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What changed in Expensify, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Expensify, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+426 added−357 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-27)

Top changes in Expensify, Inc.'s 2024 10-K

426 paragraphs added · 357 removed · 291 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

58 edited+9 added−6 removed112 unchanged
Biggest changeWe believe that by keeping our product managers involved with the customers we design and develop features that customers like to use - supporting our product-led growth. MARKETING Our members are our best marketers. They have adopted, championed and spread Expensify to their colleagues, managers and friends.
Biggest changeThe remaining approximately 75% is spent doing traditional account management tasks and performing "supervised training" of the Concierge AI in response to edge case conversations escalated from Second Responders. We believe that by keeping our product managers involved with the customers we design and develop features that customers like to use — supporting our product-led growth.
Each customer has either a "pay per use" plan in which they are billed a flat rate for each active member, or an "annual" plan where they commit to a minimum number of 8 Table of Contents monthly seats in exchange for a discount.
Each customer has either a "pay per use" plan in which they are billed a flat rate for each active member, or an "annual" plan where they commit to a minimum number of monthly seats in 8 Table of Contents exchange for a discount.
We intend to continue our intense design focus on the employee experience, support our viral bottom-up business model to drive profitable growth, and nurture our one-of-a-kind company structure and culture to maintain this competitive advantage. Intellectual Property Our intellectual property is an important aspect of our business and helps us maintain our competitive position.
We continue our intense design focus on the employee experience, to support our viral bottom-up business model to drive profitable growth and to nurture our one-of-a-kind company structure and culture to maintain this competitive advantage. Intellectual Property Our intellectual property is an important aspect of our business and helps us maintain our competitive position.
We believe the principal competitive factors that drive leadership in the markets we compete in include the following: • End user design focus; • Ease of access, adoption, deployment and use; • Platform functionality and ability to automate processes; • Mobile access across devices; • Ability to purchase without a sales representative; • Viral, bottom-up business model supported by word-of-mouth adoption; • High interoperability with internal and third party systems and consumer applications; • Flexible, employee-centric legal terms regarding data ownership; • Data security and privacy; • Speed and scalability of architecture underlying the platform; • Brand reputation and market consensus around platform superiority; and • Customer service and support.
We believe the principal competitive factors that drive leadership in the markets we compete in include the following: • End user design focus; • Ease of access, adoption, deployment and use; • Platform functionality and ability to automate processes; • Mobile access across devices; • Ability to purchase without a sales representative; • Viral, bottom-up business model supported by word-of-mouth adoption; • High interoperability with internal and third party systems and consumer applications; 17 Table of Contents • Flexible, employee-centric legal terms regarding data ownership; • Data security and privacy; • Speed and scalability of architecture underlying the platform; • Brand reputation and market consensus around platform superiority; and • Customer service and support.
Under the original Expensify Card program launched in 2020 (“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.
Under the original Expensify Card program launched in 2020 (“Legacy Card Program”), Expensify has an agreement with the payment processor, Marqeta, Inc. ("Marqeta"), and relied on Marqeta to manage the relationship with the issuing bank, Sutton Bank, and the card network, Visa, in authorizing and settling transactions.
This enables us to focus our time and resources on making our features better for our members, and avoid the reliance on a costly, traditional top-down sales and marketing approach to attract and retain customers. 6 Table of Contents • Word-of-mouth adoption supported by a market consensus approach. We believe that our happy members are the best form of marketing.
This enables us to focus our time and resources on making our features better for our members, and avoid the reliance on a costly, traditional top-down sales and marketing approach to attract and retain customers. • Word-of-mouth adoption supported by a market consensus approach. We believe that our happy members are the best form of marketing.
Our usage within an organization expands further as the company adds members and adopts new features such as the Expensify Card or Bill Pay. We offer simple, transparent and flexible subscription plans for both individuals and businesses that are completely self-service and payable by credit card.
Our usage within an organization expands further as the company adds members and adopts new features such as the Expensify Visa® Commercial Card ("Expensify Card"), Expensify Travel or Bill Pay. We offer simple, transparent and flexible subscription plans for both individuals and businesses that are completely self-service and payable by credit card.
While other financial processes have seen vast efficiency improvements with the widespread adoption of cloud-based ecosystems, company-focused preaccounting tasks such as expense management have largely remained unchanged, and 10 Table of Contents therefore are still overwhelmingly inefficient, unscalable and time-consuming.
While other financial processes have seen vast efficiency improvements with the widespread adoption of cloud-based ecosystems, company-focused preaccounting tasks such as expense management have largely remained unchanged, and therefore are still overwhelmingly inefficient, unscalable and time-consuming.
Outside of expense management, we have expanded our platform and built invoicing and bill payment features with the goal of replicating the frictionless adoption of our expense management feature. By sending an invoice using Expensify, 9 Table of Contents accounts receivable departments naturally promote Expensify to their clients.
Outside of expense management, we have expanded our platform and built invoicing and bill payment features with the goal of replicating the frictionless adoption of our expense management feature. By sending an invoice using Expensify, accounts receivable departments naturally promote Expensify to their clients.
Our sales model focuses on enabling customer self-service and low-friction entry points enhanced with AI powered customer service. Our customers can access free and fully functional trials. When a member has 16 Table of Contents completed their platform evaluation, purchasing is coordinated online through an automated, easy-to-use web or mobile based process.
Our sales model focuses on enabling customer self-service and low-friction entry points enhanced with AI powered customer service. Our customers can access free and fully functional trials. When a member has completed their platform evaluation, purchasing is coordinated online through an automated, easy-to-use web or mobile based process.
We believe that always having the pain points of our members at the center of every technology decision and feature we develop enables us to consistently deliver an improved experience for every employee in an organization. 7 Table of Contents • One platform, many features.
We believe that always having the pain points of our members at the center of every technology decision and feature we develop enables us to consistently deliver an improved experience for every employee in an organization. • One platform, many features.
Going forward, we intend to increase the promotion of the Expensify Card to both new and existing customers to drive growth in adoption; • Promote Expensify’s culture and values. We believe that consumers are more likely to both use and recommend products from brands they admire.
We intend to continue to increase the promotion of the Expensify Card to both new and existing customers to drive growth in adoption; • Promote Expensify’s culture and values. We believe that consumers are more likely to both use and recommend products from brands they admire.
Bills sent to a company’s @expensify.cash address are automatically SmartScanned, which captures key details for easy review and processing. • Real-time communication. Customers can leave comments or ask questions on the invoice and both parties can chat in real time directly in Expensify, or receive an email instantly. • Extensive integrations.
Bills sent to a company’s @expensify.cash address are automatically SmartScanned, which captures key details for easy review and processing. • Real-time communication. Customers can leave comments or ask questions on the invoice and both parties can chat in real time directly in Expensify, or receive an email instantly. 13 Table of Contents • Extensive integrations.
Our business subscriptions can be used by teams, organizations, and companies for free or upgraded to one of our paid plans, which include our Collect and Control plans, following a free trial. We bill customers on Collect and Control plans at the start of each month based on the number of policy members who were active in the previous month.
Our business subscriptions can be used by teams, organizations, and companies on one of our paid plans, which include our Collect and Control plans, following a free trial. We bill customers on Collect and Control plans at the start of each month based on the number of policy members who were active in the previous month.
Our Compliance and Data Security We are PCI-DSS, SOC1 Type II, and SOC2 Type II compliant, with external parties performing "grey box" testing. We are integrated with most major banks in the United States, and we process billions of dollars in expense reimbursements every year and are audited annually by our processing bank.
Our Compliance and Data Security We are PCI-DSS Level 1, SOC1 Type II, and SOC2 Type II compliant, with external parties performing "grey box" testing. We are integrated with most major banks in the United States, and we process billions of dollars in expense reimbursements every year and are audited periodically by our processing bank.
Since our founding in 2008, we have added over 15 million members to our community, and processed and automated over 1.5 billion expense transactions on our platform as of December 31, 2023, freeing people to spend less time managing expenses and more time doing the things they love.
Since our founding in 2008, we have added over 15 million members to our community, and processed and automated over 1.7 billion expense transactions on our platform as of December 31, 2024, freeing people to spend less time managing expenses and more time doing the things they love.
We also had approximately 83 trademark registrations (including international registrations) and approximately 29 pending applications in certain foreign jurisdictions, including Canada, the European Union, the United Kingdom, Mexico, Brazil, Australia and New Zealand. We will pursue additional trademark registrations to the extent we believe it would be beneficial and cost effective.
We also had approximately 101 trademark registrations (including international registrations) and approximately 11 pending applications in certain foreign jurisdictions, including Canada, the European Union, the United Kingdom, Mexico, Brazil, Australia and New Zealand. We will pursue additional trademark registrations to the extent we believe it would be beneficial and cost effective.
We take privacy and data security seriously and design our systems and processes based on applicable domestic and international data privacy regulations, which sometimes change faster than the wind. Our Data As of December 31, 2023, we have processed over 1.5 billion expense transactions for our customers.
We take privacy and data security seriously and design our systems and processes based on applicable domestic and international data privacy regulations, which sometimes change faster than the wind. Our Data As of December 31, 2024, we have processed over 1.7 billion expense transactions for our customers.
For additional information about our intellectual property and associated risks, see the section titled “Risk Factors—Risks Related to Our Business.” Government Regulation Our business activities are subject to various federal, state, local and foreign laws, rules and regulations.
For additional information about our intellectual property and associated risks, see the section titled “Risk Factors—Risks Related to Our Business.” 18 Table of Contents Government Regulation Our business activities are subject to various federal, state, local and foreign laws, rules and regulations.
We will continue to focus on maintaining and extending the virality of our features to support our viral, bottom-up business model; • Expand and monetize transaction volume from existing and new customers.
We continue to focus on maintaining and extending the virality of our features to support our viral, bottom-up business model; 9 Table of Contents • Expand and monetize transaction volume from existing and new customers.
For the quarter ended December 31, 2023, an average of 719,000 paid members across an average of 47,000 companies and over 200 countries and territories used Expensify to make money easy.
For the quarter ended December 31, 2024, an average of 687,000 paid members across an average of 47,600 companies and over 200 countries and territories used Expensify to make money easy.
Invoicing & Bill Pay Key capabilities of our invoicing and bill payment features include: • Payments made easy. With multiple payment options, including credit/debit card, ACH and check, customers across the globe have access to quick, easy and frictionless payment options. • Eliminate manual entry.
This facilitates smooth coordination and immediate support when needed. Invoicing & Bill Pay Key capabilities of our invoicing and bill payment features include: • Payments made easy. With multiple payment options, including credit/debit card, ACH and check, customers across the globe have access to quick, easy and frictionless payment options. • Eliminate manual entry.
Our goal is to continue increasing the number of companies that have adopted the Expensify Card and the number of members that have a card provisioned per company, both of which would increase the amount of total spend c onverted to the Expensify Card.
We believe we have growth potential in many areas in regards to the Expensify Card. Our goal is to continue increasing the number of companies that have adopted the Expensify Card and the number of members that have a card provisioned per company, both of which would increase the amount of total spend c onverted to the Expensify Card.
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) are also available free of charge on our investor relations website, investors.expensify.com as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. 18 Table of Contents We provide notifications of news or announcements regarding our financial performance, including SEC filings, investor events, press and earnings releases, on our investor relations website.
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) are also available free of charge on our investor relations website, investors.expensify.com as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
We also own several domain names, including www.expensify.com, use.expensiffy.com, www.expensify.org, and new.expensify.com. As of December 31, 2023, we had 23 issued patents and 15 pending patent applications in the United States. Our issued patents expire between August 18, 2028 and March 26, 2040. We have 1 pending application in Europe, Australia and Canada.
We also own several domain names, including www.expensify.com, use.expensiffy.com, www.expensify.org, and new.expensify.com. As of December 31, 2024, we had 26 issued patents and 12 pending patent applications in the United States. Our issued patents expire between August 18, 2028 and March 26, 2040.
Our comprehensive financial platform offers a wide range of easy-to-use but powerful features that automate the preaccounting processes for businesses of all sizes – including managing expenses, capturing and managing spend via the Expensify Card and more recently, paying bills and sending invoices, all included in the Expensify platform.
Our comprehensive financial platform offers a wide range of easy-to-use but powerful features that automate the preaccounting processes for businesses of all sizes – including managing expenses, capturing and managing spend via the Expensify Card and more recently, paying bills and sending invoices, all included in the Expensify platform. 10 Table of Contents Expense Management Expenses are among the most complicated preaccounting workflow, no matter the size of a company.
Our Culture, Employees and Human Capital At Expensify, our culture is deeply embedded in everything we do. We strive to create a diverse, inclusive and collaborative workplace that prioritizes and fosters the long-term happiness of our employees.
We believe that our data asset will continue to expand the value of our platform and drive future growth. Our Culture, Employees and Human Capital At Expensify, our culture is deeply embedded in everything we do. We strive to create a diverse, inclusive and collaborative workplace that prioritizes and fosters the long-term happiness of our employees.
We want to have a “comfortable baseline,” where on a dull, ordinary day we wake up refreshed and excited to take on the day’s challenges, and go to bed each night fully satisfied in life well lived and a job well done. 14 Table of Contents • Have Fun.
We want to have a “comfortable baseline,” where on a dull, ordinary day we wake up refreshed and excited to take on the day’s challenges, and go to bed each night fully satisfied in life well lived and a job well done. • Have Fun. Sometimes, we want to do stuff that is awesome just for the sake of awesomeness.
Our Collect plan enables our members to integrate with popular small business accounting systems, configure simple expense report approval workflows, as well as pay employees, contractors and volunteers via Direct Deposit ACH or internationally via Global Reimbursements. ◦ Control.
Collect and Control customers can access additional discounts if they spend on the Expensify Card: • Paid Plans ◦ Collect. Our Collect plan enables our members to integrate with popular small business accounting systems, configure simple expense report approval workflows, as well as pay employees, contractors and volunteers via Direct Deposit ACH or internationally via Global Reimbursements. ◦ Control.
Key capabilities of the Expensify Card include: • Streamlined card application/setup. Companies receive an automated approval decision in seconds, and card provisioning for an entire organization is possible in a few minutes. Every member receives a virtual card for immediate use. • Continuous automatic reconciliation . Card transactions are synchronized in real-time between Expensify and a company’s accounting systems.
Key capabilities of the Expensify Card include: • Streamlined card application/setup. Companies receive an automated approval decision in seconds, and card provisioning for an entire organization is possible in a few minutes. Every member receives a virtual card for immediate use. • Unlimited virtual cards.
Expense Management Expenses are among the most complicated preaccounting workflow, no matter the size of a company. Expenses touch every employee, span every layer of the organization and require interaction with a host of internal and external business systems. While the expense management process is incredibly complex, it largely occurs in three distinct, sequential phases: Capture > Approve > Pay.
Expenses touch every employee, span every layer of the organization and require interaction with a host of internal and external business systems. While the expense management process is incredibly complex, it largely occurs in three distinct, sequential phases: Capture > Approve > Pay. CAPTURE Most of today’s financial data still exists on paper.
The strength of our solution and its user-friendly nature creates advocates of our platform and allows Expensify to spread virally, through word-of-mouth, across teams, departments and organizations. This word-of-mouth marketing increases organically as more individual members and teams discover our platform.
We make our platform available for free trial online, which facilitates rapid and widespread adoption. The strength of our solution and its user-friendly nature creates advocates of our platform and allows 16 Table of Contents Expensify to spread virally, through word-of-mouth, across teams, departments and organizations. This word-of-mouth marketing increases organically as more individual members and teams discover our platform.
SmartScan optimizes for high-accuracy data extraction to support our “fire and forget” receipt capture. • Credit card matching. Receipts and emails are automatically matched to incoming credit card transactions in real-time, preventing duplicates and reducing the need to manually reconcile credit card statements at month end. • Mobile expense capture.
