Expensify Stock: Making Expense Reports Great Again

The stench of American politics has gotten a whole lot worse lately in Portland, Oregon, a city with squalor that makes third-world favelas look orderly and structured. Take a drive through the city’s main arterials and you’ll quickly notice all the crudely erected structures with garbage overflowing onto the streets. Instead of addressing this gaping sore, the city’s leadership seems to ignore it. Keep Portland weird indeed.

The problem exists because the American political party controlling the city is pulling an ostrich maneuver as America’s other political party rubs the problem in their faces. Occasionally, extremists from both parties battle it out on the streets, some even exchanging bullets. Despite the problems Portland is having, talented people get on with getting stuff done. One success story coming out of the City of Roses is Expensify, a company that helps other companies manage expense reports.

The Problem with Expense Reports

The way firms spend money on travel is inefficient and wasteful, to say the least. In most companies, travel planning happens through third-party service providers such as American Express who have no incentive to control spend. Neither do the employees who are often given “not to exceed” numbers for traveling to various locations. If you give an employee visiting Tokyo a $150 per diem, you can bet they’ll try to max it out. That’s about $2,100 for a two-week visit. Then there’s the hotel at $450 a night, and the overpriced airfare Amex booked. A two-week business trip could easily approach $10,000, and that’s before the cost of having the employee spend their valuable time filling out expense forms for their trip with accompanying receipts.

Unlike the City of Portland, expense reports were never great to begin with. Every employee detests spending the afternoon trying to get reimbursed for money they had to front for a business trip. That’s where Expensify realized that the employee would be the easiest channel through which to sell a solution.

About Expensify Stock

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Founded in 2008, Portland’s own Expensify raised just over $38 million in funding to develop their patented SmartScan technology which reads receipts and automatically creates expenses or matches them to transactions imported from a credit card. The patented scanning technology allows anyone to simply take a photo of any receipt – no matter the currency or quality of handwriting – and then receive an accurate transcription of a receipt with just one tap.

After removing the need for people to keep a pocket full of crumpled receipts, and spend hours summing them all up at the end of a business trip, Expensify then moved on to automating the entire “expense journey,” from the initial receipt scan all the way through to categorization, expense tracking, expense reporting and approval, reconciliation, and next-day reimbursements for employees. The business now counts 639,000 paid members across 53,000 companies in +200 countries and territories.

The Expensify freemium business model helps employees solve pain points, so they then become champions of the product. An impressive 60% of Expensify’s revenues can be attributed to an instance where an employee used their app, and then recommended it to their manager. Around 95% of their revenue comes from recurring, automated monthly payments made via credit cards. Try as they might, Expensify isn’t a pure SaaS business, they’re a subscription business.

As you would expect, Expensify took a hit when business travel screeched to a halt because of the pandemic. While the number of users using their platform fell, revenues fared much better, quickly recovering by the end of 2020 with growth continuing into 2021.

Expensify quarterly revenue history
Expensify revenue history by quarter – Credit: Nanalyze

The Expensify S-1 filing talks about “a pricing change implemented in May 2020, which led to a gradual increase in per member price for our paid members from existing customers not using the Expensify Card in connection with our expense management platform for 50% or more of their approved expenses.” The Expensify Card is an attempt by Expensify to expand in the B2B payments niche with a corporate card, but it doesn’t align with the problems that most companies face when it comes to employee spending.

The Employee Spending Problem

Let’s go back to our example of a business trip to Tokyo. A fundamental problem with business travel has always been that employees have no incentive whatsoever to curtail costs. In fact, they have every incentive to spend money like drunken sailors. Now that Expensify has captured all this data, they can use it to save companies money, not just by negotiating better deals with hotel chains and airlines, but by incenting employees to spend less.

For example, what if that employee who went to Tokyo was told the budget for the trip upfront – $10,000. Whatever amount of money that employee didn’t spend, half would end up in their bonus at the end of the year. That simple policy could save employers loads of money on business travel while increasing the employee’s bonus through rewarding them for good behavior. When times get tough, the employer can reduce T&E costs and the employees can increase their income. Everyone’s happy.

