Interchange derived from the Expensify Card
grew to $11.1 million, an increase of 63% compared to the prior
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 and year ended December
31, 2023.
A Message From Our
Founder
Here's how I see it:
- The same brisk sales and low churn we saw in 2022 has
continued into 2023, and we have implemented a number of
cost-cutting measures that we believe will pay off in 2024.
- However, the difficult macroeconomic outlook caused the broader
economy (and tech sector in particular) to tighten their belts,
resulting in a reduction in paid seats from existing
customers.
- We remain convinced that our fundamental business is healthy
and our significant opportunity is unchanged, and the widespread
stalling of many of our competitors' "lossy growth" model has
reinforced our commitment to competing through superior unit
economics.
- Scalable, low-cost lead generation into the historically
unaddressed SMB market remains the core strategy of our New
Expensify platform, which saw meaningful progress in 2023, setting
up a global launch of the new platform in 2024.
To learn more about that last point, please be my guest in
experiencing New Expensify yourself! Please click below to visit
one of New Expensify's neater tricks – a public room where you can
read about our product roadmap in detail, as well as chat in
realtime with our product managers:
exfy.com/roadmap
Click that link to experience our universal chat design, which
allows secure, seamless, auditable communications across
organizations using any email address or SMS number – no accounts
or passwords required! There you can learn about how we are
reinventing traditional expense management for a new generation of
chat-centric realtime road warriors, where humans and generative AI
chatbots collaborate on equal footing.
If 2023 was a year of planting, we believe 2024 will be a year
of harvesting. We've been hard at work building this universal chat
foundation, and cannot wait to give you a glimpse of the future of
expense management. See you online!
-david
Founder and CEO of Expensify
Financial:
Full Year Fiscal 2023 Highlights
- Revenue was $150.7 million, a decrease of 11% compared to the
prior year.
- Generated $1.6 million cash from operating activities.
- Free cash flow was $0.6 million.
- Net loss was $41.7 million, compared to $27.0 million for the
prior year.
- Non-GAAP net loss was $0.5 million.
- Adjusted EBITDA was $13.2 million.
- Interchange derived from the Expensify Card grew to $11.1
million, an increase of 63% compared to the prior year.
Fourth Quarter 2023 Highlights
- Revenue was $35.2 million, a decrease of 19% compared to the
same period last year.
- Utilized $0.5 million cash in operating activities
- Free cash flow was $(3.6) million
- Net loss was $7.5 million, compared to $3.4 million for the
same period last year.
- Non-GAAP net income was $3.1 million
- Adjusted EBITDA was $5.9 million
- Interchange derived from the Expensify Card grew to $3.1
million, an increase of 55% compared to the same period last
year.
Impact of Cost Cutting Measures
- As referenced previously, the company underwent aggressive cost
cutting in Q4 2023, the impact of which was immediately felt as
evidenced below:
- Utilized $0.5 million cash in operating activities, an
improvement of $4.6 million, or 89%, quarter over quarter.
- Free cash flow was $(3.6) million, an improvement of $3.5
million, or 49%, quarter over quarter.
- Net loss was $7.5 million, an improvement of $9.5 million, or
56%, quarter over quarter.
- Non-GAAP net income was $3.1 million, an improvement of $9.8
million, or 146%, quarter over quarter.
- Adjusted EBITDA was $5.9 million, an improvement of $9.4
million, or 265%, quarter over quarter.
- These measures were implemented midway through the quarter, so
the full impact will be evident in future quarters.
- Free Cash Flow Guidance: In order to better illustrate
the impact of these measures, the company is initiating Free Cash
Flow guidance. See Financial Outlook section for Free Cash Flow
guidance for fiscal year ending December 31, 2024.
Business
2023 Highlights
- Platform expansion - The company sponsored over 25
conferences totaling more than 65,000 attendees; SaaStr Global
Conference selected New Expensify transaction chat for conference
networking for its 10,000 attendees.
- Consumer functionality - The company launched consumer
payments and bill splitting which allows members to send and
receive money, split bills, and chat all in one place.
- Debt reduction - The company reduced its debt by $44.6
million in 2023.
