UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________

FORM 10-Q

___________________________________

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

OR

o TRANSITION 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)

Delaware	27-0239450
(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)

(971) 365-3939

Registrant’s telephone number, including area code

___________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per share	EXFY	The 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 pursuant 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 filer	☐	Accelerated filer	x
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

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 77,155,951 shares of Class A common stock, par value of $0.0001 per share, 4,209,827 shares of LT10 common stock, par value $0.0001 per share, and 7,597,099 shares of LT50 common stock, par value $0.0001 per share, as of November 4, 2024.

Table of Contents

		Page
Special Note Regarding Forward-Looking Statements
Part I - Financial Information
Item 1.	Condensed Consolidated Financial Statements	1
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Changes in Stockholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41
Part II - Other Information
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3.	Defaults Upon Senior Securities	47
Item 4.	Mine Safety Disclosures	47
Item 5.	Other Information	48
Item 6.	Exhibits	49
	Signatures

i

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:

•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;

•geopolitical tensions, including the war in Ukraine and the conflict in Israel, Gaza and surrounding areas;

•the impact of inflation on us and our members;

•our borrowing costs have and may continue to increase as a result of increases in interest rates;

•our ability to effectively manage our exposure to fluctuations in foreign currency exchange rates;

•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;

•any adverse impact on our business operations as a result of using artificial intelligence or other machine learning technologies in our services;

•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;

ii

•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;

•general economic conditions in either domestic or international markets, and geopolitical uncertainty and instability, including as a result of the 2024 United States presidential election;

•our ability to protect against security incidents, technical difficulties, or interruptions to our platform;

•our ability to maintain, protect and enhance our intellectual property; and

•the other risks and uncertainties identified under Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023.

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, 2023, 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. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. 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. and its consolidated subsidiaries. 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 Consolidated Financial Statements

1

Expensify, Inc.

Condensed Consolidated Balance Sheets

(unaudited, in thousands, except share data)

	As of September 30,		As of December 31,
	2024		2023
Assets
Cash and cash equivalents	$	39,172	$	47,510
Accounts receivable, net	12,650		13,834
Settlement assets, net	53,391		39,261
Prepaid expenses	9,002		5,649
Other current assets	24,321		30,978
Total current assets	138,536		137,232
Capitalized software, net	16,859		12,494
Property and equipment, net	13,763		14,372
Lease right-of-use assets	5,611		6,435
Deferred tax assets, net	489		457
Other assets	988		5,794
Total assets	$	176,246	$	176,784
Liabilities and stockholders' equity
Accounts payable	$	1,035	$	1,425
Accrued expenses and other liabilities	7,294		9,390
Borrowings under line of credit	—		15,000
Current portion of long-term debt, net of original issue discount and debt issuance costs	—		7,655
Lease liabilities, current	631		432
Settlement liabilities	39,379		33,990
Total current liabilities	48,339		67,892
Lease liabilities, non-current	5,928		6,467
Other liabilities	2,045		1,681
Total liabilities	56,312		76,040
Commitments and contingencies (Note 4)
Stockholders' equity:
Preferred stock, par value $0.0001; 10,000,000 shares of preferred stock authorized as of September 30, 2024 and December 31, 2023; no shares of preferred stock issued and outstanding as of September 30, 2024 and December 31, 2023	—		—
Common stock, par value $0.0001; 1,000,000,000 shares of Class A common stock authorized as of September 30, 2024 and December 31, 2023; 77,119,750 and 70,569,815 shares of Class A common stock issued and outstanding as of September 30, 2024 and December 31, 2023, respectively; 21,871,197 and 24,994,989 shares of LT10 common stock authorized as of September 30, 2024 and December 31, 2023, respectively; 4,209,827 and 7,333,619 shares of LT10 common stock issued and outstanding as of September 30, 2024 and December 31, 2023, respectively; 24,969,634 and 24,998,941 shares of LT50 common stock authorized as of September 30, 2024 and December 31, 2023, respectively; 7,597,099 and 7,321,894 shares of LT50 common stock issued and outstanding as of September 30, 2024 and December 31, 2023, respectively	9		8
Additional paid-in capital	269,441		241,509
Accumulated deficit	(149,516)		(140,773)
Total stockholders' equity	119,934		100,744
Total liabilities and stockholders' equity	$	176,246	$	176,784

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 September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenue	$	35,409	$	36,494	$	102,232	$	115,479
Cost of revenue, net	17,145		17,680		46,091		50,380
Gross margin	18,264		18,814		56,141		65,099
Operating expenses:
Research and development	5,618		6,607		17,936		17,119
General and administrative	9,084		14,245		29,760		38,386
Sales and marketing	3,274		12,860		9,730		36,757
Total operating expenses	17,976		33,712		57,426		92,262
Income (loss) from operations	288		(14,898)		(1,285)		(27,163)
Other income (expenses), net	181		(2,375)		(1,033)		(5,158)
Income (loss) before income taxes	469		(17,273)		(2,318)		(32,321)
(Provision for) benefit from income taxes	(2,667)		270		(6,425)		(1,931)
Net loss	$	(2,198)	$	(17,003)	$	(8,743)	$	(34,252)
Net loss per share:
Basic and diluted	$	(0.02)	$	(0.21)	$	(0.10)	$	(0.42)
Weighted average shares of common stock used to compute net loss per share:
Basic and diluted	88,177,739		82,469,190		86,643,209		82,085,508

See accompanying notes to Condensed Consolidated Financial Statements.

3

Expensify, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(unaudited, in thousands, except share data)

	Preferred stock			Common stock			Additional paid-in capital		Accumulated deficit		Total stockholders' equity
	Shares	Amount		Shares	Amount
Three months ended September 30, 2024
Balance at June 30, 2024	—	$	—	88,194,690	$	9	$	261,309	$	(147,318)	$	114,000
Issuance of common stock on exercise of stock options	—	—		250,388	—		250		—		250
Vesting of early exercised stock options	—	—		—	—		94		—		94
Issuance of restricted stock units	—	—		11,666	—		18		—		18
Repurchases of early exercised stock options	—	—		(2,520)	—		—		—		—
Issuance of common stock under Matching Plan	—	—		911,645	—		896		—		896
Issuance of common stock in connection with restricted stock units vesting	—	—		206,745	—		—		—		—
Repurchase and retirement of common stock	—	—		(645,938)	—		(1,510)		—		(1,510)
Stock-based compensation	—	—		—	—		8,384		—		8,384
Net loss	—	—		—	—		—		(2,198)		(2,198)
Balance at September 30, 2024	—	$	—	88,926,676	$	9	$	269,441	$	(149,516)	$	119,934

See accompanying notes to Condensed Consolidated Financial Statements.