Receipts and emails are automatically matched to incoming credit card transactions in real-time, preventing duplicates and reducing the need to manually reconcile credit card statements at month end. • Mobile expense capture.
Sometimes, we want to do stuff that is awesome just for the sake of awesomeness. Not too often, but often enough to remind ourselves that we are living life to its fullest, and enabling others to do the same.
Not too often, but often enough to remind ourselves that we are living life to its fullest, and enabling others to do the same.
Our Business Model Our platform strategy enables a viral bottom-up business model that is capital efficient and extremely scalable. Anyone can easily download our mobile application or go to our website to sign up for free on their own, and later upgrade to a paid subscription for advanced features.
Anyone can easily download our mobile application or go to our website to sign up for free on their own, and later upgrade to a paid subscription for advanced features.
Every receipt we process through our OCR technology makes our SmartScan technology more accurate, every transaction we process and backtest enhances our fraud protection capabilities and every customer inquiry we resolve allows Concierge to answer future questions faster. We believe that our data asset will continue to expand the value of our platform and drive future growth.
Every receipt we process through our OCR technology makes our SmartScan technology more accurate, every transaction we process and backtest enhances our fraud protection capabilities and every customer inquiry we resolve 14 Table of Contents allows Concierge to answer future questions faster.
Daily settlement also helps smooth cash flows throughout the month, as opposed to one large, uncertain lump sum at month end. Companies can also choose monthly settlement if they prefer a more classic experience. 12 Table of Contents • Integrated travel booking .
Ensure that employees never overspend what a company is able to pay. Daily settlement also helps smooth cash flows throughout the month, as opposed to one large, uncertain lump sum at month end. Companies can also choose monthly settlement if they prefer a more classic experience.
We believe that our unique culture and our employees’ happiness and long-term commitment to Expensify is a critical component of our success. As of December 31, 2023 we had 133 full-time employees. None of our employees are represented by a labor union or covered by collective bargaining agreements.
We believe that our unique culture and our employees’ happiness and long-term commitment to Expensify is a critical component of our success. As of December 31, 2024 we had 115 full-time employees.
We provide our employees with competitive compensation, comprehensive healthcare options and equity ownership across our organization. We encourage a balanced lifestyle by offering our employees the flexibility to work remotely and set their own schedules.
We remain committed to reevaluating ourselves and continuing to foster a workplace environment that prioritizes the well-being of each and every Expensify employee. We provide our employees with competitive compensation, comprehensive healthcare options and equity ownership across our organization. We encourage a balanced lifestyle by offering our employees the flexibility to work remotely and set their own schedules.
We continually review our development efforts to assess the existence and patentability of new intellectual property. We control access to our intellectual property and confidential information through internal and external controls.
We have 2 pending applications in each of Europe, Australia and Canada, and 1 pending application in the Patent Cooperation Treaty. We continually review our development efforts to assess the existence and patentability of new intellectual property. We control access to our intellectual property and confidential information through internal and external controls.
CAPTURE Most of today’s financial data still exists on paper. Expensify streamlines the capture and normalization of disparate financial data in the following ways: • SmartScan. Snap a photo of your receipt, forward receipts from email, or upload attachments directly in the application.
Expensify streamlines the capture and normalization of disparate financial data in the following ways: • SmartScan. Snap a photo of your receipt, forward receipts from email, or upload attachments directly in the application. SmartScan optimizes for high-accuracy data extraction to support our “fire and forget” receipt capture. • Credit card matching.
We strive to build a superior platform that makes the lives of employees and admins easier so that they become our champions and promote us to other individuals and organizations. We deploy large scale brand advertising to build on this platform superiority and help create market consensus that Expensify is the category leader for expense management software.
We deploy large scale brand advertising to build on this platform superiority and help create market consensus that Expensify is the category leader for expense management software.
The contents of these websites are not intended to be incorporated by reference into this report or in any other report or document we file. 19 Table of Contents
We provide notifications of news or announcements regarding our financial performance, including SEC filings, investor events, press and earnings releases, on our investor relations website. The contents of these websites are not intended to be incorporated by reference into this report or in any other report or document we file. 19 Table of Contents
We have empowered employees to simplify and streamline expense management and in the process we have created champions of our solutions who naturally demonstrate the value of Expensify to decision makers at their broader organizations. We make our platform available for free trial online, which facilitates rapid and widespread adoption.
MARKETING Our members are our best marketers. They have adopted, championed and spread Expensify to their colleagues, managers and friends. We have empowered employees to simplify and streamline expense management and in the process we have created champions of our solutions who naturally demonstrate the value of Expensify to decision makers at their broader organizations.
Our Customer Success team works closely with our customers to identify our members’ greatest needs and act as our primary Product Managers to develop features that reflect their feedback.
Our Customer Success team works closely with our customers to identify our members’ greatest needs and act as our primary Product Managers to develop features that reflect their feedback. We build our software with the end user at the center of every decision, investing substantial time, energy and resources to ensure we have a deep understanding of our members’ needs.
Various other marks have. also been published such as EXPENSIFY PAYMENTS, EASY MONEY, EXPENSIFY IS EASY MONEY, KARMA POINTS, CORPORATE KARMA, and PERSONAL KARMA. Applications for the Expensify logo and NEW EXPENSIFY have been filed and are awaiting examination.
Various other marks have also been published by us such as EXPENSIFY PAYMENTS, AT THE SPEED OF CHAT, TRAVEL AND EXPENSE AT THE SPEED OF CHAT, EASY MONEY, EXPENSIFY IS EASY MONEY, EXPENSIFY – IT’S EASY MONEY, NEW EXPENSIFY, KARMA POINTS and the Expensify “E” Logo.
We develop our features in a compounding manner, which means that everything we build improves everything we've already built, and lays a foundation for what we will build next. This enables increasingly rapid deployment of new features that solve other problems for our members and allows us to extend the network effect of our platform. • Highly integrated.
We develop our features in a compounding manner, which means that everything we build 7 Table of Contents improves everything we've already built, and lays a foundation for what we will build next.
Approximately 75% of Success Coach time is spent on traditional product management activity (i.e., writing product proposals, engaging with the product development team, testing new functionality, updating documentation). The remaining approximately 25% is spent doing "supervised training" of the Concierge AI in response to edge case conversations escalated from Second Responders.
Success Coaches are full-time employees who manage the bulk of our product management. Approximately 25% of Success Coach time is spent on traditional product management activity (i.e., writing product proposals, engaging with the product development team, testing new functionality, updating documentation).
Second Responders receive more in depth training and answer more complex questions, as well as those that require a deeper understanding of the platform. The costs of maintaining a team of First and Second Responders scales according to support volume, but thanks to Concierge, benefits from extraordinary economies of scale as well as consistency in speed and quality.
The costs of maintaining a team of First and Second Responders scales according to support volume, but thanks to Concierge, benefits from extraordinary economies of scale as well as consistency in speed and quality. First and Second Responders are employed and managed by vendors, which helps us efficiently scale up and down based on support volumes.
We also engage third-party vendors to supply on-demand workers as needed to support our operations. We have not experienced any work stoppages, and we believe that our employee relations are strong. We remain committed to reevaluating ourselves and continuing to foster a workplace environment that prioritizes the well-being of each and every Expensify employee.
None of our employees are represented by a labor union or covered by collective bargaining agreements. 15 Table of Contents We also engage third-party vendors to supply on-demand workers as needed to support our operations. We have not experienced any work stoppages, and we believe that our employee relations are strong.
He developed a platform to load gift cards on-demand from his personal credit card to offer funds immediately for individuals in his neighborhood to purchase food.
He developed a platform to load gift cards on-demand from his personal credit card to offer funds immediately for individuals in his neighborhood to purchase food. While this idea didn’t take off, David held onto the concept for more than a decade until it became a reality with the launch of Expensify.org.
To establish and protect our rights in our proprietary intellectual property, we rely upon a combination of patent, copyright, trade secret and trademark laws, and contractual restrictions such as confidentiality agreements, licenses and intellectual property assignment agreements. 17 Table of Contents As of December 31, 2023, we had 15 trademark registrations in the United States, including EXPENSIFY, EXPENSICON, EXPENSIFY THIS, SMARTSCAN, CONCEIRGE, YOU WEREN’T BORN TO DO EXPENSES, LAT* TALKS LAT TALKS, SWIPE TO WIN, and LONG ASS TABLE TALKS.
To establish and protect our rights in our proprietary intellectual property, we rely upon a combination of patent, copyright, trade secret and trademark laws, and contractual restrictions such as confidentiality agreements, licenses and intellectual property assignment agreements.
We designed our platform to easily integrate with other business and consumer applications. We offer over 40 pre-built integrations, allowing Expensify to seamlessly connect with accounting and HR systems, travel management software, business and employee bank accounts and credit cards.
We offer over 50 pre-built integrations, allowing Expensify to seamlessly connect with accounting and HR systems, travel management software, business and employee bank accounts and credit cards. These integrations enable our members to synchronize data in real-time across their technology ecosystem and automate expense management with the applications and tools they use every day.
Companies that spend over $250,000 on their Expensify Cards per month receive 2% cashback for all USD purchases or 1% for all USD purchases if monthly spend is under $250,000. • Daily settlement option . Ensure that employees never overspend what a company is able to pay.
Companies with settled spend in the United States ("U.S.") over $250,000 per month on their Expensify Cards under the Updated Card Program (defined below) receive 2% cashback for all U.S. purchases or 1% for all U.S. purchases if monthly settled spend in the U.S. is under $250,000. 12 Table of Contents • Daily settlement option .
While this idea didn’t take off, David held onto the concept for more than a decade until it became a reality with the launch of Expensify.org and its corporate-card-fueled donations called Karma Points. 13 Table of Contents Through Expensify.org, we seek to empower individuals and communities to eliminate injustice around the world by making giving and volunteering more convenient, accountable, meaningful and collaborative.
Through Expensify.org, we seek to empower individuals and communities to eliminate injustice around the world by making giving and volunteering more convenient, accountable, meaningful and collaborative.
Concierge is powered by AI and trained by customer support agents, with different levels of skill and training, spread out across the world. First Responders provide simple support that requires minimal training, with the primary requirement being English proficiency.
CUSTOMER SUCCESS Concierge is our customer support engine. Concierge is designed for speed and accuracy and optimized for cost. Concierge is powered by AI and trained by customer support agents, with different levels of skill and training, spread out across the world. Concierge is also supported with generative AI trained on how to use Expensify.
These integrations enable our members to synchronize data in real-time across their technology ecosystem and automate expense management with the applications and tools they use every day. We believe that elements of our platform strategy are a critical driver of the viral, widespread adoption of Expensify across and between any type of organization.
We believe that elements of our platform strategy are a critical driver of the viral, widespread adoption of Expensify across and between any type of organization. Our Business Model Our platform strategy enables a viral bottom-up business model that is capital efficient and extremely scalable.
As of December 31, 2023, the Updated Card Program had not yet launched to customers. Once the Updated Card Program is launched, the Company will concurrently operate the Legacy Card Program and Updated Card Program, with all new Expensify Card issuances being under 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. As of December 31, 2024, our transition of cardholders from the Legacy Card Program to the Updated Card Program was substantially complete.
Removed
Collect and Control customers can access additional discounts if they spend on the Expensify Card: • Free Plans ◦ Free. Our Free plan enables our members to roll out a corporate card program with the Expensify Card, reimburse cash expenses for employees, send invoices to clients and set up bill payment for their team. • Paid Plans ◦ Collect.
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We strive to build a superior platform that makes the lives of 6 Table of Contents employees and admins easier so that they become our champions and promote us to other individuals and organizations.
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We fully launched the Expensify Card in 2020 and, despite pullback in corporate expenses with the COVID-19 pandemic, customers began adopting the card, especially as business travel resumed following challenges caused by the COVID-19 pandemic.
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This enables increasingly rapid deployment of new features that solve other problems for our members and allows us to extend the network effect of our platform. • Highly integrated. We designed our platform to easily integrate with other business and consumer applications.
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Offered at no additional cost for all cardholders, administrators can set flight class, hotel ratings and other travel preferences to ensure that bookings comply with company policy.
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Companies can issue an unlimited number of virtual cards with fixed amount or monthly spend limits. This allows for issuing cards for specific merchants or subscriptions and ensuring spend does not exceed your budget. • Continuous automatic reconciliation . Card transactions are synchronized in real-time between Expensify and a company’s accounting systems.
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Reporting tools give admins full visibility into trip costs, and currently every booking comes with emergency transportation services in partnership with Global Rescue at no additional cost, as well as health and security assessments applicable for their destination. We believe we have growth in many areas in regards to the Expensify Card.
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Expensify Travel Expensify Travel is a travel platform that simplifies business travel by integrating booking, approvals, payments, and collaboration into one seamless experience. It has the following key capabilities: • Seamless bookings. Easily book flights, hotels, rail, and car rentals all from the Expensify app, with options tailored to fit your company’s travel policy.
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We build our software with the end user at the center of every decision, investing substantial time, energy and resources to ensure we have a deep understanding of our members’ needs. 15 Table of Contents CUSTOMER SUCCESS Concierge is our customer support engine. Concierge is designed for speed and accuracy and optimized for cost.
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This is designed to provide travelers the best options while staying within their company's budget and compliance guidelines. • Smart approvals. Real-time, policy-driven approvals ensure trips are authorized quickly, reducing the risk of unnecessary change or cancellation fees. Managers can approve trips with confidence, knowing they align with company policies. • Streamlined payments and reporting.
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First and Second Responders are employed and managed by vendors, which helps us efficiently scale up and down based on support volumes. Success Coaches are full-time employees who manage the bulk of our product management.
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Centralized virtual card payments simplify expense reconciliation, while automated reporting instantly captures every receipt and change fee for hassle-free tracking. This eliminates manual expense reporting and speeds up reimbursements. • Real-time collaboration. Dedicated chat rooms connect travelers and travel managers, keeping everyone on the same page with instant updates, approvals, and duty-of-care communication throughout the trip.
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All customer inquiries are screened to see if they can be answered from our help documentation. If they can be, Concierge will automatically respond with an answer formulated by generative AI using the help documentation as its source. Approximately 80% of initial inquiries are able to be answered automatically by Concierge without escalation.
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First Responders provide simple support that requires minimal training, with the primary requirement being English proficiency. Second Responders receive more in depth training and answer more complex questions, as well as those that require a deeper understanding of the platform.
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As of December 31, 2024, we had 16 trademark registrations in the United States, including EXPENSIFY, EXPENSICON, PERSONAL KARMA, EXPENSIFY THIS, SMARTSCAN, CONCEIRGE, CORPORATE KARMA, YOU WEREN’T BORN TO DO EXPENSES, LAT* TALKS, LAT TALKS, SWIPE TO WIN, and LONG ASS TABLE TALKS.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

142 edited+78 added−30 removed411 unchanged
Biggest changeWe cannot guarantee that our share repurchase program will be fully consummated or that it will enhance long-term stockholder value. Share repurchases could also increase the volatility of the trading price of our common stock and could diminish our cash reserves.
Biggest changeShare repurchases could also increase the volatility of the trading price of our common stock and could diminish our cash reserves. On February 25, 2025, the Executive Committee authorized a share repurchase program to repurchase up to $50 million of our outstanding Class A common stock, which replaces the Company's share repurchase program that was approved in 2022.
To increase our revenue, we must increase our customer base through various methods, including but not limited to, retaining existing customers, adding new customers, converting individuals and organizations using our free basic expense management feature and trial subscriptions into paying customers, and expanding usage within organizations.
To increase our revenue, we must increase our customer base through various methods, including but not limited to, retaining existing customers, adding new customers, converting individuals using our free basic expense management feature and organizations using our trial subscriptions into paying customers, and expanding usage within organizations.
