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Expensify Announces Q1 2022 Results

Free Plan membership grew 183% Q/Q to over 9,000 customers. The company generated positive cash flow of $11.2M with a 28% cash flow margin.

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 March 31, 2022.

“The biggest news coming out of Q1 was the growth of our Free Plan for SMBs. The plan grew to over 9,000 customers, which is an 183% increase from last quarter. The plan allows members to roll out Expensify functionality across their businesses for free, including the Expensify Card, expense management, next-day reimbursement, invoicing, bill pay, and travel booking,” says David Barrett, Expensify’s founder and CEO.

“In addition to the incredible growth we’re seeing from the Free Plan, March '22 was the second best month in company history from a paid member perspective,” says Ryan Schaffer, Expensify’s CFO. “So we’re doing a great job adding users on both the paid and free sides of the business, which is encouraging and shows the momentum we have in the business right now.”

First Quarter 2022 Highlights

Financial:

  • Revenue was $40.4 million, an increase of 36% from the same period last year.
  • Positive operating cash flows of $11.2 million.
  • Net (loss) income was $(7.4) million, compared to $8.0 million for the same period last year. This loss is driven by stock-based compensation expenses of $14.7 million.
  • Non-GAAP net income was $7.3 million.
  • Adjusted EBITDA was $11.0 million, with an Adjusted EBITDA margin of 27%.

Business

  • Free plan - swelled to over 9,000 businesses in Q1, a 183% increase from the previous quarter. The Free Plan includes the Expensify Card, expense management, next-day reimbursement, invoicing, bill pay, and travel booking.
  • Paid members - despite the challenges presented by the COVID-19 Omicron spike early in the year, a strong second half of Q1 propelled average paid members for the quarter to 706,000, exceeding expectations.
  • Expensify Card - continues to perform well, interchange increased by 150% from the same period last year.
  • CPA Card - announced in January as the first smart card with exclusive perks, pricing, and upgrades for CPAs, accounting firms, and their clients.

Financial Outlook

Expensify's outlook statements are based on current expectations. 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.

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.

Expensify is also providing an estimate on what stock based compensation is expected to look like for the rest of the fiscal year. Driven primarily by the pre-IPO grant of RSUs issued to all employees (which vest over 8 years – 1/8 after one year and quarterly thereafter), stock based compensation is estimated as seen below:

Est. stock-based compensation (millions)

 

 

Q2 2022

Q3 2022

Q4 2022

 

Low

High

Low

High

Low

High

Cost of revenue, net

$

4.8

$

5.4

$

4.6

$

5.3

$

3.4

$

4.1

Research and development

 

2.7

 

3.0

 

2.6

 

2.9

 

1.9

 

2.3

General and administrative

 

4.6

 

5.3

 

4.5

 

5.1

 

3.3

 

4.0

Sales and marketing

 

2.0

 

2.2

 

1.9

 

2.2

 

1.4

 

1.7

Total

$

14.0

$

16.0

$

13.5

$

15.5

$

10.0

$

12.0

 

Note: Amounts may not sum due to minor rounding differences.

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 results at 2:00 p.m. Pacific Time today. 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 and Non-GAAP net income.

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.

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.

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. In prior periods, 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 are not expected to impact future periods beginning with the first quarter of 2022.

The tables at the end of the 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, 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 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,” 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 economic, political and social impact of, and uncertainty relating to, the COVID-19 pandemic; the war in Ukraine and escalating geopolitical tensions as a result of Russia's invasion of Ukraine; 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 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, including the societal and economic impact of the COVID-19 pandemic, and geopolitical uncertainty and instability; 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 10 million people use Expensify's free features, which include corporate cards, expense tracking, next-day reimbursement, invoicing, bill pay, and travel booking in one app. All free. Whether you own a small business, manage a team, or close the books for your clients, Expensify makes it easy so you have more time to focus on what really matters.

Expensify, Inc.