4

Expensify, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(unaudited, in thousands, except share data)

	Preferred stock			Common stock			Additional paid-in capital		Accumulated deficit		Total stockholders' equity
	Shares	Amount		Shares	Amount
Three months ended September 30, 2023
Balance at June 30, 2023	—	$	—	82,776,491	$	7	$	216,422	$	(116,566)	$	99,863
Issuance of common stock upon exercise of stock options	—	—		97,033	—		91		—		91
Vesting of early exercised stock options	—	—		—	—		182		—		182
Issuance of restricted stock units	—	—		4,221	—		30		—		30
Repurchases of early exercised stock options	—	—		(1,328)	—		(8)		—		(8)
Issuance of common stock under Matching Plan	—	—		648,729	—		1,056		—		1,056
Issuance of common stock in connection with restricted stock units vesting	—	—		231,018	—		—		—		—
Shares withheld from common stock issued to pay employee payroll taxes	—	—		(56,936)	—		(242)		—		(242)
Stock-based compensation	—	—		—	—		11,087		—		11,087
Net loss	—	—		—	—		—		(17,003)		(17,003)
Balance at September 30, 2023	—	$	—	83,699,228	$	7	$	228,618	$	(133,569)	$	95,056

See accompanying notes to Condensed Consolidated Financial Statements.

5

Expensify, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(unaudited, in thousands, except share data)

	Preferred stock			Common stock			Additional paid-in capital		Accumulated deficit		Total stockholders' equity
	Shares	Amount		Shares	Amount
Nine months ended September 30, 2024
Balance at December 31, 2023	—	$	—	85,225,328	$	8	$	241,509	$	(140,773)	$	100,744
Issuance of common stock on exercise of stock options	—	—		306,917	—		303		—		303
Vesting of early exercised stock options	—	—		—	—		337		—		337
Issuance of restricted stock units	—	—		27,925	—		53		—		53
Repurchases of early exercised stock options	—	—		(32,954)	—		—		—		—
Issuance of common stock under Matching Plan	—	—		3,364,621	1		2,899		—		2,900
Issuance of common stock in connection with restricted stock units vesting	—	—		680,777	—		—		—		—
Repurchase and retirement of common stock	—	—		(645,938)	—		(1,510)		—		(1,510)
Stock-based compensation	—	—		—	—		25,850		—		25,850
Net loss	—	—		—	—		—		(8,743)		(8,743)
Balance at September 30, 2024	—	$	—	88,926,676	$	9	$	269,441	$	(149,516)	$	119,934

See accompanying notes to Condensed Consolidated Financial Statements.

6

Expensify, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(unaudited, in thousands, except share data)

	Preferred stock			Common stock			Additional paid-in capital		Accumulated deficit		Total stockholders' equity
	Shares	Amount		Shares	Amount
Nine months ended September 30, 2023
Balance at December 31, 2022	—	$	—	82,429,367	$	7	$	194,807	$	(97,573)	$	97,241
Issuance of common stock upon exercise of stock options	—	—		199,898	—		216		—		216
Vesting of early exercised stock options	—	—		—	—		584		—		584
Issuance of restricted stock units	—	—		9,529	—		91		—		91
Repurchase of early exercised stock options	—	—		(2,651)	—		(21)		—		(21)
Issuance of common stock under Matching Plan	—	—		1,090,571	—		3,132		—		3,132
Issuance of common stock in connection with restricted stock units vesting	—	—		738,171	—		—		—		—
Shares withheld from common stock issued to pay employee payroll taxes	—	—		(261,164)	—		(1,766)		—		(1,766)
Repurchase and retirement of common stock	—	—		(504,493)	—		(1,256)		(1,744)		(3,000)
Stock-based compensation	—	—		—	—		32,831		—		32,831
Net loss	—	—		—	—		—		(34,252)		(34,252)
Balance at September 30, 2023	—	$	—	83,699,228	$	7	$	228,618	$	(133,569)	$	95,056

See accompanying notes to Condensed Consolidated Financial Statements.

7

Expensify, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited, in thousands)

	Nine Months Ended September 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(8,743)	$	(34,252)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	4,851		3,871
Reduction of operating lease right-of-use assets	411		476
Loss on impairment, receivables and sale or disposal of equipment	637		585
Stock-based compensation expense	23,535		30,612
Amortization of original issue discount and debt issuance costs	43		139
Deferred tax assets	(32)		(86)
Changes in assets and liabilities:
Accounts receivable, net	845		1,671
Settlement assets, net	(13,202)		(9,381)
Prepaid expenses	1,597		3,672
Other current assets	2,707		(1,861)
Other assets	(144)		(125)
Accounts payable	(349)		229
Accrued expenses and other liabilities	(1,501)		4,259
Operating lease liabilities	67		(236)
Settlement liabilities	5,389		2,451
Other liabilities	364		78
Net cash provided by operating activities	16,475		2,102
Cash flows from investing activities:
Purchases of property and equipment	—		(1,103)
Software development costs	(6,699)		(3,730)
Net cash used in investing activities	(6,699)		(4,833)
Cash flows from financing activities:
Principal payments of finance leases	(96)		(482)
Principal payments of outstanding debt	(22,671)		(8,450)
Payments for debt issuance costs	(71)		—
Repurchases of early exercised stock options	(35)		(21)
Proceeds from common stock purchased under Matching Plan	2,900		3,132
Proceeds from issuance of common stock on exercise of stock options	303		216
Payments for employee taxes withheld from stock-based awards	—		(1,766)
Repurchase and retirement of common stock	(1,510)		(3,000)
Net cash used in financing activities	(21,180)		(10,371)
Net decrease in cash and cash equivalents and restricted cash	(11,404)		(13,102)
Cash and cash equivalents and restricted cash, beginning of period	96,658		147,710
Cash and cash equivalents and restricted cash, end of period	$	85,254	$	134,608
Supplemental disclosure of cash flow information:
Cash paid for interest	$	1,326	$	4,396
Cash paid for income taxes	$	3,735	$	3,104
Noncash investing and financing items:
Stock-based compensation capitalized as software development costs	$	2,315	$	2,219
Purchases of property and equipment and capitalized software in accounts payable and accrued expenses	$	178	$	—
Right-of-use assets acquired through operating leases	$	—	$	6,402
Right-of-use assets acquired through finance leases	$	—	$	409
Reconciliation of cash and cash equivalents and restricted cash to the Condensed Consolidated Balance Sheets
Cash and cash equivalents	$	39,172	$	89,118
Restricted cash included in other current assets	23,748		23,398
Restricted cash included in settlement assets, net	22,334		22,092
Total cash, cash equivalents and restricted cash	$	85,254	$	134,608

