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United States securities and exchange commission logo
May 25, 2021
Ryan Schaffer
Chief Financial Officer
Expensify, Inc.
401 SW 5th Ave
Portland, Oregon 97204
Re: Expensify, Inc.
Draft Registration
Statement on Form S-1
Submitted April 28,
2021
CIK No. 0001476840
Dear Mr. Schaffer:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form S-1 filed April 28, 2021
Risk Factors
Risks related to our business, page 17
1. We note your reference
to dollar-based net retention rate both here and on page 19. We
note your use of other
retention metrics such as gross logo retention and net seat retention
rate on page 76. Please
either revise your disclosures on page 76 to explain how you
calculate and use the
dollar-based net retention rate metric or remove references to the
metric from your
filing.
Ryan Schaffer
FirstName
Expensify, LastNameRyan Schaffer
Inc.
Comapany
May NameExpensify, Inc.
25, 2021
May 25,
Page 2 2021 Page 2
FirstName LastName
The COVID-19 pandemic has materially adversely affected..., page 20
2. Please revise to quantify the specific impacts you have experienced to
your results of
operations and relevant metrics resulting from the COVID-19 pandemic.
We rely on a single third-party vendor..., page 26
3. Please identify the single third-party vendor, issuing bank and card
network for
your Expensify Card and briefly describe the material terms of these
agreements including
the term and any material termination provisions.
Non-GAAP financial measures, page 78
4. We note that you do not present gross profit on the face of your
consolidated statements of
income. It appears that this is due to the fact that your GAAP cost of
revenues excludes
employee expenses related to customer support. We also note that your
disclosures on
pages 71-73 do not include any reconciliations of Non-GAAP gross
profit or gross margin
to the most directly comparable GAAP measures. If you are unable to
reconcile Non-
GAAP gross profit and Non-GAAP gross margin to the most directly
comparable GAAP
measures, please revise to remove these Non-GAAP measures from your
filing. Please
refer to Item 10(e)(i)(B) and footnote 27 of SEC Final Rule Release
Number 33-8176,
Conditions for Use of Non-GAAP Measures.
Credit Facilities, page 86
5. Please revise to disclose any material debt covenant requirements
applicable as of or for
the year ended December 31, 2020 and for the foreseeable future.
Please also revise to
disclose the amount of borrowings available, if any, under your
revolving line of credit as
of 12/31/20. Please similarly revise your financial statement
footnotes on page F-21.
Business, page 98
6. Please disclose the measure by which you determined you are a
leading cloud-based
expense management platform.
7. You disclose that you calculate your total addressable market by
multiplying the number
of SMBs (firms with fewer than 250 employees) in your core geographies
by Expensify s
average revenue per customer. We note that as of December 31, 2020,
you estimated that
businesses with fewer than 1,000 employees accounted for over 95% of
your customers
by revenue. However, on page 20, you state that SMBs accounted for
over 95% of your
customers by revenue. Please reconcile these statements with regard to
the definition of
SMBs.
Ryan Schaffer
FirstName
Expensify, LastNameRyan Schaffer
Inc.
Comapany
May NameExpensify, Inc.
25, 2021
May 25,
Page 3 2021 Page 3
FirstName LastName
Our members and customers, page 111
8. Please disclose the number of your paying customers for the periods
presented.
Executive Compensation, page 120
9. Please file the employment agreements with your executive officers,
2021 incentive award
plan, 2021 employee stock purchase plan and director compensation plan
as exhibits to
your registration statement. Refer to Item 601(b)(10)(iii)(A) of
Regulation S-K.
Certain relationships and related party transactions
Exchange offer and voting trust, page 134
10. We note that you intend to conduct an exchange offer open to all of
your employees
whereby the participants will have the opportunity to exchange their
shares of Class A
common stock for shares of your LTA and LTB common stock. Please
provide us with
a detailed legal analysis explaining why you believe the exchange
offer does
not constitute a tender offer subject to the tender offer rules.
