Summary
Expensify closed fiscal 2022 with fourth-quarter revenue of $43.47 million, up 7.7% from the prior-year quarter. Full-year revenue was $169.50 million, up 18.7%. Gross profit rose 33.9% to $27.36 million in the quarter and 19.8% to $106.83 million for the year. Gross margin was 63.0% in the fourth quarter, up 12.3 percentage points from the prior-year quarter, and 63.0% for the full year, up 0.6 percentage points. The company narrowed its fourth-quarter operating loss to $0.70 million, but its full-year operating loss widened to $15.23 million. Fourth-quarter net loss narrowed to $3.40 million, while full-year net loss widened to $27.01 million. The full-year diluted loss per share was negative $0.33, an improvement from the prior year. Management attributed the full-year revenue increase to more paid members and reimbursement activity, plus higher average fees per paid member as pay-per-use members increased.
Cash generation improved sharply. Fourth-quarter operating cash flow was $6.65 million, up 122.8% from the prior-year quarter. Full-year operating cash flow was $32.88 million, up 499.3%. Capital expenditures were $0.12 million in the fourth quarter, up 13.5%, and $0.58 million for the year, down 78.4%. The current portion of deferred revenue was $0.22 million, down 6.7% from the prior-year quarter. Operating margin was negative 1.6% in the fourth quarter, up 49.0 percentage points from the prior-year quarter, but negative 9.0% for the full year, down 1.8 percentage points from the prior year. Non-GAAP adjusted EBITDA was $11.2 million in the fourth quarter and $42.5 million for the full year. Non-GAAP net income was $7.1 million in the fourth quarter and $25.3 million for the full year. Free cash flow was $6.0 million in the fourth quarter and $26.3 million for the full year.
Operationally, Expensify ended the year with 779,000 paid members, an increase of 10% from the prior-year quarter. Interchange from the Expensify Card grew to $2.0 million in the fourth quarter, up 91%, and to $6.8 million for the full year, up 118%. The company expanded its accounting channel, assigned partner managers to more than 500 partner firms, added account managers for nearly all paying customers, and onboarded sales development representatives across four vendors. It repurchased $12.1 million of Class A common stock in 2022, including net share settlement of equity awards, under a $50.0 million authorization. The company reported annual gross logo retention of 83% in both 2022 and 2021 and net seat retention of 108% in 2022, up from 93% in 2021. As of December 31, 2022, Expensify had processed and automated over 1.4 billion expense transactions and had over 12 million members.
Guidance and risks. Expensify reaffirmed long-term guidance of 25-35% revenue growth over a multi-year period, which assumes an eventual return to normalcy in the world economy. The company also provided estimated stock-based compensation for the next four fiscal quarters, with total first-quarter 2023 expense estimated at $9.7 million to $11.7 million and fourth-quarter 2023 expense estimated at $8.9 million to $10.9 million. Risks include challenging macroeconomic conditions, inflation, rising interest rates, foreign currency fluctuations, and pressure on small and midsize businesses. Expensify disclosed that as of December 31, 2022 it was not in compliance with a debt covenant restricting common stock repurchases, but it obtained a waiver and expects to return to compliance by the end of the first quarter of 2023. Other risks include competition, dependence on paid member growth, security breaches, and the need to retain and convert customers. Expensify also noted that it no longer qualified as an emerging growth company effective December 31, 2022, based on the market value of common stock held by non-affiliates as of June 30, 2022.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2022 | Q3 FY2022 | QoQ | Q4 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $43.5M | $42.5M | +2.3% | $40.4M | +7.7% |
| Gross profit | $27.4M | $25.9M | +5.5% | $20.4M | +33.9% |
| Gross margin | 63.0% | 61.0% | +1.9 pp | 50.6% | +12.3 pp |
| Research & development | $3.0M | $3.4M | -12.4% | $2.9M | +4.9% |
| Sales & marketing | $11.9M | $12.3M | -3.4% | $13.1M | -9.1% |
| General & administrative | $13.2M | $15.9M | -17.3% | $24.9M | -47.2% |
| Total operating expenses | $28.1M | $31.7M | -11.3% | $40.9M | -31.3% |
| Operating income (loss) | -$700.0K | -$5.7M | +87.8% | -$20.4M | +96.6% |
| Operating margin | -1.6% | -13.4% | +11.8 pp | -50.6% | +49.0 pp |
| Net income (loss) | -$3.4M | -$8.2M | +58.8% | -$21.9M | +84.5% |
| Net margin | -7.8% | -19.4% | +11.6 pp | -54.2% | +46.4 pp |
| Diluted EPS | -$0.04 | -$0.10 | +$0.06 | -$0.43 | +$0.39 |
Risks
As of December 31, 2022, businesses with fewer than 1,000 employees accounted for approximately 95% of customers by revenue. MD&A cites inflationary pressures, rising interest rates and foreign currency fluctuations as potential negative impacts, and customers may request more refunds or chargebacks.