See accompanying notes to Condensed Consolidated Financial Statements.

8

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 license arrangements and offers unique pricing options for small and medium-sized businesses ("SMBs") and enterprises on a per-active-member basis.

Expensify also offers an Expensify charge card (the "Expensify Card"), which is primarily distributed to corporate customers in the United States ("U.S.") who 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.

As of September 30, 2024, the Expensify Card consisted of two card programs operating concurrently. Under the original Expensify Card program launched in 2020 (the “Legacy Card Program”), Expensify has an agreement with the payment processor, Marqeta, Inc. ("Marqeta"), and relies on Marqeta to manage the relationship with the issuing bank, Sutton Bank, and the card network, Visa, in authorizing and settling transactions. In October 2023, Expensify augmented the Expensify Card program by entering into an agreement with a new issuing bank, The Bancorp Bank, N.A. ("Bancorp"), to issue Expensify Cards to customers and authorize and settle transactions on the Visa card network (the “Updated Card Program”). The Updated Card Program launched in February 2024 and all new Expensify Cards issued subsequent to the launch of the Updated Card Program operate under that program.

Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of Expensify, its wholly-owned subsidiaries, and Expensify.org (collectively, the "Company") and have been prepared in accordance with U.S. 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, 2023 ("2023 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 nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or for any other future annual or interim period.

9

Expensify, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

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. Actual results could differ from those estimates. Changes in estimates are recorded in the period in which they become known.

Estimates and assumptions by management affect the Company’s classification of employee and employee-related expenses, the useful lives and recoverability of long-lived assets and deferred contract acquisition costs, income taxes, capitalization of internal-use software costs, stock-based compensation and the Company's incremental borrowing rate utilized to measure its lease right-of-use ("ROU") assets and lease liabilities.

Updates to Significant Accounting Policies

The Company’s significant accounting policies are discussed in Note 2 of the 2023 Annual Report. Since the date the 2023 Annual Report was filed with the SEC, there have been no material changes to the Company's significant accounting policies, including the adoption status of recent accounting pronouncements.

Reclassification of Prior Period Presentation

Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of financial position, operations and cash flows.

NOTE 2 - REVENUE AND CERTAIN STATEMENT OF OPERATIONS COMPONENTS

The table below provides the Company's total revenue by geographic region based on the currency of the subscription (in thousands). No other individual country outside of the United States accounted for more than 10% of total revenue.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
United States	$	32,248	$	33,255	$	92,940	$	105,377
All other locations	3,161		3,239		9,292		10,102
Total revenue	$	35,409	$	36,494	$	102,232	$	115,479

No individual customer represented more than 10% of the Company’s total revenue during the three and nine months ended September 30, 2024 and 2023.

10

Expensify, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Cashback Rewards

The Company offers a cashback rewards program to all Expensify Card customers based on volume of Expensify Card transactions and Software as a Service ("SaaS") subscription tier. Cashback rewards are earned on a monthly basis and are applied against outstanding customer receivables or paid out the following month. The Company considers the cashback payments to customers as consideration payable to a customer and it is recorded as a reduction to Revenue within the Condensed Consolidated Statements of Operations. Cashback rewards were $2.3 million and $1.8 million for the three months ended September 30, 2024 and 2023, respectively. Cashback rewards were $6.4 million and $4.8 million for the nine months ended September 30, 2024 and 2023, respectively.

Interchange

The Company generates revenue from the authorization and settlement of Expensify Card transactions under the Updated Card Program. The Company is contractually entitled to all interchange generated on Expensify Card transactions based on its agreement with the issuing bank and such funds are held as restricted cash within Other current assets until released by the issuing bank. Under the Updated Card Program, the Company is the principal in the transaction (i.e. the Company controls the services) and recognizes interchange as revenue on a gross basis within Revenue on the accompanying Condensed Consolidated Statements of Operations. Interchange revenue was $3.7 million and $4.2 million for the three and nine months ended September 30, 2024, respectively.

Consideration From a Vendor, Net

The Company receives consideration from a vendor for monetizing Expensify Card activities under the Legacy Card Program. 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 was $0.8 million and $2.8 million for the three months ended September 30, 2024 and 2023, respectively. Consideration from a vendor, net was $7.1 million and $7.3 million for the nine months ended September 30, 2024 and 2023, respectively.

11

Expensify, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

NOTE 3 - CERTAIN BALANCE SHEET COMPONENTS

Other Current Assets

Other current assets consisted of the following (in thousands):

	As of September 30,		As of December 31,
	2024		2023
Expensify Card posted collateral for funds held for customers	$	15,388	$	16,561
Expensify.org restricted cash	5,960		5,881
Earned interchange restricted cash	1,486		—
Cash in transit for funds held for customers	775		5,107
Deferred contract acquisition costs	284		129
Income tax receivable	126		2,993
Other restricted cash	124		80
Expensify Payments LLC restricted cash	15		113
Other	163		114
Other current assets	$	24,321	$	30,978

Capitalized Software, Net

Capitalized software, net consisted of the following (in thousands):

	As of September 30,		As of December 31,
	2024		2023
Capitalized software development costs	$	31,172	$	22,683
Less: accumulated amortization	(14,313)		(10,189)
Capitalized software, net	$	16,859	$	12,494

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 $1.6 million and $0.8 million for the three months ended September 30, 2024 and 2023, respectively. Amortization expense was $4.1 million and $2.3 million for the nine months ended September 30, 2024 and 2023, respectively.

