exfy-20220331
0001476840--12-312022Q1FALSEhttp://www.expensify.com/20220331#RightOfUseAssetshttp://www.expensify.com/20220331#RightOfUseAssetshttp://www.expensify.com/20220331#RightOfUseAssetshttp://www.expensify.com/20220331#RightOfUseAssetshttp://www.expensify.com/20220331#LeaseLiabilityCurrenthttp://www.expensify.com/20220331#LeaseLiabilityCurrenthttp://www.expensify.com/20220331#LeaseLiabilityNonCurrenthttp://www.expensify.com/20220331#LeaseLiabilityNonCurrent00014768402022-01-012022-03-310001476840us-gaap:CommonClassAMember2022-05-09xbrli:shares0001476840exfy:CommonStockLT10Member2022-05-090001476840exfy:CommonStockLT50Member2022-05-0900014768402022-03-31iso4217:USD00014768402021-12-310001476840us-gaap:CommonClassAMember2021-12-31iso4217:USDxbrli:shares0001476840us-gaap:CommonClassAMember2022-03-310001476840exfy:CommonStockLT10Member2021-12-310001476840exfy:CommonStockLT10Member2022-03-310001476840exfy:CommonStockLT50Member2022-03-310001476840exfy:CommonStockLT50Member2021-12-3100014768402021-01-012021-03-310001476840us-gaap:CommonStockMember2021-12-310001476840us-gaap:AdditionalPaidInCapitalMember2021-12-310001476840us-gaap:RetainedEarningsMember2021-12-310001476840us-gaap:CommonStockMember2022-01-012022-03-310001476840us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001476840us-gaap:RetainedEarningsMember2022-01-012022-03-310001476840us-gaap:CommonStockMember2022-03-310001476840us-gaap:AdditionalPaidInCapitalMember2022-03-310001476840us-gaap:RetainedEarningsMember2022-03-310001476840us-gaap:ConvertiblePreferredStockMemberus-gaap:PreferredStockMember2020-12-310001476840us-gaap:CommonStockMember2020-12-310001476840us-gaap:AdditionalPaidInCapitalMember2020-12-310001476840us-gaap:RetainedEarningsMember2020-12-3100014768402020-12-310001476840us-gaap:CommonStockMember2021-01-012021-03-310001476840us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001476840us-gaap:RetainedEarningsMember2021-01-012021-03-310001476840us-gaap:ConvertiblePreferredStockMemberus-gaap:PreferredStockMember2021-03-310001476840us-gaap:CommonStockMember2021-03-310001476840us-gaap:AdditionalPaidInCapitalMember2021-03-310001476840us-gaap:RetainedEarningsMember2021-03-3100014768402021-03-3100014768402021-10-272021-10-27xbrli:pure0001476840country:US2022-01-012022-03-310001476840country:US2021-01-012021-03-310001476840us-gaap:NonUsMember2022-01-012022-03-310001476840us-gaap:NonUsMember2021-01-012021-03-310001476840exfy:CashbackRewardsMember2022-01-012022-03-310001476840exfy:CashbackRewardsMember2021-01-012021-03-310001476840us-gaap:ComputerEquipmentMember2022-03-310001476840us-gaap:ComputerEquipmentMember2021-12-310001476840us-gaap:FurnitureAndFixturesMember2022-03-310001476840us-gaap:FurnitureAndFixturesMember2021-12-310001476840us-gaap:LeaseholdImprovementsMember2022-03-310001476840us-gaap:LeaseholdImprovementsMember2021-12-310001476840us-gaap:BuildingMember2022-03-310001476840us-gaap:BuildingMember2021-12-310001476840us-gaap:LandMember2022-03-310001476840us-gaap:LandMember2021-12-310001476840us-gaap:ConstructionInProgressMember2022-03-310001476840us-gaap:ConstructionInProgressMember2021-12-310001476840srt:SubsidiariesMemberexfy:ExpensifyOrgMember2022-03-310001476840srt:SubsidiariesMemberexfy:ExpensifyOrgMember2021-12-310001476840exfy:ExpensifyPaymentLLCMembersrt:AffiliatedEntityMember2022-03-310001476840exfy:ExpensifyPaymentLLCMembersrt:AffiliatedEntityMember2021-12-310001476840us-gaap:MortgagesMember2019-08-310001476840us-gaap:MortgagesMember2019-08-012019-08-310001476840us-gaap:PrimeRateMemberus-gaap:MortgagesMember2019-08-012019-08-310001476840us-gaap:MortgagesMember2022-03-310001476840us-gaap:MortgagesMember2021-12-310001476840exfy:Amended2021TermLoanMemberus-gaap:SecuredDebtMember2021-09-300001476840us-gaap:SecuredDebtMemberexfy:Amended2021TermLoanInitialTermLoanMember2021-09-300001476840exfy:Amended2021TermLoanDelayedTermLoanMemberus-gaap:SecuredDebtMember2021-09-300001476840us-gaap:LineOfCreditMemberexfy:Amended2021TermLoanMemberus-gaap:RevolvingCreditFacilityMember2021-09-300001476840us-gaap:LineOfCreditMemberexfy:Amended2021TermLoanMemberus-gaap:RevolvingCreditFacilityMember2021-09-012021-09-300001476840us-gaap:SecuredDebtMemberexfy:Amended2021TermLoanInitialTermLoanMember2021-09-012021-09-300001476840exfy:Amended2021TermLoanMemberus-gaap:SecuredDebtMember2021-09-012021-09-300001476840exfy:Amended2021TermLoanMemberus-gaap:SubsequentEventMemberus-gaap:SecuredDebtMembersrt:ScenarioForecastMember2024-10-012024-10-010001476840exfy:Amended2021TermLoanMemberus-gaap:SubsequentEventMemberus-gaap:SecuredDebtMembersrt:ScenarioForecastMember2025-10-012025-10-010001476840exfy:Amended2021TermLoanMemberexfy:ReferenceRateMemberus-gaap:SecuredDebtMember2021-09-302021-09-300001476840exfy:Amended2021TermLoanMemberus-gaap:SecuredDebtMember2022-03-310001476840exfy:Amended2021TermLoanMemberus-gaap:SecuredDebtMember2021-12-310001476840us-gaap:LineOfCreditMemberexfy:Amended2021TermLoanMemberexfy:ReferenceRateMemberus-gaap:RevolvingCreditFacilityMember2020-01-012020-12-310001476840us-gaap:LineOfCreditMemberexfy:Amended2021TermLoanMemberexfy:ReferenceRateMemberus-gaap:RevolvingCreditFacilityMember2021-01-012021-12-310001476840us-gaap:LineOfCreditMemberexfy:Amended2021TermLoanMemberexfy:ReferenceRateMemberus-gaap:RevolvingCreditFacilityMember2022-03-310001476840us-gaap:LineOfCreditMemberexfy:Amended2021TermLoanMemberus-gaap:RevolvingCreditFacilityMember2022-03-310001476840us-gaap:LineOfCreditMemberexfy:Amended2021TermLoanMemberus-gaap:RevolvingCreditFacilityMember2021-12-310001476840country:USsrt:MaximumMember2018-01-012018-01-010001476840country:US2021-01-012021-03-310001476840country:US2022-01-012022-03-310001476840exfy:The2009OptionPlanMember2015-12-310001476840exfy:The2009OptionPlanMember2018-01-012018-01-310001476840exfy:The2009OptionPlanMember2018-01-310001476840exfy:The2019OptionPlanMember2019-04-012019-04-3000014768402019-04-300001476840exfy:The2019OptionPlanMemberus-gaap:RestrictedStockUnitsRSUMember2021-09-300001476840exfy:The2019OptionPlanMemberus-gaap:RestrictedStockUnitsRSUMemberus-gaap:CommonClassAMember2021-09-300001476840exfy:The2019OptionPlanMemberus-gaap:RestrictedStockUnitsRSUMemberexfy:CommonStockLT50Member2021-09-300001476840exfy:The2019OptionPlanMemberus-gaap:CommonClassAMember2021-11-090001476840exfy:The2019OptionPlanMemberexfy:CommonStockLT50Member2021-11-090001476840us-gaap:CommonClassAMemberexfy:The2021IncentivePlanMember2021-11-300001476840exfy:The2021IncentivePlanMember2021-11-012021-11-300001476840exfy:The2021IncentivePlanMember2022-01-012022-01-010001476840us-gaap:CommonClassAMemberexfy:The2021IncentivePlanMembersrt:MaximumMember2022-01-010001476840us-gaap:CommonClassAMemberexfy:The2021IncentivePlanMembersrt:MaximumMember2021-11-300001476840exfy:MatchingPlanMember2022-03-310001476840us-gaap:CommonClassAMemberexfy:MatchingPlanMember2022-01-012022-03-310001476840us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-03-310001476840us-gaap:RestrictedStockUnitsRSUMemberus-gaap:CommonClassAMember2022-01-012022-03-310001476840us-gaap:RestrictedStockUnitsRSUMemberus-gaap:CommonClassAMember2021-01-012021-03-310001476840us-gaap:RestrictedStockUnitsRSUMemberus-gaap:CommonClassAMember2021-12-310001476840us-gaap:RestrictedStockUnitsRSUMemberexfy:CommonStockLT50Member2021-12-310001476840us-gaap:RestrictedStockUnitsRSUMemberexfy:CommonStockLT50Member2022-01-012022-03-310001476840us-gaap:RestrictedStockUnitsRSUMemberus-gaap:CommonClassAMember2022-03-310001476840us-gaap:RestrictedStockUnitsRSUMemberexfy:CommonStockLT50Member2022-03-310001476840us-gaap:RestrictedStockUnitsRSUMember2022-03-310001476840us-gaap:RestrictedStockUnitsRSUMember2021-12-310001476840us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-12-310001476840us-gaap:EmployeeStockOptionMemberexfy:TenPercentHolderMember2022-01-012022-03-310001476840us-gaap:EmployeeStockOptionMemberexfy:OtherThanTenPercentHolderMember2022-01-012022-03-310001476840exfy:NonStatutoryOptionsMember2022-01-012022-03-310001476840us-gaap:EmployeeStockOptionMemberexfy:The2009OptionPlanMember2022-01-012022-03-310001476840exfy:The2019OptionPlanMemberus-gaap:EmployeeStockOptionMember2022-01-012022-03-310001476840us-gaap:CommonStockMemberus-gaap:EmployeeStockOptionMember2021-01-012021-03-310001476840srt:ChiefExecutiveOfficerMemberus-gaap:StockCompensationPlanMember2022-03-310001476840srt:ChiefExecutiveOfficerMemberus-gaap:StockCompensationPlanMember2021-12-3100014768402021-01-012021-12-310001476840us-gaap:EmployeeStockOptionMember2022-03-310001476840us-gaap:EmployeeStockOptionMember2022-01-012022-03-310001476840us-gaap:EmployeeStockOptionMember2021-12-310001476840us-gaap:EmployeeStockOptionMember2021-01-012021-12-310001476840us-gaap:EmployeeStockOptionMember2021-01-012021-03-310001476840exfy:MatchingPlanMember2022-01-012022-03-310001476840exfy:MatchingPlanMember2021-01-012021-03-310001476840us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-03-310001476840us-gaap:CostOfSalesMember2022-01-012022-03-310001476840us-gaap:CostOfSalesMember2021-01-012021-03-310001476840us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-03-310001476840us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-03-310001476840us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-03-310001476840us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-03-310001476840us-gaap:SellingAndMarketingExpenseMember2022-01-012022-03-310001476840us-gaap:SellingAndMarketingExpenseMember2021-01-012021-03-310001476840us-gaap:SoftwareDevelopmentMember2022-01-012022-03-31exfy:vote0001476840us-gaap:CommonClassAMember2022-01-012022-03-310001476840exfy:CommonStockLT10Member2022-01-012022-03-310001476840exfy:CommonStockLT50Member2022-01-012022-03-310001476840us-gaap:StockCompensationPlanMember2022-01-012022-03-310001476840us-gaap:StockCompensationPlanMember2021-01-012021-03-310001476840exfy:MatchingPlanMember2022-01-012022-03-310001476840exfy:MatchingPlanMember2021-01-012021-03-310001476840us-gaap:ConvertiblePreferredStockMember2022-01-012022-03-310001476840us-gaap:ConvertiblePreferredStockMember2021-01-012021-03-310001476840srt:AffiliatedEntityMemberexfy:ExpensifyOrgMember2022-01-012022-03-310001476840srt:AffiliatedEntityMemberexfy:ExpensifyOrgMember2022-03-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
FORM 10-Q
___________________________________
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 001-41043
___________________________________
Expensify, Inc.
___________________________________
(Exact name of registrant as specified in its charter)
Delaware27-0239450
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
401 SW 5th Ave
Portland Oregon
97204
(Address of Principal Executive Offices)(Zip Code)
(475) 221-8402
Registrant’s telephone number, including area code
___________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per shareEXFYThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerxSmaller reporting company
Emerging growth companyx
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes o No x
The registrant had outstanding 68,037,063 shares of Class A common stock, par value of $0.0001 per share, 7,337,960 shares of LT10 common stock, par value $0.0001 per share, and 6,226,160 shares of LT50 common stock, par value $0.0001 per share as of May 9, 2022.


