Q1 2025 Earnings May 8th, 2025 Disclaimer All information included in this presentation is unaudited. FORWARDLOOKING STATEMENTS Forward-looking statements in this presentation, which are not historical facts, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1955. These statements include statements regarding our strategy, future financial condition, future operations, future cash flow, projected costs, prospects, plans, objectives of management, expected m ...

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $36.1 million, representing an 8% year-on-year increase [3] - Average paid members decreased by 5% year-on-year to 657,000 [3] - Total interchange increased by 43% year-on-year to 5.1% [3] - Operating cash flow was $4.8 million, while free cash flow was $9.1 million, marking a 75% increase year-on-year and a 45% increase quarter-on-quarter [4][5] - GAAP net loss was $3.2 million, while non-GAAP net income was $4.8 million, and adjusted EBITDA was $8.4 million [4] Business Line Data and Key Metrics Changes - Expense by card grew to $5.1 million, a 43% increase year-on-year [8] - Quarterly travel expenses saw a 66% quarter-over-quarter increase, with customers adopting travel at twice the rate of the ExpenseMy card [8] Market Data and Key Metrics Changes - April paid members were 655,000, slightly down from Q1, indicating a less than 0.5% decrease [7][55] Company Strategy and Development Direction - The company is focusing on diversifying revenue streams beyond just subscription models, indicating a shift in internal metrics for success [36][37] - A new simplified pricing structure was introduced to enhance customer conversion at the lower end of the market [12][13] - The company is excited about the upcoming Formula One promotion, expecting increased visibility and traction leading to higher sign-ups [20][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to weather economic challenges, citing a strong free cash flow position [32] - The impact of macroeconomic factors and tariffs is being monitored, with customers currently in a cautious holding pattern [49][50] - The anticipated benefits from the Formula One movie are expected to materialize more significantly in Q3 rather than Q2 [39][40] Other Important Information - Full Spanish support has been announced, enhancing product accessibility for Spanish-speaking users [9] - AI features have been integrated into the product to improve expense categorization and fraud detection [16][18] Q&A Session Summary Question: Impact of macro and tariff issues on the business - Management believes they are well-positioned to handle economic challenges, with a strong free cash flow of $9 million [30][32] Question: Disconnect between revenue growth and paid user numbers - Management acknowledged the importance of paid members but emphasized the diversification of revenue streams beyond subscriptions [34][36] Question: Vertical exposure of the customer base to tariff headwinds - Management noted that tracking the impact of tariffs has been challenging, with customers currently in a wait-and-see mode [47][49] Question: Accounting perspective on the Formula One movie's impact - Management explained that while cash flow impacts have been felt, the expense recognition will occur when the movie is released, leading to a significant expense in the income statement [56][57]

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, 2025 OR 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. __________________ ...

Q1'25 was another strong quarter. Though seasonally affected as expected, on an annual basis this quarter saw an 8% increase in revenue, 43% increase in interchange, 38% increase in cash from operating activities and 75% increase in free cash flow from the same quarter last year. In fact, this quarter produced $4.8 million of cash from operating activities and $9.1 million in FCF – over 50% of the bottom end of our FCF forecast for the entire year. As such we are increasing our full year 2025 FCF guidance t ...

Financial Data and Key Metrics Changes - Revenue for Q4 2024 was $37 million, representing a 5% increase both quarter-over-quarter and year-over-year [12][94] - Average paid members increased slightly to 687,000, showing a positive trend compared to the previous quarter [12][94] - Interchange revenue reached $5.1 million, a significant 62% increase year-over-year [12][94] - Operating cash flow was $7.4 million, while free cash flow was $6.3 million, marking a 272% increase year-over-year for Q4 [12][15][94] - For fiscal year 2024, total revenue was $139.2 million, with a net loss of $10.1 million and non-GAAP net income of $23.5 million [14][96] Business Line Data and Key Metrics Changes - The Expensify card saw a quarter-over-quarter growth of 11% to $5.1 million, with interchange growing 54% year-over-year to $17.2 million [19][100] - The company successfully migrated its card program, simplifying its accounting processes [20][100] - The launch of Expensify Travel introduced new fee-based and transactional revenue opportunities, generating high customer enthusiasm [22][103] Market Data and Key Metrics Changes - In January, the number of paid members was 665,000, which is lower than Q4 but consistent with seasonal trends observed in previous years [21][102] - The company noted significant seasonality in Q1, which is expected and aligns with historical data [21][102] Company Strategy and Development Direction - The company continues to focus on a scalable acquisition model through viral lead generation and bottom-up adoption strategies [25][106] - AI integration is a key focus, with the introduction of chat-based functionalities aimed at enhancing user experience and operational efficiency [26][108] - The company aims to position itself as a leader in fintech AI, leveraging its unique data assets to drive innovation [37][60] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving profitability soon, with a net loss of $1.3 million in Q4 [13][94] - The initial guidance for 2025 is set at $16 million to $20 million in free cash flow, reflecting a conservative approach due to uncertainties in the macroeconomic environment [18][99] - Management highlighted the importance of AI in driving efficiency improvements and enhancing customer engagement [17][26] Other Important Information - The company has successfully reduced its debt by $22.7 million and is now debt-free, which is a significant milestone [22][104] - The company is committed to continuous improvement in its AI capabilities, with ongoing developments in SmartScan and concierge functionalities [41][70] Q&A Session Summary Question: Understanding AI capabilities and integration with third-party systems - Management confirmed that existing AI capabilities, such as concierge and SmartScan, are operational, while more advanced features are under development [67][70] - Integration with third-party systems like Slack is possible, but the core functionalities are best utilized within the Expensify app [72][74] Question: Driving broader adoption of chat functionalities - Management noted that customer migration to the new system has been sticky, with users generally satisfied with the experience [78][80] - The chat-centric features are designed to proactively engage users, demonstrating value and encouraging adoption [81][82] Question: Adoption and revenue potential of Expensify Travel - Initial enthusiasm for Expensify Travel has been high, with significant month-over-month increases in travel bookings [84][86] - Management anticipates that, similar to the Expensify card, travel services will grow and contribute meaningfully to revenue over time [86][88]

