The company had operating cash flows of $7.6
million and demonstrated strong free cash flow in Q1 of $10.2
million. The Expensify Card grew 85% compared to the same period
last year, and the company continues share buybacks.
Expensify, Inc. (Nasdaq: EXFY), a payments superapp that helps
individuals and businesses around the world simplify the way they
manage money across expenses, corporate cards and bills, today
released a letter to shareholders from Founder and CEO David
Barrett alongside results for its quarter ended March 31, 2023.
A Message From Our
Founder
When I started Expensify at the bottom of the 2008 recession, it
was amongst the crashing of giants, towering redwoods buckling
under the weight of their rotten unit economics. Today feels
similar, in three ways.
- The first is the headlines are the same, where dotcom darlings
nervously present their ability to lose money at increasing scale
as a kind of perverse success. A decade of free money via zero
interest rates – followed by staggering stimulus checks – has
filled war chests to the brim (at the ironic cost to the same banks
that served as war profiteers in the leadup). But losing money on
every customer while attempting to make it up with scale wasn't a
viable strategy then, and we're skeptical it is now. A longer
runway doesn't help if your plane fundamentally can't fly.
- The second, more important similarity, is that our strategy
then and now is the same. We believe addressable market size and
unit economics are the only defensible long-term differentiation.
It's true we've added SDRs and outbound calling to our toolbox (and
the results aren't super noticeable yet, but are trending in
promising ways). And these can help us navigate these really
difficult near-term market conditions (as well as hold our own
against competition increasingly willing to lose on every customer
and hope nobody notices). But these tactical adjustments don't
alter the high level strategy: viral growth is the only path to a
billion user ambition.
- Which brings me to the third, and most important of all
similarity between 2008 and now. There has never – truly never –
been more excitement within the walls of Expensify for what we've
been quietly building throughout this nuclear winter, and are
finally beginning to roll out this year. It feels like the early
days of having a bold, disruptive vision, but with the resources
and scale to execute faster and more decisively than we could have
ever dreamed then.
Don't get me wrong, this quarter sucked. Yes customers were up,
which is great. But the average activity per customer was down,
which is not great. Additionally, yes card adoption is up, which is
great. But our double-whammy of interchange not being revenue – and
cashback being contra-revenue – means card growth
contra-intuitively harms revenue… which is not great.
Thankfully, it kind of doesn't matter. We have over $100MM in
the bank, have strong cash flow, are buying back shares, and plan
to pay off debt. We're shipping code faster than ever, with more
engineers than ever, on a more amazing product than ever. When the
economy comes back, all those new customers (and the old) will get
active, and all will be well. More than well. Amazing. Because we
have just started migrating users over to our eponymously named
"New Expensify" (new.expensify.com), which is shaping up so much
better than even we imagined.
I know, it's hard to believe: a single app flexible enough to do
everything from expense management to payroll, simple enough for
your kid's summer block party but powerful enough for your
multinational public CFO? Built by an open source community of a
thousand developers, atop a hyper scalable blockchain database,
using a single codebase that works across all platforms, including
desktop and mobile, without needing to install anything, and
without needing permission from your IT or accounting department?
It's easy to be skeptical.
But we believe those skeptics are going to be kicking
themselves. Google was the 25th search engine after all. That means
24 before it missed the Google-scale vision – right when everyone
thought the market was over, they demonstrated that it had only
barely begun. That's how we see expense management: only a rounding
error of global businesses do their expenses on us or any of our
competition, after all. If a billion people can chat about photos,
we think a billion people can chat about money – especially since
they already do, just pointlessly fragmented across a hundred niche
platforms.
Expensify can never be the first expense management player. The
industry was largely defined and unchanged since before we arrived.
But that's fine. We don't need to be the first. We are trying to be
the last. And I've never been more excited for our prospects. Stay
tuned!
-david
Founder and CEO of Expensify
First Quarter 2023
Highlights
Financial:
- Revenue was $40.1 million, a decrease of 1% compared to the
same period last year.
- Generated $7.6 million cash provided by operating activities
and $10.2 million of free cash flow.
- Net loss was $5.9 million, compared to $7.4 million for the
same period last year.
- Non-GAAP net income was $4.1 million.
- Adjusted EBITDA was $8.7 million.
- Interchange derived from the Expensify Card grew to $2.3
million, an increase of 85% compared to the same period last
year.
- Uses of Q1 Free Cash Flow:
- Continued Buybacks - $0.7 million spent via net share
settlement in Q1. Plan for a further $3.0 million of near-term
share repurchases in the open market starting May 10th, 2023.
- Reducing Debt - Plan to deploy $8.0 million to reduce the
company’s debt.
Business
- Paid members - Paid members grew to 747,000, an increase
of 6% from the same period last year.
- Hosted ExpensiConX to strengthen workforce - Many of the
world’s top react native engineers and teams came together to
discuss React Native and the future of the Expensify roadmap.
- Expensify also hosted its partner sales and support teams to
further train and increase the efficiency of their roles.
- Continued to scale contributor program - With a 322%
increase in the number of jobs completed by contributors in April
2023 compared to April 2022
- Increased Sales Development Representative ("SDR") count to
100+ SDRs - With multiple vendors in a built to scale
fashion.
- Improved free trials - Increasing monthly free trials by
79% y/y when looking at March 2023 compared to March 2022. This was
done through product led growth and increasing SDR efficiency.
- Scaling outsourced setup specialists - On average,
annual seats closed by outsourced sales teams has doubled every
month starting January 2023 compared to the previous month.
- Strengthened partner channels - Over 100+ invitees
confirmed to ExpensiCon 3 from some of the world's best accounting
firms.
Financial Outlook
Expensify's outlook statements are based on current estimates,
expectations and assumptions and are not a guarantee of future
performance. The following statements are forward-looking and
actual results could differ materially depending on market
conditions and the factors set forth under “Forward-Looking
Statements” below. There can be no assurance that the Company will
achieve the results expressed by this guidance.
We reaffirm our long term guidance provided in connection with
our fourth quarter 2022 results of 25-35% revenue growth over a
multi-year period, which assumes an eventual return to normalcy of
the world economy.
Expensify is also providing an estimate on what stock based
compensation is expected to look like for the next four fiscal
quarters. Driven primarily by the pre-IPO grant of RSUs issued to
all employees (which quarterly vest over 8 years with approximately
7 years remaining), stock based compensation is estimated as seen
below:
Est. stock-based compensation
(millions)
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Low
High
Low
High
Low
High
Low
High
Cost of revenue, net
$
2.9
$
3.6
2.9
$
3.5
$
2.8
$
3.4
$
2.7
$
3.3
Research and development
2.5
3.1
2.5
3.0
2.4
3.0
2.3
2.9
General and administrative
2.2
2.6
2.1
2.6
2.1
2.6
2.0
2.5
Sales and marketing
1.7
2.0
1.6
2.0
1.6
1.9
1.6
1.9
Total
$
9.3
$
11.3
$
9.1
$
11.1
$
8.9
$
10.9
$
8.6
$
10.6
Availability of Information on
Expensify’s Website
Investors and others should note that Expensify routinely
announces material information to investors and the marketplace
using SEC filings, press releases, public conference calls,
webcasts and the Expensify Investor Relations website at
https://ir.expensify.com. While not all of the information that the
Company posts to its Investor Relations website is of a material
nature, some information could be deemed to be material.
Accordingly, the Company encourages investors, the media and others
interested in Expensify to review the information that it shares on
its Investor Relations website.
Conference Call
Expensify will host a video call to discuss the financial
results and business highlights at 2:00 p.m. Pacific Time today. An
investor presentation and the video call information is available
on Expensify’s Investor Relations website at
https://ir.expensify.com. A replay of the call will be available on
the site for three months.
Non-GAAP Financial
Measures
In addition to financial measures prepared in accordance with
U.S. generally accepted accounting principles (“GAAP”), we provide
certain non-GAAP financial measures, including adjusted EBITDA,
adjusted EBITDA margin, non-GAAP net income, and free cash
flow.
We believe our non-GAAP financial measures are useful in
evaluating our business, measuring our performance, identifying
trends affecting our business, formulating business plans and
making strategic decisions. Accordingly, we believe that these
non-GAAP financial measures provide useful information to investors
and others in understanding and evaluating our results of
operations in the same manner as our management team. These
non-GAAP financial measures are presented for supplemental
informational purposes only, should not be considered a substitute
for financial information presented in accordance with GAAP, and
may be different from similarly titled metrics or measures
presented by other companies. Non-GAAP financial measures have
limitations as analytical tools and should not be considered in
isolation or as substitutes for financial information presented
under GAAP. There are a number of limitations related to the use of
non-GAAP financial measures versus comparable financial measures
determined under GAAP. For example, other companies in our industry
may calculate these non-GAAP financial measures differently or may
use other measures to evaluate their performance. All of these
limitations could reduce the usefulness of these non-GAAP financial
measures as analytical tools. Investors are encouraged to review
the related GAAP financial measures and the reconciliations of
these non-GAAP financial measures to their most directly comparable
GAAP financial measures and to not rely on any single financial
measure to evaluate our business. A reconciliation of each non-GAAP
financial measure to the most directly comparable financial measure
stated in accordance with GAAP is at the end of this press
release.
Adjusted EBITDA. We define adjusted EBITDA as net income
from operations excluding provision for income taxes, interest and
other expenses, net, depreciation and amortization and stock based
compensation.
Non-GAAP net income. We define non-GAAP net income as net
income from operations in accordance with US GAAP excluding
stock-based compensation. Through the fourth quarter of 2021,
non-GAAP net income also excluded bonus costs related to our IPO,
which we consider to be the discretionary cash bonuses paid to our
employees during 2021. These IPO-related bonus costs impacted the
second, third and fourth fiscal quarters of 2021 but did not impact
any subsequent quarters.
Free cash flow. We define Free cash flow as net cash
(used in) provided by operating activities excluding changes in
settlement assets and settlement liabilities, which represent funds
held for customers and customer funds in transit, respectively,
reduced by the purchases of property and equipment and software
development costs.
The tables at the end of the Condensed Consolidated Financial
Statements provide reconciliations to the most directly comparable
GAAP financial measure to each of these non-GAAP financial
measures.
Forward-Looking
Statements
Forward-looking statements in this press release, or made during
the earnings call, which are not historical facts, are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1955. These statements include
statements regarding our strategy, future financial condition,
future operations, projected costs, prospects, plans, objectives of
management and expected market growth, product developments and
their potential impact, our ability to meet our long-term guidance,
the amount and timing of any share repurchases, our stock-based
compensation estimates and the timing of when we expect the economy
to return to normalcy and involve known and unknown risks that are
difficult to predict. As a result, our actual results, performance
or achievements may differ materially from those expressed or
implied by these forward-looking statements. In some cases, you can
identify forward-looking statements because they contain words such
as “may,” “will,” “shall,” “should,” “expects,” “plans,”
“anticipates,” “could,” “intends,” “target,” “projects,”
“contemplates,” “believes,” “estimates,” “predicts,” “potential,”
“goal,” "ambition," “objective,” “seeks,” "outlook," or “continue”
or the negative of these words or other similar terms or
expressions that concern our expectations, strategy, plans, or
intentions. Such forward-looking statements are necessarily based
upon estimates and assumptions that, while considered reasonable by
us and our management, are inherently uncertain. Factors that may
cause actual results to differ materially from current expectations
include, but are not limited to: the impact on inflation on us and
our members; our borrowing costs have and may continue to increase
as a result of increases in interest rates; our expectations
regarding our financial performance and future operating
performance; our ability to attract and retain members, expand
usage of our platform, sell subscriptions to our platform and
convert individuals and organizations into paying customers; the
timing and success of new features, integrations, capabilities and
enhancements by us, or by competitors to their products, or any
other changes in the competitive landscape of our market; the
amount and timing of operating expenses and capital expenditures
that we may incur to maintain and expand our business and
operations to remain competitive; the sufficiency of our cash, cash
equivalents and investments to meet our liquidity needs; our
ability to make required payments under and to comply with the
various requirements of our current and future indebtedness; our
cash flows, the prevailing stock prices, general economic and
market conditions and other considerations that could affect the
specific timing, price and size of repurchases under our stock
repurchase program or our ability to fund any stock repurchases;
the war in Ukraine and escalating geopolitical tensions as a result
of Russia's invasion of Ukraine; our ability to effectively manage
our exposure to fluctuations in foreign currency exchange rates;
the increased expenses associated with being a public company; the
size of our addressable markets, market share and market trends;
anticipated trends, developments and challenges in our industry,
business and the highly competitive markets in which we operate;
our expectations regarding our income tax liabilities and the
adequacy of our reserves; our ability to effectively manage our
growth and expand our infrastructure and maintain our corporate
culture; our ability to identify, recruit and retain skilled
personnel, including key members of senior management; the safety,
affordability and convenience of our platform and our offerings;
our ability to successfully defend litigation brought against us;
our ability to successfully identify, manage and integrate any
existing and potential acquisitions of businesses, talent,
technologies or intellectual property; general economic conditions
in either domestic or international markets; our protections
against security breaches, technical difficulties, or interruptions
to our platform; our ability to maintain, protect and enhance our
intellectual property; and other risks discussed in our filings
with the SEC. All forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their
entirety by the cautionary statements set forth above. We caution
you not to place undue reliance on any forward-looking statements,
which are made only as of the date of this press release. We do not
undertake or assume any obligation to update publicly any of these
forward-looking statements to reflect actual results, new
information or future events, changes in assumptions or changes in
other factors affecting forward-looking statements, except to the
extent required by applicable law. If we update one or more
forward-looking statements, no inference should be drawn that we
will make additional updates with respect to those or other
forward-looking statements.
About Expensify
Expensify is a payments superapp that helps individuals and
businesses around the world simplify the way they manage money.
More than 12 million people use Expensify's free features, which
include corporate cards, expense tracking, next-day reimbursement,
invoicing, bill pay, and travel booking in one app. All free.
Whether you own a small business, manage a team, or close the books
for your clients, Expensify makes it easy so you have more time to
focus on what really matters.
Expensify, Inc.
Condensed Consolidated Balance
Sheets
(unaudited, in thousands, except
share and per share data)
As of March 31,
As of December 31,
2023
2022
Assets
Cash and cash equivalents
$
111,232
$
103,787
Accounts receivable, net
15,705
16,448
Settlement assets, net
38,490
35,838
Prepaid expenses
7,411
8,825
Other current assets
21,282
22,217
Total current assets
194,120
187,115
Capitalized software, net
7,581
6,881
Property and equipment, net
14,021
14,492
Lease right-of-use assets
512
745
Deferred tax assets, net
374
344
Other assets
658
664
Total assets
$
217,266
$
210,241
Liabilities and stockholders'
equity
Accounts payable
$
2,003
$
1,059
Accrued expenses and other liabilities
10,770
9,070
Borrowings under line of credit
15,000
15,000
Current portion of long-term debt, net of
original issue discount and debt issuance costs
550
551
Lease liabilities, current
443
800
Settlement liabilities
33,144
33,882
Total current liabilities
61,910
60,362
Lease liabilities, non-current
95
—
Other liabilities
1,268
1,204
Long-term debt, net of original issue
discount and debt issuance costs
51,297
51,434
Total liabilities
114,570
113,000
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $0.0001;
10,000,000 shares of preferred stock authorized as of March 31,
2023 and December 31, 2022; no shares of preferred stock issued and
outstanding as of March 31, 2023 and December 31, 2022
—
—
Common stock, par value $0.0001;
1,000,000,000 shares of Class A common stock authorized as of March
31, 2023 and December 31, 2022; 68,496,251 and 68,238,245 shares of
Class A common stock issued and outstanding as of March 31, 2023
and December 31, 2022, respectively; 24,996,826 and 24,997,561
shares of LT10 common stock authorized as of March 31, 2023 and
December 31, 2022, respectively; 7,335,456 and 7,336,191 shares of
LT10 common stock issued and outstanding as of March 31, 2023 and
December 31, 2022, respectively; 24,999,020 shares of LT50 common
stock authorized as of March 31, 2023 and December 31, 2022;
6,974,821 and 6,854,931 shares of LT50 common stock issued and
outstanding as of March 31, 2023 and December 31, 2022,
respectively
7
7
Additional paid-in capital
206,207
194,807
Accumulated deficit
(103,518
)
(97,573
)
Total stockholders' equity
102,696
97,241
Total liabilities and stockholders'
equity
$
217,266
$
210,241
Expensify, Inc.
Condensed Consolidated
Statements of Operations
(unaudited, in thousands, except
share and per share data)
Three months ended March
31,
2023
2022
Revenue
$
40,101
$
40,370
Cost of revenue, net (1)
15,775
14,133
Gross margin
24,326
26,237
Operating expenses:
Research and development (1)
5,418
3,701
General and administrative (1)
12,429
14,006
Sales and marketing (1)
9,183
13,372
Total operating expenses
27,030
31,079
Loss from operations
(2,704
)
(4,842
)
Interest and other expenses, net
(1,416
)
(902
)
Loss before income taxes
(4,120
)
(5,744
)
Provision for income taxes
(1,825
)
(1,632
)
Net loss
$
(5,945
)
$
(7,376
)
Net loss per share:
Basic and diluted
$
(0.07
)
$
(0.09
)
Weighted average shares of common stock
used to compute net loss per share:
Basic and diluted
81,768,429
80,147,208
- Includes stock-based compensation expense as follows:
Three months ended March
31,
2023
2022
Cost of revenue, net
$
3,306
$
4,908
Research and development
2,206
2,708
General and administrative
2,644
4,975
Sales and marketing
1,848
2,076
Total stock-based compensation expense
$
10,004
$
14,667
Expensify, Inc.
Condensed Consolidated
Statements of Cash Flows
(unaudited, in thousands)
Three Months Ended March
31,
2023
2022
Cash flows from operating activities:
Net loss
$
(5,945
)
$
(7,376
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
1,413
1,167
Reduction of operating lease right-of-use
assets
181
185
Loss on impairment, receivables and sale
or disposal of equipment
146
231
Stock-based compensation expense
10,004
14,667
Amortization of original issue discount
and debt issuance costs
11
10
Deferred tax assets
(30
)
—
Changes in assets and liabilities:
Accounts receivable, net
707
(482
)
Settlement assets, net
(2,683
)
(5,689
)
Prepaid expenses
1,414
377
Related party loan receivable
406
(224
)
Other current assets
—
14
Other assets
8
80
Accounts payable
944
(2,316
)
Accrued expenses and other liabilities
1,947
(2,635
)
Operating lease liabilities
(206
)
(6
)
Settlement liabilities
(738
)
12,433
Other liabilities
63
787
Net cash provided by operating
activities
7,642
11,223
Cash flows from investing activities:
Purchases of property and equipment
(28
)
(179
)
Software development costs
(870
)
(494
)
Net cash used in investing activities
(898
)
(673
)
Cash flows from financing activities:
Principal payments of finance leases
(201
)
(197
)
Principal payments of term loan
(150
)
(146
)
Vesting of early exercised stock
options
—
295
Issuance of restricted stock units
—
18
Repurchases of early exercised stock
options
(7
)
(4
)
Proceeds from common stock purchased under
Matching Plan
1,099
—
Proceeds from issuance of common stock on
exercise of stock options
66
252
Payments for employee taxes withheld from
stock-based awards
(666
)
—
Net cash provided by financing
activities
141
218
Net increase in cash and cash equivalents
and restricted cash
6,885
10,768
Cash and cash equivalents and restricted
cash, beginning of period
147,710
125,315
Cash and cash equivalents and restricted
cash, end of period
$
154,595
$
136,083
Supplemental disclosure of cash flow
information:
Cash paid for interest
$
1,409
$
267
Cash paid for income taxes
$
351
$
284
Noncash investing and financing items:
Stock-based compensation capitalized as
software development costs
$
657
$
287
Right-of-use assets acquired through
operating leases
$
145
$
—
Reconciliation of cash and cash
equivalents and restricted cash to the Condensed Consolidated
Balance Sheets
Cash and cash equivalents
$
111,232
$
101,101
Restricted cash included in other current
assets
19,013
9,973
Restricted cash included in other
assets
—
46
Restricted cash included in settlement
assets, net
24,350
24,963
Total cash, cash equivalents and
restricted cash
$
154,595
$
136,083
Expensify, Inc.
Condensed Consolidated
Statements of Cash Flows
(unaudited, in thousands)
Adjusted EBITDA and Adjusted EBITDA
Margin
Three Months Ended March
31,
2023
2022
Net loss
$
(5,945
)
$
(7,376
)
Add:
Provision for income taxes
1,825
1,632
Interest and other expenses, net
1,416
902
Depreciation and amortization
1,413
1,167
Stock-based compensation
10,004
14,667
Adjusted EBITDA
$
8,713
$
10,992
Non-GAAP Net Income and Non-GAAP Net
Income Margin
Three Months Ended March
31,
2023
2022
Net loss
$
(5,945
)
$
(7,376
)
Add:
Stock-based compensation
10,004
14,667
Non-GAAP net income
$
4,059
$
7,291
Adjusted Operating Cash Flow and Free Cash
Flow
Three Months Ended March
31,
2023
2022
Net cash provided by operating
activities
$
7,642
$
11,223
(Increase) decrease in changes in assets
and liabilities:
Settlement assets
(2,683
)
(5,689
)
Settlement liabilities
(738
)
12,433
Adjusted operating cash flow
$
11,063
$
4,479
Less:
Purchases of property and equipment
(28
)
(179
)
Software development costs
(870
)
(494
)
Free cash flow
$
10,165
$
3,806
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230509005537/en/
Investor Relations Contact Nick Tooker
investors@expensify.com
Press Contact James Dean press@expensify.com
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