DoorDash to End Partnership with Payfare’s DasherDirect
Payfare Inc. (TSX: PAY), a prominent Earned Wage Access (EWA) provider, announced that its core service agreement with DoorDash Inc.’s DasherDirect card program would not be extended beyond its current term, ending in early 2025. This development represents a pivotal moment for Payfare, as DasherDirect is currently its largest program, making up a significant portion of the company’s overall revenue.
DasherDirect, introduced as a financial service for DoorDash delivery drivers, provides instant access to earnings through a prepaid Visa card. The collaboration has been a substantial source of business for Payfare, which powered the program’s instant payout system and digital banking solutions. However, with the announcement of the non-renewal, Payfare is expected to transition out of this role in late 2024.
Given the scale of revenue derived from DasherDirect, Payfare is withdrawing its previously issued 2024 financial guidance, which included projected revenue and earnings forecasts. Although the company has not provided new financial projections, this move underlines the importance of the DoorDash partnership and its impact on Payfare’s financial outlook.
Despite the significant revenue loss looming from the DoorDash partnership’s termination, Payfare maintains a strong financial position. The company has accumulated over $100 million in cash, cash equivalents, and guaranteed investment certificates, which offers a cushion to support new strategic initiatives during this period of change. The capital is intended to provide flexibility and sustain ongoing operations as Payfare searches for new growth opportunities.
“Payfare remains well capitalized to fund its new strategic initiatives,” the company stated, underscoring that despite the financial upheaval caused by DoorDash’s non-renewal, it has the resources to pivot towards other growth avenues.
In response to DoorDash’s departure, Payfare is pivoting toward a broader strategic approach to mitigate the financial impact. This includes focusing on actively pursuing large-scale opportunities in both gig and traditional employment markets to drive GDV and revenue, utilizing its substantial cash holdings to fund strategic initiatives, such as product development or market expansion, without risking financial stability, and growing other client programs to ensure that the loss of DoorDash does not create a disproportionate void in Payfare’s revenue stream.
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