Payfare Comments on Recent Share Price Volatility

Management highlights transformational performance achieved year-to-date

TORONTO, Sept. 28, 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 commented that it is not aware of any material events impacting operations that have occurred to drive elevated share price volatility in the month of September. Management is taking this opportunity to highlight the financial and operational milestones achieved to date in 2023.

Financial Highlights for the Six Months Ended June 30, 2023:

• Increased revenue to a record $88.8 million representing a $32.2 million (+57%) increase compared to the same period in 2022.
• Ended Q2 2023 with 1,188,325 active users¹, up by 304,074 active users (+34%) versus the prior year period.
• Total gross dollar value (Total GDV)¹ was $5.5 billion, an increase of $2.1 billion (+63%) over the first half of 2022.
• Net income of $3.4 million, or $0.07 per share, up $8.4 million (+168%), compared to the same period in 2022.
• Adjusted net income¹ of $8.1 million, or $0.17 per share, representing growth of $8.4 million compared to the prior year period.
• Adjusted EBITDA¹ of $7.8 million, reflecting an $8.4 million increase compared to the same period in 2022.
• Free cash flow¹ of $4.7 million which equates to growth of $8.6 million (+221%) over the prior year period.
• Ended Q2 2023 with a cash balance of $52.0 million and no debt.

Year-to-Date 2023 Operational Highlights :

• In its Q2 2023 financial results Payfare announced that it was successfully selected in two Request for Proposal (RFP) processes to launch new private label and embedded finance programs for globally recognized strategic partners on its platform.
• Launched a new cashback rewards program partnering with Upside to provide personalized price promotion offers at fuel stations, restaurants, convenience and grocery stores to Dasher Direct cardholders.
• Introduced Avibra’s suite of free and low-cost health and wellness protection and perks access to Dasher Direct cardholders.
• Expanded the partnership with NCR Corporation to deliver self service financial tools for US cardholders by providing access to Allpoint+ cash accepting ATMs, enabling cash deposits in addition to cash withdrawals, and NCR Pay360, an API solution that allows cardholders to access cash via Payfare’s digital banking apps.
• As of July 28, 2023, Payfare’s Common Shares qualified for trading in the United States on the OTCQX Best Market, having been upgraded from the OTC Pink Market. The shares trade under the symbol “PYFRF” and will facilitate trading by interested Payfare investors in the United States.

“While the recent share price volatility is disappointing it does not impact Payfare’s ability to execute on its growth initiatives,” said Marco Margiotta, CEO and Founding Partner of Payfare. “Our business generates positive net earnings and free cash flow which eliminates the need for external financing to fund our robust pipeline of organic growth opportunities.”

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.

For further information please visit www.payfare.com

¹Non-IFRS and Supplementary Financial Measures

This press release contains references to “active users”, “Total GDV”, “adjusted net income (loss)”, “adjusted net income (loss) 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 loss (gain), amortization of deferred income, finance and interest costs (income), current tax expense and change in fair value of derivative liability.

“Adjusted EBITDA” adjusts EBITDA for stock-based compensation expense, transactional gains or losses on assets, asset impairment charges, loss on extinguishment of debts, gains or losses from changes in fair value of derivative financial instruments and contingent consideration liabilities measured at fair value through profit or loss, gains or losses from disposals of equipment, net income or loss from equity accounted investees, 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 six months ended June 30, 2023 and 2022.

	Three Months Ended June 30,			Six Months Ended June 30,
In CAD $	2023		2022	2023		2022
Net income (loss)	$   2,113,525		$  (2,310,824)	$  3,402,401		$  (5,015,362)
Add:
Current tax expense	28,099		–	45,368		–
Finance income	(287,090)		(123,752)	(769,972)		(189,087)
Other income	(1,607)		(32,946)	(9,397)		(72,908)
Foreign exchange loss	370,450		26,998	425,681		28,424
Amortization of intangible assets	713,262		209,038	1,285,245		398,319
Depreciation of building, property and equipment	34,917		36,966	70,433		69,970
EBITDA	2,971,556		(2,194,520)	4,449,759		(4,780,644)
Adjustments:
Restructuring expense/other	688,829		–	1,303,319		–
Share based compensation	1,095,813		2,485,980	2,037,506		4,212,902
Adjusted EBITDA	$  4,756,198		$  291,460	$  7,790,584		$  (567,742)

 

“Adjusted net income (loss)” adjusts net income (loss) for share-based compensation expense, amortization and depreciation expenses, transactional gains or losses on assets, asset impairment charges, loss on extinguishment of debts, gains or losses from changes in fair value of derivative financial instruments and contingent consideration liabilities measured at fair value through profit or loss, gains or losses from disposals of equipment, net income or loss from equity accounted investees, 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 (loss) for the three and six months ended June 30, 2023 and 2022.

	Three Months Ended June 30,			Six Months Ended June 30,
In CAD $	2023		2022	2023		2022
Net income (loss)	$  2,113,525		$  (2,310,824)	$  3,402,401		$  (5,015,362)
Add:
Amortization of intangible assets	713,262		209,038	1,285,245		398,319
Depreciation of building, property and equipment	34,917		36,966	70,433		69,970
Restructuring expense/other	688,829		–	1,303,319		–
Share based compensation	1,095,813		2,485,980	2,037,506		4,212,902
Adjusted net income (loss)	$  4,646,346		$  421,160	$  8,098,904		$  (334,171)

 

“Adjusted net income (loss)“ per share is calculated as Adjusted net income (loss) 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 six months ended June 30, 2023 and 2022.

	Three months ended June 30,			Six months ended June 30,
In CAD $	2023		2022	2023		2022
Cash from operating activities	$  1,945,639		$  (3,619,877)	$  7,263,567		$  (2,274,911)
Less: Cash used in investing activities
Purchase of building, property and equipment	(2,930)		(13,320)	(4,213)		(86,407)
Additions to intangible assets	(1,369,002)		(879,719)	(2,561,099)		(1,527,901)
Free cash flow	$  573,707		$  (4,512,916)	$  4,698,255		$  (3,889,219)

 

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 six months ended June 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 growth initiatives, success in two recent RFPs, business continuing to generate positive net earnings and free cash flow, the launch of new features and partnerships, and robust pipeline of organic growth opportunities. 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, Payfare’s inability to realize on growth initiatives or on its pipeline of opportunities, 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. Accordingly, readers should not place undue reliance on forward-looking information. 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