exfy-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________

FORM 10-Q

___________________________________

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number 001-41043

___________________________________

Expensify, Inc.

___________________________________

(Exact name of registrant as specified in its charter)


Delaware			27-0239450
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
401 SW 5th Ave Portland Oregon			97204
(Address of Principal Executive Offices)			(Zip Code)

(971) 365-3939

Registrant’s telephone number, including area code

___________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock, par value $0.0001 per share

EXFY

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period

that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	x	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

The registrant had outstanding 68,507,818 shares of Class A common stock, par value of $0.0001 per share, 7,335,456 shares of LT10 common stock, par value $0.0001 per share, and 6,975,375 shares of LT50 common stock, par value $0.0001 per share, as of May 5, 2023.

Table of Contents


		Page
Special Note Regarding Forward-Looking Statements

Part I - Financial Information
Item 1.	Condensed Financial Statements	1
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Changes in Stockholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	34

Part II - Other Information
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Mine Safety Disclosures	36
Item 5.	Other Information	36
Item 6.	Exhibits	37
	Signatures

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Special Note Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future financial condition, future operations, projected costs, prospects, plans, objectives of management and expected market growth, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “shall,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” “goal,” “objective,” “seeks,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategies, plans, or intentions. There are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q. Such risks, uncertainties and other important factors include, among others:

•the impact of inflation on us and our members;

•our borrowing costs have and may continue to increase as a result of increases in interest rates;

•our expectations regarding our financial performance and future operating performance;

•our ability to attract and retain members, expand usage of our platform, sell subscriptions to our platform and convert individuals and organizations into paying customers;

•the timing and success of new features, integrations, capabilities and enhancements by us, or by competitors to their products, or any other changes in the competitive landscape of our market;

•the amount and timing of operating expenses and capital expenditures that we may incur to maintain and expand our business and operations to remain competitive;

•the sufficiency of our cash, cash equivalents and investments to meet our liquidity needs;

•our ability to make required payments under and to comply with the various requirements of our current and future indebtedness;

•our cash flows, the prevailing stock prices, general economic and market conditions and other considerations that could affect the specific timing, price and size of repurchases under our stock repurchase program or our ability to fund any stock repurchases;

•the war in Ukraine and escalating geopolitical tensions as a result of Russia's invasion of Ukraine;

•our ability to effectively manage our exposure to fluctuations in foreign currency exchange rates;

•the increased expenses associated with being a public company;

•the size of our addressable markets, market share and market trends;

•anticipated trends, developments and challenges in our industry, business and the highly competitive markets in which we operate;

•our expectations regarding our income tax liabilities and the adequacy of our reserves;

•our ability to effectively manage our growth and expand our infrastructure and maintain our corporate culture;

•our ability to identify, recruit and retain skilled personnel, including key members of senior management;

•the safety, affordability and convenience of our platform and our offerings;

Table of Contents

•our ability to successfully defend litigation brought against us;

•our ability to successfully identify, manage and integrate any existing and potential acquisitions of businesses, talent, technologies or intellectual property;

•general economic conditions in either domestic or international markets, including geopolitical uncertainty and instability;

•our protections against security breaches, technical difficulties, or interruptions to our platform;

•our ability to maintain, protect and enhance our intellectual property; and

•the other risks and uncertainties identified under Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations, estimates, forecasts and projections about future events and trends that we believe may affect our business, results of operations, financial condition and prospects. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report on Form 10-Q, we cannot guarantee that the future results, levels of activity, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2022, and any subsequent filings, as well as those identified in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements. Unless otherwise indicated or unless the context requires otherwise, all references in this document to “Expensify,” the “Company,” “we,” “us,” “our” or similar references are to Expensify, Inc. and its consolidated subsidiaries. Capitalized terms used and not defined above are defined elsewhere within this Quarterly Report on Form 10-Q.

iii

Part I - Financial Information

Item 1. Condensed Financial Statements



1

Expensify, Inc.

Condensed Consolidated Balance Sheets

(unaudited, in thousands, except share and per share data)



