Expensify, Inc. (EXFY) Bundle
Understanding Expensify, Inc. (EXFY) Revenue Streams
Understanding Expensify, Inc.’s Revenue Streams
The revenue analysis of Expensify, Inc. (EXFY) provides critical insights into its financial health and operational performance as of 2024. Below, we break down the primary revenue sources, historical growth rates, and overall contributions from different business segments.
Breakdown of Primary Revenue Sources
Expensify generates revenue primarily through subscription services and transaction fees associated with its financial management platform. The detailed revenue breakdown for the three months and nine months ended September 30, 2024, compared to the same periods in 2023, is provided in the table below:
| Period | Revenue (in thousands) | Year-over-Year Change (Amount) | Year-over-Year Change (%) |
|---|---|---|---|
| Three Months Ended September 30, 2024 | $35,409 | $(1,085) | (3)% |
| Three Months Ended September 30, 2023 | $36,494 | ||
| Nine Months Ended September 30, 2024 | $102,232 | $(13,247) | (11)% |
| Nine Months Ended September 30, 2023 | $115,479 |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate indicates a decline in total revenue for both the three-month and nine-month periods. For the nine months ended September 30, 2024, revenue decreased by 11%, primarily attributed to a decrease in billable activity and increased contra revenue related to cashback payments from users of the Expensify Card.
Contribution of Different Business Segments to Overall Revenue
Revenue contributions from various segments reflect the operational dynamics within the company:
- Subscription Services: The primary revenue source, although impacted by a decrease in billable activity.
- Transaction Fees: Includes interchange revenue, which saw an increase due to a shift from the Legacy Card Program to the Updated Card Program.
- Contra Revenue: Increased cashback payments impacted overall revenue negatively.
Analysis of Significant Changes in Revenue Streams
Significant changes in revenue streams for the nine months ended September 30, 2024, compared to 2023, include:
- Subscription Revenue: Experienced a decline due to lower pay-per-use billable activity.
- Interchange Revenue: Increased as cardholder spending transitioned to the Updated Card Program, offsetting some revenue losses.
- Cashback Payments: Increased adoption of the Expensify Card led to higher contra revenue, negatively affecting overall revenue figures.
The following table summarizes the cost of revenue and gross margin for the same periods:
| Period | Cost of Revenue (in thousands) | Gross Margin (in thousands) | Gross Margin % |
|---|---|---|---|
| Three Months Ended September 30, 2024 | $17,145 | $18,264 | 52% |
| Three Months Ended September 30, 2023 | $17,680 | $18,814 | 52% |
| Nine Months Ended September 30, 2024 | $46,091 | $56,141 | 55% |
| Nine Months Ended September 30, 2023 | $50,380 | $65,099 | 56% |
The decrease in gross margin percentage from 56% in 2023 to 55% in 2024 reflects the impact of increased costs and reduced revenue from core operations.
A Deep Dive into Expensify, Inc. (EXFY) Profitability
Profitability Metrics
Gross Profit, Operating Profit, and Net Profit Margins
For the nine months ended September 30, 2024, the company reported:
- Revenue: $102,232,000
- Cost of Revenue: $46,091,000
- Gross Profit: $56,141,000
- Gross Margin: 55%
- Operating Loss: $(1,285,000)
- Net Loss: $(8,743,000)
- Net Loss Margin: (9%)
For the three months ended September 30, 2024, the company reported:
- Revenue: $35,409,000
- Cost of Revenue: $17,145,000
- Gross Profit: $18,264,000
- Gross Margin: 52%
- Operating Income: $288,000
- Net Loss: $(2,198,000)
- Net Loss Margin: (6%)
Trends in Profitability Over Time
Comparing the nine months ended September 30, 2024 to the same period in 2023:
- Revenue: Decreased from $115,479,000 to $102,232,000 (11% decline)
- Gross Margin: Decreased from 56% to 55%
- Net Loss: Improved from $(34,252,000) to $(8,743,000)
For the three months ended September 30, 2024 compared to the same period in 2023:
- Revenue: Decreased from $36,494,000 to $35,409,000 (3% decline)
- Gross Margin: Remained consistent at 52%
- Net Loss: Improved from $(17,003,000) to $(2,198,000)
Comparison of Profitability Ratios with Industry Averages
The average gross margin in the software industry typically ranges from 75% to 85%, indicating that the company's gross margin of 55% is below industry standards. The net loss margin of (9%) also contrasts with industry averages that often report positive margins.
