Earnings call transcript: Expensify misses Q1 2025 forecasts, stock drops

Published 08/05/2025, 22:40
 Earnings call transcript: Expensify misses Q1 2025 forecasts, stock drops

Expensify Inc. (EXFY) reported its Q1 2025 earnings on May 8, revealing a miss on both earnings per share (EPS) and revenue forecasts. The company posted an EPS of -$0.03, falling short of the expected $0.07. Revenue came in at $36.1 million, slightly below the forecast of $36.36 million. Following the earnings announcement, Expensify’s stock dropped 10.13% in aftermarket trading, closing at $2.75. According to InvestingPro data, the company maintains a "GOOD" overall financial health score, with particularly strong cash flow metrics despite recent challenges.

Key Takeaways

  • Expensify’s Q1 2025 EPS and revenue missed forecasts.
  • The stock fell by over 10% in aftermarket trading.
  • The company increased annual free cash flow guidance to $17–21 million.

Company Performance

Expensify’s Q1 2025 results showed an 8% year-over-year increase in revenue. However, the average number of paid members decreased by 5% compared to the previous year. The company reported a GAAP net loss of $3.2 million, while non-GAAP net income stood at $4.8 million. Despite the earnings miss, Expensify’s free cash flow rose significantly by 75% year-over-year, reaching $9.1 million. InvestingPro analysis reveals the company holds more cash than debt on its balance sheet, with a healthy current ratio of 3.6x, indicating strong liquidity position.

Financial Highlights

  • Revenue: $36.1 million, up 8% YoY
  • Earnings per share: -$0.03, down from forecasted $0.07
  • Free cash flow: $9.1 million, up 75% YoY
  • Average paid members: 657,000, down 5% YoY
  • Adjusted EBITDA: $8.4 million

Earnings vs. Forecast

The company reported an EPS of -$0.03 against a forecast of $0.07, marking a negative surprise. Revenue was also slightly below expectations at $36.1 million compared to the anticipated $36.36 million. This performance contrasts with previous quarters where Expensify had generally met or exceeded expectations, highlighting a challenging start to the year.

Market Reaction

Following the earnings release, Expensify’s stock fell by 10.13% in aftermarket trading, closing at $2.75. This significant drop reflects investor disappointment with the earnings miss. The stock’s current price is closer to its 52-week low of $1.24 than its high of $4.13, indicating a challenging market environment for the company. Based on InvestingPro’s Fair Value analysis, the stock appears slightly undervalued at current levels. Notably, the company has delivered a strong 70.95% return over the past year despite recent volatility. For deeper insights into Expensify’s valuation and 12+ additional ProTips, consider accessing the comprehensive Pro Research Report.

Outlook & Guidance

Expensify raised its annual free cash flow guidance to a range of $17–21 million, indicating confidence in its cash-generating capabilities. The company continues to invest in AI-driven product innovations and expects a positive impact from its Formula 1 movie marketing strategy in Q3. This guidance aligns with InvestingPro’s data showing strong free cash flow yield and analysts’ expectations for profitability this year, despite current challenges.

Executive Commentary

Nikki, a financial executive, emphasized resilience by stating, "We’re hoping for the best, preparing for the worst." David, a product lead, highlighted upcoming innovations, saying, "This summer is really lining up to be kind of expense new, expensified v1."

Risks and Challenges

  • Economic uncertainty and potential tariffs could impact customer spending.
  • Decrease in average paid members poses a challenge to growth.
  • Increased competition in the expense management sector.
  • Dependence on the success of new AI-driven features and marketing strategies.

Q&A

During the earnings call, analysts focused on the company’s economic resilience and the impact of its Formula 1 marketing strategy. Executives explained the variations in paid user metrics and reassured investors about diversified revenue streams.

Full transcript - Expensify Inc (EXFY) Q1 2025:

Disclaimer Speaker: All the information presented on today’s call is unaudited, and during the course of this call, management may make forward looking statements within the meaning of the federal securities laws. These statements are based on management’s current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in forward looking statements. Forward looking statements in the earnings release that we issued today, along with the comments on this call, are made only as of today and will not be updated as actual events unfold. Please refer to today’s press release and our filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward looking statements made today. Please also note that on today’s call, will refer to certain non GAAP financial measures.

