exfy-20240331

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, 2024


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 pursuant 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	☐	Accelerated filer	x
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 71,764,817 shares of Class A common stock, par value of $0.0001 per share, 7,333,335 shares of LT10 common stock, par value $0.0001 per share, and 7,395,695 shares of LT50 common stock, par value $0.0001 per share, as of May 6, 2024.

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		Page
Special Note Regarding Forward-Looking Statements

Part I - Financial Information
Item 1.	Condensed Consolidated 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	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36

Part II - Other Information
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	38
Item 6.	Exhibits	39
	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, strategy, 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:

•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;

•geopolitical tensions, including the war in Ukraine and the conflict in Israel, Gaza and surrounding areas;

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

•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;

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•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 ability to protect against security incidents, 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, 2023.

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, 2023, 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. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. 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 Consolidated Financial Statements



1

Expensify, Inc.

Condensed Consolidated Balance Sheets

(unaudited, in thousands, except share data)


	As of March 31,		As of December 31,
	2024		2023
Assets
Cash and cash equivalents	$	49,340	$	47,510
Accounts receivable, net	13,557		13,834
Settlement assets, net	48,513		39,261
Prepaid expenses	4,379		5,649
Other current assets	27,399		30,978
Total current assets	143,188		137,232
Capitalized software, net	15,107		12,494
Property and equipment, net	14,138		14,372
Lease right-of-use assets	5,954		6,435
Deferred tax assets, net	466		457
Other assets	5,918		5,794
Total assets	$	184,771	$	176,784
Liabilities and stockholders' equity
Accounts payable	$	1,373	$	1,425
Accrued expenses and other liabilities	10,326		9,390
Borrowings under line of credit	15,000		15,000
Current portion of long-term debt, net of original issue discount and debt issuance costs	7,624		7,655
Lease liabilities, current	436		432
Settlement liabilities	35,560		33,990
Total current liabilities	70,319		67,892
Lease liabilities, non-current	6,155		6,467
Other liabilities	1,787		1,681
Total liabilities	78,261		76,040
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, 2024 and December 31, 2023; no shares of preferred stock issued and outstanding as of March 31, 2024 and December 31, 2023	—		—
Common stock, par value $0.0001; 1,000,000,000 shares of Class A common stock authorized as of March 31, 2024 and December 31, 2023; 71,755,477 and 70,569,815 shares of Class A common stock issued and outstanding as of March 31, 2024 and December 31, 2023, respectively; 24,994,705 and 24,994,989 shares of LT10 common stock authorized as of March 31, 2024 and December 31, 2023, respectively; 7,333,335 and 7,333,619 shares of LT10 common stock issued and outstanding as of March 31, 2024 and December 31, 2023, respectively; 24,969,634 and 24,998,941 shares of LT50 common stock authorized as of March 31, 2024 and December 31, 2023, respectively; 7,395,695 and 7,321,894 shares of LT50 common stock issued and outstanding as of March 31, 2024 and December 31, 2023, respectively	9		8
Additional paid-in capital	251,055		241,509
Accumulated deficit	(144,554)		(140,773)
Total stockholders' equity	106,510		100,744
Total liabilities and stockholders' equity	$	184,771	$	176,784


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,
	2024		2023
Revenue	$	33,535	$	40,101
Cost of revenue, net	14,584		15,775
Gross margin	18,951		24,326
Operating expenses:
Research and development	5,929		5,418
General and administrative	11,431		12,429
Sales and marketing	3,384		9,183
Total operating expenses	20,744		27,030
Loss from operations	(1,793)		(2,704)
Interest and other expenses, net	(954)		(1,416)
Loss before income taxes	(2,747)		(4,120)
Provision for income taxes	(1,034)		(1,825)
Net loss	$	(3,781)	$	(5,945)
Net loss per share:
Basic and diluted	$	(0.04)	$	(0.07)
Weighted average shares of common stock used to compute net loss per share:
Basic and diluted	85,141,411		81,768,429


See accompanying notes to Condensed Consolidated Financial Statements.
3

Expensify, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(unaudited, in thousands, except share data)


	Preferred stock			Common stock			Additional paid-in capital		Accumulated deficit		Total stockholders' equity
	Shares	Amount		Shares	Amount
Three months ended March 31, 2024
Balance at December 31, 2023	—	$	—	85,225,328	$	8	$	241,509	$	(140,773)	$	100,744
Issuance of common stock on exercise of stock options	—	—		42,304	—		39		—		39
Vesting of early exercised stock options	—	—		—	—		137		—		137
Issuance of restricted stock units	—	—		7,288	—		18		—		18
Repurchases of early exercised stock options	—	—		(30,434)	—		—		—		—
Issuance of common stock under Matching Plan	—	—		1,030,144	1		913		—		914
Issuance of common stock in connection with restricted stock units vesting	—	—		209,877	—		—		—		—
Stock-based compensation	—	—		—	—		8,439		—		8,439
Net loss	—	—		—	—		—		(3,781)		(3,781)
Balance at March 31, 2024	—	$	—	86,484,507	$	9	$	251,055	$	(144,554)	$	106,510


