Summary
Expensify ended fiscal 2023 with fourth quarter revenue of $35.2 million, down 19% from the prior-year quarter. Gross profit fell 31.7% to $18.7 million, and gross margin slid to 53.1% from 63.0%. The operating loss widened to $5.99 million from $0.70 million a year earlier, and the net loss widened to $7.20 million from $3.40 million. Full-year revenue was $150.7 million, down 11%, full-year gross margin was 55.6%, down from 63.0% in 2022, and the full-year net loss widened to $41.46 million from $27.01 million. The full-year operating loss widened to $33.15 million from $15.23 million. Diluted loss per share for the year was $0.50 against a loss of $0.33 in 2022. The revenue decline came from lower billable activity across the user base, including pay-per-use activity that carries a higher average fee per member, and from higher cashback contra revenue tied to Expensify Card adoption.
Cash generation deteriorated sharply. Operating cash flow was negative $0.54 million in the quarter, down from $6.65 million a year earlier, and full-year operating cash flow was $1.56 million, down from $32.88 million. Capital expenditures came to $0.28 million in the quarter, up from $0.12 million. Deferred revenue, current portion only, rose to $0.92 million from $0.22 million. Management credits aggressive cost cuts made midway through the fourth quarter. Adjusted EBITDA of $5.9 million improved $9.4 million, or 265%, quarter over quarter, and non-GAAP net income of $3.1 million improved $9.8 million, or 146%. Full-year adjusted EBITDA was $13.2 million and the full-year non-GAAP net loss was $0.5 million. Free cash flow, which the company defines separately from operating cash flow, was negative $3.6 million in the quarter and $0.6 million for the year. Consideration from a vendor, net, tied to the Expensify Card, cut cost of revenue by $10.1 million for the year, up from $6.2 million.
Paid members averaged 719,000, down 8% from the same period last year, across an average of 47,000 companies and over 200 countries and territories. Retention weakened. Annual gross logo retention was 74% in 2023 against 83% in 2022, and net seat retention was 99% against 108%. The Expensify Card remained the bright spot. Interchange derived from the card grew to $3.1 million in the quarter, up 55% from the prior year, and to $11.1 million for the full year, up 63%. Expensify also established a new card program that provides more interchange per transaction, with all new customers on it and existing customers expected to be fully migrated by the end of 2024. Other releases included a budgeting tool for reimbursable and corporate card expenses, consumer payments and bill splitting, and a marketing partnership on an Apple Formula One film starring Brad Pitt and Damson Idris.
Guidance is for the full fiscal year ending December 31, 2024. Expensify initiated free cash flow guidance of $10.0 million to $12.0 million and does not reconcile that estimate to operating cash flow on a forward-looking basis. The company expects stock-based compensation of $8.3 million to $10.3 million in the first quarter of 2024, tapering to $7.6 million to $9.6 million by the fourth quarter. Risks sit on the balance sheet. Cash and cash equivalents were $47.5 million at December 31, 2023 against $22.7 million of outstanding indebtedness. The term loan was repaid in full on October 12, 2023, leaving a $15.0 million balance on the revolving line of credit. Expensify was not in compliance with several covenants under the 2021 Amended Term Loan at year end, including the minimum fixed charge coverage ratio, and obtained a waiver from CIBC. On February 21, 2024 it amended and restated its loan and security agreement with CIBC, extending the revolver maturity to September 2025, and management expects compliance by the end of the first quarter of 2024. The company reduced its debt by $44.6 million in 2023, and employees bought $4.3 million of Class A common stock through the Stock Purchase and Matching Plan. The larger demand risk is macroeconomic pressure on SMB customers, which management ties to the reduction in paid seats from existing customers.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2023 | Q3 FY2023 | QoQ | Q4 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $35.2M | $36.5M | -3.5% | $43.5M | -19.0% |
