paya-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __ to __

Commission file number 001-819881

Paya Holdings Inc.

(Exact Name of Registrant as Specified in Charter)


Delaware						85-2199433
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

303 Perimeter Center North, Suite 600, Atlanta, Georgia 30346

(Address, including zip code, of principal executive offices)

(800) 261-0240

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.0001 per share	PAYA	The Nasdaq Capital Market
Warrants to purchase common stock	PAYAW	The Nasdaq Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☒

Emerging growth company

☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

There were 126,697,492 shares of Common Stock, par value $0.0001 per share, issued and outstanding as of March 31, 2021.


PART I
Item 1. Unaudited Condensed Consolidated Financial Statements			4
Item 2 . Management ’s Discussion and Analysis of Financial Condition and Results of Operations			26
Item 3 . Quantitative and Qualitative Disclosures About Market Risk			38
I tem 4. Controls and Procedures			38

PART II
Item 1 . Legal Proceedings			39
Item 1 A. Risk Factors			39
Item 2 . Unregistered Sales of Equity Securities and Use of Proceeds			39
Item 3 . Defaults Upon Senior Securities			39
Item 4. Mine Safety Disclosures			39
Item 5 . O ther Information			39
Item 6 . Exhibits			40
SIGNATURES			41


	Three Months Ended March 31,
	2021		2020
Revenue	$	55,255	$	49,139
Cost of services exclusive of depreciation and amortization	(26,137)		(24,498)
Selling, general & administrative expenses	(16,914)		(15,580)
Depreciation and amortization	(7,032)		(5,996)
Income from operations	5,172		3,065
Other income (expense)
Interest expense	(4,043)		(4,645)
Other income (expense)	492		(17)
Total other expense	(3,551)		(4,662)
Income (loss) before income taxes	1,621		(1,597)
Income tax (expense) benefit	(576)		922
Net income (loss)	$	1,045	$	(675)

Weighted average shares outstanding of common stock	117,808,563		54,534,022
Basic net income (loss) per share	$	0.01	$	(0.01)
Diluted net income (loss) per share	$	0.01	$	(0.01)


Paya Holdings Inc.
Condensed Consolidated Balance Sheets
(In thousands, Unaudited)
	March 31,		December 31,
	2021		2020
Assets
Current assets:
Cash and cash equivalents	$	133,824	$	23,617
Trade receivables, net	22,060		17,493
Prepaid expenses	2,766		2,218
Income taxes receivable	541		541
Other current assets	636		457
Total current assets before funds held for clients	159,827		44,326
Funds held for clients	69,430		78,505
Total current assets	$	229,257	$	122,831
Noncurrent assets:
Property and equipment, net	14,057		12,805
Goodwill	206,337		206,308
Intangible assets, net	133,287		132,616
Other long-term assets	756		781
Total Assets	$	583,694	$	475,341
Liabilities and stockholders’ equity
Current liabilities:
Trade payables	2,918		3,967
Accrued liabilities	10,419		10,435
Accrued revenue share	8,351		7,535
Income taxes payable	744		—
Other current liabilities	2,985		3,071
Total current liabilities before client funds obligations	25,417		25,008
Client funds obligations	68,990		78,658
Total current liabilities	$	94,407	$	103,666
Noncurrent liabilities:
Deferred tax liability, net	14,453		14,618
Long-term debt	219,795		220,152
Tax receivable agreement liability	19,175		19,627
Other long-term liabilities	1,105		1,246
Total liabilities	$	348,935	$	359,309
Stockholders’ Equity:
Common stock, $0.0001 par value; 500,000,000 authorized; 126,697,492 and 116,697,441 issued and outstanding as of March 31, 2021 and December 31, 2020, respectively	13		12
Additional Paid-in-Capital	247,134		129,453
Accumulated deficit	(12,388)		(13,433)
Total stockholders’ equity	234,759		116,032
Total liabilities and stockholders’ equity	$	583,694	$	475,341


	Common stock
	Shares	Amount		Additional paid-in-capital		Retained earnings		Total stockholders’ equity
Balance at December 31, 2019 as recast	54,534,022	$	5	$	147,268	$	(12,909)	$	134,364
Net loss	—	—		—		(675)		(675)
Stock based compensation - Class C incentive units	—	—		392		—		392

Balance at March 31, 2020	54,534,022	$	5	$	147,660	$	(13,584)	$	134,081

Balance at December 31, 2020	116,697,441	$	12	$	129,453	$	(13,433)	$	116,032
Net income	—	—		—		1,045		1,045
Stock based compensation - Class C incentive units	—	—		259		—		259
Stock based compensation - Common stock	—	—		451		—		451
Equity offering	10,000,000	1		116,970		—		116,971
Warrant exercise	51	—		1		—		1
Balance at March 31, 2021	126,697,492	$	13	$	247,134	$	(12,388)	$	234,759


	Integrated Solutions
	Three Months Ended March 31,
	2021		2020
Revenue from contracts with customers
Transaction based revenue	$	30,178	$	26,562
Service based fee revenue	2,646		2,765
Equipment revenue	67		62
Total revenue	$	32,891	$	29,389


	Payment Services
	Three Months Ended March 31,
	2021		2020
Revenue from contracts with customers
Transaction based revenue	$	18,052	$	15,747
Service based fee revenue	4,293		3,972
Equipment revenue	19		31
Total revenue	$	22,364	$	19,750


	March 31, 2021		December 31, 2020
Computers and equipment	$	7,635	$	7,134
Internal-use software	12,430		10,708
Office equipment	141		130
Furniture and fixtures	1,320		1,320
Leasehold improvements	1,360		1,353
Other equipment	26		26
Total property and equipment	22,912		20,671
Less: accumulated depreciation	(8,855)		(7,866)
Total property and equipment, net	$	14,057	$	12,805


	Integrated Solutions		Payments Services		Total
Balance at December 31, 2020	$	152,408	$	53,900	$	206,308
Measurement period adjustment (Note 3)	29		—		29
Balance at March 31, 2020	$	152,437	$	53,900	$	206,337


	Weighted Average Useful Life (Years)	Useful Lives	Gross Carrying Amount at March 31, 2021		Accumulated Amortization		Net Carrying Value as of March 31, 2021
Customer Relationships	10.4	5-15 years	$	173,823	$	(55,010)	$	118,813
Developed Technology	4.3	3-5 years	25,520		(14,854)		10,666
Trade name	25.0	25 years	4,190		(382)		3,808
	8.0		$	203,533	$	(70,246)	$	133,287

SEC Form 10-Q filed by Paya Holdings Inc.