</u> | 3 |
|  | [<u>Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024</u>](#cash_flow) | 4 |
|  | [<u>Notes to Unaudited Consolidated Financial Statements</u>](#notes_financials_financials) | 5 |
| Item 2. | [<u>Management's Discussion and Analysis of Financial Condition and Results of Operations</u>](#item_2_mda) | 19 |
| Item 3. | [<u>Quantitative and Qualitative Disclosures About Market Risk</u>](#item_3_market_risk) | 30 |
| Item 4. | [<u>Controls and Procedures</u>](#item_4_procedures) | 31 |
| **PART II.** | [<u>OTHER INFORMATION</u>](#part_ii_other_information) | 31 |
| Item 1. | [<u>Legal Proceedings.</u>](#part_ii_legal_proc) | 31 |
| Item 1A. | [<u>Risk Factors.</u>](#pii_item1a_risks) | 32 |
| Item 2. | [<u>Unregistered Sales of Equity Securities and Use of Proceeds.</u>](#pii_item_2) | 32 |
| Item 3. | [<u>Defaults Upon Senior Securities.</u>](#part_ii_default) | 32 |
| Item 4. | [<u>Mine Safety Disclosures.</u>](#part_ii_mine) | 32 |
| Item 5. | [<u>Other Information.</u>](#part_ii_item_5_other) | 32 |
| Item 6. | [<u>Exhibits.</u>](#pii_item6_exhibits) | 34 |
| Signatures | Signatures | 35 |

---

i

------

**PART I—FINANCIAL INFORMATION**

**Item 1. Financial Statements.**

**AvidXchange Holdings, Inc.**

**Unaudited Consolidated Balance Sheets**

*(in thousands, except share and per share data)*

---

| | | |
|:---|:---|:---|
|  | **As of June 30,** | **As of December 31,** |
|  | **2025** | **2024** |
| **Assets** |  |  |
| Current assets |  |  |
| &nbsp;&nbsp;Cash and cash equivalents | $335773 | $355637 |
| &nbsp;&nbsp;Restricted funds held for customers | 1148195 | 1250346 |
| &nbsp;&nbsp;Marketable securities | 71461 | 33663 |
| &nbsp;&nbsp;Accounts receivable, net of allowances of $4,362 and $4,279, respectively | 50988 | 51671 |
| &nbsp;&nbsp;Supplier advances receivable, net of allowances of $2,024 and $1,644 respectively | 18035 | 14080 |
| &nbsp;&nbsp;Prepaid expenses and other current assets | 15503 | 15317 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 1639955 | 1720714 |
| Property and equipment, net | 96632 | 97592 |
| Deferred customer origination costs, net | 29005 | 28119 |
| Goodwill | 165921 | 165921 |
| Intangible assets, net | 65235 | 71068 |
| Other noncurrent assets and deposits | 7087 | 6297 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total assets | $2003835 | $2089711 |
| **Liabilities and Stockholders' Equity** |  |  |
| Current liabilities |  |  |
| &nbsp;&nbsp;Accounts payable | $20482 | $15494 |
| &nbsp;&nbsp;Accrued expenses | 45094 | 46849 |
| &nbsp;&nbsp;Payment service obligations | 1148195 | 1250346 |
| &nbsp;&nbsp;Deferred revenue | 12747 | 13967 |
| &nbsp;&nbsp;Current maturities of lease obligations under finance leases | 36 | 103 |
| &nbsp;&nbsp;Current maturities of lease obligations under operating leases | 663 | 1207 |
| &nbsp;&nbsp;Current maturities of long-term debt | 4800 | 4800 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 1232017 | 1332766 |
| Long-term liabilities |  |  |
| &nbsp;&nbsp;Deferred revenue, less current portion | 10640 | 11856 |
| &nbsp;&nbsp;Obligations under finance leases, less current maturities | 63342 | 63025 |
| &nbsp;&nbsp;Obligations under operating leases, less current maturities | 1655 | 1969 |
| &nbsp;&nbsp;Long-term debt | 4300 | 4300 |
| &nbsp;&nbsp;Other long-term liabilities | 4331 | 3962 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 1316285 | 1417878 |
| Commitments and contingencies |  |  |
| Stockholders' equity |  |  |
| &nbsp;&nbsp;Preferred stock, $0.001 par value; 50,000,000 shares authorized, no shares issued and outstanding as of June 30, 2025 and December 31, 2024 | - | - |
| &nbsp;&nbsp;Common stock, $0.001 par value; 1,600,000,000 shares authorized as of June 30, 2025 and December 31, 2024; 207,695,309 and 204,335,860 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively | 208 | 204 |
| &nbsp;&nbsp;Additional paid-in capital | 1718132 | 1685644 |
| &nbsp;&nbsp;Accumulated deficit | (1030790) | (1014015) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' equity | 687550 | 671833 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and stockholders' equity | $2003835 | $2089711 |

---

The accompanying notes are an integral part of these unaudited consolidated financial statements.

------

**AvidXchange Holdings, Inc.**

**Unaudited Consolidated Statements of Operations**

*(in thousands, except share and per share data)*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| **Revenues** | $110570 | $105132 | $218512 | $210730 |
| Cost of revenues (exclusive of depreciation and amortization expense) | 30949 | 30426 | 61738 | 60759 |
| **Operating expenses** |  |  |  |  |
| Sales and marketing | 23068 | 19956 | 45579 | 39697 |
| Research and development | 26975 | 25008 | 52357 | 50912 |
| General and administrative | 33510 | 22635 | 62458 | 46895 |
| Impairment and write-off of intangible assets | - | - | - | 162 |
| Depreciation and amortization | 8479 | 9208 | 17148 | 18515 |
| &nbsp;&nbsp;Total operating expenses | 92032 | 76807 | 177542 | 156181 |
| &nbsp;&nbsp;Loss from operations | (12411) | (2101) | (20768) | (6210) |
| **Other income (expense)** |  |  |  |  |
| Interest income | 4480 | 5979 | 8621 | 12541 |
| Interest expense | (2010) | (3323) | (4016) | (6660) |
| &nbsp;&nbsp;Other income | 2470 | 2656 | 4605 | 5881 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Loss) income before income taxes | (9941) | 555 | (16163) | (329) |
| Income tax (benefit) expense | (477) | 119 | 612 | 244 |
| &nbsp;&nbsp;Net (loss) income | $(9464) | $436 | $(16775) | $(573) |
| &nbsp;&nbsp;Net (loss) income per share attributable to common stockholders, basic and diluted |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic | $(0.05) | $0.00 | $(0.08) | $0.00 |
| &nbsp;&nbsp;&nbsp;&nbsp;Diluted | $(0.05) | $0.00 | $(0.08) | $0.00 |
| &nbsp;&nbsp;Weighted average number of common shares used to compute net (loss) income per share attributable to common stockholders, basic and diluted |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic | 206933045 | 207025967 | 205982206 | 205961720 |
| &nbsp;&nbsp;&nbsp;&nbsp;Diluted | 206933045 | 210370559 | 205982206 | 205961720 |

---

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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**AvidXchange Holdings, Inc.**

**Unaudited Consolidated Statements of Changes in Stockholders' Equity**

*(in thousands, except share and per share data)*

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | **Additional Paid-in Capital** | **Accumulated Deficit** | **Total Stockholders' Equity** |
| **Balances at December 31, 2024** | 204335860 | $204 | $1685644 | $(1014015) | $671833 |
| Exercise of stock options | 82121 | - | 164 | - | 164 |
| Issuance of common stock upon vesting of restricted stock units, net of shares surrendered for taxes | 1777444 | 2 | (2) | - | - |
| Stock-based compensation expense | - | - | 14226 | - | 14226 |
| Stock-based compensation expense for Employee Stock Purchase Plan, or ESPP | - | - | 260 | - | 260 |
| Net loss | - | - | - | (7311) | (7311) |
| **Balances at March 31, 2025** | 206195425 | $206 | $1700292 | $(1021326) | $679172 |
| Exercise of stock options | 233132 | 1 | 1309 | - | 1310 |
| Issuance of common stock upon vesting of restricted stock units, net of shares surrendered for taxes | 1058912 | 1 | (1) | - | - |
| Issuance of common stock under ESPP | 207840 | - | 1447 | - | 1447 |
| Stock-based compensation expense | - | - | 14811 | - | 14811 |
| Stock-based compensation expense for ESPP | - | - | 274 | - | 274 |
| Net loss | - | - | - | (9464) | (9464) |
| **Balances at June 30, 2025** | 207695309 | $208 | $1718132 | $(1030790) | $687550 |
|  | **Common Stock** | **Common Stock** | **Additional Paid-in Capital** | **Accumulated Deficit** | **Total Stockholders' Equity** |
| **Balances at December 31, 2023** | 204084024 | $204 | $1678401 | $(1022160) | $656445 |
| Exercise of stock options | 493608 | - | 3168 | - | 3168 |
| Issuance of common stock upon vesting of restricted stock units | 1737736 | 2 | (2) | - | - |
| Stock-based compensation expense | - | - | 10766 | - | 10766 |
| Stock-based compensation expense for ESPP | - | - | 193 | - | 193 |
| Net loss | - | - | - | (1009) | (1009) |
| **Balances at March 31, 2024** | 206315368 | $206 | $1692526 | $(1023169) | $669563 |
| Exercise of stock options | 308435 | - | 2225 | - | 2225 |
| Issuance of common stock upon vesting of restricted stock units | 1028744 | 1 | (1) | - | - |
| Issuance of common stock under ESPP | 167351 | - | 1220 | - | 1220 |
| Stock-based compensation expense | - | - | 12117 | - | 12117 |
| Stock-based compensation expense for ESPP | - | - | 202 | - | 202 |
| Net income | - | - | - | 436 | 436 |
| **Balances at June 30, 2024** | 207819898 | $207 | $1708289 | $(1022733) | $685763 |

---

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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**AvidXchange Holdings, Inc.**

**Unaudited Consolidated Statements of Cash Flows**

*(in thousands)*

---

| | | |
|:---|:---|:---|
|  | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
|  | **2025** | **2024** |
| **Cash flows from operating activities** |  |  |
| Net loss | $(16775) | $(573) |
| Adjustments to reconcile net loss to net cash provided by operating activities |  |  |
| &nbsp;&nbsp;Depreciation and amortization expense | 17148 | 18515 |
| &nbsp;&nbsp;Amortization of deferred financing costs | 190 | 212 |
| &nbsp;&nbsp;Provision for credit losses | 1976 | 1481 |
| &nbsp;&nbsp;Stock-based compensation | 29571 | 23278 |
| &nbsp;&nbsp;Accrued interest | 638 | 822 |
| &nbsp;&nbsp;Impairment and write-off on intangible assets | - | 162 |
| &nbsp;&nbsp;Loss on write-off of fixed assets | 3 | - |
| &nbsp;&nbsp;Gain on lease buyout | (172) | - |
| &nbsp;&nbsp;Accretion of investments held to maturity | (629) | (2209) |
| &nbsp;&nbsp;Deferred income taxes | 247 | 178 |
| &nbsp;&nbsp;Changes in operating assets and liabilities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 184 | (3652) |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued interest on investments | 43 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | (186) | (2481) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other noncurrent assets | (980) | (839) |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred customer origination costs | (887) | (142) |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 4988 | (1378) |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue | (2436) | (2735) |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and other liabilities | (1631) | (11388) |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities | (686) | (323) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total adjustments | 47381 | 19501 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by operating activities | 30606 | 18928 |
| **Cash flows from investing activities** |  |  |
| Purchase of marketable securities held to maturity | (65329) | (98996) |
| Proceeds from maturity of marketable securities held to maturity | 28117 | 55996 |
| Purchases of equipment | (1324) | (1100) |
| Purchases of intangible assets | (9034) | (8087) |
| Supplier advances, net | (5431) | (4092) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities | (53001) | (56279) |
| **Cash flows from financing activities** |  |  |
| Repayments of long-term debt | - | (813) |
| Principal payments on finance leases | (81) | (150) |
| Proceeds from issuance of common stock | 1474 | 5393 |
| Proceeds from issuance of common stock under ESPP | 1447 | 1220 |
| Remittance of taxes upon vesting of restricted stock units | (209) | - |
| Payment of acquisition-related liability | (100) | (100) |
| Payment service obligations | (102151) | (385201) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in financing activities | (99620) | (379651) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net decrease in cash, cash equivalents, and restricted funds held for customers | (122015) | (417002) |
| **Cash, cash equivalents, and restricted funds held for customers** |  |  |
| Cash, cash equivalents, and restricted funds held for customers, beginning of year | 1605983 | 1985630 |
| Cash, cash equivalents, and restricted funds held for customers, end of period | $1483968 | $1568628 |
| **Supplementary information of noncash investing and financing activities** |  |  |
| Property and equipment purchases in accounts payable and accrued expenses | $- | $19 |
| Interest paid on notes payable | - | 2673 |
| Interest paid on finance leases | 3000 | 2954 |
| Cash paid for income taxes | 369 | 254 |

---

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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**AvidXchange Holdings, Inc.**

**Notes to the Unaudited Consolidated Financial Statements**

*(in thousands, except share and per share data)*

**1. Formation and Business of the Company**

AvidXchange, Inc. was incorporated in the state of Delaware in 2000. In July 2021, the company consummated a reorganization by interposing a holding company between AvidXchange, Inc. and its stockholders. After the reorganization, all of the stockholders of AvidXchange, Inc. became stockholders of AvidXchange Holdings, Inc. and AvidXchange, Inc. became a wholly owned subsidiary of AvidXchange Holdings, Inc. To accomplish the reorganization, the company formed AvidXchange Holdings, Inc., which was incorporated in Delaware on January 27, 2021, and AvidXchange Merger Sub, Inc. ("Avid Merger Sub") as a wholly owned subsidiary of AvidXchange Holdings, Inc. The Company merged AvidXchange, Inc. with and into Avid Merger Sub, with AvidXchange, Inc. as the surviving entity, by issuing identical shares of stock of AvidXchange Holdings, Inc. to the stockholders of AvidXchange, Inc. in exchange for their equity interest in AvidXchange, Inc.

The merger was considered a transaction between entities under common control. Upon the effective date of the reorganization, July 9, 2021, AvidXchange Holdings, Inc. recognized the assets and liabilities of AvidXchange, Inc. at their carrying values within its financial statements.

AvidXchange Holdings, Inc. and its wholly owned subsidiaries are collectively referred to as "AvidXchange" or "the Company" in the accompanying unaudited consolidated financial statements after the reorganization.