Governmental and regulatory bodies and authorities may also impose new or additional requirements on our business or issue or promulgate new laws, regulations, or rules applicable to persons engaged in money transmission that adversely affect our business, including those that: • prohibit, restrict, and/or impose taxes or fees on money transmission transactions in, to or from certain countries or with certain governments, individuals, or entities; • impose additional customer identification and customer due diligence requirements; • impose additional reporting or recordkeeping requirements, or require enhanced transaction monitoring; • limit the types of entities capable of providing money transmission services, or impose additional licensing or registration requirements; • impose minimum capital or other financial requirements; • limit or restrict the revenue that may be generated from money transmission, including revenue from interest earned on customer funds, transaction fees, and revenue derived from foreign exchange; • require enhanced disclosures to our money transmission customers; • require the principal amount of money transmission originated in a country to be invested in that country or held in trust until paid; 28 Table of Contents • limit the number or principal amount of money transmission transactions that may be sent to or from a jurisdiction, whether by an individual or in the aggregate; • restrict or limit our ability to process transactions using centralized databases, for example, by requiring that transactions be processed using a database maintained in a particular country or region; or • impose other requirements in furtherance of their missions.
Governmental and regulatory bodies and authorities may also impose new or additional requirements on our business or issue or promulgate new laws, regulations, or rules applicable to persons engaged in money transmission that adversely affect our business, including those that: • prohibit, restrict, and/or impose taxes or fees on money transmission transactions in, to or from certain countries or with certain governments, individuals, or entities; • impose additional customer identification and customer due diligence requirements; 28 Table of Contents • impose additional reporting or recordkeeping requirements, or require enhanced transaction monitoring; • limit the types of entities capable of providing money transmission services, or impose additional licensing or registration requirements; • impose minimum capital or other financial requirements; • limit or restrict the revenue that may be generated from money transmission, including revenue from interest earned on customer funds, transaction fees, and revenue derived from foreign exchange; • require enhanced disclosures to our money transmission customers; • require the principal amount of money transmission originated in a country to be invested in that country or held in trust until paid; • limit the number or principal amount of money transmission transactions that may be sent to or from a jurisdiction, whether by an individual or in the aggregate; • restrict or limit our ability to process transactions using centralized databases, for example, by requiring that transactions be processed using a database maintained in a particular country or region; or • impose other requirements in furtherance of their missions.
In the future, as a result of the laws and regulations applicable to us and our business, we could be subject to investigations, inspections, examinations, and supervision, and resulting liability, including governmental fines, restrictions on our business, or other similar enforcement actions, and we could be forced to cease conducting certain aspects of our business with residents of certain jurisdictions, be forced to change our business practices in certain jurisdictions, or be required to obtain additional licenses, regulatory approvals, or other similar authorizations.
As a result of the laws and regulations applicable to us and our business, we are and could in the future be subject to investigations, inspections, examinations, and supervision, and resulting liability, including governmental fines, restrictions on our business, or other similar enforcement actions, and we could be forced to cease conducting certain aspects of our business with residents of certain jurisdictions, be forced to change our business practices in certain jurisdictions, or be required to obtain additional licenses, regulatory approvals, or other similar authorizations.
In addition, we 36 Table of Contents face risks in doing business internationally that could adversely affect our business and results of operations, including: • the need to localize and adapt our platform and features for specific countries, including translation into foreign languages, tax and regulatory updates and associated expenses; • data privacy laws that impose different and potentially conflicting obligations with respect to how personal data is processed or require that customer data be stored in a designated territory; • more fragmented partner market which proves to be harder for our platform to integrate with; • difficulties in staffing and managing foreign operations; • regulatory and other delays and difficulties in setting up foreign operations; • different pricing environments, longer accounts receivable payment cycles and collections issues; • new and different sources of competition; • weaker protection for intellectual property and other legal rights than in the United States and practical difficulties in enforcing intellectual property and other rights outside of the United States; • laws and business practices favoring local competitors; • compliance challenges related to the complexity of multiple, conflicting and changing governmental laws and regulations; • exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
In addition, we face risks in doing business internationally that could adversely affect our business and results of operations, including: • the need to localize and adapt our platform and features for specific countries, including translation into foreign languages, tax and regulatory updates and associated expenses; • data privacy laws that impose different and potentially conflicting obligations with respect to how personal data is processed or require that customer data be stored in a designated territory; • more fragmented partner market which proves to be harder for our platform to integrate with; • difficulties in staffing and managing foreign operations; • regulatory and other delays and difficulties in setting up foreign operations; • different pricing environments, longer accounts receivable payment cycles and collections issues; • new and different sources of competition; • weaker protection for intellectual property and other legal rights than in the United States and practical difficulties in enforcing intellectual property and other rights outside of the United States; • laws and business practices favoring local competitors; • compliance challenges related to the complexity of multiple, conflicting and changing governmental laws and regulations; • exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
In the past, regulators have identified violations or alleged violations of certain statutory and regulatory requirements, and we have been subject to fines and other penalties by state regulatory authorities due to their interpretation and application of their respective state money transmitter regime to our activities.
In the past, regulators have identified violations or alleged violations by us of certain statutory and regulatory requirements, and we have been subject to fines and other penalties by state regulatory authorities due to their interpretation and application of their respective state money transmitter regime to our activities.
Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant 60 Table of Contents and, with respect to any criminal proceeding, had no reasonable cause to believe such person’s conduct was unlawful; • we may, in our discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law; • we are required to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding, except that such directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification; • the rights conferred in our amended and restated bylaws are not exclusive, and we are authorized to enter into indemnification agreements with our directors, officers, employees and agents and to obtain insurance to indemnify such persons; and • we may not retroactively amend our amended and restated bylaw provisions to reduce our indemnification obligations to directors, officers, employees and agents.
Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant and, with respect to any criminal proceeding, had no reasonable cause to believe such person’s conduct was unlawful; • we may, in our discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law; • we are required to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding, except that such directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification; • the rights conferred in our amended and restated bylaws are not exclusive, and we are authorized to enter into indemnification agreements with our directors, officers, employees and agents and to obtain insurance to indemnify such persons; and • we may not retroactively amend our amended and restated bylaw provisions to reduce our indemnification obligations to directors, officers, employees and agents.
As of December 31, 2023, businesses with fewer than 1,000 employees accounted for approximately 95% of our customers by revenue, and we focus our product, marketing and sales efforts on these businesses, including SMBs. These customers may be more susceptible to general economic conditions than larger businesses, which may have greater liquidity and access to capital.
As of December 31, 2024, businesses with fewer than 1,000 employees accounted for approximately 95% of our customers by revenue, and we focus our product, marketing and sales efforts on these businesses, including SMBs. These customers may be more susceptible to general economic conditions than larger businesses, which may have greater liquidity and access to capital.
We may also review or revise our software architecture as we grow, which may require significant resources and investments. For example, we recently released the first version of an open-source financial group chat optimized for financial conversations, designed to be used both in and outside of work, and maintained by a community of open source developers.
We may also review or revise our software architecture as we grow, which may require significant resources and investments. For example, in 2021 we released the first version of an open-source financial group chat optimized for financial conversations, designed to be used both in and outside of work, and maintained by a community of open source developers.
If we were to become involved in 58 Table of Contents securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business, results of operations and financial condition. See Part I, Item 3 "Legal Proceedings" for additional information regarding our legal proceedings.
If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of 61 Table of Contents management from our business, and adversely affect our business, results of operations and financial condition. See Part I, Item 3 "Legal Proceedings" for additional information regarding our legal proceedings.
Foreign Corrupt Practices Act, U.S. bribery laws, the UK Bribery Act and similar laws and regulations in other jurisdictions; • increased financial accounting and reporting burdens and complexities; • declines in the values of foreign currencies relative to the U.S. dollar; • restrictions on the transfer of funds; • potentially adverse tax consequences; • the cost of and potential outcomes of any claims or litigation; • future accounting pronouncements and changes in accounting policies; • changes in tax laws or tax regulations; • health or similar issues, such as a pandemic or epidemic; and • regional and local economic and political conditions.
Foreign Corrupt Practices Act, U.S. bribery laws, the UK Bribery Act and similar laws and regulations in other jurisdictions; • increased financial accounting and reporting burdens and complexities; • declines in the values of foreign currencies relative to the U.S. dollar; • restrictions on the transfer of funds; • potentially adverse tax consequences; • the cost of and potential outcomes of any claims or litigation; • future accounting pronouncements and changes in accounting policies; 39 Table of Contents • changes in tax laws or tax regulations; • health or similar issues, such as a pandemic or epidemic; and • regional and local economic and political conditions.
CIBC could also exercise its rights as collateral agent to take possession of, and to dispose of, the collateral securing the loans, which collateral includes substantially all of our personal property (including intellectual property). Our business, financial condition and results of operations could be materially adversely affected as a result of any of these events.
CIBC could also exercise its rights as collateral agent to take possession of, and to dispose of, the collateral securing the loan, which collateral includes substantially all of our personal property (including intellectual property). Our business, financial condition and results of operations could be materially adversely affected as a result of any of these events.
In addition, 57 Table of Contents in July 2017, S&P Dow Jones, another provider of widely followed stock indexes, stated that companies with multiple share classes will not be eligible for certain of their indexes. As a result, our Class A common stock will likely not be eligible for these stock indexes.
In addition, in July 2017, S&P Dow Jones, another provider of widely followed stock indexes, stated that companies 60 Table of Contents with multiple share classes will not be eligible for certain of their indexes. As a result, our Class A common stock will likely not be eligible for these stock indexes.
We believe our growth depends on a number of factors, including, but not limited to, our ability to: • attract new individuals and organizations to use our features, particularly our expense management feature; • convert individuals and organizations using our free features or trial subscriptions into paying customers; • grow or maintain our gross logo retention rate and net seat retention rate, and expand usage within organizations; • price our subscription plans effectively and competitively; • retain our existing individual and organizational customers; • achieve widespread acceptance and use of our platform and features, including in markets outside of the United States; • continue to successfully advance our bottom-up sales strategy as well as strategic relationships with our channel partners; • continue to maintain and build a platform and brand that drives word-of-mouth exposure to new potential members; • grow or maintain our brand through marketing, advertising campaigns, partnerships and other methods; • gain member traction for and generate revenue from our new features and services; • grow or maintain current levels of consideration from a vendor and/or fees generated through transaction-based features; • expand the features and capabilities of our platform and features; • provide excellent customer experience and customer support; • maintain the security and reliability of our platform and features; • maintain the trust of our customers; • successfully compete against established companies and new market entrants, as well as existing software tools; • successfully respond to other competitive challenges in the United States and globally; • attract, hire and retain highly skilled personnel; • the impact of any future pandemic, epidemic or other public health crisis and the corresponding pace and rate of recovery on our business; • obtain, expand, maintain, enforce and protect our intellectual property portfolio; • operate as a public company; • grow our member and customer base in new countries and/or markets, and increase awareness of our brand on a global basis; and 22 Table of Contents • obtain and maintain compliance and licenses material to our current and future businesses, and comply with existing and new applicable laws and regulations including in markets outside of the United States.
We believe our growth depends on a number of factors, including, but not limited to, our ability to: • attract new individuals and organizations to use our features, particularly our expense management feature; • convert individuals and organizations using our free features or trial subscriptions into paying customers; • grow or maintain our gross logo retention rate and net seat retention rate, and expand usage within organizations; • price our subscription plans effectively and competitively; • retain our existing individual and organizational customers; • achieve widespread acceptance and use of our platform and features, including in markets outside of the United States; • continue to successfully advance our bottom-up sales strategy as well as strategic relationships with our channel partners; • continue to maintain and build a platform and brand that drives word-of-mouth exposure to new potential members; • grow or maintain our brand through marketing, advertising campaigns, partnerships and other methods; • gain member traction for and generate revenue from our new features and services; • grow or maintain current levels of consideration from a vendor and/or fees generated through transaction-based features; • expand the features and capabilities of our platform and features; • provide excellent customer experience and customer support; • maintain the security and reliability of our platform and features; • maintain the trust of our customers; • successfully compete against established companies and new market entrants, as well as existing software tools; • successfully respond to other competitive challenges in the United States and globally; • attract, hire and retain highly skilled personnel; • the impact of any future pandemic, epidemic or other public health crisis and the corresponding pace and rate of recovery on our business; • obtain, expand, maintain, enforce and protect our intellectual property portfolio; • operate as a public company; • grow our member and customer base in new countries and/or markets, and increase awareness of our brand on a global basis; and • obtain and maintain compliance and licenses material to our current and future businesses, and comply with existing and new applicable laws and regulations including in markets outside of the United States. 22 Table of Contents If we are unable to accomplish these tasks, our growth, including our revenue growth, would be harmed.
If we are unable to develop and offer features that meet legal requirements or help our members and customers meet their obligations under 41 Table of Contents the laws or regulations relating to privacy, data protection, or information security, or if we violate or are perceived to violate any laws, regulations, or other obligations relating to privacy, data protection, or information security, we may experience reduced demand for our platform, harm to our reputation and become subject to investigations, claims and other remedies, which would expose us to significant fines, penalties and other damages, all of which would harm our business.
If we are unable to develop and offer features that meet legal requirements or help our members and customers meet their obligations under the laws or regulations relating to privacy, data protection, or information security, or if we violate or are perceived to violate any laws, regulations, or other obligations relating to privacy, data protection, or information security, we may experience reduced demand for our platform, harm to our reputation and become subject to investigations, claims and other remedies, which would expose us to significant fines, penalties and other damages, all of which would harm our business.
As a result, our governance structure and the Voting Trust may have the effect of depriving our stockholders of an 56 Table of Contents opportunity to sell their shares at a premium over prevailing market prices and make it more difficult to replace our directors and management.
As a result, our governance structure and the Voting Trust may have the effect of depriving our stockholders of an 59 Table of Contents opportunity to sell their shares at a premium over prevailing market prices and make it more difficult to replace our directors and management.
Factors that may cause such disruptions or problems include: • human error; • security breaches; • telecommunications failures or outages from third-party providers; • computer viruses, malware, vulnerability exploits, or cyber-attacks; • software errors, failures, vulnerabilities or bugs in our features; • acts of terrorism, sabotage or other intentional acts of vandalism; • unforeseen interruption or damages; • pandemics and epidemics; • tornados, fires, earthquakes, floods and other natural disasters; and • power loss.
Factors that may cause such disruptions or problems include: • human error; • security breaches; • telecommunications failures or outages from third-party providers; 44 Table of Contents • computer viruses, malware, vulnerability exploits, or cyber-attacks; • software errors, failures, vulnerabilities or bugs in our features; • acts of terrorism, sabotage or other intentional acts of vandalism; • unforeseen interruption or damages; • pandemics and epidemics; • tornados, fires, earthquakes, floods and other natural disasters; and • power loss.
Our business will be harmed if any provider of such software systems: • discontinues or limits our access to its software or APIs; • modifies its terms of service or other policies, including fees charged to, or other restrictions on us, or other application developers; • changes how information is accessed by us or our customers; • establishes more favorable relationships with one or more of our competitors; or • develops or otherwise favors its own competitive offerings over our platform.
Our business will be harmed if any provider of such software systems: • discontinues or limits our access to its software or APIs; • modifies its terms of service or other policies, including fees charged to, or other restrictions on us, or other application developers; • changes how information is accessed by us or our customers; 46 Table of Contents • establishes more favorable relationships with one or more of our competitors; or • develops or otherwise favors its own competitive offerings over our platform.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “Management’s discussion and analysis of financial condition and results of operations.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities and equity, and the amount of revenue and expenses that are not readily apparent from other sources.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, 56 Table of Contents as provided in the section titled “Management’s discussion and analysis of financial condition and results of operations.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities and equity, and the amount of revenue and expenses that are not readily apparent from other sources.
In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on Nasdaq. Pursuant to Sections 302 and 404 of the Sarbanes-Oxley Act, our independent registered public accounting firm has provided an attestation report regarding our internal control over financial reporting.
