Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with our audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and in other parts of this Annual Report on Form 10-K.
OVERVIEW
Expensify is a cloud-based expense management software platform that helps the smallest to the largest businesses simplify the way they manage money. Every day, people from all walks of life in organizations around the world use Expensify to scan and reimburse receipts from flights, hotels, coffee shops, office supplies and ride shares. Since our founding in 2008, we have added over 15 million members to our community and processed and automated over 1.8 billion expense transactions on our platform as of December 31, 2025, freeing people to spend less time managing expenses and more time doing the things they love. For the year ended December 31, 2025, an average of 650,000 paid members across an average of 39,700 companies and over 200 countries and territories used Expensify to make money easy.
OUR BUSINESS MODEL
Our employee-centric product strategy, viral and bottom-up business model, word-of-mouth adoption and unique company culture come together to drive value for our members and a competitive advantage for us. We believe that if we remain hyper-focused on our end-user members, and build great products, our members will continue to drive adoption.
We primarily generate revenue from annual subscriptions to our cloud-based platform, driven by the number of paid members active on a monthly basis. Individuals or companies pay for subscriptions on behalf of themselves, their employees and contractors, who we collectively refer to as members. We define a customer as any member who pays for themselves and zero or more other members, grouped into one or more “expense policies.” This might be an individual, an entire company, or a department of a larger company. The definition of customer inherently excludes sole proprietors on Track or Submit plans.
We monetize transactions from the Expensify Card by receiving 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.
We monetize bookings via Expensify Travel by charging a booking fee on each booking. 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.
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. 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. After downloading our free app to submit expenses and realizing the benefits of Expensify, our enthusiastic members champion our platform internally, spread it via word-of-mouth or invites to other
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employees and often convince decision makers to adopt Expensify company-wide. In order to continue to grow, we believe we must continue prioritizing investments in our platform to delight our members and drive viral expansion.
CONVERTING FREE MEMBERS
Our success depends on converting users who try the free aspects of the Expensify platform into paid members. While our viral model means that employees or contractors often introduce Expensify into small and medium-sized businesses (“SMBs”), companies subscribe and pay for the majority of our paid members.
INVESTING TO MAINTAIN MARKET CONSENSUS
Our viral and word-of-mouth adoption model is effective in part because we have established ourselves as a recognized leader in expense management for SMBs. We deploy large scale brand advertising to promote our platform strength and create market consensus that Expensify is a category leader for expense management software. For example, in 2024 and 2025, we invested in a promotional marketing opportunity to have Expensify heavily featured in Apple's biggest budget film, F1® The Movie, which was released in theaters on June 27, 2025. 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. 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. Expensify delivers an expense management platform that we believe customers like, and that embeds us within organizations. Because of these two factors, we have historically enjoyed high customer retention rates that often outperform enterprise retention rates. We believe an additional factor that drives our retention rates is that SMBs generally re-evaluate their technology solutions less frequently, and as such, there is rarely a conscious choice around whether to choose to continue using Expensify for another year.
Gross logo retention and net seat retention are important indicators of customer satisfaction and usage of our platform. We calculate our gross logo retention rate as of the end of a period by using (a) the number of distinct 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 those same companies that are still paying for at least one subscription during the more recent period as the numerator. In each of 2025 and 2024, our annual gross logo retention was 81%. 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. In 2025 and 2024, our net seat retention was 88% and 86%, 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. 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. 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. 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 on a monthly basis.
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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. Although certain indicators have suggested that inflation has made downward progress, the economy continues to be impacted by elevated inflation rates and faces further inflation risk. Tariff and trade issues also continue to cause overall uncertainty with respect to the economy. See the section titled “Risk Factors” in this Annual Report on Form 10-K for further discussion of the possible impact of such macroeconomic trends on our business. Additionally, other potential challenging macroeconomic conditions, and the resulting impact on business continuity and travel, could negatively impact our business.
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Components of Results of Operations
Revenue
We generate revenue from subscription fees based on the usage of our cloud-based expense management software platform under arrangements paid monthly in arrears that are either (i) month-to-month and can be terminated by either party without penalty at any time or (ii) annual arrangements based on a minimum number of monthly members. Annual subscription customers who wish to terminate their contracts before the end of the term are required to pay the remaining obligation in full plus any fees or penalties set forth in the agreement. We charge our customers subscription fees for access to our platform based on the number of monthly active members and level of service. The contractual price is based on either negotiated fees or rates published on our website. We generate most of our revenue from customers who have a credit card or debit card on file with us that is automatically charged each month. Virtually all of our customers have a standard terms of service contract, with the few exceptions for customers on bespoke service contracts.
