Payfare is initiating a strategic review of the company after losing the business of its largest customer.
Payfare claims it is “well capitalized to fund ongoing operations and new strategic initiatives.”
The Toronto-based earned wage access (EWA) company announced last week that DoorDash had decided not to renew its agreement with Payfare, which was powering the food delivery app’s DasherDirect program. Payfare called the prepaid debit and mobile banking app for DoorDash’s delivery workers its largest program, adding that the revenue derived from the program was a “substantial proportion” of its total revenues.
As a result, Payfare withdrew its previously issued 2024 financial guidance for revenue and earnings. In response, the price of Payfare shares on the Toronto Stock Exchange (TSX) plummeted from $8.35 CAD to $2.00, a more than 75 percent reduction. It is the lowest that Payfare has ever been valued in the public markets.
The shareholder response prompted Payfare’s board to engage with legal and financial advisers to launch a strategic review of the company’s options.
“This review process will assess strategic alternatives that may include, but are not limited to strategic partnerships, strategic investments, accretive acquisitions, a potential sale, merger or other business combination,” Payfare said in a statement released Sunday night.
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The company said there is no deadline or definitive timetable for the strategic review, and that there are no guarantees the review will result in any transactions or outcomes. The company also claimed it has over $100 million in cash, cash equivalents, and guaranteed investment certificates, and that it is still “well capitalized to fund ongoing operations and new strategic initiatives.”
“Although the loss of the DasherDirect program will have a substantial impact on the Company’s revenue profile, Payfare intends to right size its operating expenses to align with the near to mid-term reduction in revenues while providing the flexibility to execute on new business and initiatives to build long-term value,” the statement reads.
Payfare’s EWA offering looks to provide gig workers with a way to access their earnings more quickly, rather than wait for a payday, as well as cashback rewards. Earlier this year, Payfare announced a long-term extension of a similar partnership with Lyft.
The company said Payfare and DoorDash will establish a transition plan in the fourth quarter of 2024, and that it will continue to support the DasherDirect program and its cardholders until the agreement ends in early 2025.
Feature image courtesy DoorDash.