Expensify(EXFY) - 2024 Q3 - Quarterly Report

Financial Performance - For the quarter ended September 30, 2024, revenue was $35.4 million, a decrease of 3$36.5 million in the same period in 2023 [112]. - Revenue decreased by $13.2 million, or 11$9.676 million, compared to a loss of $3.549 million in the same period of 2023, indicating a significant improvement [133]. - The adjusted EBITDA margin improved to 27$5.432 million, a recovery from a loss of $6.736 million in the same period of 2023 [135]. - The non-GAAP net income margin was 15$2.2 million, compared to a net loss of $17.0 million in the same period in 2023 [110]. Operating Expenses - Total operating expenses for the three months ended September 30, 2024, were$18.0 million, down from $33.7 million in the same period in 2023 [110]. - Research and development expenses for the three months ended September 30, 2024, were$5.6 million, down from $6.6 million in the same period in 2023 [110]. - General and administrative expenses decreased significantly to$9.1 million for the three months ended September 30, 2024, from $14.2 million in the same period in 2023 [110]. - Sales and marketing expenses for the three months ended September 30, 2024, were$3.3 million, a decrease from $12.9 million in the same period in 2023 [110]. - Research and development expenses decreased by$1.0 million, or 15%, for the three months ended September 30, 2024 compared to the same period in 2023 [115]. - General and administrative expenses decreased by $5.2 million, or 36$9.6 million, or 75%, for the three months ended September 30, 2024 compared to the same period in 2023 [117]. Cash Flow and Liquidity - Net cash provided by operating activities increased to $16.475 million for the nine months ended September 30, 2024, up from$2.102 million in the same period of 2023 [141]. - The company had $39.2 million in cash and cash equivalents as of September 30, 2024, with no outstanding indebtedness and$24.0 million available for additional borrowings [139]. - Net cash used in investing activities was $6.699 million for the nine months ended September 30, 2024, primarily due to software development costs [143]. - Net cash used in financing activities was$21.180 million for the nine months ended September 30, 2024, mainly for repayment of the revolving line of credit and common stock repurchases [144]. - The company believes its existing cash resources will be sufficient to finance operations and growth strategy for the next 12 months [140]. Membership and Transactions - As of September 30, 2024, Expensify has processed 1.7 billion expense transactions and has over 15 million members [93]. - The average number of paid members decreased from 719,000 in September 30, 2023 to 684,000 in September 30, 2024, representing a decline of approximately 4.9% [131]. Other Financial Metrics - Interchange revenue for the three months ended September 30, 2024, was $3.7 million, compared to$4.2 million for the nine months ended September 30, 2024 [99]. - Cost of revenue, net decreased by $0.5 million, or 3$4.1 million, or 80%, for the nine months ended September 30, 2024 compared to the same period in 2023 [125]. - Provision for income taxes was $6.4 million during the nine months ended September 30, 2024 compared to$1.9 million for the same period in 2023 [127]. Compliance and Governance - As of September 30, 2024, the company was in compliance with all debt covenants [154]. - The total liquidity ratio must be maintained at not less than 1.10 to 1.00 from the quarter ending March 31, 2024, and not less than 1.20 to 1.00 from the quarter ending June 30, 2024 [152]. - The total EBITDA net leverage ratio must be maintained at not less than 2.50 to 1.00 from the quarter ended March 31, 2025 [152]. - There have been no material changes in contractual obligations and commitments as of September 30, 2024 [155]. - The company has not engaged in any off-balance sheet financing arrangements during the periods presented [157]. - There have been no material changes to critical accounting policies and estimates compared to the 2023 Annual Report [159]. - No indemnification demands have been made that could materially affect the company's financial statements [156]. - The company has entered into a Second Amendment to the 2024 Amended Loan and Security Agreement, allowing certain subsidiaries to remain excluded under specific conditions [153]. - There have been no material changes in market risk disclosures compared to the 2023 Annual Report [161]. - Recent accounting pronouncements not yet adopted are detailed in the Quarterly Report on Form 10-Q [160]. Transition and Future Outlook - The transition from the Legacy Card Program to the Updated Card Program is expected to be fully completed by December 31, 2024 [95]. - The company expects to continue investing in product and service offerings to enhance customer experience and attract new customers [104].