Summary
Expensify's quarter ended March 31, 2023 arrived with a flat top line and a founder willing to say so. Revenue was $40.1 million, down 0.7% from $40.4 million in the prior-year quarter. Paid members grew 6% to 747,000, spread across 47,800 companies and over 200 countries and territories. The catch, as CEO David Barrett put it in the shareholder letter, is that average activity per customer fell. He described the period bluntly: "this quarter sucked."
Gross profit fell harder than revenue. It came in at $24.3 million, down 7.3% from the prior-year quarter, and gross margin slipped to 60.7% from 65.0%, a decline of 4.3 percentage points. Management attributed the compression to higher cost of revenue, driven by outsourcing to maintain the platform, more payment processing fees as reimbursement activity rose, and more spending on support and implementation services. Card economics cut both ways. Interchange from the Expensify Card grew 85% to $2.3 million, but that interchange is not recorded as revenue, and cashback paid to card users is booked as contra revenue. Faster card adoption therefore drags reported revenue down even as it brings cash into the business.
The loss lines improved. Operating loss was $2.7 million, narrower than the $4.8 million loss a year earlier, and the operating margin of -6.7% was up 5.3 percentage points from -12.0%. Net loss narrowed to $5.9 million from $7.4 million, and diluted net loss per share was $0.07 against $0.09 in the prior-year quarter.
Cash generation was solid but lighter than a year ago. Operating cash flow was $7.6 million for the quarter, down 31.9% from $11.2 million. Capital expenditures, purchases of property and equipment, were $28,000, down 84.4% from $179,000. Management highlighted free cash flow of $10.2 million for the quarter, against $3.8 million in the same period last year, along with non-GAAP net income of $4.1 million and adjusted EBITDA of $8.7 million. Deferred revenue, current portion, rose 177.7% to $0.6 million. The base is small, but the direction fits the card and subscription push.
Capital allocation stayed conservative. Expensify spent $0.7 million on net share settlement during the quarter, plans a further $3.0 million of near-term open-market repurchases, and intends to deploy $8.0 million to reduce debt. The balance sheet carries $111.2 million in cash and cash equivalents.
Guidance was unchanged in substance. The company reaffirmed the long-term outlook it gave with its fourth quarter 2022 results, calling for revenue growth over a multi-year period contingent on the world economy returning to normal. It also set expectations for stock-based compensation across the next four fiscal quarters, starting with a range of $9.3 million to $11.3 million for the second quarter of 2023 and easing slightly through the first quarter of 2024. The near-term reality is that the long-term target implies a sharp acceleration from the current trajectory.
Risks are visible in the filings. The 10-Q discloses that as of March 31, 2023 Expensify was not in compliance with all debt covenants, specifically a covenant restricting common stock repurchases, including RSU net share settlements, and one requiring deposit, operating and collateral accounts to be held with CIBC. The company obtained a waiver and expects to be in compliance, or to have further waivers, by the end of the quarter ending June 30, 2023. Interest costs are climbing with the bank's reference rate, and the disclosure notes the option for a delayed term loan expired in March 2023. Competition is another pressure point, with Barrett arguing that rivals are willing to lose money on every customer. The bull case rests on New Expensify, an expanded sales development team, and product-led trial growth, none of which has shown up clearly in the numbers yet.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2023 | Q4 FY2022 | QoQ | Q1 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $40.1M | $43.5M | -7.7% | $40.4M | -0.7% |
| Gross profit | $24.3M | $27.4M | -11.1% | $26.2M | -7.3% |
| Gross margin | 60.7% | 63.0% | -2.3 pp | 65.0% | -4.3 pp |
| Research & development | $5.4M | $3.0M | +81.1% | $3.7M | +46.4% |
| Sales & marketing | $9.2M | $11.9M | -22.9% | $13.4M | -31.3% |
| General & administrative | $12.4M | $13.2M | -5.5% | $14.0M | -11.3% |
| Total operating expenses | $27.0M | $28.1M | -3.7% | $31.1M | -13.0% |
| Operating income (loss) | -$2.7M | -$700.0K | -286.3% | -$4.8M | +44.2% |
| Operating margin | -6.7% | -1.6% | -5.1 pp | -12.0% | +5.3 pp |
| Net income (loss) | -$5.9M | -$3.4M | -75.0% | -$7.4M | +19.4% |
| Net margin | -14.8% | -7.8% | -7.0 pp | -18.3% | +3.4 pp |
| Diluted EPS | -$0.07 | -$0.04 | -$0.03 | -$0.09 | +$0.02 |
Risks
As of March 31, 2023 the company was not in compliance with all covenants under its 2021 Amended Term Loan with CIBC, specifically the covenant restricting the amount of common stock repurchases (including RSU net share settlements) and the covenant requiring deposit, operating and collateral accounts to be maintained with CIBC. A waiver was obtained, but a repeat failure could let CIBC terminate commitments and declare the $67.1 million of outstanding indebtedness immediately due and payable.
Gross margin fell to 61% for the three months ended March 31, 2023 from 64% in the same period in 2022, as cost of revenue, net rose 12% to $15.8 million while revenue declined 1% to $40.1 million. Effective March 2023 the company removed a $25,000 monthly threshold for 1% cash back, now offering a minimum of 1% cash back on all purchases, which increases contra revenue recorded against Revenue.
Interest and other expenses, net increased 57% to $1.4 million for the three months ended March 31, 2023 compared to the same period in 2022, driven by higher interest expense on the 2021 Amended Term Loan and revolving line of credit because of increases in CIBC's reference rate. Borrowings accrue interest at the bank's reference rate plus 2.25%, or 10.25% as of March 31, 2023, leaving results exposed to further rate moves.
Revenue decreased 1% to $40.1 million for the three months ended March 31, 2023 compared to the same period in 2022, primarily due to an increase in contra revenue related to cashback payments driven by greater adoption and spend on the Expensify Card. Average paid members grew to 747,000 from 706,000, so the decline reflects cashback mix rather than member attrition.
Net cash provided by operating activities fell 31.9% to $7.6 million for the three months ended March 31, 2023 compared to $11.2 million in the same period in 2022, on lower revenue, higher employee and external contributor time on new product features, increased platform outsourcing, higher payment processing fees and increased support and implementation efforts.
Operating expense mix shifted materially, with research and development up 46% to $5.4 million for the three months ended March 31, 2023 versus the same period in 2022 while sales and marketing fell 31% to $9.2 million on lower advertising and marketing event spend. The company expects research and development and sales and marketing expenses to increase as it scales, which may pressure profitability if revenue does not accelerate.
SaaS KPIs
All quarters →Adjusted EBITDA
Adjusted EBITDA margin
Free cash flow
Paid members
Non-GAAP net income
Non-GAAP net income margin
Summary, forecast, risks and KPIs are extracted from Expensify, Inc.'s SEC filings for Q1 FY2023 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.