12

Expensify, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

	As of September 30,		As of December 31,
	2024		2023
Computers and equipment	$	170	$	170
Furniture and fixtures	1,930		1,930
Leasehold improvements	7,937		7,937
Commercial building	6,493		6,493
Land	4,151		4,151
Construction in progress	2,570		2,570
Total property and equipment	23,251		23,251
Less: accumulated depreciation	(9,488)		(8,879)
Property and equipment, net	$	13,763	$	14,372

Depreciation expense related to property and equipment is recorded in General and administrative, Sales and marketing, and Other income (expenses), net on the Condensed Consolidated Statements of Operations. Depreciation expense related to property and equipment was $0.1 million and $0.2 million for the three months ended September 30, 2024 and 2023, respectively. Depreciation expense related to property and equipment was $0.6 million and $1.1 million for the nine months ended September 30, 2024 and 2023, respectively.

13

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):

	As of September 30,		As of December 31,
	2024		2023
Sales, payroll and other taxes payable	$	2,168	$	2,546
Professional fees	1,482		1,311
Partner payouts and advertising fees	1,142		1,486
Cashback rewards	529		915
Matching Plan payroll liability	404		198
Income taxes payable	378		843
Restricted common stock liability for early stock option exercises	202		562
Credit card processing fees	153		76
Accrued expense reports	150		159
Commissions payable	75		140
Hosting and license fees	44		134
Interest payable	35		359
Other	532		661
Accrued expenses and other liabilities	$	7,294	$	9,390

NOTE 4 - COMMITMENTS AND CONTINGENCIES

Finance and Operating Lease Arrangements

The Company did not enter into any new lease agreements during the nine months ended September 30, 2024. The components of lease cost reflected in the Condensed Consolidated Statements of Operations for all leases were as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Finance lease cost:
Amortization of ROU assets	$	34	$	77	$	102	$	472
Interest on lease liabilities	6		3		19		7
Total finance lease cost	40		80		121		479
Operating lease cost	270		277		805		707
Total lease cost	$	310	$	357	$	926	$	1,186

14

Expensify, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Other information related to leases was as follows (in thousands, except as noted within):

	As of September 30,			As of December 31,
	2024			2023
Finance lease ROU assets (included within Lease right-of-use assets)	$	261		$	364
Operating lease ROU assets (included within Lease right-of-use assets)	$	5,350		$	6,071
Weighted average remaining lease term (in years):
Finance leases	1.92			2.67
Operating leases	8.53			9.18
Weighted average discount rate:
Finance leases	8.10		%	8.10		%
Operating leases	8.30		%	8.30		%

Supplemental cash flow information related to leases was as follows (in thousands):

	Nine months ended September 30,
	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(327)	$	(466)
Operating cash flows from finance leases	$	(19)	$	(7)
Financing cash flows from finance leases	$	(96)	$	(482)

Maturities of lease liabilities as of September 30, 2024 were as follows (in thousands):

For the year ending:	Finance leases		Operating leases
Remainder of 2024	$	39	$	189
2025	153		1,079
2026	102		1,018
2027	—		1,033
2028	—		1,063
Thereafter	—		4,499
Total future lease payments	294		8,881
Less: imputed interest	(21)		(2,595)
Less: Lease liabilities, current	(137)		(494)
Lease liabilities, non-current	$	136	$	5,792

15

Expensify, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

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 required principal and interest payments to be made each month over a five-year period. Interest accrued at a fixed rate of 5.00% per year until August 2024, at which point the remaining outstanding principal balance on the amortizing term mortgage was due in full. The borrowings were secured by the building. The outstanding balance of the amortizing term mortgage was $7.7 million as of December 31, 2023. The then-outstanding balance of $7.6 million and an immaterial amount of accrued interest on the amortizing term mortgage were repaid in full on August 29, 2024.

Loan and Security Agreement

In September 2021, the Company amended and restated its loan and security agreement with CIBC (the "2021 Amended Loan and Security Agreement") which consisted of a $45.0 million initial term loan, the option to enter into an additional $30.0 million delayed term loan that expired in March 2023, and a monthly revolving line of credit of $25.0 million. Under the 2021 Amended Loan and Security Agreement, the initial term loan of $45.0 million was payable over a 60-month period with principal and accrued interest payments due each quarter, commencing on September 30, 2021. The 2021 Amended Loan and Security Agreement amortized 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 in September 2026. The amounts borrowed accrued interest at the bank’s reference rate plus 2.25% beginning on September 30, 2021 and continued on a quarterly basis through maturity of the term loan. The borrowings were secured by substantially all the Company’s assets. The then-outstanding balance of $36.0 million and $0.1 million of accrued interest on the term loan were repaid in full on October 12, 2023.

In February 2024, the Company entered into a Second Amended and Restated Loan and Security Agreement (as amended by the First Amendment described below, and as may be further amended from time to time, the "2024 Amended Loan and Security Agreement") with CIBC. The 2024 Amended Loan and Security Agreement amends and restates the 2021 Amended Loan and Security Agreement, to extend the maturity date of the revolving line of credit from September 2024 to September 2025, remove certain provisions related to the term loan that was repaid in full in October 2023 and make certain changes to the positive and negative covenants intended to better align with the operations of the Company. The 2024 Amended Loan and Security Agreement continues to provide for a $25.0 million revolving credit facility. Borrowings under the revolving line of credit accrue interest at CIBC’s reference rate plus 1.00% (9.00% as of September 30, 2024) and are secured by substantially all of the Company's assets. In May 2024, the Company entered into a First Amendment to the 2024 Amended Loan and Security Agreement, which amended the covenant restricting the amount of repurchases of common stock to allow for certain additional repurchase activity and provided a waiver for the Company's non-compliance during prior periods with the previous version of such covenant.