While we believe these non GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Please refer to today’s press release or the investor presentation for a reconciliation of these non GAAP financial measures to their most comparable GAAP measures.

Nikki, Financial Executive, Expensify: Thanks, Nikki. Now let’s talk about the q one two thousand twenty five financials. Our revenue was 36,100,000.0, which is up 8% year on year. Our average paid members were 657,000, which is, down 5% year on year. And our total interchange was 5.1%, which is up 43% year on year.

Our operating cash flow was 4,800,000.0. Our free cash flow was 9,100,000.0. The difference between those two numbers again is, customer funds. Our GAAP net loss was 3,200,000.0. Our non GAAP net income was 4,800,000.0, and our adjusted EBITDA was 8,400,000.0.

Now let’s talk about free cash flow. Obviously, we had a really good quarter free cash flow wise. Our, like I just said, our q one free cash flow is 9,100,000.0, which is a 75% increase year on year and an increase of 45% quarter on quarter. With our q four results, we initiated, free cash flow guidance of annual free cash flow guidance of 16,000,000 to 20,000,000. We are increasing that to 17,000,000 to 21,000,000.

That’s a bit of a conservative increase. This is due to the kind of tumultuous nature of the economy right now as we watch the impact of the tariffs on the economy. And, so, again, we think this is a conservative number. We have confidence we can hit this number, and we will update this as we see kind of how the current economic policy plays out. As always, here’s our flash April paid members.

April paid members were 655,000, which is just slightly down from q one. It’s, less than half a percent down, so essentially flat. And, April is usually a little soft, and this April is no different. You can see, previous April’s, denoted by the pink lines on the graph. Now let’s talk about q one business highlights.

Like I mentioned before, the expense by card grew to 5,100,000.0, which is a 43% increase year on year. Expense by travel continues to grow very quickly. We saw a 66% quarter over quarter increase in quarterly travel in q one. And notably, we, we are seeing customers adopt travel at twice the rate that they adopted the ExpenseMy card. So we compare those two because it’s a a cross sell from our traditional expense product, but we’re seeing travel adoption be met by customers with a lot of enthusiasm, and we’re very excited about it.

Also, we announced, full Spanish support. So if you speak Spanish, the product, will look great to you. Our it’s we have Spanish in our product UI and our product messaging, and, also, we’re now doing sales demos and customer support in Spanish. And we are also adding more international support in more languages coming very soon. You might have also seen we announced a simplified pricing for our collect plan.

Our legacy collect pricing, which is the same scheme that the control pricing is still under, the collect legacy pricing was 5 to $20 per active member per month, and we gave you a 50% discount for any annual commitment or subscription and a 50% discount for expense by card adoption. Notably, no cost if you have employees who are inactive. Now this is great for a more sophisticated customer that can forecast what their usage is gonna be in the product. If you have, let’s say, a hundred employees, about 33% of them will be active on the platform any given month, but not the same 33%. So a different mix of employees each month.

So in that case, the customer would buy a 33 seat subserve subscription, and any employee can kinda sit in those seats. However, that did take me a while to explain, and it is more sophisticated. And we saw that kinda falling flat on the on the lower end of the market. These the collect customers generally self-service, and they’re not talking to a salesperson. So we need to communicate what our pricing is, you know, in under five seconds, very simply.

So this pricing is not a, price reduction per se. It’s more of a streamlining of our pricing, and that’s based on extensive research into, you know, watching user set, sessions, talking to customers, and sales feedback. So under the new scheme, it’s $5 for any member per month. So you just enter how many employees you want to use the product at any time, and it’s, multiply up times $5, and that’s your monthly price. So there’s no annual commitment or card required, but they are billed whether or not the user is actually active.

So you’re paying per account versus per active seat. The result is collect is $5 per month per member, simplified pricing for simple customers, and control, which is 9 to 36 per month per active employee, which is advanced pricing for advanced customers. We think this is going to help us convert at the lower end of the market, and we’re really excited for it.

David, Executive/Product Lead, Expensify: Yeah.

Nikki, Financial Executive, Expensify: Now I’m gonna pass it over to David. Great.