Our contracts with our customers include two performance obligations: access to the hosted software service, inclusive of all features available within the platform, and the related customer support. We account for the platform access and the support as a combined performance obligation because they have the same pattern of transfer over the same period and are therefore delivered concurrently. We satisfy our performance obligation over time each month as we provide platform access and support services to customers and as such recognize revenue over time. We recognize revenue net of applicable taxes imposed on the related transaction. Revenue earned from subscription fees was $130.5 million and $138.8 million for the years ended December 31, 2025 and 2024, respectively.
As of December 31, 2025, the Expensify Card substantially consisted of a single card program that launched in February 2024 (the “Updated Card Program”). The Updated Card Program operates under an agreement with the issuing bank, The Bancorp Bank, N.A. (“Bancorp”), to issue Expensify Cards to customers and authorize and settle transactions on the Visa card network.
Under the Updated Card Program, we generate revenue from the authorization and settlement of Expensify Card transactions and are contractually entitled to all interchange generated on Expensify Card transactions based on our agreement with Bancorp. We are the principal in the transaction and recognize interchange as revenue on a gross basis within Revenue on the Consolidated Statements of Operations. Interchange revenue was $21.3 million and $9.2 million for the years ended December 31, 2025 and 2024, respectively.
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 consider our cashback rewards as consideration payable to a customer, and it is recorded as contra revenue within Revenue on the Consolidated Statements of Operations. Cashback rewards applied against outstanding customer receivables are reflected as a reduction to Accounts receivable, net on the Consolidated Balance Sheets. 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. The cashback rewards cost was $10.1 million and $8.9 million for the years ended December 31, 2025 and 2024, respectively.
Cost of Revenue, Net
Cost of revenue, net primarily consists of personnel-related expenses, including stock-based compensation, attributable to supporting our customers and maintenance of our platform, amortization expense on capitalized software development costs, expenses related to hosting our service, including the costs of data center capacity, credit card processing fees, third-party software license fees, amortization of finance lease right-of-use assets, outsourcing engineering costs to maintain our platform, outsourcing costs to support customer service and outsourcing costs to support our patented scanning technology
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SmartScan, net of consideration from a vendor under the Updated Card Program for certain volume-based incentives from Visa and consideration from a vendor under our previous card program (the “Legacy Card Program”), which an immaterial number of cardholders continue to operate within, for monetizing Expensify Card activities.
Under the Updated Card Program, we receive consideration from a vendor for certain volume-based incentives from Visa, which are included as a reduction to Cost of revenue, net on the Consolidated Statements of Operations as they are earned. The amounts earned under these volume-based incentives were $1.5 million and $0.3 million for the years ended December 31, 2025 and 2024, respectively.
The Legacy Card Program operates under an agreement with the payment processor, Marqeta, Inc. (“Marqeta”), and relies on Marqeta to manage the relationship with the issuing bank, Sutton Bank, and the card network, Visa, in authorizing and settling transactions. The 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. This consideration, net of fees paid to the vendor, is included as a reduction to Cost of revenue, net on the Consolidated Statements of Operations as it is earned. Consideration earned under the Legacy Card Program, net was immaterial for the year ended December 31, 2025. Consideration earned under the Legacy Card Program was $7.2 million, net of $0.8 million of fees paid to the vendor, for the year ended December 31, 2024.
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. We capitalize certain software development costs that are attributable to developing or adding significant functionality to our internal-use software during the application development stage of the projects. All research and development expenses, excluding capitalized software development costs, are expensed as incurred.
We believe delivering new functionality is critical to attract new customers and expand our relationships with existing customers. We expect to continue to make investments in and expand our product and service offerings to enhance our customers’ experience and satisfaction and to attract new customers. We expect research and development expenses will increase as we develop new products and product enhancements.
General and Administrative
General and administrative expenses primarily consist of personnel-related expenses, including stock-based compensation, for any employee time allocated to administrative functions, including finance and accounting, legal and 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, external professional services, including finance and accounting, audit, tax, legal and compliance, and human resources, third-party software license fees, settlement losses, net of recoveries, and legal settlements. 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.