With the release of their “Expensify Card,” the company is pivoting towards the sort of value proposition on offer from firms like FLEETCOR and WEX. Expensify’s recently released corporate card captures transaction fees on spend which means growth comes when businesses increase T&E expenditures. More than half their customers have at least one Expensify Card, and those that don’t will eventually face increased fees.

There’s some clever marketing and problem solving on display here from Expensify, combining the use of artificial intelligence and crowdsourcing to solve a pain point that nearly every employee who engages in business travel has experienced. Unfortunately, there are far too many red flags for us to consider a punt.

Should You Buy Expensify Stock?

If you’re looking for financial advice from a bunch of stoned MBAs, you’re probably someone who hasn’t started accumulating wealth yet. You need money to make money. So, here’s some financial advice. If you must own a vehicle, buy a used Toyota outright with cash you saved by living below your means. Then, sock away the money you would have spent on a car payment into a savings account and buy broad market index funds with it. Now that we’ve done our good deed for the day, here’s our thoughts on Expensify for what they’re worth.

For us, Expensify doesn’t make the cut. The biggest reason is because their fortunes are tied to employee expense reports. Business travel is a significant driver of expenses on their platform, and this is one place managers look to trim fat when budgets need to be reined in.

While the market probably hasn’t fully reacted to the havoc caused by The Rona, it did give us a glimpse of what industries might take a beating if we enter times of economic turmoil. In a recent article on the $125 trillion B2B payments opportunity, we talked about how company spending conducted by employees is often discretionary. That is, T&E budgets will be cut in when times get tough. Furthermore, many businesses have already learned how to work together remotely, something that erodes the argument that “in-person is best.” In looking at member growth on the Expensify platform, it’s clearly stalled for whatever reason.

Expensify member growth over time has stalled
Expensify member growth over time has stalled – Credit: Nanalyze

Another reason to steer clear of the company is the Founder and CEO whose personal rant in his letter to shareholders is void of direction and clarity, reeks of politics, and sounds more like he’s running a charity. Look no further than his decision to bring politics not just into his workplace, but also to impose it onto his customer base, further dividing a country that’s already reaching peak divisiveness. We expect companies we invest in to forbid politics in the workplace – similar to what Coinbase did. When a country is evenly split down the middle in regards to political viewpoints, emailing 10 million customers and telling them who to vote for is a foolishly short-sighted thing to do, and is certainly not acting in the best interest of shareholders.

For this company leader, fiduciary responsibility seems to rank a distant second to his save the world prerogatives, as he says without a hint of irony:

It’s time for us to put aside our silly distractions, come together, and get some serious shit done—and for anyone who answers that call, Expensify will be there.

Expensify CEO and Founder, David Barrett

If only.

Right now, 10% of transaction fees from the Expensify Card go to a charity – Expensify.org – which supports causes that align with the CEO’s political beliefs. Instead, focus should be placed on generating profits for shareholders and letting them decide what charities to fund with their return on investment. While Expensify’s charity is busy solving “housing equity” problems in New Yawk and Chiraq, serious problems need addressing in their own backyard.


We don’t just invest in a technology that solves a major pain point, we also invest in business models and the people who drive them – leadership teams that can show a clear vision of future growth with a primary focus on adding shareholder value. There needs to be life outside the initial use cases and total addressable market, a path to greatness that shareholders can understand and get behind. Leadership teams need to show that generating shareholder value is a clear priority above any other personal prerogatives they might have.

If the initial public offering (IPO) goes through as planned, Expensify shares will trade under the ticker EXFY.

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2 thoughts on “Expensify Stock: Making Expense Reports Great Again
  1. It started trading a year ago at around $50, now is $8.455. So it lost around 83% in one year. Market cap $665M.
    Expensify fell 20% after announcing Q3 results on 10th November.
    Q3: revenue of $42.5M (+13.6% Y/Y), misses by $3.44M. The problem I see is very low revenue growth.

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