- Share purchases - The company’s employees purchased $4.3
million worth of Class A common stock via the company’s Stock
Purchase and Matching Plan in 2023.
Fourth Quarter 2023 Highlights
- Paid members - Paid members were 719,000, a decrease of
8% from the same period last year.
- New functionality - The company launched a new budgeting
tool, which works for both reimbursable expenses and corporate card
expenses to provide admins with more insight into company
finances.
- The Expensify Card - Established a new card program
which provides more interchange per transaction. All new customers
fall under this card program and existing customers are expected to
be fully migrated over by EOY 2024.
- Marketing Partnership - The company will be a partner on
the upcoming, untitled Formula One movie from Apple starring Brad
Pitt and Damson Idris.
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.
Free Cash Flow
Expensify estimates Free Cash Flow of $10.0 million - $12.0
million for the fiscal year ending December 31, 2024.
The Company does not provide a reconciliation for free cash flow
estimates on a forward-looking basis because it is unable, without
making unreasonable efforts, to provide a meaningful or reasonably
accurate calculation or estimation of net cash used in (provided
by) operating activities and certain reconciling items on a
forward-looking basis, which could be significant to the Company's
results.
Stock Based Compensation
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 five years
remaining).
Est. stock-based compensation (millions)
Q1 2024
Q2 2024
Q3 2024
Q4 2024
Low
High
Low
High
Low
High
Low
High
Cost of revenue, net
$
2.7
$
3.3
$
2.5
$
3.2
$
2.5
$
3.2
$
2.5
$
3.2
Research and development
3.1
3.9
3.0
3.7
2.9
3.6
2.8
3.5
General and administrative
1.5
1.9
1.4
1.8
1.4
1.8
1.4
1.8
Sales and marketing
1.0
1.2
1.0
1.2
1.0
1.2
0.9
1.1
Total
$
8.3
$
10.3
$
7.9
$
9.9
$
7.8
$
9.8
$
7.6
$
9.6
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,
non-GAAP net (loss) 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 loss
from operations excluding provision for income taxes, interest and
other expenses, net, depreciation and amortization and stock-based
compensation.
Non-GAAP net income (loss). We define Non-GAAP net income
(loss) as net loss from operations 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 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 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.
Consolidated Balance
Sheets
(unaudited, in thousands, except
share and per share data)
As of December 31,
2023
2022
Assets
Cash and cash equivalents
$
47,510
$
103,787
Accounts receivable, net
13,834
16,448
Settlement assets, net
39,261
35,838
Prepaid expenses
5,649
8,825
Other current assets
30,978
22,217
Total current assets
137,232
187,115
Capitalized software, net
12,494
6,881
Property and equipment, net
14,372
14,492
Lease right-of-use assets
6,435
745
Deferred tax assets, net
457
344
Other assets
5,794
664
Total assets
$
176,784
$
210,241
Liabilities and stockholders'
equity
Accounts payable
$
1,425
$
1,059
Accrued expenses and other liabilities
9,674
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
7,655
551
Lease liabilities, current
432
800
Settlement liabilities
33,990
33,882
Total current liabilities
68,176
60,362
Lease liabilities, non-current
6,467
—
Other liabilities
1,681
1,204
Long-term debt, net of original issue
discount and debt issuance costs
—
51,434
Total liabilities
76,324
113,000
Commitments and contingencies (Note
12)
Stockholders' equity:
Preferred stock, par value $0.0001;
10,000,000 shares of preferred stock authorized as of December 31,
2023 and 2022, respectively; no shares of preferred stock issued
and outstanding as of December 31, 2023 and 2022
—
—
Common stock, par value $0.0001;
1,000,000,000 shares of Class A common stock authorized as of
December 31, 2023 and 2022; 70,569,815 and 68,238,245 shares of
Class A common stock issued and outstanding as of December 31, 2023
and 2022, respectively; 24,994,989 and 24,997,561 shares of LT10
common stock authorized as of December 31, 2023 and 2022,
respectively; 7,333,619 and 7,336,191 shares of LT10 common stock
issued and outstanding as of December 31, 2023 and 2022,
respectively; 24,998,941 and 24,999,020 shares of LT50 common stock
authorized as of December 31, 2023 and 2022, respectively;
7,321,894 and 6,854,931 shares of LT50 common stock issued and
outstanding as of December 31, 2023 and 2022, respectively
8
7
Additional paid-in capital
241,509
194,807
Accumulated deficit
(141,057
)
(97,573
)
Total stockholders' equity
100,460
97,241
Total liabilities and stockholders'
equity
$
176,784
$
210,241
Expensify, Inc.
