Payfare generated net income of $5.1 million, and Adjusted net income per share1 of $0.15 in Q1 2024. The Company has also provided an update on its Audited Annual Filings.
TORONTO, May 8, 2024 /PRNewswire/ – Payfare Inc. (“Payfare” or the “Company”) (TSX: PAY) (OTCQX: PYFRF), a leading international Earned Wage Access (“EWA”) company powering instant access to earnings and digital banking solutions for workforces, today announced the filing of its Financial Statements and Management’s Discussion and Analysis (“MD&A”) for the quarter ending March 31, 2024. A comprehensive discussion of Payfare’s financial position and results of operations are provided in the MD&A, which is filed on SEDAR+ under Payfare’s profile and can be found at www.sedarplus.ca.
Q1 2024 Highlights:
Increased revenue to a record $51.9 million for the three months ended March 31, 2024, representing a $9.6 million (+23%) increase compared to the same period in 2023.
Ended Q1 2024 with 1,423,502 active users1, up by 296,042 (+26%) compared to active users1 count as at the end of Q1 2023.
Total gross dollar value (Total GDV)1 in Q1 2024 was $3.5 billion, up by $0.9 billion (+33%) over Q1 2023.
Gross Profit of $12.8 million in Q1 2024, up by $3.4 million (+36%) over the prior year period.
Net income of $5.1 million, or $0.11 per share, for the three months ended March 31, 2024, up $3.8 million (+296%), compared to the same period in 2023.
Adjusted net income1 of $7.5 million, or $0.15 per share, for the three months ended March 31, 2024, representing growth of $4.0 million (+116%) over the prior year period.
Adjusted EBITDA1 of $6.0 million for the three months ended March 31, 2024, reflecting a $3.0 million increase (+98%) compared to the same period in 2023.
Free cash flow1 of $5.8 million for the three months ended March 31, 2024, versus $6.5 million in the prior year period. The year-over-year change in free cash flow was a function of investing in new growth programs and enhancing existing programs.
On March 5, 2024, the Company announced the launch of the Uber Pro Card, a significant new program with Uber providing free instant payouts after every trip or delivery, enhanced loyalty features for drivers and delivery people, and backup balance for qualifying users on the Uber platform in Canada, powered by Payfare’s leading digital banking app.
Payfare launched a new embedded finance product with an international big box retailer, to provide earnings payouts to the retailer’s delivery gig workforce in Canada. The Company expects to announce additional details of this program as it completes the enrollment phase.
In Q1 2024, the Company signed a commercial agreement with Automatic Data Processing Inc. (“ADP”) to offer Earned Wage Access (EWA) to the Canadian market.
Payfare Provides Update on Annual Filings
Payfare provided an update to its previously disclosed management cease trade order (“MCTO”), in respect of its delayed filing of its audited annual financial statements, management’s discussion and analysis, annual information form, and related certifications, all for the year ended December 31, 2023 (collectively, the “Annual Filings”).
The delay in the Annual Filings is due solely to the delay in receiving the System and Organization Controls (“SOC 1”) auditor’s report from its material vendor (the “Vendor”) which is required in order for the Company’s auditors to complete their required audit procedures to issue their opinion.
There have been no changes to the expected timing of the delivery of the SOC 1 report from the Vendor disclosed within the press release dated April 25, 2024. Payfare continues to anticipate that it will complete its Annual Filings by May 22, 2024. The Company will issue a news release announcing completion of filing of the Annual Filings at such time as they are completed and filed.
Until the Company files the Annual Filings, it will comply with the alternative information guidelines set out under National Policy 12-203 – Cease Trade Orders for Continuous Disclosure Defaults, including issuing bi-weekly default status reports by way of news releases such as this one, which will be filed on SEDAR+.
No Conference Call Scheduled
Management recently hosted a conference call on April 29, 2024, and provided an update on Payfare’s financial outlook, strategy, and operations. There have been no new developments to discuss since the previous conference call, and as such management believes there is no value in hosting another conference call to discuss Q1 2024 financial results. An archived recording of the previous conference call hosted on April 29, 2024 will be available until May 29, 2024. To listen to the recording, call 289-819-1325 or 1-888-660-6264 and enter passcode 10007.
