Business fundamentals remain strong. Company
announces plan for additional $6 million in near-term share
repurchases, for an expected total of $10 million for FY22
including net settling equity awards.
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
announced results for its quarter ended September 30th, 2022.
"The business is doing great and we’re methodically executing
our long-term strategy but the economy sucks, especially for SMBs.
We have seen tons of interest in the new payroll launch, and we're
super excited about what we've got cooking up in the lab," said
David Barrett, founder and CEO. "We stand behind our multi-year
revenue guidance, with the caveat that hitting this requires the
world to return to normalcy – which we think it will soon, but your
guess is as good as ours, The waters are a lot choppier than
anybody would like, but we believe all of the contributing factors
to this volatility are temporary, so we aren't letting them
distract us. I contribute 100% of my salary to the ESPP and the
company is actively buying back company stock, so we couldn't be
more bullish on the future."
"Despite economic headwinds, we continue to show that Expensify
is a strong business able to generate positive cash flow in
challenging economic environments," said Ryan Schaffer, Expensify's
CFO. "This quarter we saw modest user growth, with revenue slightly
down due to a simplification of subscription management for our
accounting partners to streamline client management. We repurchased
$4 million in shares in Q3 via net settling equity incentive awards
that vested and intend to continue taking advantage of the
volatility in the market by repurchasing an additional $6 million
starting at market open tomorrow morning."
Third Quarter 2022
Highlights
Financial:
- Revenue was $42.5 million, an increase of 13% compared to the
same period last year.
- Net cash used by operating activities was $(0.9) million.
- The timing of customer settlement funds was the primary driver
in decreasing operating cash flow this quarter. Removing customer
funds and considering only funds generated by the business gives a
Free cash flow of $4.7 million.
- Net loss was $8.2 million, compared to $6.3 million for the
same period last year. Q3 22's loss was primarily driven by
stock-based compensation expenses of $13.4 million.
- Non-GAAP net income was $5.1 million.
- Stock-based compensation is expected to decrease going forward.
See stock based compensation schedule below for further
details.
- Adjusted EBITDA was $9.0 million, with an Adjusted EBITDA
margin of 21%.
- Interchange derived from the Expensify Card grew to $1.9
million, an increase of 115% compared to the same period last
year.
Business
- Paid members - Paid members grew to 761,000, an increase
of 14% from the same period last year.
- Buyback - The company previously announced it had
obtained authorization to repurchase $50M in shares. In Q3, $4M was
spent on net share settlement of RSUs, and the company announced
its plans to begin repurchasing a further $6M at market open on
November 11, 2022.
- Payroll - Began on-boarding beta customers to Expensify
Payroll, with a significant waitlist of interested customers.
- New Pricing for Accountants - In addition to the
Expensify CPA Card and preferred pricing, accounting firms that
join the Expensify Approved! Accountants program now receive
flexible subscription management and a dedicated account manager
for them and their clients.
- New Account Managers - Top 41% of customers (by revenue)
now have a dedicated account manager. The remaining 59% are being
evaluated for account managers in the near future.
- Free Plan - More than 15,000 businesses are now using
the Expensify Free Plan, which offers corporate cards, expense
management, invoicing, and bill payment at no cost.
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 2021 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)
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Low
High
Low
High
Low
High
Low
High
Cost of revenue, net
$
3.6
$
4.3
3.4
$
4.1
$
3.3
$
4.0
$
3.3
$
3.9
Research and development
1.5
1.8
1.4
1.7
1.4
1.7
1.3
1.6
General and administrative
3.6
4.3
3.4
4.1
3.3
4.0
3.2
3.9
Sales and marketing
1.7
2.0
1.6
1.9
1.5
1.8
1.5
1.8
Total
$
10.4
$
12.4
$
9.8
$
11.8
$
9.5
$
11.5
$
9.3
$
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 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.
Adjusted EBITDA margin. We define adjusted EBITDA margin
as adjusted EBITDA divided by total revenue for the same
period.
Non-GAAP net income. We define non-GAAP net income as net
income from operations in accordance with US GAAP excluding
stock-based compensation and IPO-related bonus costs. Prior to the
fourth quarter of 2021, this metric only excluded IPO-related bonus
costs and did not exclude expenses related to stock-based
compensation. However, management now believes that further
excluding stock-based compensation from non-GAAP net income is
useful to better understand the financial performance of our
business and to facilitate a better comparison of our results to
those of peer companies over multiple periods given that this item
may vary between companies for reasons unrelated to overall
operating performance. IPO-related bonus costs impacted the second,
third and fourth fiscal quarters of 2021 but did not impact the
first or second quarters of 2022 and are not expected to impact
future periods.