Consolidated Statements of
Operations
(unaudited, in thousands, except
share and per share data)
Three Months Ended December
31,
Year ended December
31,
2023
2022
2023
2022
Revenue
$
35,208
$
43,469
$
150,687
$
169,495
Cost of revenue, net(1)
16,508
16,105
66,888
62,669
Gross margin
18,700
27,364
83,799
106,826
Operating expenses:
Research and development(1)
6,249
2,991
23,368
13,692
General and administrative(1)
10,842
13,155
49,228
58,490
Sales and marketing(1)
7,595
11,918
44,352
49,876
Total operating expenses
24,686
28,064
116,948
122,058
Loss from operations
(5,986
)
(700
)
(33,149
)
(15,232
)
Interest and other expenses, net
(169
)
(185
)
(5,327
)
(5,411
)
Loss before income taxes
(6,155
)
(885
)
(38,476
)
(20,643
)
Provision for income taxes
(1,333
)
(2,512
)
(3,264
)
(6,366
)
Net loss
$
(7,488
)
$
(3,397
)
$
(41,740
)
$
(27,009
)
Net loss per share:
Basic and diluted
$
(0.09
)
$
(0.04
)
$
(0.51
)
$
(0.33
)
Weighted-average shares of common stock
used to compute net loss per share:
Basic and diluted
83,703,085
81,567,647
82,493,226
80,786,725
(1) Includes stock-based compensation
expense as follows:
Three Months Ended December
31,
Year ended December
31,
2023
2022
2023
2022
Cost of revenue, net
$
3,650
$
4,125
$
13,868
$
18,403
Research and development
3,308
1,645
10,870
7,875
General and administrative
2,290
2,787
9,842
17,850
Sales and marketing
1,352
1,982
6,632
8,204
Total stock-based compensation expense
$
10,600
$
10,539
$
41,212
$
52,332
Expensify, Inc.
Consolidated Statements of
Cash Flows
(unaudited, in thousands)
Year Ended December
31,
2023
2022
Cash flows from operating activities:
Net loss
$
(41,740
)
$
(27,009
)
Adjustments to reconcile net loss to cash
provided by operating activities:
Depreciation and amortization
5,164
5,388
Reduction of operating lease right-of-use
assets
614
666
Loss on impairment, receivables and sale
or disposal of equipment
923
881
Stock-based compensation
41,212
52,332
Amortization of original issue discount
and debt issuance costs
257
42
Deferred tax assets
(113
)
26
Changes in assets and liabilities:
Accounts receivable, net
2,219
(1,341
)
Settlement assets, net
(6,398
)
(7,796
)
Prepaid expenses
3,176
(1,389
)
Related party loan receivable
—
14
Other current assets
(561
)
2,875
Other assets
(5,130
)
(81
)
Accounts payable
228
(2,693
)
Accrued expenses and other liabilities
1,190
(1,537
)
Operating lease liabilities
(200
)
(758
)
Settlement liabilities
108
12,202
Other liabilities
610
1,054
Net cash provided by operating
activities
1,559
32,876
Cash flows from investing activities:
Purchase of property and equipment
(1,384
)
(585
)
Proceeds from sale or disposal of property
and equipment
—
5
Software development costs
(5,910
)
(1,619
)
Net cash used in investing activities
(7,294
)
(2,199
)
Cash flows from financing activities:
Principal payments of finance leases
(513
)
(793
)
Principal payments of term loan
(44,587
)
(595
)
Repurchases of early exercises of common
stock
(17
)
(25
)
Proceeds from common stock purchased under
Matching Plan
4,255
3,672
Proceeds from issuance of common stock on
exercise of stock options
311
795
Payments for employee taxes withheld from
stock-based awards
(1,766
)
(5,336
)
Repurchase and retirement of common
stock
(3,000
)
(6,000
)
Net cash used in financing activities
(45,317
)
(8,282
)
Net (decrease) increase in cash and cash
equivalents and restricted cash
(51,052
)
22,395
Cash and cash equivalents and restricted
cash, beginning of period
147,710
125,315
Cash and cash equivalents and restricted
cash, end of period
$
96,658
$
147,710
Supplemental disclosure of cash flow
information:
Cash paid for interest
$
5,936
$
3,912
Cash paid for income taxes
$
3,785
$
975
Noncash investing and financing items:
Stock-based compensation capitalized as
software development costs
$
3,126
$
1,757
Purchases of property and equipment and
capitalized software in accounts payable and accrued expenses
$
390
$
—
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 Consolidated Balance
Sheets:
Cash and cash equivalents
$
47,510
$
103,787
Restricted cash included in other current
assets
27,742
19,542
Restricted cash included in settlement
assets, net
21,406
24,381
Total cash and cash equivalents and
restricted cash
$
96,658
$
147,710
Expensify, Inc.