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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 sales and marketing expenses will decrease following our title sponsorship of F1® The Movie, which was released in theaters in June 2025.
Other Income (Expense), Net
Other income (expense), net, consists primarily of interest income. 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, as well as realized gains and losses on foreign currency transactions, foreign currency remeasurement, and interest expense under our credit facilities with Canadian Imperial Bank of Commerce (“CIBC”).
Provision for Income Taxes
Income taxes primarily consist of income taxes in the United States, United Kingdom, Australia, Netherlands and Canada, as well as states in the United States in which we do business.
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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.
The following table sets forth our results of operations for the periods presented (in thousands, except percentages, share and per share data):
Year Ended December 31,
Operating expenses:
Other income (expense), net 1,726 (1,572)
Provision for income taxes (5,096) (7,663)
Net loss per share
Basic and diluted $ (0.23) $ (0.12)
Weighted average shares of common stock used to compute net loss per share:
Net loss margin (15) % (7) %
(1)Includes stock-based compensation expense as follows (in thousands):
Year Ended December 31,
Total stock-based compensation expense $ 26,578 $ 33,537
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COMPARISON OF THE YEARS ENDED DECEMBER 31, 2025 AND 2024
Revenue
Year Ended December 31, Change
(in thousands, except percentages)
Revenue increased $2.9 million, or 2%, for the year ended December 31, 2025 compared to the same period in 2024, primarily due to an increase in interchange revenue driven primarily by a shift in cardholder spend from the Legacy Card Program to the Updated Card Program. This increase was partially offset by (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.
Cost of Revenue, Net and Gross Margin
Year Ended December 31, Change
(in thousands, except percentages)
Gross margin % 50 % 54 %
Cost of revenue, net increased by $6.3 million, or 10%, for the year ended December 31, 2025 compared to the same period in 2024, primarily due to (i) a decrease in consideration earned under the Legacy Card Program driven primarily by a shift in cardholder spend from the Legacy Card Program to the Updated Card Program, (ii) an increase in payment processing fees, and (iii) an increase in amortization expense related to capitalized software. This increase was partially offset by a decrease in SmartScan costs due to increased use of AI instead of human agents.
Gross margin decreased to 50% for the year ended December 31, 2025 compared to 54% in the same period in 2024 due to the factors described in the preceding paragraphs for Revenue and Cost of revenue, net.
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Research and Development
Year Ended December 31, Change
(in thousands, except percentages)
Research and development expenses decreased by $4.0 million, or 16%, for the year ended December 31, 2025 compared to the same period in 2024, primarily due to a decrease in employee and external contributor time spent on project initiatives and new product features as a result of increased focus on sales and marketing efforts related to our title sponsorship of F1® The Movie, which was released in theaters in June 2025.
General and Administrative
Year Ended December 31, Change
(in thousands, except percentages)
General and administrative expenses increased $3.7 million, or 10%, for the year ended December 31, 2025 compared to the same period in 2024, primarily due to (i) the estimated liability, net of the Company's expected insurance recoveries, related to the Putative Class Action discussed under Part I, Item 3 “Legal Proceedings” and the related increase in legal fees, and (ii) an increase in settlement losses, net of recoveries. This increase was partially offset by a decrease in business insurance costs.
Sales and Marketing
Year Ended December 31, Change
(in thousands, except percentages)
Sales and marketing expenses increased $13.9 million, or 109%, for the year ended December 31, 2025 compared to the same period in 2024, primarily due to (i) an increase in advertising spend related to our title sponsorship of F1® The Movie, which was released in theaters in June 2025, and (ii) an increase in time spent on sales and marketing activities.
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Other Income (Expense), Net
Year Ended December 31, Change
(in thousands, except percentages)
Other income (expense), net changed by $3.3 million, or 210%, for the year ended December 31, 2025 compared to the same period in 2024 primarily due to (i) period-over-period favorability in net foreign currency gains/losses, (ii) a decrease in interest expense incurred due to the repayments of the revolving credit facility and amortizing term mortgage in 2024 discussed below under “Liquidity and Capital Resources—Credit Facilities”, and (iii) an increase in interest income.
