Interchange derived from the Expensify Card
grew to $3.1 million, an increase of 65% as compared to the same
period last year.
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 September 30,
2023.
A Message From Our
Founder
This was a challenging quarter, but I am happy to share that we
are trimming costs – which should improve profitability for years
to come – and we are making great strides with our SEM, SEO,
and overall conversion optimization efforts.
Additionally, the competitive environment is shifting back in
our favor. Previously-free competitors are announcing expensive
pricing plans compared to our cost of $6/employee (versus
$15/employee elsewhere).
(We have traditionally presented ARPU on an active-user basis,
where we charge about $18 for each employee actively using the
product. But only about 1/3rd of employees are active in a given
month. So on an apples-to-apples, per-employee basis, we're
actually more like $6/employee.)
On top of clearer skies coming into view, this quarter was one
of our best ever for product development. Our engineering team --
supercharged by over 2,000 open source developers -- has made
phenomenal progress on building out New Expensify into a financial
superapp that does all of:
- WhatsApp-style DM and group chat with anybody having an email
address or phone number, in or out of your contact book
- Venmo-style request/send money, but with integrated receipt
scanning and distance requests
- Splitwise-style bill splitting, but with group chat, receipt
scanning, and currency conversion
- Slack-style business chat, but without all of the confusing
ways to invite someone: just invite them and they are in
- All married with Expensify-style real-time expense management,
simplified for a largely untapped VSB and SMB market
Whoever you are and whatever you're doing, big company or small,
employee or boss, for work or for play – if it involves moving
money, New Expensify will get the job done the same way, with the
same app, and for one low monthly price. We still have work to do
to bring that dream to reality, but it's getting close. With luck,
our long-awaited migration of Expensify Classic to New Expensify
should be actively underway by this time next quarter.
Ultimately, I believe the whole industry is still in a
challenging environment. Instability and high interest rates seem
likely here to stay for a while. But in the long run, this just
reinforces the pillars of our product strategy:
- Expand the addressable market by reaching for the 99% of global
businesses who are on the sidelines.
- Lower our cost of sale with viral lead generation from chat/P2P
consumer features.
- Increase our value to the customer with a financial superapp of
many use cases for a single price.
We're not done yet. But all the major technical, regulatory,
compliance, and product design challenges are behind us. Soon, we
expect Expensify will offer a product competitive with:
- Ramp's $15/employee/mo value - Slack's $12.50/employee/mo
value - Bill's $94/mo value - ... along with invoicing, payroll,
and travel management
All for an average price of $6 per employee per month.
It's an admittedly ambitious vision. But it's looking better and
better every day, and I couldn't be more excited.
-david Founder and CEO of Expensify
Third Quarter 2023
Highlights
Financial:
- Revenue was $36.5 million, a decrease of 14% compared to the
same period last year.
- The Company utilized $5.1 million cash in operating
activities.
- Free cash flow was $(7.1) million.
- Net loss was $17.0 million, compared to $8.2 million for the
same period last year.
- Non-GAAP net loss was $6.7 million.
- Adjusted EBITDA was $(3.5) million.
- Interchange derived from the Expensify Card grew to $3.1
million, an increase of 65% compared to the same period last
year.
- Immediately following the end of the current quarter, the
Company deployed $36.0 million of available cash to further reduce
outstanding debt by paying off its term loan in full.
Business+
- Paid members - Paid members were 719,000, a
decrease of 6% from the same period last year.
- Share purchases - Expensify employees purchased 275,210
shares of common stock during the quarter, resulting in gross cash
proceeds to the Company of $1.1 million.
- Accounting Channel - The Company announced that
Accounting Partners onboarding clients to the Expensify Card will
receive 50 basis points in revenue share for their clients, further
strengthening the Company’s presence in the accounting
channel.
- Expense reductions - The company's reduction of
debt by $36.0 million in October reduced projected Q4 2023 and FY
2024 interest expense by $0.9 million and $3.8 million,
respectively.. Further internal expense cuts are expected to reduce
operating costs by approximately $15.0 million in 2024, which is
expected to result in positive cash flow in 2024 and beyond.
- Expensify Card accounting treatment - The company will
become the program manager of the Expensify Card starting in late
Q4. New cards issued after that time will receive a different
accounting treatment in which interchange is categorized as
revenue, rather than contra cost of revenue, and the company will
receive 20% more interchange under the new card program.