On May 6, 2025, AvidXchange Holdings, Inc. entered into an Agreement and Plan of Merger (the "Merger Agreement") with Arrow Borrower 2025, Inc., a Delaware corporation ("Parent"), and Arrow Merger Sub 2025, Inc., a Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub"), pursuant to which, subject to the satisfaction or waiver of the conditions set forth therein, Merger Sub will merge with and into the Company (the "Merger"), with the Company surviving the Merger as a wholly owned subsidiary of Parent. Parent and Merger Sub are subsidiaries of an investment fund affiliated with TPG Global, LLC. Corpay, Inc. will also be a direct or indirect investor in Parent. On July 2, 2025, the Company received notice from the Federal Trade Commission of the early termination of the required 30-day waiting period under the HSR Act. In addition, on June 30, 2025, the Company received clearance pursuant to Council Regulation (EC) No. 139/2004 (the EU Merger Regulation) from the European Commission. Completion of the Merger remains subject to the satisfaction of the remaining closing conditions under the Merger Agreement, including receipt of certain money transfer approvals and approval by the Company's stockholders. If the Merger is consummated, the common stock of the Company will be delisted from Nasdaq and deregistered under the Securities Exchange Act of 1934, as amended, and the Company will become a privately held company.

AvidXchange provides accounts payable ("AP") automation software and payment solutions for middle market businesses and their suppliers. The Company provides solutions and services throughout North America spanning multiple industries including real estate, community association management, construction, financial services (including banks and credit unions), healthcare facilities, social services, education, media, and hospitality.

**2. Summary of Significant Accounting Policies**

## **Basis of Consolidation and Presentation** 
The accompanying unaudited consolidated financial statements include the accounts of the Company and have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. The unaudited consolidated financial statements have been prepared on the same basis as the annual unaudited consolidated financial statements and reflect all normal and recurring adjustments that are, in the opinion of management, necessary for a fair statement of the Company's financial position, results of operations, changes in stockholders' equity, and cash flows for the periods presented. The results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025 or for any other future annual or interim period. The unaudited consolidated balance sheets as of December 31, 2024 included herein was derived from the audited financial statements as of that date, but does not include all disclosures including certain notes required by U.S. GAAP on an annual reporting basis. All significant intercompany accounts and transactions have been eliminated. There are no items of comprehensive income.

These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2024.

## **Use of Estimates** 
The preparation of unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities as of and during the reporting period. The Company bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. Significant estimates reflected in these unaudited consolidated financial statements include, but are not limited to, the allowance for credit

------

**AvidXchange Holdings, Inc.**

**Notes to the Unaudited Consolidated Financial Statements**

*(in thousands, except share and per share data)*

losses and returns, useful lives assigned to fixed and intangible assets, capitalization of internal-use software, deferral of customer origination costs, the fair value of intangible assets acquired in a business combination, the fair value of goodwill, and the recoverability of deferred income taxes. The Company assesses estimates on an ongoing basis; however, actual results could materially differ from those estimates.

## **Proposed Plan of Merger** 
On May 6, 2025, the Company entered into the Merger Agreement. The Company expects to incur additional expenses relating to the Merger, such as legal, accounting, financial advisory, printing and other professional services fees, as well as other customary payments. During the three and six months ended June 30, 2025, in connection with the Merger, the Company incurred approximately $6,450 and $8,590, respectively, of transaction-related expenses, reported in general and administrative expense in the Company's unaudited consolidated statements of operations. In the event that the Merger is terminated under certain circumstances set forth in the Merger Agreement, the Company may also be required to pay a termination fee to Parent of $78,000, or may be entitled to receive a termination fee of $133,000 from Parent.

## **Segments** 
The Company operates and manages its business as one reportable segment, which is the same as the operating segment as defined under FASB Accounting Standards Codification ("ASC") Topic 280, Segment Reporting. The segment's business operations, policies, and financial statements are fully aligned with those of the consolidated company that are included within the unaudited consolidated financial statements. The Company's Chief Executive Officer, who is the chief operating decision maker, reviews financial information on a consolidated basis for purposes of making decisions regarding allocating resources and assessing performance. All tangible assets are held in the United States and all revenue is generated in the United States. Refer to "Concentrations" below and Note 3 "Revenue from Contracts with Customers" for additional entity-wide disclosures. There are no additional significant revenue or expense categories reviewed by the Company's Chief Executive Officer other than those already presented on the Company's unaudited consolidated financial statements. No additional reconciliations are necessary because all significant expense and revenue data aligns with the unaudited consolidated financial statements.

## **Concentrations** 
*Significant Services*

A substantial portion of the Company's revenue is derived from interchange fees earned on payment transactions processed as virtual commercial cards ("VCC"). The Company utilizes service providers to process these transactions. Revenue from one service provider represented 27% of total revenue for both the three months ended June 30, 2025 and 2024, and 30% and 20% of total revenue for the six months ended June 30, 2025 and 2024, respectively. Accounts receivable from this service provider represented 39% and 46% of accounts receivable, net as of June 30, 2025 and December 31, 2024, respectively. Revenue from a second provider represented 18% and 19% of total revenue for the three months ended June 30, 2025 and 2024, respectively, and 15% and 26% of total revenue for the six months ended June 30, 2025 and 2024, respectively. Accounts receivable from this second service provider represented 10% and 3% of accounts receivable, net as of June 30, 2025 and December 31, 2024, respectively.

Future regulation or changes by the card brand payment networks could have a substantial impact on interchange rates and the Company's revenue from VCC transactions. If interchange rates decline, whether due to actions by the card brand payment networks or future regulation, or if merchant/suppliers elect to receive payments that result in lower or no interchange revenue, such as check, or apply fees in consideration of accepting electronic forms of payment, the Company's total operating revenues, operating results, prospects for future growth and overall business could be materially affected. The Company's revenue from VCC transactions is also impacted by fees charged by service providers to process our VCC transactions.

## **Restructuring costs** 
During the fourth quarter of 2023, the Company initiated a restructuring plan to generate cost savings and improve effectiveness of the organization which resulted in a reduction in the Company's U.S. workforce. The plan was implemented in the fourth quarter of 2023 and completed in the second quarter of 2024. The Company recorded restructuring costs of $1,157 in the six months ended June 30, 2024, and $3,037 cumulatively, from one-time severance charges in connection with this plan. In the three and six months ended June 30, 2025, the Company recorded $(50) and $618, respectively, in restructuring (gain) costs not associated with this plan. Restructuring costs are included in general and administrative expenses in the unaudited consolidated statements of operations.

## **Cash and Cash Equivalents** 
The Company considers all highly liquid investments with a maturity of three months or less at the time of purchase that are not recorded as marketable securities to be cash equivalents. The carrying values of cash and cash equivalents approximate their fair

------

**AvidXchange Holdings, Inc.**

**Notes to the Unaudited Consolidated Financial Statements**

*(in thousands, except share and per share data)*

values due to the short-term nature of these instruments. Cash in the Company's bank accounts may exceed federally insured limits.

## **Marketable Securities** 
Marketable securities consist of short-term investments in agency and corporate bonds, commercial paper, and various U.S. government backed securities. To reflect its intention, the Company classifies its marketable securities as held-to-maturity at the time of purchase. As a result, the marketable securities are recorded at amortized cost and any gains or losses realized upon maturity are reported in other income (expense) in the unaudited consolidated statements of operations.

## **Accounts Receivable, Supplier Advances and Allowance for Credit Losses** 
Accounts receivable represent amounts due from the Company's VCC service providers for interchange fees earned and from buyer customers who have been invoiced for the use of the Company's software offerings, but for whom payments have not been received. Accounts receivable from VCC service providers are presented net of an allowance for returns for transactions subsequently canceled that do not ultimately settle through the payment network. Accounts receivable from buyer customers are presented net of allowances for credit losses and returns. The Company estimates expected credit losses related to accounts receivable balances based on a review of available and relevant information including current economic conditions, projected economic conditions, historical loss experience, account aging, and other factors that could affect collectability. Expected credit losses are determined individually or collectively depending on whether the accounts receivable balances share similar risk characteristics. The allowance for returns for VCC transactions subsequently canceled are assessed at each period end and recognized as a reduction of revenue. The allowances for buyer customer's credit losses and returns are assessed at each period end and are recognized as bad debt expense within general and administrative expenses in the unaudited consolidated statements of operations and as a reduction of revenue, respectively. A buyer customer receivable is written off against the allowance when it is determined that all collection efforts have been exhausted and the potential for recovery is considered remote. Historically, losses related to customer nonpayment have been immaterial and most of the accounts receivable balances have been current.

Supplier advances receivable represent amounts that have been advanced as part of the AvidXchange's Payment Accelerator product but have not been collected. Advances are collected from the buyer customer once the buyer initiates the transfer of funds for the invoice that was previously advanced. If the buyer does not transfer the funds as expected, the Company is exposed to losses. The Company's experience with such delinquencies by buyer customers has been immaterial to date. Supplier advances receivable are stated net of expected credit losses. The Company estimates expected credit losses related to supplier advances receivable balances based on a review of available and relevant information including current economic conditions, projected economic conditions, historical loss experience, account aging, and other factors that could affect collectability. Expected credit losses are determined individually or collectively depending on whether the accounts receivable balances share similar risk characteristics. The allowance for credit losses for supplier advances is assessed at period end and the measurement of the allowance is included as a component of cost of revenues in the Company's unaudited consolidated statements of operations. Supplier advances receivable balances are charged against the allowance when the Company determines it is probable the receivable will not be recovered after collection efforts and legal actions have been exhausted. The Company classifies the fees charged to supplier customers as cash flows from operating activities with the remaining accelerated advancements and recoupments classified as cash flows from investing activities on a net basis within the unaudited consolidated statements of cash flows.

## **Restricted Funds Held for Customers and Payment Service Obligations** 
Restricted funds held for customers and the corresponding liability of payment service obligations represent funds that are collected from customers for payments to their suppliers. The Company determines the balances of restricted funds held for customers, and the corresponding payment services obligations, by reconciling cash held by financial institutions and the corresponding payments in transit at the end of each period. The balance of these obligations may fluctuate from period to period depending on the timing of the period end and the timing of when outstanding payments clear with financial institutions. The Company is registered as a money services business with the Financial Crimes Enforcement Network. Payment service obligations are comprised of outstanding daily transaction liabilities per state regulatory average daily transaction liability reporting requirements and other unregulated settlements with payees, which do not constitute a regulatory liability event under reporting requirements.

The Company historically transmitted buyer customer funds using a legacy model pursuant to which buyer customer funds were held in trust accounts that were maintained and operated by a trustee pending distribution to suppliers in accordance with instructions provided through the Company's platform. The Company is not the trustee or beneficiary of the trusts which hold these buyer deposits; accordingly, the Company does not record these assets and offsetting liabilities on its unaudited consolidated balance sheets. The Company has largely phased out this model although certain banks that resell its products and

------

**AvidXchange Holdings, Inc.**

**Notes to the Unaudited Consolidated Financial Statements**

*(in thousands, except share and per share data)*

services continue to leverage a similar structure. The Company contractually earns interest on funds held for certain buyers. The amount of Company and bank customer funds held in all trust-related and similar accounts was approximately $50,872 and $14,618 as of June 30, 2025 and December 31, 2024, respectively.

The Company has transitioned most payment transmission activity to the money transmitter license model and obtained a money transmitter license in all states which require licensure. This model enables AvidXchange to provide commercial payment services to businesses through its "for the benefit of customer" bank accounts, also known as FBO, that are restricted for such purposes. The restricted funds held for customers are restricted for the purpose of satisfying the customer's supplier obligations and are not available for general business use by the Company. The Company maintains these funds in liquid cash accounts and contractually earns interest on these funds held for customers. These funds are recognized as a restricted cash asset and a corresponding liability is recorded for payments due to their suppliers on the Company's unaudited consolidated balance sheets. Restricted funds held for customers are included in the cash and cash equivalents on the unaudited consolidated statements of cash flows.

## **Stock-Based Compensation** 
Compensation cost for stock-based awards issued to employees and outside directors, including stock options and restricted stock units ("RSUs"), is measured at fair value on the date of grant.

The fair value of stock options is estimated using a Black-Scholes option-pricing model, while the fair value of RSUs is determined using the fair value of the Company's underlying common stock. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period of the award. Stock-based compensation expense for RSUs with performance conditions is recognized over the requisite service period on an accelerated-basis as long as the performance condition in the form of a specified liquidity event is probable to occur. In the case of equity issued in lieu of cash bonus, expense is recognized in the period the cash bonus was earned.

## **Nonqualified Deferred Compensation Plan** 
The Company adopted a nonqualified, deferred compensation plan effective October 1, 2015, which is an unfunded plan created for the benefit of a select group of management or highly compensated employees. The purpose of the plan is to attract and retain key employees by providing them with an opportunity to defer receipt of a portion of their compensation. It is exempt from the participation, vesting, funding, and fiduciary requirements set forth in Title I of the Employee Retirement Income Security Act of 1974, as amended. Deferred amounts are not subject to forfeiture and are deemed invested among investment funds offered under the nonqualified deferred compensation plan, as directed by each participant.

The Company has established a 'rabbi trust' that serves as an investment to shadow the deferred compensation plan liability. The assets of the rabbi trust primarily consist of trust-owned life insurance policies which are recorded at cash surrender value and are included in other noncurrent assets. The change in cash surrender value of the life insurance policies in the rabbi trust is recorded in other income (expense) on the Company's unaudited consolidated statements of operations. The assets of the rabbi trust are general assets of the Company and as such, would be subject to the claims of creditors in the event of bankruptcy or insolvency. The related deferred compensation liabilities are included in other long-term liabilities.

The Company has recorded these assets and liabilities at their fair value. In association with this plan, $2,951 and $2,756 were included in other noncurrent assets and $2,615 and $2,393 were included in noncurrent liabilities as of June 30, 2025 and December 31, 2024, respectively, on the Company's unaudited consolidated balance sheets.

**Contingent Liabilities**

Contingent liabilities require significant judgment in estimating potential losses for legal claims. The Company reviews significant new claims and litigation for the probability of an adverse outcome. Estimates are recorded as liabilities when it is probable that a liability has been incurred and the amount of the loss is reasonably estimable. Disclosure is required when there is a reasonable possibility that the ultimate loss will materially exceed the recorded provision. Contingent liabilities are often resolved over long periods of time. Estimating probable losses requires analysis of multiple forecasts that often depend on judgments about potential actions by third parties such as regulators, and the estimated loss can change materially as individual claims develop.

## **New Accounting Pronouncements** 
*Accounting Pronouncements Issued but Not Yet Adopted*

In December 2023, the FASB issued ASU 2023-09, *Improvements to Income Tax Disclosures*, which requires significant additional disclosures about income taxes, primarily focused on the disclosure of income taxes paid and the rate reconciliation table. The new guidance will be applied prospectively (with retrospective application permitted) and is effective for calendar year-end public business entities in the 2025 annual period and in 2026 for interim periods, with early adoption permitted. The Company is assessing the impact of this guidance on its financial statements.

------

**AvidXchange Holdings, Inc.**

**Notes to the Unaudited Consolidated Financial Statements**

*(in thousands, except share and per share data)*

In November 2024, the FASB issued ASU 2024-03, *Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.* This standard is intended to require more detailed disclosures about specified categories of expenses included in certain expense captions presented on the face of the income statement. This ASU is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The amendments may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. The Company is assessing the impact of this guidance on its financial statements.