Provision For Income Taxes
Year Ended December 31, Change
(in thousands, except percentages)
We recorded a provision for income taxes of $5.1 million for the year ended December 31, 2025 compared to a $7.7 million provision for income taxes for the year ended December 31, 2024. The change in provision is primarily due to an increase in loss before income taxes as a result of increased expenses related to our title sponsorship of F1® The Movie. 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 basis of the assets and liabilities. 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, 2025 and 2024, we recorded an incremental valuation allowance of $4.3 million and $0.9 million, 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 (31.3)% and (320.4)%, for the years ended December 31, 2025 and 2024, respectively. The effective income tax rate differs from the statutory rate in 2025 primarily due to nondeductible stock-based compensation and the change in the valuation allowance. The effective income tax rate differs from the statutory rate in 2024 primarily due to nondeductible stock-based compensation, the compensation limits imposed by the Internal Revenue Code Section 162(m), and the change in the valuation allowance.
Liquidity and Capital Resources
Since our inception, we have financed our operations primarily through our cash flow from operations, sales of our equity securities and borrowings under our credit facilities. As of December 31, 2025, we had $63.1 million in cash and cash equivalents, with no outstanding indebtedness and a $7.5 million letter of credit outstanding.
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.
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CASH FLOWS
The following table summarizes our cash flows for the periods indicated (in thousands):
Year Ended December 31,
Net cash provided by operating activities $ 20,089 $ 23,877
Net cash used in investing activities (3,555) (7,628)
Net cash used in financing activities (2,744) (22,073)
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash provided by operating activities was $20.1 million for the year ended December 31, 2025 as compared to $23.9 million for the same period in 2024, primarily due to (i) an increase in marketing and advertising spend related to our title sponsorship of F1® The Movie, which was released in theaters in June 2025, and (ii) a decrease in subscription revenue. This decrease was partially offset by (i) an increase in interchange revenue driven by the increased adoption and spend captured from members using the Expensify Card, and (ii) a decrease in SmartScan costs.
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used in investing activities was $3.6 million for the year ended December 31, 2025, primarily consisting of software development costs.
Net cash used in investing activities decreased for the year ended December 31, 2025 compared to the same period in 2024, primarily due to a decrease in employee and external contributor software development costs.
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash used in financing activities was $2.7 million for the year ended December 31, 2025, primarily consisting of the repurchase and retirement of common stock, partially offset by proceeds from common stock purchased under the 2021 Stock Purchase and Matching Plan (the “Matching Plan”).
Net cash used in financing activities was $22.1 million for the year ended December 31, 2024, primarily consisting of the repayment of the revolving credit facility and the amortizing term mortgage, and the repurchase and retirement of common stock, which was partially offset by proceeds from common stock purchased under the Matching Plan.
Share Repurchase Program
On May 10, 2022, the Executive Committee of the Board of Directors (the “Executive Committee”) approved a share repurchase program with authorization to purchase up to $50.0 million of shares of Class A common stock (“2022 Share Repurchase Program”). The 2022 Share Repurchase Program authorized us to repurchase shares from time to time through open market purchases, in privately negotiated transactions or by other means, including the use of trading plans intended to qualify under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), in accordance with applicable securities laws and other restrictions. The 2022 Share Repurchase Program, which would have expired in March 2025, was replaced with the 2025 Share Repurchase Program described below.
On February 25, 2025, the Executive Committee approved a new share repurchase program with authorization to purchase up to $50.0 million of shares of Class A common stock that expires on March 31, 2028 (“2025 Share Repurchase Program”). Under the 2025 Share Repurchase Program, we may repurchase shares from time to time through open market purchases, in privately negotiated transactions
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or by other means, including through 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. The actual timing and total amount of future repurchases are subject to business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, restrictions under the terms of our current and future debt agreements and other considerations. The 2025 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, 2025, there was approximately $41.0 million remaining under the 2025 Share Repurchase Program, not including amounts used for net share settlement of vested equity incentive awards.
See Note 8 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further information.
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. 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. On August 29, 2024, we repaid in full the then-outstanding balance of $7.6 million and an immaterial amount of accrued interest and terminated the associated mortgage agreement with CIBC and secured promissory note. See Note 7 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further information.
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, the “2024 Amended Loan and Security Agreement”) with CIBC. The 2024 Amended Loan and Security Agreement provided for a $25.0 million revolving credit facility that was set to expire in September 2025. Borrowings under the revolving credit facility accrued interest at CIBC’s reference rate plus 1.00% and were secured by substantially all of our assets.