In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the Nasdaq Stock Market LLC ("Nasdaq"). Pursuant to Sections 302 and 404 of the Sarbanes-Oxley Act, our independent registered public accounting firm has provided an attestation report regarding our internal control over financial reporting.
Many companies that provide cloud based services have reported a significant increase in cyberattack activity since the beginning of the COVID-19 pandemic and related increase in remote work. We and certain of our third-party providers regularly experience cyberattacks and other incidents, and we expect such attacks and incidents to continue in varying degrees.
Many companies that provide cloud based services have reported a significant increase in cyberattack activity since the beginning of the COVID-19 pandemic and related increase in remote work. 31 Table of Contents We and certain of our third-party providers regularly experience cyberattacks and other incidents, and we expect such attacks and incidents to continue in varying degrees.
Identity thieves and those committing fraud using stolen or fabricated credit card or bank account numbers, or other deceptive or malicious practices, can potentially steal significant amounts of money from our business. In configuring our payments services, we face an inherent trade-off between 35 Table of Contents security and customer convenience.
Identity thieves and those committing fraud using stolen or fabricated credit card or bank account numbers, or other deceptive or malicious practices, can potentially steal significant amounts of money from our business. In configuring our payments services, we face an inherent trade-off between security and customer convenience.
In the event that our trademarks are successfully 48 Table of Contents challenged or we do not adequately protect our trademarks, we could be forced to rebrand our platform, which would result in loss of brand recognition and would require us to devote resources to advertising and marketing new brands. Policing unauthorized use of our technology and trademarks is difficult.
In the event that our trademarks are successfully challenged or we do not adequately protect our trademarks, we could be forced to rebrand our platform, which would result in loss of brand recognition and would require us to devote resources to advertising and marketing new brands. Policing unauthorized use of our technology and trademarks is difficult.
Economies domestically and internationally have been affected from time to time by falling demand for a variety of goods and services, restricted credit, poor liquidity, 37 Table of Contents reduced corporate profitability, employment pressures in services sectors, volatility in credit, equity and foreign exchange markets, bankruptcies and health crises, including COVID-19, as well as war, terrorist activity, political unrest, civil strife and other geopolitical uncertainty, and the resulting impact on business continuity and travel, supply chain disruptions, inflation, security issues, and overall uncertainty with respect to the economy, including with respect to tariff and trade issues.
Economies domestically and internationally have been affected from time to time by falling demand for a variety of goods and services, restricted credit, poor liquidity, reduced corporate profitability, employment pressures in services sectors, volatility in credit, equity and foreign exchange markets, bankruptcies and health crises, as well as war, terrorist activity, political unrest, civil strife and other geopolitical uncertainty, and the resulting impact on business continuity and travel, supply chain disruptions, inflation, security issues, and overall uncertainty with respect to the economy, including with respect to tariff and trade issues.
Foreign Corrupt Practices Act of 1977 (“FCPA”) and the U.K. Bribery Act 2010 (“Bribery Act”), as well as the laws of the countries where we do business. These laws and regulations apply to companies, individual directors, officers, employees and agents, and may restrict our operations, trade practices, investment decisions and partnering activities.
Foreign Corrupt Practices Act of 1977 (“FCPA”) and the U.K. Bribery Act 2010 (“Bribery Act”), as well as the laws of the countries where we do business. These laws and regulations apply to companies, individual directors, officers, employees and 40 Table of Contents agents, and may restrict our operations, trade practices, investment decisions and partnering activities.
We cannot assure you that additional financing will be available to us on favorable terms when required, or at all. If we raise additional funds through the issuance of equity or equity-linked securities, those securities may have rights, preferences, or privileges senior to the rights of existing stockholders, 51 Table of Contents and existing stockholders may experience dilution.
We cannot assure you that additional financing will be available to us on favorable terms when required, or at all. If we raise additional funds through the issuance of equity or equity-linked securities, those securities may have rights, preferences, or privileges senior to the rights of existing stockholders, and existing stockholders may experience dilution.
We intend to rely on some or all of these exceptions. As a result, we do not have a majority of independent directors, we do not have a nominating and corporate governance committee, and the members of our compensation committee are not independent directors.
We rely on some or all of these exceptions. As a result, we do not have a majority of independent directors, we do not have a nominating and corporate governance committee, and the members of our compensation committee are not independent directors.
Some of our larger competitors use broader product offerings to compete, including by selling at zero or negative margins, by bundling their product, or by closing access to their technology platforms. Potential customers may prefer to purchase from their existing suppliers rather than a new supplier regardless of product performance or features.
Some of our larger competitors use broader product offerings to compete, including by selling at zero or 26 Table of Contents negative margins, by bundling their product, or by closing access to their technology platforms. Potential customers may prefer to purchase from their existing suppliers rather than a new supplier regardless of product performance or features.
Furthermore, potential customers may be more willing to incrementally add solutions to their existing infrastructure from competitors than to replace their existing infrastructure with our platform. These competitive pressures in our market, or our failure to compete effectively, may 26 Table of Contents result in price reductions, fewer new customers, lower revenue and loss of market share.
Furthermore, potential customers may be more willing to incrementally add solutions to their existing infrastructure from competitors than to replace their existing infrastructure with our platform. These competitive pressures in our market, or our failure to compete effectively, may result in price reductions, fewer new customers, lower revenue and loss of market share.
All shares of LT10 and LT50 common stock are held directly by the Voting Trust established in connection with our initial public offering pursuant to a voting trust agreement (“Voting Trust Agreement”).
All shares of LT10 and LT50 common stock are held directly by the Voting Trust established in connection with our initial public offering pursuant to a voting trust agreement ("Voting Trust Agreement").
Many very small businesses (“VSBs”) and SMBs experienced substantial revenue and cash liquidity declines in the early months of the COVID-19 pandemic, and there were high observed rates of small business failures.
Many very small businesses ("VSBs") and SMBs experienced substantial revenue and cash liquidity declines in the early months of the COVID-19 pandemic, and there were high observed rates of small business failures.
Customers may or may not renew their subscriptions as a result of a number of factors, including their satisfaction or dissatisfaction with our platform; changes we may implement in our pricing or structure; the pricing or capabilities of the products and services offered by our competitors; the effects of general economic conditions; or customers’ budgetary constraints.
Customers may or may not renew their subscriptions as a result of a number of factors, including their satisfaction or dissatisfaction with our platform; changes we may implement in our pricing 24 Table of Contents or structure; the pricing or capabilities of the products and services offered by our competitors; the effects of general economic conditions; or customers’ budgetary constraints.
The BSA prohibits, among other things, our 38 Table of Contents involvement in transferring the proceeds of criminal activities. Regulators in the United States and globally may require us to further revise or expand our compliance program, including the procedures we use to verify the identity of our customers and to monitor international and domestic transactions.
The BSA prohibits, among other things, our involvement in transferring the proceeds of criminal activities. Regulators in the United States and globally may require us to further revise or expand our compliance program, including the procedures we use to verify the identity of our customers and to monitor international and domestic transactions.
This could limit or delay our ability to offer new or competitive features and increase our costs. Any of the foregoing would disrupt the distribution and sale of subscriptions to our platform and harm our business, results of operations and financial condition. Any litigation against us could be costly and time-consuming to defend.
This could limit or delay our ability to offer new or competitive features and increase our costs. Any of the foregoing 52 Table of Contents would disrupt the distribution and sale of subscriptions to our platform and harm our business, results of operations and financial condition. Any litigation against us could be costly and time-consuming to defend.
The length, impact and outcome of these conflicts are highly unpredictable; however, they could lead to significant market and other disruptions, some of which have already been experienced, including significant volatility in commodity prices and supply of energy resources, instability in financial markets, supply chain interruptions, political and social instability and changes in consumer or purchaser preferences, as well as an increase in cyberattacks and espionage.
The length, impact and outcome of these conflicts are highly unpredictable; however, they caused and could continue to cause significant market and other disruptions, some of which have already been experienced, including significant volatility in commodity prices and supply of energy resources, instability in financial markets, supply chain interruptions, political and social instability and changes in consumer or purchaser preferences, as well as an increase in cyberattacks and espionage.
If new technologies emerge that deliver competitive products at lower prices, more efficiently, more conveniently, or more securely, it could adversely impact our ability to compete. Our platform must also integrate with a variety of network, hardware, mobile and software platforms and technologies.
If new technologies emerge that deliver competitive products at lower prices, more efficiently, more conveniently, or more securely, it could adversely impact our ability to compete. 23 Table of Contents Our platform must also integrate with a variety of network, hardware, mobile and software platforms and technologies.
In addition, if Internet service providers and other third parties providing Internet services, including incumbent phone companies, cable companies and wireless companies, have outages or suffer deterioration in their quality of service, our customers may not have access to or may experience a decrease in the quality of our platform and features.
In addition, if Internet service providers and other third parties providing Internet services, including incumbent phone companies, cable 45 Table of Contents companies and wireless companies, have outages or suffer deterioration in their quality of service, our customers may not have access to or may experience a decrease in the quality of our platform and features.
Our operating activities may be restricted as a result of covenants related to the indebtedness under our existing loan and security agreement and/or future indebtedness, and we may be required to repay the outstanding indebtedness in an event of default, which would have an adverse effect on our business.
Our operating activities may be restricted as a result of covenants related to the indebtedness under our 2024 Amended Loan and Security Agreement and/or future indebtedness, and we may be required to repay the outstanding indebtedness in an event of default, which would have an adverse effect on our business.
This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims.
This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds 64 Table of Contents favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims.
It is not always possible to identify and deter misconduct by our employees and other third parties, and the precautions we take to detect and prevent these activities may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations.
It is not always possible to identify and deter misconduct by our employees and other third parties, and the precautions we take to detect and prevent these activities may not be effective in controlling unknown or unmanaged risks or 53 Table of Contents losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations.
However, such laws, regulations, regulatory codes and guidelines regulations are complex, may be inconsistent across jurisdictions or conflict with other rules and their interpretation is rapidly evolving, making implementation and enforcement, and thus compliance requirements, 39 Table of Contents ambiguous, uncertain, and potentially inconsistent and therefore, there can be no assurance that our policies and process will be fully implemented, complied with, or effective.
However, such laws, regulations, regulatory codes and guidelines regulations are complex, may be inconsistent across jurisdictions or conflict with other rules and their interpretation is rapidly evolving, making implementation and enforcement, and thus compliance requirements, ambiguous, uncertain, and potentially inconsistent and therefore, there can be no assurance that our policies and process will be fully implemented, complied with, or effective.
In addition, the use of the Internet as a means of conducting business could be adversely affected due to delays in the development or adoption of new standards and protocols to handle increased demands of 45 Table of Contents Internet activity, security, reliability, cost, ease of use, accessibility and quality of service.
In addition, the use of the Internet as a means of conducting business could be adversely affected due to delays in the development or adoption of new standards and protocols to handle increased demands of Internet activity, security, reliability, cost, ease of use, accessibility and quality of service.
As a result, our business is therefore subject to a number of federal, state, local and foreign laws, regulations, regulatory codes and guidelines governing data privacy, data protection and security, including with respect to the collection, storage, use, processing, transmission, sharing and protection of personal data.
As a result, our business is subject to a number of federal, state, local and foreign laws, regulations, regulatory codes and guidelines governing data privacy, data protection and security, including with respect to the collection, storage, use, processing, transmission, disclosure and protection of Personal Data.
There can be no assurance that we will be able to accurately project the 42 Table of Contents rate or timing of increases, if any, in the use of our platform or expand and upgrade our systems and infrastructure to accommodate such increases on a timely basis.
There can be no assurance that we will be able to accurately project the rate or timing of increases, if any, in the use of our platform or expand and upgrade our systems and infrastructure to accommodate such increases on a timely basis.
The number and significance of our legal disputes and inquiries have increased as we have grown larger, as our business has expanded in scope and geographic reach, and as our features and services have 50 Table of Contents increased in complexity, and we expect the potential for future legal proceedings, claims and disputes will continue to increase.
The number and significance of our legal disputes and inquiries have increased as we have grown larger, as our business has expanded in scope and geographic reach, and as our features and services have increased in complexity, and we expect the potential for future legal proceedings, claims and disputes will continue to increase.
New investors in 59 Table of Contents subsequent transactions could gain rights, preferences and privileges senior to those of holders of our Class A common stock.
New investors in 62 Table of Contents subsequent transactions could gain rights, preferences and privileges senior to those of holders of our Class A common stock.
We therefore depend on the interoperability of our platform with such third-party services, mobile devices 44 Table of Contents and mobile operating systems, as well as cloud-enabled hardware, software, networking, browsers, database technologies and protocols that we do not control.
We therefore depend on the interoperability of our platform with such third-party services, mobile devices and mobile operating systems, as well as cloud-enabled hardware, software, networking, browsers, database technologies and protocols that we do not control.
On an ongoing basis, we are evaluating sources of financing and may raise additional capital in the future. Our ability to obtain additional capital will depend on our development efforts, business plans, investor demand, operating performance, the condition of the capital markets, and other factors.
On an ongoing basis, we evaluate sources of financing and may raise additional capital in the future. Our ability to obtain additional capital will depend on our development efforts, business plans, investor demand, operating performance, the condition of the capital markets, and other factors.
Despite our compliance efforts and activities we cannot assure compliance by our employees or representatives for which we may be held responsible, and any such violation could materially adversely affect our reputation, business, financial condition and results of operations.
Despite our compliance efforts and activities we cannot assure compliance by our employees or representatives for which we may be held responsible, and any such 41 Table of Contents violation could materially adversely affect our reputation, business, financial condition and results of operations.
Furthermore, the steps we have taken and may take in the future may not prevent misappropriation of our proprietary features or technologies, particularly with respect to officers and employees who are no longer employed by us.
Furthermore, the 49 Table of Contents steps we have taken and may take in the future may not prevent misappropriation of our proprietary features or technologies, particularly with respect to officers and employees who are no longer employed by us.
We intend to pursue expansion of our international operations. Operating in international markets requires significant resources and management attention and subjects us to regulatory, economic and political risks that are different from those in the United States.
In the future, we may pursue expansion of our international operations. Operating in international markets requires significant resources and management attention and subjects us to regulatory, economic and political risks that are different from those in the United States.
If our data centers or related systems fail to operate properly or become disabled even for a brief period of time, we could suffer financial loss, a 43 Table of Contents disruption of our business, liability to customers, or damage to our reputation.
If our data centers or related systems fail to operate properly or become disabled even for a brief period of time, we could suffer financial loss, a disruption of our business, liability to customers, or damage to our reputation.
In addition to the E.U., a growing number of other global jurisdictions are considering or have passed legislation implementing data protection requirements or requiring local storage and processing of data or similar requirements that could increase the cost and complexity of delivering our platform, particularly as we expand our operations internationally.
In addition to the EU, a growing number of other global jurisdictions are considering or have passed legislation implementing data protection requirements or requiring local storage and processing of Personal Data or similar requirements that could increase the cost and complexity of delivering our platform, particularly as we expand our operations internationally.
We have derived, and expect to continue to derive, substantially all of our revenue from the sale of subscriptions for our cloud based platform. The market for cloud based software is not as mature as the market for on premises software applications.
We have derived, and expect to continue to derive, substantially all of our revenue from the sale of subscriptions for our cloud based platform. The market for cloud based software is not as mature as the 33 Table of Contents market for on premises software applications.
Further, if we become subject to other state-level privacy laws, guidelines or regulations, we may be required again to modify our data collection or processing practices and policies and to incur substantial costs and expenses in an effort to comply and increase our potential exposure to regulatory enforcement and/or litigation.
Further, if we become subject to new state-level privacy laws, guidelines or regulations in the future, we may be required again to modify our data collection or processing practices and policies and to incur substantial costs and expenses in an effort to comply and increase our potential exposure to regulatory enforcement and/or litigation.
Any litigation may also involve non-practicing entities or other adverse patent owners that have no relevant solution revenue, and therefore, our patent portfolio may provide little or no deterrence as we would not be able to assert our patents against such entities or individuals.