**3. Revenue from Contracts with Customers**

## **Disaggregation of Revenue** 
The table below presents the Company's revenues disaggregated by type of services performed.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Software revenue | $32927 | $29914 | $63865 | $59602 |
| Payment revenue | 76681 | 74183 | 152621 | 149385 |
| Services revenue | 962 | 1035 | 2026 | 1743 |
| Total revenues | $110570 | $105132 | $218512 | $210730 |

---

## **Contract Assets and Liabilities** 
The Company's rights to payments are not conditional on any factors other than the passage of time, and as such, the Company does not have any contract assets. Contract liabilities consist primarily of advance cash receipts for services (deferred revenue) and are recognized as revenue when the services are provided.

The table below presents information on accounts receivable and contract liabilities.

---

| | | |
|:---|:---|:---|
|  | **As of June 30, 2025** | **As of December 31, 2024** |
| Trade accounts receivable, net | $20479 | $19989 |
| Payment processing receivable, net | 30509 | 31682 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net | $50988 | $51671 |
| Contract liabilities | $23387 | $25823 |

---

Significant changes in the contract liabilities balance are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Revenue recognized included in beginning of period balance | $(3217) | $(3018) | $(5341) | $(6409) |
| Cash received, excluding amounts recognized as revenue during the period | 2049 | 1614 | 4167 | 3674 |
| Adjustments not recognized as revenue | (1262) | - | (1262) | - |

---

The tables below present a summary of changes in the Company's allowances for credit losses and returns for the six months ended June 30, 2025:

---

| | | | |
|:---|:---|:---|:---|
|  | **Accounts Receivable** | **Accounts Receivable** |  |
|  | **Allowance for Credit Losses** | **Allowance for Returns** | **Supplier Advances Receivable Allowance** |
| Allowance balance, December 31, 2024 | $2498 | $1781 | $1644 |
| &nbsp;&nbsp;&nbsp;Amounts charged to contra revenue, cost of revenues and expenses | 500 | 120 | 1489 |
| &nbsp;&nbsp;&nbsp;Amounts written off as uncollectable | (537) | - | (1448) |
| &nbsp;&nbsp;&nbsp;Recoveries of amounts previously written off | - | - | 339 |
| &nbsp;&nbsp;&nbsp;Deduction released to revenue | - | - | - |
| Allowance balance, June 30, 2025 | $2461 | $1901 | $2024 |

---

------

**AvidXchange Holdings, Inc.**

**Notes to the Unaudited Consolidated Financial Statements**

*(in thousands, except share and per share data)*

---

| | | | |
|:---|:---|:---|:---|
|  | **Accounts Receivable** | **Accounts Receivable** |  |
|  | **Allowance for Credit Losses** | **Allowance for Returns** | **Supplier Advances Receivable Allowance** |
| Allowance balance, December 31, 2023 | $2142 | $2089 | $1333 |
| &nbsp;&nbsp;&nbsp;Amounts charged to contra revenue, cost of revenues and expenses | 286 | (105) | 654 |
| &nbsp;&nbsp;&nbsp;Amounts written off as uncollectable | (28) | - | (1216) |
| &nbsp;&nbsp;&nbsp;Recoveries of amounts previously written off | - | - | 572 |
| &nbsp;&nbsp;&nbsp;Deduction released to revenue | - | - | - |
| Allowance balance, June 30, 2024 | $2400 | $1984 | $1343 |

---

# **Transaction Price Allocated to Remaining Performance Obligations** 
Transaction price allocated to the remaining performance obligations represents contracted revenue that has not yet been recognized. These revenues are subject to future economic risks including customer cancellations, bankruptcies, regulatory changes and other market factors.

The Company applies the practical expedient in ASC Topic 606, *Revenue from Contracts with Customers* ("Topic 606"), paragraph 606-10-50-14(b) and does not disclose information about remaining performance obligations related to transaction and processing services that qualify for recognition in accordance with paragraph 606-10-55-18 of Topic 606. These contracts contain variable consideration for stand-ready performance obligations for which the exact quantity and mix of transactions to be processed are contingent upon buyer or supplier request. These contracts also contain fixed fees and non-refundable upfront fees; however, these amounts are not considered material to total consolidated revenue.

The Company's remaining performance obligation consists of contracts with financial institutions who are using the ASCEND solution. These contracts generally have a duration of two to five years and contain fixed maintenance fees that are considered fixed price guarantees. Remaining performance obligation consisted of the following:

---

| | | | |
|:---|:---|:---|:---|
|  | **Current** | **Noncurrent** | **Total** |
| As of June 30, 2025 | $15824 | $17910 | $33734 |
| As of December 31, 2024 | 15805 | 20946 | 36751 |

---

## **Contract Costs** 
The Company incurs incremental costs to obtain a contract, as well as costs to fulfill a contract with buyer customers that are expected to be recovered. These costs consist primarily of sales commissions incurred if a contract is obtained, and customer implementation related costs.

The Company utilizes a portfolio approach when estimating the amortization of contract acquisition and fulfillment costs. These costs are amortized on a straight-line basis over the expected benefit period of generally five years, which was determined by taking into consideration customer attrition rates, estimated terms of customer relationships, useful lives of technology, industry peers, and other factors. The amortization of contract fulfillment costs associated with implementation activities are recorded as cost of revenues in the Company's unaudited consolidated statements of operations. The amortization of contract acquisition costs associated with sales commissions that qualify for capitalization is recorded as sales and marketing expense in the Company's unaudited consolidated statements of operations. Costs to obtain or fulfill a contract are classified as deferred customer origination costs in the Company's unaudited consolidated balance sheets.

The following tables present information about deferred contract costs:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Capitalized sales commissions and implementation costs | $4039 | $3827 | $7193 | $6480 |
| **Amortization of deferred contract costs** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Costs to obtain contracts included in sales and marketing expense | $1830 | $1692 | $3591 | $3243 |
| &nbsp;&nbsp;&nbsp;Costs to fulfill contracts included in cost of revenue | $1342 | $1546 | 2716 | $3095 |

---

**4. Loss Per Common Share**

The following common share equivalent securities have been excluded from the calculation of weighted average common shares outstanding because the effect is anti-dilutive for the periods presented:

------

**AvidXchange Holdings, Inc.**

**Notes to the Unaudited Consolidated Financial Statements**

*(in thousands, except share and per share data)*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| **Anti-Dilutive Common Share Equivalents** | **2025** | **2024** | **2025** | **2024** |
| &nbsp;&nbsp;&nbsp;Stock options | 6996174 | 158920 | 6996174 | 7556543 |
| &nbsp;&nbsp;&nbsp;Restricted stock units | 13518979 | 102523 | 13518979 | 10986075 |
| &nbsp;&nbsp;&nbsp;Employee stock purchase plan | 63469 | 3988 | 63469 | 60450 |
| &nbsp;&nbsp;&nbsp;Total anti-dilutive common share equivalents | 20578622 | 265431 | 20578622 | 18603068 |

---

Basic and diluted net loss per common share is calculated as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Numerator: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Net loss | $(9464) | $436 | $(16775) | $(573) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss attributable to common stockholders | $(9464) | $436 | $(16775) | $(573) |
| Denominator: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Weighted-average common shares outstanding, basic | 206933045 | 207025967 | 205982206 | 205961720 |
| &nbsp;&nbsp;&nbsp;Weighted-average effect of potentially dilutive securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock options | - | 1322945 | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Restricted stock units | - | 2021647 | - | - |
| &nbsp;&nbsp;&nbsp;Weighted-average common shares outstanding, diluted | 206933045 | 210370559 | 205982206 | 205961720 |
| Net loss per common share, basic | $(0.05) | $0.00 | $(0.08) | $0.00 |
| Net loss per common share, diluted | $(0.05) | $0.00 | $(0.08) | $0.00 |

---

**5. Fair Value Measurements**

The Company's financial instruments consist of cash and cash equivalents, marketable securities, trade and supplier advances receivables, assets of the rabbi trust, AP, deferred compensation liabilities, and debt. The carrying amount of cash, trade and supplier advances receivables, and AP approximate fair value due to the short-term maturity. The estimated fair value of long-term debt is based on borrowing rates available during the period to the Company for similar debt issues. The fair value approximated the carrying value of long-term debt at the report date.

In accordance with applicable accounting standards, the Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.

The following is a brief description of those three levels:

---

| | |
|:---|:---|
| Level 1 | Observable inputs such as quoted market prices in active markets for identical assets or liabilities. |
| Level 2 | Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. |
| Level 3 | Unobservable inputs that reflect the reporting entity's own assumptions. The fair value for such assets and liabilities is generally determined using pricing models, discounted cash flow methodologies, or similar techniques that incorporate the assumptions a market participant would use in pricing the asset or liability. |

---

When more than one level of input is used to determine the fair value, the financial instrument is classified as Level 1, 2 or 3 according to the lowest level input that has a significant impact on the fair value measurement. The Company performs a review of the fair value hierarchy classification on an annual basis. Changes in the observability of valuation inputs may result in a reclassification of certain financial assets or financial liabilities within the fair value hierarchy.

## **Assets and Liabilities Measured at Fair Value on a Recurring Basis** 
The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level to classify them for each reporting period. This determination requires significant judgment.

The following tables present information about the Company's assets and liabilities that are measured at fair value on a recurring basis using the above categories, as of the periods presented.

------

**AvidXchange Holdings, Inc.**

**Notes to the Unaudited Consolidated Financial Statements**

*(in thousands, except share and per share data)*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of June 30, 2025** | **As of June 30, 2025** | **As of June 30, 2025** | **As of June 30, 2025** |
| **Description** | **Level 1** | **Level 2** | **Level 3** | **Total** |
| Cash equivalents |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Money market mutual funds <sup>(1)</sup> | $86368 | $- | $- | $86368 |
| Rabbi trust-owned life insurance policies (at cash surrender value) <sup>(2)</sup> | - | 2951 | - | 2951 |
| Total assets | $86368 | $2951 | $- | $89319 |
| Other long-term liabilities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Deferred compensation | $- | $2615 | $- | 2615 |
| Total liabilities | $- | $2615 | $- | $2615 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** |
| **Description** | **Level 1** | **Level 2** | **Level 3** | **Total** |
| Cash equivalents |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Money market mutual funds <sup>(1)</sup> | $72686 | $- | $- | $72686 |
| Rabbi trust-owned life insurance policies (at cash surrender value) <sup>(2)</sup> | - | 2756 | - | 2756 |
| Total assets | $72686 | $2756 | $- | $75442 |
| Other long-term liabilities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Deferred compensation | $- | $2393 | $- | 2393 |
| Total liabilities | $- | $2393 | $- | $2393 |

---

________________

(1) Money market funds are classified as cash equivalents in the Company's unaudited consolidated balance sheets. As short-term, highly liquid investments readily convertible to known amounts of cash with remaining maturities of three months or less at the time of purchase, the Company's cash equivalent money market funds have carrying values that approximate fair value.

(2) Fair value of insurance policies represents their cash surrender value based on the underlying investments in the account which is determined based on quoted prices for identical or similar financial instruments in active markets.

**6. Marketable Securities**

Marketable securities consist of agency and corporate bonds, commercial paper, and U.S. Treasury debt, and are classified as held-to-maturity. As the Company invests in short-term and high credit quality marketable securities, the Company expects to receive fixed par value without any loss of principle at the maturity of each security. Therefore, an allowance for expected credit losses is not recognized as of June 30, 2025 and December 31, 2024. The following presents information about the Company's marketable securities:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **As of June 30, 2025** | **As of June 30, 2025** | **As of June 30, 2025** | **As of June 30, 2025** | **As of June 30, 2025** | **As of June 30, 2025** |
| **Sector** | **Amortized Cost** | **Allowance for Credit Losses** | **Net Amortized Cost** | **Gross Unrealized Gains** | **Gross Unrealized Losses** | **Fair Value** |
| &nbsp;&nbsp;&nbsp;Agency | $3099 | $- | $3099 | $4 | $- | $3103 |
| &nbsp;&nbsp;&nbsp;Financial | 22409 | - | 22409 | 46 | (18) | 22437 |
| &nbsp;&nbsp;&nbsp;Government | 11402 | - | 11402 | - | (2) | 11400 |
| &nbsp;&nbsp;&nbsp;Industrial | 34551 | - | 34551 | 166 | (1) | 34716 |
| Total | $71461 | $- | $71461 | $216 | $(21) | $71656 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** |
| **Sector** | **Amortized Cost** | **Allowance for Credit Losses** | **Net Amortized Cost** | **Gross Unrealized Gains** | **Gross Unrealized Losses** | **Fair Value** |
| &nbsp;&nbsp;&nbsp;Financial | $33663 | $- | $33663 | $27 | $(54) | $33636 |
| Total | $33663 | $- | $33663 | $27 | $(54) | $33636 |

---

------

**AvidXchange Holdings, Inc.**

**Notes to the Unaudited Consolidated Financial Statements**

*(in thousands, except share and per share data)*

The fair value of marketable securities across all major sectors is classified as Level 1 within the Company's fair value hierarchy, as described in Note 5 "Fair Value Measurements", with the exception of commercial paper holdings in the Financial and Industrial sectors, which are classified as Level 2 and have an aggregate fair value of $2,704 as of June 30, 2025. As of December 31, 2024, the fair value of all marketable securities were classified as Level 2.