Financial Data and Key Metrics Changes - Revenue for Q4 2024 was $37 million, representing a 5% increase both quarter-over-quarter and year-over-year [11][12] - Average paid members increased slightly to 687,000, while interchange revenue reached $5.1 million, a 62% increase year-over-year [12][11] - Operating cash flow was $7.4 million, and free cash flow was $6.3 million, with a net loss of $1.3 million [12][14] - For fiscal year 2024, total revenue was $139.2 million, with a net loss of $10.1 million and non-GAAP net income of $23.5 million [14][15] - Free cash flow for fiscal year 2024 was $23.9 million, a 4,200% increase year-on-year [14][15] Business Line Data and Key Metrics Changes - The Expensify card grew 11% quarter-on-quarter to $5.1 million, with interchange growing 54% year-on-year to $17.2 million [18][19] - The company successfully completed the migration of its card program, simplifying its accounting structure [19][20] - The launch of Expensify Travel is expected to add fee-based and transactional revenue opportunities, with high customer enthusiasm noted [21][22] Market Data and Key Metrics Changes - In January, the number of paid members was 665,000, which is lower than Q4 but consistent with seasonal trends [20][21] - The company noted significant seasonality in Q1, which is expected [20] Company Strategy and Development Direction - The company continues to focus on bottom-up adoption and the payment super app strategy, which remains a sound approach [24][25] - AI integration is a significant focus, with the introduction of chat-based functionalities aimed at enhancing user experience and operational efficiency [25][26] - The company aims to leverage its unique data access for AI training, enhancing its competitive edge in expense management [39][40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving profitability soon, with a focus on improving operational efficiency through AI [12][15] - The initial guidance for 2025 is set at $16 million to $20 million in free cash flow, reflecting a conservative approach due to macroeconomic uncertainties [17][18] - The company is excited about the potential of its AI-driven features, which are expected to enhance user engagement and operational efficiency [25][26] Other Important Information - The company has reduced its debt by $22.7 million and is now debt-free, which is a significant achievement [22][23] - The company is committed to continuous improvement and innovation, with a focus on AI and automation to enhance its service offerings [48][49] Q&A Session Summary Question: Understanding AI capabilities and integration with third-party systems - Management confirmed that existing AI capabilities like concierge and SmartScan are operational, while more advanced features are under development [68][69] - Integration with third-party systems like Slack is possible, but the core functionalities are best utilized within the Expensify app [72][73] Question: Driving broader adoption of the chat functionality - Management noted that customer migration to the new system has been sticky, with users generally satisfied with the experience [77][78] - The chat-centric features are expected to demonstrate value and encourage broader adoption through proactive engagement [80][81] Question: Adoption and future outlook for Expensify Travel - Initial enthusiasm for Expensify Travel has been high, with account managers reporting significant interest following the launch [84][85] - The company anticipates that, similar to the Expensify card, travel services will grow and contribute meaningfully to revenue over time [86]