Description of Capital Stock
Common Stock, page 139
11. Please briefly describe the sale and transfer requirements in your
amended and restated
certificate of incorporation and describe the types of transfers that
are excepted from those
requirements.
12. Please clarify your statement that the voting trust will be able to
elect a majority of the
members of your board of directors to disclose that it will be able to
elect all of the
members of your board of directors or advise.
The Voting Trust, page 141
13. Please identify the trustees to the voting trust agreement, disclose
how the trustees are
selected and under what circumstances they can be replaced and file
this agreement as an
exhibit to your registration statement. Refer to Item
601(b)(10)(ii)(A) of Regulation S-K.
14. Please provide a legal analysis that it is permissible under
applicable law for the trustees
to make decisions without fiduciary duties of any kind to the trust
beneficiaries and clarify
how the voting trust will achieve the stated objectives without the
trustees owing any
fiduciary duties to the beneficiaries. Also, disclose the objective
criteria the trustees will
consider in determining how to vote the shares in the voting trust.
15. Please clarify whether the terms of the exchange offer will require
participants to deposit
their LTA and LTB shares of common stock in the voting trust. Also,
disclose the
circumstances under which employees that are not trust beneficiaries
may become parties
to the voting trust agreement.
Ryan Schaffer
Expensify, Inc.
May 25, 2021
Page 4
16. We note your statement that the voting trust is irrevocable and
terminates upon the mutual
agreement between the company and the trustees. Please tell us the
provisions of state
law that permit the trust to have a perpetual existence.
Audited Consolidated Financial Statements
Consolidated Statements of Income, page F-4
17. Please revise the title of "Cost of revenue, net" to make it clear
that this line item excludes
employee costs for customer support.
18. Please revise to disclose both income allocated to participating
securities and net income
(loss) attributable to common stockholders on the face of your
consolidated statements of
income. Similarly revise your consolidated statements of income data
on pages 13 and
69.
Note 1 - Description of Business and Basis of Presentation, page F-8
19. Please revise to clarify if you consolidate Expensify.org and tell us
how you
considered ASC 810 in arriving at your conclusion. As a related
matter, please revise to
disclose your commitments to Expensify.org and describe how these
commitments are
reflected in your consolidated financial statements for the periods
presented. We note
disclosures about your Expensify.org commitments on pages 104, 106 and
134.
Note 2 - Summary of Significant Accounting Policies, page F-9
20. Revise to disclose, as you do on page 81, that both your sales and
marketing expenses and
general and administrative expenses exclude all employee costs.
21. We note that, due to price increases in 2020, you recorded contract
assets of $1,164,825 as
of December 31, 2020. Please revise to more fully describe the nature
of these contract
assets and the conditions that have not yet been met.
22. Please revise to disclose how you account for the cost of free trials,
if material.
Note 12 - Commitments and Contingencies, page F-28
23. We note your disclosure on page 46 regarding the Federal Election
Commission's
notification to you of complaints involving e-mails by David Barrett.
Please tell us how
you considered the disclosure requirements of ASC 450-20-50 with
regards to this matter.
General
24. Please supplementally provide us with copies of all written
communications, as defined in
FirstName LastNameRyan Schaffer
Rule 405 under the Securities Act, that you, or anyone authorized to do
so on your behalf,
Comapany NameExpensify,
present Inc.
to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
May 25,not theyPage
2021 retain
4 copies of the communication.
FirstName LastName
Ryan Schaffer
FirstName
Expensify, LastNameRyan Schaffer
Inc.
Comapany
May NameExpensify, Inc.
25, 2021
May 25,
Page 5 2021 Page 5
FirstName LastName
You may contact Lisa Etheredge, Senior Staff Accountant, at (202)
551-3424 or Robert
Littlepage, Accounting Branch Chief, at (202) 551-3361 if you have questions
regarding
comments on the financial statements and related matters. Please contact
Alexandra Barone,
Staff Attorney, at (202) 551-8816 or Jeffrey Kauten, Staff Attorney, at (202)
551-3447 with any
other questions.
Sincerely,
Division of
Corporation Finance
Office of Technology