Condensed Consolidated Balance Sheets

(unaudited, in thousands, except share and per share data)

 

As of March 31,

As of December 31,

 

2022

2021

Assets

 

 

Cash and cash equivalents

$

101,101

 

$

98,398

 

Accounts receivable, net

 

16,022

 

 

15,713

 

Settlement assets

 

34,313

 

 

21,880

 

Prepaid expenses

 

7,060

 

 

7,436

 

Related party loan receivable, current

 

 

 

14

 

Other current assets

 

15,746

 

 

14,201

 

Total current assets

 

174,242

 

 

157,642

 

Capitalized software, net

 

6,158

 

 

6,359

 

Property and equipment, net

 

15,584

 

 

15,930

 

Lease right-of-use assets

 

1,832

 

 

2,202

 

Deferred tax assets, net

 

370

 

 

370

 

Other assets

 

628

 

 

710

 

Total assets

$

198,814

 

$

183,213

 

Liabilities and stockholders' equity

 

 

Accounts payable

$

1,437

 

$

3,752

 

Accrued expenses and other liabilities

 

8,411

 

 

11,046

 

Borrowings under line of credit

 

15,000

 

 

15,000

 

Current portion of long-term debt, net of issuance costs

 

547

 

 

549

 

Lease liabilities, current

 

1,559

 

 

1,549

 

Settlement liabilities

 

34,113

 

 

21,680

 

Total current liabilities

 

61,067

 

 

53,576

 

Lease liabilities, non-current

 

405

 

 

802

 

Other liabilities

 

1,028

 

 

153

 

Long-term debt, net of issuance costs

 

51,847

 

 

52,067

 

Total liabilities

 

114,347

 

 

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 March 31, 2022 and December 31, 2021; 68,050,193 and 67,844,060 shares of Class A common stock issued and outstanding as of March 31, 2022 and December 31, 2021, respectively; 25,000,000 shares of LT10 common stock authorized as of March 31, 2022 and December 31, 2021; 7,332,640 shares of LT10 common stock issued and outstanding as of March 31, 2022 and December 31, 2021; 25,000,000 shares of LT50 common stock authorized as of March 31, 2022 and December 31, 2021; 6,224,160 shares of LT50 common stock issued and outstanding as of March 31, 2022 and December 31, 2022

 

6

 

 

6

 

Additional paid-in capital

 

157,743

 

 

142,515

 

Accumulated deficit

 

(73,282

)

 

(65,906

)

Total stockholders' equity

 

84,467

 

 

76,615

 

Total liabilities and stockholders' equity

$

198,814

 

$

183,213

 

 

 

 

Expensify, Inc.

Condensed Consolidated Statements of Income

(unaudited, in thousands, except share and per share data)

Three months ended March 31,

 

2022

2021

Revenue

$

40,370

 

$

29,720

 

Cost of revenue, net(1)

 

14,133

 

 

7,637

 

Gross margin

 

26,237

 

 

22,083

 

Operating expenses:

 

 

Research and development(1)

 

3,701

 

 

1,097

 

General and administrative(1)

 

14,006

 

 

6,367

 

Sales and marketing(1)

 

13,372

 

 

3,077

 

Total operating expenses

 

31,079

 

 

10,541

 

(Loss) income from operations

 

(4,842

)

 

11,542

 

Interest and other expenses, net

 

(902

)

 

(737

)

(Loss) income before income taxes

 

(5,744

)

 

10,805

 

Provision for income taxes

 

(1,632

)

 

(2,762

)

Net (loss) income

$

(7,376

)

$

8,043

 

 

 

 

Less: income allocated to participating securities

 

 

 

(5,547

)

Net (loss) income attributable to Class A, LT10 and LT50 common stockholders

$

(7,376

)

$

2,496

 

Net (loss) income per share attributable to Class A, LT10 and LT50 common stockholders:

 

 

Basic

$

(0.09

)

$

0.08

 

Diluted

$

(0.09

)

$

0.06

 

Weighted-average shares of common stock used to compute net (loss) income per share attributable to Class A, LT10 and LT50 common stockholders:

 

 

Basic

 

80,147,208

 

 

29,522,409

 

Diluted

 

80,147,208

 

 

40,576,339

 

 

 

 

  1. Includes stock-based compensation expense as follows:

 

Three months ended March 31,

 

2022

2021

 

(in thousands)

Cost of revenue, net

$

4,908

$

188

Research and development

 