Non-GAAP net income margin. We define non-GAAP net income
as non-GAAP net income divided by total revenue for the same
period.
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, 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,” “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 September 30,
As of December 31,
2022
2021
Assets
Cash and cash equivalents
$
106,212
$
98,398
Accounts receivable, net
16,274
15,713
Settlement assets
39,359
21,880
Prepaid expenses
5,698
7,436
Related party loan receivable
—
14
Other current assets
21,247
14,201
Total current assets
188,790
157,642
Capitalized software, net
6,142
6,359
Property and equipment, net
14,872
15,930
Lease right-of-use assets
1,109
2,202
Deferred tax assets, net
200
370
Other assets
580
710
Total assets
$
211,693
$
183,213
Liabilities and stockholders'
equity
Accounts payable
$
2,177
$
3,752
Accrued expenses and other liabilities
7,862
11,046
Borrowings under line of credit
15,000
15,000
Current portion of long-term debt, net of
original issuance discount and debt issuance costs
549
549
Lease liabilities, current
1,190
1,549
Settlement liabilities
36,383
21,680
Total current liabilities
63,161
53,576
Lease liabilities, non-current
—
802
Other liabilities
1,145
153
Long-term debt, net of original issuance
discount and debt issuance costs
51,572
52,067
Total liabilities
115,878
106,598
Commitments and contingencies (Note 4)
Stockholders' equity:
Common stock, par value $0.0001;
1,000,000,000 shares of Class A common stock authorized as of
September 30, 2022 and December 31, 2021; 68,575,385 and 67,844,060
shares of Class A common stock issued and outstanding as of
September 30, 2022 and December 31, 2021, respectively; 24,997,561
and 25,000,000 shares of LT10 common stock authorized as of
September 30, 2022 and December 31, 2021, respectively; 7,336,191
and 7,332,640 shares of LT10 common stock issued and outstanding as
of September 30, 2022 and December 31, 2021, respectively;
24,999,170 and 25,000,000 shares of LT50 common stock authorized as
of September 30, 2022 and December 31, 2021, respectively;
6,732,693 and 6,224,160 shares of LT50 common stock issued and
outstanding as of September 30, 2022 and December 31, 2021,
respectively; preferred stock, par value $0.0001; 10,000,000 shares
of preferred stock authorized as of September 30, 2022 and December
31, 2021; no shares of preferred stock issued and outstanding as of
September 30, 2022 and December 31, 2021
7
6
Additional paid-in capital
185,326
142,515
Accumulated deficit
(89,518
)
(65,906
)
Total stockholders' equity
95,815
76,615
Total liabilities and stockholders'
equity
$
211,693
$
183,213
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,
2022
2021
2022
2021
(in thousands, except per
share data)
Revenue
$
42,493
$
37,447
$
126,026
$
102,471
Cost of revenue, net(1)
16,554
18,197
46,564
33,768
Gross margin
25,939
19,250
79,462
68,703
Operating expenses:
Research and development(1)
3,416
2,167
10,701
8,138
General and administrative(1)
15,898
18,333
45,335
35,827
Sales and marketing(1)
12,342
7,608
37,958
14,555
Total operating expenses
31,656
28,108
93,994
58,520
(Loss) income from operations
(5,717
)
(8,858
)
(14,532
)
10,183
Interest and other expenses, net
(2,369
)
(1,054
)
(5,226
)
(2,560
)
(Loss) income before income taxes
(8,086
)
(9,912
)
(19,758
)
7,623
Provision for income taxes
(156
)
3,567
(3,854
)
706
Net (loss) income
$
(8,242
)
$
(6,345
)
$
(23,612
)
$
8,329
Less: income allocated to participating
securities
—
—
—
(5,625
)
Net (loss) income attributable to Class A,
LT10 and LT50 common stockholders
$
(8,242
)
$
(6,345
)
$
(23,612
)
$
2,704
Net (loss) income per share attributable
to Class A, LT10 and LT50 common stockholders:
Basic
$
(0.10
)
$
(0.18
)
$
(0.29
)
$
0.09
Diluted
$
(0.10
)
$
(0.18
)
$
(0.29
)
$
0.07
Weighted-average shares of common stock
used to compute net (loss) income per share attributable to Class
A, LT10 and LT50 common stockholders:
Basic
80,941,664
34,490,860
80,523,557
31,301,387
Diluted
80,941,664
34,490,860
80,523,557
41,452,880
(1) Includes stock-based compensation
expense as follows:
Three months ended September
30,
Nine months ended September
30,
2022
2021
2022
2021
Cost of revenue, net
$ 4,667
$ 245
$ 14,278
$ 670
Research and development
1,931
154
6,230
482
General and administrative
4,624
410
15,063
1,118
Sales and marketing
2,142
88
6,222
225
Total stock-based compensation expense
$ 13,364
$ 897
$ 41,793
$ 2,495
Expensify, Inc.