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)
Q4 2023
Q1 2024
Q2 2024
Q3 2024
Low
High
Low
High
Low
High
Low
High
Cost of revenue, net
$
3.0
$
3.6
$
2.8
$
3.4
$
2.7
$
3.3
$
2.7
$
3.2
Research and development
3.3
4.0
3.1
3.8
3.0
3.7
3.0
3.7
General and administrative
2.1
2.5
2.0
2.4
1.9
2.3
1.8
2.3
Sales and marketing
1.4
1.7
1.3
1.6
1.3
1.6
1.2
1.5
Total
$
9.8
$
11.8
$
9.2
$
11.2
$
8.9
$
10.9
$
8.7
$
10.7
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, future cash flow, projected costs, prospects,
plans, objectives of management and expected market growth, product
developments and their potential impact, 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;
geopolitical tensions, including the war in Ukraine and the
escalating conflict in Israel, Gaza and surrounding areas; 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 September 30,
As of December 31,
2023
2022
Assets
Cash and cash equivalents
$
89,118
$
103,787
Accounts receivable, net
14,508
16,448
Settlement assets, net
42,930
35,838
Prepaid expenses
5,153
8,825
Other current assets
27,934
22,217
Total current assets
179,643
187,115
Capitalized software, net
10,247
6,881
Property and equipment, net
14,598
14,492
Lease right-of-use assets
6,607
745
Deferred tax assets, net
430
344
Other assets
789
664
Total assets
$
212,314
$
210,241
Liabilities and stockholders'
equity
Accounts payable
$
1,292
$
1,059
Accrued expenses and other liabilities
12,654
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
8,099
551
Lease liabilities, current
387
800
Settlement liabilities
36,333
33,882
Total current liabilities
73,765
60,362
Lease liabilities, non-current
6,506
—
Other liabilities
1,408
1,204
Long-term debt, net of original issue
discount and debt issuance costs
35,579
51,434
Total liabilities
117,258
113,000
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $0.0001;
10,000,000 shares of preferred stock authorized as of September 30,
2023 and December 31, 2022; no shares of preferred stock issued and
outstanding as of September 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
September 30, 2023 and December 31, 2022; 69,158,181 and 68,238,245
shares of Class A common stock issued and outstanding as of
September 30, 2023 and December 31, 2022, respectively; 24,994,989
and 24,997,561 shares of LT10 common stock authorized as of
September 30, 2023 and December 31, 2022, respectively; 7,333,619
and 7,336,191 shares of LT10 common stock issued and outstanding as
of September 30, 2023 and December 31, 2022, respectively;
24,998,941 and 24,999,020 shares of LT50 common stock authorized as
of September 30, 2023 and December 31, 2022, respectively;
7,207,428 and 6,854,931 shares of LT50 common stock issued and
outstanding as of September 30, 2023 and December 31, 2022,
respectively
7
7
Additional paid-in capital
228,618
194,807
Accumulated deficit
(133,569
)
(97,573
)
Total stockholders' equity
95,056
97,241
Total liabilities and stockholders'
equity
$
212,314
$
210,241
Expensify, Inc.
Condensed Consolidated
Statements of Operations
(unaudited, in thousands, except
share and per share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenue
$
36,494
$
42,493
$
115,479
$
126,026
Cost of revenue, net (1)
17,680
16,554
50,380
46,564
Gross margin
18,814
25,939
65,099
79,462
Operating expenses:
Research and development (1)
6,607
3,416
17,119
10,701
General and administrative (1)
14,245
15,898
38,386
45,335
Sales and marketing (1)
12,860
12,342
36,757
37,958
Total operating expenses
33,712
31,656
92,262
93,994
Loss from operations
(14,898
)
(5,717
)
(27,163
)
(14,532
)
Interest and other expenses, net
(2,375
)
(2,369
)
(5,158
)
(5,226
)
Loss before income taxes
(17,273
)
(8,086
)
(32,321
)
(19,758
)
Benefit from (provision for) income
taxes
270
(156
)
(1,931
)
(3,854
)
Net loss
$
(17,003
)
$
(8,242
)
$
(34,252
)
$
(23,612
)
Net loss per share:
Basic and diluted
$
(0.21
)
$
(0.10
)
$
(0.42
)
$
(0.29
)
Weighted average shares of common stock
used to compute net loss per share:
Basic and diluted
82,469,190
80,941,664
82,085,508
80,523,557
(1) Includes stock-based
compensation expense as follows:
Three Months Ended September
30,
Nine months ended September
30,
2023
2022
2023
2022
Cost of revenue, net
$
3,312
$
4,667
$
10,218
$
14,278
Research and development
2,901
1,931
7,562
6,230
General and administrative
2,532
4,624
7,552
15,063
Sales and marketing
1,522
2,142
5,280
6,222
Total stock-based compensation expense
$
10,267
$
13,364
$
30,612
$
41,793
Expensify, Inc.