The 2024 Amended Loan and Security Agreement was amended (i) in May 2024 to amend the covenant restricting the amount of repurchases of common stock to allow for certain additional repurchase activity and provide a waiver for our non-compliance during prior periods, (ii) in August 2024 to permit our wholly-owned subsidiary, 401 SW 5th Ave LLC, to remain an excluded subsidiary, and (iii) in February 2025 to amend the covenant restricting the amount of repurchases of common stock to allow for certain additional net share settlement activity.
In April 2024, we entered into an irrevocable standby letter of credit (the “Letter of Credit”) issued under the 2024 Amended Loan and Security Agreement to reduce cash collateral requirements in connection with the Updated Card Program. The Letter of Credit was issued in the amount of $1.0 million for the benefit of Bancorp. The Letter of Credit was renewed on February 28, 2025 and expires on March 20, 2026.On April 16, 2025, we entered into an amendment to the irrevocable standby letter of credit to increase the Letter of Credit to $7.5 million.
On July 10, 2024, the then-outstanding balance of $15.0 million and an immaterial amount of accrued interest under the revolving credit facility were repaid in full.
On July 1, 2025, we terminated the revolving credit facility under the 2024 Amended Loan and Security Agreement. At the time of such termination, we had no borrowings under the revolving credit facility, and certain terms of the 2024 Amended Loan and Security Agreement, including collateral security, survived the termination with respect to outstanding Contingent Obligations (as defined in the 2024 Amended Loan
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and Security Agreement) arising from Bank Services (as defined in the 2024 Amended Loan and Security Agreement). The Letter of Credit, which had no amounts drawn, also remained outstanding. There were no penalties incurred by us as a result of the termination of the revolving credit facility.
See Note 7 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further information.
Letter of Credit Security Agreement
On October 9, 2025, we entered into a Letter of Credit Facility and Security Agreement (the “LOC Security Agreement”) with CIBC. The LOC Security Agreement, among other things, provides for the issuance of additional irrevocable standby letters of credit, governs the terms of the outstanding Letter of Credit originally issued under the 2024 Amended Loan and Security Agreement, and grants to CIBC, for the ratable benefit of the lenders, a security interest in substantially all of our assets and its subsidiaries, and also replaces the 2024 Amended Loan and Security Agreement with respect to the Contingent Obligations described above. Under the LOC Security Agreement, the Letter of Credit remained at $7.5 million with an expiration date of March 20, 2026. No amounts had been drawn on the Letter of Credit as of December 31, 2025.
Certain Covenants
We are subject to customary covenants under the LOC Security Agreement which, unless waived by CIBC, restrict our and our subsidiaries’ ability to, among other things, incur certain additional indebtedness, create or incur certain liens, permit a change of control, sell or transfer assets, pay dividends or make distributions, subject to certain exceptions.
As of December 31, 2025, we were in compliance with all debt covenants under the LOC Security Agreement.
Key Business Metrics and Non-GAAP Financial Measures
We supplement the reporting of our financial information determined under U.S. generally accepted accounting principles (“GAAP”) with certain business metrics and non-GAAP financial measures which we regularly review to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. Accordingly, we believe that these key business metrics and non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management team. 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.
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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. 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.
The following table sets forth the average number of paid members for the quarters ended March 31, 2024 through December 31, 2025 (in thousands):
Quarter ended Paid members
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. There are a number of limitations related to the use of non-GAAP financial measures versus comparable financial measures determined under GAAP. For example, other companies in our industry may calculate these non-GAAP financial measures differently or may use other measures to evaluate their performance. All of these limitations could reduce the usefulness of these non-GAAP financial measures as analytical tools. Investors are encouraged to review the related GAAP financial measures and the reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures and to not rely on any single financial measure to evaluate our business.
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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.
Adjusted EBITDA and Adjusted EBITDA Margin
We define adjusted EBITDA as net loss excluding provision for income taxes, other (income) expense, net, depreciation and amortization and stock-based compensation expense. We define adjusted EBITDA margin as adjusted EBITDA divided by revenue for the same period. 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.