Revenue Growth and Customer Retention - The ability to convert free users and trial subscriptions into paying customers is essential for revenue growth[102]. - Retaining existing customers and expanding usage within organizations are key factors for maintaining gross logo retention and net seat retention rates[96]. - The success of new features and enhancements is vital for attracting new customers and increasing revenue from existing customers[108]. - The company must ensure effective pricing strategies to attract new customers and retain existing ones[107]. - The company is focused on expanding its member and customer base in new markets while ensuring compliance with local regulations[96]. Competition and Market Risks - The company faces risks from competition, pricing pressures, and the need to adapt to rapidly changing technology and customer preferences[100]. - The company faces significant competition from traditional expense management solutions and newer entrants, which may impact customer acquisition and retention rates[112]. - Increased competition from larger firms with more resources could hinder the company's ability to maintain market share and pricing power[113]. - An economic downturn could lead to declines in business spending and a reduction in the number of paid monthly members, adversely affecting revenue[116]. Compliance and Regulatory Challenges - Regulatory compliance is critical, with the company subject to various laws and regulations that could impose significant costs and operational changes[117]. - The company is in the process of obtaining additional money transmission licenses, which involves ongoing compliance obligations and potential regulatory scrutiny[120]. - The company is subject to anti-corruption and anti-money laundering laws, which could expose it to criminal and civil liabilities if not complied with[180]. - The company’s wholly owned subsidiary, Expensify Payments LLC, is registered as a "Money Services Business" and must comply with the Bank Secrecy Act, which imposes significant operational requirements[182]. - The California Consumer Privacy Act (CCPA) imposes new operational requirements and potential liabilities for the company, particularly in the event of a data breach[187]. Financial Performance and Capital Structure - The company has authorized a share repurchase program of up to $50 million for its Class A common stock, which may increase stock price volatility[126]. - The company expects to be in compliance with all debt covenants by the end of the fiscal quarter ended March 31, 2025[249]. - The company is currently experiencing a high interest rate environment, which could adversely impact its financial condition due to variable-rate debt[250]. - The company may need additional capital in the future, and there is no assurance that financing will be available on favorable terms[244]. - The company does not intend to pay cash dividends in the foreseeable future, relying instead on stock price appreciation for investor returns[284]. Technology and Innovation - The company uses third-party artificial intelligence technologies to optimize internal processes and is making significant investments in this area[146]. - The company anticipates increased investment in AI technologies to enhance products and services, with no assurance of guaranteed benefits to efficiency or profitability[148]. - The company relies on third-party data centers and technologies, and any disruptions could adversely affect operations and customer relationships[205]. - The platform's performance may degrade due to increasing customer numbers and bandwidth requirements, potentially leading to customer loss[203]. Intellectual Property and Legal Risks - The company faces risks from third-party intellectual property claims, which could lead to significant legal expenses and operational disruptions[220]. - The ability to develop and commercialize solutions without infringing on third-party intellectual property rights is crucial for the company's success[221]. - The company may incur substantial costs and resource diversion due to litigation related to intellectual property rights enforcement[227]. - The reliance on unpatented proprietary technology poses risks, as unauthorized parties may attempt to copy or misuse the company's technology[230]. Customer Experience and Support - The ability to provide excellent customer experience and support is crucial for maintaining customer trust and loyalty[96]. - The company faces challenges in maintaining high-quality customer experience, which is critical for converting trial users into paying customers and sustaining its reputation[160]. - The company relies on a global network of specialized contractors for customer support, and any inability to attract sufficient personnel could harm its operations and financial condition[163]. International Operations and Market Dynamics - Revenue from international customers was $12.4 million (9% of total revenue) for the year ended December 31, 2024, compared to $13.3 million in 2023 and $14.7 million in 2022, indicating a decline in international revenue[173]. - The company faces significant risks in international operations, including the need for localization, compliance with varying data privacy laws, and potential political and economic instability[174][176]. - The company is exposed to foreign currency exchange rate fluctuations, which can adversely affect revenue and operational results[179]. Governance and Shareholder Considerations - The company qualifies as a "controlled company" under Nasdaq standards, which allows it to rely on exemptions from certain corporate governance requirements[273]. - The company’s governance structure allows the Voting Trust to control significant corporate decisions, which may not align with the interests of public stockholders[267]. - Anti-takeover provisions in the company's governance documents could impair takeover attempts and affect the market price of Class A common stock[287].

