Summary
Expensify's fiscal 2026 second quarter showed a top line that is still contracting while losses narrowed sharply. Revenue, net was $33.9 million for the quarter, down 5.3% from $35.76 million in the prior-year quarter. Gross profit fell 12.1% to $16.33 million, and gross margin slipped to 48.2% from 51.9%. Management blamed lower billable activity across the user base and higher contra revenue from cashback payments as more members used the Expensify Card. Cost of revenue rose slightly, driven by amortization of capitalized software, and was partly offset by savings from using AI in place of human agents.
The bottom line improved. Operating loss narrowed to $2.92 million from $10.34 million a year earlier, and operating margin was -8.6%, compared with -28.9%. Net loss was $3.85 million, or $0.04 per diluted share, compared with a net loss of $8.79 million, or $0.10 per diluted share, in the prior-year quarter. Most of the swing came from sales and marketing, where spending fell sharply after elevated advertising in 2025 tied to the F1 movie title sponsorship.
Cash generation held up in the quarter. Operating cash flow was $8.43 million, up 3.0% from $8.18 million a year earlier. For the six months, operating cash flow was $8.55 million, down 46.7% from $16.04 million, which management tied to lower subscription revenue and a settlement payment related to a putative class action. Free cash flow, a non-GAAP measure, was $6.4 million for the quarter. Adjusted EBITDA was $6.6 million and non-GAAP net income was $3.4 million. Capital expenditures were $0.00 million for the six months, against $0.02 million in the prior-year period. The company ended June 30, 2026 with $65.8 million in cash and cash equivalents, no outstanding indebtedness and a $7.5 million letter of credit outstanding.
Paid members averaged 640,000 in the quarter, down 2% from a year earlier. The growth story the company is selling rests on New Expensify. Revenue from net new customers, defined as those who signed up on New Expensify and never used Classic, grew more than 250% year over year to over $10 million in ARR across more than 10,000 new customers. Deferred revenue, current portion, was $0.62 million, up 39.1% from $0.44 million. On the product side, the company shipped more than 30 improvements in the quarter and launched the Expensify MCP, which connects the platform to AI assistants such as ChatGPT, Claude and Cursor.
Capital return was the loudest signal of the quarter. Expensify repurchased about 6.8 million shares of Class A common stock, roughly a 7% reduction in shares outstanding. That included 6.1 million shares at $1.20 through a modified Dutch auction tender offer, which the company said was substantially undersubscribed despite the premium offered, plus about 0.7 million additional shares at an average price of $1.63. As of June 30, 2026, $39.8 million remained under the 2025 share repurchase program.
Guidance is for the full fiscal year. Expensify estimates free cash flow of $12.0 million to $14.0 million for the fiscal year ending December 31, 2026. It also published stock-based compensation estimates for the next four fiscal quarters, with totals of $5.4 million to $7.4 million in the third quarter of 2026 and lower ranges in each of the following three quarters. The risks are familiar. The customer base sits mostly with small and medium-sized businesses that are exposed to inflation, tariffs and geopolitical uncertainty, including the conflict in the Middle East. Expensify Classic is a closed pool that cannot add new sign-ups and drains through churn. The company also cites the risk of failing to meet Nasdaq's minimum bid price requirement and a potential delisting.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2026 | Q1 FY2026 | QoQ | Q2 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $33.9M | $34.0M | -0.3% | $35.8M | -5.3% |
| Gross profit | $16.3M | $16.2M | +1.0% | $18.6M | -12.1% |
| Gross margin | 48.2% | 47.6% | +0.6 pp | 51.9% | -3.7 pp |
| Research & development | $5.0M | $5.3M | -5.4% | $5.2M | -3.4% |
| Sales & marketing | $4.7M | $3.8M | +24.4% | $14.3M | -67.4% |
| General & administrative | $9.6M | $9.1M | +5.2% | $9.4M | +1.9% |
| Total operating expenses | $19.3M | $18.1M | +6.1% | $28.9M | -33.4% |
| Operating income (loss) | -$2.9M | -$2.0M | -48.1% | -$10.3M | +71.7% |
| Operating margin | -8.6% | -5.8% | -2.8 pp | -28.9% | +20.3 pp |
| Net income (loss) | -$3.9M | -$2.3M | -64.8% | -$8.8M | +56.2% |
| Net margin | -11.4% | -6.9% | -4.5 pp | -24.6% | +13.2 pp |
| Diluted EPS | -$0.04 | -$0.02 | -$0.02 | -$0.10 | +$0.06 |
Risks
The company received a Nasdaq deficiency letter on April 17, 2026 because its Class A common stock closing bid price was below $1.00 for 30 consecutive business days. It regained compliance on May 28, 2026, but the filing states it could fall out of compliance again and delisting would adversely impact liquidity and potentially result in an even lower share price.
The MD&A highlights that the majority of Expensify's customers are small and medium-sized businesses whose spending depends on the overall economy. It cites elevated inflation, tariff and trade issues, geopolitical uncertainty including the conflict in the Middle East, and potential recession as factors that could reduce business continuity and travel and negatively impact revenue.
Revenue, net decreased 5% to $33.9 million for the quarter ended June 30, 2026 and 6% to $67.8 million for the six months ended June 30, 2026, driven by lower billable activity across the user base and higher cashback contra revenue. Average paid members also fell to 640,000 from 652,000 in the prior-year quarter, indicating pressure on the core customer base.
Gross margin declined 3.7 percentage points to 48.2% in the quarter ended June 30, 2026 and declined 3.3 percentage points to 47.9% for the six months ended June 30, 2026. The company cites higher cashback contra revenue and increased amortization of capitalized software, partially offset by savings from greater use of AI in place of human agents.
Operating cash flow for the six months ended June 30, 2026 decreased 46.7% to $8.6 million, partly due to a settlement payment related to the Putative Class Action and related legal fees. The MD&A identifies this litigation as a driver of lower cash generation.
SaaS KPIs
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Summary, forecast, risks and KPIs are extracted from Expensify, Inc.'s SEC filings for Q2 FY2026 (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 1, 2026.