Year Ended December 31,
(in thousands, except percentages)
Net loss margin (15) % (7) %
Add:
Other (income) expense, net (1,726) 1,572
Depreciation and amortization 8,299 6,655
Adjusted EBITDA margin 12 % 28 %
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Non-GAAP Net Income and Non-GAAP Net Income Margin
We define non-GAAP net income as net loss excluding stock-based compensation expense. We define non-GAAP net income margin as non-GAAP net income divided by 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, which is not considered indicative of the core operating performance of our business.
Year Ended December 31,
(in thousands, except percentages)
Net loss margin (15) % (7) %
Add:
Non-GAAP net income margin 4 % 17 %
Free Cash Flow and Free Cash Flow Margin
We define free cash flow as net cash provided by operating activities excluding changes in settlement assets, net and settlement liabilities, which represent funds held for customers and customer funds in transit, respectively, reduced by the purchases of property and equipment and software development costs. We define free cash flow margin as free cash flow divided by revenue for the same period. We are focused on profitable growth and we consider free cash flow to be an important measure because it helps illustrate underlying trends in our business that could otherwise be masked by the effect of the cash flows that are not indicative of the core operating performance of our business.
Year Ended December 31,
(in thousands, except percentages)
Net cash provided by operating activities $ 20,089 $ 23,877
Operating cash flow margin 14 % 17 %
Changes in settlement assets and liabilities:
Less:
Purchase of property and equipment (17) —
Software development costs (3,538) (7,628)
Free cash flow margin 14 % 17 %
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Contractual Obligations and Commitments
The following table summarizes our contractual obligations and commitments as of December 31, 2025 (in thousands):
Payments due by period
Less than 1 year 1-3 years More than 3 years Total
Finance lease commitments $ 102 $ — $ — $ 102
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. In addition, we have entered into indemnification agreements with our directors and certain officers and employees that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. 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.
Off-Balance Sheet Arrangements
During the periods presented, we did not have, and we do not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Critical Accounting Policies and Estimates
Our consolidated financial statements included elsewhere herein have been prepared in accordance with GAAP. The preparation of our financial statements requires us to make estimates and judgments that affect our reported amounts of assets, liabilities, revenues and expenses. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. For our accounting policies, see Note 2 to our consolidated financial statements contained elsewhere herein for a description of our significant accounting policies.
REVENUE RECOGNITION
We generate revenue from subscription fees paid by our customers to access and use our hosted software services, as well as standard customer support.
Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
Our contracts are either month-to-month arrangements billed monthly in arrears based on a specified number of members or annual arrangements billed monthly in arrears based on a minimum number of
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monthly members. Month-to-month contracts can be terminated by either party at any time without penalty. Annual subscription customers who wish to terminate their contracts before the end of the term are required to pay the remaining obligation in full plus any fees or penalties set forth in the agreement.
We charge customers subscription fees for access to our platform based on the number of monthly members and level of service. The contractual price per member is based on either negotiated fees or rates published on our website. Our contracts with customers include two performance obligations: access to the hosted software service (“SaaS”), inclusive of all features available within the platform and related customer support. The SaaS and the support are accounted for as a combined performance obligation because they have the same pattern of transfer over the same period and, therefore, are delivered concurrently. We satisfy our performance obligation over time each month as it provides the SaaS and support services to customers and as such recognizes revenue monthly based on the number of monthly members and contractual rate per member.
Certain annual contracts provide the customer the option to increase the minimum number of members and extend the contract term on a prospective basis or to purchase members beyond the minimum contracted number of members at a higher rate for a particular month. These options are accounted for when the customer exercises the option as they do not represent a material right and are accounted for as a contract modification.
Revenue is recognized net of applicable taxes imposed on the related transaction. We charge customers on a monthly basis, in arrears, with typical payment terms being 30 days. 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. Our agreement with the issuing bank allows for card transactions to be authorized and settled on the Visa network. We are contractually entitled to all interchange generated on Expensify Card transactions based on our agreement with the issuing bank. Based on our agreements with the payment processor and issuing bank, we are the principal in the transaction. As such, we recognize interchange as revenue on a gross basis within Revenue on the Consolidated Statements of Operations.
