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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(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


☐	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

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

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.

AvidXchange Holdings, Inc.

Form 10-Q

For the Quarterly Period Ended June 30, 2025

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Unaudited Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024	1
	Unaudited Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2025 and 2024	2
	Unaudited Consolidated Statements of Changes in Stockholders' Equity for the Three and Six Months Ended June 30, 2025 and 2024	3
	Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024	4
	Notes to Unaudited Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	31
PART II.	OTHER INFORMATION	31
Item 1.	Legal Proceedings.	31
Item 1A.	Risk Factors.	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	32
Item 3.	Defaults Upon Senior Securities.	32
Item 4.	Mine Safety Disclosures.	32
Item 5.	Other Information.	32
Item 6.	Exhibits.	34
Signatures		35

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
Cash and cash equivalents	$	335,773		$	355,637
Restricted funds held for customers		1,148,195			1,250,346
Marketable securities		71,461			33,663
Accounts receivable, net of allowances of $4,362 and $4,279, respectively		50,988			51,671
Supplier advances receivable, net of allowances of $2,024 and $1,644 respectively		18,035			14,080
Prepaid expenses and other current assets		15,503			15,317
Total current assets		1,639,955			1,720,714
Property and equipment, net		96,632			97,592
Deferred customer origination costs, net		29,005			28,119
Goodwill		165,921			165,921
Intangible assets, net		65,235			71,068
Other noncurrent assets and deposits		7,087			6,297
Total assets	$	2,003,835		$	2,089,711
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	20,482		$	15,494
Accrued expenses		45,094			46,849
Payment service obligations		1,148,195			1,250,346
Deferred revenue		12,747			13,967
Current maturities of lease obligations under finance leases		36			103
Current maturities of lease obligations under operating leases		663			1,207
Current maturities of long-term debt		4,800			4,800
Total current liabilities		1,232,017			1,332,766
Long-term liabilities
Deferred revenue, less current portion		10,640			11,856
Obligations under finance leases, less current maturities		63,342			63,025
Obligations under operating leases, less current maturities		1,655			1,969
Long-term debt		4,300			4,300
Other long-term liabilities		4,331			3,962
Total liabilities		1,316,285			1,417,878
Commitments and contingencies
Stockholders' equity
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		-			-
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
Additional paid-in capital		1,718,132			1,685,644
Accumulated deficit		(1,030,790	)		(1,014,015	)
Total stockholders' equity		687,550			671,833
Total liabilities and stockholders' equity	$	2,003,835		$	2,089,711

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,						Six Months Ended June 30,
	2025			2024			2025			2024
Revenues	$	110,570		$	105,132		$	218,512		$	210,730
Cost of revenues (exclusive of depreciation and amortization expense)		30,949			30,426			61,738			60,759
Operating expenses
Sales and marketing		23,068			19,956			45,579			39,697
Research and development		26,975			25,008			52,357			50,912
General and administrative		33,510			22,635			62,458			46,895
Impairment and write-off of intangible assets		-			-			-			162
Depreciation and amortization		8,479			9,208			17,148			18,515
Total operating expenses		92,032			76,807			177,542			156,181
Loss from operations		(12,411	)		(2,101	)		(20,768	)		(6,210	)
Other income (expense)
Interest income		4,480			5,979			8,621			12,541
Interest expense		(2,010	)		(3,323	)		(4,016	)		(6,660	)
Other income		2,470			2,656			4,605			5,881
(Loss) income before income taxes		(9,941	)		555			(16,163	)		(329	)
Income tax (benefit) expense		(477	)		119			612			244
Net (loss) income	$	(9,464	)	$	436		$	(16,775	)	$	(573	)
Net (loss) income per share attributable to common stockholders, basic and diluted
Basic	$	(0.05	)	$	0.00		$	(0.08	)	$	0.00
Diluted	$	(0.05	)	$	0.00		$	(0.08	)	$	0.00
Weighted average number of common shares used to compute net (loss) income per share attributable to common stockholders, basic and diluted
Basic		206,933,045			207,025,967			205,982,206			205,961,720
Diluted		206,933,045			210,370,559			205,982,206			205,961,720

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

AvidXchange Holdings, Inc.

