Payfare Announces Record Third Quarter 2023 Financial Results

Record quarterly profitability, generating net income of $4.8 million, and Adjusted net income per share¹ of $0.16 in Q3 2023

TORONTO, Nov. 8, 2023 /PRNewswire/ – Payfare Inc. (“Payfare” or the “Company“) (TSX: PAY) (OTCQX: PYFRF), a leading fintech powering instant payout 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 September 30, 2023. 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.

Q3 2023 Highlights:

• Increased revenue to a record $47.2 million for the three months ended September 30, 2023, representing a $12.3 million (+35%) increase compared to the same period in 2022.
• Ended Q3 2023 with 1,211,275 active users¹, up 290,593 (+32%) compared to active user¹ count as at the end of Q2 2022. As of October 31, 2023 Payfare had 1,254,848 active users, up 43,573 from the quarter ended September 30, 2023 as the company enters the seasonally strong fourth quarter.
• Total gross dollar value (Total GDV)¹ in Q3 2023 was $3.0 billion, an increase of $0.8 billion (+40%) over Q3 2022.
• Net income of $4.8 million, or $0.10 per share, for the three months ended September 30, 2023, up $5.6 million (+684%), compared to the same period in 2022.
• Adjusted net income¹ of $7.5 million, or $0.16 per share, for the three months ended September 30, 2023, representing growth of $5.8 million (+337%) over the prior year period.
• Adjusted EBITDA¹ of $6.3 million for the three months ended September 30, 2023, reflecting a $5.0 million increase (+373%) compared to the same period in 2022.
• Free cash flow¹ of $3.6 million for the three months ended Sept 30, 2023, which equates to growth of $0.8 million (+29%) over the prior year period.
• The Company has issued fourth quarter 2023 revenue and Adjusted EBITDA¹ guidance of $50 million and $7 million, respectively, and remains on track to meet its full year guidance.
• In the prior quarter, the Company was successfully selected in two Request for Proposal (RFP) processes to launch new private label and embedded finance programs for globally recognized strategic partners. In the third quarter, Payfare signed a definitive agreement with one of these partners, an international big box retailer, to provide earnings payouts to the retailer’s delivery gig workforce in Canada. Integration and app development remains ongoing with the second partner client, which Payfare expects to execute a definitive agreement with in the fourth quarter of 2023.
• Payfare intends to file with the Toronto Stock Exchange (“TSX”) a notice of intention to commence a normal course issuer bid (“NCIB”) for its Class A Common Shares (“Shares”). Subject to acceptance by the TSX, the Company would be permitted under the NCIB to purchase for cancellation, through the facilities of the TSX and all available Canadian markets and alternative trading platforms, up to 5% of the issued and outstanding Shares for a period of 12 months after the NCIB commences. The exact amount of Shares subject to the NCIB will be determined on the date of acceptance of the notice of intention by the TSX.
• Post quarter end, Payfare announced that it is expanding its partnership with its card processor i2c Inc., to support growth in new markets including Canada and the United Kingdom.

“We are proud to achieve record levels of profitability in the quarter,” said Marco Margiotta, CEO and Founding Partner of Payfare. “In Q3 we were focused on integration with the two new significant partnerships won in Q2. Looking ahead, our pipeline of new gig and Earned Wage Access clients remains robust as we focus on these growth initiatives heading into 2024”. 

Conference Call

Management will host a conference call on Wednesday November 8, 2023, at 6:30 p.m. ET to discuss these results. A short presentation in connection with the conference call will be made available on the Company’s website at https://corp.payfare.com/investors/. Management will also host a live question and answer session on the conference call with analysts.

To access the conference call, please dial (416) 764-8658 or 1-888-886-7786. Please call the conference telephone number 10-15 minutes prior to the start time so that you are in the queue for an operator to assist in registering and patching you through.

An archived recording of the conference call will be available until December 8, 2023. To listen to the recording, call 416-764-8692 or 1-877-674-7070 and enter passcode 781255.

About Payfare (TSX:PAY)

Payfare is a global financial technology company powering digital banking and instant payment solutions for today’s gig workforce. Payfare partners with leading platforms and marketplaces, such as Uber, Lyft and DoorDash, to provide financial health for their workforce.