As of December 31, 2022, the company was not in compliance with the covenant in its CIBC loan and security agreement restricting common stock repurchases, including RSU net share settlements, and obtained a waiver. It expects to be in compliance with all debt covenants by the end of the quarter ended March 31, 2023.
Expensify Card relies on a single third-party vendor Marqeta, issuing bank Sutton Bank and card network Visa. Consideration from this vendor, net, increased to $6.2 million in FY2022 from $2.9 million in FY2021; termination or transition failure could cause service interruptions and additional expenses.
Expensify Payments LLC is a licensed money transmitter in various U.S. states and territories and is obtaining additional licenses; it is subject to money transmitter, AML, sanctions and PCI-DSS rules. Past fines and future enforcement actions or additional licensing costs could materially harm business.
Success depends on key executive officers and employees, including founder and CEO David Barrett, and the company has no employment agreements requiring them to stay. It also relies on professional services firms for a significant portion of its finance function; losing those teams could cause material weaknesses in internal control and delayed financial reporting.
A majority of subscriptions are driven by bottom-up adoption of the expense management feature, so market acceptance of that feature is critical. If the feature fails to satisfy customer demand or convert free and trial users to paying subscribers, business and growth prospects would suffer.
The company faces significant competition from traditional horizontal platforms, corporate card providers and niche expense management solutions. Larger competitors have greater resources and may sell at zero or negative margins or bundle products, which could pressure pricing and market share.
Growth rate may decline as the business matures; revenue was up 18.7% for FY2022 year to date versus FY2021 year to date, but sales and marketing expenses rose 80% for the year ended December 31, 2022. Gross logo retention was 83% in both 2022 and 2021, and future growth depends on retaining existing customers.
The Voting Trust controls a majority of voting power, so the company qualifies as a controlled company and relies on Nasdaq exemptions: it does not have a majority of independent directors, lacks a nominating and corporate governance committee, and its compensation committee members are not independent. The multi-class structure may also make Class A common stock ineligible for certain stock indexes.
The May 10, 2022 share repurchase program authorizes up to $50 million of Class A common stock repurchases but does not obligate any specific amount. The program may not be fully consummated, could increase stock price volatility, and could diminish cash and cash equivalents.
The company is developing an open-source financial group chat as a complete rewrite of the Expensify front end on React Native. It has not developed a similar feature before, and the offering may not meet customer needs, gain member traction or generate revenue sufficient to offset development costs.
SaaS KPIs
All quarters →Adjusted EBITDA
Free cash flow
Paid members
Non-GAAP net income
Non-GAAP net income margin
Free cash flow margin
Interchange Derived from Expensify Card
Operating cash flow margin
Adjusted operating cash flow
Summary, forecast, risks and KPIs are extracted from Expensify, Inc.'s SEC filings for Q4 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 2, 2026.