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EI

Expensify, Inc. (EXFY)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue grew 8% year over year to $36.1M, while non-GAAP EPS was $0.053 vs S&P Global consensus $0.064; revenue modestly missed Street by ~$0.3M and EPS missed by ~$0.011 as higher taxes and ongoing SBC weighed on results . Values marked with * are from S&P Global.
  • Adjusted EBITDA was $8.4M and free cash flow was $9.1M (+75% y/y), driven by 43% y/y growth in Expensify Card interchange to $5.1M and strong adoption of Travel; paid members declined 5% y/y to 657k .
  • Management raised FY 2025 free cash flow guidance to $17.0–$21.0M from $16.0–$20.0M, citing confidence but a conservative posture amid macro/tariff uncertainty; April paid members were ~flat at 655k .
  • Near-term catalysts include the June 25 F1 movie sponsorship (front-loaded GAAP S&M expense recognition with limited incremental cash impact), simplified pricing for Collect ($5/member/month), and expanding Concierge AI capabilities to voice and conversational corrections .

What Went Well and What Went Wrong

What Went Well

  • Interchange growth: Expensify Card interchange reached $5.1M (+43% y/y), supporting revenue diversification beyond subscriptions .
  • Travel adoption: Quarterly travel bookings rose 166% q/q; management notes customers are adopting Travel at twice the rate of the card at launch .
  • Cash generation and guidance raise: Free cash flow was $9.1M (+75% y/y), prompting an FY25 FCF guidance increase to $17.0–$21.0M; “we think this is a conservative number” amid tariff-related uncertainty .
  • Quote: “Q1'25 was another strong quarter... we are increasing our full year 2025 FCF guidance to $17.0 million - $21.0 million” – Founder & CEO David Barrett .

What Went Wrong

  • Paid members decline: Paid members were 657k (−5% y/y), and April was slightly down (~0.5%), reflecting continued SMB caution and macro headwinds .
  • Street misses: Revenue of $36.1M modestly missed S&P Global consensus of $36.41M*; Primary EPS (normalized) of $0.053 missed $0.0643* (tax expense up y/y to $2.0M vs $1.0M) . Values retrieved from S&P Global.
  • Elevated stock-based compensation (SBC): Total SBC expense was $8.0M in Q1, contributing to GAAP net loss of $(3.2)M, and GAAP S&M expense will spike in Q2 on F1 sponsorship accounting recognition .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$35.409 $37.004 $36.074
GAAP Net Income ($USD Millions)$(2.198) $(1.312) $(3.169)
GAAP Diluted EPS ($USD)$(0.02) $(0.01) $(0.03)
Adjusted EBITDA ($USD Millions)$9.676 $12.390 $8.446
Non-GAAP Net Income ($USD Millions)$5.432 $8.690 $4.821
Cash from Operating Activities ($USD Millions)$3.687 $7.402 $4.805
Free Cash Flow (Company Definition, $USD Millions)$6.679 $6.274 $9.104
Interchange ($USD Millions)$4.6 $5.1 $5.1

KPIs

KPIQ3 2024Q4 2024Q1 2025
Paid Members684,000 687,000 657,000
Travel Bookings Growth (q/q)Expanded beta to mid-market GA launch imminent +166% q/q
April Paid Members (flash)—665,000 (Jan commentary) 655,000 (April, ~flat)

Margins (indicative, S&P Global)

MetricQ3 2024Q4 2024Q1 2025
Gross Profit Margin %51.58%*50.96%*50.57%*
EBITDA Margin %1.37%*1.70%*−3.61%*

Values marked with * are retrieved from S&P Global.

Versus Estimates (S&P Global for Q1 2025)

MetricConsensusActual
Revenue ($USD Millions)$36.407*$36.074
Primary EPS (Normalized) ($USD)$0.0643*$0.053*
EBITDA ($USD Millions)$10.596*−$1.304*

Values marked with * are retrieved from S&P Global.

Notes:

  • Company-reported Adjusted EBITDA was $8.4M; S&P’s EBITDA “actual” uses a GAAP-defined construct and differs from company’s adjusted EBITDA .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Free Cash Flow ($USD Millions)FY 2025$16.0–$20.0 $17.0–$21.0 Raised
SBC Expense – Total ($USD Millions)Q2 2025$6.3–$8.3 $5.9–$7.9 Lowered
SBC Expense – Total ($USD Millions)Q3 2025$6.2–$8.2 $5.6–$7.6 Lowered
SBC Expense – Total ($USD Millions)Q4 2025$6.0–$8.0 $5.3–$7.3 Lowered
Revenue guidanceFY/Q2/Q3 2025Not provided Not provided Maintained (no guidance)
Margins, OpEx, OI&E, Tax rateFY/Q2/Q3 2025Not provided Tax expense commentary only (movie accounting in Q2) N/A

Additional guidance notes:

  • Management reiterated Q2 recognition of cumulative F1 sponsorship expense in GAAP S&M, with most cash already spent; expect higher S&M expense in Q2, limited incremental cash impact .

