Summary
Expensify's fiscal 2022 third quarter revenue rose 13.5% year over year to $42.5 million, and revenue for the nine months ended September 30, 2022 reached $126.0 million, up 23.0%. Growth came from more paid members and a higher average fee per paid member, since pay-per-use members pay more on average than annual members. Gross profit for the quarter increased 34.7% to $25.9 million, and gross margin improved 9.6 percentage points to 61.0%. Management credited the gain to a lower cost of revenue base, helped by more consideration from a vendor tied to the Expensify Card. The year-to-date margin moved the other way, down 4.0 percentage points to 63.1%, as costs rose faster than revenue.
GAAP results stayed in the red. The quarterly operating loss was $5.7 million, narrower than a year earlier, and operating margin improved 10.2 percentage points to -13.5%. Net loss widened 29.9% to $8.2 million, yet diluted EPS of -$0.10 was a narrower loss than the prior-year quarter. Stock-based compensation of $13.4 million drove most of the net loss, and the company said that expense should shrink from here. The nine-month numbers were weaker across the board: operating loss of $14.5 million, operating margin down 21.5 percentage points to -11.5%, net loss of $23.6 million, and diluted EPS of -$0.29, each swinging from a profit a year earlier.
Cash flow reversed in the quarter. Operating cash flow was -$0.9 million, down 109.0% from the prior-year quarter, which the company tied to the timing of customer settlement funds. Free cash flow, a non-GAAP measure that strips out customer funds and subtracts capital spending, was $4.7 million. For the nine months, operating cash flow was $26.2 million, down 24.1%. Capital expenditures were $0.2 million in the quarter, down 69.8%, and $0.5 million year to date, down 82.1%. Deferred revenue, current portion only, was $0.3 million, up 24.4%.
Operating metrics held up better than the income statement. Average paid members reached 761,000, up 14% from a year earlier. Interchange from the Expensify Card grew 115% to $1.9 million. More than 15,000 businesses use the Free Plan, and the company began onboarding beta customers to Expensify Payroll against a significant waitlist. Adjusted EBITDA was $9.0 million, a 21% margin, and non-GAAP net income was $5.1 million. On capital allocation, the company spent $4 million in the quarter on net share settlement of RSUs and plans another $6 million of repurchases starting November 11, 2022, for an expected total of $10 million in fiscal 2022. It has authorization to repurchase up to $50 million in shares.
Guidance stays qualitative. Expensify reaffirmed long-term guidance of 25-35% revenue growth over a multi-year period, with the caveat that the outlook assumes the global economy returns to normal. It also gave stock-based compensation estimates for the next four fiscal quarters, with total expense of $10.4 million to $12.4 million in the fourth quarter of 2022, $9.8 million to $11.8 million in the first quarter of 2023, $9.5 million to $11.5 million in the second quarter of 2023, and $9.3 million to $11.2 million in the third quarter of 2023. Management flagged a rough economy for small and medium businesses, inflation, rising interest rates, and foreign currency losses, which pushed interest and other expenses higher. The company ended the quarter with $106.2 million in cash and cash equivalents, $67.4 million of outstanding indebtedness, and a debt covenant breach that required a waiver from CIBC.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2022 | Q2 FY2022 | QoQ | Q3 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $42.5M | $43.2M | -1.5% | $37.4M | +13.5% |
| Gross profit | $25.9M | $27.3M | -4.9% | $19.3M | +34.7% |
| Gross margin | 61.0% | 63.2% | -2.2 pp | 51.4% | +9.6 pp |
| Research & development | $3.4M | $3.6M | -4.7% | $2.2M | +57.6% |
| Sales & marketing | $12.3M | $12.2M | +0.8% | $7.6M | +62.2% |
| General & administrative | $15.9M | $15.4M | +3.0% | $18.3M | -13.3% |
| Total operating expenses | $31.7M | $31.3M | +1.3% | $28.1M | +12.6% |
| Operating income (loss) | -$5.7M | -$4.0M | -43.9% | -$8.9M | +35.5% |
| Operating margin | -13.4% | -9.2% | -4.2 pp | -23.6% | +10.2 pp |
| Net income (loss) | -$8.2M | -$8.0M | -3.1% | -$6.3M | -29.9% |
| Net margin | -19.4% | -18.5% | -0.9 pp | -16.9% | -2.5 pp |
| Diluted EPS | -$0.10 | -$0.10 | ±$0.00 | -$0.18 | +$0.08 |
Risks
A substantial portion of debt is variable-rate, and the company notes the U.S. Federal Reserve raised interest rates by more than 300 basis points in 2022 and signaled further increases. Interest and other expenses, net increased 125% for the three months ended September 30, 2022 compared with the same period in 2021 due in part to higher interest expense under the CIBC facilities.
Total stock-based compensation expense was $13.4 million for the three months ended September 30, 2022 and $41.8 million for the nine months ended September 30, 2022, compared with $0.9 million and $2.5 million in the prior-year periods. This expense contributed to GAAP net loss of $8.2 million for the quarter and $23.6 million year to date, and may continue to pressure GAAP profitability.
Cost of revenue, net increased 38% for the nine months ended September 30, 2022 compared with the prior-year period while revenue increased 23%, causing gross margin to decrease to 63% from 67%. Sales and marketing expenses increased 62% for the quarter and 161% year to date, driven by advertising spend, marketing events and stock-based compensation.
As of September 30, 2022, the company was not in compliance with certain CIBC debt covenants, including the covenant restricting transfers to Expensify Payments LLC and the covenant restricting common stock repurchases, including RSU net share settlements. A waiver was obtained, but failure to perform obligations under these covenants could lead CIBC to terminate commitments and declare outstanding borrowings immediately due.
Interest and other expenses, net increased 125% for the three months ended September 30, 2022 and 104% for the nine months ended September 30, 2022 compared with the prior-year periods, due in part to increased foreign currency losses from the strengthening U.S. dollar.
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 Q3 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 1, 2026.