Table of Contents
Table of Contents
Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
i

Table of Contents
Special Note Regarding Forward Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future financial condition, future operations, projected costs, prospects, plans, objectives of management and expected market growth, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “shall,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” “goal,” “objective,” “seeks,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. There are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q. Such risks, uncertainties and other important factors include, among others:
the economic, political and social impact of, and uncertainty relating to, the COVID-19 pandemic;
the war in Ukraine and escalating geopolitical tensions as a result of Russia's invasion of Ukraine;
our expectations regarding our financial performance and future operating performance;
our ability to attract and retain members, expand usage of our platform, sell subscriptions to our platform and convert individuals and organizations into paying customers;
the timing and success of new features, integrations, capabilities and enhancements by us, or by competitors to their products, or any other changes in the competitive landscape of our market;
the amount and timing of operating expenses and capital expenditures that we may incur to maintain and expand our business and operations to remain competitive;
the sufficiency of our cash, cash equivalents and investments to meet our liquidity needs;
our ability to make required payments under and to comply with the various requirements of our current and future indebtedness;
our ability to effectively manage our exposure to fluctuations in foreign currency exchange rates;
the increased expenses associated with being a public company;
the size of our addressable markets, market share and market trends;
anticipated trends, developments and challenges in our industry, business and the highly competitive markets in which we operate;
our expectations regarding our income tax liabilities and the adequacy of our reserves;
our ability to effectively manage our growth and expand our infrastructure and maintain our corporate culture;
our ability to identify, recruit and retain skilled personnel, including key members of senior management;
the safety, affordability and convenience of our platform and our offerings;
our ability to successfully defend litigation brought against us;
our ability to successfully identify, manage and integrate any existing and potential acquisitions of businesses, talent, technologies or intellectual property;
ii

Table of Contents
general economic conditions in either domestic or international markets, including the societal and economic impact of the COVID-19 pandemic, and geopolitical uncertainty and instability;
our protections against security breaches, technical difficulties, or interruptions to our platform; and
our ability to maintain, protect and enhance our intellectual property.
We caution you that the foregoing list does not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations, estimates, forecasts and projections about future events and trends that we believe may affect our business, results of operations, financial condition and prospects. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report on Form 10-Q, we cannot guarantee that the future results, levels of activity, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2021, and any subsequent filings, as well as those identified in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements. Unless otherwise indicated or unless the context requires otherwise, all references in this document to “Expensify,” the “Company,” “we,” “us,” “our” or similar references are to Expensify, Inc. Capitalized terms used and not defined above are defined elsewhere within this Quarterly Report on Form 10-Q.
iii