Any litigation may also involve non-practicing entities or other adverse patent owners that have no relevant solution revenue, and therefore, 48 Table of Contents our patent portfolio may provide little or no deterrence as we would not be able to assert our patents against such entities or individuals.
In addition, as permitted by Section 145 of the Delaware General Corporation Law, our amended and restated bylaws and our indemnification agreements that we have entered or intend to enter into with our directors and officers provide that: • we will indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request, to the fullest extent permitted by Delaware law.
Our amended and restated bylaws provide that we will indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law. 63 Table of Contents In addition, as permitted by Section 145 of the Delaware General Corporation Law, our amended and restated bylaws and our indemnification agreements that we have entered or intend to enter into with our directors and officers provide that: • we will indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request, to the fullest extent permitted by Delaware law.
For example, in 2023 we opened the Expensify Lounge in San Francisco, CA as a brand awareness campaign that ultimately did not yield the expected results and was shut down in late 2023.
For example, in 2023 we opened the Expensify Lounge in San Francisco, CA as a brand awareness campaign, but it ultimately did not yield the expected results and was shut down in late 2023.
The contractual provisions that we enter into may not prevent unauthorized use or disclosure of our proprietary technology or intellectual property rights and may not provide an adequate remedy in the event of unauthorized use or disclosure of our proprietary technology or intellectual property rights.
The contractual provisions that we enter into may not prevent unauthorized use or disclosure of our proprietary technology or intellectual property rights and may not provide an adequate remedy in the event of unauthorized use or disclosure of our proprietary technology or intellectual 50 Table of Contents property rights.
In addition, various news sources, bloggers and other publishers often make statements regarding our historical or projected business or financial 54 Table of Contents performance, and you should not rely on any such information even if it is attributed directly or indirectly to us.
In addition, various news sources, bloggers and other publishers often make statements regarding our historical or projected business or financial performance, and you should not rely on any such information even if it is attributed directly or indirectly to us.
If we or our service providers are unable to comply with the security standards 31 Table of Contents established by banks and the payment card industry, we may be subject to fines, restrictions and expulsion from card acceptance programs, which could materially and adversely affect our business.
If we or our service providers are unable to comply with the security standards established by banks and the payment card industry, we may be subject to fines, restrictions and expulsion from card acceptance programs, which could materially and adversely affect our business.
For example, a search engine may change its ranking algorithms, methodologies, or design layouts. As a result, links to our website may not be prominent enough to drive traffic to our website, and we may not know how or otherwise be in a position to influence the results.
For example, a search engine 47 Table of Contents may change its ranking algorithms, methodologies, or design layouts. As a result, links to our website may not be prominent enough to drive traffic to our website, and we may not know how or otherwise be in a position to influence the results.
Our future success and competitive position depends in part upon our ability to obtain or maintain certain intellectual property used in our platform. We rely primarily on patent, trademark, copyright and trade 47 Table of Contents secrets laws and confidentiality procedures and contractual provisions to protect our technology.
Our future success and competitive position depends in part upon our ability to obtain or maintain certain intellectual property used in our platform. We rely primarily on patent, trademark, copyright and trade secrets laws and confidentiality procedures and contractual provisions to protect our technology.
Furthermore, because the techniques used to obtain unauthorized access to, or to sabotage, systems change frequently and often are not recognized until launched against a target, we may be unable to 30 Table of Contents anticipate these techniques or implement adequate preventative measures.
Furthermore, because the techniques used to obtain unauthorized access to, or to sabotage, systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures.
For example, we recently released the first version of an open-source financial group chat optimized for financial conversations, designed to be used both in and outside of work, and maintained by a community of open source developers. This initial version has a subset of the features of our legacy app available as we continue development.
For example, in 2021 we released the first version of an open-source financial group chat optimized for financial conversations, designed to be used both in and outside of work, and maintained by a community of open source developers. The current version has a subset of the features of our legacy app available as we continue development.
There are a number of legislative proposals in the United States, at 40 Table of Contents both the federal and state level, and in the E.U. and more globally, that could impose new obligations in areas such as e-commerce and other related legislation or liability for copyright infringement by third parties.
There are a number of legislative proposals in the United States, at both the federal and state level, and in the EU and more globally, that could impose new obligations in areas such as e-commerce and other related legislation or liability for copyright infringement by third parties.
We may be subject to suits by parties claiming ownership of what we believe to be open source software, or claiming non-compliance with the applicable open source licensing terms.
We may be subject to 51 Table of Contents suits by parties claiming ownership of what we believe to be open source software, or claiming non-compliance with the applicable open source licensing terms.
Increases in interest rates, like what has been experienced in 2022 and 2023, may cause a corresponding decline in demand for equity investments. Any such increase in interest rates or reduction in demand for our Class A common stock resulting from other relatively more attractive investment opportunities may cause the market price of our Class A common stock to decline.
Increases in interest rates, like what has been experienced in recent years, may cause a corresponding decline in demand for equity investments. Any such increase in interest rates or reduction in demand for our Class A common stock resulting from other relatively more attractive investment opportunities may cause the market price of our Class A common stock to decline.
In the annual periods ended December 31, 2023, 2022 and 2021, consideration from this vendor representing monetized Expensify Card activities reduced our cost of revenue by $10.1 million, $6.2 million, and $2.9 million, respectively.
In the annual periods ended December 31, 2024, 2023 and 2022, consideration from this vendor representing monetized Expensify Card activities reduced our cost of revenue by $7.2 million, $10.1 million, and $6.2 million, respectively.
We cannot fully predict the impact of these laws, or subsequent guidance, regulations or rules on our business or operations, including those that are still in draft form, but they may increase our compliance costs and potential liability, particularly in the event of a data breach, and could have a material adverse effect on our business, including how we use personal data, our financial condition, and the results of our operations or prospects.
We cannot fully predict the impact of these laws, or subsequent guidance, regulations or rules on our business or operations, but they may increase our compliance costs and potential liability, particularly in the event of a data breach, and could have a material adverse effect on our business, including how we use Personal Data, our financial condition, and the results of our operations or prospects.
Furthermore, at the federal level, we are also subject to laws, regulations and standards covering marketing, advertising, cookies, tracking technologies, e-marketing, and other activities conducted by telephone, email, mobile devices and the internet, such as the Federal Wiretap Act, the Telephone Consumer Protection Act, the Controlling the Assault of Non-Solicited Pornography and Marketing Act, and similar state consumer protection and communication privacy laws.
Furthermore, at the federal level, we are also subject to laws, regulations and standards covering financial institutions, marketing, advertising, cookies, tracking technologies, e-marketing, and other activities conducted by telephone, email, mobile devices and the internet, such as the Gramm-Leach-Bliley Act (“GLBA”), the Federal Wiretap Act, the Telephone Consumer Protection Act, the Controlling the Assault of Non-Solicited Pornography and Marketing Act, and similar state consumer protection and communication privacy laws.
We also plan to enhance our brand and drive interest in our overall platform by introducing certain consumer-focused features, which may not be successful. Substantial advertising expenditures may be required to maintain and enhance our brand, which may not prove successful.
We also plan to enhance our brand and drive interest in our overall platform by 32 Table of Contents introducing certain consumer-focused features, which may not be successful. Substantial advertising expenditures may be required to maintain and enhance our brand, which may not prove successful.
Our future success also depends in part on our ability to provide 24 Table of Contents additional features to attract new members at existing customers, as well as increase transaction monetization from the Expensify Card.
Our future success also depends in part on our ability to provide additional features to attract new members at existing customers, as well as increase transaction monetization from the Expensify Card.
We receive, process, store and use business and personal data relating to our employees, members and customers around the world, including the United States and the European Economic Area (“EEA”).
We receive, process, store and use business and personal data relating to our employees, business contacts, members and customers around the world (collectively, “Personal Data”), including the United States and the European Economic Area (“EEA”).
Similarly, if any litigation to which we may be a party fails to settle and we go to trial, we may be 46 Table of Contents subject to an unfavorable judgment that may not be reversible upon appeal.
Similarly, if any litigation to which we may be a party fails to settle and we go to trial, we may be subject to an unfavorable judgment that may not be reversible upon appeal.
The loan and security agreement subjects us, and any future indebtedness would likely subject us, to various customary covenants, including requirements as to financial reporting, insurance and certain liquidity and leverage thresholds and restrictions on our ability to maintain cash deposits outside of CIBC above certain thresholds, dispose of our business or property, to change our line of business, to liquidate or dissolve, to enter into any change in control transaction, to merge or consolidate with any other entity or to acquire all or substantially all the capital stock or property of another entity, to incur additional indebtedness, to incur liens on our property, to pay any dividends or other distributions on capital stock other than dividends payable solely in capital stock, to redeem capital stock, to engage in transactions with affiliates, to encumber our intellectual property and certain other restrictions on our activities.
Our 2024 Amended Loan and Security Agreement consists of a $25.0 million revolving line of credit, which matures in September 2025, and subjects us, and any future indebtedness would likely subject us, to various customary covenants, including requirements as to financial reporting, insurance and certain liquidity and leverage thresholds and restrictions on our ability to maintain cash deposits outside of CIBC above certain thresholds, dispose of our business or property, to change our line of business, to liquidate or dissolve, to enter into any change in control transaction, to merge or consolidate with any other entity or to acquire all or substantially all the capital stock or property of another entity, to incur additional indebtedness, to incur liens on our property, to pay any dividends or other distributions on capital stock other than dividends payable solely in capital stock, to redeem capital stock, to engage in transactions with affiliates, to encumber our intellectual property and certain other restrictions on our activities.
We may be required to repay the outstanding indebtedness under the loan facility if an event of default occurs under the loan and security agreement.
We may be required to repay any outstanding indebtedness if an event of default occurs under the 2024 Amended Loan and Security Agreement.
Any failure or perceived failure to comply with existing or new laws and regulations, or orders of any governmental authority, including changes to or expansion of their interpretations, may subject us to significant fines, penalties, criminal and civil lawsuits, forfeiture of significant assets, enforcement actions in one or more jurisdictions, result in additional compliance and licensure requirements, and increased regulatory scrutiny of our business.
Responding to such conflicting, complex or changing rules and regulations entails inherent costs, and any actual or perceived failure to comply with existing or new laws and regulations, or orders of any governmental authority, including changes to or expansion of their interpretations, may subject us to significant fines, penalties, criminal and civil lawsuits, forfeiture of significant assets, enforcement actions in one or more jurisdictions, result in additional compliance and licensure requirements, and increased regulatory scrutiny of our business.
Additionally, we will need to continue to make substantial investments and expenditures to, among other things: • hire new and retain existing employees; • maintain, expand, update and improve our infrastructure; • expand our sales and marketing activities, including to obtain channel partners and to expand our SMB and consumer advertising; • expand our operations across multiple geographies; • operate as a public company; and 32 Table of Contents • pay for increasing costs associated with our general and administrative organization.
Additionally, we have and will need to continue to make substantial investments and expenditures to, among other things: • hire new and retain existing employees; • maintain, expand, update and improve our infrastructure; • expand our sales and marketing activities, including to obtain channel partners and to expand our SMB and consumer advertising; • expand our operations across multiple geographies; and • pay for increasing costs associated with our general and administrative organization.
Our revenue generated from customers outside the United States was $13.3 million (9% of our revenue), $14.7 million (9% of our revenue), and $15.2 million (11% of our revenue) for the annual periods ended December 31, 2023, 2022 and 2021, respectively. Our core geographies are the United States, the United Kingdom, Canada and Australia.
Our revenue generated from customers outside the United States was $12.4 million (9% of our revenue), $13.3 million (9% of our revenue), and $14.7 million (9% of our revenue) for the annual periods ended December 31, 2024, 2023 and 2022, respectively. Our core geographies are the United States, the United Kingdom, Canada and Australia.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur cybersecurity risk management program includes: • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise IT environment; • a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls; • cybersecurity awareness training of our employees, incident response personnel, and senior management; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and • a third-party risk management process for service providers, suppliers, and vendors.
Biggest changeKey elements of our cybersecurity risk management program include but are not limited to the following: • risk assessments designed to help identify material cybersecurity risks to our critical systems, and information; • a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security processes; • cybersecurity awareness training of our employees, incident response personnel, and senior management; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and • a third-party risk management process for key service providers based on our assessment of their criticality to our operations and respective risk profile. 66 Table of Contents We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition.
Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function, including oversight of cybersecurity and other information technology risks. The Board oversees management’s implementation of our cybersecurity risk management program. 63 Table of Contents The Board receives periodic reports from management on our cybersecurity risks.
Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function, including oversight of cybersecurity and other information technology risks. The Board oversees management’s implementation of our cybersecurity risk management program. The Board receives periodic reports from management on our cybersecurity risks.
In addition, management updates the Board, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser impact potential. Our management team, including our Chief Compliance Officer and Director of Engineering, is responsible for assessing and managing our material risks from cybersecurity threats.
In addition, management updates the Board, where it deems appropriate, regarding any cybersecurity incidents it considers to be significant. Our management team, including our Chief Compliance Officer and Director of Engineering, is responsible for assessing and managing our material risks from cybersecurity threats.
Item 1C. Cybersecurity Cybersecurity Risk Management and Strategy We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information. We design and assess our program based on applicable laws and regulations, and informed by industry standards and industry-recognized practices.
Item 1C. Cybersecurity Cybersecurity Risk Management and Strategy We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information.
The team has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and external cybersecurity consultants. Our management team’s experience includes a combined two decades of experience in various software development, cybersecurity, product management, and other technology-related roles.
The team has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and external cybersecurity consultants. Our Chief Compliance Officer and Director of Engineering have over 8 and 12 years of experience, respectively, in various software development, cybersecurity, product management, and other technology-related roles.
Our Chief Compliance Officer and Director of Engineering have each served in a number of significant leadership roles at our company since 2017 and 2013, respectively, including oversight of security, safety, and integrity initiatives Our management team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the IT environment.
Our management team takes steps to stay informed about and monitor efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in our IT environment.
Removed
We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition.
Added
We design and assess our program based on applicable laws and regulations, and informed by industry standards and industry-recognized practices including but not limited to following the latest NIST and CISA guidance and SOC 2 Principles and Framework.
Added
Our Chief Compliance Officer and Director of Engineering have each served in a number of significant leadership roles at our company since 2017 and 2013, respectively, including oversight of security, safety, and integrity initiatives.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe believe our facilities are adequate and suitable for our current needs and that, should it be needed, suitable additional or alternative space on commercially reasonable terms will be available to accommodate our operations.
Biggest changeWe give all employees the ability to rent a co-working space if we do not provide one. We believe our facilities are adequate and suitable for our current needs and that, should it be needed, suitable additional or alternative space on commercially reasonable terms will be available to accommodate our operations.
Removed
We give all employees the ability to rent a co-working space if we do not provide one. We intend to procure additional space or expand existing facilities in the future as we continue to add employees and expand geographically.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe lawsuit is purportedly brought on behalf of all those who purchase or acquired our stock pursuant or traceable to our initial public offering (“IPO”). The complaint alleges claims under Sections 11 and 15 of the Securities Act of 1933 based on allegedly false or misleading statements in the offering documents filed in connection with our IPO.
Biggest changeThe complaint alleges claims under Sections 11 and 15 of the Securities Act of 1933 based on allegedly false or misleading statements in the offering documents filed in connection with our IPO. The lawsuit seeks unspecified damages and other relief. On January 29, 2024, three shareholders moved to be appointed lead plaintiff in the Putative Class Action.
We may receive unfavorable preliminary or 64 Table of Contents interim rulings in the course of litigation, and there can be no assurances that favorable final outcomes will be obtained. The results of any current or future litigation cannot be predicted with certainty.
We may receive unfavorable preliminary or interim rulings in the course of litigation, and there can be no assurances that favorable final outcomes will be obtained. The results of any current or future litigation cannot be predicted with certainty.
