AvidXchange Sends Mixed Messages to Market

Businesses exchanging money with other businesses – what’s often called B2B payments – is a fragmented financial marketplace that’s estimated to exceed $100 trillion worldwide. If you’re able to capture just one basis point (0.01%) of that opportunity, you have a $10 billion run rate. Companies that process B2B payments charge a whole lot more than that, and it’s also an underpenetrated opportunity. In the US alone, nearly a third of all B2B transactions still use cash or paper checks. (Almost 90% of B2B payments fraud relates to paper checks.) That’s the B2B payments thesis in a nutshell, and it’s why we originally invested in AvidXchange (AVDX).

Growth Slows

Our last piece on AVDX noted that while growth remained strong, there were signs of weakness. We were surprised that the company was not enjoying higher revenue growth given the value proposition of saving its customers loads of money. The midpoint of their 2024 guidance was 16.6%, and actual growth came in at 15%. That’s not horribly bad, but next year’s guidance is dismal – just 4% growth expected.

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