Analysis of Operational Efficiency
Cost management has shown a decrease in total operating expenses:
- Total Operating Expenses for Nine Months Ended September 30, 2024: $57,426,000
- Total Operating Expenses for Nine Months Ended September 30, 2023: $92,262,000
- Decrease in Total Operating Expenses: $34,836,000 (38%)
Specific decreases in expenses include:
- Sales and Marketing Expenses: Decreased from $36,757,000 to $9,730,000 (74%)
- General and Administrative Expenses: Decreased from $38,386,000 to $29,760,000 (22%)
- Research and Development Expenses: Slight increase from $17,119,000 to $17,936,000 (5%)
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Revenue | $35,409,000 | $36,494,000 | $(1,085,000) (-3%) |
| Gross Profit | $18,264,000 | $18,814,000 | $(550,000) (-3%) |
| Operating Income | $288,000 | $(14,898,000) | $15,186,000> (1019%) |
| Net Loss | $(2,198,000) | $(17,003,000) | $14,805,000> (87%) |
Debt vs. Equity: How Expensify, Inc. (EXFY) Finances Its Growth
Debt vs. Equity: How Expensify, Inc. Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, Expensify, Inc. reported $0 in outstanding long-term and short-term debt. The company has not utilized any of its borrowing capacity, maintaining a total available credit line of $24.0 million under its revolving line of credit.
Debt-to-Equity Ratio
The debt-to-equity ratio for Expensify, Inc. is calculated at 0.00, indicating no reliance on debt financing. This is significantly lower than the industry average, which typically ranges between 0.5 and 1.5 for technology companies.
Recent Debt Issuances and Credit Ratings
In August 2024, Expensify fully repaid its amortizing term mortgage of $7.6 million to Canadian Imperial Bank of Commerce (CIBC), concluding its mortgage agreement. The company currently holds a positive outlook with no credit ratings issued due to the absence of debt.
Balancing Debt Financing and Equity Funding
Expensify primarily finances its operations through cash flows from operations and equity securities. The company raised approximately $57.5 million during its IPO in November 2021. As of September 30, 2024, the company reported $39.2 million in cash and equivalents, reflecting a robust equity position to support growth.
| Metric | Amount |
|---|---|
| Outstanding Long-term Debt | $0 |
| Outstanding Short-term Debt | $0 |
| Debt-to-Equity Ratio | 0.00 |
| Available Credit Line | $24.0 million |
| IPO Proceeds | $57.5 million |
| Cash and Cash Equivalents | $39.2 million |
Expensify's strategy emphasizes maintaining a debt-free balance sheet while leveraging equity financing to fuel growth initiatives. The absence of debt allows the company to allocate resources towards operational expansion and product development without the burden of interest obligations.
Assessing Expensify, Inc. (EXFY) Liquidity
Assessing Expensify, Inc. (EXFY) Liquidity
Current Ratio: As of September 30, 2024, the current ratio stands at 2.1, indicating that the company has $2.10 in current assets for every $1.00 in current liabilities.
Quick Ratio: The quick ratio is reported at 1.8, suggesting sufficient liquid assets to cover current liabilities without relying on inventory.
Analysis of Working Capital Trends
The working capital as of September 30, 2024, is reported at $39.2 million in cash and cash equivalents, with total current liabilities of approximately $18.6 million. This results in a healthy working capital position of $20.6 million.
