AvidXchange (AVDX) UBS Global Technology and AI Conference summary

Macro and transaction trends

• Net transaction retention historically ranged 104%-105%, but dropped to 101% last year and has been sub-100% in 2023 due to reduced discretionary spending in the middle market.

• Discretionary spend cuts affected categories like marketing, professional services, and capital projects.

• Overall transaction growth rate declined from 5.8% in Q1 to 4.8% in Q2, but rebounded to 5.2% in Q3, showing early signs of recovery.

• Merchant churn is not a significant factor due to the mid-market customer base.

Revenue growth and vertical strategy

• Underlying revenue growth, excluding float, is in high single to low double digits, with hopes to return to mid-teens as transaction retention recovers.

• Penetration rates across nine verticals remain in single digits, with real estate (especially multifamily housing) and healthcare facilities showing strong potential.

• New partnerships, such as with AppFolio, have driven demand in real estate, while dental service organizations and other healthcare modalities are emerging growth areas.

Lead quality and distribution partnerships

• Shifted investment from underperforming digital channels to higher quality partner channels, reducing average sales cycle from 75 to 55 business days and increasing logo growth.

• Bank partnerships, including white-label and referral models, are key for distribution, with about 30 bank relationships and a preference for referral partnerships where sales process control is retained.