Part I - Financial Information
Item 1. Condensed Financial Statements
1


Expensify, Inc.
Condensed Consolidated Balance Sheets
(unaudited, in thousands, except share and per share data)
As of March 31,As of December 31,
20222021
Assets
Cash and cash equivalents$101,101 $98,398 
Accounts receivable, net16,022 15,713 
Settlement assets34,313 21,880 
Prepaid expenses7,060 7,436 
Related party loan receivable, current 14 
Other current assets15,746 14,201 
Total current assets174,242 157,642 
Capitalized software, net6,158 6,359 
Property and equipment, net15,584 15,930 
Lease right-of-use assets1,832 2,202 
Deferred tax assets, net370 370 
Other assets628 710 
Total assets$198,814 $183,213 
Liabilities and stockholders' equity
Accounts payable$1,437 $3,752 
Accrued expenses and other liabilities8,411 11,046 
Borrowings under line of credit15,000 15,000 
Current portion of long-term debt, net of issuance costs547 549 
Lease liabilities, current1,559 1,549 
Settlement liabilities34,113 21,680 
Total current liabilities61,067 53,576 
Lease liabilities, non-current405 802 
Other liabilities1,028 153 
Long-term debt, net of issuance costs51,847 52,067 
Total liabilities114,347 106,598 
Commitments and contingencies (Note 4)
Stockholders' equity:
Common stock, par value $0.0001; 1,000,000,000 shares of Class A common stock authorized as of March 31, 2022 and December 31, 2021; 68,050,193 and 67,844,060 shares of Class A common stock issued and outstanding as of March 31, 2022 and December 31, 2021, respectively; 25,000,000 shares of LT10 common stock authorized as of March 31, 2022 and December 31, 2021; 7,332,640 shares of LT10 common stock issued and outstanding as of March 31, 2022 and December 31, 2021; 25,000,000 shares of LT50 common stock authorized as of March 31, 2022 and December 31, 2021; 6,224,160 shares of LT50 common stock issued and outstanding as of March 31, 2022 and December 31, 2021
6 6 
Additional paid-in capital157,743 142,515 
Accumulated deficit(73,282)(65,906)
Total stockholders' equity84,467 76,615 
Total liabilities and stockholders' equity$198,814 $183,213 
See accompanying notes to condensed consolidated financial statements.
2


Expensify, Inc.
Condensed Consolidated Statements of Income
(unaudited, in thousands, except share and per share data)
Three months ended March 31,
20222021
Revenue$40,370 $29,720 
Cost of revenue, net14,133 7,637 
Gross margin26,237 22,083 
Operating expenses:
Research and development3,701 1,097 
General and administrative14,006 6,367 
Sales and marketing13,372 3,077 
Total operating expenses31,079 10,541 
(Loss) income from operations(4,842)11,542 
Interest and other expenses, net(902)(737)
(Loss) income before income taxes(5,744)10,805 
Provision for income taxes(1,632)(2,762)
Net (loss) income$(7,376)$8,043 
Less: income allocated to participating securities (5,547)
Net (loss) income attributable to Class A, LT10 and LT50 common stockholders$(7,376)$2,496 
Net (loss) income per share attributable to Class A, LT10 and LT50 common stockholders:
Basic$(0.09)$0.08 
Diluted$(0.09)$0.06 
Weighted-average shares of common stock used to compute net (loss) income per share attributable to Class A, LT10 and LT50 common stockholders:
Basic80,147,208 29,522,409 
Diluted80,147,208 40,576,339 
See accompanying notes to condensed consolidated financial statements.
3


Expensify, Inc.
Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)
Three Months Ended March 31
(unaudited, in thousands, except share and per share data)

Convertible preferred stockCommon stockAdditional paid-in capitalAccumulated deficitTotal stockholders'
equity (deficit)
SharesAmountSharesAmount
Three months ended March 31, 2022
Balance at December 31, 2021— $— 81,400,860 $6 $142,515 $(65,906)$76,615 
Issuance of common stock upon exercise of stock options— — 205,730 — 252 — 252 
Vesting of early exercised stock options— — — — 295 — 295 
Issuance of restricted stock units— — 2,733 — 18 — 18 
Repurchases of early exercised stock options— — (2,330)— (4)— (4)
Stock-based compensation— — — — 14,667 — 14,667 
Net loss— — — — — (7,376)(7,376)
Balance at March 31, 2022— $— 81,606,993 $6 $157,743 $(73,282)$84,467 
Three months ended March 31, 2021
Balance at December 31, 20204,203,139 $45,105 29,366,940 $ $21,312 $(52,348)$(31,036)
Issuance of common stock upon exercise of stock options— — 273,580 — 125 — 125 
Stock-based compensation— — — — 710 — 710 
Net income— — — — — 8,043 8,043 
Balance at March 31, 20214,203,139 $45,105 29,640,520 $ $22,147 $(44,305)$(22,158)
See accompanying notes to condensed consolidated financial statements.
4

Table of Contents
Expensify, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited, in thousands)
Three months ended March 31,
20222021
Cash flows from operating activities:
Net (loss) income$(7,376)$8,043 
Adjustments to reconcile net (loss) income to net cash provided (used) by operating activities:
Depreciation and amortization1,167 1,170 
Reduction of operating lease right-of-use assets185 181 
Loss on impairment, receivables and sale or disposal of equipment231 56 
Stock-based compensation14,667 710 
Amortization of debt issuance costs10 8 
Changes in assets and liabilities:
Accounts receivable(482)(1,601)
Related party loan receivables14  
Settlement assets(5,689)464 
Prepaid expenses377 (1,642)
Other current assets(224)318 
Other assets80 9 
Accounts payable(2,316)236 
Accrued expenses and other liabilities(2,635)2,821 
Operating lease liabilities(6)(200)
Settlement liabilities12,433 (980)
Other liabilities787 316 
Net cash provided by operating activities11,223 9,909 
Cash flows from investing activities:
Purchase of property and equipment(179)(284)
Software development costs(494)(669)
Net cash used by investing activities(673)(953)
Cash flows from financing activities:
Principal payments of finance leases(197)(192)
Principal payments of term loan(146)(616)
Payments of deferred offering costs (400)
Vesting of early exercised stock options295  
Issuance of restricted stock units18  
Repurchases of early exercised stock options(4) 
Proceeds from issuance of common stock on exercise of stock options252 125 
Net cash provided by financing activities218 (1,083)
Net increase in cash and cash equivalents10,768 7,873 
Cash and cash equivalents and restricted cash, beginning of period125,315 46,878 
Cash and cash equivalents and restricted cash, end of period$136,083 $54,751 
Supplemental disclosure of cash flow information:
Cash paid for interest$267 $723 
Cash paid for income taxes$284 $263 
Noncash investing and financing items:
Accrued deferred offering costs$ $531 
Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets
Cash and cash equivalents$101,101 $41,926 
Restricted cash included in other current assets9,973 2,818 
Restricted cash included in other assets46 48 
Restricted cash included in settlement assets24,963 9,959 
Total cash, cash equivalents and restricted cash$136,083 $54,751 
See accompanying notes to condensed consolidated financial statements.
5

Table of Contents
Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)



NOTE 1 – GENERAL INFORMATION
Description of Business
Expensify, Inc. ("Expensify"), was incorporated in Delaware on April 29, 2009. Expensify offers a comprehensive expense management platform that integrates with a variety of third-party accounting applications, including QuickBooks Desktop, QuickBooks Online, Xero, NetSuite, Intacct, Sage, Microsoft Dynamics, MYOB and others. Expensify's product simplifies the way that employees and vendors manage and submit expense receipts and bills and provides efficiencies to companies for the payment of those bills. Expensify delivers its services over the internet to corporations and individuals under a license arrangement and offers unique pricing options for small and midsized businesses ("SMB") and enterprises on a per-active-member basis. Expensify's customers are worldwide but primarily in the United States ("U.S.").
Expensify also offers an Expensify credit card (the "Expensify Card"), which is primarily distributed to large corporate customers in the U.S. that subsequently distribute the card to their employees for business use. The Expensify Card allows customers to have real-time control over their employees' spending and compliance with spending limits in addition to eReceipt reporting on purchases made.
Basis of Presentation and Principles of Consolidation
The accompanying unaudited consolidated financial statements, include the accounts of Expensify and its wholly-owned subsidiaries (the "Company"), and have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"), and the applicable rules and regulations of the Securities and Exchange Commission (the "SEC") for interim reporting in conformity with the instructions to Form 10-Q and Article 10 of Regulation S-X. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with U.S. GAAP. Management believes the disclosures contained herein are adequate to make the information presented not misleading. However, these condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Annual Report").
All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, the accompanying condensed consolidated financial statements reflect all normal and recurring adjustments that are necessary to present fairly our financial position, results of operations, changes in convertible preferred stock and stockholders’ equity (deficit), and cash flows for the interim periods presented.
The consolidated statements of income for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any other future annual or interim period.
On October 27, 2021, the Company effected a ten-for-one stock split of its common stock. All share and per share information has been retroactively adjusted to reflect the stock split for all prior interim periods presented.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and judgments are based on historical experience, forecasted events and various other assumptions that the Company believes to be reasonable under
6