Unaudited Consolidated Statements of Changes in Stockholders’ Equity

(in thousands, except share and per share data)


	Common Stock				Additional Paid-in Capital			Accumulated Deficit			Total Stockholders' Equity

Balances at December 31, 2024		204,335,860	$	204	$	1,685,644		$	(1,014,015	)	$	671,833
Exercise of stock options		82,121		-		164			-			164
Issuance of common stock upon vesting of restricted stock units, net of shares surrendered for taxes		1,777,444		2		(2	)		-			-
Stock-based compensation expense		-		-		14,226			-			14,226
Stock-based compensation expense for Employee Stock Purchase Plan, or ESPP		-		-		260			-			260
Net loss		-		-		-			(7,311	)		(7,311	)
Balances at March 31, 2025		206,195,425	$	206	$	1,700,292		$	(1,021,326	)	$	679,172
Exercise of stock options		233,132		1		1,309			-			1,310
Issuance of common stock upon vesting of restricted stock units, net of shares surrendered for taxes		1,058,912		1		(1	)		-			-
Issuance of common stock under ESPP		207,840		-		1,447			-			1,447
Stock-based compensation expense		-		-		14,811			-			14,811
Stock-based compensation expense for ESPP		-		-		274			-			274
Net loss		-		-		-			(9,464	)		(9,464	)
Balances at June 30, 2025		207,695,309	$	208	$	1,718,132		$	(1,030,790	)	$	687,550


	Common Stock				Additional Paid-in Capital			Accumulated Deficit			Total Stockholders' Equity

Balances at December 31, 2023		204,084,024	$	204	$	1,678,401		$	(1,022,160	)	$	656,445
Exercise of stock options		493,608		-		3,168			-			3,168
Issuance of common stock upon vesting of restricted stock units		1,737,736		2		(2	)		-			-
Stock-based compensation expense		-		-		10,766			-			10,766
Stock-based compensation expense for ESPP		-		-		193			-			193
Net loss		-		-		-			(1,009	)		(1,009	)
Balances at March 31, 2024		206,315,368	$	206	$	1,692,526		$	(1,023,169	)	$	669,563
Exercise of stock options		308,435		-		2,225			-			2,225
Issuance of common stock upon vesting of restricted stock units		1,028,744		1		(1	)		-			-
Issuance of common stock under ESPP		167,351		-		1,220			-			1,220
Stock-based compensation expense		-		-		12,117			-			12,117
Stock-based compensation expense for ESPP		-		-		202			-			202
Net income		-		-		-			436			436
Balances at June 30, 2024		207,819,898	$	207	$	1,708,289		$	(1,022,733	)	$	685,763

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

AvidXchange Holdings, Inc.

Unaudited Consolidated Statements of Cash Flows

(in thousands)


	Six Months Ended June 30,
	2025			2024
Cash flows from operating activities
Net loss	$	(16,775	)	$	(573	)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization expense		17,148			18,515
Amortization of deferred financing costs		190			212
Provision for credit losses		1,976			1,481
Stock-based compensation		29,571			23,278
Accrued interest		638			822
Impairment and write-off on intangible assets		-			162
Loss on write-off of fixed assets		3			-
Gain on lease buyout		(172	)		-
Accretion of investments held to maturity		(629	)		(2,209	)
Deferred income taxes		247			178
Changes in operating assets and liabilities
Accounts receivable		184			(3,652	)
Accrued interest on investments		43			-
Prepaid expenses and other current assets		(186	)		(2,481	)
Other noncurrent assets		(980	)		(839	)
Deferred customer origination costs		(887	)		(142	)
Accounts payable		4,988			(1,378	)
Deferred revenue		(2,436	)		(2,735	)
Accrued expenses and other liabilities		(1,631	)		(11,388	)
Operating lease liabilities		(686	)		(323	)
Total adjustments		47,381			19,501
Net cash provided by operating activities		30,606			18,928
Cash flows from investing activities
Purchase of marketable securities held to maturity		(65,329	)		(98,996	)
Proceeds from maturity of marketable securities held to maturity		28,117			55,996
Purchases of equipment		(1,324	)		(1,100	)
Purchases of intangible assets		(9,034	)		(8,087	)
Supplier advances, net		(5,431	)		(4,092	)
Net cash used in investing activities		(53,001	)		(56,279	)
Cash flows from financing activities
Repayments of long-term debt		-			(813	)
Principal payments on finance leases		(81	)		(150	)
Proceeds from issuance of common stock		1,474			5,393
Proceeds from issuance of common stock under ESPP		1,447			1,220
Remittance of taxes upon vesting of restricted stock units		(209	)		-
Payment of acquisition-related liability		(100	)		(100	)
Payment service obligations		(102,151	)		(385,201	)
Net cash used in financing activities		(99,620	)		(379,651	)
Net decrease in cash, cash equivalents, and restricted funds held for customers		(122,015	)		(417,002	)
Cash, cash equivalents, and restricted funds held for customers
Cash, cash equivalents, and restricted funds held for customers, beginning of year		1,605,983			1,985,630
Cash, cash equivalents, and restricted funds held for customers, end of period	$	1,483,968		$	1,568,628
Supplementary information of noncash investing and financing activities
Property and equipment purchases in accounts payable and accrued expenses	$	-		$	19
Interest paid on notes payable		-			2,673
Interest paid on finance leases		3,000			2,954
Cash paid for income taxes		369			254

