PAYA HOLDINGS INC.
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A") summarizes the significant factors affecting the
consolidated operating results, financial condition, liquidity and capital
resources of Paya Holdings Inc. and is intended to help the reader understand
Paya Holdings Inc. , our operations and our present business environment. This
discussion should be read in conjunction with the Company's audited consolidated
financial statements and notes thereto included in Part II, Item 8 of the
Company's Annual Report on Form 10-K for the year ended December 31, 2021 and
the unaudited consolidated financial statements and notes thereto included in
Part I, Item 1 of this Quarterly Report on Form 10-Q. References to "we," "us,"
"our", "Paya", "Paya Holdings ", or "the Company" refer to Paya Holdings Inc. and
its consolidated subsidiaries.
Overview
We are an independent integrated payments platform providing card, ACH, and check payment processing solutions via software to middle-market businesses inthe United States . Our solutions integrate with customers' core business software to enable payments acceptance, reconcile invoice detail, and post payment information to their core accounting system. In this manner, we enable our customers to collect revenue from their B2C and B2B customers with a seamless experience and high-level of security across payment types.
Recent Developments
On
Macro-Economic Conditions and COVID-19 Update
Adverse macroeconomic conditions, including but not limited to heightened inflation, slower growth or recession, changes to fiscal and monetary policy, higher interest rates, currency fluctuations and challenges in the supply chain could impact macro-level consumer spending trends affecting the amount of volumes processed on our platform, and resulting in fluctuations to our revenue streams. In addition, theFederal Reserve Board has raised interest rates and signaled that it will continue to raise rates. Our interest expense increased primarily due to rising interest rates on the Term Loan credit facilities from the higher interest rate environment. We utilize derivative instruments to manage risk from fluctuations in interest rates on our Term Loan. As a result, to date, the effects of rising interest rates on our results of operations and financial condition have not been significant. However, there can be no assurance that our interest rates will not continue to increase and that we will be able to mitigate such increases in the future. In addition, the war inUkraine has given rise to potential global security issues that may adversely affect international business and economic conditions as well as economic sanctions imposed by the international community that have impacted the global economy. Certain of our customers may be negatively impacted by these events. In addition, the impact that COVID-19 will have on our consolidated results of operations for the remainder of 2022 continues to remain uncertain. While we have not seen a meaningful degradation in new customer enrollment or an increase in existing customer attrition as a result of COVID-19, it is possible that those business trends change if economic hardship across the country forces new or additional business closures or other detrimental actions.
We will continue to evaluate the nature and extent of these potential impacts to our business, consolidated results of operations, and liquidity.
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Factors Affecting Results of Operations
A number of factors impact our business, results of operations, financial condition, and forecasts, including, but not limited to, the following:
•Increased adoption of integrated payments solutions. We generate revenue through volume-based rates and per item fees attributable to payment transactions between our customers and their customers. We expect to grow our customer base by bringing on new software partners, continuing to sell payment capabilities to customers of our existing software partners not yet leveraging our payment integrations, and by adding integrations within existing multi-platform software partners to access additional customer bases. Further, we expect to benefit from the natural growth of our partners who are typically growing franchises within their respective verticals. •Acquisition, retention, and growth of software partnerships.Paya leverages a partner-first distribution network to grow our client base and payment volume. Continuing to innovate and deliver new commerce products and wraparound services is critical to our ability to attract, retain, and grow relationships with software partners in ourPaya verticals and adjacent markets. •Growth in customer life-time value. We benefit from, and aid-in, the growth of online electronic payment transactions to our customers. This is dependent on the sales growth of the customers' businesses, the overall adoption of online payment methods by their customer bases, and the adoption of our additional integrated payment modules such as our proprietary ACH capabilities. Leveraging these solutions helps drive increased customer retention, as well as higher volume and revenue per customer. •Pursuit and integration of strategic acquisitions. We look to opportunistically make strategic acquisitions to enhance our scale, expand into new verticals, add product capabilities, and embed payments in vertical software. These acquisitions are intended to increase the long-term growth of the business, while helping us achieve greater scale, but may increase operating expenses in the short-term until full synergies are realized. •For additional discussion on trends affecting our results of operations, see "Key Trends Impacting Our Market" under Part 1, Item 1 of the Company's Annual Report on Form 10-K for the year endedDecember 31, 2021 .