Table of Contents
Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
the circumstances. Estimates and judgments may differ under different assumptions or conditions. Estimates and judgments are evaluated on an ongoing basis. Actual results could differ from those estimates. Changes in estimates are recorded in the period in which they become known.
Significant estimates and assumptions by management affect the Company’s revenues, fair value of common stock, classification of employee and employee-related expenses, the useful lives and recoverability of long-lived assets, income taxes, capitalization of internal-use software costs, incremental borrowing rates for finance and operating lease right-of-use assets and finance and operating lease liabilities, and stock-based compensation.
Updates to Significant Accounting Policies
The Company’s significant accounting policies are discussed in “Consolidated Financial Statements — Note 2 - Summary of Significant Accounting Policies” in the 2021 Annual Report. There have been no significant changes to these policies during the three months ended March 31, 2022.
Restricted Cash
Restricted cash includes amounts deposited with a Commercial Bank required as collateral for corporate credit cards issued by the respective Commercial Bank in the U.S. and UK, cash in transit for funds held for customers to the Company's Payment Processor, Expensify Card collateral for funds held for customers, cash held by Expensify.org for social justice and equity efforts of Expensify.org, cash held on behalf of service providers to be used towards service provider share purchases at the end of the Matching Plan (as defined below) offering period, and settlement assets for funds held for customers that are deposited into a Commercial Bank account held by the Company for the benefit of the customers until remitted to the customer's members.
Recent Accounting Pronouncements Adopted
There have been no changes to the recent accounting pronouncements adopted during the three months ended March 31, 2022 as discussed in “Consolidated Financial Statements — Note 2 - Summary of Significant Accounting Policies” in the 2021 Annual Report.
Recent Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments ("Topic 326"), which requires an impairment model (known as the current expected credit loss or "CECL Model") that is based on expected rather than incurred losses, with an anticipated result of more timely loss recognition. The CECL Model requires measurement of expected credit losses not only based on historical experience and current conditions, but also by including reasonable and supportable forecasts incorporating forward-looking information. The Company is in the process of determining key accounting interpretations, data requirements and necessary changes to our credit loss estimation methods, processes and systems. This guidance is effective for the Company for annual reporting periods beginning after December 15, 2022 and interim periods therein. The Company is currently evaluating the impact of adoption of ASU No. 2016-13 on its consolidated financial statements and related disclosures.
7

Table of Contents
Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)


NOTE 2 - REVENUE AND CERTAIN INCOME STATEMENT COMPONENTS
Our revenues by geographic region, based on user address, were as follows (in thousands):
Three months ended March 31,
20222021
Revenue by customers' geographic locations
United States$36,518 $26,440 
All other locations3,852 3,280 
Total revenue$40,370 $29,720 
No individual customer represents more than 10% of the Company’s total revenue for the three months ended March 31, 2022 and 2021, respectively.
Cashback Rewards
The Company offers a cashback rewards program to all customers based on volume of Expensify card transactions and SaaS subscription tier. Cashback rewards are earned on a monthly basis and paid out the following month. The Company considers their cashback payments to customers as consideration payable to a customer under the scope of ASC 606 and it is therefore recorded as contra revenue within Revenue on the consolidated statements of income.
The table below provides the cashback rewards recorded as contra revenue for the three months ended March 31, 2022 and 2021 (in thousands):
Three months ended March 31,
20222021
Cashback rewards $505 $ 
Consideration From a Vendor, net
The Company receives consideration from a vendor for monetizing Expensify Card activities. This consideration, net of credit card processing fees paid to the vendor, is included as a reduction to cost of revenue within the consolidated statements of income.
The table below provides the consideration from a vendor, net of credit card processing fees paid to the vendor, for the three months ended March 31, 2022 and 2021 (in thousands):
Three months ended March 31,
20222021
Consideration from a vendor, net$1,123 $456 
8

Table of Contents
Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
NOTE 3 - CERTAIN BALANCE SHEET COMPONENTS
Capitalized Software
Capitalized software, net consisted of the following (in thousands):
As of March 31,
As of December 31,
20222021
Capitalized software development costs$11,423 $10,966 
Less: accumulated amortization (5,265)(4,607)
$6,158 $6,359 
Amortization expense related to capitalized software development costs is recorded in Cost of revenue, net on the consolidated statements of income. The table below provides the amortization expense related to capitalized software development costs for the three months ended March 31, 2022 and 2021 (in thousands):
Three months ended March 31,
20222021
Amortization expense for capitalized software$658 $376 
Property and Equipment, net
Property and equipment, net consisted of the following (in thousands):
As of March 31,
As of December 31,
20222021
Computers and equipment$291 $311 
Furniture and fixtures1,374 1,462 
Leasehold improvements6,960 7,106 
Commercial building6,493 6,493 
Land4,151 4,151 
Construction in progress2,535 2,391 
21,804 21,914 
Less: accumulated depreciation(6,220)(5,984)
$15,584 $15,930 
Depreciation expense related to Property and equipment is recorded in General and administrative on the consolidated statements of income.
The table below provides the depreciation expense related to Property and equipment for the three months ended March 31, 2022 and 2021 (in thousands):
Three months ended March 31,
20222021
Depreciation expense$509 $597 

9

Table of Contents
Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)


Other Current Assets
Other current assets consisted of the following (in thousands):
As of March 31,
As of December 31,
20222021
Expensify.org restricted cash$3,997 $3,078 
Expensify Card posted collateral for funds held for customers4,323 5,115 
Cash in transit for funds held for customers1,345 388 
Contract assets 8 
Expensify Payments LLC restricted cash56 55 
Income tax receivable5,544 5,412 
Matching plan escrow
235  
Other246 145 
$15,746 $14,201 
Accrued expenses and other liabilities
Accrued expenses and other liabilities consisted of the following (in thousands):
As of March 31,
As of December 31,
20222021
Accrued expense reports$172 $246 
Partner payouts and advertising fees438 574 
Hosting and license fees98 36 
Credit card processing fees87 56 
Professional and other fees2,208 1,274 
Sales, payroll and other taxes payable1,819 4,936 
Cashback rewards211 239 
Interest payable771 783 
Restricted common stock liability for early stock option exercises2,231 2,443 
Matching plan payroll liability
235  
Other141 459 
$8,411 $11,046 
NOTE 4 - COMMITMENTS AND CONTINGENCIES
Finance and Operating Lease Arrangements
During three months ended March 31, 2022 and 2021, respectively, the Company did not enter into any additional operating lease agreements or finance lease agreements to finance the acquisition of new property and equipment.
10

Table of Contents
Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
The components of lease cost were as follows (in thousands):
Three months ended March 31,
20222021
Finance lease cost:
Amortization of ROU assets $198 $198 
Interest on lease liabilities7 12 
Total finance lease cost205 210 
Operating lease cost185 285 
Total lease cost$390 $495 
Other information related to leases is as follows (in thousands):
As of March 31,
As of December 31,
20222021
Finance lease ROU asset (included within Lease right-of-use assets)$1,053 $1,251 
Operating lease ROU asset (included within Lease right-of-use assets)$779 $951 
Weighted-average remaining lease term (in years):
Finance leases1.331.58
Operating leases1.171.40
Weighted-average discount rate:
Finance leases2.5 %2.5 %
Operating leases5.3 %5.3 %

Three months ended March 31,
20222021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$(192)$(224)
Operating cash flows from finance leases(7)(12)
Financing cash flows from finance leases(197)(192)
11

Table of Contents
Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)


Maturities of lease liabilities as of March 31, 2022 were as follows (in thousands):
Finance leasesOperating leases
For the year ending:
Remainder of 2022$619 $604 
2023
476 333 
2024
  