The Company incurred an immaterial amount of costs in connection with entering into the 2024 Amended Loan and Security Agreement. These debt issuance costs are reflected as a deferred asset within Other current assets on the Condensed Consolidated Balance Sheets and are being amortized to interest expense on a straight-line basis over the term of the agreement. As of September 30, 2024, the unamortized debt issuance costs included within Other current assets was immaterial.

On April 24, 2024, the Company entered into an irrevocable standby letter of credit (the "Letter of Credit") issued under the 2024 Amended Loan and Security Agreement to reduce cash collateral requirements in connection with the Updated Card Program. The Letter of Credit was issued in the amount of $1.0 million for the benefit of Bancorp and expires on March 20, 2025. No amounts have been drawn on the Letter of Credit as of September 30, 2024.

16

Expensify, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Upon repayment of the amortizing term mortgage on August 29, 2024, the Company entered into a Second Amendment to the 2024 Amended Loan and Security Agreement, which permits the Company's wholly-owned subsidiary, 401 SW 5th Ave LLC, to remain an excluded subsidiary provided that the subsidiary does not engage in any operations or activities except to maintain legal existence and ownership of the real property or any related activities thereto, does not hold assets other than real estate assets, and does not incur any indebtedness except for intercompany liabilities permitted under the agreement or grant any liens.

As of December 31, 2023, there were $15.0 million of borrowings under the revolving line of credit. The then-outstanding balance of $15.0 million and an immaterial amount of accrued interest on the revolving line of credit were repaid in full on July 10, 2024. As of September 30, 2024, there was $24.0 million of capacity available for additional borrowings.

As of September 30, 2024, the Company was in compliance with all debt covenants.

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 participant’s eligible compensation. No discretionary profit-sharing contributions were made during the three and nine months ended September 30, 2024 and 2023. The Company’s 401(k) matching contributions were $0.2 million for both the three months ended September 30, 2024 and 2023. The Company’s 401(k) matching contributions were $0.6 million and $0.7 million for the nine months ended September 30, 2024 and 2023, 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 September 30, 2024, 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.

17

Expensify, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

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 2009 Stock Plan by 535,130 shares to 17,030,280 shares. 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, the Board of Directors approved the grant of 8,679,380 restricted stock units under the 2019 Stock Plan, covering 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 ("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 ("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, 11,676,932 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, restricted stock awards, 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 and available for issuance under the 2021 Incentive Plans as of September 30, 2024 and December 31, 2023 was 22,814,452 shares and 19,712,910 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 end, 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.

18

Expensify, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Matching Plan

The Matching Plan operates using consecutive three-month offering periods that commenced on March 15, 2022. Employees, consultants and directors (collectively, "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.

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 closing stock price 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 September 14, 2024 purchased a total of 370,122 Class A common shares, based on a purchase price of $2.42, resulting in gross cash proceeds to the Company of $0.9 million.

Service Providers who participated in the Matching Plan for the offering period ended September 14, 2023 purchased a total of 275,210 Class A common shares, based on a purchase price of $3.84, resulting in gross cash proceeds to the Company of $1.1 million.

For the offering period ended September 14, 2024, the Company elected to match each share of Class A common stock purchased or issued under the Matching Plan with 1/20 of a share of Class A common stock. The Company granted a total of 176,449 shares of Class A common stock as a matching contribution under the Matching Plan with no shares withheld for taxes, during the three months ended September 30, 2024. The Company granted a total of 443,671 shares of Class A common stock as a matching contribution under the Matching Plan with no shares withheld for taxes, during the nine months ended September 30, 2024.

For the offering period ended September 14, 2023, the Company elected to match each share of Class A common stock purchased or issued under the Matching Plan with 1/20 of a share of Class A common stock. The Company granted a total of 35,732 shares of Class A common stock as a matching contribution under the Matching Plan, net of a total of 9,054 shares withheld for taxes, during the three months ended September 30, 2023. The Company granted a total of 72,578 shares of Class A common stock as a matching contribution under the Matching Plan, net of a total of 15,871 shares withheld for taxes, during the nine months ended September 30, 2023.

19

Expensify, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

The Company has made discretionary contributions under the Matching Plan to eligible Service Providers. The Company granted a total of 365,074 shares of Class A common stock as discretionary contributions under the Matching Plan with no shares withheld for taxes, during the three months ended September 30, 2024. The Company granted a total of 1,300,451 shares of Class A common stock as discretionary contributions under the Matching Plan with no shares withheld for taxes, during the nine months ended September 30, 2024.

The Company granted a total of 299,713 shares of Class A common stock as discretionary contributions under the Matching Plan, net of a total of 29,020 shares withheld for taxes, during the three months ended September 30, 2023. The Company granted a total of 375,024 shares of Class A common stock as discretionary contributions under the Matching Plan, net of a total of 64,411 shares withheld for taxes, during the nine months ended September 30, 2023.

Restricted Stock Units

On September 24, 2021, under the 2019 Stock Plan, the Company approved the grant of Class A and LT50 common stock RSUs to Service Providers 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 having vested 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 230,064 Class A common stock RSUs for the nine months ended September 30, 2024. A total of 62,676 Class A common RSUs vested during the nine months ended September 30, 2024 related to previously-granted RSU awards as the quarterly service conditions were satisfied.

20

Expensify, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

During the nine months ended September 30, 2024, RSU activity for Service Providers and non-employee directors was as follows:

	Class A Common Stock	LT50 Common Stock	Weighted average grant date fair value per share
Outstanding at December 31, 2023	2,742,273	2,646,332	$	32.59
RSUs granted	230,064	—	$	1.40
RSUs vested	(373,745)	(307,032)	$	30.42
RSUs cancelled/forfeited/expired	(316,939)	(316,939)	$	38.13
Outstanding at September 30, 2024	2,281,653	2,022,361	$	30.45

As of September 30, 2024, there was $109.4 million of unamortized stock-based compensation cost related to unvested RSUs, which is expected to be recognized over the remaining weighted average life of 4.69 years. As of December 31, 2023, there was $153.4 million of unamortized stock-based compensation cost related to unvested RSUs, which was expected to be recognized over the remaining weighted average life of 5.37 years.