David, Executive/Product Lead, Expensify: So last quarter, we talked a ton about AI and all of the cool things that we’re doing with it. And so this quarter is basically just saying we did a bunch of that. So last, we talked about this idea of conversational corrections, meaning that when you scan a receipt to create an expense, we use AI to figure out what the most likely category is it based upon, you know, the type of merchant, what that merchant’s name is, what the category names are, and so forth, as well as everything you’ve done, everything else your, you know, coworkers have done with a merchant in the past. We will either automatically categorize it, or we will suggest the most likely categories. And then based upon that suggestion, you can either say, like, you meals or whatever, or you can just respond in natural language what you want done.

And then our AI will basically do the right thing with that. What you would a human would do in a situation, now we’ll do. We talked about that aspirationally last quarter, and now that’s done. And so that’s in product, and you can use it today. It’s very cool, and it’s just a great powerful feature to bring AI in to solve these kind of mundane problems.

Similarly, a feature, we’ve talked about for a while is this idea of more advanced policy violations where you can prohibit tobacco, gambling, alcohol expenses, and things like this. So now we do kind of deep receipt analysis to figure out what actually is being purchased, not merely where did you go, and so you can deny those. Likewise, one thing we talked about is the power of AI for fraud reduction. Anyone who’s basically doing anything online, selling a product, booking travel, things like this, there’s always some degree of, like, fraud that you’re trying to control, especially when it comes to just trying to understand on a per travel basis what they’re actually doing to make sure they’re actually not booking any sketchy things, to make sure that no one’s account got taken over or whatever it might be. Wide variety of ways things can go wrong.

However, we can control for that, and we can basically detect and cancel this fraud, travel in real time. So all of this is basically stuff that we’ve talked about, and stuff that we’re bringing, to market and a lot of this to market right now. Looking forward, I would say the stuff we’re the most excited for is this idea that we talked about in the past we kind of call virtual CFO functionality. Imagine if you had a CFO and they sat down with you to kind of optimize your workflow. They would say things like, why are you cutting a bunch of physical checks?

Let’s actually streamline that with direct deposit. Or even asking questions, saying, like, who are my top spenders? Who spends the most out out of policy? You should just be able to ask concierge that and just get the answer directly. Likewise, you know, on a monthly basis, a CFO would tell you what’s changed week on week, month on month, things like this, and now this is gonna be built out of the box.

And so you basically have this ability to just get analysis pushed to you automatically without thinking about it. So AI is getting great. AI is heating up, but also the prep for f one is really heating up. We’re getting super excited about just the amount of visibility and traction that we’re seeing in the the lead of f one. Just to give one new thing that just happened, and so Doja Cat, my personal favorite, just launched this music video, and it’s wild.

Like, the first twenty seconds of this music video are just slowly zooming in on the Expenseify name. You gotta watch the video. It’s fantastic. It’s not exactly safe for work, but it’s still great. At the Met Gala, Dan just walked out.

First, drove up in a Expensify branded f one car, which no one’s talking about that, which also is kind of amazing. And then walked into the Met wearing an Expensify, you like, track like, basically, racing outfit. And then it was dramatically torn off, he has a sweet suit underneath it. But, basically, the part that I care about is he walked into the Met Gala wearing the Expensify branding while driving up an Expensify car. And so this is just the kind of thing happening right now, and it’s wild.

And it really has an effect. We saw actually, for the hours after this particular thing happened, sign ups, quadrupled, basically, just from this one small action that just happened automatically that we didn’t even plan for. And so there’s all kinds of stuff like this happening every day around this, and the movie hasn’t even launched. And so we’re pretty excited about this f one promo. It’s gonna be it’s lining up to be one of the best product placements ever.

And so it’s it’s pretty cool. We’re excited. And, also, overall, I think we’re excited that users are really starting to notice just how cool this design is. Here’s just an actual user who just posted a review unprompted to g two crowd talking about how great Expensify Chat is because we’ve talked about sort of the the the challenge of expense management is you can automate, like, 80% of it, but that remaining 20%, the human interaction, that’s where all your pain is. And so chat centric design is what streamlines that sort of last 20% by bringing it in product so you can just talk to your account, your employees, whoever it might be, in the context of the thing you have a question on.