Earnings Call Themes & Trends

TopicQ-2 (Q3 2024)Q-1 (Q4 2024)Q1 2025 (Current)Trend
AI initiativesChat-centric design to automate “last 20%” of expense mgmt; aim for 100% automation Deep AI drove cost efficiencies (SmartScan, Concierge, QA, engineering) Delivered conversational corrections; Concierge voice; fraud detection; virtual CFO roadmap Accelerating execution and feature breadth
Expensify Card & interchangeMigration 94% completed; $4.6M interchange (+48% y/y) Fully migrated; $5.1M interchange in Q4; FY $17.2M (+54% y/y) $5.1M interchange (+43% y/y) Sustained growth; migration complete
Travel productBeta widened; initial revenue GA launch and strong interest +166% q/q bookings; adoption outpacing card launch Early momentum strengthening
Pricing strategy—Platform value vs pricing power discussion (keep price near-term) Simplified Collect pricing: $5/member/month Streamlining to improve conversion at lower end
Macro/tariffsSMB expansion headwinds noted Conservative FY25 FCF guide; invest selectively Conservative raise; monitoring tariff impacts; customers “wait-and-see” Cautious but confident
Capital allocationBuyback approach discussed, opportunistic Debt fully repaid; buybacks favored where appropriate New $50M repurchase authorization announced (Feb 27) Balance sheet strengthened; buybacks enabled
F1 movie catalyst—Preparation for summer 2025 brand push Expect web traffic in Q2; conversion/new business in Q3; GAAP S&M spike on release Building toward Q3 conversion impact

Management Commentary

  • “We’re seeing companies adopt travel at over twice the rate they adopted the Expensify Card at launch.” – Ryan Schaffer .
  • “We are increasing our full year 2025 FCF guidance to $17.0 million - $21.0 million.” – David Barrett .
  • “This pricing is not a price reduction per se. It’s more of a streamlining... the result is Collect is $5 per month per member.” – Ryan Schaffer .
  • “We talked about conversational corrections... that’s in product and you can use it today... giving Concierge actual voice.” – David Barrett .
  • On F1 movie: “The day the movie comes out, we will recognize the expense of all the payments we made... large expense being recognized, but not necessarily a large cash flow impact.” – Ryan Schaffer .

Q&A Highlights

  • Macro/tariffs: Management raised FCF guidance conservatively and believes the business is well positioned to weather tougher conditions (Q1 FCF $9.1M) .
  • Paid members vs revenue diversification: Paid members remain important, but interchange and Travel broaden revenue levers beyond subscriptions .
  • F1 impact timing: Expect Q2 web traffic rise, with conversion/new business more in Q3 and beyond; minimal Q1 benefit .
  • April paid members: 655k, slightly down (<0.5%), essentially flat; April seasonally softer .
  • Movie accounting: GAAP S&M expense spike on release; cash impact already mostly felt; additional Q2 marketing spend expected .
  • Vertical exposure: Customers in “wait-and-see” mode amid tariff uncertainty; difficult to quantify industry impacts yet .

Estimates Context

  • Q1 2025 vs S&P Global consensus: Revenue $36.074M vs $36.407M* (miss), Primary EPS (normalized) $0.053 vs $0.0643* (miss). EBITDA “actual” −$1.304M* vs $10.596M* (miss), while company-reported Adjusted EBITDA was $8.4M . Values marked with * are retrieved from S&P Global.
  • Implications: Near-term estimates may need modest downward revisions for Q2 on GAAP S&M (movie expense recognition) and potentially EPS/EBITDA, with upward adjustments to FY25 free cash flow given the guidance raise .

Key Takeaways for Investors

  • Revenue diversification is working: interchange and Travel are offsetting subscription headwinds from lower paid members; watch Travel’s monetization ramp through Q3/Q4 .
  • Free cash flow trajectory is improving: FY25 FCF guidance raised to $17–$21M; operating discipline and AI efficiencies underpin cash generation .
  • Expect GAAP optics headwind in Q2: F1 sponsorship expense recognition will spike GAAP S&M, with limited incremental cash impact; Q3 likely the conversion/lead benefit window .
  • Pricing simplification should aid SMB conversion at the low end; monitor paid members trend and Collect plan impact over the next 2–3 quarters .
  • AI productization is accelerating (voice Concierge, conversational corrections); potential to further reduce support costs and enhance conversion/retention .
  • Capital allocation flexibility: debt-free, new $50M buyback authorization; scope to offset dilution and support per-share metrics .
  • Trading lens: Near term, Q2 GAAP expense spike could pressure reported EPS; medium term, Travel ramp, card growth, and the F1 catalyst support an improving growth/cash narrative into Q3–Q4 .

Values marked with * are retrieved from S&P Global.