The following table presents maturities of the Company's marketable securities as of June 30, 2025:

---

| | |
|:---|:---|
|  | **Amortized Cost** |
| Due in one year or less | $40821 |
| Due after one year through five years | 30640 |
| Total | $71461 |

---

The following table presents information about the Company's investments that were in an unrealized loss position and for which an other-than-temporary impairment has not been recognized in earnings:

---

| | | |
|:---|:---|:---|
|  | **As of June 30, 2025** | **As of December 31, 2024** |
| Aggregate fair value of investments with unrealized losses <sup>(1)</sup> | $29589 | $10957 |
| Aggregate amount of unrealized losses | (21) | (54) |

---

_________________

(1) Investments have been in a continuous loss position for less than 12 months

**7. Intangible Assets and Goodwill**

## **Intangible Assets** 
The following table presents information about capitalized software development costs:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| **Capitalized software development costs** | **2025** | **2024** | **2025** | **2024** |
| Capitalized | $4572 | $4048 | $9034 | $8087 |
| Amortized | 4490 | 4449 | 9123 | 8867 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **As of June 30, 2025** | **As of June 30, 2025** | **As of June 30, 2025** |
|  | **Gross** | **Accumulated** |  |
|  | **Amount** | **Amortization** | **Net Amount** |
| Internally developed software | $127751 | $(101612) | $26139 |
| Non-compete | 6194 | (4966) | 1228 |
| Customer relationships | 72512 | (49788) | 22724 |
| Technology | 45791 | (34616) | 11175 |
| Trade name | 7748 | (3779) | 3969 |
| &nbsp;&nbsp;&nbsp;Total intangible assets | $259996 | $(194761) | $65235 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** |
|  | **Gross** | **Accumulated** |  |
|  | **Amount** | **Amortization** | **Net Amount** |
| Internally developed software | $118717 | $(92489) | $26228 |
| Non-compete | 6194 | (4557) | 1637 |
| Customer relationships | 72512 | (45827) | 26685 |
| Technology | 45791 | (33590) | 12201 |
| Trade name | 7748 | (3431) | 4317 |
| &nbsp;&nbsp;&nbsp;Total intangible assets | $250962 | $(179894) | $71068 |

---

Total amortization expense associated with identifiable intangible assets was as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Total amortization expense associated with identifiable intangible assets | $7349 | $7863 | $14867 | $15693 |

---

------

**AvidXchange Holdings, Inc.**

**Notes to the Unaudited Consolidated Financial Statements**

*(in thousands, except share and per share data)*

## **Impairment and write-off of intangible assets** 
Impairment and write-off expense related to internally developed software projects was as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Impairment and write-off of intangible assets | $- | $- | $- | $162 |

---

## **Goodwill** 
There were no changes in goodwill during the six months ended June 30, 2025.

**8. Leases and Leasing Commitments**

Supplemental cash flow information related to the Company's operating and finance leases was as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| **Cash paid for amounts included in the measurement of lease liabilities:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Financing cash flows for finance leases | $28 | $73 | $81 | $150 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating cash flows for finance leases | 1509 | 1486 | 3000 | 2954 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating cash flows for operating leases | 384 | 577 | 848 | 1146 |
| **Right of use assets obtained in exchange for new lease obligations:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Finance lease liabilities | - | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities | - | - | - | - |

---

The components of lease expense were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| **Lease expense** | **2025** | **2024** | **2025** | **2024** |
| Finance lease expense: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Amortization of right-of-use assets | $458 | $568 | $952 | $1156 |
| &nbsp;&nbsp;&nbsp;Interest on lease liabilities | 1667 | 1656 | 3331 | 3308 |
| Operating lease expense | 76 | 408 | 162 | 822 |
| Short-term lease expense | - | - | - | - |
| Variable lease expense | 16 | 74 | 59 | 148 |
| Total lease expense | $2217 | $2706 | $4504 | $5434 |

---

**9. Long-Term Debt**

Long-term debt as of June 30, 2025 and December 31, 2024 was as follows:

---

| | | |
|:---|:---|:---|
|  | **As of June 30, 2025** | **As of December 31, 2024** |
| Total principal due on promissory notes payable for land acquisition | $9100 | $9100 |
| Current portion of promissory notes | (4800) | (4800) |
| &nbsp;&nbsp;&nbsp;Long-term debt | $4300 | $4300 |

---

On August 8, 2024, the Company, through its wholly-owned subsidiaries, AvidXchange, Inc. and AFV Commerce, Inc. (the "Borrowers"), entered into a credit agreement (the "2024 Amended and Restated Credit Agreement") with KeyBank National Association ("KeyBank") to amend and restate in its entirety its previous senior secured credit facility (as amended, the "2022 Credit Agreement"), dated as of December 29, 2022. The Company repaid all amounts outstanding under the term loan facility under the 2022 Credit Agreement upon closing the 2024 Amended and Restated Credit Agreement. The 2024 Amended and Restated Credit Agreement has a term of five years and consists of a $150,000 5-year revolving credit facility (the "2024 Revolver").

Under the 2024 Amended and Restated Credit Agreement and subject to specific conditions, the Company may request, and the lenders have the right, but not the obligation, to increase the 2024 Revolver or add a term loan facility by an additional amount (for all such increases) not to exceed $150,000, for a total aggregate amount of $300,000. The 2024 Revolver may be used for working capital, for refinancing existing indebtedness, and for other general corporate purposes.

------

**AvidXchange Holdings, Inc.**

**Notes to the Unaudited Consolidated Financial Statements**

*(in thousands, except share and per share data)*

Letters of credit may be issued by KeyBank pursuant to the 2024 Amended and Restated Credit Agreement in an aggregate face amount up to $30,000 and the availability under the 2024 Revolver will be reduced by any outstanding letters of credit. As of June 30, 2025, no letters of credit were outstanding.

The maturity date for the 2024 Revolver is August 8, 2029. Interest only payments are required during the term, with the outstanding principal balance due in full upon maturity. Interest is payable quarterly. The Company may voluntarily pre-pay all or any part of the 2024 Revolver along with accrued interest and any applicable breakage costs, without premium or penalty.

Interest on the loans under the 2024 Amended and Restated Credit Agreement is equal to the daily simple secured overnight financing rate ("SOFR"), term SOFR or a base rate, plus an applicable margin. The applicable margin is between 2.0% and 2.5% for daily simple SOFR and term SOFR loans (plus a SOFR adjustment of 0.1%), and between 1.0% and 1.5% for base rate loans. The applicable margin fluctuates based on a leverage ratio that reflects the Company's consolidated funded indebtedness to the Company's consolidated EBITDA. The Company may elect one-, three- or six-month interest periods in connection with term SOFR. The base rate is equal to the higher of KeyBank's prime rate, the federal funds effective rate plus 0.5%, or one-month term SOFR plus 1.0%. For purposes of the 2024 Amended and Restated Credit Agreement, daily simple SOFR, term SOFR and the base rate will never be less than 0.5%.

The 2024 Amended and Restated Credit Agreement contains certain customary representations and warranties and affirmative and negative covenants. The affirmative covenants require the Company to provide the lenders with certain financial statements, budgets, compliance certificates and other documents and reports and to comply with certain laws. The negative covenants restrict the Company's ability to incur additional indebtedness, create additional liens on its assets, make certain investments, dispose of its assets or engage in a merger or other similar transaction or engage in transactions with affiliates, which are subject, in each case, to the various exceptions and conditions described in the 2024 Amended and Restated Credit Agreement. The negative covenants further restrict the Company's ability to make certain restricted payments, including the payment of dividends in certain circumstances and repurchase of common equity in excess of $50,000 shares in any fiscal year.

The 2024 Amended and Restated Credit Agreement also contains several financial covenants, measured on a consolidated basis. First, during the period commencing with the fiscal quarter ended June 30, 2024 through June 30, 2025, (a) there must be liquidity (which is defined as availability under the 2024 Revolver, plus unrestricted cash) that is more than the greater of (1) $35,000 and (2) 35% of the Revolving Amount, as defined in the 2024 Amended and Restated Credit Agreement, (b) as of the end of each such quarter, total revenue on a trailing four-quarter basis must be greater than the requirements set forth in the 2024 Amended and Restated Credit Agreement, and (c) for each period of four consecutive quarters, Consolidated EBITDA, as defined in the 2024 Amended and Restated Credit Agreement, must not be less than $10,000. Second, during the period commencing with the fiscal quarter ending September 30, 2025 until maturity, (i) the Leverage Ratio, as defined in the 2024 Amended and Restated Credit Agreement, must not exceed 3.00 to 1.00 at the end of each fiscal quarter and (ii) the Interest Coverage Ratio, as defined in the 2024 Amended and Restated Credit Agreement, must not be less than 3.00 to 1.00 at the end of each fiscal quarter. The Leverage Ratio must not exceed 3.50 to 1.00 during certain periods following an acquisition of a certain size. The Company was in compliance with its financial debt covenants as of June 30, 2025.

The 2024 Amended and Restated Credit Agreement also includes certain customary events of default. If an event of default occurs and is continuing, the lenders are entitled to take various actions, including the charging of a default rate of interest, accelerating the maturity of all loans and taking all actions permitted to be taken by a secured creditor with respect to the collateral for the 2024 Amended and Restated Credit Agreement and under applicable law.

The obligations under the 2024 Amended and Restated Credit Agreement are secured by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•substantially all of the tangible and intangible assets of the Company and its material subsidiaries, except for existing real estate, client funds, client funds accounts, and other excluded accounts (as such terms are defined in the 2024 Amended and Restated Credit Agreement), and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the capital stock of the Company's material subsidiaries.

Under the 2024 Amended and Restated Credit Agreement, the Company's wholly-owned subsidiaries, AvidXchange, Inc. and AFV Commerce, Inc., are the only borrowers, and AvidXchange Holdings, Inc. and certain subsidiaries of AvidXchange, Inc. and AFV Commerce, Inc. are co-guarantors.

## **Revolving Credit Facility** 
There was no balance outstanding under the 2024 Revolver as of June 30, 2025. The Company is required to pay on a quarterly basis a commitment fee of between 0.25% and 0.3% per annum as determined by the Leverage Ratio, with respect to the amount of the 2024 Revolver during the term of the agreement.

------

**AvidXchange Holdings, Inc.**

**Notes to the Unaudited Consolidated Financial Statements**

*(in thousands, except share and per share data)*

## **Deferred Financing Costs** 
The Company has $1,548 and $1,737 in deferred financing costs included in other noncurrent assets and deposits as of June 30, 2025 and December 31, 2024, respectively. Amortization of deferred financing costs was $95 and $106 for the three months ended June 30, 2025 and 2024, respectively, and $190 and $212 for the six months ended June 30, 2025 and 2024, respectively, which is presented in the unaudited consolidated statements of operations as interest expense.

# **Land Promissory Notes** 
The Company has two promissory notes executed in connection with the purchase of land parcels and improvements adjacent to its Charlotte, North Carolina headquarters campus. The aggregate outstanding principal amount was $9,100 as of June 30, 2025 and will be paid in two remaining annual payments of $4,800 and $4,300, plus accrued interest at 6.75%.

**10. Stockholders' Equity**

The holders of common stock are entitled to one vote for each share.

## **Authorized Shares** 
The Company is authorized to issue 1,600,000,000 shares of common stock, $0.001 par value per share, and 50,000,000 shares of preferred stock, $0.001 par value per share.

## **Common Stock** 
At June 30, 2025, the Company had reserved a total of 60,293,641 of its 1,600,000,000 shares of common stock for future issuance as follows:

---

| | |
|:---|:---|
|  | **As of June 30, 2025** |
| Outstanding stock options | 6996174 |
| Restricted stock units | 13518979 |
| Available for future issuance under stock award plans | 30181685 |
| Available for future issuance under employee stock purchase plan | 9596803 |
| Total common shares reserved for future issuance | 60293641 |

---

**Share Repurchase Program**

In August 2024, our board of directors authorized the repurchase of up to $100,000 of our outstanding shares of common stock (the "Share Repurchase Program"). Repurchases under the program may be made in the open market, in privately negotiated transactions or otherwise, including pursuant to a Rule 10b5-1 plan. The timing, price, and volume of the repurchases will be executed based on various market and legal factors, and subject to a $50,000 cap in any fiscal year pursuant to the terms of the 2024 Amended and Restated Credit Agreement. The share repurchase program will terminate upon the earlier of December 31, 2025 or the date on which the maximum dollar amount has been expended, but is subject to suspension, modification, or termination at any time at the Company's discretion.

During the three and six months ended June 30, 2025, the Company did not repurchase and subsequently retire any shares of common stock under the Share Repurchase Program. As of June 30, 2025, $50,000 remained available for future share repurchases under the Share Repurchase Program.

**11. Stock-Based Compensation**

# **Stock Plans** 
The Company maintains its 2021 Long-Term Incentive Plan ("2021 Plan") under which it grants stock awards to its employees, directors and non-employee third parties. On January 1, 2025, the number of shares of common stock available to issue under the 2021 Plan automatically increased by 10,216,793 shares. As of June 30, 2025, the Company had 30,181,685 shares of common stock allocated to the 2021 Plan but not yet issued or granted as an award.

The Company also maintains its 2021 Employee Stock Purchase Plan ("ESPP"), under which eligible employees may purchase the Company's common stock through accumulated payroll deductions. On January 1, 2025, the number of shares of common stock reserved for issuance under the ESPP automatically increased by 2,043,359. As of June 30, 2025, the number of shares of common stock reserved for issuance under the ESPP was 9,596,803.

## **Stock Options** 
Stock options granted under the Company's current and prior equity incentive plans have various vesting periods ranging from fully-vested on the date of grant to vesting over a period of three or four years. The term for each incentive stock option under

------

**AvidXchange Holdings, Inc.**

**Notes to the Unaudited Consolidated Financial Statements**

*(in thousands, except share and per share data)*

these plans is ten years from the grant date, or five years for a grant to a ten percent owner optionee, in each case assuming continued employment. The fair value of options granted is estimated on the date of grant using the Black-Scholes option-pricing model.

Stock option activity for the six months ended June 30, 2025 was as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Stock Options** | **Stock Options** | **Stock Options** | **Stock Options** |
|  | **Number of Stock Options Outstanding** | **Weighted Average Exercise Price** | **Weighted Average Remaining Contractual Life** | **Aggregate Intrinsic Value** |
| Balance as of December 31, 2024 | 7396102 | $9.02 | 6.51 | $14247 |
| Exercised | (315253) | 4.67 |  |  |
| Cancelled | (40909) | 9.00 |  |  |
| Expired | (43766) | 8.80 |  |  |
| Balance as of June 30, 2025 | 6996174 | $9.22 | 6.11 | $10012 |
| Vested and exercisable | 5743361 | $9.19 | 5.81 | $8849 |

---

As of June 30, 2025, the total unamortized stock-based compensation expense related to the unvested stock options was $4,997, which the Company expects to amortize over a weighted average period of 1.7 years.

## **Restricted Stock Units** 
RSUs have a vesting period of between one and four years. Any unvested RSUs are forfeited upon termination of employment. RSUs are valued based on the trading price of the Company's common stock at the date of grant. RSUs granted prior to the Company's IPO are valued at the estimated value of a share of common stock at the date of grant.

RSU activity for the six months ended June 30, 2025 was as follows:

---

| | | |
|:---|:---|:---|
|  | **Restricted Stock Units** | **Restricted Stock Units** |
|  | **Number of Restricted Stock Units Outstanding** | **Weighted Average Grant Date Fair Value** |
| Balance as of December 31, 2024 | 10098649 | $10.58 |
| Granted | 7020020 | 8.50 |
| Released | (2864678) | 10.57 |
| Cancelled | (735012) | 8.62 |
| Balance as of June 30, 2025 | 13518979 | $9.61 |

---

As of June 30, 2025, the total unamortized stock-based compensation expense related to the unvested RSUs was $115,929, which the Company will amortize over a weighted average period of 2.4 years.

## **Stock-Based Compensation Expense** 
Stock-based compensation expense from stock options and RSUs, reduced for actual forfeitures, was included in the following line items in the accompanying unaudited consolidated statements of operations:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Cost of revenues | $1949 | $1587 | $3889 | $2784 |
| Sales and marketing | 1540 | 1453 | 2937 | 2551 |
| Research and development | 3802 | 2924 | 7491 | 6582 |
| General and administrative | 7520 | 6153 | 14720 | 10966 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total | $14811 | $12117 | $29037 | $22883 |

---

## **Employee Stock Purchase Plan** 
Stock-based compensation expense for the ESPP is based on the estimated fair value of the option to purchase shares at a discount and uses grant date inputs including the purchase discount, expected contributions and stock price. Total ESPP expense recorded in the Company's unaudited consolidated statements of operations was as follows:

------

**AvidXchange Holdings, Inc.**

**Notes to the Unaudited Consolidated Financial Statements**

*(in thousands, except share and per share data)*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| ESPP expense | $274 | $202 | $534 | $395 |

---

**12. Income Taxes**

The Company's effective tax rate for the three months ended June 30, 2025 and 2024 was 4.8% and 21.4%, respectively. The Company's effective tax rate for the six months ended June 30, 2025 and 2024 was (3.8)% and (74.2)%, respectively. The Company's effective tax rate is driven by current state income taxes in taxable jurisdictions and changes in the Company's valuation allowances relative to pretax earnings.

