Expensify, Inc. Third Quarter 2026 Earnings Call - EXPENSIFY INC

Financial Performance:

• Q3 2026 revenue reached $33 million with average paid members at 630,000.
• Forward interchange revenue (Classic and New Expensify combined) totaled $5.8 million, an 8% year-over-year increase.
• New Expensify revenue grew 30% sequentially and 212% year-over-year, exceeding $13 million in ARR.
• Operating cash flow was $4 million; free cash flow was $3.3 million, representing a 170% year-over-year increase.
• GAAP net loss was $3.3 million, while non-GAAP net income was $3.1 million and adjusted EBITDA was $6.1 million.
• Full-year 2026 free cash flow guidance was raised to $13.5–15 million from the previous $12–14 million range.
• Capital allocation included repurchasing 722,121 shares for approximately $1.3 million.
• October 2026 paid member count stood at 636,000.

Guidance and Future Outlook:

• Management anticipates the inflection point where New Expensify growth outpaces legacy Classic revenue attrition could occur in 2027, contingent on current trajectories.
• The primary near-term goal is accelerating the migration of remaining Classic customers to the New Expensify platform to reduce churn and drive top-line growth.
• Future growth is expected to be driven by capturing the "99%" of businesses that have previously avoided traditional expense management via a product that adapts to existing workflows.
• Travel and card segments are projected to continue ramping, with potential for the travel product to eventually rival the card program in revenue contribution.
• AI agent capabilities are expected to improve incrementally, with a target of handling nearly 100% of user requests without constraints.

Business Segments and Product Lines:

• New Expensify: Revenue grew 212% YoY; cohorts are showing improved conversion rates as the product better turns first expenses into paying customers.
• Expensify Card: Expanded internationally to 13 European and UK markets (issuing in GBP and EUR); added biometric controls, virtual cards, and rules to block out-of-policy transactions.
• Travel: Bookings grew 13% sequentially and 40% year-over-year, marking the biggest quarter on record; launched consolidated travel billing to increase revenue per booking.
• AI and Integrations: Launched native integrations with AI-native ERPs Rillet and DualEntry; became the first expense tool in Anthropic's "Claude for Small Business" plugin; introduced the Expensify MCP for AI assistants like Claude and ChatGPT.
• Partnerships: Announced a referral agreement with Visa to support "bring-your-own-card" strategies; secured revenue share agreements with Rillet.
• HR Integrations: Expanded to include Workday, HiBob, and BambooHR.

Market and Competitive Landscape:

• The company targets the 99% of businesses that reject traditional expense tools, positioning its solution as a programmable tool that adapts to workflows rather than forcing process changes.
• Competitive positioning has shifted in Travel from a retention-only tool to a growth driver, with the ability to pull customers away from T&E competitors like Navan.
• The "99% market" is viewed as universal across all industries and geographies, with no specific vertical concentration.
• Strategy focuses on meeting customers within existing ecosystems (e.g., email, AI assistants) to avoid friction.

Risks and Challenges:

• Current top-line pressure is attributed to the coexistence of a rapidly growing New Expensify platform and a slowly declining legacy Classic customer base.
• Churn remains a critical risk, particularly driven by customers leaving for integrated Travel & Expense (T&E) solutions.
• Timing of the revenue inflection point is uncertain; delays in migration or churn reduction could push the return to sustainable top-line growth beyond 2027.
• AI adoption and agent reliability are ongoing development areas, currently achieving 96% task completion without constraints.

Management Commentary and Tone:

• Tone was confident and focused on fundamentals, emphasizing the successful execution of the "New Expensify" flywheel.
• Management described the situation as a "technology startup company hidden inside a legacy technology company," expressing optimism that the new engine is finally overpowering the legacy decline.
• CEO David Barrett highlighted that reducing churn is a high-impact, albeit less exciting, priority that is significantly driving revenue stability.
• CFO Ryan Schaefer emphasized the company's commitment to capital return through stock buybacks while maintaining investment in growth.

Analyst Questions and Answers:

• Travel Strategy: Analysts asked if travel is primarily for retention or new acquisition; management confirmed it addresses all three growth levers (acquisition, expansion, retention), but churn reduction was the initial urgent priority.
• Anthropic Partnership: Regarding the "Claude for Small Business" bundle, management viewed the selection as validation of their AI integration strength, though future joint marketing specifics were not disclosed.
• Growth Inflection Point: Questions regarding when New Expensify growth will offset Classic attrition were answered with a "late 2026 to 2027" window, dependent on churn reduction and migration speed.
• Target Market Characteristics: Management clarified there is no specific vertical alignment; traction is broad across industries because expense management is a universal business need.
• Product Philosophy: The Q&A reinforced the strategy of "adapting to the user" via AI agents and email concierge rather than requiring users to adapt to rigid software processes.

Other Key Points:

• The company successfully launched consolidated travel billing, allowing companies to book travel into a single monthly debit, significantly increasing revenue per booking.
• Expensify's AI agents handle over 96% of requests, a metric that management noted is continuously improving.
• The referral agreement with Visa supports the strategy of keeping clients on their existing corporate cards while gaining Expensify's control and reconciliation features.
• Management highlighted that the "99% of the market" that previously opted out of expense management is now accessible due to the product's ability to integrate seamlessly into existing tools like email and AI assistants.