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 International Financial Reporting 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 financial 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 and going public transaction.

The table below reconciles net income (loss) to EBITDA and Adjusted EBITDA for the three and nine months ended September 30, 2023 and 2022.

	Three Months Ended September 30,			Nine Months Ended September 30,
In CAD $	2023		2022	2023		2022
Net income (loss)	$   4,810,360		$  (823,855)	$ 8,212,761		$  (5,839,217)
Add:
Current tax expense	20,874		–	66,242		–
Finance income	795,305		303,597	1,565,277		492,684
Other income	–		23,153	9,397		96,061
Foreign exchange gain	445,690		63,136	20,009		34,712
Amortization of intangible assets	942,531		354,976	2,227,776		753,295
Depreciation of building, property and equipment	17,182		36,587	87,615		106,557
EBITDA	4,549,952		(822,178)	8,999,711		(5,602,822)
Adjustments:
Restructuring expense/other	706,185		142,274	2,009,504		142,274
Share based compensation	1,040,863		2,011,292	3,078,369		6,224,194
Adjusted EBITDA	$  6,297,000		$  1,331,388	$  14,087,584		$ 763,646

“Adjusted net income” adjusts net income (loss) 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 and going public transaction. The table below reconciles net income (loss) to Adjusted net income for the three and nine months ended September 30, 2023 and 2022.

	Three Months Ended September 30,			Nine Months Ended September 30,
In CAD $	2023		2022	2023		2022
Net income (loss)	$   4,810,360		$  (823,855)	$ 8,212,761		$  (5,839,217)
Add:
Amortization of intangible assets	942,531		354,976	2,227,776		753,295
Depreciation of building, property  and equipment	17,182		36,587	87,615		106,557
Restructuring expense/other	706,185		142,274	2,009,504		142,274
Share based compensation	1,040,863		2,011,292	3,078,369		6,224,194
Adjusted net income	$  7,517,121		$  1,721,274	$  15,616,025		$  1,387,103

“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 and nine months ended September 30, 2023 and 2022.

	Three Months Ended September 30,			Nine Months Ended September 30,
In CAD $	2023		2022	2023		2022
Cash from operating activities	$  5,142,608		$ 3,766,903	$  12,406,175		$  1,491,992
Less: Cash used in investing activities
Purchase of building, property and equipment	(15,495)		–	(19,708)		(86,407)
Additions to intangible assets	(1,506,530)		(949,998)	(4,067,629)		(2,477,899)
Free cash flow	$  3,620,583		$  2,816,905	$  8,318,838		$  (1,072,314)

Additional information on these measure may be found under the heading “Definitions – IFRS, Additional GAAP and Non-GAAP Measures” in the MD&A for the three and nine months ended September 30, 2023 which is available under Payfare’s profile on SEDAR+ at www.sedarplus.ca and is incorporated by reference to this press release.

Forward-Looking Information

This press release 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 underlying fundamentals of core business model, success in two recent RFPs, new partnerships and product shelf enhancements over the balance of the year, guidance information for fourth quarter and the full year in 2023, the launch of new features and partnerships, and expansion into new business verticals which include Earned Wage Access for full time employees, the Company’s intention to file to commence its NCIB, the timing thereof, and the number of Shares which may be purchased under the NCIB. 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 year ended December 31, 2022. Other factors that could cause actual results or events to differ materially include the inability of Payfare to launch and market its new programs or platforms that are planned in a timely manner, the lack of experience or resources to enter into Earned Wage Access vertical, Payfare’s inability to manage the increased volume of new cardholder sign-ups, active users or transactions, the decline in third party ranking of Payfare’s mobile apps, the impact of inflation and rising costs of goods and services on Payfare’s business model which may impact management’s expectations on active user growth in the year 2023 and beyond, the failure to enter into definitive agreements with parties who have selected Payfare through their RFP processes, Payfare’s ability to finance and support new programs and platforms, a general decline in the credit markets, gig economy or confidence in the banking sector in North America, non-acceptance by the TSX of the Company’s notice application for the NCIB. Accordingly, readers should not place undue reliance on forward-looking information. The purpose of guidance contained in this news release is solely to outline management’s current expectations and outlook for its 2023 financial performance, and not to forecast or project future results. 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.

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SOURCE Payfare