Mike Praeger, AvidXchange Co-Founder & CEO joins the Yahoo Finance Live panel to discuss the AvidXchange making their public debut on the Nasdaq.

Video Transcript

ZACK GUZMAN: Welcome back to Yahoo Finance Live. Right now, we are continuing to track the biggest moves in the IPO space today. AvidXchange making its debut, seeing shares drop, as of right now, by about 5 and 1/2%. The company, though, price shares above its marketed range, bringing in about $660 million in its IPO. Shares selling for 25 bucks a pop, 22 million of them after marketing them in a range of 23 to 25. So, still something to show off there. And want to bring on the CEO and co-founder of AvidXchange here to discuss a little bit more about what the company does. Mike Praeger joins us right now.

And Mike, I mean, when we look at this, it's interesting. You got Mastercard among one of your investors here, the bigger name investors that you guys, of course, have been an operator in the software space that automates payments, invoicing for small businesses for quite some time. But talk to me about what investors listening to this might need to know about AvidXchange.

MIKE PRAEGER: Yeah, so first of all, Zack, thanks for having me. Excited to be here. So AvidXchange, we're a software company. And we're really purpose built to help middle market companies automate their accounts payable and their payment process. So, simply speaking, we eliminate the paper invoice and the paper check for our middle market customers.

Today, in the North American market, we have over 7,000 buyer customers that use our software to manage their accounts payable and payment process, along with over 700,000 supplier customers that rely on the AvidPay network to submit invoices and receive their payments and the remittance data related to those payments.

AKIKO FUJITA: Mike, it's a good reminder, as you explained your business, that there's still a lot of companies that are filing paperwork. Not everything is happening digitally. Obviously, that's where you come into play. How do you think the pandemic and the way in which the shift has happened in terms of how we work, how has that accelerated the digital transformation that you have positioned yourself to help spur along?

MIKE PRAEGER: Yeah, Akiko, that's a great question. And, you know, obviously, in March of last year, the world changed very quickly related to how CFOs and controllers thought about executing their key back office processes. And very quickly, they realized that if they don't have their core financial systems in a cloud-based software as a service environment, it's really difficult to execute a work from home model. And so, that's certainly been a catalyst.

Overall, in the industry today, you know, here we are in 2021. And across the broader entire market, being enterprise, middle market, and small business, still over 40% of all, you know, payment transactions are paper checks. And we expect in the middle market, it's even over 60%. So that's the business problem that we're trying to solve and really excited to help these middle market companies on their journey of automating for the first time.

ZACK GUZMAN: Let's talk a little bit about what investors should expect when it comes to profitability here. Because if we have seen a trend, I think some of the stocks that have traded lower on their debuts have shown growing net losses. You guys would be in that bucket as well, a net loss of $92 million for the first six months of the year versus $51 million a year prior. I mean, revenues have also grown over that time period. So maybe talk to me about how you kind of pair those and what it looks like moving forward.

MIKE PRAEGER: Yeah, that's a really good question. It's really about strategy. You know, our strategy today is, we have a tremendous white space or open market opportunity within our middle market segment of our last, you know, 1,000 new customers that we added. Over 95% of those customers were actually automating their business process for the first time. So they're moving from paper to electronic for the first time.

And so, our focus has been-- it's really, you know, aggressively to take advantage of that market opportunity, along with focused on really healthy, you know, gross margin and gross margin expansion. So we think that's kind of the right barometer in terms of, certainly, in the short-term, take advantage of the market opportunities, you know, measuring growth, along with that gross margin expansion.

ZACK GUZMAN: And you guys are out there now as a publicly traded company. Day one, shares off just a bit here. But Mike Praeger, AvidXchange co-founder and CEO, I appreciate you coming on here to chat about what lies in store moving forward. Congrats again on the debut.