	As of March 31,		As of December 31,
	2023		2022
Assets
Cash and cash equivalents	$	111,232	$	103,787
Accounts receivable, net	15,705		16,448
Settlement assets, net	38,490		35,838
Prepaid expenses	7,411		8,825
Other current assets	21,282		22,217
Total current assets	194,120		187,115
Capitalized software, net	7,581		6,881
Property and equipment, net	14,021		14,492
Lease right-of-use assets	512		745
Deferred tax assets, net	374		344
Other assets	658		664
Total assets	$	217,266	$	210,241
Liabilities and stockholders' equity
Accounts payable	$	2,003	$	1,059
Accrued expenses and other liabilities	10,770		9,070
Borrowings under line of credit	15,000		15,000
Current portion of long-term debt, net of original issue discount and debt issuance costs	550		551
Lease liabilities, current	443		800
Settlement liabilities	33,144		33,882
Total current liabilities	61,910		60,362
Lease liabilities, non-current	95		—
Other liabilities	1,268		1,204
Long-term debt, net of original issue discount and debt issuance costs	51,297		51,434
Total liabilities	114,570		113,000
Commitments and contingencies (Note 4)
Stockholders' equity:
Preferred stock, par value $0.0001; 10,000,000 shares of preferred stock authorized as of March 31, 2023 and December 31, 2022; no shares of preferred stock issued and outstanding as of March 31, 2023 and December 31, 2022	—		—
Common stock, par value $0.0001; 1,000,000,000 shares of Class A common stock authorized as of March 31, 2023 and December 31, 2022; 68,496,251 and 68,238,245 shares of Class A common stock issued and outstanding as of March 31, 2023 and December 31, 2022, respectively; 24,996,826 and 24,997,561 shares of LT10 common stock authorized as of March 31, 2023 and December 31, 2022, respectively; 7,335,456 and 7,336,191 shares of LT10 common stock issued and outstanding as of March 31, 2023 and December 31, 2022, respectively; 24,999,020 shares of LT50 common stock authorized as of March 31, 2023 and December 31, 2022; 6,974,821 and 6,854,931 shares of LT50 common stock issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	7		7
Additional paid-in capital	206,207		194,807
Accumulated deficit	(103,518)		(97,573)
Total stockholders' equity	102,696		97,241
Total liabilities and stockholders' equity	$	217,266	$	210,241


See accompanying notes to condensed consolidated financial statements.
2

Expensify, Inc.

Condensed Consolidated Statements of Operations

(unaudited, in thousands, except share and per share data)



	Three Months Ended March 31,
	2023		2022
Revenue	$	40,101	$	40,370
Cost of revenue, net	15,775		14,133
Gross margin	24,326		26,237
Operating expenses:
Research and development	5,418		3,701
General and administrative	12,429		14,006
Sales and marketing	9,183		13,372
Total operating expenses	27,030		31,079
Loss from operations	(2,704)		(4,842)
Interest and other expenses, net	(1,416)		(902)
Loss before income taxes	(4,120)		(5,744)
Provision for income taxes	(1,825)		(1,632)
Net loss	$	(5,945)	$	(7,376)
Net loss per share:
Basic and diluted	$	(0.07)	$	(0.09)
Weighted average shares of common stock used to compute net loss per share:
Basic and diluted	81,768,429		80,147,208


See accompanying notes to condensed consolidated financial statements.
3

Expensify, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(unaudited, in thousands, except share and per share data)



	Preferred stock			Common stock			Additional paid-in capital		Accumulated deficit		Total stockholders' equity
	Shares	Amount		Shares	Amount
Three months ended March 31, 2023
Balance at December 31, 2022	—	$	—	82,429,367	$	7	$	194,807	$	(97,573)	$	97,241
Issuance of common stock on exercise of stock options	—	—		50,994	—		66		—		66
Vesting of early exercised stock options	—	—		—	—		216		—		216
Issuance of restricted stock units	—	—		1,548	—		31		—		31
Repurchases of early exercised stock options	—	—		(735)	—		(7)		—		(7)
Issuance of common stock under Matching Plan	—	—		163,417	—		1,099		—		1,099
Issuance of common stock in connection with restricted stock units vesting	—	—		245,313	—		—		—		—
Shares withheld from common stock issued to pay employee payroll taxes	—	—		(83,376)	—		(666)		—		(666)
Stock-based compensation	—	—		—	—		10,661		—		10,661
Net loss	—	—		—	—		—		(5,945)		(5,945)
Balance at March 31, 2023	—	$	—	82,806,528	$	7	$	206,207	$	(103,518)	$	102,696


See accompanying notes to condensed consolidated financial statements.
4

Expensify, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(unaudited, in thousands, except share and per share data)



	Preferred stock			Common stock			Additional paid-in capital		Accumulated deficit		Total stockholders' equity
	Shares	Amount		Shares	Amount
Three months ended March 31, 2022
Balance at December 31, 2021	—	$	—	81,400,860	$	6	$	142,515	$	(65,906)	$	76,615
Issuance of common stock upon exercise of stock options	—	—		205,730	—		252		—		252
Vesting of early exercised stock options	—	—		—	—		295		—		295
Issuance of restricted stock units	—	—		2,733	—		18		—		18
Repurchases of early exercised stock options	—	—		(2,330)	—		(4)		—		(4)
Stock-based compensation	—	—		—	—		14,667		—		14,667
Net loss	—	—		—	—		—		(7,376)		(7,376)
Balance at March 31, 2022	—	$	—	81,606,993	$

SEC Form 10-Q filed by Expensify Inc.