Item 3. Legal Proceedings On November 29, 2023, a putative securities class action (the “Putative Class Action”) was filed in the United States District Court for the District of Oregon captioned Wilhite v. Expensify, Inc., et al., Case No. 3:23-cv-01784-JR, naming us, two of our executive officers and two of our former directors as defendants.
Item 3. Legal Proceedings On November 29, 2023, a putative securities class action (the “Putative Class Action”) was filed in the United States District Court for the District of Oregon captioned Wilhite v.
The lawsuit seeks unspecified damages and other relief. On January 29, 2024, three shareholders moved to be appointed lead plaintiff in the Putative Class Action. The court has not yet ruled on those motions. The defendants intend to deny the allegations of wrongdoing and vigorously defend against the claims in the Putative Class Action.
The defendants intend to deny the allegations of wrongdoing and vigorously defend against the claims in the Putative Class Action. On May 9, 2024, a shareholder derivative lawsuit was filed in the United States District Court for the District of Oregon captioned O’Halloran v.
Added
Expensify, Inc., et al., Case No. 67 Table of Contents 3:23-cv-01784-JR, naming us, two of our executive officers and two of our former directors as defendants (collectively, the “Defendants”). The lawsuit is purportedly brought on behalf of all those who purchase or acquired our stock pursuant or traceable to our initial public offering (“IPO”).
Added
The court appointed a lead plaintiff and lead counsel on March 11, 2024. Pursuant to the parties’ stipulation, the lead plaintiff’s amended complaint was filed May 10, 2024, naming six of our current board members as additional defendants (together with the Defendants, the “Amended Defendants”). Amended Defendants’ motion to dismiss the amended complaint was filed on July 9, 2024.
Added
The lead plaintiff’s opposition was filed on September 6, 2024, and the Amended Defendants’ reply was filed on October 18, 2024. On December 30, 2024, the magistrate judge issued findings and recommendation that the Amended Defendants’ motion to dismiss be granted in part and denied in part.
Added
The lead plaintiff and Amended Defendants each filed objections to the magistrate judge’s findings and recommendation on January 21, 2025, and responses to the objections on February 4, 2025. The district court has not yet ruled on the Amended Defendants’ motion to dismiss or on the parties’ objections to the magistrate judge’s findings and recommendation.
Added
Barrett, et al., Case No. 3:24-cv-00775 (the “O’Halloran Action”), purportedly on our behalf, naming us as nominal defendant, and all of our current board members and executive officers and two of our former directors as defendants (collectively, the “Derivative Defendants”).
Added
On August 14, 2024, the Court stayed the O’Halloran Action pending resolution of any and all motion(s) to dismiss the Putative Class Action. On December 18, 2024, a shareholder derivative lawsuit was filed in the United States District Court for the District of Oregon captioned Da Silva v.
Added
Barrett, et al., Case No. 3:24-cv-02095 (the “Da Silva Action” and with the O’Halloran Action, the “Derivative Action”), purportedly on our behalf against the Derivative Defendants and asserting substantively the same claims as those asserted in the O’Halloran Action.
Added
On January 2, 2025, the parties to the Derivative Action filed a stipulation to consolidate the O’Halloran and Da Silva Actions and apply the stay entered in the O’Halloran Action to the Derivative Action.
Added
On February 10, 2025, the Court consolidated the O’Halloran and Da Silva Actions and applied the existing stay to the consolidated action under the caption In re Expensify, Inc. Derivative Litigation, Case No. 3:24-cv-00775-SI. The Derivative Defendants deny the allegations of wrongdoing and will continue to vigorously defend against the claims in the Derivative Action.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePERFORMANCE GRAPH This performance graph shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act or incorporated by reference into any filing of Expensify, Inc. under the Securities Act or the Exchange Act.
Biggest changeThe 2025 repurchase program expires on March 31, 2028 and does not obligate us to repurchase any specific number of shares and may be modified, suspended or terminated at any time at our discretion. 70 Table of Contents PERFORMANCE GRAPH This performance graph shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act or incorporated by reference into any filing of Expensify, Inc. under the Securities Act or the Exchange Act.
The graph assumes $100 was invested at the market close on November 10, 2021, which was the first day our Class A common stock began trading. Data for the Nasdaq, S&P 500 and S&P 500 IT indexes assumes reinvestment of dividends.
The graph assumes $100 was invested at the market close on November 10, 2021, which was the first day our Class A common stock began trading. Data for the Nasdaq Composite, S&P 500 and S&P 500 IT indexes assumes reinvestment of dividends.
The graph below compares the cumulative total stockholder return on our Class A common stock with the cumulative total return on the Nasdaq Composite Index (“NASDAQ”), S&P 500 Index (“S&P 500”), and the S&P 500 Information Technology Index (“S&P 500 IT”).
The graph below compares the cumulative total stockholder return on our Class A common stock with the cumulative total return on the Nasdaq Composite Index (“Nasdaq Composite”), S&P 500 Index (“S&P 500”), and the S&P 500 Information Technology Index (“S&P 500 IT”).
ISSUER PURCHASES OF EQUITY SECURITIES The following table sets forth information regarding our purchases of shares of Class A common stock during the three months ended December 31, 2023: Total number of shares purchased Weighted-average price paid per share Total number of shares purchased as part of publicly announced programs Maximum number (or approximate dollar value) of shares that may yet be purchased under the program(1) October 1 - 31, 2023 — $ — — $ 41,000,003 November 1 - 30, 2023 — $ — — $ 41,000,003 December 1 - 31, 2023 — $ — — $ 41,000,003 Total — — 66 Table of Contents (1) On May 12, 2022, we announced the approval of a share repurchase program with authorization to purchase up to $50.0 million of our Class A common stock at management’s discretion.
RECENT SALES OF UNREGISTERED SECURITIES None. 69 Table of Contents ISSUER PURCHASES OF EQUITY SECURITIES The following table sets forth information regarding our purchases of shares of Class A common stock during the three months ended December 31, 2024: Total number of shares purchased Weighted average price paid per share Total number of shares purchased as part of publicly announced programs Maximum number (or approximate dollar value) of shares that may yet be purchased under the program (1) October 1 - 31, 2024 — $ — — $ 39,490,003 November 1 - 30, 2024 — $ — — $ 39,490,003 December 1 - 31, 2024 — $ — — $ 39,490,003 Total — — (1) On May 12, 2022, we announced the approval of a share repurchase program with authorization to purchase up to $50.0 million of our Class A common stock at management’s discretion.
HOLDERS OF OUR COMMON STOCK As of February 21, 2024 there were 21 stockholders of record of our Class A common stock. This number does not include beneficial owners whose shares are held by nominees in street name.
HOLDERS OF OUR COMMON STOCK As of February 24, 2025, there were 17 stockholders of record of our Class A common stock. This number does not include beneficial owners whose shares are held by nominees in street name.
The holders of our Class A, LT10 and LT50 common stock are entitled to receive dividends if, as and when declared from time to time by our Board of Directors out of legally available funds. RECENT SALES OF UNREGISTERED SECURITIES None.
The holders of our Class A, LT10 and LT50 common stock are entitled to receive dividends if, as and when declared from time to time by our Board of Directors out of legally available funds.
As of February 21, 2024 the Expensify Voting Trust held all of the outstanding shares of our LT10 common stock and LT50 common stock.
As of February 24, 2025, the Expensify Voting Trust held all of the outstanding shares of our LT10 common stock and LT50 common stock.
Removed
The repurchase program does not have an expiration date, does not obligate us to repurchase any specific number of shares and may be modified, suspended or terminated at any time at our discretion.
Added
The 2022 repurchase program was scheduled to expire in March 2025. On February 27, 2025, we announced the approval of a new share repurchase program with authorization to purchase up to $50.0 million of our Class A common stock at management's discretion, which replaced the 2022 share repurchase program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

72 edited+36 added−27 removed42 unchanged
Biggest changeWe expect to be in compliance with all debt covenants pursuant to the 2024 Amended Term Loan by the end of the fiscal quarter ended March 31, 2024. 82 Table of Contents Contractual Obligations and Commitments The following table summarizes our contractual obligations and commitments as of December 31, 2023: Payments due by period (in thousands) Less than 1 year 1-3 years More than 3 years Total Principal payments on debt $ 22,671 $ — $ — $ 22,671 Interest payments on debt $ 1,677 $ — $ — $ 1,677 Finance lease commitments $ 153 $ 255 $ — $ 408 Operating lease commitments $ 838 $ 3,130 $ 5,562 $ 9,530 Total $ 25,339 $ 3,385 $ 5,562 $ 34,286 Indemnification Agreements In the ordinary course of business, we enter into agreements of varying scope and terms whereby we agree to indemnify customers, issuing banks, card networks, vendors and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, services to be provided by us or from intellectual property infringement claims made by third parties.
Biggest changeAdjusted EBITDA and Adjusted EBITDA Margin Year ended December 31, 2024 2023 (in thousands, except percentages) Net loss $ (10,055) $ (41,456) Net loss margin (7) % (28) % Add: Provision for income taxes 7,663 2,980 Interest and other expenses, net 1,572 5,327 Depreciation and amortization 6,655 5,111 Stock-based compensation expense 33,537 41,212 Adjusted EBITDA $ 39,372 $ 13,174 Adjusted EBITDA margin 28 % 9 % 87 Table of Contents Non-GAAP net income and non-GAAP net income margin Year ended December 31, 2024 2023 (in thousands, except percentages) Net loss $ (10,055) $ (41,456) Net loss margin (7) % (28) % Add: Stock-based compensation expense 33,537 41,212 Non-GAAP net income (loss) $ 23,482 $ (244) Non-GAAP net income (loss) margin 17 % — % Adjusted Operating Cash Flow and Free Cash Flow Year ended December 31, 2024 2023 (in thousands, except percentages) Net cash provided by operating activities $ 23,877 $ 1,559 Operating cash flow margin 17 % 1 % (Increase) decrease in changes in assets and liabilities: Settlement assets, net 2,469 6,398 Settlement liabilities 5,145 (108) Adjusted operating cash flow 31,491 7,849 Less: Purchase of property and equipment — (1,384) Software development costs (7,628) (5,910) Free cash flow $ 23,863 $ 555 Free cash flow margin 17 % — % 88 Table of Contents Contractual Obligations and Commitments The following table summarizes our contractual obligations and commitments as of December 31, 2024: Payments due by period (in thousands) Less than 1 year 1-3 years More than 3 years Total Finance lease commitments $ 153 $ 102 $ — $ 255 Operating lease commitments 1,079 3,114 4,499 8,692 Total $ 1,232 $ 3,216 $ 4,499 $ 8,947 Indemnification Agreements In the ordinary course of business, we enter into agreements of varying scope and terms whereby we agree to indemnify customers, issuing banks, card networks, vendors and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, services to be provided by us or from intellectual property infringement claims made by third parties.
Additionally, other potential challenging macroeconomic conditions, and the resulting impact on business continuity and travel, could negatively impact our business. 70 Table of Contents 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.
Additionally, other potential challenging macroeconomic conditions, and the resulting impact on business continuity and travel, could negatively impact our business. 74 Table of Contents 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.
We monetize transactions from the Expensify Card by receiving a percentage of the interchange for all spend on the card. As we expand our platform, we intend to increase the number of integrations and to more actively promote the Expensify Card with complementary use cases beyond expense management to both new and existing customers to drive increased adoption.
We monetize transactions from the Expensify Card by receiving a percentage of the interchange for all spend on the card. As we expand our platform, we continue to increase the number of integrations and to more actively promote the Expensify Card with complementary use cases beyond expense management to both new and existing customers to drive increased adoption.
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 Exchange Act, in accordance with applicable securities laws and other restrictions.
We 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 Exchange Act, in accordance with applicable securities laws and other restrictions.
In addition to personnel-related expenses, general and administrative expenses consist of rent, utilities, depreciation on property and equipment, amortization of operating lease right-of-use assets, information technology and external professional services, including finance and accounting, audit, tax, legal and compliance, and human resources.
In addition to personnel-related expenses, general and administrative expenses consist of business insurance, rent, utilities, depreciation on property and equipment, amortization of operating lease right-of-use assets, information technology and external professional services, including finance and accounting, audit, tax, legal and compliance, and human resources.
We calculate our net seat retention rate as of the end of a period by using (a) the number of paid member seats from companies who have ever had five or more paid members paying for a subscription during the period ending one year prior as the denominator and (b) the number of paid member seats at those same companies during the more recent period as the numerator.
We calculate our net seat retention rate as of the end of a period by using (a) the number of paid member seats from companies who have 73 Table of Contents ever had five or more paid members paying for a subscription during the period ending one year prior as the denominator and (b) the number of paid member seats at those same companies during the more recent period as the numerator.
It also includes 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, realized gains 72 Table of Contents and losses on foreign currency transactions and foreign currency remeasurement.
It also includes 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, realized gains and losses on foreign currency transactions and foreign currency remeasurement.
The effective income tax rate differs from the statutory rate in 2023 primarily due to nondeductible stock-based compensation, the change in the valuation allowance, and the compensation limitations imposed by Internal Revenue Code ("IRC") Section 162(m).
The effective income tax rate differs from the statutory rate in 2024 primarily due to nondeductible stock-based compensation, the compensation limitations imposed by Internal Revenue Code ("IRC") Section 162(m), and the change in the valuation allowance.
We follow the asset and liability method of accounting for income taxes, whereby we recognize deferred income taxes for the tax consequences of temporary differences between the financial statement carrying amounts and the tax 76 Table of Contents basis of the assets and liabilities.
We follow the asset and liability method of accounting for income taxes, whereby we recognize deferred income taxes for the tax consequences of temporary differences between the financial statement carrying amounts and the tax 80 Table of Contents basis of the assets and liabilities.
EMPLOYEE AND EMPLOYEE-RELATED EXPENSES Allocating our employee and employee-related expenses, which consist of contractor costs, employee salary and wages, stock-based compensation and travel and other employee-related costs, to their appropriate financial statement line items on the Consolidated Statements of Operations, requires us to 83 Table of Contents make estimates and judgments as a result of our generalist model and organizational structure.
EMPLOYEE AND EMPLOYEE-RELATED EXPENSES Allocating our employee and employee-related expenses, which consist of contractor costs, employee salary and wages, stock-based compensation and travel and other employee-related costs, to their appropriate financial statement line items on the Consolidated Statements of Operations, requires us to make estimates and judgments as a result of our generalist model and organizational structure.
The effective income tax rate differs from the statutory rate in 2022 primarily due to nondeductible stock-based compensation, the compensation limitations imposed by IRC Section 162(m), and the change in the valuation allowance.
The effective income tax rate differs from the statutory rate in 2023 primarily due to nondeductible stock-based compensation, the change in the valuation allowance, and the compensation limitations imposed by IRC Section 162(m).
We are focused on profitable growth and we consider adjusted EBITDA to be an important measure because it helps illustrate underlying trends in our business that could otherwise be masked by the effect of the income or expenses that are not indicative of the core operating performance of our business.
We are focused on profitable growth and we consider adjusted EBITDA to be an important measure because it helps 85 Table of Contents illustrate underlying trends in our business that could otherwise be masked by the effect of the income or expenses that are not indicative of the core operating performance of our business.
We base our estimates for allocating employee and employee related expenses on our internal productivity and team management tools. Management reviews the estimates each reporting period to evaluate the amounts allocated to Cost of revenue, net, Research and development, General and administrative, and Sales and marketing on the Consolidated Statements of Operations.
We base our estimates for allocating employee and employee related expenses on our internal productivity and team management tools. Management reviews the estimates each reporting period to evaluate the 89 Table of Contents amounts allocated to Cost of revenue, net, Research and development, General and administrative, and Sales and marketing on the Consolidated Statements of Operations.
The actual timing, manner, price and total amount of future repurchases will depend on a variety of factors, 80 Table of Contents including business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, restrictions under the terms of loan agreements and other considerations.