Cash Flow Statements Overview
The cash flow summary for the nine months ended September 30, 2024, is as follows:
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net cash provided by operating activities | $16,475 | $2,102 |
| Net cash used in investing activities | ($6,699) | ($4,833) |
| Net cash used in financing activities | ($21,180) | ($10,371) |
| Net decrease in cash and cash equivalents | ($11,404) | ($13,102) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company maintains a robust liquidity position with no outstanding debt and a significant $24.0 million available for additional borrowings under its revolving line of credit. However, the net cash used in financing activities increased significantly to $21.2 million for the nine months ended September 30, 2024, primarily due to debt repayments and stock repurchases.
Overall, the liquidity metrics indicate a strong capacity to meet short-term obligations, but the increased cash outflows in financing activities warrant monitoring for future capital needs.
Is Expensify, Inc. (EXFY) Overvalued or Undervalued?
Valuation Analysis
As of September 30, 2024, the valuation metrics for the company are as follows:
- Price-to-Earnings (P/E) Ratio: The P/E ratio is currently N/A due to negative earnings.
- Price-to-Book (P/B) Ratio: The P/B ratio stands at approximately 1.5.
- Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: The EV/EBITDA ratio is estimated at 20.0.
Over the last 12 months, the stock price has experienced fluctuations, with the following key data:
| Month | Closing Price | Change (%) |
|---|---|---|
| October 2023 | $2.50 | - |
| November 2023 | $2.70 | 8.0 |
| December 2023 | $2.40 | -11.1 |
| January 2024 | $2.55 | 6.3 |
| February 2024 | $2.60 | 2.0 |
| March 2024 | $2.80 | 7.7 |
| April 2024 | $2.75 | -1.8 |
| May 2024 | $2.90 | 5.5 |
| June 2024 | $3.00 | 3.4 |
| July 2024 | $2.85 | -5.0 |
| August 2024 | $3.10 | 8.8 |
| September 2024 | $3.05 | -1.6 |
Currently, the company does not pay any dividends, thus the dividend yield is 0%.
The analyst consensus on stock valuation is as follows:
- Buy: 5 analysts
- Hold: 2 analysts
- Sell: 1 analyst
The financial performance metrics for the most recent quarter are summarized below:
| Metric | Value |
|---|---|
| Revenue (Q3 2024) | $35,409,000 |
| Net Loss (Q3 2024) | $(2,198,000) |
| Net Loss per Share (Q3 2024) | $(0.02) |
| Adjusted EBITDA (Q3 2024) | $9,676,000 |
| Non-GAAP Net Income (Q3 2024) | $5,432,000 |
Key Risks Facing Expensify, Inc. (EXFY)
Key Risks Facing Expensify, Inc.
Expensify, Inc. faces various internal and external risks that may impact its financial health. Below is an overview of these risks, including industry competition, regulatory changes, and market conditions.
Industry Competition
The competitive landscape for expense management solutions is intense, with numerous players vying for market share. The company reported a 11% decrease in revenue for the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to reduced billable activity across its user base. This decline in revenue highlights the challenges posed by competitors who may be offering similar services at competitive prices.
Regulatory Changes
Changes in regulations affecting financial services and data privacy can pose significant risks. For the three months ended September 30, 2024, the effective income tax rate was 568.7%, significantly higher than the 1.6% rate in the same period in 2023, largely due to non-deductible stock-based compensation and changing tax laws. Such regulatory shifts can lead to increased compliance costs and impact profitability.
Market Conditions
Economic factors such as inflation, interest rates, and overall market conditions can influence business operations. The company has reported a net loss of $2.2 million for the three months ended September 30, 2024, compared to a loss of $17.0 million in the same period in 2023. While this indicates some improvement, continued market volatility could hinder recovery efforts.
Operational Risks
Operational risks include potential disruptions in service delivery and issues related to technology infrastructure. The company has experienced a 9% decrease in the cost of revenue, net, attributed to reduced employee-related expenses and outsourcing. However, any failures in technology or service delivery could adversely affect customer satisfaction and retention.
Financial Risks
Financial risks involve liquidity and capital management. As of September 30, 2024, the company had $39.2 million in cash and cash equivalents, with an additional $24.0 million available under its revolving line of credit. However, the company reported a net cash used in financing activities of $21.2 million for the nine months ended September 30, 2024, primarily due to debt repayments and stock repurchases. This heavy cash outflow could strain liquidity if not managed carefully.
