Expensify, Inc. (EXFY)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 was mixed: revenue grew 7% year over year to $35.8M, but GAAP profitability compressed due to one-time recognition tied to the F1 movie marketing, with GAAP diluted EPS at -$0.10 and adjusted EBITDA at -$1.4M .
• Wall Street consensus was missed: revenue $35.764M vs $36.1475M* and Primary EPS -$0.0202 vs $0.0187*, while free cash flow remained strong at $6.3M and FY25 FCF guidance was raised to $19–$23M* .
• Strategic progress: Expensify expanded internationally (10,000+ new bank feeds, 10 languages, EUR billing) and expects UK/EU Expensify Card availability imminently, with travel bookings up 44% q/q .
• Shareholder returns: $3.0M of buybacks in Q2 (1.285M shares at $2.33 average) under a $50M authorization through March 2028 .
• Near-term stock reaction catalysts: raised FCF guidance, growing interchange (+31% y/y to $5.3M), accelerating travel adoption, and broadening international footprint; offset by paid member declines (-5% y/y to 652k) and the Q2 EPS miss .
  Values with * were retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

• Revenue +7% y/y to $35.8M, interchange +31% y/y to $5.3M; operating cash flow $8.9M and free cash flow $6.3M demonstrate cash generation despite marketing investments .
• Management raised FY25 FCF guidance to $19–$23M, citing confidence and a 10% y/y FCF increase in Q2; buybacks of $3.0M signal continued capital return .
• International expansion: 10,000+ additional bank integrations, 10 languages, EUR billing, and Expensify Card expected in UK/EU; "we spent the last quarter strengthening our international offering" (CEO letter) .

What Went Wrong

• GAAP diluted EPS was -$0.10 and adjusted EBITDA was -$1.4M, driven by the one-time accounting recognition of cumulative F1 movie payments in Q2, compressing profitability temporarily .
• Paid members fell to 652k (-5% y/y), with July at 641k reflecting seasonal softness; member trend remains a watch item for subscription momentum .
• Consensus miss: revenue ($35.764M vs $36.1475M*) and Primary EPS (-$0.0202 vs $0.0187*), likely prompting near-term estimate recalibration* .
  Values with * were retrieved from S&P Global.

Financial Results

Estimates vs Actuals

Values with * were retrieved from S&P Global.

KPIs

Note: No formal segment reporting provided in Q2 materials .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CFO on Q2 profitability: “We’ve been making payments for multiple years, but the expense is all recognized this quarter… We expect next quarter for these to go back to normal.”
• CEO on AI approach: “Concierge is multimodal… [and] uses a tree of thought design… allowing different trains of reasoning for support, modifying expenses, etc.”
• CFO on brand awareness: “Over a 50% increase in our core demographic… and a 350% increase in ages 18–24… unaided awareness… way more people were able to name Expensify by name than any other… competitors.”
• CEO on product architecture: “Chat‑centric design… collaborate in real time with our AI… all functionality works on mobile… a major differentiation… the fundamental upgrade… is done and in production.”

Q&A Highlights

• Conversion timing from F1 exposure: Impact largely future‑dated; brand halo vs direct performance marketing; Q2 ran only three business days post‑release .
• SEO/AI search shifts: Strong historical SEO; optimizing toward chat‑based AIs (ChatGPT, Claude, Gemini) as future of search .
• R&D allocation and scale: Building one integrated payments engine vs siloed products; heavy R&D focus despite accounting allocations .
• AI moat vs competitors: Enterprise incumbents likely add ‘side’ agents; Expensify’s deeply infused Concierge differentiates; competitor “card‑first” vs Expensify “AI‑first” .
• Travel traction: Positive quarter‑over‑quarter growth; accelerating adoption post demos/pilots; strong GBTA feedback .

Estimates Context

• Q2 2025 revenue and Primary EPS missed consensus: $35.764M vs $36.1475M* and -$0.0202 vs $0.0187*, while Q4 2024 beat on both and Q1 2025 was mixed (revenue miss, EPS miss)* .
• Given Q2’s EPS miss and management’s note on one‑time expense recognition for the movie, near‑term EPS models may adjust lower, with normalization potential in Q3 per management commentary .
  Values with * were retrieved from S&P Global.

Key Takeaways for Investors

• One‑time F1 expense recognition compressed Q2 profitability; management expects adjusted EBITDA and EPS to normalize in Q3 as the accounting effect rolls off .
• FY25 free cash flow guidance raised for a second consecutive quarter to $19–$23M; Q2 FCF delivered $6.3M (18% margin), underlining cash resilience despite marketing spend .
• Interchange growth remains a bright spot: $5.3M (+31% y/y), supporting diversification beyond subscriptions and free cash flow generation .
• Paid members are trending down (-5% y/y to 652k; July 641k seasonally soft), making conversion of heightened brand awareness into paying users a key execution focus .
• International expansion (10,000+ bank feeds, 10 languages, EUR billing, UK/EU card rollout) and accelerating travel adoption (+44% q/q) broaden TAM and transaction-driven revenue opportunities .
• Active shareholder returns with $3.0M Q2 buybacks under a $50M authorization provide support while the business transitions to New Expensify and ramps AI and travel .
• Near-term trading: expect sensitivity to Q2 consensus miss and paid member declines; medium-term thesis: rising interchange/travel, AI‑driven operating leverage, and expanded international footprint could drive sustained FCF and multiple re‑rating if conversion improves .

Additional Documents and Context

• Q2 press release and 8‑K (Item 2.02) furnished Exhibit 99.1 provide full financial reconciliations and SBC estimates .
• Q1 press release shows prior guidance ($17–$21M FY25 FCF) and travel adoption surge (+166% q/q), setting the stage for Q2 updates .
• Q4 2024 press release provides AI context, debt paydown, and baseline profitability trajectory into FY25 .
• Share buyback details (1.285M shares; $3.0M) and program authorization ($50M through Mar‑2028) support capital return narrative .
• Legal press release referencing a 2023 class action may be a sentiment overhang; monitor developments alongside fundamentals .