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.
(Provision for) Benefit from 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. 73 Table of Contents Results of Operations The results of operations presented below should be reviewed in conjunction with the consolidated financial statements and notes included elsewhere in this Annual Report on Form 10-K.
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. 77 Table of Contents Results of Operations The results of operations presented below should be reviewed in conjunction with the consolidated financial statements and notes included elsewhere in this Annual Report on Form 10-K.
Since our founding in 2008, we have added over 15 million members to our community and processed and automated over 1.5 billion expense transactions on our platform as of December 31, 2023, freeing people to spend less time managing expenses and more time doing the things they love.
Since our founding in 2008, we have added over 15 million members to our community and processed and automated over 1.7 billion expense transactions on our platform as of December 31, 2024, freeing people to spend less time managing expenses and more time doing the things they love.
The following discussion and analysis of our financial condition and results of operations generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
The following discussion and analysis of our financial condition and results of operations generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
CASH FLOWS FROM FINANCING ACTIVITIES During the year ended December 31, 2023, net cash used in financing activities was $45.3 million, primarily consisting of principal payments on the 2021 Amended Term Loan, the repurchase and retirement of common stock, and payment for employees taxes withheld from stock-based awards, which was partially offset by proceeds from common stock purchased under the Company's 2021 Stock Purchase and Matching Plan ("Matching Plan").
During the year ended December 31, 2023, net cash used in financing activities was $45.3 million, primarily consisting of principal payments on the term loan, the repurchase and retirement of common stock, and payment for employees taxes withheld from stock-based awards, which was partially offset by proceeds from common stock purchased under the Matching Plan.
Instead, the net of the Expensify interchange amount and vendor fees are paid to us, which we record as "Consideration from a 71 Table of Contents vendor, net," a contra expense in Cost of revenue, net in the Consolidated Statements of Operations.
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 Consolidated Statements of Operations.
A discussion of 2021 items and year-to-year comparisons between 2022 and 2021 can be found in "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 8, 2023.
A discussion of 2022 items and year-to-year comparisons between 2023 and 2022 can be found in "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 26, 2024.
Pursuant to the 2024 Amended Term Loan, we must also maintain certain financial covenants: a total liquidity ratio, as defined in the loan and security agreement, tested each quarter, of not less than 1.10 to 1.00 from the quarter ending March 31, 2024 through and including June 29, 2024, not less than 1.20 to 1.00 from the quarter ending June 30, 2024 and each quarter thereafter, a total EBITDA net leverage ratio, as defined in the loan and security agreement, tested each quarter, of not less than 2.50 to 1.00 from the quarters ending March 31, 2025 and each quarter thereafter.
We must also maintain certain financial covenants: a total liquidity ratio, as defined in the 2024 Amended Loan and Security Agreement, tested each quarter, of not less than 1.10 to 1.00 from the quarter ending March 31, 2024, not less than 1.20 to 1.00 from the quarter ending June 30, 2024 and each quarter thereafter, and a total EBITDA net leverage ratio, as defined in the 2024 Amended Loan and Security Agreement, tested each quarter, of not less than 2.50 to 1.00 from the quarter ended March 31, 2025 and each quarter thereafter.
Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. During the years ended December 31, 2023 and 2022, we recorded an incremental valuation allowance of $3.7 million and $2.8 million, respectively.
Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. During the years ended December 31, 2024 and 2023, we recorded an incremental valuation allowance of $0.9 million and $3.7 million, respectively.
No demands have been made upon us to provide indemnification under such agreements and there are no claims that we are aware of that could have a material effect on our Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit), or Consolidated Statements of Cash Flows.
No demands have been made upon us to provide indemnification under such agreements and there are no claims that we are aware of that could have a material effect on our Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Changes in Stockholders' Equity, or Consolidated Statements of Cash Flows.
Gross margin decreased to 56% in 2023 compared to 63% in the same period in 2022 due to the factors described in the preceding paragraphs for Revenue and Cost of revenue, net.
Gross margin decreased to 54% in 2024 compared to 56% in the same period in 2023 due to the factors described in the preceding paragraphs for Revenue and Cost of revenue, net.
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.
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 engineering costs to maintain our platform, outsourcing costs to support customer service and outsourcing costs to support our patented scanning technology SmartScan, net of consideration from a vendor for monetizing Expensify Card activities.
For the year ended December 31, 2023, an average of 719,000 paid members across an average of 47,000 companies and over 200 countries and territories used Expensify to make money easy.
For the year ended December 31, 2024, an average of 687,000 paid members across an average of 47,600 companies and over 200 countries and territories used Expensify to make money easy.
CREDIT FACILITIES Amortizing Term Mortgage In August 2019, we entered into an $8.3 million amortizing term mortgage agreement with CIBC for our commercial building in Portland, Oregon. The agreement requires interest and principal payments to be made each month over a five-year period.
CREDIT FACILITIES Amortizing Term Mortgage In August 2019, we entered into an $8.3 million amortizing term mortgage agreement with CIBC for our commercial building located in Portland, Oregon. The agreement required principal and interest payments due each month over a five-year period.
To provide a seamless experience for our customers, we integrate with accounting, ERP and travel software used by SMBs and their employees every day. We also have frictionless integrations with many of the technology providers that generate the most receipts for our members, such as Uber and Lyft.
RETAINING EXISTING CUSTOMERS Expense management touches many functions across a company. To provide a seamless experience for our customers, we integrate with accounting, ERP and travel software used by SMBs and their employees every day. We also have frictionless integrations with many of the technology providers that generate the most receipts for our members, such as Uber and Lyft.
The provision for income taxes reflects taxable income earned and taxed in U.S. federal and state, and non-U.S. jurisdictions. Our effective income tax rate was (7.7)% and (30.8)%, for the years ended December 31, 2023 and 2022, respectively.
The provision for income taxes reflects taxable income earned and taxed in U.S. federal and state, and non-U.S. jurisdictions. Our effective income tax rate was (320.4)% and (7.7)%, for the years ended December 31, 2024 and 2023, respectively.
The following summarizes these various amounts for each of the periods presented: Year ended December 31, 2023 2022 (in thousands) Expensify interchange amount $ 11,144 $ 6,832 Vendor fees (1,009) (616) Consideration from a vendor, net $ 10,135 $ 6,216 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.
The following summarizes these various amounts for each of the periods presented: Year ended December 31, 2024 2023 (in thousands) Expensify interchange amount $ 8,014 $ 11,144 Vendor fees (821) (1,009) Consideration from a vendor, net $ 7,193 $ 10,135 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 of new products or enhancing existing products or services.
The following table sets forth the average number of paid members for the quarters ended March 31, 2022 through December 31, 2023 (in thousands): Quarter ended Paid members March 31, 2022 706 June 30, 2022 754 September 30, 2022 761 December 31, 2022 779 March 31, 2023 747 June 30, 2023 742 September 30, 2023 719 December 31, 2023 719 77 Table of Contents NON-GAAP FINANCIAL MEASURES Limitations of Non-GAAP Financial Measures Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as substitutes for financial information presented under GAAP.
The following table sets forth the average number of paid members for the quarters ended March 31, 2023 through December 31, 2024 (in thousands): Quarter ended Paid members March 31, 2023 747 June 30, 2023 742 September 30, 2023 719 December 31, 2023 719 March 31, 2024 688 June 30, 2024 684 September 30, 2024 684 December 31, 2024 687 NON-GAAP FINANCIAL MEASURES Limitations of Non-GAAP Financial Measures Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as substitutes for financial information presented under GAAP.
Year ended December 31, 2023 2022 (in thousands, except percentages) Adjusted EBITDA $ 13,174 $ 42,488 Adjusted EBITDA margin 9 % 25 % Non-GAAP Net Income and Non-GAAP Net Income Margin We define non-GAAP net income as net loss from operations in accordance with GAAP excluding stock-based compensation.
Year ended December 31, 2024 2023 (in thousands, except percentages) Adjusted EBITDA $ 39,372 $ 13,174 Adjusted EBITDA margin 28 % 9 % Non-GAAP Net Income and Non-GAAP Net Income Margin We define non-GAAP net income as net loss from operations in accordance with GAAP excluding stock-based compensation.
Cashback rewards liability is recorded within Accrued expenses and other liabilities on the 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.
Cashback rewards liability is recorded within Accrued expenses and other liabilities on the Consolidated Balance Sheets. The cashback rewards fluctuate over time as customers meet eligibility requirements and timing of payments made to customers.
We believe investing in market consensus enables us to focus on creating great viral features for our members rather than relying on low-margin, unscalable activities of traditional sales and marketing to drive customer acquisition. RETAINING EXISTING CUSTOMERS Expense management touches many functions across a company.
We believe investing in market consensus enables us to focus on creating great viral features for our members rather than relying on low-margin, unscalable activities of traditional sales and marketing to drive customer acquisition.
CASH FLOWS The following table summarizes our cash flows for the periods indicated: Year ended December 31, 2023 2022 (in thousands) Net cash provided by operating activities $ 1,559 $ 32,876 Net cash used in investing activities (7,294) (2,199) Net cash (used in) provided by financing activities (45,317) (8,282) Net (decrease) increase in cash and cash equivalents and restricted cash $ (51,052) $ 22,395 CASH FLOWS FROM OPERATING ACTIVITIES Net cash provided by operating activities was $1.6 million for the year ended December 31, 2023 as compared to $32.9 million for the same period in 2022.
CASH FLOWS The following table summarizes our cash flows for the periods indicated: Year ended December 31, 2024 2023 (in thousands) Net cash provided by operating activities $ 23,877 $ 1,559 Net cash used in investing activities (7,628) (7,294) Net cash used in financing activities (22,073) (45,317) Net decrease in cash and cash equivalents and restricted cash $ (5,824) $ (51,052) CASH FLOWS FROM OPERATING ACTIVITIES Net cash provided by operating activities was $23.9 million for the year ended December 31, 2024 as compared to $1.6 million for the same period in 2023.
Interest accrues 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 is due in full. The borrowings are secured by the building. The outstanding balance of the amortizing term mortgage was $7.7 million as of December 31, 2023.
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.
Provision for Income Taxes Year ended December 31, Change 2023 2022 Amount % (in thousands, except percentages) Provision for income taxes $ (2,980) $ (6,366) $ 3,386 (53) % We recorded a provision for income taxes of $3.0 million for the year ended December 31, 2023 compared to a $6.4 million provision for income taxes for the year ended December 31, 2022.
Provision for Income Taxes Year ended December 31, Change 2024 2023 Amount % (in thousands, except percentages) Provision for income taxes $ (7,663) $ (2,980) $ (4,683) 157 % We recorded a provision for income taxes of $7.7 million for the year ended December 31, 2024 compared to a $3.0 million provision for income taxes for the year ended December 31, 2023.
In 2023 and 2022, our annual gross logo retention was 74% and 83%, respectively.
In 2024 and 2023, our annual gross logo retention was 81% and 74%, respectively.
The following table sets forth our results of operations for the periods presented: Year ended December 31, 2023 2022 (in thousands, except per share data) Revenue $ 150,687 $ 169,495 Cost of revenue, net(1) 66,888 62,669 Gross margin 83,799 106,826 Operating expenses: Research and development(1) 23,368 13,692 General and administrative(1) 49,228 58,490 Sales and marketing(1) 44,352 49,876 Total operating expenses 116,948 122,058 Loss from operations (33,149) (15,232) Interest and other expenses, net (5,327) (5,411) Loss before income taxes (38,476) (20,643) (Provision for) benefit from income taxes (2,980) (6,366) Net loss $ (41,456) $ (27,009) Net loss per share: Basic and diluted $ (0.50) $ (0.33) Weighted average shares of common stock used to compute net loss per share: Basic and diluted 82,493,226 80,786,725 Net loss margin (28) % (16) % (1) Includes stock-based compensation expense as follows: Year ended December 31, 2023 2022 (in thousands) Cost of revenue, net $ 13,868 $ 18,403 Research and development 10,870 7,875 General and administrative 9,842 17,850 Sales and marketing 6,632 8,204 Total stock-based compensation expense $ 41,212 $ 52,332 74 Table of Contents COMPARISON OF THE YEARS ENDED DECEMBER 31, 2023 AND 2022 Revenue Year ended December 31, Change 2023 2022 Amount % (in thousands, except percentages) Revenue $ 150,687 $ 169,495 $ (18,808) (11) % Revenue decreased $18.8 million, or 11%, for the year ended December, 31, 2023 compared to the same period in 2022, 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.
The following table sets forth our results of operations for the periods presented: Year ended December 31, 2024 2023 (in thousands, except per share data) Revenue $ 139,236 $ 150,687 Cost of revenue, net (1) 64,239 66,888 Gross margin 74,997 83,799 Operating expenses: Research and development (1) 24,638 23,368 General and administrative (1) 38,382 49,228 Sales and marketing (1) 12,797 44,352 Total operating expenses 75,817 116,948 Loss from operations (820) (33,149) Interest and other expenses, net (1,572) (5,327) Loss before income taxes (2,392) (38,476) Provision for income taxes (7,663) (2,980) Net loss $ (10,055) $ (41,456) Net loss per share: Basic and diluted $ (0.12) $ (0.50) Weighted average shares of common stock used to compute net loss per share: Basic and diluted 87,380,708 82,493,226 Net loss margin (7) % (28) % (1) Includes stock-based compensation expense as follows: Year ended December 31, 2024 2023 (in thousands) Cost of revenue, net $ 12,506 $ 13,868 Research and development 11,900 10,870 General and administrative 6,815 9,842 Sales and marketing 2,316 6,632 Total stock-based compensation expense $ 33,537 $ 41,212 78 Table of Contents COMPARISON OF THE YEARS ENDED DECEMBER 31, 2024 AND 2023 Revenue Year ended December 31, Change 2024 2023 Amount % (in thousands, except percentages) Revenue $ 139,236 $ 150,687 $ (11,451) (8) % Revenue decreased $11.5 million, or 8%, for the year ended December, 31, 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.
This investment in product allows us to develop easy-to-use but powerful features that encourage adoption of our platform. Our ability to grow our paid members depends on our viral, bottom-up adoption cycle that starts with an individual 68 Table of Contents employee.
Relative to other software companies, we invest more in product development and less in sales. This investment in product allows us to develop easy-to-use but powerful features that encourage adoption of our platform. Our ability to grow our paid members depends on our viral, bottom-up adoption cycle that starts with an individual employee.
Under the 2021 Amended Term Loan, the initial term loan of $45.0 million was payable over a 60-month period with principal and accrued interest payments due each quarter thereafter, which commenced with the first payment due on September 30, 2021. Quarterly principal payments were fixed and escalate throughout the term.
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.
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 offer a cashback rewards program to all customers on the Updated Card Program based on volume of Expensify Card transactions. Cashback rewards are earned on a monthly basis and are applied against outstanding customer receivables or are paid out the following month.
We expect sales and marketing expenses will decrease as we reduce our outsourced activities as it relates to sales and product demos. Interest and Other Expenses, Net Interest and other expenses, net, consist primarily of interest paid under our credit facilities with Canadian Imperial Bank of Commerce ("CIBC").
We expect sales and marketing expenses will increase as we expand our brand marketing. Interest and Other Expenses, Net Interest and other expenses, net, consist primarily of interest paid under our credit facilities with Canadian Imperial Bank of Commerce ("CIBC").
We define non-GAAP net income margin as non-GAAP net income divided by total revenue for the same period. We are focused on profitable growth and we consider non-GAAP net income to be an important measure because it helps illustrate underlying trends in our business that could otherwise be masked by the effect of stock-based compensation.
We are focused on profitable growth and we consider non-GAAP net income to be an important measure because it helps illustrate underlying trends in our business that could 86 Table of Contents otherwise be masked by the effect of stock-based compensation, which is not considered indicative of the core operating performance of our business.
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 any time at its discretion without prior notice.