Basis of Presentation
We have presented results of operations, including the related discussion and analysis, for the following periods:
•the three months endedSeptember 30, 2022 compared to the three months endedSeptember 30, 2021 . •the nine months endedSeptember 30, 2022 compared to the nine months endedSeptember 30, 2021 .
Key Components of Revenue and Expenses
Revenue
The Company's business model provides payment services, credit and debit card processing, and ACH processing to customers through enterprise or vertically focused software partners, direct sales, reseller partners, other referral partners, and a limited number of financial institutions. The Company recognizes processing revenues at the time customer transactions are processed and periodic fees over the period the service is performed. Transaction based revenue represents revenue generated from transaction fees based on volume and is recognized net of interchange fees and assessments. Service based fee revenue is generated from charging a service fee, a fee charged to the client for facilitating bankcard processing, and is recognized on a gross basis. The Company also generates service based fees related to ACH inclusive of monthly support and statement fees. Cost of services
Cost of services includes card processing costs, ACH costs, other fees paid to card networks, and equipment expenses directly attributable to payment processing and related services to customers. These costs are recognized as
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incurred. Cost of services also includes revenue share amounts paid to reseller and referral partners based on customer activity. These expenses are recognized as transactions are processed. Accrued revenue share represents amounts earned during the month but not yet paid at the end of the period.
Selling general & administrative
Selling, general and administrative expenses consist primarily of salaries, wages, commissions, marketing costs, professional services costs, technology costs, occupancy costs of leased space, and bad debt expense. Stock-based compensation expense is also included in this category.
Depreciation & Amortization
Depreciation and amortization consist primarily of amortization of intangible assets, including customer relationships, internal use software, acquired customer lists, trade names, and to a lesser extent, depreciation on our investments in property, equipment, and software. We depreciate and amortize our assets on a straight-line basis. These lives are 3 years for computers and equipment and acquired internal-use software, 5 years for furniture, fixtures, and office equipment, and the lesser of the asset useful life or remaining lease term for leasehold improvements. Repair and maintenance costs are expensed as incurred and included in selling, general and administrative expenses on the consolidated statements of income and other comprehensive income. The purchase of customer lists are treated as asset acquisitions, resulting in recording an intangible asset at cost on the date of acquisition. The acquired customer lists intangible assets have a useful life of 5 years, other customer relationships are amortized over a period of 5-15 years, developed technology 5-10 years, and trade names over 5-25 years. Results of Operations The period to period comparisons of our results of operations have been prepared using the historical periods included in our unaudited consolidated financial statements. The following discussion should be read in conjunction with the audited consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the year endedDecember 31, 2021 and the unaudited consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. Three Months EndedSeptember 30, 2022 Compared to Three Months EndedSeptember 30, 2021 (in millions) Three Months Ended September 30, Change 2022 2021 Amount % Revenue$ 71.4 $ 63.1 $ 8.3 13.2 % Cost of services exclusive of depreciation and amortization (35.5) (30.5) (5.0) (16.4) % Selling, general & administrative expenses (21.1) (18.8) (2.3) (12.2) % Depreciation and amortization (8.4) (7.9) (0.5) (6.3) % Income from operations 6.4 5.9 0.5 8.5 % Other income (expense) Interest expense (3.5) (3.2) (0.3) 9.4 % Other income (expense) (0.2) - (0.2) 182.1 % Total other expense (3.7) (3.2) (0.5) 15.6 % Income before income taxes 2.7 2.7 - - % Income tax expense (1.4) (5.7) 4.3 75.4 % Net income (loss)$ 1.3 $ (3.0) $ 4.3 143.3 %
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Revenue
Total revenue was
Cost of services exclusive of depreciation and amortization
Cost of services increased by$5.0 , or 16.4%, to$35.5 for the three months endedSeptember 30, 2022 from$30.5 for the three months endedSeptember 30, 2021 . The increase was driven by growth from higher revenue share partners in Integrated Solutions and growth in ACH in Payment Services.