| Gross profit | $18.7M | $18.8M | -0.6% | $27.4M | -31.7% |
| Gross margin | 53.1% | 51.5% | +1.6 pp | 63.0% | -9.8 pp |
| Research & development | $6.2M | $6.6M | -5.4% | $3.0M | +108.9% |
| Sales & marketing | $7.6M | $12.9M | -40.9% | $11.9M | -36.3% |
| General & administrative | $10.8M | $14.2M | -23.9% | $13.2M | -17.6% |
| Total operating expenses | $24.7M | $33.7M | -26.8% | $28.1M | -12.0% |
| Operating income (loss) | -$6.0M | -$14.9M | +59.8% | -$700.0K | -755.1% |
| Operating margin | -17.0% | -40.8% | +23.8 pp | -1.6% | -15.4 pp |
| Net income (loss) | -$7.2M | -$17.0M | +57.6% | -$3.4M | -112.1% |
| Net margin | -20.5% | -46.6% | +26.1 pp | -7.8% | -12.7 pp |
| Diluted EPS | -$0.09 | -$0.21 | +$0.12 | -$0.04 | -$0.05 |
Risks
Gross logo retention fell to 74% in 2023 from 83% in 2022 and net seat retention fell to 99% from 108%, while average paid members declined from 779,000 in Q4 2022 to 719,000 in Q4 2023. Subscription revenue depends on retaining and expanding existing customers.
Revenue decreased 11.1% to $150.7 million for the year ended December 31, 2023, and gross margin decreased to 55.6% from 63.0% for current YTD vs prior YTD. Lower billable activity and higher Expensify Card cashback contra revenue contributed to the decline.
Operating loss widened to $33.1 million and net loss widened to $41.5 million for the year ended December 31, 2023; adjusted EBITDA fell to $13.2 million from $42.5 million and non-GAAP net income turned to a $0.2 million loss.
Approximately 95% of customers by revenue as of December 31, 2023 were businesses with fewer than 1,000 employees, which may be more susceptible to economic downturns, reduced business spending, and higher refunds or chargebacks. MD&A cites inflationary pressures, rising interest rates, and a softening in capital markets.
The Expensify Card relies on a single third-party vendor Marqeta, issuing bank Sutton Bank or Bancorp, and card network Visa. Termination or transition failure could cause service interruptions and additional expenses; vendor consideration reduced cost of revenue by $10.1 million in 2023.
Expensify Payments LLC is a licensed money transmitter and is seeking additional licenses, subjecting it to capital, recordkeeping, anti-money laundering, and other requirements. Past fines have occurred, and future enforcement or licensing changes could restrict operations or increase compliance costs.
As of December 31, 2023, the company was not in compliance with several covenants under the 2021 Amended Term Loan and obtained a waiver from CIBC. Failure to comply with the 2024 Amended Term Loan covenants could accelerate borrowings.
The company faces competition from do-it-yourself approaches, larger horizontal platforms with greater resources, and corporate card providers. Some competitors may sell at zero or negative margins or bundle products.
Operating cash flow decreased 95.3% to $1.6 million for the year ended December 31, 2023, and cash and cash equivalents were $47.5 million with $22.7 million outstanding debt. Future capital needs could require additional financing.
Success depends on key executives including founder and CEO David Barrett and on professional services firms for part of the finance function. Equity award value decline may hurt recruiting and retention, and loss of the outsourced finance team could impair financial reporting.
Substantial investments in brand and marketing may not yield returns; the Expensify Lounge opened in 2023 did not yield expected results and was shut down in late 2023, and ExpensiCon required significant resources.
The open-source financial group chat is a complete rewrite of the Expensify front end and may not meet customer needs or gain member traction, and the expense management feature drives the majority of subscriptions.
SaaS KPIs
All quarters →Adjusted EBITDA
Adjusted EBITDA margin
Free cash flow
Paid members
Non-GAAP net income
Non-GAAP net income margin
Interchange Derived from Expensify Card
Summary, forecast, risks and KPIs are extracted from Expensify, Inc.'s SEC filings for Q4 FY2023 (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.