Condensed Consolidated
Statements of Cash Flows
(unaudited, in thousands)
Nine Months Ended September
30,
2023
2022
Cash flows from operating activities:
Net loss
$
(34,252
)
$
(23,612
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
3,871
4,072
Reduction of operating lease right-of-use
assets
476
531
Loss on impairment, receivables and sale
or disposal of equipment
585
722
Stock-based compensation expense
30,612
41,793
Amortization of original issue discount
and debt issuance costs
139
22
Deferred tax assets
(86
)
170
Changes in assets and liabilities:
Accounts receivable, net
1,671
(1,016
)
Settlement assets, net
(9,381
)
(10,096
)
Prepaid expenses
3,672
1,738
Related party loan receivable
—
14
Other current assets
(1,861
)
558
Other assets
(125
)
11
Accounts payable
229
(1,575
)
Accrued expenses and other liabilities
4,259
(2,195
)
Operating lease liabilities
(236
)
(601
)
Settlement liabilities
2,451
14,703
Other liabilities
78
990
Net cash provided by operating
activities
2,102
26,229
Cash flows from investing activities:
Purchases of property and equipment
(1,103
)
(467
)
Software development costs
(3,730
)
(906
)
Net cash used in investing activities
(4,833
)
(1,373
)
Cash flows from financing activities:
Principal payments of finance leases
(482
)
(593
)
Principal payments of outstanding debt
(8,450
)
(445
)
Repurchases of early exercised stock
options
(21
)
(25
)
Proceeds from common stock purchased under
Matching Plan
3,132
2,433
Proceeds from issuance of common stock on
exercise of stock options
216
700
Payments for employee taxes withheld from
stock-based awards
(1,766
)
(4,172
)
Repurchase and retirement of common
stock
(3,000
)
—
Net cash used in financing activities
(10,371
)
(2,102
)
Net (decrease) increase in cash and cash
equivalents and restricted cash
(13,102
)
22,754
Cash and cash equivalents and restricted
cash, beginning of period
147,710
125,315
Cash and cash equivalents and restricted
cash, end of period
$
134,608
$
148,069
Supplemental disclosure of cash flow
information:
Cash paid for interest
$
4,396
$
2,721
Cash paid for income taxes
$
3,104
$
879
Noncash investing and financing items:
Stock-based compensation capitalized as
software development costs
$
2,219
$
1,093
Right-of-use assets acquired through
operating leases
$
6,402
$
—
Right-of-use assets acquired through
finance leases
$
409
$
—
Reconciliation of cash and cash
equivalents and restricted cash to the Condensed Consolidated
Balance Sheets
Cash and cash equivalents
$
89,118
$
106,212
Restricted cash included in other current
assets
23,398
16,255
Restricted cash included in settlement
assets, net
22,092
25,602
Total cash, cash equivalents and
restricted cash
$
134,608
$
148,069
Expensify, Inc.
Reconciliation of GAAP to
Non-GAAP Financial Measures
(unaudited, in thousands, except
percentages)
Adjusted EBITDA and Adjusted EBITDA
Margin
Three Months Ended September
30,
2023
2022
Net loss
$
(17,003
)
$
(8,242
)
Net loss margin
(47
)%
(19
)%
Add:
(Benefit from) provision for income
taxes
(270
)
156
Interest and other expenses, net
2,375
2,369
Depreciation and amortization
1,082
1,323
Stock-based compensation
10,267
13,364
Adjusted EBITDA
$
(3,549
)
$
8,970
Adjusted EBITDA margin
(10
)%
21
%
Non-GAAP Net Loss and Non-GAAP Net Loss
Margin
Three Months Ended September
30,
2023
2022
Net loss
$
(17,003
)
$
(8,242
)
Net loss margin
(47
)%
(19
)%
Add:
Stock-based compensation
10,267
13,364
Non-GAAP net loss
$
(6,736
)
$
5,122
Non-GAAP net loss margin
(18
)%
12
%
Adjusted Operating Cash Flow and Free Cash
Flow
Three Months Ended September
30,
2023
2022
Net cash used in operating activities
$
(5,106
)
$
(929
)
(Increase) decrease in changes in assets
and liabilities:
Settlement assets
(4,137
)
(1,097
)
Settlement liabilities
3,833
(5,207
)
Adjusted operating cash flow
(4,802
)
5,375
Less:
Purchases of property and equipment
(624
)
(200
)
Software development costs
(1,687
)
(438
)
Free cash flow
$
(7,113
)
$
4,737
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231107570935/en/
Investor Relations Contact Nick Tooker
investors@expensify.com
Press Contact James Dean press@expensify.com
Expensify (NASDAQ:EXFY)
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