Financial Performance - Q4 revenue increased by 5% quarter-over-quarter, with FY24 net loss down 76% year-over-year[3]. - FY24 adjusted EBITDA reached $39.4 million, up 199% year-over-year[3]. - Revenue for Q4 2024 was $37,004,000, a 5.1% increase from $35,208,000 in Q4 2023[29]. - Total revenue for the year ended December 31, 2024, was $139,236,000, down 7.6% from $150,687,000 in 2023[29]. - The net loss for the year ended December 31, 2024, was $10,055 thousand, a significant improvement from a net loss of $41,456 thousand in 2023, representing a reduction of approximately 76.8%[31]. - Non-GAAP net income for FY24 was $23.5 million, compared to a net loss of $10.1 million[8]. - Adjusted EBITDA for the year ended December 31, 2024, was $39,372 thousand, compared to $13,174 thousand in 2023, indicating an increase of approximately 198.5%[32]. - The net loss margin for the year ended December 31, 2024, improved to 7% from 28% in 2023[33]. Cash Flow and Liquidity - Operating cash flow and free cash flow for FY24 were both $23.9 million, exceeding the high end of the forecast by 19%[3]. - The net cash provided by operating activities for the year ended December 31, 2024, was $23,877 thousand, a substantial increase from $1,559 thousand in 2023[31]. - Free cash flow for the year ended December 31, 2024, was $23,863 thousand, compared to $555 thousand in 2023, reflecting a notable increase[34]. - Free cash flow guidance for FY25 is estimated between $16.0 million and $20.0 million[11]. - Cash and cash equivalents rose to $48,772,000 as of December 31, 2024, compared to $47,510,000 in 2023[27]. - The cash and cash equivalents and restricted cash at the end of the period were $90,834 thousand, down from $96,658 thousand at the end of 2023[31]. Expenses and Liabilities - Operating expenses for Q4 2024 totaled $18,391,000, a decrease of 25.5% compared to $24,686,000 in Q4 2023[29]. - Research and development expenses for the year ended December 31, 2024, were $24,638,000, up from $23,368,000 in 2023[29]. - Total stock-based compensation expense for the year ended December 31, 2024, was $33,537,000, down from $41,212,000 in 2023[29]. - The company reported a total current liabilities reduction from $67,892,000 in 2023 to $38,010,000 in 2024[27]. - The company reduced its debt by $22.7 million in 2024, achieving a debt-free status[3][15]. Membership and Revenue Streams - Paid members decreased by 4% year-over-year to 687,000, but showed a slight increase from Q3 2024[15]. - Expensify Card spend grew by 44% year-over-year, with interchange revenue increasing by 54% year-over-year to $17.2 million[3][8]. - The company launched a travel product, adding new revenue opportunities[15]. Operational Efficiency - AI-driven support expanded to provide 80% of tier 1 support, significantly reducing human escalations[15]. - Gross margin for Q4 2024 was $18,856,000, slightly up from $18,700,000 in Q4 2023[29]. - The adjusted operating cash flow margin for the year ended December 31, 2024, was 17%, up from 1% in 2023[34].

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Financial Data and Key Metrics Changes - Total revenue for Q3 2024 was $35.4 million, representing a 6.3% increase quarter-over-quarter but a 3% decrease year-over-year, indicating ongoing challenges in the business [7] - Average paid members remained flat at 684,000 quarter-over-quarter, reflecting a 5% decrease compared to the same period last year [8] - Free cash flow for Q3 was $6.7 million, with operating cash flow at $3.7 million and a net loss of $2.2 million; non-GAAP net income was $5.4 million, and adjusted EBITDA was $9.7 million [9] - Free cash flow guidance for the year was increased to $19 million to $20 million, up from previous guidance of $15 million to $16 million [11] Business Line Data and Key Metrics Changes - Interchange revenue from the Expensify Card was $4.6 million, a significant 48% increase year-over-year, driven by the successful launch of the new card program [8][13] - 94% of existing card spend has been migrated to the new program, which is expected to further enhance revenue growth [14][15] Market Data and Key Metrics Changes - Paid active users in October increased to 693,000, a 1% improvement from Q3 [16] Company Strategy and Development Direction - The company is focusing on stabilizing the business and improving core fundamentals while laying a stronger foundation for future growth [6] - The new Expensify platform aims to automate the remaining 20% of expense management processes, enhancing efficiency and user experience through a chat-centric design [21][24] - Expensify Travel is in the market and generating revenue, with expectations for significant growth as it becomes a standard offering in expense management [27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about near-term momentum and the potential for revenue growth from the new Expensify platform [7] - The company is seeing a rebound in existing customer usage expansion, which is expected to contribute positively to future growth [35] Other Important Information - The company has not implemented any workforce reductions; instead, it is focusing on operational efficiencies to improve cash flow margins [47] Q&A Session Summary Question: What is the revenue contribution from Expensify Travel today? - Management believes Expensify Travel has significant potential as it becomes a standard requirement for expense management, but specific revenue figures are not yet available [28] Question: How does the company plan to manage share buybacks going forward? - Management is opportunistic regarding share buybacks and is exploring various options for deploying cash reserves [29][30] Question: What is driving the increase in paid members? - The increase is attributed to the ramp-up of the new Expensify platform and a rebound in existing customer usage expansion [34] Question: How is the go-to-market strategy evolving? - The company continues to focus on organic channels and improving conversion rates, with positive early results from the new platform [38][40] Question: Is there any interchange revenue from travel offerings? - Management indicated that the connection between travel product usage and interchange revenue is not significant at this time [43][45] Question: Were there any cost-cutting measures that led to increased free cash flow? - The increase in free cash flow is primarily due to operational efficiencies rather than workforce reductions [47]