Selling, general & administrative
Selling, general and administrative expenses increased by$2.3 , or 12.2%, to$21.1 for the three months endedSeptember 30, 2022 from$18.8 for the three months endedSeptember 30, 2021 . The increase is primarily due to a$2.6 increase in compensation and benefits. The compensation and benefits increases are primarily due to an increase in share-based compensation awards and restructuring related expenses.
Depreciation and amortization
Depreciation and amortization increased by$0.5 , or 6.3%, to$8.4 for the three months endedSeptember 30, 2022 as compared to$7.9 for the three months endedSeptember 30, 2021 . The increase is primarily due to$0.3 in technology amortization, primarily related to the acquisition of VelocIT.
Interest Expense
Interest expense increased by$0.3 , or 9.4%, to$3.5 for the three months endedSeptember 30, 2022 from$3.1 for the three months endedSeptember 30, 2021 , primarily due to rising interest rates on the Term Loan credit facilities from a higher interest rate environment in 2022.
Other Income (Expense)
Other income (expense) increased by$0.2 to$(0.2) for the three months endedSeptember 30, 2022 from$0 for the three months endedSeptember 30, 2021 . The increase is primarily due to lease restructuring expenses of$0.3 offset by changes in expected payments of the tax receivable agreement and a non-cash change in fair value of the interest rate cap agreement. -------------------------------------------------------------------------------- Nine Months EndedSeptember 30, 2022 Compared to Nine Months EndedSeptember 30, 2021 (in millions) Nine Months Ended September 30, Change 2022 2021 Amount % Revenue$ 209.9 $ 182.3 $ 27.6 15.1 % Cost of services exclusive of depreciation and amortization (102.5) (86.8) (15.7) (18.1) % Selling, general & administrative expenses (66.4) (56.6) (9.8) (17.3) % Depreciation and amortization (24.1) (22.4) (1.7) (7.6) % Income from operations 16.9 16.5 0.4 2.4 % Other income (expense) Interest expense (9.7) (11.0) 1.3 11.8 % Other income (expense) 1.4 (8.0) 9.4 117.5 % Total other expense (8.3) (19.0) 10.7 56.3 % Income (loss) before income taxes 8.6 (2.5) 11.1 NM Income tax expense (3.4) (2.6) (0.8) 30.8 % Net income (loss)$ 5.2 $ (5.1) $ 10.3 NM NM - Not meaningful Revenue Total revenue was$209.9 for the nine months endedSeptember 30, 2022 as compared to total revenue of$182.3 for the nine months endedSeptember 30, 2021 . The increase of$27.6 , or 15.1%, was driven by a$21.7 or 19.3% increase in Integrated Solutions, led by growth in the B2B vertical, and a$5.9 or 8.4% increase in Payment Services, led by growth in ACH. Growth includes inorganic contributions from Paragon for the nine months endedSeptember 30, 2022 .
Cost of services exclusive of depreciation and amortization
Cost of services increased by$15.7 , or 18.1%, to$102.5 for the nine months endedSeptember 30, 2022 from$86.8 for the nine months endedSeptember 30, 2021 . The increase was driven by growth from higher revenue share partners as well as inorganic contributions from Paragon.
Selling, general & administrative
Selling, general and administrative expenses increased by$9.8 , or 17.3%, to$66.4 for the nine months endedSeptember 30, 2022 from$56.6 for the nine months endedSeptember 30, 2021 . The increase is primarily due to a$8.4 increase in compensation and benefits and$1.0 in technology related expenses. The compensation and benefits increase is primarily due to increased headcount, an increase in share based compensation awards and restructuring related expenses.