2025
  
2026  
Thereafter  
Total lease payments1,095 937 
Less: imputed interest(26)(42)
Less: lease liabilities, current(798)(761)
Lease liabilities, non-current$271 $134 
Financing Arrangements
Amortizing Term Mortgage
Under the amortizing term mortgage agreement with CIBC for the Company's commercial building in Portland, Oregon, the Company borrowed $8.3 million in August 2019, which requires interest and principal payments be made each month over a 30-year period. Interest accrues at a fixed rate of 5% per year until August 2024, at which point the interest rate changes to the Wall Street Journal Prime Rate minus 0.25% for the remaining term of the mortgage. The borrowings are secured by the building. As of March 31, 2022 and December 31, 2021, the outstanding balance of the amortizing term mortgage was $7.9 million and $8.0 million, respectively.
2021 Amended Term Loan
In September 2021, the Company amended and restated its loan and security agreement with CIBC (the "2021 Amended Term Loan") to refinance the existing non-amortizing and amortizing term loans, establish a single term loan of up to $75.0 million, consisting of a $45.0 million initial term loan effective immediately with an option at a later date to enter into an additional $30.0 million delayed term loan, and increase the monthly revolving line of credit to $25.0 million. Approximately $23.5 million of the loan proceeds were used to immediately repay the remaining balances under the amortizing and non-amortizing term loans at the time of the amendment and restatement in September 2021 as well as the commitment fees and any other debt issuance costs associated with the amended agreement. The remaining proceeds from the initial term loan went towards the Company's normal business operations.
Under the 2021 Amended Term Loan with CIBC, the initial term loan of $45.0 million entered into by the Company in September 2021 is payable over a 60 month period with principal and accrued interest payments due each quarter thereafter, which commences with the first payment due on September 30, 2021. Quarterly principal payments are fixed and began with quarterly payments of $0.1 million commencing on September 30, 2021 with increases to $0.2 million beginning October 1, 2024 and $0.6 million beginning October 1, 2025 with any remaining principal balance becoming due and payable at the end of the term loan in September 2026. The amounts borrowed are payable with interest at the bank’s reference rate plus 2.25% (5.75% as of March 31, 2022) beginning on September 30, 2021 and continuing on a quarterly basis through the end of the term loan. The borrowings are secured by substantially all the Company’s assets. As of March 31, 2022 and December 31, 2021, the outstanding balance of the 2021 Amended Term Loan was $44.8 million and $44.9 million, respectively.
12

Table of Contents
Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
Monthly Revolving Line of Credit
The line of credit agreement with CIBC, as amended with the 2021 amended term loan entered into by the Company in September 2021, provides borrowings up to $25.0 million. Borrowings under the line bear interest at the bank’s reference rate plus 1.00% (4.50% as of March 31, 2022) and are secured by substantially all of the Company’s assets. As of March 31, 2022 and December 31, 2021, the line of credit balance remained at $15.0 million with $10.0 million of capacity available for borrowings under the line of credit.
For the three months ended March 31, 2022 and 2021, respectively, the Company incurred an immaterial amount of costs related to the amortizing term mortgage and term loan agreements. These debt issuance costs are reflected as a reduction of the carrying amount of the long-term debt and are being amortized to interest expense over the term of the agreements. As of March 31, 2022 and December 31, 2021, the unamortized debt issuance costs remaining are $0.3 million and $0.2 million, respectively.
Future aggregate annual principal payments on all long-term debt are as follows for the next five years:
As of March 31, 2022(in thousands)
Remainder of 2022$15,441 
2023595 
2024715 
20251,397 
2026 and thereafter
49,546 
67,694 
Less: discount for issuance costs(300)
67,394 
Less: line of credit(15,000)
Less: current portion, net of issuance costs(547)
Total long-term debt, net of issuance costs$51,847 
As of March 31, 2022, the Company was in compliance with all debt covenants.
Defined Contribution Plans
401(k) plan
In fiscal 2009, the Company sponsored a U.S. 401(k) defined contribution plan covering eligible employees who elect to participate. The Company is allowed to make discretionary profit sharing and 401(k) matching contributions as defined in the plan and as approved by the Board of Directors. Effective January 1, 2018, the Company matches up to 4.5% of each eligible participant’s 401(k) contribution. The Company’s actual contribution may be reduced by certain available forfeitures, if any, during the plan year. No discretionary profit-sharing contributions were made during the three months ended March 31, 2022 and 2021. The Company’s 401(k) matching contributions for the three months ended March 31, 2022 and March 31, 2021 was $0.2 million.
From time to time in the normal course of business, the Company may be involved in claims, proceedings and litigation. In the case of any litigation, the Company records a provision for a liability when management believes that it is both probable that a liability has been incurred, and the amount of the loss can be reasonably estimated. The Company reviews these provisions at least quarterly and
13

Table of Contents
Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)


adjusts these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case.
As of March 31, 2022, there were no legal contingency matters, either individually or in aggregate, that would have a material adverse effect on the Company’s financial position, results of operations, or cash flows.
NOTE 5 - STOCK INCENTIVE PLANS
2009 and 2019 Stock Plans
In 2009, the Company’s Board of Directors approved the Company's 2009 Stock Plan (the "2009 Stock Plan"). As amended in 2015, the 2009 Stock Plan permitted the Company to grant awards covering up to 16,495,150 shares of the Company’s common stock. In January 2018, the Company increased the number of shares of common stock reserved under the 2009 Stock Plan by 535,130 shares, from 16,495,150 shares to 17,030,280. In April 2019, the Company approved the adoption of the 2019 Stock Plan (the "2019 Stock Plan", and together with the 2009 Stock Plan, the "Stock Plans"). The 2019 Stock Plan permitted the Company to grant up to 8,173,970 additional shares, increasing the overall common stock reserved for grant under the Stock Plans 25,204,250 shares. In September 2021, under the 2019 Stock Plan, the Company's Board of Directors approved the grant of 8,679,380 restricted stock units under the 2019 Stock Plan, which covered of an aggregate of 4,339,690 shares of each of Class A and LT50 common stock effective as of immediately prior to the effectiveness of the Company's IPO Registration Statement on November 9, 2021. On November 9, 2021, the Company's Board of Directors amended and restated the 2019 Stock Plan to, among other things, increased the common stock reserved for issuance under the 2019 Stock Plan to an aggregate of 16,856,770 shares of the Company's LT50 and Class A common stock.
Following the completion of the IPO, the Company did not and will not make any further grants under the Stock Plans. However, the Stock Plans will continue to govern the terms and conditions of the outstanding awards granted under the Stock Plans. Upon the expiration, forfeiture, cancellation, withholding of shares upon exercise or settlement of an award to satisfy the exercise price or tax withholding, or repurchase of any shares of Class A common stock underlying outstanding stock-based awards granted under the 2009 Stock Plan or of Class A or LT50 common stock underlying outstanding stock-based awards granted under the 2019 Stock Plan, an equal number of shares of Class A common stock will become available for grant under the Company's 2021 Incentive Award Plan (the "2021 Plan") and the Company's 2021 Stock Purchase and Matching Plan ("Matching Plan" and together with the 2021 Plan, the "2021 Incentive Plans"), each of which was adopted by the Company immediately before the effectiveness of the IPO Registration Statement.
2021 Incentive Plans
In November 2021, the Company’s Board of Directors adopted, and its stockholders approved, the 2021 Incentive Plans, which both became effective immediately before the effectiveness of the IPO Registration Statement and use a combined share reserve. Under the 2021 Incentive Plans, 11,676,932 shares of the Company's Class A common stock are reserved for issuance pursuant to a variety of stock-based awards, including incentive stock options, nonqualified stock options, stock appreciation rights ("SARs"), restricted stock awards, RSUs, and other forms of equity and cash compensation under the 2021 Plan and purchase rights and matching awards under the Matching Plan. The number of shares initially reserved for issuance or transfer pursuant to awards under the 2021 Incentive Plans was increased by 776,600 shares that were available for issuance under the Stock Plans as of the effective date of the 2021 Incentive Plans and will be increased upon the expiration, forfeiture, cancellation, withholding of shares upon exercise or settlement of an award to satisfy the exercise price or tax withholding, or repurchase of any shares of Class A common stock underlying outstanding stock-based awards granted under the 2009 Stock Plan or of Class A or LT50 common stock underlying outstanding
14

