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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 June 30, 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 Exchange Act).
Yes o No x
The registrant had outstanding 68,252,500 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 6,225,330 shares of LT50 common stock, par value $0.0001 per share as of August 8, 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, strategies, 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 cash flows, the prevailing stock prices, general economic and market conditions and other considerations that could affect the specific timing, price and size of repurchases under our stock repurchase program or our ability to fund any stock repurchases;
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;
ii

Table of Contents
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;
general economic conditions in either domestic or international markets, including 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 June 30,
As of December 31,
20222021
Assets
Cash and cash equivalents$105,537 $98,398 
Accounts receivable, net16,270 15,713 
Settlement assets43,780 21,880 
Prepaid expenses5,430 7,436 
Related party loan receivable 14 
Other current assets20,434 14,201 
Total current assets191,451 157,642 
Capitalized software, net6,006 6,359 
Property and equipment, net15,174 15,930 
Lease right-of-use assets1,472 2,202 
Deferred tax assets, net689 370 
Other assets580 710 
Total assets$215,372 $183,213 
Liabilities and stockholders' equity
Accounts payable$2,169 $3,752 
Accrued expenses and other liabilities8,967 11,046 
Borrowings under line of credit15,000 15,000 
Current portion of long-term debt, net of original issuance discount and debt issuance costs548 549 
Lease liabilities, current1,508 1,549 
Settlement liabilities41,590 21,680 
Total current liabilities69,782 53,576 
Lease liabilities, non-current68 802 
Other liabilities1,121 153 
Long-term debt, net of original issuance discount and debt issuance costs51,710 52,067 
Total liabilities122,681 106,598 
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 June 30, 2022 and December 31, 2021; 68,209,726 and 67,844,060 shares of Class A common stock issued and outstanding as of June 30, 2022 and December 31, 2021, respectively; 24,999,330 and 25,000,000 shares of LT10 common stock authorized as of June 30, 2022 and December 31, 2021, respectively; 7,337,960 and 7,332,640 shares of LT10 common stock issued and outstanding as of June 30, 2022 and December 31, 2021, respectively; 24,999,170 and 25,000,000 shares of LT50 common stock authorized as of June 30, 2022 and December 31, 2021, respectively; 6,225,330 and 6,224,160 shares of LT50 common stock issued and outstanding as of June 30, 2022 and December 31, 2021, respectively; preferred stock, par value $0.0001; 10,000,000 shares of preferred stock authorized as of June 30, 2022 and December 31, 2021; no shares of preferred stock outstanding as of June 30, 2022 and December 31, 2021
6 6 
Additional paid-in capital173,961 142,515 
Accumulated deficit(81,276)(65,906)
Total stockholders' equity92,691 76,615 
Total liabilities and stockholders' equity$215,372 $183,213 
See accompanying notes to condensed consolidated financial statements.
2


Expensify, Inc.
Condensed Consolidated Statements of Operations
(unaudited, in thousands, except share and per share data)
Three months ended June 30,
Six months ended June 30,
2022202120222021
Revenue$43,162 $35,304 $83,532 $65,024 
Cost of revenue, net15,876 7,934 30,010 15,571 
Gross margin27,286 27,370 53,522 49,453 
Operating expenses:
Research and development3,584 4,874 7,285 5,971 
General and administrative15,432 11,127 29,438 17,494 
Sales and marketing12,244 3,870 25,616 6,947 
Total operating expenses31,260 19,871 62,339 30,412 
(Loss) income from operations(3,974)7,499 (8,817)19,041 
Interest and other expenses, net(1,955)(769)(2,856)(1,506)
(Loss) income before income taxes(5,929)6,730 (11,673)17,535 
Provision for income taxes(2,065)(99)(3,697)(2,861)
Net (loss) income$(7,994)$6,631 $(15,370)$14,674 
Less: income allocated to participating securities (4,706) (9,426)
Net (loss) income attributable to Class A, LT10 and LT50 common stockholders$(7,994)$1,925 $(15,370)$5,248 
Net (loss) income per share attributable to Class A, LT10 and LT50 common stockholders:
Basic$(0.10)$0.06 $(0.19)$0.18 
Diluted$(0.10)$0.05 $(0.19)$0.13 
Weighted-average shares of common stock used to compute net (loss) income per share attributable to Class A, LT10 and LT50 common stockholders:
Basic80,473,097 29,836,295 80,311,053 29,680,220 
Diluted80,473,097 41,341,330 80,311,053 41,216,420 
See accompanying notes to condensed consolidated financial statements.
3