For the six months ended June 30, 2025 and 2024, the Company has utilized the discrete effective tax rate method, as allowed by ASC 740-270-30-18, *Income Taxes—Interim Reporting*, to calculate its interim income tax provision. The discrete method is applied when the application of the estimated annual effective tax rate is impractical because it is not possible to reliably estimate the annual effective tax rate. The discrete method treats the year-to-date period as if it was the annual period and determines the income tax expense or benefit on that basis. The Company believes that, at this time, the use of this discrete method is more appropriate than the annual effective tax rate method as its full-year forecasted pre-tax income, relative to its year-to-date loss, has the potential to distort its estimated annual effective tax rate.

**13. Subsequent Events**

**Income Taxes**

On July 4, 2025, the President signed into law the One Big Beautiful Bill Act ("OBBBA" or the "Tax Act") extending key provisions of the 2017 Tax Cuts and Jobs Act including, but not limited to, federal bonus depreciation and deductions for domestic research and development expenditures. While the Company is evaluating the full effects of the legislation on its estimated annual effective tax rate and cash tax position, the Company expects that the legislation will likely not have a material impact on its financial statements. As the legislation was signed into law after June 30, 2025, it had no impact on the Company's operating results for the three and six months ended June 30, 2025.

------

# **Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.** 
*You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the unaudited interim financial statements and notes thereto included in this Quarterly Report on Form 10-Q and with our audited financial statements and notes thereto for the year ended December 31, 2024 and the related Management's Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K for the year ended December 31, 2024.*

**Cautionary Note Regarding Forward Looking Statements**

*The following discussion and other parts of this Quarterly Report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended, (the "Exchange Act") and the Private Securities Litigation Reform Act of 1995 (collectively with the Securities Act and the Exchange Act, the "Acts"). We intend for all such forward-looking statements to be covered by the applicable safe harbor provisions for forward-looking statements contained in the Acts. All statements other than statements of historical fact contained in this Quarterly Report, including statements regarding the expected timing, completion, and effects of the proposed merger transaction (the "Transaction") involving us, Arrow Borrower 2025, Inc. and Arrow Merger Sub 2025, Inc., our future operating results and financial position, our business strategy and plans, market growth, and our objectives for future operations, may constitute forward-looking statements. These statements are often identified by the use of words such as "believe," "may," "will," "estimate," "potential," "continue," "anticipate," "intend," "expect," "could," "would," "project," "plan," "target," and similar expressions or variations. The forward-looking statements in this Quarterly Report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, operating results, business strategy, short-term and long-term business operations and objectives. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of risks, uncertainties and assumptions, including (i) the timing, receipt and terms and conditions of any required governmental and regulatory approvals of the Transaction that could reduce anticipated benefits or cause the parties to abandon the Transaction; (ii) the possibility that the Company's stockholders may not approve the Transaction; (iii) the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement entered into pursuant to the Transaction; (iv) the risk that the parties to the merger agreement may not be able to satisfy the conditions to the Transaction in a timely manner or at all; (v) the risk of any litigation relating to the Transaction; (vi) the risk that the Transaction and its announcement could have an adverse effect on the ability of the Company to retain buyers and retain and hire key personnel and maintain relationships with buyers, suppliers, employees, stockholders and other business relationships and on the Company's operating results and business generally; (vii) the risk that the Transaction and its announcement could have adverse effects on the market price of the Company's common stock; (viii) the possibility that the parties to the Transaction may not achieve some or all of any anticipated benefits with respect to the Company's business and the Transaction may not be completed in accordance with the parties' expected plans or at all; (ix) the risk that restrictions on the Company's conduct during the pendency of the Transaction may impact the Company's ability to pursue certain business opportunities; (x) the possibility that the Transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; (xi) the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement, including in circumstances requiring the Company to pay a termination fee; (xii) the risk that the Company's stock price may decline significantly if the Transaction is not consummated; (xiii) the Company's ability to enter into new strategic relationships and to further develop existing strategic relationships, including relationships with accounting and enterprise resource planning software providers, financial institutions, payment processing and other service providers; (xiv) the Company's ability to develop or acquire and deploy new solutions; (xv) the Company's ability to raise capital and the terms of those financings; (xvi) the Company's ability to identify and respond to cybersecurity threats and incidents; (xvii) the risk posed by legislative, regulatory and economic developments affecting the Company's business; (xviii) general economic and market developments and conditions, including with respect to federal monetary policy, federal trade policy, interest rates, interchange rates, labor shortages and supply chain issues; and (xix) the other risk factors and cautionary statements described in Part II, Item 1A under the heading "Risk Factors" and in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, and other documents filed by the Company with the Securities and Exchange Commission ("SEC"). The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.*

*You should read this Quarterly Report on Form 10-Q, and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the SEC, with the understanding that our actual future results, performance, and events and circumstances may be materially different from what we expect.*

*In this Quarterly Report on Form 10-Q, the words "we," "our," "us," "AvidXchange," and "our Company" refer to AvidXchange, Inc. prior to our reorganization, and to AvidXchange Holdings, Inc. and its consolidated subsidiaries following the reorganization, unless the context requires otherwise.*

------

## **Overview** 
AvidXchange was founded in 2000 to serve the AP automation needs of the middle market. In 2012, in response to customer demand for more efficient payment methods, we launched the AvidPay Network. Since 2012, we have had substantial growth, both organic and through a series of strategic acquisitions allowing us to expand in the markets that we serve and enter new ones.

## **Proposed Plan of Merger** 
On May 6, 2025, we entered into an Agreement and Plan of Merger (the "Merger Agreement") with Arrow Borrower 2025, Inc., a Delaware corporation ("Parent"), and Arrow Merger Sub 2025, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent ("Merger Sub"), pursuant to which, subject to the satisfaction or waiver of the conditions set forth therein, Merger Sub will merge with and into the Company (the "Merger"), with the Company surviving the Merger as a wholly owned subsidiary of Parent. Parent and Merger Sub are subsidiaries of an investment fund affiliated with TPG Global, LLC. Corpay, Inc. will also be a direct or indirect investor in Parent. On July 2, 2025, we received notice from the Federal Trade Commission of the early termination of the required 30-day waiting period under the HSR Act. In addition, on June 30, 2025, we received clearance pursuant to Council Regulation (EC) No. 139/2004 (the EU Merger Regulation) from the European Commission. Completion of the Merger remains subject to the satisfaction of the remaining closing conditions under the Merger Agreement, including receipt of certain money transfer approvals and approval by our stockholders. The Merger is expected to close in the fourth quarter of 2025. If the Merger is consummated, the common stock of the Company will be delisted from Nasdaq and deregistered under the Securities Exchange Act of 1934, as amended, and the Company will become a privately held company. See Note 1 "Formation and Business of the Company" of our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

## **Our Business and Revenue Model** 
We sell our solutions through a hybrid go-to-market strategy that includes direct and indirect channels. Our direct sales force leverages their domain expertise in select verticals and over 270 referral relationships with integrated software providers, financial institutions and other partners to identify and attract buyers that would benefit from our AP software solutions and the AvidPay Network. Our indirect channel includes reseller partners and other strategic partnerships such as Mastercard, through MasterCard's B2B Hub, which includes Fifth Third Bank and Bank of America, and other financial institutions, such as KeyBank, and third-party software providers such as MRI Software, RealPage and Sage Software. Our referral and indirect channel partnerships provide us greater reach across the market to access a variety of buyers.

Our revenues are recurring in nature and are derived from multiple sources, predominantly through software revenue from our buyers and revenue from payments made to their suppliers. The table below represents our revenues disaggregated by type of service performed (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| **Disaggregation of Revenue:** | **2025** | **2024** | **2025** | **2024** |
| Software revenue | $32927 | $29914 | $63865 | $59602 |
| Payment revenue | 76681 | 74183 | 152621 | 149385 |
| Services revenue | 962 | 1035 | 2026 | 1743 |
| Total revenues | $110570 | $105132 | $218512 | $210730 |

---

Software revenue, payment revenue and services revenue are described below in the section titled "Components of Results of Operations."

## **Macroeconomic Environment's Impact on Revenue** 
Economic uncertainty regarding tariff and global trade policy, monetary policy, inflation and treasury yields drove sentiment during the first six months of 2025 and negatively impacted business confidence. With this uncertainty as a backdrop, we believe that certain of our customers continue to exhibit caution in their purchasing decisions. More broadly, we believe that certain of the verticals or sub-components of those verticals in which we operate have been and may continue to be more adversely impacted by the macroeconomic environment.

Tempered spending by prospects and customers impacts us primarily in two ways. First, tempered spending and a focus on costs can impact payment volumes, payment amounts, and payment type mix. The business metrics that best reflect this impact include transaction yield and total payment volume. Second, cautious spending impacts sales and is reflected, in part, in our software revenue as well as the number of invoices that we process. The business metric that best reflects this impact can be found in transactions processed.

As for potential changes in the interest rate environment, when rates move higher, our payment revenue and interest income, resulting from the funds we hold for buyers, tend to be positively impacted. Interest income, which is a component of our payment revenue, would be negatively impacted should the Federal Reserve elect to cut interest rates. Such changes could also lead to difficulty in comparing our current consolidated financial results to our results in future reporting periods.

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## **Key Financial and Business Metrics** 
We regularly review several financial and business metrics to measure our performance, identify trends affecting our business, prepare financial projections, and make strategic decisions. We believe that these key business metrics provide meaningful supplemental information for management and investors in assessing our historical and future operating performance. The calculation of the key metrics and other measures discussed below may differ from other similarly titled metrics used by other companies, securities analysts or investors.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Percentage** | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Percentage** |
|  | **2025** | **2024** | **Change** | **2025** | **2024** | **Change** |
| Transactions Processed | 20094193 | 19730167 | 1.8% | 39775912 | 39050282 | 1.9% |
| Transaction Yield | $5.50 | $5.33 | 3.2% | $5.49 | $5.40 | 1.7% |
| Total Payment Volume (in millions) | $21455 | $20617 | 4.1% | $42057 | $40484 | 3.9% |

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***Transactions processed***

We believe that transactions processed is an important measure of our business because it is a key indicator of the use by both buyers and suppliers of our solutions and our ability to generate revenue, since a majority of our revenue is generated based on transactions processed. We define transactions processed as the number of invoice transactions and payment transactions, such as invoices, purchase orders, checks, ACH payments and VCCs, processed through our platform during a particular period.

***Transaction yield***

We believe that transaction yield is an important measure of the value of our solutions to buyers and suppliers as we scale. We define transaction yield as the total revenue during a particular period divided by the total transactions processed during such period.

***Total payment volume***

We believe total payment volume is an important measure of our AvidPay Network business as it quantifies the demand for our payment services. We define total payment volume as the dollar sum of buyers' AP payments paid to their suppliers through the AvidPay Network during a particular period.

# **Components of Results of Operations** 

## **Revenue** 
We generate revenue from the following sources: (i) software, (ii) payments, and (iii) services.

***Software Revenue***

We generate software revenue from our buyers primarily through (i) fees calculated based on the number of invoices and payment transactions processed and (ii) recurring maintenance and SaaS fees. Software revenue is typically billed to and paid by our buyers on a monthly basis. Our software offerings, many of which are built for specific verticals, address the needs of buyers and together they comprise our suite of predominately cloud-based solutions designed to manage invoices and automate the AP function. We generally sign multi-year contracts with buyers and revenue is recognized over the term of the contract. We also generally receive initial upfront implementation fees and software maintenance fees for ongoing support, which are recognized ratably over the term of the applicable support period.

***Payment Revenue***

We generate revenue from the payments our buyers make to their suppliers through (i) offering electronic payment solutions to suppliers, (ii) fees charged to suppliers from our invoice payment accelerator product, and (iii) interest on funds held for buyers pending disbursement.

Our electronic payment solutions currently include VCC and an enhanced ACH payment product, or AvidPay Direct, which eliminate paper checks and increase the speed of payment to the supplier. AvidPay Direct also provides suppliers with enhanced remittance data allowing the supplier to reconcile the payment and the underlying invoice. VCC revenues result from interchange fees applied to the spend processed and are recorded net of fees and incentives. AvidPay Direct revenue is based on a per transaction fee that we charge to suppliers that generally includes a cap and is based on the spend per payment and is recorded net of incentives.

Our invoice payment accelerator product, Payment Accelerator, provides certain suppliers with the opportunity to better manage cash flows and receive payments even faster by allowing suppliers to receive advance payment on qualifying invoices. Revenues are generated on a per transaction basis for each payment that is advanced. We currently fund the accelerated payment of invoices from our balance sheet.

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Interest income represents interest received from buyer deposits held during the payment clearing process. We receive interest on funds held through our contractual relationship with our buyers, which we recognize as payment revenue. The rate we earn on buyer funds is difficult to predict in the short and long term and will continue to be impacted by the Federal Reserve's monetary policy and any adjustments that are made in response to inflation. Due to the elevated levels of inflation in the U.S. economy, and the resulting increases in interest rates, since 2022, we have experienced an increase in revenues generated on funds held during the payment clearing process. This level of interest income on buyer deposits may not be sustainable in future years or in nearer term periods depending on the Federal Reserve's future actions. The Federal Reserve is expected by many to reduce interest rates in near to mid-term future periods, which would in turn have a negative impact on our payment revenue although the extent to which rates will be reduced, if at all, and the specific timing of the rate cuts remains highly uncertain.

Our media payments business includes customers that are involved in political advertising in the U.S. Revenue from these customers is cyclical as it is connected to U.S. election advertising spend, which tends to increase during significant election years, such as mid-term and presidential elections. As 2024 was a presidential election year, we expect a decrease in the payments associated with political advertising in connection with the presidential election cycle in 2025, which is not a significant election year, compared to 2024.

We utilize service providers to process a substantial portion of our payment revenue that is derived from interchange fees earned on payment transactions processed as VCCs. A large percentage of our revenue is processed by a small number of providers and our revenue is also dependent on the rates we are able to negotiate with these providers. See Note 2 "Summary of Significant Accounting Policies" of our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for disclosures regarding this concentration.

***Services Revenue***

Services revenue includes fees charged to process buyer change in service requests.

***Total Revenue***

We expect our total revenue to increase year over year due to an increase in the number of transactions processed, and the number of buyers and suppliers using the AvidPay Network, and that payment revenue should comprise a greater proportion of total revenue compared to software and services revenue as the volume of transactions on the AvidPay Network continue to increase.