Depreciation and amortization
Depreciation and amortization increased by$1.7 , or 7.6%, to$24.1 for the nine months endedSeptember 30, 2022 as compared to$22.4 for the nine months endedSeptember 30, 2021 . The increase is primarily due to$1.7 in customer list amortization from additional customer list acquisitions and$0.7 in internally developed software amortization partially offset by a reduction in technology amortization of$0.6 . --------------------------------------------------------------------------------
Interest Expense
Interest expense decreased by$1.3 , or 11.8%, to$9.7 for the nine months endedSeptember 30, 2022 from$11.0 for the nine months endedSeptember 30, 2021 , primarily due to lower interest rates on the Term Loan credit facilities from a debt refinancing inJune 2021 .
Other Income (Expense)
Other income (expense) increased by$9.4 to$1.4 for the nine months endedSeptember 30, 2022 from$(8.0) for the nine months endedSeptember 30, 2021 . The increase is primarily due to a non-cash change in fair value of the interest rate cap agreement of$2.6 due to the increase in market interest rates and a prepayment penalty of$2.3 , and a write off of debt issuance costs of$6.2 related to our Prior Credit Agreement in 2021. This was offset by a$0.5 change in the expected payments of the tax receivable agreement and$0.9 in lease restructuring expenses.
`Key Performance Indicators and Non-GAAP Financial Measures
Our management uses a variety of financial and operating metrics to evaluate our business, analyze our performance, and make strategic decisions. We believe these metrics and non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results in the same manner as management. However, some of these measures are not financial measures calculated in accordance withU.S. GAAP and should not be considered as substitutes for financial measures that have been calculated in accordance withU.S. GAAP. We primarily review the following key performance indicators and non-GAAP measures when assessing our performance:
Revenue (
We analyze our revenues by comparing actual revenues to our internal projections for a given period and to prior periods to assess our performance. We believe that revenues are a meaningful indicator of the demand and pricing for our services. Key drivers to change in revenues are primarily dollar volume, basis point spread earned, and number of transactions processed in a given period.
Payment Volume
Payment volume is defined as the total dollar amount of all payments processed by our customers through our services. Volumes for the three and nine months endedSeptember 30, 2022 andSeptember 30, 2021 are shown in the table below: Three Months Ended September 30, Change (in millions) 2022 2021 Amount % Payment volume $ 12,633$ 11,054 $ 1,579 14.3 %
The increase in volume for the three months ended
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Nine Months Ended September 30, Change
(in millions) 2022 2021 Amount %
Payment volume $ 36,584 $ 31,201 $ 5,383 17.3 %
The increase in volume for the nine months ended
Adjusted EBITDA and Adjusted Net Income
Adjusted EBITDA is a non-GAAP financial measure that represents earnings before
interest and other expense, income taxes, depreciation, and amortization
("EBITDA"), and further adjustments to EBITDA to exclude certain non-cash items
and other non-recurring items that we believe are not indicative of ongoing
operations to come to Adjusted EBITDA.
Adjusted Net Income is a non-GAAP financial measure that represents net income
prior to amortization and further adjustments to exclude certain non-cash items
and other non-recurring items that management believes are not indicative of
ongoing operations to come to Adjusted Net Income.
We disclose EBITDA, Adjusted EBITDA, and Adjusted Net Income in this Quarterly
Report because these non-GAAP measures are key measures used by us to evaluate
our business, measure our operating performance and make strategic decisions. We
believe EBITDA, Adjusted EBITDA, and Adjusted Net Income are useful for
investors and others in understanding and evaluating our results of operations
in the same manner as we do. However, EBITDA, Adjusted EBITDA, and Adjusted Net
Income are not financial measures calculated in accordance with U.S. GAAP and
should not be considered as a substitute for net income, income before income
taxes, or any other operating performance measure calculated in accordance with
U.S. GAAP. Using these non-GAAP financial measures to analyze our business would
have material limitations because the calculations are based on the subjective
determination of management regarding the nature and classification of events
and circumstances that investors may find significant. In addition, although
other companies in our industry may report measures titled EBITDA, Adjusted
EBITDA and Adjusted Net Income or similar measures, such non-GAAP financial
measures may be calculated differently from how we calculate non-GAAP financial
measures, which reduces their overall usefulness as comparative measures.