See accompanying notes to Condensed Consolidated Financial Statements.
4

Expensify, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(unaudited, in thousands, except 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 upon 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.
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Expensify, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited, in thousands)


	Three Months Ended March 31,
	2024		2023
Cash flows from operating activities:
Net loss	$	(3,781)	$	(5,945)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	1,423		1,413
Reduction of operating lease right-of-use assets	136		181
Loss on impairment, receivables and sale or disposal of equipment	337		146
Stock-based compensation expense	7,524		10,004
Amortization of original issue discount and debt issuance costs	11		11
Deferred tax assets	(9)		(30)
Changes in assets and liabilities:
Accounts receivable, net	139		707
Settlement assets, net	(6,120)		(2,683)
Prepaid expenses	1,270		1,414
Other current assets	171		406
Other assets	(124)		8
Accounts payable	(260)		944
Accrued expenses and other liabilities	1,044		1,947
Operating lease liabilities	34		(206)
Settlement liabilities	1,570		(738)
Other liabilities	106		63
Net cash provided by operating activities	3,471		7,642
Cash flows from investing activities:
Purchases of property and equipment	—		(28)
Software development costs	(2,829)		(870)
Net cash used in investing activities	(2,829)		(898)
Cash flows from financing activities:
Principal payments of finance leases	(31)		(201)
Principal payments of outstanding debt	(37)		(150)
Payments for debt issuance costs	(8)		—
Repurchases of early exercised stock options	(32)		(7)
Proceeds from common stock purchased under Matching Plan	914		1,099
Proceeds from issuance of common stock on exercise of stock options	39		66
Payments for employee taxes withheld from stock-based awards	—		(666)
Net cash provided by financing activities	845		141
Net increase in cash and cash equivalents and restricted cash	1,487		6,885
Cash and cash equivalents and restricted cash, beginning of period	96,658		147,710
Cash and cash equivalents and restricted cash, end of period	$	98,145	$	154,595
Supplemental disclosure of cash flow information:
Cash paid for interest	$	454	$	1,409
Cash paid for income taxes	$	1,164	$	351
Noncash investing and financing items:
Stock-based compensation capitalized as software development costs	$	915	$	657
Purchases of property and equipment and capitalized software in accounts payable and accrued expenses	$	223	$	—
Right-of-use assets acquired through operating leases	$	—	$	145
Reconciliation of cash and cash equivalents and restricted cash to the Condensed Consolidated Balance Sheets
Cash and cash equivalents	$	49,340	$	111,232
Restricted cash included in other current assets	24,267		19,013
Restricted cash included in settlement assets, net	24,538		24,350
Total cash, cash equivalents and restricted cash	$	98,145	$	154,595


See accompanying notes to Condensed Consolidated Financial Statements.
6

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Expensify, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

NOTE 1 – GENERAL INFORMATION

Description of the Business

Expensify, Inc. ("Expensify") was incorporated in Delaware on April 29, 2009. Expensify offers a comprehensive expense management platform that integrates with a variety of third-party accounting applications, including QuickBooks Desktop, QuickBooks Online, Xero, NetSuite, Intacct, Sage, Microsoft Dynamics, MYOB and others. Expensify's product simplifies the way that employees and vendors manage and submit expense receipts and bills and provides efficiencies to companies for the payment of those bills. Expensify delivers its services over the internet to corporations and individuals under license arrangements and offers unique pricing options for small and medium-sized businesses ("SMBs") and enterprises on a per-active-member basis.

Expensify also offers an Expensify charge card (the "Expensify Card"), which is primarily distributed to corporate customers in the United States ("U.S.") who subsequently distribute the card to their employees for business use. The Expensify Card allows customers to have real-time control over their employees' spending and compliance with spending limits in addition to eReceipt reporting on purchases.