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

Convertible preferred stockCommon stockAdditional paid-in capitalSubscriptions receivableAccumulated deficitTotal stockholders'
equity (deficit)
SharesAmountSharesAmount
Three months ended June 30, 2022
Balance at March 31, 2022— $— 81,606,993 $6 $157,743 $ $(73,282)$84,467 
Issuance of common stock on exercise of stock options— — 101,345 — 183 — — 183 
Vesting of early exercised stock options— — — — 456 — — 456 
Issuance of restricted stock units— — 3,896 — 28 — — 28 
Repurchases of early exercised stock options— — (10,740)— (16)— — (16)
Issuance of common stock under Matching Plan— — 71,522 — 1,188 — — 1,188 
Stock-based compensation— — — — 14,379 — — 14,379 
Net loss— — — — — — (7,994)(7,994)
Balance at June 30, 2022
— $— 81,773,016 $6 $173,961 $ $(81,276)$92,691 
Three months ended June 30, 2021
Balance at March 31, 20214,203,139 $45,105 29,640,520 $ $22,147 $ $(44,305)$(22,158)
Issuance of common stock on exercise of stock options— — 5,140,000 — 2,606 (1,760)— 846 
Stock-based compensation— — — — 888 — — 888 
Net income— — — — — — 6,631 6,631 
Balance at June 30, 2021
4,203,139 $45,105 34,780,520 $ $25,641 $(1,760)$(37,674)$(13,793)
See accompanying notes to condensed consolidated financial statements.
4


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

Convertible preferred stockCommon stockAdditional paid-in capitalSubscriptions receivableAccumulated deficitTotal stockholders'
equity (deficit)
SharesAmountSharesAmount
Six months ended June 30, 2022
Balance at December 31, 2021
— $— 81,400,860 $6 $142,515 $ $(65,906)$76,615 
Issuance of common stock on exercise of stock options— — 307,075 — 435 — — 435 
Vesting of early exercised stock options— — — — 751 — — 751 
Issuance of restricted stock units— — 6,629 — 46 — — 46 
Repurchases of early exercised stock options— — (13,070)— (20)— — (20)
Issuance of common stock under Matching Plan— — 71,522 — 1,188 — — 1,188 
Stock-based compensation— — — — 29,046 — — 29,046 
Net loss— — — — — — (15,370)(15,370)
Balance at June 30, 2022
— $— 81,773,016 $6 $173,961 $ $(81,276)$92,691 
Six months ended June 30, 2021
Balance at December 31, 2020
4,203,139 $45,105 29,366,940 $ $21,312 $ $(52,348)$(31,036)
Issuance of common stock on exercise of stock options— — 5,413,580 — 2,731 (1,760)— 971 
Stock-based compensation— — — — 1,598 — — 1,598 
Net income— — — — — — 14,674 14,674 
Balance at June 30, 2021
4,203,139 $45,105 34,780,520 $ $25,641 $(1,760)$(37,674)$(13,793)
See accompanying notes to condensed consolidated financial statements.
5