Because of these limitations, you should consider EBITDA, Adjusted EBITDA, and
Adjusted Net Income alongside other financial performance measures, including
net income and our other financial results presented in accordance with U.S.
GAAP. The following table presents a reconciliation of net income (loss) to
EBITDA and Adjusted EBITDA for each of the periods indicated:
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Adjusted EBITDA for the Three and Nine Months Ended
Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2022 2021 2022 2021
Net income (loss) $ 1.3 $ (3.0) $ 5.2 $ (5.1)
Depreciation & amortization 8.4 7.9 24.1 22.4
Income tax expense 1.4 5.7 3.4 2.6
Interest and other expense 3.7 3.2 8.3 19.0
EBITDA 14.8 13.8 41.0 38.9
Transaction-related expenses(a) - 0.9 3.0 2.4
Stock based compensation(b) 2.1 0.9 5.6 2.5
Restructuring costs(c) 1.2 0.2 2.4 1.2
Discontinued service costs(d) 0.1 - 0.3 0.2
Non-recurring public company start-up costs - 0.2 0.4 0.8
Contingent non-income tax liability - - 0.1 0.8
Other costs(e) 0.4 0.3 1.4 1.1
Total adjustments 3.8 2.5 13.2 9.0
Adjusted EBITDA $ 18.6 $ 16.3 $ 54.2 $ 47.9
(a)Represents professional service fees related to mergers and acquisitions such
as legal fees, consulting fees, accounting advisory fees, and other costs.
(b)Represents non-cash charges associated with stock-based compensation expense,
which has been, and will continue to be for the foreseeable future, a
significant recurring expense in our business and an important part of our
compensation strategy.
(c)Represents costs associated with restructuring plans designed to streamline
operations and reduce costs including costs associated with the relocation of
facilities, certain staff restructuring charges including severance, certain
executive hires, and acquisition related restructuring charges.
(d)Represents costs incurred to retire certain tools, applications and services
that are no longer in use.
(e)Represents non-operational gains or losses, non-standard project expense, and
non-operational legal expense.
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Adjusted Net Income for the Three and Nine Months Ended
Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2022 2021 2022 2021
Net income (loss) $ 1.3 $ (3.0) $ 5.2 $ (5.1)
Amortization add back 7.0 6.6 20.2 19.0
Debt refinancing interest expense(a) - - - 8.5
Transaction-related expenses(b) - 0.9 3.0 2.4
Stock based compensation(c) 2.1 0.9 5.6 2.5
Restructuring costs(d) 1.2 0.2 2.4 1.2
Discontinued IT service costs(e) 0.1 - 0.3 0.2
Non-recurring public company start-up costs - 0.2 0.4 0.8
Contingent non-income tax liability - - 0.1 0.8
Other costs(f) 0.4 0.3 1.4 1.1
Total adjustments 10.8 9.1 33.4 36.5
Tax effect of adjustments(g) (0.8) (0.6) (3.1) (3.0)
Adjusted Net Income $ 11.3 $ 5.5 $ 35.5 $ 28.4
(a)Represents one-time debt refinancing expenses for prepayment penalty and
write-off of debt issuance costs in connection with our Prior Credit Agreement.
(b)Represents professional service fees related to mergers and acquisitions such
as legal fees, consulting fees, accounting advisory fees, and other costs.
(c)Represents non-cash charges associated with stock-based compensation expense,
which has been, and will continue to be for the foreseeable future, a
significant recurring expense in our business and an important part of our
compensation strategy.
(d)Represents costs associated with restructuring plans designed to streamline
operations and reduce costs including costs associated with the relocation of
facilities, certain staff restructuring charges including severance, certain
executive hires, and acquisition related restructuring charges.
(e)Represents costs incurred to retire certain tools, applications and services
that are no longer in use.
(f)Represents non-operational gains or losses, non-standard project expense,
non-operational legal expense and legal debt refinancing expense.