The 2022 Share Repurchase Program does not obligate us to acquire any particular amount of Class A common stock, and the program may be suspended or terminated by us at any time at our discretion without prior notice. As of December 31, 2024, there was approximately $39.5 million remaining under the share repurchase authorization.
These key business metrics and non-GAAP financial measures are presented for supplemental informational purposes only, should not be considered a substitute for our financial information presented in accordance with GAAP and may be different from similarly titled metrics or measures presented by other companies.
These key business metrics and non-GAAP financial measures are presented for supplemental informational purposes only, should not be considered a substitute for our financial information presented in accordance with GAAP and may be different from similarly titled metrics or measures presented by other companies. 84 Table of Contents KEY BUSINESS METRICS Paid Members We believe that our ability to increase the number of paid members on our platform will drive our success as a business.
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. Consideration from a vendor is related to the Expensify Card. We use a third-party vendor to issue Expensify Cards and process the related transactions.
Additional costs include amortization of finance right-of-use assets, amortization expense on capitalized software development costs and personnel-related 75 Table of Contents expenses, including stock-based compensation and employee costs attributable to supporting our customers and maintenance of our platform.
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, referral fees for strategic partners and other benefits that we provide to our referral and affiliate partners.
We expect that general and administrative expenses will remain consistent as it relates to costs associated with being a publicly traded company, including legal, audit, business insurance and consulting fees. 76 Table of Contents 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, referral fees for strategic partners and other benefits that we provide to our referral and affiliate partners.
See Note 7 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further information. 81 Table of Contents Certain Covenants As of December 31, 2023, we were subject to customary covenants under the 2021 Amended Term Loan, which unless waived by CIBC, restrict our and our subsidiaries' ability to, among other things incur additional indebtedness, create or incur liens, permit a change of control, merge or consolidate with other companies, sell or transfer assets, pay dividends or make distributions, make acquisitions, investments or loans, or payments and prepayments of subordinated indebtedness, subject to certain exceptions.
Certain Covenants We are subject to customary covenants under the 2024 Amended Loan and Security Agreement, which, unless waived by CIBC, restrict our and our subsidiaries' ability to, among other things, incur additional indebtedness, create or incur liens, permit a change of control, merge or consolidate with other companies, sell or transfer assets, pay dividends or make distributions, make acquisitions, investments or loans, or payments and prepayments of subordinated indebtedness, subject to certain exceptions.
In 2023 and 2022, our net seat retention was 99% and 108%, respectively. Our growth will depend on our ability to retain existing customers. INTRODUCING FEATURES TO EXPAND OUR RELATIONSHIP WITH EXISTING CUSTOMERS We fully launched the Expensify Card in 2020 and, despite pullback in corporate expenses with the COVID-19 pandemic, customers began adopting the card.
In 2024 and 2023, our net seat retention was 86% and 99%, respectively. Our growth will depend on our ability to retain existing customers. INTRODUCING FEATURES TO EXPAND OUR RELATIONSHIP WITH EXISTING CUSTOMERS We fully launched the Expensify Card in 2020 and we intend to actively promote the Expensify Card to both new and existing customers to drive increased adoption.
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 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.
Year ended December 31, 2023 2022 (in thousands, except percentages) Non-GAAP net (loss) income $ (244) $ 25,323 Non-GAAP net (loss) income margin — % 15 % 78 Table of Contents Reconciliations of Non-GAAP Financial Measures The following tables reconcile the most directly comparable GAAP financial measure to each of these non-GAAP financial measures.
Year ended December 31, 2024 2023 (in thousands, except percentages) Free cash flow $ 23,863 $ 555 Free cash flow margin 17 % — % Reconciliations of Non-GAAP Financial Measures The following tables reconcile the most directly comparable GAAP financial measure to each of these non-GAAP financial measures.
Cost of Revenue, Net and Gross Margin Year ended December 31, Change 2023 2022 Amount % (in thousands, except percentages) Cost of revenue, net $ 66,888 $ 62,669 $ 4,219 7 % Gross margin $ 83,799 $ 106,826 $ (23,027) (22) % Gross margin % 56 % 63 % Cost of revenue, net increased by $4.2 million, or 7%, for the year ended December 31, 2023 compared to the same period in 2022.
Cost of Revenue, Net and Gross Margin Year ended December 31, Change 2024 2023 Amount % (in thousands, except percentages) Cost of revenue, net $ 64,239 $ 66,888 $ (2,649) (4) % Gross margin $ 74,997 $ 83,799 $ (8,802) (11) % Gross margin % 54 % 56 % Cost of revenue, net decreased by $2.6 million, or 4%, for the year ended December 31, 2024 compared to the same period in 2023.
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.
Due to the nature of the vendor agreement, we do not record the Expensify interchange amount as revenue under the Legacy Card Program.
Sales and Marketing Year ended December 31, Change 2023 2022 Amount % (in thousands, except percentages) Sales and marketing $ 44,352 $ 49,876 $ (5,524) (11) % Sales and marketing expenses decreased $5.5 million, or 11%, for the year ended December 31, 2023 compared to the same period in 2022, primarily due to a decrease in advertising spend partially offset by (i) an increase in outsourcing activities related to sales and product demos, and (ii) increased marketing event spend to gain further brand awareness.
Sales and Marketing Year ended December 31, Change 2024 2023 Amount % (in thousands, except percentages) Sales and marketing $ 12,797 $ 44,352 $ (31,555) (71) % Sales and marketing expenses decreased $31.6 million, or 71%, for the year ended December 31, 2024 compared to the same period in 2023, primarily due to (i) a decrease in outsourcing activities related to sales and product demos, (ii) a decrease in total employee and employee related expenses subject to allocation and a decrease in time spent on sales and marketing activities, (iii) a decrease in advertising spend, and (iv) a decrease in marketing event spend.
At most companies, not every employee generates expenses that would be submitted via an expense report on a monthly basis. As we add additional features that are used 69 Table of Contents by all employers, we have the potential to monetize the segment of our customers’ employees that are not submitting expense reports.
As we add additional features that are used by all employers, we have the potential to monetize the segment of our customers’ employees that are not submitting expense reports.
We believe that our existing cash resources will be sufficient to finance our continued operations and growth strategy for the next 12 months and the foreseeable future.
Our future capital requirements will depend on many factors, including revenue growth and costs incurred to support growth in our business and our need to respond to business opportunities, challenges or unforeseen circumstances. We believe that our existing cash resources will be sufficient to finance our continued operations and growth strategy for the next 12 months and the foreseeable future.
Interest and Other Expenses, Net Year ended December 31, Change 2023 2022 Amount % (in thousands, except percentages) Interest and other expenses, net $ (5,327) $ (5,411) $ 84 (2) % Interest and other expenses, net decreased by $0.1 million, or 2%, for the year ended December 31, 2023 compared to the same period in 2022 primarily due to a reduction in foreign currency losses partially offset by an increase in interest expense incurred under the 2021 Amended Term Loan (as defined below) due to increases in CIBC's reference rate.
Interest and Other Expenses, Net Year ended December 31, Change 2024 2023 Amount % (in thousands, except percentages) Interest and other expenses, net $ (1,572) $ (5,327) $ 3,755 (70) % Interest and other expenses, net decreased by $3.8 million, or 70%, for the year ended December 31, 2024 compared to the same period in 2023 primarily due to a decrease in interest expense incurred due to the repayments of the term loan component of the 2021 Amended Loan and Security Agreement (as defined below), the revolving line of credit and the amortizing term mortgage.
We define paid members as the average number of users (employees, contractors, volunteers, team members, etc.) who are billed on Collect or Control plans during any particular quarter. For SMBs or sole proprietors with only one employee, the business owner may also be the only paid member.
Our customers pay for subscriptions on behalf of employees and contractors who use the platform, whom we refer to as paid members. We define paid members as the average number of users (employees, contractors, volunteers, team members, etc.) who are billed on Collect or Control plans during any particular quarter.
Cost of revenue, net increased primarily due to increased outsourcing activities related to maintaining our platform.
Cost of revenue, net decreased primarily due to (i) a decrease in outsourcing activities related to maintaining our platform, and (ii) a decrease in total employee and employee related expenses subject to allocation.
Key Factors Affecting Our Performance Our performance depends on many factors, including the following: INVESTING IN PRODUCT-LED GROWTH We are focused on growing the number of paid members on our platform. Relative to other software companies, we invest more in product development and less in sales.
We intend to continue to develop complimentary features to Expensify Travel to increase the number of existing companies using Expensify Travel and to attract new customers. 72 Table of Contents Key Factors Affecting Our Performance Our performance depends on many factors, including the following: INVESTING IN PRODUCT-LED GROWTH We continue to focus on growing the number of paid members on our platform.
CASH FLOWS FROM INVESTING ACTIVITIES During the year ended December 31, 2023, net cash used in investing activities was $7.3 million, primarily consisting of software development costs and the purchase of property and equipment.
The increase is primarily due to a decrease in marketing and advertising spend and a decrease in outsourcing activities related to sales and product demos, partially offset by a decrease in revenue. CASH FLOWS FROM INVESTING ACTIVITIES During the year ended December 31, 2024, net cash used in investing activities was $7.6 million, primarily consisting of software development costs.
Research and Development Year ended December 31, Change 2023 2022 Amount % (in thousands, except percentages) Research and development $ 23,368 $ 13,692 $ 9,676 71 % Research and development expenses increased by $9.7 million, or 71%, for the year ended December 31, 2023 compared to the same period in 2022, primarily due to an increase in employee and external contributor time spent on project initiatives and new product features. 75 Table of Contents General and Administrative Year ended December 31, Change 2023 2022 Amount % (in thousands, except percentages) General and administrative $ 49,228 $ 58,490 $ (9,262) (16) % General and administrative expenses decreased $9.3 million, or 16%, for the year ended December 31, 2023 compared to the same period in 2022, primarily related to a decrease in employee time allocated to administrative functions resulting from one-time planning and implementation activities incurred in 2022 for first year compliance with Section 404 of the Sarbanes-Oxley Act and other new public company requirements.
Research and Development Year ended December 31, Change 2024 2023 Amount % (in thousands, except percentages) Research and development $ 24,638 $ 23,368 $ 1,270 5 % Research and development expenses increased by $1.3 million, or 5%, for the year ended December 31, 2024 compared to the same period in 2023, primarily due to an increase in employee time spent on project initiatives and new product features, partially offset by a decrease in total employee and employee related expenses subject to allocation. 79 Table of Contents General and Administrative Year ended December 31, Change 2024 2023 Amount % (in thousands, except percentages) General and administrative $ 38,382 $ 49,228 $ (10,846) (22) % General and administrative expenses decreased $10.8 million, or 22%, for the year ended December 31, 2024 compared to the same period in 2023, primarily due to (i) a decrease in total employee related expenses subject to allocation, (ii) a decrease in settlement losses, and (iii) a decrease in business insurance expense.
Refer to Note 9 to our consolidated financial statements in this Annual Report on Form 10-K for further detail over stock-based compensation and our stock incentive plans. Recent Accounting Pronouncements See Note 2 to our consolidated financial statements in this Annual Report on Form 10-K for recently issued accounting pronouncements.
See Note 7 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further information.
The 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.
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. 2024 Loan and Security Agreement In February 2024, we entered into a Second Amended and Restated Loan and Security Agreement (as amended by the amendments described below, and as may be further amended from time to time, the "2024 Amended Loan and Security Agreement") with CIBC.
Loan and Security Agreement In September 2021, we amended and restated our 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.
See Note 7 to our condensed consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further information. 82 Table of Contents 2021 Loan and Security Agreement In September 2021, we amended and restated our 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.
The amounts borrowed beared interest at the bank’s reference rate plus 2.25% and were to continue on a quarterly basis through the maturity of the term loan. 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%.
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 our assets.
On February 21, 2024 we further amended and restated our loan and security agreement with CIBC (the “2024 Amended Term Loan”) to, among other things, extend the maturity of the revolving line of credit by one year, to September 2025, and revise the positive and negative covenants in a manner intended to better align with our operations.
The 2024 Amended Loan and Security Agreement amended and restated the 2021 Amended Loan and Security Agreement in its entirety, 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 our operations.
We expect interest and other expenses, net will decrease as we reduce our interest expense by paying down outstanding debt.
We expect interest and other expenses, net will decrease as all outstanding debt has been paid off as of December 31, 2024.
Net cash used in financing activities increased for the year ended December 31, 2023 compared to the same period in 2022, primarily due to an increase principal payments on the 2021 Amended Term Loan as the outstanding balance on the term loan was repaid in full on October 12, 2023, partially offset by a decrease in the repurchase and retirement of common stock.
Net cash used in investing activities increased for the year ended December 31, 2024 compared to the same period in 2023, primarily due to an increase in employee and external contributor software development costs offset by a decrease in the purchase of property and equipment. 81 Table of Contents CASH FLOWS FROM FINANCING ACTIVITIES During the year ended December 31, 2024, net cash used in financing activities was $22.1 million, primarily consisting of the repayment of the revolving line of credit and the amortizing term mortgage, and the repurchase and retirement of common stock, which was partially offset by proceeds from common stock purchased under our 2021 Stock Purchase and Matching Plan ("Matching Plan").
A contract asset is the right to consideration for transferred goods or services and arises when the amount of revenue recognized exceeds amounts billed to a customer. Since our performance obligation is satisfied monthly, at any reporting period, we have no unsatisfied, or partially unsatisfied, performance obligations.
Since our performance obligation is satisfied monthly, at any reporting period, we have no unsatisfied, or partially unsatisfied, performance obligations. Under the Updated Card Program, we generate revenue from the authorization and settlement of Expensify Card transactions. We partner with an issuing bank to issue Expensify Cards to customers as a feature of the Company’s SaaS.
Going forward, we intend to more actively promote the Expensify Card to both new and existing customers to drive increased adoption. Outside of the Expensify Card, we have invested, and will continue to invest, in developing features complementary and adjacent to expense management.
Outside of the Expensify Card and Expensify Travel, we have invested, and will continue to invest, in developing features complementary and adjacent to expense management. At most companies, not every employee generates expenses that would be submitted via an expense report on a monthly basis.
Removed
MACROECONOMIC TRENDS Our business and the operations of our customers, the majority of which are SMBs, were disrupted by the COVID-19 pandemic and the resulting economic downturn, which yielded inflationary pressures, rising interest rates, foreign currency fluctuations, supply chain issues and a softening in capital markets.
Added
We monetize bookings via Expensify Travel by charging a booking fee on each booking.
Removed
We expect that general and administrative expenses will remain consistent as it relates to costs associated with being a publicly traded company, including legal, audit, business insurance and consulting fees.
Added
In 2024 we invested in a promotional marketing opportunity to have Expensify heavily featured in Apple's biggest budget film, F1, which is scheduled to be released in theaters on June 27, 2025. Our goal is that this will increase our brand awareness and support our bottom-up, word of mouth marketing.
Removed
These increases were partially offset by an increase in Consideration from a vendor, net, driven primarily by the increased adoption and spend captured from members using the Expensify Card, which reduced Cost of revenue, net by $10.1 million for the year ended December 31, 2023 compared to $6.2 million for the year ended December, 31 2022.
Added
In 2024, we launched our travel platform, Expensify Travel, as a natural extension of our expense management product. Many companies look for combined travel and expenses solutions in order to streamline the booking to reimbursement flow.
Removed
KEY BUSINESS METRICS Paid Members We believe that our ability to increase the number of paid members on our platform will drive our success as a business. Our customers pay for subscriptions on behalf of employees and contractors who use the platform, whom we refer to as paid members.
Added
MACROECONOMIC TRENDS Our business and the operations of our customers, the majority of which are SMBs, depend on the overall state of the economy, and we and they could be negatively impacted by slower economic growth and a potential for a recession.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeNonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, results of operations or financial condition. 85
Biggest changeNonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, results of operations or financial condition. 91

Other EXFY 10-K year-over-year comparisons