Expensify Tests Other Services for Growth

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The global expense management software market is expected to grow at 12% CAGR to reach $6.6 billion by 2025 driven by the continuing centralization of enterprise expense-related data. Centralizing all-expense-related data along with utilizing expense management software provides organizations with the ability to review, monitor, and manage expense reports on the go. While the market remains dominated by bigger players like SAP Concur, Sodexo, and Intuit, Expensify (Nasdaq: EXFY) is a smaller player that went public last year.

Expensify’s Financials

Recently, Expensify announced its first quarter earnings. Revenues grew 36% to $40.4 million and loss was $0.06 per share.

Among key metrics, its free plan offering that includes the Expensify Card, expense management, next-day reimbursement, invoicing, bill pay, and travel booking grew 183% over the previous quarter to over 9,000 businesses. Despite the challenges of the pandemic, its paid members increased to 706,000.

It did not provide any outlook, but reaffirmed its long-term guidance of 25-35% revenue growth over a multi-year period. The market is looking for revenues of $43.66 million for the second quarter with an EPS of $0.06 per share and revenues of $182.45 million for the year with an EPS of $0.37.

Expensify’s Offerings

Expensify recently released a very different offering for its customers. Currently in beta stage, the company launched Expensify Lounge, a new space in its San Francisco office that will offer café-like working environment and provide a co-working space paired with its integrated chat Concierge. Expensify customers can work from the space as often as they like, as long as they like, and use the offered wi-fi, complimentary drinks, and snacks. During the beta test period, no membership was required, but after the beta period, it will be offered as a part of the $9 per month Expensify membership.

Earlier this year, Expensify also released the Expensify CPA Card, a very niche card. The accountant-friendly card allows client to setup in minutes and provides a high monthly revolving credit limit with no credit check or personal guarantees. The card is powered with continuous reconciliation between Expensify and integrated accounting systems so that admins can maintain a real-time picture of company financials. Expensify is already used by nearly half of the top 100 CPA firms in the U.S. The company leveraged its relationship with this group to build a card that caters to the CPA community.

Expensify’s business model works by individual employees signing up for Expensify in the company before waiting for the company to sign up with Expensify. This turns every expense report into a targeted marketing message, helping Expensify generate leads in the companies of all sizes. By adding capabilities such as the CPA card, it is making its offering that much more attractive to individuals, who in turn can help it get more organizations into its customer portfolio.

Expensify’s stock is currently trading at $17.25 with a market capitalization of $1.43 billion. It had listed last year at $27. The stock had climbed to a high of $51.06 in November last year, and fallen to a low of $13.58 in May.

Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article.

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