About Payfare (TSX:PAY, OTCQX: PYFRF)
Payfare is a leading, international Earned Wage Access (“EWA”) company powering instant access to earnings through an award-winning digital banking platform for today’s workforce. Payfare partners with leading e-commerce marketplaces, payroll platforms, and employers to provide financial security and inclusion for all workers.
1Non-IFRS and Supplementary Financial Measures
This press release contains references to “active users”, “Total GDV”, “adjusted net income”, “adjusted net income per share”, “EBITDA”, “Adjusted EBITDA” and “free cash flow”, which are not measures prescribed by IFRS Accounting Standards (“IFRS”). These supplementary financial measures are provided as additional information to complement IFRS measures by providing a further understanding of our results of operations from management’s perspective, to provide investors and security analysts with supplemental measures to evaluate the financial performance of the Company and highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. Management also uses non-IFRS and supplementary financial measures to facilitate operating performance comparisons from period to period, prepare annual operating budgets and strategic business plans and to evaluate and price potential acquisitions. Accordingly, non-IFRS and supplementary financial measures should not be considered in isolation or as a substitute for analysis of our financial information reported under IFRS. Such measures do not have any standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other corporations. The non-IFRS and supplementary financial measures are not subject to standard industry definition and our definitions and method of calculation may differ from other issuers and therefore may not be comparable to similar measures presented by other issuers.
The Company determines the number of users to its services based on active users. “Active users” represent users who have loaded earnings and direct deposits on their card in the period. “Total GDV” is defined as the aggregate dollar amount of active user earnings and direct deposits loaded on their payment card during the period.
“EBITDA” means net income (loss) before amortization and depreciation expenses, foreign exchange gain (loss), amortization of deferred income, finance and interest income/ costs, current tax expense and change in fair value of derivative liability.
“Adjusted EBITDA” adjusts EBITDA for stock-based compensation expense, restructuring costs and non-recurring expense items. Non-recurring expense items are transactions or events which management believes will not re-occur within the foreseeable future and includes legal and professional fees related to claim settlements, acquisition, divestiture, asset impairment charges and going public transaction.
The table below reconciles net income to EBITDA and Adjusted EBITDA for the three months ended March 31, 2024 and 2023.
|
Three Months Ended March 31, |
|||
|
In CAD $ |
2024 |
2023 |
|
|
Net income |
$ 5,108,563 |
$ 1,288,876 |
|
|
Add: |
|||
|
Current tax expense |
41,517 |
17,269 |
|
|
Finance income |
(871,181) |
(482,882) |
|
|
Other income |
– |
(7,790) |
|
|
Foreign exchange (gain) loss |
(626,729) |
55,231 |
|
|
Amortization of intangible assets |
1,220,356 |
571,983 |
|
|
Depreciation of building, property and equipment |
25,624 |
35,516 |
|
|
EBITDA1 |
4,898,150 |
1,478,203 |
|
|
Adjustments: |
|||
|
Restructuring expense/other |
500,987 |
614,490 |
|
|
Share based compensation |
601,586 |
941,693 |
|
|
Adjusted EBITDA1 |
$ 6,000,723 |
$ 3,034,386 |
|
“Adjusted net income” adjusts net income for share-based compensation expense, restructuring costs and non-recurring expense items. Non-recurring expense items are transactions or events which management believes will not re-occur within the foreseeable future and includes legal and professional fees related to claim settlements, acquisition, divestiture, asset impairment charges and going public transaction.
The table below reconciles net income to Adjusted net income for the three months ended March 31, 2024 and 2023.
|
Three Months Ended March 31, |
|||
|
In CAD $ |
2024 |
2023 |
|
|
Net income |
$ 5,108,563 |
$ 1,288,876 |
|
|
Add: |
|||
|
Amortization of intangible assets |
1,220,356 |
571,983 |
|
|
Depreciation of building, property and equipment |
25,624 |
35,516 |
|
|
Restructuring expense/other |
500,987 |
614,490 |
|
|
Share based compensation |
601,586 |
941,693 |
|
|
Adjusted net income1 |
$ 7,457,116 |
$ 3,452,558 |
|
“Adjusted net income ” per share is calculated as Adjusted net income divided by the basic weighted average number of shares outstanding during the period.