Table of Contents
Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
stock-based awards granted under the 2019 Stock Plan. The number of shares of Class A common stock reserved for issuance under the 2021 Incentive Plans increased by 747,212 shares on January 1, 2022 and will automatically increase each subsequent January 1 through January 1, 2031, by the lesser of (A) 6% of the aggregate number of shares of all classes of the Company's common stock outstanding on the immediately preceding calendar year, or (B) such lesser number of shares as determined by the Company’s board of directors or compensation committee; provided, however, that no more than 87,576,990 shares of stock may be issued upon the exercise of incentive stock options.
Matching Plan
The Matching Plan operates using consecutive 3 month offering periods that commenced on March 15, 2022. Service providers of the Company, including employees and consultants, can participate in the Matching Plan by electing to contribute compensation through payroll deductions or from fee payments or may be granted discretionary awards under the Matching Plan. On the last day of the offering period the contributions made during the offering period are used to purchase shares of Class A common stock.
The price at which Class A common stock is purchased under the Matching Plan equals the average of the high and low trading price of a share of the Company’s Class A common stock as of the last trading day of the offering period. At the end of each offering period, the Company may provide a discretionary match up to 1/10 of a share of the Company's Class A common stock for each share of Class A common stock purchased by or issued to an employee under the Matching Plan that is retained through the end of the applicable offering period. For the current offering period, the Company has elected to match each share of Class A common stock purchased by or issued to an employee under the Matching Plan that is retained through June 14, 2022 with 1/20 of a share of Class A common stock. No fractional shares will be issued by the Company. The Company will round to the nearest full share for shares purchased by an employee as well as any matched shares issued to an employee under the Matching Plan. The match rate applicable to each offering period shall be limited to 1.5% of the shares of any class of Company capital stock outstanding as of the exercise date applicable to such offering period.
The Company estimates the fair value of matched shares provided by the Company under the Matching Plan using the Black-Scholes option-pricing model on the date of grant. The Company recognizes stock-based compensation expense related to the matched shares provided by the Company pursuant to its Matching Plan on a straight-line basis over the applicable 3-month offering period. As of March 31, 2022, no Class A common stock has been issued or purchased by service providers under the Matching Plan. During the three months ended March 31, 2022, the Company granted an estimated total of 4,365 Class A common shares, which will be provided to all service providers participating in the Matching Plan at the end of the current offering period on June 14, 2022.
Restricted Stock Units
On September 24, 2021, the Company approved the grant of RSUs to service providers covering Class A common stock and LT50 common stock effective as of the date the Company amended its certificate of incorporation to include, among other things, LT50 common stock, which was November 9, 2021. RSUs granted to employees in September 2021 vest upon the satisfaction of both a performance and service condition. The performance condition was satisfied immediately prior to the effectiveness of the IPO Registration Statement on November 9, 2021. The RSUs approved on September 24, 2021 vest over eight years with 1/8 of the grant vesting on September 15, 2022 and quarterly vesting of 1/32 of the grant every December 15, March 15, June 15 and September 15 (each, a "Specified Quarterly Date") thereafter until fully vested, in each case subject to continued service to the Company. All RSUs granted to employees during and after November 2021 have a service condition only, which vests over 8 years from a vesting commencement date corresponding to one of the Specified Quarterly Dates near the date of grant, with 1/8 of each grant vesting on the first anniversary of the vesting commencement
15

Table of Contents
Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)


date and 1/32 of each grant vesting in equal quarterly installments thereafter until fully vested, in each case, subject to continued service to the Company.
During the three months ended March 31, 2022, the Company granted certain service providers a total of 43,060 RSUs, covering shares of Class A common stock, at a grant date fair value of $18.93 per share. These RSUs vest as described above. The Company had 2,316 RSUs covering shares of Class A common stock vest during the three months ended March 31, 2022 related to previously granted RSU awards to Non-Employee Directors as the quarterly service conditions were satisfied. There were no RSUs granted during the three months ended March 31, 2021.
During the three months ended March 31, 2022, RSU activity was as follows:
Class A Common Stock(1)
LT50 Common Stock(1)
Weighted average grant date fair value per share
Outstanding at December 31, 20214,329,530 4,301,750 $33.75 
RSUs granted43,060  $18.93 
RSUs vested(2,316) $47.62 
RSUs cancelled/forfeited/expired(88,020)(88,020)$33.14 
Outstanding at March 31, 20224,282,254 4,213,730 $33.92 
(1)On November 9, 2021, immediately prior to the effectiveness of the Company’s IPO Registration Statement, the Company’s certificate of incorporation was amended to provide for, among other things, LT50 common stock.
As of March 31, 2022, there was $263.3 million of unamortized stock-based compensation cost related to unvested RSUs, which is expected to be recognized over the remaining weighted average life of 6.81 years. As of December 31, 2021, there was $282.0 million of unamortized stock-based compensation cost related to unvested RSUs, which is expected to be recognized over the remaining weighted average life of 6.92 years.
Stock Options
Both Stock Plans, as well as the 2021 Plan, provide for the grant of incentive and nonstatutory stock options to employees, nonemployee directors and consultants of the Company. Under the Stock Plans and the 2021 Plan, the exercise price of incentive stock options must be at least equal to 110% of the fair market value of the common stock on the grant date for a “ten-percent holder” or 100% of the fair market value of the common stock on the grant date for any other employee. The exercise price of nonstatutory options granted must be at least equal to 100% of the fair market value of the Company’s common stock on the date of grant.
The Company has only granted options under the Stock Plans. Under both Stock Plans, most options typically vest over four years and are exercisable at any time after the grant date, provided that service providers exercising unvested options receive restricted common stock that is subject to repurchase at the original exercise price upon a termination of service. The repurchase right lapses in accordance with the vesting schedule of the exercised option. Early exercises of options prior to vesting are not deemed to be substantive exercises for accounting purposes and accordingly, amounts received for early exercises of unvested options are recorded as a liability. These repurchase terms are considered to be a forfeiture provision and do not result in variable accounting. During the three months ended March 31, 2022, the Company repurchased an immaterial amount of exercised restricted common stock. There were no repurchases of common stock during the three months ended March 31, 2021.
As of March 31, 2022 and December 31, 2021, there were 1,282,740 and 1,437,760 shares, respectively, subject to repurchase related to stock options exercised prior to vesting that are expected to vest. As
16

Table of Contents
Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
of March 31, 2022 and December 31, 2021, the Company recorded a liability related to these shares subject to repurchase in the amount of $2.2 million and $2.4 million, respectively, which is included within Accrued expenses and other liabilities in the accompanying consolidated balance sheets. These amounts are reclassified to common stock and additional paid in capital as the underlying shares vest.
A summary of the Company's stock option activity was as follows:
SharesWeighted average exercise price per shareWeighted average
remaining contractual life
(in years)
Outstanding at December 31, 2021
7,193,193 $1.87 6.45
Options granted $ 
Options exercised (205,730)$1.60 
Options cancelled/forfeited/expired(184,391)$1.73 
Outstanding at March 31, 20226,803,072 $1.85 6.04
Exercisable at March 31, 20226,564,742 $1.06 6.29

The total pretax intrinsic value of options exercised during the three months ended March 31, 2022 and 2021 was $5.2 million and $2.0 million, respectively. The total pretax intrinsic value of options outstanding at March 31, 2022 and December 31, 2021 was $106.7 million and $302.8 million, respectively. The intrinsic value is the difference between the estimated fair market value of the Company’s common stock at the date of exercise and the exercise price for in-the-money options. No options were granted during the three months ended March 31, 2022. The weighted average grant date fair value of options granted during the three months ended March 31, 2021 was $8.60.
As of March 31, 2022, there was $11.8 million of unrecognized stock-based compensation cost related to unvested stock options, which is expected to be recognized over a weighted average period of 1.57 years. As of December 31, 2021, there was $13.2 million of unrecognized stock-based compensation cost related to unvested stock options, which is expected to be recognized over a weighted average period of 1.7 years.
Cash received from option exercises and purchases of shares under the Stock Plans for the three months ended March 31, 2022 and 2021 was $0.3 million and $0.1 million, respectively.
Stock-Based Compensation
The following table summarizes the stock-based compensation expense recognized for the options granted under the 2009 Stock Plan, options and RSUs granted under the 2019 Stock Plan, RSUs granted under the 2021 Plan and matching shares issued under the Matching Plan, in each case, as plans discussed above (in thousands):
Three months ended March 31,
20222021
Stock options$1,006 $710 
Matching shares2  
Restricted stock units13,659  
Total$14,667 $710 
17

Table of Contents
Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)