Stock Options

The Stock Plans and the 2021 Plan provide for the grant of incentive and nonstatutory stock options to Service Providers. 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. There was an immaterial amount of exercised restricted common stock repurchased during the nine months ended September 30, 2024 and 2023.

As of September 30, 2024 and December 31, 2023, there were 155,400 and 393,251 shares subject to repurchase, respectively, related to unvested stock options that had been early exercised. As of September 30, 2024 and December 31, 2023, the Company recorded a liability related to shares subject to repurchase of $0.2 million and $0.6 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.

21

Expensify, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

A summary of the Company's stock option activity was as follows:

	Shares	Weighted average exercise price per share		Weighted average remaining contractual life (in years)
Outstanding at December 31, 2023	5,902,591	$	1.68	4.03
Options exercised	(306,917)	$	0.99
Options cancelled/forfeited/expired	(122,788)	$	3.12
Outstanding at September 30, 2024	5,472,886	$	1.66	3.15
Exercisable at September 30, 2024	5,447,146	$	1.65	3.14

The total pretax intrinsic value of options outstanding at September 30, 2024 and December 31, 2023 was $5.9 million and $8.9 million, respectively. The total pretax intrinsic value of options exercisable at September 30, 2024 was $5.9 million. 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.

As of September 30, 2024, there was $1.7 million of unrecognized stock-based compensation cost related to unvested stock options, which is expected to be recognized over a weighted average period of 0.40 years. As of December 31, 2023, there was $4.1 million of unrecognized stock-based compensation cost related to unvested stock options, which was expected to be recognized over a weighted average period of 0.75 years.

Cash received from option exercises and purchases of shares under the Stock Plans for both the nine months ended September 30, 2024 and 2023 was $0.3 million and $0.2 million, respectively.

Stock-Based Compensation

The following table summarizes the stock-based compensation recognized for options granted under the 2009 Stock Plan, options and RSUs granted under the 2019 Stock Plan, RSUs granted under the 2021 Plan and matching and discretionary shares issued under the Matching Plan (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Matching Plan shares	$	898	$	1,697	$	3,468	$	3,018
Restricted stock units	6,793		8,548		20,083		27,197
Stock options	693		842		2,299		2,616
Total stock-based compensation	8,384		11,087		25,850		32,831
Less: stock-based compensation capitalized as software development costs	(754)		(820)		(2,315)		(2,219)
Total stock-based compensation expense	$	7,630	$	10,267	$	23,535	$	30,612

22

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 expense is included in the following components of expenses on the accompanying Condensed Consolidated Statements of Operations (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Cost of revenue, net	$	2,843	$	3,312	$	8,661	$	10,218
Research and development	2,530		2,901		8,424		7,562
General and administrative	1,560		2,532		4,965		7,552
Sales and marketing	697		1,522		1,485		5,280
Total stock-based compensation expense	$	7,630	$	10,267	$	23,535	$	30,612

NOTE 6 - INCOME TAXES

For the three and nine months ended September 30, 2024, the Company prepared its interim tax provision by applying a year-to-date effective tax rate, which the Company believes results in the best estimate of the annual effective tax rate.

The Company recorded a provision for income taxes of $2.7 million and a benefit from income taxes of $0.3 million for the three months ended September 30, 2024 and 2023, respectively, which resulted in effective tax rates of 568.7% and 1.6%, respectively.

The Company recorded a provision for income taxes of $6.4 million and $1.9 million for the nine months ended September 30, 2024 and 2023, respectively, which resulted in effective tax rates of (277.2)% and (6.0)%, respectively.

The principal reasons for the difference between the statutory rate and the effective rate for 2024 were primarily due to non-deductible stock-based compensation and the change in valuation allowance. The principal reasons for the difference between the statutory rate and the effective rate for 2023 were primarily due to non-deductible stock-based compensation, the change in valuation allowance, and Section 162(m) of the Internal Revenue Code ("IRC") compensation limitations.

The Company follows the provisions of ASC 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 September 30, 2024 and December 31, 2023, the Company recorded an uncertain tax position liability of $1.9 million and $1.5 million, respectively, within Other liabilities on the Condensed Consolidated Balance Sheets. This liability includes $0.3 million and an immaterial amount of interest and penalties as of September 30, 2024 and December 31, 2023, respectively.

The Company has received notice from the Internal Revenue Service ("IRS") that an examination of the Company's 2021 federal tax return will commence in Q4 2024.

23

Expensify, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

NOTE 7 - NET LOSS PER SHARE

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except share and per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Numerator
Net loss, basic and diluted	$	(2,198)	$	(17,003)	$	(8,743)	$	(34,252)
Denominator
Weighted average shares of common stock used to compute net loss per share, basic and diluted	88,177,739		82,469,190		86,643,209		82,085,508
Net loss per share, basic and diluted	$	(0.02)	$	(0.21)	$	(0.10)	$	(0.42)

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 ten 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 ten-month notice period for LT10 common stock and a 50-month 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 resulting net loss 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:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2024	2023	2024	2023
Weighted average stock options	2,354,936	4,166,033	1,715,576	4,660,837
Matching shares	22,135	645	—	13,099
Total	2,377,071	4,166,678	1,715,576	4,673,936

24

Expensify, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

NOTE 8 - EQUITY

On May 10, 2022, the Executive Committee of the Board of Directors approved a share repurchase program with authorization to purchase up to $50.0 million of shares of Class A common stock ("2022 Share Repurchase Program"). The Company may repurchase shares from time to time through open market purchases, in privately negotiated transactions or by other means, including the use of trading plans intended to qualify under Rule 10b5-1 of the Securities Exchange Act of 1934, in accordance with applicable securities laws and other restrictions. The actual timing, manner, price and total amount of future repurchases will depend on a variety of factors, including business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, restrictions under the terms of loan agreements and other considerations. The 2022 Share Repurchase Program does not obligate the Company to acquire any particular amount of Class A common stock, and the program may be suspended or terminated at any time by the Company at its discretion without prior notice.