As of March 31, 2024, the Expensify Card consisted of two card programs operating concurrently. Under the original Expensify Card program launched in 2020 (the “Legacy Card Program”), Expensify has an agreement with the payment processor, Marqeta, Inc. ("Marqeta"), and relies on Marqeta to manage the relationship with the issuing bank, Sutton Bank, and the card network, Visa, in authorizing and settling transactions. In October 2023, Expensify augmented the Expensify Card program by entering into an agreement with a new issuing bank, The Bancorp Bank, N.A. ("Bancorp"), to issue Expensify Cards to customers and authorize and settle transactions on the Visa card network (the “Updated Card Program”). The Updated Card Program launched during the three months ended March 31, 2024, and all new Expensify Cards issued subsequent to the launch operate under the Updated Card Program.

Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of Expensify, its wholly-owned subsidiaries, and Expensify.org (the "Company") and have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and the applicable rules and regulations of the Securities and Exchange Commission ("SEC") for interim reporting in conformity with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP have been condensed or omitted pursuant to such SEC rules. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2023 ("2023 Annual Report").

All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, the accompanying condensed consolidated financial statements reflect all normal and recurring adjustments that are necessary for the fair presentation of the Company's financial position, results of operations, equity, and cash flows for the periods presented.

Results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or for any other future annual or interim period.


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Expensify, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and judgments are based on historical experience, forecasted events and various other assumptions that the Company believes to be reasonable under the circumstances. Estimates and judgments are evaluated on an ongoing basis. Actual results could differ from those estimates. Changes in estimates are recorded in the period in which they become known.

Estimates and assumptions by management affect the Company’s classification of employee and employee-related expenses, the useful lives and recoverability of long-lived assets and deferred contract acquisition costs, income taxes, capitalization of internal-use software costs, stock-based compensation and the Company's incremental borrowing rate utilized to measure its lease right-of-use ("ROU") assets and lease liabilities.

Updates to Significant Accounting Policies

The Company’s significant accounting policies are discussed in Note 2 of the 2023 Annual Report. Since the date the 2023 Annual Report was filed with the SEC, there have been no material changes to the Company's significant accounting policies, including the status of adoption of recent accounting pronouncements.

Recent Accounting Pronouncements

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements - Codification Amendments in Responses to the SEC's Disclosure Update and Simplification Initiative. The amendments clarify or improve disclosure and presentation requirements on various disclosure areas, including the statement of cash flows, earnings per share, debt, and equity. The amendments will align the requirements in the FASB ASC with the SEC's regulations. The amendments in this ASU will be effective on the date the related disclosures are removed from Regulation S-X or Regulation S-K by the SEC, and will not be effective if the SEC has not removed the applicable disclosure requirement by June 30, 2027. Early adoption is prohibited. The Company is currently evaluating the impact of this update on its consolidated financial statement disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures, which provides improvement primarily through enhanced disclosures about significant segment expenses. The ASU is effective for annual periods beginning after December 15, 2023 and quarterly periods beginning after December 15, 2024. The ASU allows for adoption on a retrospective basis for all prior periods presented in the financial statements. The Company is currently evaluating the effect of this update on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. The ASU is effective for annual periods beginning after December 15, 2024 and allows for adoption on a prospective basis, with a retrospective option. The Company is currently evaluating the effect of this update on its consolidated financial statements and related disclosures.


8

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Expensify, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

NOTE 2 - REVENUE AND CERTAIN STATEMENT OF OPERATIONS COMPONENTS

The table below provides the Company's total revenue by geographic region based on the currency of the subscription (in thousands). No other individual country outside of the United States accounted for more than 10% of total revenue.


	Three Months Ended March 31,
	2024		2023
United States	$	30,513	$	36,635
All other locations	3,022		3,466
Total revenue	$	33,535	$	40,101

No individual customer represented more than 10% of the Company’s total revenue during the three months ended March 31, 2024 and 2023.

Cashback Rewards

The Company offers a cashback rewards program to all Expensify Card customers based on volume of Expensify Card transactions and Software as a Service ("SaaS") subscription tier. Cashback rewards are earned on a monthly basis and are applied against outstanding customer receivables or paid out the following month. The Company considers the cashback payments to customers as consideration payable to a customer and it is recorded as a reduction to Revenue within the Condensed Consolidated Statements of Operations. Cashback rewards for the three months ended March 31, 2024 and 2023 was $2.0 million and $1.2 million, respectively.

Interchange

The Company generates revenue from the authorization and settlement of Expensify Card transactions under the Updated Card Program. The Company is contractually entitled to all interchange generated on Expensify Card transactions based on its agreement with the issuing bank. Under the Updated Card Program, the Company is the principal in the transaction (i.e. the Company controls the services) and recognizes interchange as revenue on a gross basis within Revenue on the accompanying Condensed Consolidated Statements of Operations. For the three months ended March 31, 2024, the Company had an immaterial amount of interchange revenue.