So you’re not texting them to say, like, hey. Remember that thing you did two months ago? And they’re gonna be like, what are you talking about? Rather, you’re saying, on this particular expense, what’s it for? And then you can fix it right in the context of that, especially when concierge is there.

And so if you say what the fix is, the concierge can just apply it right away. The design’s really coming together. It’s super exciting. I think this summer, in my mind, is really lining up to be kind of expense new, expensified v one. It’s a very complete vision of what we set out to do years ago, and it’s actually I would say it’s even better than we imagined.

And so it’s it’s a pretty exciting time overall. That’s all we got for now, and you’re good to hear your questions.

Moderator: Thank you, David. One quick note. Due to the amount of earnings calls happening today, we had a few scheduling conflicts with our analysts. So if we don’t hear from you on the QA, we look forward to speaking with you on the one on one call backs. First, let’s start off with Citi.

I believe George, you’re here.

George, Analyst (Citi), Citi: Hey, David, Ryan, Nikki. How are you all?

Nikki, Financial Executive, Expensify: Hey, George.

George, Analyst (Citi), Citi: Great. Yeah. Maybe we can just stop start with the, you know, the topic of the day, macro and tariff impacts. You know, you guys talked about kinda conservatively baking that into your guide to some extent. Have you seen any impacts to date?

And maybe, you know, when you just think about your business, macro headwinds have been an issue, know, in the recent past. You know, you guys have made some changes to the business. How do you just think about your resiliency in the face of this environment?

Nikki, Financial Executive, Expensify: So great question. I specifically like your question about resiliency. So I think a obviously, no one wants a bad economy. That’s not good for anyone. But if we’re going into kind of rough economic waters, I think that we are well positioned.

Obviously, we had 9,000,000 in free cash flow this year. So I think that the way we’ve kind of restructured the business over the last, you know, year or two, we’re in a really good place to weather, you know, a tough economic environment. So that is I mean, we’re hoping for the best, preparing for the worst.

George, Analyst (Citi), Citi: Yeah. Okay. Okay. That that makes perfect sense. I wanted to also ask about the paid user number and really just kind of the the disconnect that started to show up between what you’ve seen on revenue versus paid users.

I mean, revenue up 8% year over year, paid users down year over year. When you guys think about your business, I think investors, like, we have been kinda trained on paid users as, you know, one of the most important metrics for the business. But now you guys are becoming multiproduct. I mean, is that still how you guys are thinking about the business internally and kind of optimizing for paid users? Because it seems like there’s levers here that that are driving success that kind of extend beyond that that metric.

Maybe you could just talk about what you’ve seen in that metric and then how you think about the business, you know, that as one of many levers.

Nikki, Financial Executive, Expensify: Yes. Another great question. So, obviously, paid members is really important. That hasn’t changed. That’s a huge focus for us, but we have diversified kind of our revenue streams over the last couple of years.

So it’s not I think around the time we IPO ed, it was revenue and and paid members were kind of in lockstep, and we’ve diversified kinda beyond that. Right? We can make money in other ways other than subscription. So I think that we are paid members is still very important, but we have other tools in our toolbox to increase revenue, which is good.

George, Analyst (Citi), Citi: Okay. Great. And then maybe if I could just sneak one more in on the on the Formula one. I think exciting exciting exciting times here where I think we’re a t minus a month and a half or so away. Mhmm.

You you guys talked about maybe some early impacts. Do you feel like, it it had an impact in q one, or do you think of this more as, a q two benefit and then presumably the bulk of the benefit is gonna be felt kind of in q three and beyond? Or how how are you thinking about kinda sequencing of of how this hits the model?

Nikki, Financial Executive, Expensify: I mean, I don’t think we’ve seen much benefit in q one. I think it’s definitely going to pick up. Obviously, we’re just kinda we’re seeing the almost like pre promotion type of impact. But, I mean, to answer your question, we think it’s going the impact is going to increase over time and probably more in q three than than q two because it I mean, it takes time and, you know, you see the you see the movie. Okay.

Then you go to the website. You get into kind of our conversion funnels. So the in terms of, like, web traffic and stuff, obviously, we expect a lot around q two. But, in terms of that representing, you know, new business, we wouldn’t see that until, you know, a little bit after. Agree with that.