Table of Contents
Expensify, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited, in thousands)
Six months ended June 30,
20222021
Cash flows from operating activities:
Net (loss) income$(15,370)$14,674 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization2,735 2,294 
Reduction of operating lease right-of-use assets358 365 
Loss on impairment, receivables and sale or disposal of equipment475 133 
Stock-based compensation28,428 1,598 
Amortization of original issuance discount and debt issuance costs21 16 
Deferred tax assets(319) 
Changes in assets and liabilities:
Accounts receivable, net(906)(3,513)
Settlement assets(8,999)(2,996)
Prepaid expenses2,006 (1,542)
Related party loan receivable14 (291)
Other current assets1,193 855 
Other assets2 20 
Accounts payable(1,583)(1,335)
Accrued expenses and other liabilities(1,366)6,768 
Operating lease liabilities(404)(406)
Settlement liabilities19,910 7,101 
Other liabilities963 472 
Net cash provided by operating activities27,158 24,213 
Cash flows from investing activities:
Purchases of property and equipment(267)(1,940)
Software development costs(468)(1,353)
Net cash used by investing activities(735)(3,293)
Cash flows from financing activities:
Principal payments of finance leases(394)(385)
Principal payments of term loan(297)(1,231)
Repurchases of early exercised stock options(20) 
Proceeds from common stock purchased under Matching Plan1,188  
Payments of deferred offering costs (3,343)
Proceeds from issuance of common stock on exercise of stock options519 971 
Net cash provided (used) by financing activities996 (3,988)
Net increase in cash and cash equivalents and restricted cash27,419 16,932 
Cash and cash equivalents and restricted cash, beginning of period125,315 46,878 
Cash and cash equivalents and restricted cash, end of period$152,734 $63,810 
Supplemental disclosure of cash flow information:
Cash paid for interest$1,750 $1,445 
Cash paid for income taxes$606 $5,122 
Noncash investing and financing items:
Accrued deferred offering costs$ $821 
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets
Cash and cash equivalents$105,537 $45,429 
Restricted cash included in other current assets16,077 3,652 
Restricted cash included in other assets 49 
Restricted cash included in settlement assets31,120 14,680 
Total cash, cash equivalents and restricted cash$152,734 $63,810 
See accompanying notes to condensed consolidated financial statements.
6

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

NOTE 1 – GENERAL INFORMATION
Description of the 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 and enterprises on a per-active-member basis.
Expensify also offers an Expensify card ("Expensify Card"), which is primarily distributed to large corporate customers in the United States ("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 condensed consolidated financial statements include the accounts of Expensify and its wholly-owned subsidiaries (the "Company") and have been prepared in accordance with United States generally accepted accounting principles ("GAAP") and the applicable rules and regulations of the Securities and Exchange Commission ("SEC") for interim reporting in conformity with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP have been condensed or omitted pursuant to such SEC rules. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2021 ("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 for the fair presentation of the Company's financial position, results of operations, equity, and cash flows for the periods presented.
Results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 or for any other future annual or interim period.
Stock Split
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 periods presented.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed 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 the circumstances. Estimates and judgments are evaluated on an ongoing basis.
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Table of Contents
Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)