(g)Represents pro forma income tax adjustment effect, at the anticipated blended
rate, for all items expected to have a cash tax impact (i.e. items that were not
originally recorded through goodwill). Any impact to the valuation allowance
assessment for these adjustments has not been considered.
Segments
We provide our services through two reportable segments: (1) Integrated Solutions and (2) Payment Services. The Company's reportable segments are the same as the operating segments.
More information about our two reportable segments:
•Integrated Solutions - Our Integrated Solutions segment represents the delivery of our credit and debit card payment solutions, and to a lesser extent, ACH processing solutions to customers via integrations with software partners across our strategic vertical markets. Our Integrated Solutions partners include --------------------------------------------------------------------------------
vertical focused front-end Customer Relationship Management software providers as well as back-end Enterprise Resource Planning and accounting solutions.
•Payment Services - Our Payment Services segment represents the delivery of card payment processing solutions to our customers through resellers, as well as ACH, check, and gift card processing. Card payment processing solutions in this segment do not originate via a software integration but still utilizePaya's core technology infrastructure. ACH, check, and gift card processing may or may not be integrated with third-party software.
All segment revenue is from external customers.
The following table shows our segment income statement data and selected performance measures for the periods indicated:
Three Months EndedSeptember 30, 2022 Compared to Three Months EndedSeptember 30, 2021 Three Months Ended September 30, Change (in millions) 2022 2021 Amount % Integrated Solutions Segment revenue $ 45.7$ 39.7 $ 6.0 15.3 % Segment gross profit(1) $ 21.9$ 20.1 $ 1.8 8.7 % Segment gross profit margin 47.9 % 50.8 % Payment Services Segment revenue $ 25.6$ 23.4 $ 2.2 9.5 % Segment gross profit(1) $ 14.0$ 12.4 $ 1.6 12.6 % Segment gross profit margin 54.5 % 53.0 %
(1)Segment gross profit is revenue less cost of services excluding depreciation and amortization.
Integrated Solutions
Revenue for the Integrated Solutions segment was
Gross profit for the Integrated Solutions segment was$21.9 resulting in a gross profit margin of 47.9% for the three months endedSeptember 30, 2022 as compared to$20.1 with a gross profit margin of 50.8% for the three months endedSeptember 30, 2021 . The increase of$1.8 in segment gross profit was primarily driven by revenue growth partially offset by higher revenue share from partner mix. Payment Services Revenue for the Payment Services segment was$25.6 for the three months endedSeptember 30, 2022 as compared to$23.4 for the three months endedSeptember 30, 2021 . The increase of$2.2 was driven by ACH growth. Gross profit for the Payment Services segment was$14.0 resulting in a gross profit margin of 54.5% for the three months endedSeptember 30, 2022 as compared to$12.4 with a gross profit margin of 53.0% for the three months endedSeptember 30, 2021 . The increase of$1.6 in segment gross profit was primarily driven by ACH growth. -------------------------------------------------------------------------------- Nine Months EndedSeptember 30, 2022 Compared to Nine Months EndedSeptember 30, 2021 Nine Months Ended September 30, Change (in millions) 2022 2021 Amount % Integrated Solutions Segment revenue$ 133.8 $ 112.1 $ 21.7 19.3 % Segment gross profit(1) $ 66.5$ 59.5 $ 7.0 11.8 % Segment gross profit margin 49.7 % 53.1 % Payment Services Segment revenue $ 76.1$ 70.2 $ 5.9 8.4 % Segment gross profit(1) $ 40.9$ 36.0 $ 4.9 13.6 % Segment gross profit margin 53.7 %
51.2 %
(1)Segment gross profit is revenue less cost of services excluding depreciation and amortization.
