Summary
Expensify reported $43.16 million in revenue for the second quarter of fiscal 2022, up 22.3% from the prior-year quarter. Year-to-date revenue reached $83.53 million, up 28.5%. Gross profit was $27.29 million for the quarter, flat compared with the prior-year quarter on a 0.3% decline, and $53.52 million year to date, up 8.2%. Gross margin fell to 63.2% for the quarter from 77.5%, down 14.3 percentage points, and year-to-date gross margin was 64.1%, down 12.0 percentage points from 76.1%.
The bottom line turned negative. Expensify swung to an operating loss of $3.97 million for the quarter, compared with operating income of $7.50 million in the prior-year quarter. Operating margin was -9.2%, down 30.4 percentage points from 21.2%. Year-to-date operating loss was $8.82 million, compared with operating income of $19.04 million, and year-to-date operating margin was -10.6%, down 39.8 percentage points from 29.3%. Net loss was $7.99 million for the quarter, compared with net income of $6.63 million, and net loss was $15.37 million year to date, compared with net income of $14.67 million. Diluted EPS was -$0.10 for the quarter, down from $0.05, and -$0.19 year to date, down from $0.13.
Costs drove the swing. Cost of revenue, net increased by 100% for the quarter, according to the MD&A, while revenue rose 22.3%. The net loss was primarily driven by stock-based compensation expenses of $14.0 million, the company said. Non-GAAP net income was $6.1 million, with a non-GAAP net income margin of 14%. Adjusted EBITDA was $11.7 million, with an adjusted EBITDA margin of 27%. Operating cash flow was $15.94 million for the quarter, up 11.4% from $14.30 million in the prior-year quarter. Year-to-date operating cash flow was $27.16 million, up 12.2% from $24.21 million. Capital expenditures were $0.09 million for the quarter, down 94.7% from $1.66 million, and $0.27 million year to date, down 86.2% from $1.94 million. Deferred revenue was $0.27 million at June 30, 2022, current portion only. The MD&A points to higher payment processing fees, support and implementation services, and outsourcing, partly offset by consideration from a vendor, net, of $1.5 million. Operating expenses also moved sharply: sales and marketing rose 216%, general and administrative rose 39%, and research and development fell 26%.
Operational metrics showed momentum. Average paid members were 754,000 in the second quarter, up from 706,000 in the first quarter and 639,000 in the prior-year quarter. Expensify called it the strongest quarter for paid member growth to date and said paid members now exceed pre-pandemic levels. Interchange from the Expensify Card grew 142% year over year and 40% sequentially. The company is adding dedicated accounting partner managers and plans to bring back its invite-only ExpensiCon in May 2023. Management said every ExpensiCon has paid for itself many times over through subscription increases. Expensify has added over 10 million members and processed and automated over 1.2 billion expense transactions as of June 30, 2022, and it serves paid members in 200 countries and territories.
Guidance and risks round out the quarter. Expensify reaffirmed long-term guidance of 25-35% revenue growth over a multi-year period. It also estimated stock-based compensation for the third quarter of 2022, the fourth quarter of 2022, and the first quarter of 2023, with total SBC of $13.2 million to $15.2 million for the third quarter of 2022, $10.7 million to $12.7 million for the fourth quarter of 2022, and $10.3 million to $12.1 million for the first quarter of 2023. Risks include the challenging climate, the COVID-19 pandemic and its impact on SMBs, the war in Ukraine and geopolitical tensions, competition, and the need to attract and retain members. Expensify disclosed that as of June 30, 2022 it was not in compliance with all debt covenants. The issue was a covenant restricting the amount of transfers for donations to Expensify.org during the period. The company obtained a waiver from CIBC and expects to be in compliance with all debt covenants by the end of the fiscal quarter ended September 30, 2022. The credit agreement includes a liquidity covenant of not less than $10.0 million and a total annual recurring revenue leverage ratio not to exceed 0.8 to 1.0 for the first year. A covenant failure could let CIBC terminate commitments and declare borrowings immediately due.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $43.2M | $40.4M | +6.9% | — | — |
| Gross profit | $27.3M | $26.2M | +4.0% | — | — |
| Gross margin | 63.2% | 65.0% | -1.8 pp | — | — |
| Research & development | $3.6M | $3.7M | -3.2% | — | — |
| Sales & marketing | $12.2M | $13.4M | -8.4% | — | — |
| General & administrative | $15.4M | $14.0M | +10.2% | — | — |
| Total operating expenses | $31.3M | $31.1M | +0.6% | — | — |
| Operating income (loss) | -$4.0M | -$4.8M | +17.9% | — | — |
| Operating margin | -9.2% | -12.0% | +2.8 pp | — | — |
| Net income (loss) | -$8.0M | -$7.4M | -8.4% | — | — |
| Net margin | -18.5% | -18.3% | -0.3 pp | — | — |
| Diluted EPS | -$0.10 | -$0.09 | -$0.01 | — | — |
Risks
Operating income swung to a loss of $3.97 million in FY2022 Q2 from income of $7.50 million in FY2021 Q2, down 153.0%, and net income swung to a loss of $7.99 million from $6.63 million, down 220.6%. The losses were driven by higher stock-based compensation and operating expenses.
Gross margin decreased to 63.2% in FY2022 Q2 from 77.5% in FY2021 Q2, down 14.3 percentage points, and year to date decreased to 64.1% from 76.1%, down 12.0 percentage points. Cost of revenue, net increased 100% in Q2, including $4.7 million of stock-based compensation.
Stock-based compensation expense rose to $14.0 million in FY2022 Q2 from $0.9 million in FY2021 Q2, and to $28.4 million year to date from $1.6 million, primarily from RSUs granted in September and November 2021. This expense materially contributed to the operating and net losses.
As of June 30, 2022, the company was not in compliance with all debt covenants, specifically the covenant restricting transfers for donations to Expensify.org, and obtained a waiver from CIBC. Failure to comply with covenants could result in termination of credit commitments or acceleration of outstanding borrowings.
On May 10, 2022, the Executive Committee of the Board authorized a share repurchase program for up to $50 million of Class A common stock. The program does not obligate the company to repurchase any specific amount, may be modified, suspended, or terminated at any time, and could increase stock price volatility and diminish cash reserves.
Sales and marketing expenses increased 216% to $12.2 million in FY2022 Q2 and 269% to $25.6 million year to date, due to increased advertising spend and employee focus on recently developed products such as the Free Plan and Expensify Card.
The company recorded a valuation allowance of $3.8 million in FY2022 Q2 and $6.2 million year to date, with an effective income tax rate of (34.8)% in Q2. The allowance reflects uncertainty about realizing deferred tax assets.
Interest and other expenses, net increased 154% to $2.0 million in FY2022 Q2 and 90% to $2.9 million year to date, due to increased foreign currency losses from the strengthening U.S. dollar and higher interest expense under the 2021 Amended Term Loan and revolving line of credit.
The business and its SMB customers were disrupted by COVID-19, and average paid members declined in 2020. Average paid members increased to 754,000 in FY2022 Q2 from 639,000 in FY2021 Q2, but the lasting impact of the pandemic on global economies and SMBs remains uncertain.
SaaS KPIs
All quarters →Adjusted EBITDA
Adjusted EBITDA margin
Paid members
Non-GAAP net income
Non-GAAP net income margin
Operating Cash Flow
Summary, forecast, risks and KPIs are extracted from Expensify, Inc.'s SEC filings for Q2 FY2022 (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.