The Company defines its free cash flow as cash from operating activities less cash used in investing activities (including additions to intangible assets and purchase of building, property and equipment). The table below reconciles cash from operating activities to free cash flow for the three months ended March 31, 2024 and 2023.
|
Three Months Ended March 31, |
|||
|
In CAD $ |
2024 |
2023 |
|
|
Cash from operating activities |
$ 7,546,074 |
$ 7,701,845 |
|
|
Less: Cash used in investing activities: |
|||
|
Purchase of building, property and equipment |
(30,742) |
(1,283) |
|
|
Additions to intangible assets |
(1,697,853) |
(1,192,097) |
|
|
Free cash flow1 |
$ 5,817,479 |
$ 6,508,465 |
|
Additional information on these measure may be found under the heading “Definitions – IFRS, Additional GAAP and Non-GAAP Measures” in the interim MD&A for the three months ended March 31, 2024 which is available under Payfare’s profile on SEDAR+ at www.sedarplus.ca.
Cautionary Statement Regarding Unaudited and Unreviewed Financial Information and Forward-Looking Information
This press release contains unaudited and unreviewed financial information which has not been audited or reviewed by the Company’s auditors, nor have the auditors expressed an opinion regarding such unaudited and unreviewed financial information. Security holders, potential security holders and other prospective investors are cautioned not to place undue reliance on unaudited and unreviewed financial information.
This press release also contains forward-looking information within the meaning of applicable securities legislation, which reflects Payfare’s current expectations regarding future events as of the date hereof. Such forward-looking information may include but are not limited to statements regarding Company’s future audited financial statements and the timing of its Annual Filings and the auditor’s report in respect thereof, the delivery of the SOC 1 report by the Vendor, Payfare’s compliance with the MCTO and NP 12-203, the Company’s future financial conditions, results of operations, plans, objectives, performance or business developments and includes statements on the launch of new programs, new services and platforms, guidance information, the acceleration of growth, strategic objectives for 2024 and target revenue and Adjusted EBITDA ranges for 2024, diversifying the Company’s customer base and verticals, the operational roll-out of the “Uber Pro” program, achieving continued profitability, expedited payout options for gig workers, expansion into the earned wage access vertical for hourly paid employees, new partnerships and new merchant relationships, and establishing infrastructure in international markets to facilitate global expansion and continued improvements in gross profits. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Payfare’s control, that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks include the factors discussed under the “Risk Factors” section in Payfare’s MD&A for the three months ended March 31, 2024 and March 31, 2023 and factors discussed from time to time in Payfare’s filings with the Canadian Securities Authorities, copies of which can be found under Payfare’s profile on the SEDAR+ website at www.sedarplus.ca. Other factors that could cause actual results or events to differ materially include the inability of Payfare to obtain the SOC 1 report from the Vendor, or obtain a report which is free from material deficiencies or findings, the inability of Payfare to complete its Annual Filings, the need for Payfare to materially change its unaudited results that were previously disclosed, the revoking of the MCTO by the Ontario Securities Commission, the inability of Payfare to launch its new programs or platforms including for earned wage access in a timely manner, the lack of experience or resources to enter into the EWA vertical, the regulatory uncertainty around EWA services, the economic viability of new programs and platforms, cash-back, incentive, “win-back” and/or marketing campaigns are reduced or discontinued by the respective gig platform clients or do not have the intended impact that the Company has expected or forecasted, the inability to scale Payfare’s operations to manage the increased volume of new cardholder sign-ups, active users or transactions, regulatory constraints when providing earned wage access programs, the impact of an inflationary recession and rising costs of goods and services on Payfare’s business model, Payfare’s ability to finance and support new programs and platforms, a general decline in the credit markets or gig economy in North America, the availability of talent and the retention of employees to support Payfare’s plans, and industry competitors who may have superior technology or are quicker to take advantage of certain market opportunities. Accordingly, readers should not place undue reliance on forward-looking information. The purpose of guidance contained in this news release is to assist investors, shareholders, and others in understanding certain financial metrics relating to expected 2024 financial results for evaluating the performance of our business. Readers are cautioned that such guidance is not appropriate for any other purpose Payfare does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.
SOURCE Payfare Inc.