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

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,				Six Months Ended June 30,
	2025		2024		2025		2024
Software revenue	$	32,927	$	29,914	$	63,865	$	59,602
Payment revenue		76,681		74,183		152,621		149,385
Services revenue		962		1,035		2,026		1,743
Total revenues	$	110,570	$	105,132	$	218,512	$	210,730

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	$	20,479	$	19,989
Payment processing receivable, net		30,509		31,682
Accounts receivable, net	$	50,988	$	51,671
Contract liabilities	$	23,387	$	25,823

Significant changes in the contract liabilities balance are as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
Revenue recognized included in beginning of period balance	$	(3,217	)	$	(3,018	)	$	(5,341	)	$	(6,409	)
Cash received, excluding amounts recognized as revenue during the period		2,049			1,614			4,167			3,674
Adjustments not recognized as revenue		(1,262	)		-			(1,262	)		-

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
	Allowance for Credit Losses			Allowance for Returns		Supplier Advances Receivable Allowance
Allowance balance, December 31, 2024	$	2,498		$	1,781	$	1,644
Amounts charged to contra revenue, cost of revenues and expenses		500			120		1,489
Amounts written off as uncollectable		(537	)		-		(1,448	)
Recoveries of amounts previously written off		-			-		339
Deduction released to revenue		-			-		-
Allowance balance, June 30, 2025	$	2,461		$	1,901	$	2,024

AvidXchange Holdings, Inc.

Notes to the Unaudited Consolidated Financial Statements

(in thousands, except share and per share data)


	Accounts Receivable
	Allowance for Credit Losses			Allowance for Returns			Supplier Advances Receivable Allowance
Allowance balance, December 31, 2023	$	2,142		$	2,089		$	1,333
Amounts charged to contra revenue, cost of revenues and expenses		286			(105	)		654
Amounts written off as uncollectable		(28	)		-			(1,216	)
Recoveries of amounts previously written off		-			-			572
Deduction released to revenue		-			-			-
Allowance balance, June 30, 2024	$	2,400		$	1,984		$	1,343

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	$	15,824	$	17,910	$	33,734
As of December 31, 2024		15,805		20,946		36,751

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,				Six Months Ended June 30,
	2025		2024		2025		2024
Capitalized sales commissions and implementation costs	$	4,039	$	3,827	$	7,193	$	6,480
Amortization of deferred contract costs
Costs to obtain contracts included in sales and marketing expense	$	1,830	$	1,692	$	3,591	$	3,243
Costs to fulfill contracts included in cost of revenue	$	1,342	$	1,546		2,716	$	3,095

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,				Six Months Ended June 30,
Anti-Dilutive Common Share Equivalents	2025		2024		2025		2024
Stock options		6,996,174		158,920		6,996,174		7,556,543
Restricted stock units		13,518,979		102,523		13,518,979		10,986,075
Employee stock purchase plan		63,469		3,988		63,469		60,450
Total anti-dilutive common share equivalents		20,578,622		265,431		20,578,622		18,603,068

