Expensify, Inc. Q2 FY2025 earnings

Expensify's second quarter of fiscal 2025 showed a split picture. Revenue rose 7% to $35.8 million, helped by interchange from the Expensify Card, which grew 31% to $5.3 million. Paid members fell 5% to 652,000. The company served an average of 42,800 companies and over 200 countries and territories. The top line improved, but profitability moved sharply the other way. Gross profit slipped 1.8% to $18.6 million, and gross margin was 51.9%, down from the prior-year quarter. The company swung to an operating loss of $10.3 million. Net loss widened to $8.8 million, and diluted EPS was -$0.10, down from the prior-year quarter. Operating margin was -28.9%, down from the prior-year quarter.

The margin pressure came from a mix shift in card programs and higher contra revenue from cashback. Management said the gross margin decline reflected the shift of cardholder spend from the Legacy Card Program to the Updated Card Program, along with higher cashback payments and lower billable activity. Sales and marketing expenses rose because of a one-time charge tied to the F1 The Movie title sponsorship. Research and development expenses fell as internal and external contributor time shifted toward that marketing push. Those expense swings drove the operating loss. The shift to the Updated Card Program changes the economics because interchange is recognized gross, while the Legacy Card Program was recorded as a reduction to cost of revenue. That accounting change helps revenue but pressures gross margin.

Cash generation held up better than earnings. Operating cash flow was $8.9 million, down 4% from the prior-year quarter. Free cash flow was $6.3 million, up 10% from the prior-year quarter. The company repurchased 1,285,336 Class A shares for about $3.0 million. Deferred revenue was $0.4 million, down 66.8% from the prior-year quarter. Capital expenditures were $0.02 million year to date, up from the prior-year period. For the first half, revenue was $71.8 million, up 7.5%. Gross profit was $36.8 million, down 2.8%. Gross margin was 51.3%, down from the prior-year period. Operating loss widened to $11.8 million. Net loss widened to $12.0 million, and diluted EPS was -$0.13, down from the prior-year period. Operating cash flow was $13.7 million, up 7.3%.

Guidance points to better free cash flow for the full fiscal year. Expensify raised the midpoint of its full year 2025 free cash flow guidance by $2.0 million, to a range of $19.0 million to $23.0 million. That is a full-year outlook, not a quarterly target. The company also gave stock-based compensation estimates for the next four fiscal quarters. Management expects the F1 sponsorship to lift brand awareness, with surveys showing 50% gains in target demographics and 350% gains in the 18-24 group. Expensify Travel bookings rose 44% in the quarter. International expansion is a central part of the plan. The Expensify Card is expected to be available in the UK and most of the EU this month, opening access to more than 30 million businesses in 18 new countries. The company added support for more than 10,000 banks and now supports 10 languages, with EUR billing added.

Risks remain. Expensify depends on small and medium-sized businesses, which are sensitive to slower economic growth, elevated inflation, tariffs, and trade uncertainty. The company also faces competition, the need to attract and retain members, and the possibility of security incidents or technical difficulties. The paid member decline of 5% is a reminder that the core subscription business is not growing. The quarter's profit swing shows how much the F1 sponsorship and card program economics can move results. Management's plan leans on international card adoption and AI features to improve the model, but those efforts will take time to show up in the financials. The company processed and automated 1.8 billion expense transactions as of June 30, 2025, and more than 15 million people use its free features.