This is a ‘negative event’ for company: Eight Capital This is a ‘negative event’ for company: Eight Capital
In a note issued Friday, analysts at investment dealer Eight Capital called the exit a “negative event” for Payfare.
“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, as the report estimates DoorDash represents 70 to 80 per cent of Payfare’s revenue.
However, the note states that the company has secured commitments which 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.”