Integrated Solutions
Revenue for the Integrated Solutions segment was
Gross profit for the Integrated Solutions segment was$66.5 resulting in a gross profit margin of 49.7% for the nine months endedSeptember 30, 2022 as compared to$59.5 with a gross profit margin of 53.1% for the nine months endedSeptember 30, 2021 . The increase of$7.0 in segment gross profit was primarily driven by revenue growth partially offset by growth from higher revenue share partners. Payment Services Revenue for the Payment Services segment was$76.1 for the nine months endedSeptember 30, 2022 as compared to$70.2 for the nine months endedSeptember 30, 2021 . The increase of$5.9 was driven by ACH growth and inorganic Paragon contributions. Gross profit for the Payment Services segment was$40.9 resulting in a gross profit margin of 53.7% for the nine months endedSeptember 30, 2022 as compared to$36.0 with a gross profit margin of 51.2% for the nine months endedSeptember 30, 2021 . The increase of$4.9 in segment gross profit was primarily driven by ACH growth and inorganic Paragon contributions.
Liquidity and Capital Resources
Sources
We have historically sourced our liquidity requirements primarily with cash flow from operations and, when needed, with borrowings under our credit facilities and in 2021, with an equity issuance. We have historically sourced our acquisitions with cash flow from operations and borrowings under our credit facilities. As ofSeptember 30, 2022 , we had$156.0 of cash and cash equivalents on hand and borrowing capacity of$45.0 from our Revolver. We believe our existing cash and cash provided by our ongoing operations together with funds available under our credit facilities will be sufficient to meet our working capital, capital expenditures and cash needs for the next 12 months and beyond.
Uses
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Our material cash requirements from known contractual and other obligations primarily relate to the commitment fees related to our credit facilities, interest on long-term debt and operating lease obligations. For information related to these cash requirements, refer to Note 6 and Note 11 under Part 1, Item 1 of this quarterly report on Form 10-Q.
Indebtedness
OnJune 25, 2021 ,Paya entered into a credit agreement which governs new senior secured credit facilities, consisting of the$250.0 Term Loan, and the$45.0 Revolver. OnDecember 31, 2021 , the Company began making quarterly amortization payments on the Term Loan. As ofSeptember 30, 2022 ,$247.5 remains outstanding under the Term Loan and there were no borrowings outstanding under the Revolver. Cash Flows
The following table presents a summary of cash flows from operating, investing and financing activities for the following comparative periods.
Nine Months EndedSeptember 30, 2022 Compared to Nine Months EndedSeptember 30, 2021 Nine Months Ended September 30, 2022 2021 (in millions) Net cash provided by operating activities $ 27.8$ 20.9 Net cash used in investing activities (15.7) (39.2) Net cash provided by financing activities 2.0 135.0 Change in cash $ 14.1$ 116.7 Operating Activities Net cash provided by operating activities increased$6.9 to$27.8 for the nine months endedSeptember 30, 2022 from$20.9 for the nine months endedSeptember 30, 2021 . The increase in net cash provided by operating activities was primarily due to higher revenue in the nine months endedSeptember 30, 2022 .
Investing Activities
Net cash used in investing activities decreased
Financing Activities
Net cash provided by financing activities decreased$133.0 to$2.0 for the nine months endedSeptember 30, 2022 from$135.0 for the nine months endedSeptember 30, 2021 . The decrease in cash provided by financing activities was primarily due to net proceeds from an equity offering conducted in 2021 of$116.8 , repayment of the Prior Credit Agreement of$228.7 and borrowings under new credit facility of$250.0 in the nine months endedSeptember 30, 2021 . --------------------------------------------------------------------------------
Critical Accounting Estimates
A summary of our critical accounting estimates is included in Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year-endedDecember 31, 2021 . There have been no material changes to the critical accounting estimates disclosed in our Annual Report on Form 10-K for the year-endedDecember 31, 2021 .
Principles of Consolidation
Refer to Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year-endedDecember 31, 2021 . There have been no material changes to our principles of consolidation disclosed in our Annual Report on Form 10-K for the year-endedDecember 31, 2021 .
Recently Issued Accounting Standards
Refer to Note 1 of the notes to our unaudited consolidated financial statements included in Part 1, Item 1 of this Quarterly Report on Form 10-Q for our assessment of recently issued and adopted accounting standards.
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