Consideration From a Vendor, Net

The Company receives consideration from a vendor for monetizing Expensify Card activities under the Legacy Card Program. This consideration, net of credit card processing fees paid to the vendor, is included as a reduction to Cost of revenue, net within the Condensed Consolidated Statements of Operations. Consideration from a vendor, net for the three months ended March 31, 2024 and 2023 was $3.2 million and $2.1 million, respectively.


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Expensify, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

NOTE 3 - CERTAIN BALANCE SHEET COMPONENTS

Other Current Assets

Other current assets consisted of the following (in thousands):


	As of March 31,		As of December 31,
	2024		2023
Expensify Card posted collateral for funds held for customers	$	10,846	$	16,561
Cash in transit for funds held for customers	7,364		5,107
Expensify.org restricted cash	5,911		5,881
Income tax receivable	2,750		2,993
Deferred contract acquisition costs	182		129
Expensify Payments LLC restricted cash	113		113
Matching Plan escrow and other restricted cash	33		80
Other	200		114
Other current assets	$	27,399	$	30,978

Capitalized Software, Net

Capitalized software, net consisted of the following (in thousands):


	As of March 31,		As of December 31,
	2024		2023
Capitalized software development costs	$	26,444	$	22,683
Less: accumulated amortization	(11,337)		(10,189)
Capitalized software, net	$	15,107	$	12,494

Amortization expense related to capitalized software development costs is recorded in Cost of revenue, net on the Condensed Consolidated Statements of Operations. Amortization expense was $1.2 million and $0.7 million for the three months ended March 31, 2024 and 2023, respectively.


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Expensify, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):


	As of March 31,		As of December 31,
	2024		2023
Computers and equipment	$	170	$	170
Furniture and fixtures	1,930		1,930
Leasehold improvements	7,937		7,937
Commercial building	6,493		6,493
Land	4,151		4,151
Construction in progress	2,570		2,570
Total property and equipment	23,251		23,251
Less: accumulated depreciation	(9,113)		(8,879)
Property and equipment, net	$	14,138	$	14,372

Depreciation expense related to property and equipment is recorded in General and administrative, Sales and marketing, and Interest and other expenses, net on the Condensed Consolidated Statements of Operations. Depreciation expense related to property and equipment for the three months ended March 31, 2024 and 2023 was $0.2 million and $0.5 million, respectively.

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following (in thousands):


	As of March 31,		As of December 31,
	2024		2023
Professional fees	$	2,680	$	1,311
Sales, payroll and other taxes payable	2,387		3,389
Cashback rewards	1,228		915
Partner payouts and advertising fees	1,210		1,486
Restricted common stock liability for early stock option exercises	400		562
Interest payable	354		359
Accrued expense reports	183		159
Commissions payable	153		140
Hosting and license fees	84		134
Credit card processing fees	40		76
Matching Plan payroll liability	174		198
Other	1,433		661
Accrued expenses and other liabilities	$	10,326	$	9,390


11

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Expensify, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

NOTE 4 - COMMITMENTS AND CONTINGENCIES

Finance and Operating Lease Arrangements

The Company did not enter into any new lease agreements during the three months ended March 31, 2024. The components of lease cost reflected in the Condensed Consolidated Statements of Operations for all leases were as follows (in thousands):


	Three Months Ended March 31,
	2024		2023
Finance lease cost:
Amortization of ROU assets	$	34	$	198
Interest on lease liabilities	7		3
Total finance lease cost	41		201
Operating lease cost	271		186
Total lease cost	$	312	$	387

Other information related to leases was as follows (in thousands, except as noted within):


	As of March 31,			As of December 31,
	2024			2023
Finance lease ROU asset (included within Lease right-of-use assets)	$	330		$	364
Operating lease ROU asset (included within Lease right-of-use assets)	$	5,624		$	6,071
Weighted average remaining lease term (in years):
Finance leases	2.42			2.67
Operating leases	8.93			9.18
Weighted average discount rate:
Finance leases	8.10		%	8.10		%
Operating leases	8.30		%	8.30		%

Supplemental cash flow information related to leases was as follows (in thousands):


	Three months ended March 31,
	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(99)	$	(210)
Operating cash flows from finance leases	$	(7)	$	(3)
Financing cash flows from finance leases	$	(31)	$	(201)


12

Table of Contents

Expensify, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Maturities of lease liabilities as of March 31, 2024 were as follows (in thousands):


For the year ending:	Finance leases		Operating leases
Remainder of 2024	$	115	$	417
2025	153		1,079
2026	102		1,018
2027	—		1,033
2028	—		1,063
Thereafter	—		4,499
Total future lease payments

SEC Form 10-Q filed by Expensify Inc.