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, classification of employee and employee-related expenses, the useful lives and recoverability of long-lived assets, income taxes, capitalization of internal-use software costs, and stock-based compensation.
Updates to Significant Accounting Policies
The Company’s significant accounting policies are discussed in Note 2 of the 2021 Annual Report. Since the date of the 2021 Annual Report, there have been no material changes to the Company's significant accounting policies, including the status of recent accounting pronouncements adopted, other than those detailed below.
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 United Kingdom, 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 in Note 5) 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 customers' members.
Recent Accounting Pronouncements Not Yet Adopted
In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments, 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. As the Company will no longer qualify as an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012, as of December 31, 2022, the guidance will be effective for the Company beginning with the annual reporting period ended December 31, 2022 and interim periods presented therein. The Company is in the process of determining key accounting interpretations, data requirements and necessary changes to credit loss estimation methods, processes and systems and the impact to the consolidated financial statements and related disclosures.
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Table of Contents
Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
NOTE 2 - REVENUE AND CERTAIN STATEMENTS OF OPERATIONS COMPONENTS
Revenue by geographic region, based on user address, was as follows (in thousands):
Three months ended June 30,
Six months ended June 30,
2022
2021
2022
2021
United States$39,388 $31,472 $75,906 $57,912 
All other locations3,774 3,832 7,626 7,112 
Total revenue$43,162 $35,304 $83,532 $65,024 
No individual customer represented more than 10% of the Company’s total revenue during the three and six months ended June 30, 2022 and 2021.
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 the cashback payments to customers as consideration payable to a customer and is recorded as contra revenue within Revenue on the condensed consolidated statements of operations. Cashback rewards for the three months and six months ended June 30, 2022 was $0.7 million and $1.2 million, respectively. There were no cashback rewards for the three months and six months ended June 30, 2021.
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, net within the condensed consolidated statements of operations. Consideration from a vendor, net for the three months ended June 30, 2022 and 2021 was $1.5 million and $0.7 million, respectively. Consideration from a vendor, net for the six months ended June 30, 2022 and 2021 was $2.7 million and $1.1 million, respectively.
NOTE 3 - CERTAIN BALANCE SHEET COMPONENTS
Other Current Assets
Other current assets consisted of the following (in thousands):
June 30,
December 31,
20222021
Expensify.org restricted cash$4,977 $3,078 
Expensify Card posted collateral for funds held for customers7,265 5,115 
Cash in transit for funds held for customers3,508 388 
Contract assets 8 
Expensify Payments LLC restricted cash101 55 
Income tax receivable4,112 5,412 
Matching plan escrow
210  
Other261 145 
Total$20,434 $14,201 
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Table of Contents
Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)


Capitalized Software, net
Capitalized software, net consisted of the following (in thousands):
June 30,
December 31,
20222021
Capitalized software development costs$11,944 $10,966 
Less: accumulated amortization (5,938)(4,607)
Capitalized software, net$6,006 $6,359 
Amortization expense related to capitalized software development costs is recorded in Cost of revenue, net on the condensed consolidated statements of operations. Amortization expense was $0.7 million and $0.4 million for the three months ended June 30, 2022 and 2021, respectively. Amortization expense was $1.3 million and $0.8 million for the six months ended June 30, 2022 and 2021, respectively.
Property and Equipment, net
Property and equipment, net consisted of the following (in thousands):
June 30,
December 31,
20222021
Computers and equipment$236 $311 
Furniture and fixtures1,440 1,462 
Leasehold improvements6,960 7,106 
Commercial building6,493 6,493 
Land4,151 4,151 
Construction in progress2,542 2,391 
Total property and equipment21,822 21,914 
Less: accumulated depreciation(6,648)(5,984)
Total properly and equipment, net$15,174 $15,930 
Depreciation expense related to property and equipment is recorded in General and administrative on the condensed consolidated statements of operations. Depreciation expense related to property and equipment for the three months ended June 30, 2022 and 2021 was $0.5 million and $0.5 million, respectively. Depreciation expense related to property and equipment for the six months ended June 30, 2022 and 2021 was $1.0 million and $1.1 million, respectively.
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Table of Contents
Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consisted of the following (in thousands):
June 30,
December 31,
20222021
Accrued expense reports$263 $246 
Partner payouts and advertising fees785 574 
Hosting and license fees89 36 
Credit card processing fees22 56 
Professional fees2,098 1,274 
Sales, payroll and other taxes payable2,067 4,936 
Cashback rewards269 239 
Interest payable874 783 
Restricted common stock liability for early stock option exercises1,775 2,443 
Matching plan payroll liability
207  
Other518 459 
Total$8,967 $11,046 
NOTE 4 - COMMITMENTS AND CONTINGENCIES
Finance and Operating Lease Arrangements
The Company did not enter into any additional operating lease agreements or finance lease agreements to finance the acquisition of new property and equipment during the six months ended June 30, 2022 and 2021.
The components of lease cost reflected in the condensed consolidated statements of operations were as follows (in thousands):
Three months ended June 30,
Six months ended June 30,
2022202120222021
Finance lease cost:
Amortization of ROU assets $198 $197 $395 $395 
Interest on lease liabilities6 11 14 23 
Total finance lease cost204 208 409 418 
Operating lease cost173 125 358 410 
Total lease cost$377 $333 $767 $828 
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Table of Contents
Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)