## **Cost of Revenues and Operating Expenses** 
***Cost of Revenues***

Cost of revenues includes personnel related costs, which include direct compensation, fringe benefits, short- and long-term incentive plans and stock-based compensation expense. Cost of revenues includes teams responsible for buyer and supplier onboarding and setup, invoice processing, payment operations, money movement execution, and customer service. Personnel costs also include internal labor associated with the employees who monitor the performance and reliability of our buyer and supplier solutions and the underlying delivery infrastructure (i.e., application and data hosting administration, product support and escalations, payment monitoring and settlement functions).

Cost of revenues also includes external expenses that are directly attributed to the processing of invoice and payment transactions. These expenses include the cost of scanning and indexing invoices, printing checks, postage for mailing checks, expenses for processing payments (ACH, check, and wires), bank fees associated with buyer deposits held during the payment clearing process, and other transaction execution costs. Additionally, cost of revenues includes fees paid to third parties for the use of their technology, data hosting services, customer relationship management tools used in the delivery of our services or in support of the delivery infrastructure, and adjustments to the allowance for uncollectible advancements processed through Payment Accelerator. Lastly, cost of revenues includes estimates for treasury losses that occur in treasury operations. Treasury losses include various unrecoverable internal payment processing errors that occur in the ordinary course of business, such as duplicate payments, overpayments, payments to the wrong party and reconciliation errors.

We have elected to exclude amortization expense of capitalized developed software and acquired technology, as well as allocations of fixed asset depreciation expense and facility expenses from cost of revenues.

We expect our cost of revenues as a percentage of revenue to decrease as we continue to realize operational efficiencies and shift more of our transactions to electronic payments.

***Sales and Marketing***

Sales and marketing consists primarily of costs related to our direct sales force and partner channels that are incurred in the process of setting up go-to-market strategies, generating leads, building brand awareness and acquiring new buyers and suppliers, including efforts to convert suppliers from paper check payments to electronic forms of payments and efforts to enroll them into the Payment Accelerator solution.

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Personnel costs include salaries, wages, direct and amortized sales commissions, fringe benefits, short- and long-term incentive plans and stock-based compensation expense. Most of the commissions paid to the direct sales force are incremental based upon invoice and payment volume from the acquisition of a new buyer and are deferred and amortized ratably over an estimated benefit period of five years.

The partner ecosystem consists of reseller, referral and accounting system partners. Compensation paid to referral and accounting system partners in exchange for the referral and marketing efforts of the partner is classified as sales and marketing expense.

In addition, we focus on generating awareness of our platform and products through a variety of sponsorships, user conferences, trade shows, and integrated marketing campaigns. Costs associated with these efforts, including travel expenses, external consulting services, and various technology applications are included in sales and marketing as well.

While we expect to continue to increase marketing activities over the coming periods, we are focused on efficient deployment of these marketing resources, and as a result we expect our sales and marketing expenses to experience modest growth in absolute terms in the near term.

***Research and Development***

Research and development efforts focus on the development of new products and business intelligence tools or the enhancements of existing products and applications, as well as large scale infrastructure projects that improve the underlying architecture of our technology.

The main contributors of research and development costs are (i) personnel related expenses, including fringe benefits, short- and long-term incentive plans and stock-based compensation expense and (ii) fees for outsourced professional services. We capitalize certain internal and external development costs that are attributable to new products or new functionality of existing products and amortize such costs to depreciation and amortization on a straight-line basis over an estimated useful life, which is generally three years.

We also incur research and development costs attributable to the use of software tools and technologies required to facilitate our research and development activities. Examples of such costs include fees paid to third parties to host lower technical environments and the associated virtual machine ware fees paid to support agile development efforts, and fees paid for software tools and licenses used in quality control testing and code deployment activities.

While we expect our research and development expense to decrease as a percentage of revenue over the longer term, we expect such expenses may increase from time to time, both in absolute dollars and as a percentage of revenue, over the shorter term as we balance the efficient deployment of internal resources with our development needs.

***General and Administrative***

General and administrative expenses consist primarily of our finance, human resources, legal and compliance, facilities, information technology, administration, and information security organizations. Significant cost contributors are (i) personnel expenses, including fringe benefits, short- and long-term incentive plans and stock-based compensation expense and (ii) costs of software applications, including end user computing solutions, and various technology tools utilized by these organizations. Occupancy expenses, which include personnel, rent, maintenance and property tax costs are not allocated to other components of the statements of operations and remain in general and administrative expenses.

While we expect our general and administrative expenses to decrease as a percentage of revenue over the longer term, we expect our general and administrative expenses may increase from time to time, both in absolute dollars and as a percentage of revenue, over the shorter term as we incur expenses associated with the proposed Merger, focus on retaining and incentivizing employees, continue to build out our infrastructure to support our operations, and implement additional safeguards and cybersecurity enhancements.

General and administrative expenses include costs incurred from time to time related to events and transactions not directly attributable to operations. For example, during 2025, general and administrative expenses include transaction costs incurred in connection with the proposed Merger. Additionally, general and administrative expenses may also include restructuring costs incurred in connection with planned reductions of our U.S. workforce. Restructuring costs consist of one-time severance charges to be paid to affected employees. We expect to continue to incur significant transaction costs in connection with the Merger.

***Impairment and Write-Off of Intangible Assets*** 

Impairment and write-off of intangible assets is the reduction from carrying value to fair value for assets or asset groups whose carrying value is not recoverable and also includes charges determined based on our estimation of the amount of obsolescence of previously capitalized software development costs.

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***Depreciation and Amortization***

Depreciation and amortization expense includes depreciation of property and equipment over the estimated useful life of the applicable asset, as well as amortization of acquired intangibles (i.e., technology, customer list and tradename) with a useful life between 3 and 15 years, and amortization of capitalized software development costs with an estimated benefit of 3 years.

***Other Income (Expense)***

Other income (expense) consists primarily of interest expense on our bank borrowings and headquarters finance leases, offset by interest income on non-customer corporate funds.

***Income Tax Expense (Benefit)***

Income tax expense (benefit) consists of federal and state current and deferred income taxes.

# **Results of Operations** 
The following table sets forth our results of operations for the periods presented (in thousands, except share and per share data):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| **Revenues** | $110570 | $105132 | $218512 | $210730 |
| Cost of revenues (exclusive of depreciation and amortization expense) | 30949 | 30426 | 61738 | 60759 |
| **Operating expenses** |  |  |  |  |
| Sales and marketing | 23068 | 19956 | 45579 | 39697 |
| Research and development | 26975 | 25008 | 52357 | 50912 |
| General and administrative | 33510 | 22635 | 62458 | 46895 |
| Impairment and write-off of intangible assets | - | - | - | 162 |
| Depreciation and amortization | 8479 | 9208 | 17148 | 18515 |
| &nbsp;&nbsp;Total operating expenses | 92032 | 76807 | 177542 | 156181 |
| &nbsp;&nbsp;Loss from operations | (12411) | (2101) | (20768) | (6210) |
| **Other income (expense)** |  |  |  |  |
| Interest income | 4480 | 5979 | 8621 | 12541 |
| Interest expense | (2010) | (3323) | (4016) | (6660) |
| &nbsp;&nbsp;Other income | 2470 | 2656 | 4605 | 5881 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Loss) income before income taxes | (9941) | 555 | (16163) | (329) |
| Income tax (benefit) expense | (477) | 119 | 612 | 244 |
| &nbsp;&nbsp;Net (loss) income | $(9464) | $436 | $(16775) | $(573) |
| &nbsp;&nbsp;Net (loss) income per share attributable to common stockholders, basic and diluted |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic | $(0.05) | $0.00 | $(0.08) | $0.00 |
| &nbsp;&nbsp;&nbsp;&nbsp;Diluted | $(0.05) | $0.00 | $(0.08) | $0.00 |
| &nbsp;&nbsp;Weighted average number of common shares used to compute net (loss) income per share attributable to common stockholders, basic and diluted |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic | 206933045 | 207025967 | 205982206 | 205961720 |
| &nbsp;&nbsp;&nbsp;&nbsp;Diluted | 206933045 | 210370559 | 205982206 | 205961720 |

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# **Comparison of the Three Months Ended June 30, 2025 and 2024** 
***Revenues***

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Period-to-Period Change** | **Period-to-Period Change** |
| *(in thousands)* | **2025** | **2024** | **Amount** | **Percentage** |
| Revenues | $110570 | $105132 | $5438 | 5.2% |

---

The increase in revenues was largely comprised of an increase in software revenue of $3.0 million, or 10%, driven primarily by increased payment transaction volume from new and existing customers as well as an increase in certain subscription-based revenue. Payment revenue increased by $2.5 million, or 3%, driven primarily by increased electronic payments on the AvidPay Network due to the addition of new and existing buyer payment transaction volume and an increase in payment yield. Payment revenue and payment yield were negatively impacted by interest on funds held for customers as the rate earned on those funds decreased during the period compared to rates earned in the prior year period. Payment revenue from interest decreased $1.2 million to $10.6 million in the second quarter of 2025 from $11.8 million in the second quarter of 2024. The current quarter includes an out of period adjustment of $0.5 million increase to revenue, primarily comprised of a $0.8 million increase in software revenue, offset by a $0.3 million decrease in payment revenue.

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***Cost of Revenues***

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** |  |  |
|  | **2025** | **2025** | **2024** | **2024** | **Period-to-Period Change** | **Period-to-Period Change** |
| *(in thousands)* | **Amount** | **Percentage of Revenue** | **Amount** | **Percentage of Revenue** | **Amount** | **Percentage** |
| Cost of revenues (excluding depreciation and amortization expense) | $30949 | 28.0% | $30426 | 28.9% | $523 | 1.7% |

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The increase in cost of revenues (excluding depreciation and amortization expense) was driven primarily by an increase in Payments Accelerator reserve of $0.5 million, an increase in unrecovered misdirected payments of $0.4 million, an increase in IT infrastructure costs of $0.4 million, and an increase in invoices and check processing fees of $0.3 million. These increases were partially offset by decreases in consulting and contract labor costs of $0.8 million and a decrease in employee costs of $0.5 million.

***Operating Expenses***

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** |  |  |
|  | **2025** | **2025** | **2024** | **2024** | **Period-to-Period Change** | **Period-to-Period Change** |
| *(in thousands)* | **Amount** | **Percentage of Revenue** | **Amount** | **Percentage of Revenue** | **Amount** | **Percentage** |
| Sales and marketing | $23068 | 20.9% | $19956 | 19.0% | $3112 | 15.6% |
| Research and development | 26975 | 24.4% | 25008 | 23.8% | 1967 | 7.9% |
| General and administrative | 33510 | 30.3% | 22635 | 21.5% | 10875 | 48.0% |
| Impairment and write-off of intangible assets | - | 0.0% | - | 0.0% | - | 0.0% |
| Depreciation and amortization | 8479 | 7.7% | 9208 | 8.8% | (729) | (7.9)% |

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*Sales and Marketing Expenses* 

The increase in sales and marketing expenses was driven primarily by an increase in employee costs of $1.3 million. The increase in employee costs was primarily driven by an increase in headcount, a $0.1 million increase in stock-based compensation, partially offset by an increase in the capitalization of sales commissions of $0.4 million and a decrease in commission expense of $0.2 million. Additionally, sales and marketing expenses increased due to increases in partner commissions of $1.0 million, marketing costs of $0.3 million, and IT infrastructure costs of of $0.2 million.

*Research and Development Expenses* 

The increase in research and development expenses was driven primarily by an increase in employee costs of $1.5 million and an increase in engaging consultants and contractors of $1.1 million. These increases were partially offset by the amount capitalized for software development costs of $0.5 million.

*General and Administrative Expenses*

The increase in general and administrative expense is driven primarily by an increase in employee costs of $2.7 million due primarily to stock-based compensation expense. We incurred transaction and deal costs of $6.4 million during the period, primarily related to the Merger, as well as increases in IT infrastructure costs of $0.3 million related to several enhancement initiatives, an increase in bad debt write-offs of $0.2 million, and an increase of $2.1 million as a result of a benefit recognized from insurance proceeds received in the prior year period. These increases were partially offset by a $0.5 million decrease in facilities costs related to lease abandonments in the fourth quarter of 2024.

*Depreciation and Amortization*

Depreciation and amortization decreased in absolute terms due primarily to the amortization of acquired intangible assets as well as fixed asset depreciation.

***Other Income (Expense)*** 

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** |  |  |
|  | **2025** | **2025** | **2024** | **2024** | **Period-to-Period Change** | **Period-to-Period Change** |
| *(in thousands)* | **Amount** | **Percentage of Revenue** | **Amount** | **Percentage of Revenue** | **Amount** | **Percentage** |
| Other Income (Expense) | $2470 | 2.2% | $2656 | 2.5% | $(186) | (7.0)% |

---

The decrease in other income is due to an unfavorable decrease in interest income of $1.5 million related to a lower cash balance and a decrease in interest rates partially offset by a favorable decrease in interest expense of $1.3 million that resulted from repaying our term loan in 2024.

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***Income Tax Expense*** 

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** |  |  |
|  | **2025** | **2025** | **2024** | **2024** | **Period-to-Period Change** | **Period-to-Period Change** |
| *(in thousands)* | **Amount** | **Percentage of Revenue** | **Amount** | **Percentage of Revenue** | **Amount** | **Percentage** |
| Income tax expense | $(477) | (0.4)% | $119 | 0.1% | $(596) | (500.8)% |

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The provision for income taxes is driven by current state income taxes in taxable jurisdictions and changes in the Company's valuation allowances relative to pretax earnings.

# **Comparison of the Six Months Ended June 30, 2025 and 2024** 
***Revenues***

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Period-to-Period Change** | **Period-to-Period Change** |
| *(in thousands)* | **2025** | **2024** | **Amount** | **Percentage** |
| Revenues | $218512 | $210730 | $7782 | 3.7% |

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The increase in revenues was largely comprised of an increase in software revenue of $4.3 million, or 7%, driven primarily by increased payment transaction volume from new and existing customers as well as an increase in certain subscription-based revenue. Payment revenue increased by $3.2 million, or 2%, driven primarily by increased electronic payments on the AvidPay Network due to the addition of new and existing buyer payment transaction volume and an increase in payment yield. Payment revenue and payment yield were negatively impacted by interest on funds held for customers as the rate earned on those funds decreased during the period compared to rates earned in the prior year period. Payment revenue from interest decreased $3.3 million to $21.6 million in the six months ended June 30, 2025 from $24.9 million in the six months ended June 30, 2024. The current period includes an out of period adjustment of $0.5 million increase to revenue, primarily comprised of a $0.8 million increase in software revenue, offset by a $0.3 million decrease in payment revenue.