During the three and nine months ended September 30, 2024, the Company repurchased 645,938 shares of Class A common stock under the 2022 Share Repurchase Program, at a total cost to the Company of $1.5 million. These shares were repurchased from the Company's Chief Executive Officer, David Barrett, at a price of $2.34 per share, which represents a weighted average price for the Class A Common Stock of the Company for the three trading-day period ending August 27, 2024 as reported by Nasdaq. As of September 30, 2024, the Company had approximately $39.5 million remaining under the share repurchase authorization, not including amounts used for net share settlement of vested equity incentive awards.

During the three months ended September 30, 2023, the Company did not repurchase any shares of Class A common stock under the 2022 Share Repurchase Program. During the nine months ended September 30, 2023, the Company repurchased 504,493 shares of Class A common stock under the 2022 Share Repurchase Program, at a total cost to the Company of $3.0 million.

NOTE 9 - RELATED PARTY TRANSACTIONS

During the nine months ended September 30, 2024 and 2023, Expensify, Inc. made no contributions and contributed $0.2 million, respectively, to Expensify.org, a nonprofit benefit organization established by the Company. There were no commitments from Expensify, Inc. that remained open for contribution as of September 30, 2024 and December 31, 2023.

There are no other significant related party transactions for the Company as of September 30, 2024, except as noted elsewhere in these condensed consolidated financial statements.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction 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, 2023 ("2023 Annual Report"). This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Part I, Item 1A. "Risk Factors" in our 2023 Annual Report and included elsewhere in 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 15 million members to our community and processed and automated 1.7 billion expense transactions on our platform as of September 30, 2024, freeing people to spend less time managing expenses and more time doing the things they love. For the quarter ended September 30, 2024, an average of 684,000 paid members across an average of 46,300 companies and over 200 countries and territories used Expensify to make money easy.

RECENT DEVELOPMENTS

Since 2020, when we launched the Expensify Card, it has operated under one card program (the “Legacy Card Program”). In February 2024, we launched a new card program (the "Updated Card Program"). The Legacy Card Program operates under an agreement with the payment processor, Marqeta, Inc. ("Marqeta"), and relies on Marqeta to manage the relationship with the issuing bank, Sutton Bank, and the card network, Visa, in authorizing and settling transactions. The Updated Card Program operates under an agreement with a new issuing bank, The Bancorp Bank, N.A. ("Bancorp"), to issue Expensify Cards to customers and authorize and settle transactions on the Visa card network.

All new Expensify Cards issued subsequent to the launch of the Updated Card Program will operate under such program. Our transition of cardholders from the Legacy Card Program to the Updated Card Program has commenced, with a significant portion of card users migrated as of September 30, 2024. We currently expect full completion of this transition by December 31, 2024.

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Components of Results of Operations

Revenue

We generate revenue from subscription fees based on the usage of our cloud-based expense management software platform under arrangements paid monthly in arrears that are either (i) month-to-month and can be terminated by either party without penalty at any time or (ii) 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. 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 for customers 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 the 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 services to customers and as such recognize revenue over time. We recognize revenue net of applicable taxes imposed on the related transaction.

We offer a cashback rewards program to all customers based on volume of Expensify Card transactions and Software as a Service ("SaaS") subscription tier. Cashback rewards are earned on a monthly basis and are applied against outstanding customer receivables or are paid out the following month. We consider our cashback rewards as consideration payable to a customer, and they are recorded as contra revenue within Revenue on the Condensed Consolidated Statements of Operations. Cashback rewards applied against outstanding customer receivables are reflected as a reduction to Accounts receivable, net on the Condensed Consolidated Balance Sheets. Cashback rewards liability is recorded within Accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets. The cashback rewards fluctuate over time as customers meet eligibility requirements in conjunction with the applicable SaaS subscription tier of each customer and the timing of payments made to customers.

As of September 30, 2024, the Expensify Card consisted of two card programs operating concurrently: the Legacy Card Program and the Updated Card Program. All new Expensify Cards issued subsequent to the launch of the Updated Card Program operate under that program.

Under the Updated Card Program, we generate revenue from the authorization and settlement of Expensify Card transactions and are contractually entitled to all interchange generated on Expensify Card transactions based on our agreement with the issuing bank. Under the Updated Card Program, we are the principal in the transaction (i.e. we control the services) and recognize interchange as revenue on a gross basis within Revenue on the accompanying Condensed Consolidated Statements of Operations. Interchange revenue was $3.7 million and $4.2 million for the three and nine months ended September 30, 2024, respectively.

Cost of Revenue, Net

Cost of revenue, net primarily consists of expenses related to hosting our 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 our patented scanning technology SmartScan, net of consideration from a vendor. Additional costs include amortization of finance right-of-use assets, 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.

27

Consideration from a vendor is related to the Expensify Card under the Legacy Card Program, where we use a third-party vendor to issue Expensify Cards and process the related transactions. 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 (our remainder portion, "Expensify interchange amount"). The vendor also charges us fees ("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 under the Legacy Card Program. Instead, the net of the Expensify interchange amount and vendor fees are paid to us, which we record as "Consideration from a vendor, net," a contra expense in Cost of revenue, net on the Condensed Consolidated Statements of Operations. The following summarizes these various amounts for each of the periods presented:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands)
Expensify interchange amount	$	876	$	3,090	$	7,932	$	8,008
Vendor fees	(78)		(281)		(805)		(724)
Consideration from a vendor, net	$	798	$	2,809	$	7,127	$	7,284

OPERATING EXPENSES

Research and Development

Research and development expenses consist primarily of personnel-related expenses, including stock-based compensation, and external contributor costs incurred related to the planning and preliminary project stage and post-implementation stage of new products or enhancing existing products or services. We capitalize certain software development costs that are attributable to developing or adding significant functionality to our internal-use software during the application development stage of the projects. All research and development expenses, excluding capitalized software development costs, are expensed as incurred.

We believe delivering new functionality is critical to attract new customers and expand our relationships with existing customers. We expect to continue to make investments in and expand our product and service offerings to enhance our customers’ experience and satisfaction and to attract new customers.

General and Administrative

General and administrative expenses primarily consist of personnel-related expenses, including stock-based compensation, for any employee time allocated to administrative functions, including finance and accounting, legal and human resources. In addition to personnel-related expenses, general and administrative expenses consist of rent, utilities, depreciation on property and equipment, amortization of operating right-of-use assets, information technology and external professional services, including finance and accounting, audit, tax, legal and compliance, and human resources.