Other information related to leases was as follows (in thousands, except as noted within):
June 30,
December 31,
20222021
Finance lease ROU asset (included within Lease right-of-use assets)$856 $1,251 
Operating lease ROU asset (included within Lease right-of-use assets)$616 $951 
Weighted-average remaining lease term (in years):
Finance leases1.081.58
Operating leases0.921.40
Weighted-average discount rate:
Finance leases2.47 %2.50 %
Operating leases5.25 %5.30 %
Supplemental cash flow information related to leases was as follows (in thousands):
Six months ended June 30,
20222021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$(399)$(451)
Operating cash flows from finance leases(14)(23)
Financing cash flows from finance leases(394)(385)
Maturities of lease liabilities as of June 30, 2022 were as follows (in thousands):
Finance leasesOperating leases
For the year ending:
Remainder of 2022$408 $392 
2023
476 332 
2024
  
2025
  
2026  
Thereafter  
Total future lease payments884 724 
Less: imputed interest(13)(19)
Less: lease liabilities, current(803)(705)
Lease liabilities, non-current$68 $ 
Amortizing Term Mortgage
In August 2019, the Company entered into an $8.3 million amortizing term mortgage agreement with Canadian Imperial Bank of Commerce ("CIBC") for the Company's commercial building located in Portland, Oregon. The agreement requires interest and principal payments be made each month over a 30-year period. Interest accrues at a fixed rate of 5.00% per year until August 2024, at which point the interest rate changes to the Wall Street Journal Prime Rate less 0.25% for the remaining term of the mortgage. The borrowings are secured by the building. The outstanding balance of the amortizing term mortgage was $7.9 million and $8.0 million as of June 30, 2022 and December 31, 2021, respectively.
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Table of Contents
Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
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 to enter into an additional $30.0 million delayed term loan, and increase the monthly revolving line of credit to $25.0 million. The term loan and revolving line of credit mature in September 2026 and September 2024, respectively. 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, as well as commitment fees and other debt issuance costs associated with the amendment. The remaining proceeds from the initial term loan were utilized to fund the Company's normal business operations.
Under the 2021 Amended Term Loan, the initial term loan of $45.0 million is payable over a 60 month period with principal and accrued interest payments due each quarter, commencing on September 30, 2021. The 2021 Amended Term Loan amortizes in equal quarterly installments of $0.1 million through September 30, 2024, $0.2 million beginning October 1, 2024 and $0.6 million beginning October 1, 2025, with any remaining principal balance due and payable on maturity. The amounts borrowed bear interest at the bank’s reference rate plus 2.25% (7.00% as of June 30, 2022) beginning on September 30, 2021 and continuing on a quarterly basis through maturity of the term loan. The borrowings are secured by substantially all the Company’s assets. As of June 30, 2022 and December 31, 2021, the outstanding balance of the 2021 Amended Term Loan was $44.7 million and $44.9 million, respectively.
Monthly Revolving Line of Credit
The line of credit agreement, as amended with the 2021 Amended Term Loan, provides borrowings up to $25.0 million. Borrowings under the line of credit bear interest at CIBC’s reference rate plus 1.00% (5.75% as of June 30, 2022) and are secured by substantially all of the Company’s assets. As of June 30, 2022 and December 31, 2021, there were $15.0 million of borrowings under the line of credit and $10.0 million of capacity available for borrowings.
In connection with the amortizing term mortgage and the 2021 Amended Term Loan, the Company recorded an immaterial amount of debt issuance costs and the 2021 Amended Term Loan was subject to an original issuance discount. These amounts are being amortized to interest expense over the term of the respective agreements using the effective interest method. As of June 30, 2022 and December 31, 2021, unamortized original issuance discount and debt issuance costs remaining were $0.3 million and $0.2 million, respectively.
Future aggregate annual principal payments on long-term debt as of June 30, 2022 is expected to be as follows (in thousands):
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Table of Contents
Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)