Stock-based compensation expense is allocated based on the cost center to which the award holder spent time during the reported periods. Stock-based compensation is included in the following components of expenses on the accompanying consolidated statements of income (in thousands):
Three months ended March 31,
20222021
Cost of revenue, net$4,908 $188 
Research and development2,708 154 
General and administrative4,975 304 
Sales and marketing2,076 64 
Total$14,667 $710 
Stock-based compensation expense capitalized as internally developed software costs was $0.3 million for the three months ended March 31, 2022. These amounts were immaterial for the three months ended March 31, 2021.
NOTE 6 - INCOME TAXES
The components of the Company’s provision for income taxes are as follows (in thousands):
Three months ended March 31,
20222021
Current income tax benefit (expense):
Federal$(1,092)$(2,175)
State(184)(555)
Foreign(356)(32)
Total provision for income taxes$(1,632)$(2,762)
For the three months ended March 31, 2022, the Company prepared its interim tax provision by applying a year-to-date effective tax rate. For the three months ended March 31, 2021, the Company prepared its interim tax provision by applying an annual effective tax rate. Use of the actual year-to-date effective tax rate commenced during the three months ended September 30, 2021 and the Company believes that continuing to use the actual year-to-date effective tax rate going forward results in the best estimate of the annual effective tax rate.
18

Table of Contents
Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
The effective income tax rate differs from the statutory rate during the three months ended March 31, 2022 primarily due to the change in valuation allowance.
Three months ended March 31,
20222021
Statutory rate21.0 %21.0 %
State tax4.9 %3.8 %
Research and development (R&D) credit0.6 %(0.5)%
Rate differentials for controlled foreign corporations (CFCs) and charitable organizations(1.8)%(0.2)%
Permanent items and others(0.3)% %
Change in valuation allowance(53.4)% %
Stock-based compensation - federal0.6 %1.5 %
Total(28.4)%25.6 %

The Company follows the provisions of ASC Subtopic 740-10, Accounting for Uncertainty in Income Taxes. ASC 740-10 prescribes a comprehensive model for the recognition, measurement, presentation and disclosure in financial statements of uncertain tax positions that have been taken or expected to be taken on a tax return. As of March 31, 2022 and December 31, 2021, the Company recorded an uncertain tax position liability, exclusive of interest and penalties, of $1.0 million and $0.2 million respectively, within Other liabilities on the consolidated balance sheets.
The Company is subject to income taxes in U.S. federal and various state, local and foreign jurisdictions. The tax years ended from December 2012 to December 2020 remain open to examination due to the carryover of unused net operating losses or tax credits.
19

Table of Contents
Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)


NOTE 7 - NET (LOSS) INCOME PER SHARE
The computation of net (loss) income per share attributable to common stockholders is as follows (in thousands, except share and per share data):
Three months ended March 31,
20222021
Basic net (loss) income per share:
Numerator
Net (loss) income$(7,376)$8,043 
Less: income allocated to participating securities (5,547)
Net (loss) income attributable to Class A, LT10 and LT50 common stockholders, basic and diluted$(7,376)$2,496 
Denominator
Weighted-average shares of common stock used to compute net (loss) income per share attributable to common stockholders, basic80,147,208 29,522,409 
Net (loss) income per share attributable to Class A, LT10 and LT50 common stockholders, basic$(0.09)$0.08 
Diluted net (loss) income per share:
Numerator
Net (loss) income$(7,376)$8,043 
Less: income allocated to participating securities (5,547)
Net (loss) income attributable to Class A, LT10 and LT50 common stockholders, diluted$(7,376)$2,496 
Denominator
Effect of dilutive securities:
Warrants 419,250 
Stock options 10,634,680 
Weighted-average shares of common stock used to compute net (loss) income per share attributable to common stockholders, diluted80,147,208 40,576,339 
Net (loss) income per share attributable to Class A, LT10 and LT50 common stockholders, diluted$(0.09)$0.06 
The rights, including the liquidation and dividend rights, of the holders of Class A, LT10 and LT50 common stock are identical, except with respect to voting, conversion and transfer rights. Each share of Class A common stock is entitled to one vote per share, each share of LT10 common stock is entitled to 10 votes per share and each share of LT50 common stock is entitled to 50 votes per share. Each share of LT10 and LT50 common stock is convertible into one share of Class A common stock voluntarily at the option of the holder after the satisfaction of certain requirements, which includes a 10 month notice period for LT10 common stock and 50 months notice period for LT50 common stock to convert to Class A common stock, or automatically upon certain events. The Class A common stock has no conversion rights. As the liquidation and dividend rights are identical for Class A, LT10 and LT50 common stock, the undistributed earnings are allocated on a proportional basis based on the number of weighted-average shares within each class of common stock during the period and the
20

Table of Contents
Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
resulting net (loss) income per share attributable to common stockholders will be the same for the Class A, LT10, and LT50 common stock on an individual or combined basis.
The following potentially dilutive shares were not included in the calculation of diluted shares outstanding as the effect would have been anti-dilutive:
Year ended Three months ended March 31,
20222021
Weighted-average stock options6,067,912  
Matching shares39,756  
Convertible preferred stock 42,031,390 
Total6,107,668 42,031,390 
NOTE 8 - RELATED PARTY TRANSACTIONS
During the three months ended March 31, 2022, Expensify, Inc. contributed $0.9 million to its wholly-owned subsidiary, Expensify.org, a nonprofit benefit organization established by the Company. There was an immaterial amount of contributions from Expensify, Inc. to Expensify.org during the three months ended March 31, 2021. $0.3 million in commitments from Expensify, Inc. remain open for contribution as of March 31, 2022. All intercompany transactions and balances have been eliminated in consolidation.
There are no other significant related party transactions for the Company as of March 31, 2022 except as noted elsewhere in these consolidated financial statements.
21

Table of Contents

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021 (the "2021 Annual Report"). This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” in our 2021 Annual Report and in other parts of this Quarterly Report on Form 10-Q. See “Special Note Regarding Forward-Looking Statements.”
OVERVIEW
Expensify is a cloud-based expense management software platform that helps the smallest to the largest businesses simplify the way they manage money. Every day, people from all walks of life in organizations around the world use Expensify to scan and reimburse receipts from flights, hotels, coffee shops, office supplies and ride shares. Since our founding in 2008, we have added over 10 million members to our community and processed and automated over 1.2 billion expense transactions on our platform as of March 31, 2022, freeing people to spend less time managing expenses and more time doing the things they love. For the quarter ended March 31, 2022, an average of 706,000 paid members across 200 countries and territories used Expensify to make money easy.
IMPACT OF COVID-19
As a result of the COVID-19 pandemic, we temporarily closed our offices, asked our employees to work remotely and implemented travel restrictions, all of which represent a disruption in how we operate our business. The operations of our customers, the majority of which are small and medium businesses ("SMBs"), were likewise disrupted. The outsized impact of the pandemic on SMBs was evident in 2020 as an abnormal percentage of our customers stopped adding new members to our platform, ceased (or paused) operations and/or scaled back or terminated subscriptions to the Expensify platform.
Business travel, traditionally a significant driver of expenses on our platform, has been severely curtailed during the pandemic with complex regional effects as lockdowns were put in place and altered rapidly. As a result of the pull-back in travel related expenses and other expenses that were not generated in a work from home environment, many of our customers that remained on our platform had fewer employees incurring expenses on a monthly basis in 2020. After a steady increase in paid members over multiple years, the average number of paid members on our platform declined 15% from 742,000 in the quarter ended March 31, 2020 to 633,000 in the quarter ended September 30, 2020 and we have rebounded to 706,000 paid members in the quarter ended March 31, 2022. Our activity is still recovering from May 2020 as the United States and certain other parts of the world continue to rebound from COVID-19. The amount of expenses incurred by the paid members remaining on our platform has also declined as a result of the factors stated above. While activity decreased and remains at lower levels than pre-pandemic, our revenue only declined until the quarter ended June 30, 2020. This initial adverse impact on revenue was mitigated by the prevalence of our annual contracts and minimum user requirements in those contracts as well as a price change that became effective in May 2020. We introduced the Expensify Card in 2020, immediately before the pandemic. Given the decline in the volume of expenses and potential customers’ reluctance to adopt a new card in this unusual environment, growth from monetizing the transactions from the Expensify Card has taken longer than anticipated, but the rate of adoption is increasing despite the COVID headwinds.
While the full lasting impact of the COVID-19 pandemic on the global economy and SMBs in particular remains uncertain, we believe that use of our platform will increase as economies reopen and business travel resumes, which we have started to see.
22