2,708

 

154

General and administrative

 

4,975

 

304

Sales and marketing

 

2,076

 

64

Total stock-based compensation expense

$

14,667

$

710

 

 

 

Expensify, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited, in thousands)

 

Three months ended March 31,

 

2022

2021

Cash flows from operating activities:

 

 

Net (loss) income

$

(7,376

)

$

8,043

 

Adjustments to reconcile net (loss) income to net cash provided (used) by operating activities:

 

 

Depreciation and amortization

 

1,167

 

 

1,170

 

Reduction of operating lease right-of-use assets

 

185

 

 

181

 

Loss on impairment, receivables and sale or disposal of equipment

 

231

 

 

56

 

Stock-based compensation

 

14,667

 

 

710

 

Amortization of debt issuance costs

 

10

 

 

8

 

Changes in assets and liabilities:

 

 

Accounts receivable

 

(482

)

 

(1,601

)

Related party loan receivables

 

14

 

 

 

Settlement assets

 

(5,689

)

 

464

 

Prepaid expenses

 

377

 

 

(1,642

)

Other current assets

 

(224

)

 

318

 

Other assets

 

80

 

 

9

 

Accounts payable

 

(2,316

)

 

236

 

Accrued expenses and other liabilities

 

(2,635

)

 

2,821

 

Operating lease liabilities

 

(6

)

 

(200

)

Settlement liabilities

 

12,433

 

 

(980

)

Other liabilities

 

787

 

 

316

 

Net cash provided by operating activities

 

11,223

 

 

9,909

 

Cash flows from investing activities:

 

 

Purchase of property and equipment

 

(179

)

 

(284

)

Software development costs

 

(494

)

 

(669

)

Net cash used by investing activities

 

(673

)

 

(953

)

Cash flows from financing activities:

 

 

Principal payments of finance leases

 

(197

)

 

(192

)

Principal payments of term loan

 

(146

)

 

(616

)

Payments of deferred offering costs

 

 

 

(400

)

Vesting of restricted common stock

 

295

 

 

 

Issuance of restricted stock units

 

18

 

 

 

Repurchases of early exercised stock options

 

(4

)

 

 

Proceeds from issuance of common stock on exercise of stock options

 

252

 

 

125

 

Net cash provided by financing activities

 

218

 

 

(1,083

)

Net increase in cash and cash equivalents

 

10,768

 

 

7,873

 

Cash and cash equivalents and restricted cash, beginning of period

 

125,315

 

 

46,878

 

Cash and cash equivalents and restricted cash, end of period

$

136,083

 

$

54,751

 

Supplemental disclosure of cash flow information:

 

 

Cash paid for interest

$

267

 

$

723

 

Cash paid for income taxes

$

284

 

$

263

 

Noncash investing and financing items:

 

 

Accrued deferred offering costs

$

 

$

531

 

Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets

 

 

Cash and cash equivalents

$

101,101

 

$

41,926

 

Restricted cash included in other current assets

 

9,973

 

 

2,818

 

Restricted cash included in other assets

 

46

 

 

48

 

Restricted cash included in settlement assets

 

24,963

 

 

9,959

 

Total cash, cash equivalents and restricted cash

$

136,083

 

$

54,751

 

 

 

 

Expensify, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(unaudited, in thousands)

Adjusted EBITDA

 

Three months ended March 31,

 

2022

 

(in thousands, except percentages)

Net (loss) income

$

(7,376)

Net (loss) income margin

 

(18) %

Add:

 

Provision for income taxes

 

1,632

Interest and other expenses, net

 

902

Depreciation and amortization

 

1,167

Stock-based compensation

 

14,667

Adjusted EBITDA

$

10,992

Adjusted EBITDA margin

 

27 %

 

 

Non-GAAP net income

 

Three months ended March 31,

 

2022

 

(in thousands, except percentages)

Net (loss) income

$

(7,376)

Net (loss) income margin

 

(18) %

Add:

 

Stock-based compensation

 

14,667

IPO-related bonus expense

 

Non-GAAP net income

$

7,291

Non-GAAP net income margin

 

18 %

 

 

 

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