For the year ending:
Remainder of 2022$295 
2023595 
2024715 
20251,397 
2026
42,355 
Thereafter7,191 
Total principal payments52,548 
Less: unamortized original issuance discount and debt issuance costs(290)
Less: current portion, net of unamortized original issuance discount and debt issuance costs(548)
Long-term debt, net of unamortized original issuance discount and debt issuance costs$51,710 
As of June 30, 2022, the Company was not in compliance with all debt covenants, specifically the covenant restricting the amount of transfers for donations to Expensify.org during the period, but obtained a waiver from CIBC. The Company does not believe non-compliance with this covenant had any material impact on the Company or its operations. The Company expects to be in compliance with all debt covenants by the end of the fiscal quarter ended September 30, 2022.
Defined Contribution Plans
The Company sponsors a U.S. 401(k) defined contribution plan for all eligible employees who elect to participate. The Company is permitted 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 4.50% 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 and six months ended June 30, 2022 and 2021. The Company’s 401(k) matching contributions for the three months ended June 30, 2022 and 2021 were $0.2 million and $0.2 million, respectively. The Company’s 401(k) matching contributions for the six months ended June 30, 2022 and 2021 were $0.4 million and $0.4 million, respectively.
Legal
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 such provisions at least quarterly and adjusts such 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 June 30, 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 Board of Directors approved the 2009 Stock Plan ("2009 Stock Plan"). As amended in 2015, the 2009 Stock Plan permitted the Company to grant up to 16,495,150 shares of common stock. In January 2018, the Company increased the number of shares of common stock reserved under the
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Table of Contents
Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
2009 Stock Plan by 535,130 shares, from 16,495,150 shares to 17,030,280. In April 2019, the Board of Directors approved the adoption of the 2019 Stock Plan ("2019 Stock Plan", and together with the 2009 Stock Plan, "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 to 25,204,250 shares. In September 2021, under the 2019 Stock Plan, the 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 immediately prior to the effectiveness of the Company's IPO Registration Statement on Form S-1 (the "IPO Registration Statement") on November 9, 2021. On November 9, 2021, the Board of Directors amended and restated the 2019 Stock Plan to, among other things, increase the common stock reserved for issuance under the 2019 Stock Plan to an aggregate of 16,856,770 shares of Class A and LT50 common stock.
Following the completion of the initial public offering of the Company’s Class A common stock (the "IPO"), the Company did not and does not intend to 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 2021 Incentive Award Plan ("2021 Plan") and the Company's 2021 Stock Purchase and Matching Plan ("Matching Plan" and together with the 2021 Plan, "2021 Incentive Plans").
2021 Incentive Plans
In November 2021, the 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, 12,453,532 shares of Class A common stock were initially 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 ("RSAs"), restricted stock units ("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 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 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 as of June 30, 2022 and December 31, 2021 was 17,336,972 shares and 12,453,532 shares, respectively. The number of shares 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 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 Class A common stock may be issued upon the exercise of incentive stock options.
Matching Plan
The Matching Plan operates using consecutive three month offering periods that commenced on March 15, 2022. Employees, consultants and directors ("Service Providers") of the Company 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.
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Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)