Sales and Marketing

Sales and marketing expenses primarily consist of personnel-related expenses, including stock-based compensation, advertising expenses, depreciation on property and equipment, outsourcing costs for sales and product demos, branding and public relations expenses and referral fees for strategic partners and other benefits that we provide to our referral and affiliate partners.

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Other Income (Expenses), Net

Other income (expenses), net, consists of the results of operations of our Fifth & Harvey, LLC subsidiary, which holds title to and manages operations of the operating lease for lots in Portland, Oregon that are currently used to host multiple portable food vendors open to the general public, as well as interest income, realized gains and losses on foreign currency transactions, foreign currency remeasurement, and interest paid under our credit facilities with Canadian Imperial Bank of Commerce ("CIBC").

Provision for Income Taxes

Income taxes primarily consist of income taxes in the United States, United Kingdom, Australia, Netherlands and Canada, as well as states in the United States in which we do business.

29

Results of Operations

The results of operations presented below should be reviewed in conjunction with the condensed consolidated financial statements and notes included elsewhere in this Quarterly Report on Form 10-Q.

The following table sets forth our results of operations for each of the periods presented:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
	(in thousands, except percentages, share and per share data)
Revenue	$	35,409		$	36,494		$	102,232		$	115,479
Cost of revenue, net(1)	17,145			17,680			46,091			50,380
Gross margin	18,264			18,814			56,141			65,099
Operating expenses:
Research and development(1)	5,618			6,607			17,936			17,119
General and administrative(1)	9,084			14,245			29,760			38,386
Sales and marketing(1)	3,274			12,860			9,730			36,757
Total operating expenses	17,976			33,712			57,426			92,262
Income (loss) from operations	288			(14,898)			(1,285)			(27,163)
Other income (expenses), net	181			(2,375)			(1,033)			(5,158)
Income (loss) before income taxes	469			(17,273)			(2,318)			(32,321)
(Provision for) benefit from income taxes	(2,667)			270			(6,425)			(1,931)
Net loss	$	(2,198)		$	(17,003)		$	(8,743)		$	(34,252)
Net loss per share:
Basic and diluted	$	(0.02)		$	(0.21)		$	(0.10)		$	(0.42)
Weighted average shares of common stock used to compute net loss per share:
Basic and diluted	88,177,739			82,469,190			86,643,209			82,085,508
Net loss margin	(6)		%	(47)		%	(9)		%	(30)		%

(1)Includes stock-based compensation expense as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands)
Cost of revenue, net	$	2,843	$	3,312	$	8,661	$	10,218
Research and development	2,530		2,901		8,424		7,562
General and administrative	1,560		2,532		4,965		7,552
Sales and marketing	697		1,522		1,485		5,280
Stock-based compensation expense	$	7,630	$	10,267	$	23,535	$	30,612

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COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

Revenue

	Three Months Ended September 30,				Change
	2024		2023		Amount		%
	(in thousands, except percentages)
Revenue	$	35,409	$	36,494	$	(1,085)	(3)	%

Revenue decreased by $1.1 million, or 3%, for the three months ended September 30, 2024 compared to the same period in 2023, primarily due to (i) a decrease in billable activity across our user base, including a decrease in pay-per-use billable activity which has a higher average fee per member than our annual members, and (ii) an increase in contra revenue related to cashback payments driven by the increased adoption and spend captured from members using the Expensify Card. These decreases were partially offset by an increase in interchange revenue driven primarily by a shift in cardholder spend from the Legacy Card Program to the Updated Card Program.

Cost of Revenue, Net and Gross Margin

	Three Months Ended September 30,						Change
	2024			2023			Amount		%
	(in thousands, except percentages)
Cost of revenue, net	$	17,145		$	17,680		$	(535)	(3)	%
Gross margin	$	18,264		$	18,814		$	(550)	(3)	%
Gross margin %	52		%	52		%

Cost of revenue, net decreased by $0.5 million, or 3%, for the three months ended September 30, 2024 compared to the same period in 2023. Cost of revenue, net decreased primarily due to a decrease in total employee and employee related expenses subject to allocation. This was partially offset by a decrease in Consideration from a vendor, net driven primarily by a shift in cardholder spend from the Legacy Card Program to the Updated Card Program.

Gross margin remained consistent at 52% for both the three months ended September 30, 2024 and 2023.

OPERATING EXPENSES

Research and Development

	Three Months Ended September 30,				Change
	2024		2023		Amount		%
	(in thousands, except percentages)
Research and development	$	5,618	$	6,607	$	(989)	(15)	%

Research and development expenses decreased by $1.0 million, or 15%, for the three months ended September 30, 2024 compared to the same period in 2023, primarily due to a decrease in total employee and employee related expenses subject to allocation, partially offset by an increase in time spent on project initiatives and new product features.

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General and Administrative

	Three Months Ended September 30,				Change
	2024		2023		Amount		%
	(in thousands, except percentages)
General and administrative	$	9,084	$	14,245	$	(5,161)	(36)	%

General and administrative expenses decreased by $5.2 million, or 36%, for the three months ended September 30, 2024 compared to the same period in 2023, primarily due to (i) a decrease in total employee and employee related expenses subject to allocation, (ii) a decrease in settlement losses, and (iii) a decrease in business insurance expense.

Sales and Marketing

	Three Months Ended September 30,				Change
	2024		2023		Amount		%
	(in thousands, except percentages)
Sales and marketing	$	3,274	$	12,860	$	(9,586)	(75)	%

Sales and marketing expenses decreased by $9.6 million, or 75%, for the three months ended September 30, 2024 compared to the same period in 2023, primarily due to (i) a decrease in advertising spend, (ii) a decrease in outsourcing activities related to sales and product demos, (iii) a decrease in total employee and employee related expenses subject to allocation and a decrease in time spent on sales and marketing activities, and (iv) a decrease in marketing event spend.

Other income (expenses), net

	Three Months Ended September 30,				Change
	2024		2023		Amount	%
	(in thousands, except percentages)
Other income (expenses), net	$	181	$	(2,375)