Reconciliation of GAAP to
Non-GAAP Financial Measures
(unaudited, in thousands, except
percentages)
Adjusted EBITDA
Three Months Ended December
31,
Year ended December
31,
Three Months Ended September
30,
2023
2022
2023
2022
2023
Net loss
$
(7,488
)
$
(3,397
)
$
(41,740
)
$
(27,009
)
$
(17,003
)
Add:
Provision for (benefit from) income
taxes
1,333
2,512
3,264
6,366
(270
)
Interest and other expenses, net
169
185
5,327
5,411
2,375
Depreciation and amortization
1,240
1,316
5,111
5,388
1,082
Stock-based compensation
10,600
10,539
41,212
52,332
10,267
Adjusted EBITDA
$
5,854
$
11,155
$
13,174
$
42,488
$
(3,549
)
Adjusted EBITDA margin
17
%
26
%
9
%
25
%
(10
)%
Non-GAAP Net Income and Non-GAAP Net
Income Margin
Three Months Ended December
31,
Year ended December
31,
Three Months Ended September
30,
2023
2022
2023
2022
2023
Net loss
$
(7,488
)
$
(3,397
)
$
(41,740
)
$
(27,009
)
$
(17,003
)
Net loss margin
(21
)%
(8
)%
(28
)%
(16
)%
(47
)%
Add:
Stock-based compensation
10,600
10,539
41,212
52,332
10,267
Non-GAAP net income (loss)
$
3,112
$
7,142
$
(528
)
$
25,323
$
(6,736
)
Non-GAAP net income (loss) margin
9
%
16
%
—
%
15
%
(18
)%
Adjusted Operating Cash Flow and Free Cash
Flow
Three Months Ended December
31,
Year ended December
31,
Three Months Ended September
30,
2023
2022
2023
2022
2023
Net cash (used in) provided by operating
activities
$
(543
)
$
6,647
$
1,559
$
32,876
$
(5,106
)
Operating cash flow margin
(2
)%
15
%
1
%
19
%
(14
)%
(Increase) decrease in changes in assets
and liabilities:
Settlement assets
(2,983
)
(2,300
)
6,398
7,796
4,137
Settlement liabilities
2,343
2,501
(108
)
(12,202
)
(3,833
)
Adjusted operating cash flow
$
(1,183
)
$
6,848
$
7,849
$
28,470
$
(4,802
)
Less:
Purchases of property and equipment
(281
)
(118
)
(1,384
)
(585
)
(624
)
Software development costs
(2,180
)
(713
)
(5,910
)
(1,619
)
(1,687
)
Free cash flow
$
(3,644
)
$
6,017
$
555
$
26,266
$
(7,113
)
Free cash flow margin
(10
)%
14
%
—
%
15
%
(19
)%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240222559949/en/
Investor Relations Contact Nick Tooker
investors@expensify.com
Press Contact James Dean press@expensify.com
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