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 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 Class A common stock for each share of Class A common stock purchased by or issued to a service provider under the Matching Plan that is retained through the end of the applicable offering period. No fractional shares will be issued by the Company. The Company will round to the nearest full share for shares purchased by a service provider as well as any matched shares issued to a service provider under the Matching Plan. The match rate applicable to each offering period shall be limited to 1.50% of the shares of any class of capital stock outstanding as of the exercise date applicable to such offering period. The Company estimates the fair value of matched shares provided 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 pursuant to its Matching Plan on a straight-line basis over the applicable three month offering period.
Service Providers who participated in the Matching Plan for the offering period ended June 14, 2022 purchased a total of 67,946 Class A common shares, based on a purchase price of $17.42, resulting in gross cash proceeds to the Company of $1.2 million.
For the offering period ended June 14, 2022, the Company elected to match each share of Class A common stock purchased by or issued under the Matching Plan with 1/20 of a share of Class A common stock. During the six months ended June 30, 2022, the Company granted 3,576 shares of Class A common stock under the Matching Plan.
Restricted Stock Units
On September 24, 2021, under the 2019 Stock Plan, the Company approved the grant of RSUs to Service Providers covering Class A and LT50 common stock effective November 9, 2021, the date the Company amended its Certificate of Incorporation, to include, among other things, LT50 common stock. RSUs granted to Service Providers on November 9, 2021 that were approved 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. The service condition is satisfied 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 Service Providers after the IPO, under the 2021 Plan, have a service condition only, which is satisfied over eight years from the vesting commencement date corresponding to one of the Specified Quarterly Dates nearest the date of grant, with 1/8 of each grant vesting on the first anniversary of the vesting commencement 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.
Pursuant to the Company's Non-Employee Director Compensation Program, which was adopted under the 2021 Incentive Plans, the Company granted 20,163 RSUs covering shares of Class A common stock for the six months ended June 30, 2022. A total of 4,629 RSUs covering shares of Class A common stock vested during the six months ended June 30, 2022 related to previously granted RSU awards as the quarterly service conditions were satisfied. There were no RSUs granted under this program during the six months ended June 30, 2021.
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Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
During the six months ended June 30, 2022, RSU activity for Service Providers and non-employee directors was as follows:
Class A Common StockLT50 Common StockWeighted average grant date fair value per share
Outstanding at December 31, 2021
4,329,530 4,301,750 $33.75 
RSUs granted63,223  $18.21 
RSUs vested(4,629) $47.62 
RSUs cancelled/forfeited/expired(181,941)(181,941)$37.14 
Outstanding at June 30, 2022
4,206,183 4,119,809 $33.88 
As of June 30, 2022, there was $242.6 million of unamortized stock-based compensation cost related to unvested RSUs, which is expected to be recognized over the remaining weighted average life of 6.62 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
The Stock Plans and the 2021 Plan provide for the grant of incentive and nonstatutory stock options to employees, non-employee directors and consultants of the Company. Under the Stock Plans and the 2021 Plan, the exercise price of incentive stock options must be equal to at least 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 participant. The exercise price of nonstatutory options granted must be equal to at least 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. 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 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 six months ended June 30, 2022, the Company repurchased an immaterial amount of exercised restricted common stock. There were no repurchases of common stock during the six months ended June 30, 2021.
As of June 30, 2022 and December 31, 2021, there were 1,096,140 and 1,437,760 shares subject to repurchase, respectively, related to unvested stock options that had been early exercised. As of June 30, 2022 and December 31, 2021, the Company recorded a liability related to shares subject to repurchase of $1.8 million and $2.4 million, respectively, which is included within Accrued expenses and other liabilities in the accompanying condensed consolidated balance sheets. These amounts are reclassified to common stock and additional paid in capital as the underlying shares vest.
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Expensify, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)


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 (307,075)$1.69 
Options cancelled/forfeited/expired(324,324)$1.72 
Outstanding at June 30, 2022
6,561,794 $1.86 5.74
Exercisable at June 30, 2022
6,346,904 $1.73 5.68