Table of Contents

While uncertainty remains on many fronts, we are confident that the pandemic has also had a positive impact on the way we operate our business. We have fully embraced the distributed workforce and reimagined how we use our existing office space. As demand for expense management slowed during the pandemic, we invested in building our platform outside of our core expense management features, which will result in a more diversified range of use cases that is better insulated against similar shocks in the future.
See the section titled “Risk Factors” in our 2021 Annual Report for further discussion of the possible impact of the COVID-19 pandemic on our business.
Key Business Metrics and Non-GAAP Financial Measures
We review the following key metrics and non-GAAP financial measures to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. Accordingly, we believe that these key business metrics and non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management team. These key business metrics and non-GAAP financial measures are presented for supplemental informational purposes only, should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly titled metrics or measures presented by other companies.
KEY BUSINESS METRICS
Paid Members
We believe that our ability to increase the number of paid members on our platform will drive our success as a business. Companies pay for subscriptions on behalf of employees and contractors who use the platform, whom we refer to as paid members. We define paid members as the average number of users (employees, contractors, volunteers, team members, etc.) who are billed on Collect or Control plans during any particular quarter. For SMBs or sole proprietors with only one employee, the business owner may also be the only paid member.
While the full lasting impact of the COVID-19 pandemic on the global economy and SMBs in particular remains uncertain, and the resulting impact on our number of paid members, remains uncertain, there have been signs of recovery as the economy has slowly reopened. See the section titled “Impact of COVID-19” above for additional information.
The following table sets forth the average number of paid members for the three months ended March 31, 2022 and 2021, respectively.
Three months endedPaid members (in thousands)
March 31, 2022706 
March 31, 2021633 
NON-GAAP FINANCIAL MEASURES
Adjusted EBITDA and Adjusted EBITDA Margin
We define adjusted EBITDA as net income from operations excluding provision for income taxes, interest and other expenses, net, depreciation and amortization and stock-based compensation. We define adjusted EBITDA margin as adjusted EBITDA divided by total revenue for the same period. We are focused on profitable growth and we consider adjusted EBITDA to be an important measure because it helps illustrate underlying trends in our business that could otherwise be masked by the
23

Table of Contents

effect of the income or expenses that are not indicative of the core operating performance of our business.
Three months ended March 31,
20222021
(in thousands, except percentages)
Adjusted EBITDA$10,992 $13,422 
Adjusted EBITDA margin27 %45 %
Non-GAAP Net Income and Non-GAAP Net Income Margin
We define non-GAAP net income as net income from operations in accordance with US GAAP excluding stock-based compensation and bonus costs related to our initial pubic offering ("IPO"), which we consider to be the discretionary cash bonuses paid to our employees during 2021. Refer to "Part II, Item 7. Management's Discussion and Analysis of Financial Conditions and Results of Operations — Liquidity and Capital Resources” in our 2021 Annual Report for further detail over the discretionary cash bonuses paid to employees in 2021. We define non-GAAP net income margin as non-GAAP net income divided by total revenue for the same period. We are focused on profitable growth and we consider non-GAAP net income to be an important measure because it helps illustrate underlying trends in our business that could otherwise be masked by the effect of stock-based compensation and the one-time IPO-related discretionary cash bonus costs. Both expenses are not considered indicative of the core operating performance of our business. IPO-related bonus costs impacted the second, third and fourth fiscal quarters of 2021, but are not expected to impact future periods beginning with the first quarter of 2022.
Three months ended March 31,
20222021
(in thousands, except percentages)
Non-GAAP net income$7,291 $8,753 
Non-GAAP net income margin18 %29 %
Limitations and Reconciliations of Non-GAAP Financial Measures
Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as substitutes for financial information presented under GAAP. There are a number of limitations related to the use of non-GAAP financial measures versus comparable financial measures determined under GAAP. For example, other companies in our industry may calculate these non-GAAP financial measures differently or may use other measures to evaluate their performance. All of these limitations could reduce the usefulness of these non-GAAP financial measures as analytical tools. Investors are encouraged to review the related GAAP financial measures and the reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures and to not rely on any single financial measure to evaluate our business.
The following tables reconcile the most directly comparable GAAP financial measure to each of these non-GAAP financial measures.
Adjusted EBITDA and Adjusted EBITDA Margin
24

Table of Contents

Three months ended March 31,
20222021
(in thousands, except percentages)
Net (loss) income$(7,376)$8,043 
Net (loss) income margin(18)%27 %
Add:
Provision for income taxes1,632 2,762 
Interest and other expenses, net902 737 
Depreciation and amortization1,167 1,170 
Stock-based compensation14,667 710 
Adjusted EBITDA$10,992 $13,422 
Adjusted EBITDA margin27 %45 %
Non-GAAP net income and non-GAAP net income margin
Three months ended March 31,
20222021
(in thousands, except percentages)
Net (loss) income$(7,376)$8,043 
Net (loss) income margin(18)%27 %
Add:
Stock-based compensation14,667 710 
IPO-related bonus expense— — 
Non-GAAP net income$7,291 $8,753 
Non-GAAP net income margin18 %29 %
Components of Results of Operations
Revenue
We generate revenue from subscription fees based on the usage of our expense reporting cloud-based platform under arrangements paid monthly in arrears that are either month-to-month that can be terminated by either party without penalty at any time or annual arrangements based on a minimum number of monthly members. Annual subscription customers who wish to terminate their contracts before the end of the term are required to pay the remaining obligation in full plus any fees or penalties set forth in the agreement. In May 2020, we updated our terms of service whereby annual contracts became non-cancelable. We charge our customers subscription fees for access to our platform based on the number of monthly active members and level of service. The contractual price is based on either negotiated fees or rates published on our website. We generate most of our revenue from customers who have a credit card or debit card on file with us that is automatically charged each month. Virtually all of our customers have a standard terms of service contract, with the few exceptions on bespoke service contracts.
Our contracts with our customers include two performance obligations: access to the hosted software service, inclusive of all features available within the platform and related customer support. We account for the platform access and the support as a combined performance obligation because they have the same pattern of transfer over the same period and are therefore delivered concurrently. We satisfy our performance obligation over time each month as we provide platform access and support
25

Table of Contents

services to customers and as such recognize revenue over time. We recognize revenue net of applicable taxes imposed on the related transaction.
Beginning in August 2021, we offer a cashback rewards program to all customers based on volume of Expensify card transactions and SaaS subscription tier. Cashback rewards are earned on a monthly basis and paid out the following month. We consider our cashback payments to customers as consideration payable to a customer under the scope of ASC 606 and it is therefore recorded as contra revenue within Revenue on the consolidated statements of income. We also record a cashback rewards liability that represents the consideration payable to customers for earned cashback rewards. The cashback rewards liability is impacted over time by customers meeting eligibility requirements in conjunction with the SaaS subscription tier of the customer and the timing of payments to customers.
Cost of Revenue, Net
Cost of revenue, net primarily consists of expenses related to hosting the company’s service, including the costs of data center capacity, credit card processing fees, third-party software license fees, outsourcing costs to support customer service and outsourcing costs to support and process our patented scanning technology SmartScan, net of consideration from a vendor. Additional costs include amortization expense on capitalized software development costs and personnel-related expenses, including stock-based compensation and employee costs attributable to supporting our customers and maintenance of our platform.
The consideration from a vendor is related to the Expensify Card. We use a third-party vendor to issue Expensify Cards and process the related transactions. When purchases are made with the Expensify Card, a fee is charged by the card network to the merchant (also known as “Interchange”). The vendor is contractually entitled to the Interchange through its relationships with the card network and card issuing bank. The vendor keeps a portion of the Interchange for their services, and our agreement with the vendor results in us receiving the remainder of the Interchange minus the amount retained by the vendor (our remainder portion, the "Expensify Interchange Amount"). The vendor also charges us fees (the "Vendor Fees") for the services it provides to us. Due to the nature of the vendor agreement, we do not record the Expensify Interchange Amount as revenue. Instead, the net of the Expensify Interchange Amount and Vendor Fees are paid to us, and we record it as "consideration from a vendor", a contra-expense in Cost of revenue, net. The following summarizes these various amounts for the periods presented: