Expensify Card interchange increased by 56% as
compared to the previous period last year. Company repurchased $3.9
million in common shares (including $0.9 million of net share
settlement on equity awards), decreased outstanding debt by $8.2
million.
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 June 30, 2023.
A Message From Our
Founder
This is an exciting time for the expense management industry. As
long predicted, our major competitors have abandoned their
interchange-only business models and announced a transition to
Expensify-style subscription pricing plans. This welcome change
signals the beginning of the end of this strange, distorted period
where free options were being dumped into the industry at a
perpetual loss. We knew it couldn't last forever, and we're
thankful that reality is starting to sink in, because Expensify's
ultimate strength is its amazing unit economics.
With twelve consecutive quarters of profitability (on an
Adjusted EBITDA basis), we have spent our entire history gearing up
for a long and grueling battle in the trenches, and we relish the
fight. While weathering the combined fire of our competition in the
current, tiny, heavily contested corner of the market, we believe
we are the only ones genuinely preparing for the next order of
magnitude, targeting the 100MM+ businesses in the world that have
never heard of any of us. And those preparations are going
great:
- We deployed our cross-platform, open-source, universal chat
foundation at multiple real world conferences, acquiring 3x the
leads that our booth traditionally has -- while enabling a presence
at 10x the conferences at 1/10th the cost of attending physically.
After all, it doesn't matter what the conference is about: if it's
for business, every single attendee is likely to file an expense
report after.
- We began our first real world expense reimbursements on the New
Expensify platform, proving out the "universal" nature of our
chat-first payment design -- and are aggressively porting over more
advanced cases to begin testing with live customers.
- We activated ChatGPT for high quality, high scale, real time
content moderation, and are beginning to incorporate it throughout
our chat-first sales, support, and product design.
On top of these major investments in revolutionary product
design, we plan to continue making a full court press with
evolutionary enhancements to our SDRs, SEO, SEM, dedicated sales,
account management, and other more traditional growth tools, all of
which are showing strong improvement. But the real opportunity is
still in cracking open a market 10-100x larger than what we've ever
seen before. Building this vision has admittedly taken longer than
we estimated, giving more oxygen to our competition than we would
have liked. But we remain convinced we are the only ones on the
right path towards the biggest opportunity in the shortest time
frame, even despite the stiffer than expected headwinds in the near
term.
-david Founder and CEO of Expensify
Second Quarter 2023
Highlights
Financial:
- Revenue was $38.9 million, a decrease of 10% compared to the
same period last year.
- Utilized $0.4 million cash in operating activities and
generated $1.1 million of free cash flow.
- Net loss was $11.3 million, compared to $8.0 million for the
same period last year.
- Non-GAAP net loss was $1.0 million.
- Adjusted EBITDA was $2.2 million.
- Interchange derived from the Expensify Card grew to $2.7
million, an increase of 56% compared to the same period last
year.
Business
- Paid members - Paid members were 742,000, a
decrease of 2% from the same period last year.
- Hosted ExpensiCon 3 - An invite-only conference
featuring successful accountants and thought leaders from top
global accounting firms.
- Preferred agreements - Signed preferred partnership
agreements with the California Society of Certified Public
Accountants and the Texas Society of Certified Public
Accountants.
- Share repurchase - The Company repurchased 625,345
shares during the quarter, representing 0.8% of total outstanding
common shares, at a total cost of $3.9 million (including $0.9
million of net share settlement on equity awards). Since the
approval of the Company’s share repurchase program in May 2022, the
Company has repurchased shares at a total cost of $15.9 million
(including $6.9 million of net share settlement on equity
awards).
- Debt reduction - The Company reduced its outstanding
debt balance by $8.2 million during the quarter.
- Global reimbursement - The Company expanded its employee
reimbursement functionality; businesses can now reimburse employees
in over 154 different currencies in more than 200 countries.
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.
An estimate of expected stock-based compensation for the next
four fiscal quarters is as follows, which is driven primarily by
the pre-IPO grant of RSUs issued to all employees (which vest
quarterly over eight years with approximately six years
remaining).
Est. stock-based compensation
(millions)
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Low
High
Low
High
Low
High
Low
High
Cost of revenue, net
$
3.4
$
4.1
$
3.3
$
4.0
$
3.2
$
3.9
$
3.1
$
3.7
Research and development
3.1
3.6
3.0
3.6
2.9
3.5
2.7
3.3
General and administrative
2.1
2.5
2.0
2.4
1.9
2.3
1.8
2.2
Sales and marketing
1.8
2.2
1.8
2.1
1.7
2.0
1.6
2.0
Total
$
10.4
$
12.4
$
10.1
$
12.1
$
9.7
$
11.7
$
9.2
$
11.2
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 loss, 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 loss. We define non-GAAP net loss as net
income (loss) from operations in accordance with US GAAP excluding
stock-based compensation.
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 and our stock-based
compensation estimates 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 data)
As of June 30,
As of December 31,
2023
2022
Assets
Cash and cash equivalents
$
97,795
$
103,787
Accounts receivable, net
14,922
16,448
Settlement assets, net
39,276
35,838
Prepaid expenses
5,050
8,825
Other current assets
24,606
22,217
Total current assets
181,649
187,115
Capitalized software, net
8,617
6,881
Property and equipment, net
14,545
14,492
Lease right-of-use assets
6,417
745
Deferred tax assets, net
409
344
Other assets
749
664
Total assets
$
212,386
$
210,241
Liabilities and stockholders'
equity
Accounts payable
$
1,691
$
1,059
Accrued expenses and other liabilities
11,650
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
557
551
Lease liabilities, current
278
800
Settlement liabilities
32,500
33,882
Total current liabilities
61,676
60,362
Lease liabilities, non-current
6,226
—
Other liabilities
1,441
1,204
Long-term debt, net of original issue
discount and debt issuance costs
43,180
51,434
Total liabilities
112,523
113,000
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $0.0001;
10,000,000 shares of preferred stock authorized as of June 30, 2023
and December 31, 2022; no shares of preferred stock issued and
outstanding as of June 30, 2023 and December 31, 2022
—
—
Common stock, par value $0.0001;
1,000,000,000 shares of Class A common stock authorized as of June
30, 2023 and December 31, 2022; 68,347,794 and 68,238,245 shares of
Class A common stock issued and outstanding as of June 30, 2023 and
December 31, 2022, respectively; 24,996,238 and 24,997,561 shares
of LT10 common stock authorized as of June 30, 2023 and December
31, 2022, respectively; 7,334,868 and 7,336,191 shares of LT10
common stock issued and outstanding as of June 30, 2023 and
December 31, 2022, respectively; 24,999,020 shares of LT50 common
stock authorized as of June 30, 2023 and December 31, 2022;
7,093,829 and 6,854,931 shares of LT50 common stock issued and
outstanding as of June 30, 2023 and December 31, 2022,
respectively
7
7
Additional paid-in capital
216,422
194,807
Accumulated deficit
(116,566
)
(97,573
)
Total stockholders' equity
99,863
97,241
Total liabilities and stockholders'
equity
$
212,386
$
210,241
Expensify, Inc.
Condensed Consolidated
Statements of Operations
(unaudited, in thousands, except
share and per share data)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenue
$
38,884
$
43,162
$
78,985
$
83,532
Cost of revenue, net (1)
16,925
15,876
32,700
30,010
Gross margin
21,959
27,286
46,285
53,522
Operating expenses:
Research and development (1)
5,094
3,584
10,512
7,285
General and administrative (1)
11,712
15,432
24,141
29,438
Sales and marketing (1)
14,714
12,244
23,897
25,616
Total operating expenses
31,520
31,260
58,550
62,339
Loss from operations
(9,561
)
(3,974
)
(12,265
)
(8,817
)
Interest and other expenses, net
(1,367
)
(1,955
)
(2,783
)
(2,856
)
Loss before income taxes
(10,928
)
(5,929
)
(15,048
)
(11,673
)
Provision for income taxes
(376
)
(2,065
)
(2,201
)
(3,697
)
Net loss
$
(11,304
)
$
(7,994
)
$
(17,249
)
$
(15,370
)
Net loss per share:
Basic and diluted
$
(0.14
)
$
(0.10
)
$
(0.21
)
$
(0.19
)
Weighted average shares of common stock
used to compute net loss per share:
Basic and diluted
82,011,477
80,473,097
81,890,624
80,311,053
(1) Includes stock-based compensation expense as follows:
Three Months Ended June
30,
Six months ended June
30,
2023
2022
2023
2022
Cost of revenue, net
$
3,600
$
4,704
$
6,906
$
9,611
Research and development
2,455
1,877
4,661
4,298
General and administrative
2,376
5,463
5,020
10,439
Sales and marketing
1,910
2,004
3,758
4,080
Total stock-based compensation expense
$
10,341
$
14,048
$
20,345
$
28,428
Expensify, Inc.
Condensed Consolidated
Statements of Cash Flows
(unaudited, in thousands)
Six Months Ended June
30,
2023
2022
Cash flows from operating activities:
Net loss
$
(17,249
)
$
(15,370
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
2,789
2,735
Reduction of operating lease right-of-use
assets
334
358
Loss on impairment, receivables and sale
or disposal of equipment
402
475
Stock-based compensation expense
20,345
28,428
Amortization of original issue discount
and debt issuance costs
49
21
Deferred tax assets
(65
)
(319
)
Changes in assets and liabilities:
Accounts receivable, net
1,358
(906
)
Settlement assets, net
(5,244
)
(8,999
)
Prepaid expenses
3,775
2,006
Related party loan receivable
—
14
Other current assets
(952
)
1,193
Other assets
(88
)
2
Accounts payable
632
(1,583
)
Accrued expenses and other liabilities
2,670
(1,366
)
Operating lease liabilities
(294
)
(404
)
Settlement liabilities
(1,382
)
19,910
Other liabilities
128
963
Net cash provided by operating
activities
7,208
27,158
Cash flows from investing activities:
Purchases of property and equipment
(479
)
(267
)
Software development costs
(2,043
)
(468
)
Net cash used in investing activities
(2,522
)
(735
)
Cash flows from financing activities:
Principal payments of finance leases
(404
)
(394
)
Principal payments of term loan
(8,300
)
(297
)
Repurchases of early exercised stock
options
(13
)
(20
)
Proceeds from common stock purchased under
Matching Plan
2,076
1,188
Proceeds from issuance of common stock on
exercise of stock options
125
519
Payments for employee taxes withheld from
stock-based awards
(1,524
)
—
Repurchase and retirement of common
stock
(3,000
)
—
Net cash (used in) provided by financing
activities
(11,040
)
996
Net (decrease) increase in cash and cash
equivalents and restricted cash
(6,354
)
27,419
Cash and cash equivalents and restricted
cash, beginning of period
147,710
125,315
Cash and cash equivalents and restricted
cash, end of period
$
141,356
$
152,734
Supplemental disclosure of cash flow
information:
Cash paid for interest
$
2,912
$
1,750
Cash paid for income taxes
$
2,251
$
606
Noncash investing and financing items:
Stock-based compensation capitalized as
software development costs
$
1,399
$
—
Right-of-use assets acquired through
operating leases
$
6,402
$
—
Accrued property and equipment
$
373
$
—
Reconciliation of cash and cash
equivalents and restricted cash to the Condensed Consolidated
Balance Sheets
Cash and cash equivalents
$
97,795
$
105,537
Restricted cash included in other current
assets
20,986
16,077
Restricted cash included in settlement
assets, net
22,575
31,120
Total cash, cash equivalents and
restricted cash
$
141,356
$
152,734
Expensify, Inc.
Reconciliation of GAAP to
Non-GAAP Financial Measures
(unaudited, in thousands, except
percentages)
Adjusted EBITDA and Adjusted
EBITDA Margin
Three Months Ended June
30,
2023
2022
Net loss
$
(11,304
)
$
(7,994
)
Net loss margin
(29
)%
(19
)%
Add:
Provision for income taxes
376
2,065
Interest and other expenses, net
1,367
1,955
Depreciation and amortization
1,376
1,582
Stock-based compensation
10,341
14,048
Adjusted EBITDA
$
2,156
$
11,656
Adjusted EBITDA margin
6
%
27
%
Non-GAAP Net Loss and Non-GAAP Net Loss
Margin
Three Months Ended June
30,
2023
2022
Net loss
$
(11,304
)
$
(7,994
)
Net loss margin
(29
)%
(19
)%
Add:
Stock-based compensation
10,341
14,048
Non-GAAP net loss
$
(963
)
$
6,054
Non-GAAP net loss margin
(2
)%
14
%
Adjusted Operating Cash Flow and Free Cash
Flow
Three Months Ended June
30,
2023
2022
Net cash (used in) provided by operating
activities
$
(434
)
$
15,935
(Increase) decrease in changes in assets
and liabilities:
Settlement assets
(2,561
)
(3,310
)
Settlement liabilities
(644
)
7,477
Adjusted operating cash flow
2,771
11,768
Less:
Purchases of property and equipment
(451
)
(88
)
Software development costs
(1,173
)
26
Free cash flow
$
1,147
$
11,706
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230808676572/en/
Investor Relations Contact Nick Tooker
investors@expensify.com
Press Contact James Dean press@expensify.com
Expensify (NASDAQ:EXFY)
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