George, Analyst (Citi), Citi: Okay. Great. Thanks for taking the questions here.

Nikki, Financial Executive, Expensify: Great questions, George.

Moderator: Great. Next, we have Citizens GMP. Aaron, I believe you’re on the line.

Aaron, Analyst (Citizens GMP), Citizens GMP: Yeah. Thanks, guys.

Nikki, Financial Executive, Expensify: Hey, Aaron.

Aaron, Analyst (Citizens GMP), Citizens GMP: How’s it going?

Nikki, Financial Executive, Expensify: It’s good to see you.

Aaron, Analyst (Citizens GMP), Citizens GMP: Always. So can you talk about what verticals following up on George a little bit? What verticals your customer base is most exposed to today? I think you’ve become less reliant on tech customers since the IPO. And any analysis you’ve done on what percentage of your customer bases in industries that may face tariff headwinds?

David, Executive/Product Lead, Expensify: Great question. So

Nikki, Financial Executive, Expensify: that’s it’s been a little challenging to track that because the that are the tariffs gonna happen? What industries are they affecting? Does it get, you know, pulled back? So I think that’s been kind of tough to get a, you know, exact answer. But, I mean, kind of the behavior we’re seeing is customers kind of in a wait and see type of

David, Executive/Product Lead, Expensify: Like a caution.

Nikki, Financial Executive, Expensify: Like, holding pattern type thing. In a healthy economy, our customers are growing. Right? SMB customers grow faster than enterprise customers generally because they’re smaller. And I think our customers are kinda just waiting.

Right? They’re not hiring a whole bunch of people. They’re not doing big big expenditures. They’re trying to see how this shakes out and how it impacts them and and all that. So in q one, I think it’s kinda too early to really see, know, that impact.

And it’s something we’re we’re definitely monitoring, but it’s tough to kinda pin down to a single number.

David, Executive/Product Lead, Expensify: Yeah. It’s like everyone’s just kind of holding their breath to see what’s coming on the pipeline. And so, I mean, I think we’re as eager to find out as everyone else.

Aaron, Analyst (Citizens GMP), Citizens GMP: Got it. And then a second one, I’m looking at the slides right now. Correct me if I’m wrong, but I think you usually share the paid member numbers for the first month of the next quarter.

Nikki, Financial Executive, Expensify: Yeah.

Aaron, Analyst (Citizens GMP), Citizens GMP: Are are the April numbers in here?

Nikki, Financial Executive, Expensify: Yeah. Yeah. They are. Yeah. So it was, flat.

It was, slightly down flat, less than 1%, like less than 05%.

Aaron, Analyst (Citizens GMP), Citizens GMP: Got it. And then the last one would just be, can you remind us from an accounting perspective with the F1 movie coming out in Q2, how we should think about how that’s going to hit the cash flow statement and the income statement?

Nikki, Financial Executive, Expensify: Yes. Great question, Aaron. The movie accounting is interesting, just as a review. So we have been making payments for the movie for a while. So as of the the free cash flow impact of that has largely already been felt.

However, we have not recognized the expense yet. So the day the movie comes out, we will recognize the expense of all the payments we’ve made over multiple years. So a large expense being recognized, but not necessarily a large cash flow impact. Now we do have one more payment, so there are some free cash flow. And when we’re doing advertising, next quarter, we’re we’re you know, next quarter is gonna be expensive quarter.

So it will impact free cash flow, but the s and m expense will be substantially higher because we’re recognizing all the past payments that have already been recognized in free cash flow.

Aaron, Analyst (Citizens GMP), Citizens GMP: Great. Thank you, guys.

Nikki, Financial Executive, Expensify: Thank you. Of course.

Moderator: Great. Well, with the competing schedules, that’s everybody we have live. So we will speak to the rest of you all offline.

David, Executive/Product Lead, Expensify: Great. Short and sweet.

Nikki, Financial Executive, Expensify: Alright. Thank you all, and we’ll see you next quarter. And go see the movie. Yes. See the movie.

David, Executive/Product Lead, Expensify: June 25. We’ll see you there.

Nikki, Financial Executive, Expensify: Alright. Thank you.

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