***Cost of Revenues***

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |  |  |
|  | **2025** | **2025** | **2024** | **2024** | **Period-to-Period Change** | **Period-to-Period Change** |
| *(in thousands)* | **Amount** | **Percentage of Revenue** | **Amount** | **Percentage of Revenue** | **Amount** | **Percentage** |
| Cost of revenues (excluding depreciation and amortization expense) | $61738 | 28.3% | $60759 | 28.8% | $979 | 1.6% |

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The increase in cost of revenues (excluding depreciation and amortization expense) was driven primarily by an increase in Payments Accelerator reserve of $0.8 million, an increase in invoices and check processing fees of $0.8 million, and an increase in unrecovered misdirected payments of $0.3 million. These increases were partially offset by decreases in consulting and contract labor costs of $1.1 million related to transitioning to new vendors in the prior year period and a decrease in employee costs of $0.2 million.

***Operating Expenses***

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |  |  |
|  | **2025** | **2025** | **2024** | **2024** | **Period-to-Period Change** | **Period-to-Period Change** |
| *(in thousands)* | **Amount** | **Percentage of Revenue** | **Amount** | **Percentage of Revenue** | **Amount** | **Percentage** |
| Sales and marketing | $45579 | 20.9% | $39697 | 18.8% | $5882 | 14.8% |
| Research and development | 52357 | 24.0% | 50912 | 24.2% | 1445 | 2.8% |
| General and administrative | 62458 | 28.6% | 46895 | 22.3% | 15563 | 33.2% |
| Impairment and write-off of intangible assets | - | 0.0% | 162 | 0.1% | (162) | (100.0)% |
| Depreciation and amortization | 17148 | 7.8% | 18515 | 8.8% | (1367) | (7.4)% |

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*Sales and Marketing Expenses* 

The increase in sales and marketing expenses was driven primarily by an increase in employee costs of $2.8 million. The increase in employee costs was primarily driven by an increase in headcount and a $0.4 million increase in stock-based compensation, partially offset by a decrease in the capitalization of sales commissions of $1.1 million. Additionally, sales and marketing expenses increased due to increases in partner commissions of $1.2 million, marketing costs of $0.8 million, amortization expense of deferred sales commissions of $0.3 million, travel expenses of $0.2 million, consulting and contract labor costs of $0.2 million, and IT infrastructure costs of $0.2 million.

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*Research and Development Expenses* 

The increase in research and development expenses was driven primarily by an increase in employee costs of $1.5 million and an increase in engaging consultants and contractors of $1.2 million. These increases were partially offset by the amount capitalized for software development costs of $0.9 million and a decrease in other expenses, including recruiting costs of $0.3 million.

*General and Administrative Expenses*

The increase in general and administrative expense is driven primarily by an increase in employee costs of $5.4 million due primarily to stock-based compensation expense. We incurred transaction and deal costs of $8.6 million, primarily related to the Merger, during the period as well as increases in IT infrastructure costs of $0.7 million related to several enhancement initiatives, an increase in bad debt write-offs of $0.2 million, and an increase of $2.1 million as a result of a benefit recognized from insurance proceeds received in the prior year period. These increases were partially offset by a $0.6 million decrease in facilities costs related to lease abandonments in the fourth quarter of 2024.

*Depreciation and Amortization*

Depreciation and amortization decreased in absolute terms due primarily to the amortization of acquired intangible assets as well as fixed asset depreciation.

***Other Income (Expense)*** 

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |  |  |
|  | **2025** | **2025** | **2024** | **2024** | **Period-to-Period Change** | **Period-to-Period Change** |
| *(in thousands)* | **Amount** | **Percentage of Revenue** | **Amount** | **Percentage of Revenue** | **Amount** | **Percentage** |
| Other Income (Expense) | $4605 | 2.1% | $5881 | 2.8% | $(1276) | (21.7)% |

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The decrease in other income is due to an unfavorable decrease in interest income of $3.9 million related to a lower cash balance and a decrease in interest rates partially offset by a favorable decrease in interest expense of $2.6 million that resulted from repaying our term loan in 2024.

***Income Tax Expense*** 

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |  |  |
|  | **2025** | **2025** | **2024** | **2024** | **Period-to-Period Change** | **Period-to-Period Change** |
| *(in thousands)* | **Amount** | **Percentage of Revenue** | **Amount** | **Percentage of Revenue** | **Amount** | **Percentage** |
| Income tax (benefit) expense | $612 | 0.3% | $244 | 0.1% | $368 | 150.8% |

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The provision for income taxes is driven by current state income taxes in taxable jurisdictions and changes in the Company's valuation allowances relative to pretax earnings.

# **Liquidity and Capital Resources** 
Prior to the second quarter of 2024, we did not historically generate positive cash flow through our operations. We have historically financed our operations and capital expenditures primarily through sales of common and preferred stock, through borrowings under our credit facilities, as described below, and through our IPO that was completed in October 2021, which resulted in net proceeds of $621.4 million, including the exercise of the overallotment option and after deducting underwriting discounts and commissions of $40.4 million and offering expenses of approximately $11.8 million. As of June 30, 2025, our principal sources of liquidity are our unrestricted cash and cash equivalents of $335.8 million, marketable securities of $71.5 million, cash from operations, and funds available under our revolving credit facility, which we refer to as the 2024 Amended and Restated Credit Agreement, which we entered into in August 2024. As of June 30, 2025, our unused committed capacity under the 2024 Amended and Restated Credit Agreement was $150.0 million comprised of a revolving commitment.

We believe that our unrestricted cash, cash equivalents, marketable securities, cash from operations, and funds available under our 2024 Amended and Restated Credit Agreement will be sufficient to meet our working capital requirements for at least the next twelve months. To the extent existing cash, marketable securities, cash from operations, and amounts available for borrowing under the 2024 Amended and Restated Credit Agreement are insufficient to fund future activities, we may need to raise additional capital. In the future, we may attempt to raise additional capital through the sale of equity securities or through equity-linked or debt financing arrangements. If we raise additional capital by issuing equity or equity-linked securities, the ownership of our existing stockholders will be diluted. If we raise additional capital by the incurrence of additional indebtedness, we may be subject to increased fixed payment obligations and could also be subject to additional restrictive covenants, such as limitations on our ability to incur additional debt, and other operating restrictions that could adversely impact our ability to conduct our business. Our ability to raise additional debt may be limited by applicable regulatory requirements as a licensed money transmitter that require us to meet certain net worth requirements. Any future indebtedness we incur may result in terms that could be unfavorable to equity investors. There can be no assurances that we will be able to raise additional capital. The inability to raise capital would adversely affect our ability to achieve our business objectives.

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On May 6, 2025, AvidXchange Holdings, Inc. entered into the Merger Agreement, as described elsewhere in the Quarterly Report on Form 10-Q. Pursuant to the Merger Agreement, if the Merger is consummated, the common stock of the Company will be delisted from Nasdaq and deregistered under the Securities Exchange Act of 1934, as amended, and the Company will become a privately held company. See Note 1 "Formation and Business of the Company" included elsewhere in this Quarterly Report on Form 10-Q for additional information.

## **Cash Flows** 
Below is a summary of our unaudited consolidated statements of cash flows:

---

| | | |
|:---|:---|:---|
| **Selected Cash Flow Data:** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| *(in thousands)* | **2025** | **2024** |
| Net cash provided by (used in): |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating activities | $30606 | $18928 |
| &nbsp;&nbsp;&nbsp;&nbsp;Investing activities | (53001) | (56279) |
| &nbsp;&nbsp;&nbsp;&nbsp;Financing activities | (99620) | (379651) |
| Net decrease in cash, cash equivalents, and restricted funds held for customers | $(122015) | $(417002) |

---

##  ***Net Cash Provided by Operating Activities*** 
Our primary source of cash provided by our operating activities is from our software and payment revenue. Our primary uses of cash in our operating activities include payments for employee salary and related costs, payments to third party service providers to execute our payment transactions, sales and marketing costs, and other general corporate expenditures.

Net cash provided by operating activities improved to $30.6 million during the six months ended June 30, 2025 from $18.9 million provided by operating activities during the six months ended June 30, 2024, due primarily to changes in working capital, primarily due to variations in timing of payment of accounts payable and accrued expenses.

##  ***Net Cash Used in Investing Activities*** 
Cash flows related to our investing activities consist primarily of the maturity and purchases of marketable securities, purchases of property and equipment, purchases of intangible assets, capitalization of internal-use software, and supplier advances related to our Payment Accelerator product.

Net cash used in investing activities decreased to $53.0 million during the six months ended June 30, 2025 compared to $56.3 million used in investing activities during the six months ended June 30, 2024, primarily driven by differences in the timing of purchases and maturities in our portfolio of held-to-maturity marketable securities.

***Net Cash Used in Financing Activities***

Cash flows related to our financing activities consist primarily of changes in restricted buyer fund deposits related to buyer payment transactions, exercise of stock options, principal payments on financing leases, borrowings and repayments of long-term debt, and share repurchases.

Net cash used in financing activities was $99.6 million during the six months ended June 30, 2025 compared to $379.7 million during the six months ended June 30, 2024, due primarily to variations in the inflows and outflows from payment service obligations of our customers as well as proceeds from the issuance of common stock.

## **Outstanding Debt** 
Below is a summary of our outstanding debt (in thousands):

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| | | |
|:---|:---|:---|
|  | **As of June 30, 2025** | **As of December 31, 2024** |
| Total principal due on promissory notes payable for land acquisition | $9100 | $9100 |
| Current portion of promissory notes | (4800) | (4800) |
| &nbsp;&nbsp;&nbsp;Long-term debt | $4300 | $4300 |

---

***Credit Facilities***

On August 8, 2024, we entered into an agreement to amend and restate our previous credit facility. As a result, we repaid the outstanding amount of the term loan and expanded the borrowing capacity of the revolving line of credit. As of June 30, 2025, the aggregate available borrowing capacity under this agreement was $150.0 million, which may be increased, subject to specific conditions, by an additional amount (for all such increases) not to exceed $150.0 million, for a total aggregate amount of $300.0 million.

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We were in compliance with our financial covenants as of June 30, 2025. Refer to Note 9 "Long-Term Debt" of our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional details about our credit facilities.

***Land Promissory Notes***

We have promissory notes in connection with land and improvements adjacent to our Charlotte, North Carolina headquarters campus. Refer to Note 9 "Long-Term Debt" of our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for information on our promissory notes.

## **Issuances of Common Stock** 
During the six months ended June 30, 2025, we issued shares of common stock under our existing stock plans. Refer to our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for details.

## **Share Repurchases** 
In August 2024, our board of directors authorized the repurchase of up to $100.0 million of our outstanding shares of common stock. During the three and six months ended June 30, 2025, we did not repurchase and subsequently retire any shares of common stock under the Share Repurchase Program. Refer to Note 10 "Stockholders' Equity" to our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional details.

## **Payment Obligations** 
We process payments for our customers. As part of our payment product offering, we have recorded payment service obligations in our unaudited consolidated balance sheets of $1,148.2 million as of June 30, 2025 and an offsetting asset of restricted funds held for customers. This balance is short-term in nature and represents our obligation to pay our customers' suppliers as directed by our customers.

We historically transmitted buyer customer funds using a legacy model pursuant to which buyer customer funds were held in trust accounts that were maintained and operated by a trustee pending distribution to suppliers in accordance with instructions provided through our platform. After buyers' funds were deposited in a trust account, we initiated payment through external payment networks whereby the buyers' funds were distributed from the trust to the appropriate supplier. We are not the trustee or beneficiary of the trusts which hold these buyer deposits; accordingly, we do not record these assets and offsetting liabilities on our unaudited consolidated balance sheets. We have largely transitioned away from the trust model although certain banks that resell our products and services continue to leverage a similar structure. We contractually earn interest on funds held for certain buyers. The amount of Company and bank customer funds held in all trust-related and similar accounts was approximately $50.9 million and $14.6 million as of June 30, 2025 and December 31, 2024, respectively.

# **Contractual Obligations** 
There were no material changes in our contractual obligations and commitments during the six months ended June 30, 2025 from the contractual obligations and commitments disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024. See Note 8 "Leases and Leasing Commitments" of the notes to our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information regarding contractual obligations and commitments.

# **Critical Accounting Policies and Estimates** 
Our unaudited consolidated financial statements have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements, as well as the reported revenue generated, and reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There have been no material changes to our critical accounting policies as compared to the critical accounting policies and significant judgments and estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on February 28, 2025.

## **Recent Accounting Pronouncements** 
See Note 2 "Summary of Significant Accounting Policies" to our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of June 30, 2025.

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# **ITEM 3. Quantitative and Qualitative Disclosures about Market Risk** 

## **Interest Rate Risk** 
Our overall investment portfolio is comprised of (i) our operating cash and (ii) buyer funds. Our operating cash includes cash received from revenues generated, the sale of common and preferred stock and increased borrowings. Buyer funds are funds that have been collected from buyers but not yet remitted to the applicable supplier. The funds are held in either company-owned accounts, which are subject to applicable state money transmitter laws, or in trust-related accounts. We are generally entitled to retain any interest earned on the investment of buyer funds as specified by our contractual arrangements with our buyers.

Our operating cash may be invested in accordance with our cash investment policy. Under that policy, we invest with the objective of preserving capital while optimizing yield. Permissible investments include U.S. Treasury instruments, U.S. Government Agency securities, Government-Sponsored Enterprise securities, corporate bonds, commercial paper, and money market funds. As of June 30, 2025, we held marketable securities with an amortized cost basis of $71.5 million and money market funds with an aggregate value of $85.8 million. The remaining amount of operating cash was held in interest-bearing demand deposit accounts.

Our buyer funds assets are invested with safety of principal, liquidity, and diversification as the primary objectives. Consistent with these objectives, we also seek to maximize interest income and to minimize the volatility of interest income with emphasis on liquidity. Pursuant to our investment policy and subject to applicable law, buyer funds may be invested in U.S. Treasury securities, U.S. Government Agency securities, or other cash equivalents, including time deposits. As of June 30, 2025, all buyer funds have been invested in interest-bearing demand deposit accounts.

We are exposed to interest-rate risk relating to our investment portfolio, which consists principally of interest-bearing demand deposit accounts as well as investments made in accordance with our cash investment policy. We recognize interest earned from buyer funds assets as revenue. We generally do not pay interest to buyers. Factors that influence the rate of interest we earn include the short-term market interest rate environment and the weighting of balances by security type. The annualized interest rate earned on our investment of operating cash and funds held for buyers decreased to 4.04% during the first six months of fiscal year 2025 from 5.03% during fiscal year 2024. Based on current investment practices, an increase in the interest rate of 100 basis points would have changed our interest income in the first six months of fiscal year 2025 from our investment of operating cash by approximately $1.6 million and our interest on buyer funds assets by approximately $5.9 million based upon the average balances for the first six months of fiscal year 2025 of $399.7 million in operating cash investments and $1,088.6 million in buyer funds investments, respectively. In addition to interest rate risks, we also have exposure to risks associated with changes in laws and regulations that may affect buyer fund balances. For example, a change in regulations that restricts the permissible investment alternatives for buyer funds may reduce our interest earned revenue.

We are also exposed to interest-rate risk relating to existing variable rate bank borrowings. As of June 30, 2025 and December 31, 2024, we had no outstanding borrowings on variable rate debt.