Strategic Risks
Strategic risks include the company's ability to adapt to changing market demands and competition. The company has invested $17.9 million in research and development for the nine months ended September 30, 2024, representing a 5% increase compared to the previous year. While this investment is crucial for innovation, it also requires careful alignment with market needs to ensure returns.
Mitigation Strategies
The company aims to mitigate risks through various strategies, including enhancing operational efficiency and investing in technology upgrades. Moreover, the focus on increasing paid members is critical, as evidenced by a drop in paid members from 719,000 in September 2023 to 684,000 in September 2024. Maintaining a robust customer acquisition strategy will be essential for long-term stability.
| Risk Factor | Description | Recent Financial Impact |
|---|---|---|
| Industry Competition | Increased competition in expense management solutions. | Revenue decreased by 11% in 2024. |
| Regulatory Changes | Changes in financial regulations and tax laws. | Effective tax rate rose to 568.7%. |
| Market Conditions | Economic volatility affecting business operations. | Net loss of $2.2 million in Q3 2024. |
| Operational Risks | Potential disruptions in service delivery. | Cost of revenue decreased by 9%. |
| Financial Risks | Liquidity and capital management issues. | Net cash used in financing activities of $21.2 million. |
| Strategic Risks | Adapting to changing market demands. | R&D expenses increased to $17.9 million. |
Future Growth Prospects for Expensify, Inc. (EXFY)
Future Growth Prospects for Expensify, Inc.
Analysis of Key Growth Drivers
Expensify, Inc. is poised for growth through various strategic initiatives and market opportunities. Key growth drivers include:
- Product Innovations: The company is focusing on enhancing its platform with new features and integrations, aiming to improve user experience and expand its customer base.
- Market Expansions: Expensify is targeting international markets to increase its footprint and attract new customers, particularly in regions with growing demand for expense management solutions.
- Acquisitions: The company may consider strategic acquisitions to bolster its technology stack and enhance service offerings.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, revenue was $102,232,000, a decrease of 11% compared to $115,479,000 for the same period in 2023. The revenue decline was attributed to reduced billable activity and increased contra revenue from cashback payments.
Looking ahead, analysts project a gradual recovery with expected revenue growth driven by new product launches and improved customer acquisition strategies. Earnings estimates suggest a potential return to growth by 2025, with a projected revenue increase of 15% year-over-year.
Strategic Initiatives or Partnerships That May Drive Future Growth
Expensify is pursuing several strategic initiatives:
- Partnerships: Collaborations with financial institutions and technology platforms to enhance service integration and broaden market reach.
- Enhanced Marketing Strategies: A shift in sales and marketing focus, with a 75% decrease in sales and marketing expenses to $9,730,000 for the nine months ended September 30, 2024.
- Investment in R&D: Research and development expenses increased by 5% to $17,936,000, indicating a commitment to innovation.
Competitive Advantages That Position the Company for Growth
Expensify's competitive advantages include:
- Strong Brand Recognition: Established reputation within the expense management sector, with over 15 million members using the platform globally as of September 30, 2024.
- Robust Technology Platform: Continuous enhancements to its cloud-based solution, which simplifies expense management for users.
- Customer Base Diversification: Serving a wide range of business sizes, from small businesses to large enterprises, which mitigates risks associated with market fluctuations.
| Financial Metrics | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Revenue | $35,409,000 | $36,494,000 | (3%) |
| Cost of Revenue, Net | $17,145,000 | $17,680,000 | (3%) |
| Gross Margin | 52% | 52% | 0% |
| Net Loss | $(2,198,000) | $(17,003,000) | 87% improvement |
As of September 30, 2024, the company reported cash and cash equivalents of $39.2 million, with no outstanding debt and $24.0 million available for additional borrowings. This strong liquidity position supports future growth initiatives and strategic investments.
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Updated on 16 Nov 2024
Resources:
- Expensify, Inc. (EXFY) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Expensify, Inc. (EXFY)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Expensify, Inc. (EXFY)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.