Expensify, Inc. Q3 FY2025 earnings

Expensify's fiscal 2025 third quarter arrived with mixed top-line trends. Revenue was $35.1 million, down 1.0% from the prior-year quarter. Year-to-date revenue was $106.9 million, up 4.6%. Gross profit was $17.4 million in the quarter, down 4.7%, and gross margin was 49.6%, down 2.0 percentage points. Year-to-date gross profit was $54.2 million, down 3.4%, while year-to-date gross margin was 50.7%, down 4.2 percentage points. Lower billable activity across the user base and higher cashback contra revenue tied to Expensify Card usage weighed on revenue. Interchange growth and a shift in cardholder spend from the Legacy Card Program to the Updated Card Program provided a partial offset, especially over the nine-month period.

Profitability turned negative in the quarter. Operating income swung to a loss of $2.3 million from the prior-year quarter. Operating margin was -6.4%, down 7.2 percentage points. Net loss was $2.3 million, and the loss widened from the prior-year quarter. Diluted EPS was -$0.03, and that loss also widened. The nine-month picture was weaker. Operating loss for the first nine months was $14.1 million, and the loss widened from the prior-year period. Operating margin was -13.2%, down 11.9 percentage points. Net loss was $14.3 million, and the loss widened from the prior-year period. Diluted EPS was -$0.15, and that loss widened from the prior-year period. Management pointed to higher sales and marketing expense, legal fees, settlement losses, and advertising related to the F1 The Movie title sponsorship. Lower research and development costs partially offset those increases.

Cash generation held up better than earnings. Operating cash flow was $4.2 million in the quarter, up 13.0% from the prior-year quarter. Year-to-date operating cash flow was $17.9 million, up 8.6%. Free cash flow, a non-GAAP measure, was $1.2 million, with a free cash flow margin of 4%. That compared with a free cash flow margin of 19% in the prior-year quarter. Adjusted EBITDA was $6.5 million, and non-GAAP net income was $4.3 million. Capital expenditures were $0.00 million in the quarter, flat from the prior-year quarter, and $0.02 million year to date, up from the prior-year period. Deferred revenue, current portion, was $0.50 million, down 6.4% from the prior-year quarter.

Operational metrics showed both progress and pressure. Paid members were 642,000, down 6% from the prior-year period. Expensify Travel posted a 36% increase in quarterly travel bookings, and travel bookings are up 95% since Q1 2025. Interchange derived from the Expensify Card grew 18% from the prior-year period. The company became the official Travel and Expense partner of the Brooklyn Nets, a long-time customer that adopted Expensify Travel in the quarter. Expensify migrated all Collect customers off Classic and fully onto New Expensify, and it is now focused on migrating Control customers. Management also highlighted a heavily upgraded Concierge AI. As of September 30, 2025, Expensify had processed and automated 1.8 billion expense transactions and served over 15 million members. The company repurchased 1,579,763 shares of Class A common stock for approximately $3.0 million, and it had $44.0 million remaining under the 2025 Share Repurchase Program.

Guidance centers on free cash flow for the full fiscal year 2025. Management stood by its outlook of $19.0 million to $23.0 million for the fiscal year ending December 31, 2025. It did not provide a forward-looking reconciliation for free cash flow. The company also estimated stock-based compensation expense for the next four fiscal quarters, starting with Q4 2025. Risks include macroeconomic pressure, elevated inflation, tariff and trade uncertainty, slower economic growth or recession, and the concentration of customers in small and medium-sized businesses. Other named risks include competition, the use of artificial intelligence and machine learning, security incidents, technical interruptions, litigation, foreign currency fluctuations, interest rates, and restrictions under the LOC Security Agreement. The company had no outstanding indebtedness and a $7.5 million letter of credit outstanding as of September 30, 2025. Management believes existing cash resources will be sufficient to finance continued operations and growth strategy for the next 12 months and for the foreseeable future.