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


	Three Months Ended June 30,					Six Months Ended June 30,
	2025			2024		2025			2024
Numerator:
Net loss	$	(9,464	)	$	436	$	(16,775	)	$	(573	)
Net loss attributable to common stockholders	$	(9,464	)	$	436	$	(16,775	)	$	(573	)
Denominator:
Weighted-average common shares outstanding, basic		206,933,045			207,025,967		205,982,206			205,961,720
Weighted-average effect of potentially dilutive securities:
Stock options		-			1,322,945		-			-
Restricted stock units		-			2,021,647		-			-
Weighted-average common shares outstanding, diluted		206,933,045			210,370,559		205,982,206			205,961,720
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
Description	Level 1		Level 2		Level 3		Total
Cash equivalents
Money market mutual funds (1)	$	86,368	$	-	$	-	$	86,368
Rabbi trust-owned life insurance policies (at cash surrender value) (2)		-		2,951		-		2,951
Total assets	$	86,368	$	2,951	$	-	$	89,319

Other long-term liabilities
Deferred compensation	$	-	$	2,615	$	-		2,615
Total liabilities	$	-	$	2,615	$	-	$	2,615


	As of December 31, 2024
Description	Level 1		Level 2		Level 3		Total
Cash equivalents
Money market mutual funds (1)	$	72,686	$	-	$	-	$	72,686
Rabbi trust-owned life insurance policies (at cash surrender value) (2)		-		2,756		-		2,756
Total assets	$	72,686	$	2,756	$	-	$	75,442

Other long-term liabilities
Deferred compensation	$	-	$	2,393	$	-		2,393
Total liabilities	$	-	$	2,393	$	-	$	2,393

________________


(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
Sector	Amortized Cost		Allowance for Credit Losses		Net Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Agency	$	3,099	$	-	$	3,099	$	4	$	-		$	3,103
Financial		22,409		-		22,409		46		(18	)		22,437
Government		11,402		-		11,402		-		(2	)		11,400
Industrial		34,551		-		34,551		166		(1	)		34,716
Total	$	71,461	$	-	$	71,461	$	216	$	(21	)	$	71,656


	As of December 31, 2024
Sector	Amortized Cost		Allowance for Credit Losses		Net Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Financial	$	33,663	$	-	$	33,663	$	27	$	(54	)	$	33,636
Total	$	33,663	$	-	$	33,663	$	27	$	(54	)	$	33,636

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	$	40,821
Due after one year through five years		30,640
Total	$	71,461

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 (1)	$	29,589		$	10,957
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,				Six Months Ended June 30,
Capitalized software development costs	2025		2024		2025		2024
Capitalized	$	4,572	$	4,048	$	9,034	$	8,087
Amortized		4,490		4,449		9,123		8,867


	As of June 30, 2025
	Gross		Accumulated
	Amount		Amortization			Net Amount
Internally developed software	$	127,751	$	(101,612	)	$	26,139
Non-compete		6,194		(4,966	)		1,228
Customer relationships		72,512		(49,788	)		22,724
Technology		45,791		(34,616	)		11,175
Trade name		7,748		(3,779	)		3,969
Total intangible assets	$	259,996	$	(194,761	)	$	65,235

          
         As of December 31, 2024

          
         Gross

         Accumulated

          
         Amount

         Amortization

         Net Amount

Internally developed software

118,717

1. Formation and Business of the Company

2. Summary of Significant Accounting Policies

Basis of Consolidation and Presentation

Use of Estimates

Proposed Plan of Merger

Segments

Concentrations

Restructuring costs

Cash and Cash Equivalents

Marketable Securities

Accounts Receivable, Supplier Advances and Allowance for Credit Losses

Restricted Funds Held for Customers and Payment Service Obligations

Stock-Based Compensation

Nonqualified Deferred Compensation Plan

New Accounting Pronouncements

3. Revenue from Contracts with Customers

Disaggregation of Revenue

Contract Assets and Liabilities

Transaction Price Allocated to Remaining Performance Obligations

Contract Costs

4. Loss Per Common Share

5. Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

6. Marketable Securities

7. Intangible Assets and Goodwill

Intangible Assets

AvidXchange Holdings, Inc. 10-Q