Payfare Stock and its largest customer, DoorDash, will not be going forward into renewing their partnership next year. This will be expected in a move that one investment dealer expects to result in major revenue losses for the wage access of the company. This news about Payfare stock was stated in a news release issued Thursday. In it, Payfare stock said that its agreement related to DoorDash’s DasherDirect card program will not be renewed beyond the current term in early 2025.
Payfare or Payfare stock firm is known to be a platform that allows gig workers and other companies to quickly and easily get paid following a delivery. DoorDash utilizes the platform to pay its employees. This is primarily for those who collect food orders and deliver it to customers.
The news release says that DasherDirect is its largest program. Plus, the revenue derived from the program has been a substantial proportion of the Payfare stock total revenue. The loss is expected to affect its 2024 total earnings. This is as per what the company says that it will be withdrawing its previously issued financial guidance and earnings for this year. Apart from that, DoorDash is the company’s (Payfare Stock Firm) largest client.
What Has Been Said About Payfare Stock in the Release?
“Payfare continues to see high growth with its other client programs and is working on securing new, large-scale EWA programs in both the gig economy and employee verticals,” the news release reads in extended parts. “[Payfare] believes that the aggregate Gross Dollar Value (GDV) from these opportunities could mitigate the impact of the DoorDash non-renewal.”
According to its website, Payfare stock clients include Uber, Uber Eats and Lyft. All of these companies employ gig workers like DoorDash. Plus, they are known well for it. The company’s stock dropped over 75 percent on Friday during the late afternoon trading following the announcement.
In addition, to this, Payfare Stock firm’s director, Hugo Chan, has resigned due to “personal reasons,” the release said.
How Does Eight Capital View Payfare Stock Firm’s Resignation?
In a note issued on Friday, the analysts at investment dealer Eight Capital called the exit a “negative event” for Payfare Stock.
“There is no denying that this is a negative event for the company and one that changes the company’s financial profile on a fundamental level,” it reads in part. “The company will now be left with the majority of its revenue from its recently renewed Lyft (Not Rated) contract and from the recently launched Uber Pro Card with Uber in Canada.”
The analysts do not expect third-quarter or fourth-quarter estimates will be impacted. However, it expects there to be a large decrease in earnings next year. This is because the report estimates DoorDash represents 70 to 80 percent of Payfare’s revenue.
However, the note states that the company has secured commitments. This therefore in the long run is beneficial as it will help it maintain its gross margin profile, and thus generate profit next year, after operating at a deficit.
“…Given the company’s capex light model, we do see a path to potentially EBITDA breakeven towards the end of F25, as the company has several measures to mitigate the opex impact,” it reads. “That being said, under any scenario, Payfare would go from FCF generation to being OCF negative, which in turn would put a strain on the company’s $94mm cash balance.”
About Payfare
Payfare is a leading, international Earned Wage Access (“EWA”) company powering instant access to earnings. This is through an award-winning digital banking platform for today’s workforce. Payfare partners. It has in it, leading e-commerce marketplaces, payroll platforms, and employers to provide financial security and inclusion for all workers.
Final Words
Payfare has over $100 million in cash, cash equivalents, and guaranteed investment certificates. This is important to fund the ongoing operations and new strategic initiatives. Along with all of it, the firm has a great deal of capital too in it. Although the loss of the DasherDirect program will have a substantial impact on the Company’s revenue profile. The Payfare intends to bring on a right size. This is important for its operating expenses. This is important for it to align with the near to mid-term reduction in revenues. All of this will get forward into doing while providing the flexibility to execute on new business. Plus, to fund various initiatives to build long-term value.