Expensify (EXFY) Reports Q4 Results
Expensify (EXFY) reported after the bell yesterday and revenue was a touch light (2% miss) while EPS beat expectations on the back of strong margins. Revenue rose 7.8% to $43.5 million (missed by $850K) while adjusted EPS of $0.07 beat by a penny. Management reaffirmed long-term revenue guidance of 25% to 35%.
While revenue metrics, including revenue per paid member (flat at $55.8), were on the low side of expectations due to the pay-per-use customer base (35% of customers) and seasonally slow Q4, adjusted EBITDA margin (a measure of profit) of 25.7% was well ahead of expectations for 23.2%.
The company added 18,000 new subscribers in the quarter and ended Q4 with 779,000 average subscribers.
As discussed in my report, Expensify is working on several fronts to build a more durable and consistent growth company. This includes building out a direct sales force and bringing on account managers to convert pay-per-use customers to subscribers, as well as to retain customers. Subscriber revenue is a more predictable revenue stream than pay-per-use.
It is also launching the Card program with a new processor and building out its accounting channel (again with dedicated account managers) to grow new products, including a CPA card and Chat.
Big picture, and not unexpectedly, Expensify continues to face a mediocre environment for its customer base, which tilts toward small businesses. But it is on a self-help program that should position the company for significant and steadier growth in the coming years.
The quarter shows there is still a lot of work to be done. If there wasn’t, EXFY would be a $20 (or higher) stock, not one trading below $10. With an undemanding valuation and a brighter future, we’ll stick with a buy rating. That said, we could see some weakness in shares today, depending on how the broad market acts (PCED inflation comes out today).
Expensify has $38 million remaining on its share buyback program which should lend support to shares. BUY
