Summary
Expensify reported revenue of $37.45 million for the quarter ended September 30, 2021, up 72.6% from $21.69 million in the prior-year quarter. Year-to-date revenue was $102.47 million, up 64.4%. Management pointed to a pricing change introduced in May 2020 and a rebound in business travel as restrictions eased in the United States and elsewhere. Average paid members in the quarter reached 667,000, up from 633,000 a year earlier, but still below the 742,000 averaged in the quarter ended March 31, 2020. The platform has added over 10 million members since 2008 and processed and automated over 1.2 billion expense transactions as of September 30, 2021, with paid members spread across 200 countries and territories.
The margin picture is messier. Gross profit rose 45.3% to $19.25 million, yet gross margin fell to 51.4% from 61.1%. Cost of revenue grew much faster than revenue. Roughly $3.6 million of that came from discretionary cash bonuses paid to employees who support customers, with a further $5.4 million accrued for bonuses to be paid later. Higher payment processing fees tied to increased reimbursement activity added pressure.
Operating loss widened to $8.86 million from $5.09 million, and operating margin slipped to negative 23.7% from negative 23.4%. The net loss narrowed to $6.34 million from $6.94 million, helped by a swing to a benefit for income taxes from a provision in the prior-year quarter. Diluted loss per share was $0.18, better than the $0.25 loss a year earlier. Adjusted EBITDA, a non-GAAP measure the company reports, was negative $6.5 million, compared with positive $7.4 million in the prior-year quarter.
The nine-month view is far stronger than the quarter alone. Year-to-date net income was $8.33 million, a swing from a net loss of $3.45 million in the same period of 2020. Operating income was $10.18 million against $1.28 million, and gross margin expanded to 67.0% from 61.7%. Diluted earnings per share were $0.07, compared with a loss of $0.13. The first half carried the year while the third quarter produced an operating loss, which the company tied to the bonus accruals and a large step-up in advertising and marketing spend.
Cash generation held up. Operating cash flow for the nine months was $34.58 million, against $4.39 million used in the prior-year period. Capital expenditures rose 40.1% to $2.60 million, mostly for office build-outs in Portland and San Francisco and capitalized software development. The company held $68.1 million in cash and cash equivalents as of September 30, 2021, alongside $67.6 million of outstanding indebtedness. Its initial public offering closed in November 2021 with net proceeds of about $57.5 million, and the offering included 11,190,392 shares of Class A common stock at $27.00 per share.
The largest near-term swing factor is the cash bonus program. Expensify estimated roughly $27.8 million of remaining discretionary bonuses to be paid during the fourth quarter of fiscal 2021. It expects cost of revenue, research and development, sales and marketing and general and administrative expenses to rise in the three months and year ended December 31, 2021 as a result, along with additional stock-based compensation. Other risks include the uneven pandemic recovery for small and midsize businesses, the reliance on business travel, a paid member base that only recently returned to 2020 levels, and loan covenants that require a total annual recurring revenue leverage ratio no greater than 0.8 to 1.0 and liquidity of at least $10.0 million. Interest and other expenses also grew on a stronger dollar and higher foreign exchange losses.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2021 | Q2 FY2021 | QoQ | Q3 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $37.4M | — | — | — | — |
| Gross profit | $19.3M | — | — | — | — |
| Gross margin | 51.4% | — | — | — | — |
| Research & development | $2.2M | — | — | — | — |
| Sales & marketing | $7.6M | — | — | — | — |
| General & administrative | $18.3M | — | — | — | — |
| Total operating expenses | $28.1M | — | — | — | — |
| Operating income (loss) | -$8.9M | — | — | — | — |
| Operating margin | -23.6% | — | — | — | — |
| Net income (loss) | -$6.3M | — | — | — | — |
| Net margin | -16.9% | — | — | — | — |
| Diluted EPS | -$0.18 | — | — | — | — |
Risks
The COVID-19 pandemic materially adversely affected the business, with paid members declining 15% from 742,000 in the quarter ended March 31, 2020 to 630,000 in the quarter ended June 30, 2020 before rebounding to 667,000 in the quarter ended September 30, 2021. MD&A states activity is still recovering and the member base may not return to pre-pandemic levels.
MD&A expects increases in cost of revenue, research and development, sales and marketing, and general and administrative expenses for the three months and year ended December 31, 2021 due to discretionary cash bonuses and stock-based compensation. It estimates remaining cash bonuses at approximately $27.8 million as of the Quarterly Report date. For FY2021 Q3, operating loss widened to $8.86 million from $5.09 million and gross margin decreased to 51.4% from 61.1%.
Risk factors state the growth rate may decline and may not return to pre-pandemic levels, and that the company may not maintain profitability. MD&A notes revenue increased 72.6% in FY2021 Q3 versus the prior-year quarter, but operating loss widened and adjusted EBITDA was negative $6.5 million.
As of September 30, 2021, businesses with fewer than 1,000 employees accounted for approximately 95% of customers by revenue, and the company focuses on SMBs and VSBs. These customers may be more susceptible to economic downturns, price sensitivity, and small business failures.
The Expensify Card relies on a single third-party vendor Marqeta, issuing bank Sutton Bank, and card network Visa. The Marqeta agreement has a three year term expiring in June 2022 and can be terminated without cause on 180 days notice or with reduced or no notice in certain regulatory circumstances. Loss could cause service interruptions and delays.
Expensify Payments is a licensed money transmitter in various U.S. states and territories and is obtaining more licenses. It has been subject to fines and penalties by state regulatory authorities due to interpretation of the money transmitter regime, and future noncompliance could lead to investigations, fines, restrictions, or forced business changes.
The company faces significant competition from Intuit, Oracle NetSuite, SAP Concur, Workday, and smaller expense management and corporate card providers such as Brex, Divvy, Ramp, and Zoho Expense. Larger competitors may bundle products or sell at zero or negative margins, and smaller competitors may compete on price for SMBs.
The company depends on senior management, including founder and CEO David Barrett, and on a single professional services firm for a significant portion of its finance function. Loss of key employees or the outsourced finance team could harm accounting processes, financial reporting, and internal controls.
Remote work during COVID-19 may increase vulnerability to phishing and other cybersecurity events, and cloud service providers reported a significant increase in cyberattack activity since the pandemic began. Breaches could harm reputation and customer retention.
The company recently increased subscription prices and implemented a May 2020 pricing change. Risk factors state that inability to price optimally or market rejection of pricing changes could harm the business, and MD&A attributes part of the revenue increase to the May 2020 pricing change.
SaaS KPIs
All quarters →Adjusted EBITDA
Adjusted EBITDA margin
Paid members
Summary, forecast, risks and KPIs are extracted from Expensify, Inc.'s SEC filings for Q3 FY2021 (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.