Condensed Consolidated
Statements of Cash Flows
(unaudited, in thousands)
Nine months ended September
30,
2022
2021
Cash flows from operating activities:
Net (loss) income
$
(23,612
)
$
8,329
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation and amortization
4,072
3,732
Reduction of operating lease right-of-use
assets
531
552
Loss on impairment, receivables and sale
or disposal of equipment.
722
283
Stock-based compensation
41,793
2,495
Amortization of original issuance discount
and debt issuance costs
22
23
Deferred tax assets
170
—
Changes in assets and liabilities:
Accounts receivable, net
(1,016
)
(3,865
)
Settlement assets
(10,096
)
(3,344
)
Prepaid expenses
1,738
(2,886
)
Related party loan receivable
14
(224
)
Other current assets
558
1,212
Other assets
11
120
Accounts payable
(1,575
)
(330
)
Accrued expenses and other liabilities
(2,195
)
18,870
Operating lease liabilities
(601
)
(614
)
Settlement liabilities
14,703
10,699
Other liabilities
990
(472
)
Net cash provided by operating
activities
26,229
34,580
Cash flows from investing activities:
Purchases of property and equipment
(467
)
(2,602
)
Software development costs
(906
)
(4,397
)
Net cash used by investing activities
(1,373
)
(6,999
)
Cash flows from financing activities:
Principal payments of finance leases
(593
)
(579
)
Principal payments of term loan
(445
)
(25,157
)
Proceeds from term loan
—
45,000
Repurchases of early exercised stock
options
(25
)
—
Proceeds from common stock purchased under
Matching Plan
2,433
—
Payments of deferred offering costs
—
(4,796
)
Vesting of restricted common stock
—
234
Proceeds from issuance of common stock on
exercise of stock options
700
2,862
Payments for employee taxes withheld from
stock-based awards
(4,172
)
—
Net cash (used) provided by financing
activities
(2,102
)
17,564
Net increase in cash and cash equivalents
and restricted cash
22,754
45,145
Cash and cash equivalents and restricted
cash, beginning of period
125,315
46,878
Cash and cash equivalents and restricted
cash, end of period
$
148,069
$
92,023
Supplemental disclosure of cash flow
information:
Cash paid for interest
$
2,721
$
2,182
Cash paid for income taxes
$
879
$
6,910
Noncash investing and financing items:
Accrued deferred offering costs.
$
—
$
795
Reconciliation of cash, cash equivalents
and restricted cash to the condensed
Cash and cash equivalents
$
106,212
$
68,058
Restricted cash included in other current
assets.
16,255
5,989
Restricted cash included in other
assets
—
47
Restricted cash included in settlement
assets
25,602
17,929
Total cash, cash equivalents and
restricted cash
$
148,069
$
92,023
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,
2022
Net (loss) income
$
(8,242
)
Net (loss) income margin
(19
) %
Add:
Provision for income taxes
156
Interest and other expenses, net
2,369
Depreciation and amortization
1,323
Stock-based compensation
13,364
Adjusted EBITDA
$
8,970
Adjusted EBITDA margin
21
%
Non-GAAP Net Income and Non-GAAP Net
Income Margin
Three months ended September
30,
2022
Net (loss) income
$
(8,242
)
Net (loss) income margin
(19
) %
Add:
Stock-based compensation
13,364
IPO-related bonus expense
—
Non-GAAP net income
$
5,122
Non-GAAP net income margin
12
%
Adjusted Operating Cash Flow and Free Cash
Flow
Three months ended September
30,
2022
(in thousands)
Net cash (used in) provided by operating
activities
$
(929
)
(Increase) decrease in changes in assets
and liabilities:
Settlement assets
(1,097
)
Settlement liabilities
(5,207
)
Adjusted operating cash flow
$
5,375
Less:
Purchases of property and equipment
(200
)
Software development costs
(438
)
Free cash flow
$
4,737
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221110006094/en/
Investor Relations Contact Nick Tooker
investors@expensify.com
Press Contact James Dean press@expensify.com
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