Our interest-rate risk will continue to be impacted by the Federal Reserve's monetary policy and response to the higher than normal level of inflation in the U.S. economy.

## **Credit Risk** 
We may be exposed to credit risk in connection with our investments, as our cash on deposit, including buyer funds, regularly exceed Federal Deposit Insurance Company ("FDIC") limits. We limit credit risk by diversifying our portfolio, including a requirement that no more than 5% of invested funds may be held in the issues of a single corporation. Additionally, absent certain limited exceptions, the minimum credit quality of any fixed income investment shall be not less than an '(A-) or (A3)' rating equivalent from any single rating services based on ratings by any of Standard and Poor's Ratings Services, Moody's Investors Service, or Fitch Investor Services. The maximum maturity of any security in the portfolio shall not exceed 24 months. The weighted average maturity of the portfolio shall not exceed 36 months. In addition, maximum maturities of individual securities are further limited by the security type and cash segment of the investment. We are also exposed to credit risk related to the timing of payments made from buyer funds collected. We typically remit buyer funds to our buyers' suppliers in advance of having good or confirmed funds collected from our buyers. Our buyers generally have three days to dispute transactions and if we remit funds in advance of receiving confirmation that no dispute was initiated by our buyer, then we could suffer a credit loss. We mitigate this credit exposure by leveraging our data assets to make credit underwriting decisions about whether to accelerate disbursements, managing exposure limits, and various controls in our operating systems.

There can be no assurance that our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the U.S. government, or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions or by acquisition in the event of a failure or liquidity crisis. While we do not currently maintain private insurance to mitigate this risk, we seek to mitigate this risk by monitoring financial institutions that we conduct business with and endeavoring to maintain our cash balances at large well-capitalized financial institutions.

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We are also exposed to risks associated with our Payment Accelerator product, in which our supplier customers can accelerate the receipt of payment for outstanding invoices before our buyers initiate the transfer of funds. If those invoices are not approved or the buyer does not transfer the requisite funds then we are exposed to the risk of not being able to recoup our advances to the supplier. We mitigate this risk through data analytics to determine which invoices are available and appropriate for advance payment.

## **Liquidity Risk** 
As part of our buyer funds investment strategy, we use the daily collection of funds from our buyers to satisfy other unrelated buyer funds obligations. We minimize the risk of not having funds collected from a buyer available at the time the buyer's obligation becomes due by collecting the buyer's funds in advance of the timing of payment of the buyer's obligation. As a result of this practice, we have consistently maintained the required level of buyer funds assets to satisfy all of our obligations.

## **Concentration Risk** 
A substantial portion of our revenue is derived from interchange fees earned on payment transactions processed from VCC service providers. Prior to 2022, our interchange fees were processed primarily through a single provider. To mitigate this concentration risk, we have expanded the number of processor suppliers. Revenue from two of these suppliers was greater than 10% of our total revenue, individually. Refer to Note 2 "Summary of Significant Accounting Policies" of our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information regarding this concentration.

Future regulation or changes by the payment networks could have a substantial impact on our revenue from VCC transactions. If interchange rates decline, whether due to actions by the payment networks, merchant/suppliers availing themselves of lower rates, or future regulation, our total operating revenues, operating results, prospects for future growth and overall business could be materially affected.

We are also exposed to concentration risk associated with buyer funds that we hold in Company-owned accounts, which are subject to applicable state money transmitter laws, and in trust accounts. As of June 30, 2025, all buyer funds have been invested in interest-bearing demand deposit accounts. The majority of these demand accounts are maintained at one institution which is a full-service, FDIC-insured national bank supervised by the Office of the Comptroller of the Currency and is a subsidiary of a bank holding company subject to regulation, supervision, and examination by the Federal Reserve. As indicated above, while we do not currently maintain private insurance to mitigate this risk, we seek to mitigate this risk by monitoring financial institutions that we conduct business with and endeavoring to maintain our cash balances at large well-capitalized financial institutions.

# **ITEM 4. Controls and Procedures.** 

## **Evaluation of Disclosure Controls and Procedures** 
Our management, with the participation of our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Our disclosure controls and procedures are designed to provide reasonable assurance that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures. Based on that evaluation, our CEO and CFO concluded that, as of June 30, 2025, our disclosure controls and procedures were effective at a reasonable assurance level.

## **Changes in Internal Control Over Financial Reporting** 
There were no changes in our internal control over financial reporting that occurred during the most recent fiscal quarter ended June 30, 2025, which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

**PART II—OTHER INFORMATION**

**Item 1. Legal Proceedings.**

Following the public announcement by the Company of the execution of the Merger Agreement, the Company filed a preliminary proxy statement on Schedule 14A with the SEC on June 17, 2025 (the "Preliminary Proxy"). On July 11, 2025, a purported stockholder of the Company filed a lawsuit in the United States District Court for the Southern District of New York captioned Zappia v. AvidXchange Holdings, Inc., et al., No. 1:25-cv-5727 (S.D.N.Y.) (the "Zappia Complaint"). The Zappia Complaint alleges that the Preliminary Proxy contains materially false and misleading statements and omissions in violation of Sections 14(a) and 20(a) of the Exchange Act and SEC Rule 14a-9, and asserts a state law breach of fiduciary duty claim under Delaware law. The allegations focus on purported failures to disclose conflicts of interest of the Company's legal advisors and failures to disclose details regarding the Company's valuation analyses. On July 21, 2025, the plaintiff in the Zappia Complaint filed an amended

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complaint alleging substantially the same claims. On July 22, 2025, the plaintiff filed a motion for preliminary injunction seeking to enjoin the stockholder vote and consummation of the Transactions until alleged disclosure deficiencies were corrected. On July 28, 2025, the court issued an order to show cause, scheduling expedited briefing and a hearing on the plaintiff's motion. On July 31, 2025, the defendants in the Zappia Complaint filed an opposition to the preliminary injunction motion. On August 1, 2025, the plaintiff in the Zappia Complaint voluntarily withdrew his preliminary injunction motion.

From time to time, we have been and will continue to be subject to additional legal proceedings and claims. We are not presently a party to any other legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, results of operations, financial condition, or cash flows. Defending such proceedings is costly and can impose a significant burden on management and employees. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

**Item 1A. Risk Factors.**

Except to the extent updated below or previously updated, or to the extent additional factual information disclosed elsewhere in this Quarterly Report on Form 10-Q relates to such risk factors (including, without limitation, the matters discussed in Part I, Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operation", there have been no material changes to the risk factors associated with our business previously disclosed in "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024 and "Item 1A. Risk Factors" in our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2025.

**Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.**

**(a) Unregistered Sales of Equity Securities**

None.

**(b) Use of Proceeds**

***Use of Proceeds***

On October 15, 2021, we completed our IPO. All shares sold were registered pursuant to a registration statement on Form S-1, as amended (File No. 333-259632), declared effective by the SEC on October 12, 2021.

There have been no material changes in the planned use of proceeds from the IPO from those described in our Final Prospectus. We have invested a portion of the funds received in short-term, interest bearing, investment-grade securities.

**(b) Purchases of Equity Securities by the Company**

***Purchases of Equity Securities by the Company***

In August 2024, our board of directors authorized the repurchase of up to $100 million of our outstanding shares of common stock (the "Share Repurchase Program"). Repurchases under the program may be made in the open market, in privately negotiated transactions or otherwise, including pursuant to a Rule 10b5-1 plan. The timing, price, and volume of the repurchases will be executed based on various market and legal factors, and subject to a $50 million cap in any fiscal year pursuant to the terms of the 2024 Amended and Restated Credit Agreement. The Share Repurchase Program will terminate upon the earlier of December 31, 2025 or the date on which the maximum dollar amount has been expended, but is subject to suspension, modification, or termination at any time at the Company's discretion. We did not repurchase and subsequently retire any shares of common stock under the Share Repurchase Program during the three and six months ended June 30, 2025. As of June 30, 2025, $50 million remained available for future share repurchases under the Share Repurchase Program.

**Item 3. Defaults Upon Senior Securities.**

Not applicable.

**Item 4. Mine Safety Disclosures.**

Not applicable.

**Item 5. Other Information.**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  |  | **Trading Agreement** | **Trading Agreement** |  |  |
|  | **Action** | **Date** | **Rule 10b5-1** <sup>(1)</sup> | **Non-Rule 10b5-1** <sup>(2)</sup> | **Total Shares to be Sold** | **Expiration Date** |
| Angelic Gibson, Chief Information Officer, Senior Vice President | Terminate | May 6, 2025 | X |  | 45000 | June 30, 2025 |
| <sup>(1)</sup> Intended to satisfy the affirmative defense of Rule 10b5-1(c) | <sup>(1)</sup> Intended to satisfy the affirmative defense of Rule 10b5-1(c) | <sup>(1)</sup> Intended to satisfy the affirmative defense of Rule 10b5-1(c) | <sup>(1)</sup> Intended to satisfy the affirmative defense of Rule 10b5-1(c) | <sup>(1)</sup> Intended to satisfy the affirmative defense of Rule 10b5-1(c) | <sup>(1)</sup> Intended to satisfy the affirmative defense of Rule 10b5-1(c) | <sup>(1)</sup> Intended to satisfy the affirmative defense of Rule 10b5-1(c) |
| <sup>(2)</sup> Not intended to satisfy the affirmative defense of Rule 10b5-1(c) | <sup>(2)</sup> Not intended to satisfy the affirmative defense of Rule 10b5-1(c) | <sup>(2)</sup> Not intended to satisfy the affirmative defense of Rule 10b5-1(c) | <sup>(2)</sup> Not intended to satisfy the affirmative defense of Rule 10b5-1(c) | <sup>(2)</sup> Not intended to satisfy the affirmative defense of Rule 10b5-1(c) | <sup>(2)</sup> Not intended to satisfy the affirmative defense of Rule 10b5-1(c) | <sup>(2)</sup> Not intended to satisfy the affirmative defense of Rule 10b5-1(c) |

---

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# **Item 6. Exhibits.** 

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | **Incorporated by Reference**<br>**(Unless Otherwise Indicated)** | **Incorporated by Reference**<br>**(Unless Otherwise Indicated)** | **Incorporated by Reference**<br>**(Unless Otherwise Indicated)** | **Incorporated by Reference**<br>**(Unless Otherwise Indicated)** |
| **Exhibit**<br>**Number** | **Description** | **Form** | **File** | **Exhibit** | **Filing Date** |
| 2.1 | [<u>Agreement and Plan of Merger, dated as of March 4, 2021, by and among AvidXchange Holdings, Inc., AvidXchange Holdings Merger Sub, Inc., and AvidXchange, Inc.</u>](https://www.sec.gov/Archives/edgar/data/1858257/000119312521276254/d219478dex21.htm) | S-1 | 333-259632 | 2.1 | September 17, 2021 |
| 2.2\* | [<u>Agreement and Plan of Merger, dated as of May 6, 2025, by and among Arrow Borrower 2025, Inc., Arrow Merger Sub 2025, Inc. and AvidXchange Holdings, Inc.</u>](https://www.sec.gov/Archives/edgar/data/1858257/000119312525114937/d132155dex21.htm) | 8-K | 001-40898 | 2.1 | May 7, 2025 |
| 3.1 | [<u>Restated Certificate of Incorporation of AvidXchange Holdings, Inc.</u>](https://www.sec.gov/Archives/edgar/data/1858257/000119312521300018/d213917dex31.htm) | 8-K | 001-40898 | 3.1 | October 15, 2021 |
| 3.2 | [<u>Second Amended and Restated Bylaws of AvidXchange Holdings, Inc.</u>](https://www.sec.gov/Archives/edgar/data/1858257/000095017022018679/avdx-ex3_1.htm) | 8-K | 001-40898 | 3.1 | September 15, 2022 |
| 4.1 | [<u>Form of Common Stock Certificate</u>](https://www.sec.gov/Archives/edgar/data/1858257/000119312521288413/d219478dex41.htm) | S-1/A | 333-259632 | 4.1 | October 1, 2021 |
| 4.2 | [<u>Eighth Amended and Restated Investor Rights Agreement, dated July 9, 2021, by and among AvidXchange Holdings, Inc. and certain holders identified therein</u>](https://www.sec.gov/Archives/edgar/data/1858257/000119312521276254/d219478dex101.htm) | S-1 | 333-259632 | 10.1 | September 17, 2021 |
| 10.1\* | [<u>Voting and Support Agreement, dated as of May 6, 2025, by and among Arrow Borrower 2025, Inc., AvidXchange Holdings, Inc. and the stockholders party thereto</u>](https://www.sec.gov/Archives/edgar/data/1858257/000119312525114937/d132155dex101.htm) | 8-K | 001-40898 | 10.1 | May 7, 2025 |
| 31.1 | [<u>Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.</u>](avdx-ex31_1.htm) | __ | __ | __ | Filed herewith |
| 31.2 | [<u>Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</u>](avdx-ex31_2.htm). | __ | __ | __ | Filed herewith |
| 32.1 | [<u>Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</u>](avdx-ex32_1.htm). | __ | __ | __ | Furnished herewith |
| 101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. | __ | __ | __ | Filed herewith |
| 101.SCH | Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents | __ | __ | __ | Filed herewith |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | __ | __ | __ | Filed herewith |

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\* Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted schedules and exhibits upon request by the SEC.

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**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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| | | |
|:---|:---|:---|
|  | AvidXchange Holdings, Inc. | AvidXchange Holdings, Inc. |
| Date: August 6, 2025 | By: | /s/ Joel Wilhite |
|  |  | Joel Wilhite |
|  |  | Chief Financial Officer <br>(Authorized Signatory and Principal Financial and Accounting Officer) |

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## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO**

**EXCHANGE ACT RULE 13A-14(A)/15D-14(A)** 

**AS ADOPTED PURSUANT TO SECTION 302 OF**

**THE SARBANES-OXLEY ACT OF 2002**

I, Michael Praeger, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of AvidXchange Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 6, 2025

<u>/s/ Michael Praeger</u> 

Michael Praeger

*Chief Executive Officer and Chairman of the Board*

(Principal Executive Officer)

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## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO**

**EXCHANGE ACT RULE 13A-14(A)/15D-14(A)** 

**AS ADOPTED PURSUANT TO SECTION 302 OF**

**THE SARBANES-OXLEY ACT OF 2002**

I, Joel Wilhite, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of AvidXchange Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 6, 2025

<u>/s/ Joel Wilhite</u> 

Joel Wilhite

*Chief Financial Officer*

(Principal Financial and Accounting Officer)

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## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER**

**PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Michael Praeger, Chief Executive Officer (principal executive officer) of AvidXchange Holdings, Inc. (the "Company"), and Joel Wilhite, Chief Financial Officer (principal financial and accounting officer) of the Company, each hereby certify that, to the best of such officer's knowledge:

1. The Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 6, 2025

<u>/s/ Michael Praeger</u> 

Michael Praeger

*Chief Executive Officer and Chairman of the Board*

(Principal Executive Officer)

<u>/s/ Joel Wilhite</u> 

Joel Wilhite

*Chief Financial Officer*

(Principal Financial and Accounting Officer)

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