Recent Accounting Pronouncements
See Note 2 to our consolidated financial statements in this Annual Report on Form 10-K for recently issued and adopted accounting pronouncements.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
FOREIGN CURRENCY EXCHANGE RISK
We report our results in U.S. dollars, which is our reporting currency. For our foreign operations, the majority of our revenues and expenses are denominated in other currencies, such as the British pound and the Australian dollar. Foreign currency assets and liabilities are remeasured into the U.S. dollar at end-of-period exchange rates except for prepaid expenses, property and equipment and related depreciation and amortization and lease right-of-use assets and related amortization, which are remeasured at historical exchange rates. Revenues and expenses are remeasured at average exchange rates in effect during each period. Gains or losses from foreign currency transactions are included in the Consolidated Statements of Operations.
If the value of the U.S. dollar weakens relative to foreign currencies, this may have an unfavorable impact on our cash flows and operating results. We do not believe that a 10% change in the relative value of the U.S. dollar to other foreign currencies would have a material effect on our cash flows and operating results.
INFLATION RISK
We do not believe that inflation has had a material impact on our business, results of operations or financial condition. Nonetheless, 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.
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Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) 97
Consolidated Financial Statements
Consolidated Balance Sheets 98
Consolidated Statements of Operations 99
Consolidated Statements of Changes in Stockholders’ Equity 100
Consolidated Statements of Cash Flows 101
Notes to Consolidated Financial Statements 103
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors
Expensify, Inc.:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheet of Expensify, Inc. and subsidiaries (the Company) as of December 31, 2025, the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal
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control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Evaluation of the sufficiency of audit evidence over subscription fee revenue
As discussed in Note 2 to the consolidated financial statements, the Company generates revenue from subscription fees paid by its customers to access and use the Company’s hosted software services, as well as standard customer support. Subscription fee revenue is recognized monthly based on the number of monthly members and the contractual rate per member. The Company recorded $130.5 million of subscription fee revenue for the year ended December 31, 2025.
We identified the evaluation of the sufficiency of audit evidence over subscription fee revenue as a critical audit matter. Subjective auditor judgment was required to evaluate the sufficiency of audit evidence obtained due to the highly automated nature of the process to record subscription fee revenue, which involves interfacing high volumes of data across multiple information technology (IT) systems. IT professionals with specialized skills and knowledge were also required to assess the IT environment in the subscription fee revenue process.
The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature and extent of audit procedures over subscription fee revenue. We evaluated the design and tested the operating effectiveness of certain internal controls related to the subscription fee revenue process. We involved IT professionals with specialized skills and knowledge, who assisted in the testing of certain general IT controls and IT application controls, including data interfaces, used in the Company’s subscription fee revenue process. We performed a software-assisted data analysis to test relationships among certain subscription fee revenue transactions. In addition, we evaluated the sufficiency of audit evidence obtained over subscription fee revenue by assessing the results of procedures performed, including the appropriateness of the nature and extent of such evidence.
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/s/ KPMG LLP
We have served as the Company’s auditor since 2025.
Philadelphia, Pennsylvania
February 26, 2026
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Expensify, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Expensify, Inc. (the Company) as of December 31, 2024, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We have served as the Company’s auditor from 2020 to 2025.
San Francisco, California
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Expensify, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share data)
As of December 31,
Assets
Deferred tax assets, net 494 499
Liabilities and stockholders' equity
Accrued expenses and other liabilities 17,893 8,240
Lease liabilities, current 678 729
Lease liabilities, non-current 5,061 5,738
Commitments and contingencies (Note 12)
Stockholders' equity:
Total liabilities and stockholders' equity $ 185,989 $ 173,680
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Expensify, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share data)
Year Ended December 31,
Operating expenses:
Other income (expense), net 1,726 (1,572)
Provision for income taxes (5,096) (7,663)
Net loss per share:
Basic and diluted $ (0.23) $ (0.12)
Weighted average shares of common stock used to compute net loss per share:
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Expensify, Inc.
Consolidated Statements of Changes in Stockholders’ Equity
(in thousands, except share and per share data)
Shares Amount Shares Amount
Vesting of early exercised stock options — — — — 426 — 426
Issuance of restricted stock units — — 35,808 — 70 — 70
Repurchases of early exercised stock options — — (32,954) — — — —
Repurchase and retirement of common stock — — (645,938) — (1,510) — (1,510)
Issuance of common stock upon exercise of stock options — — 361,924 — 323 — 323
Vesting of early exercised stock options — — — — 113 — 113
Issuance of restricted stock units — — 11,218 — 33 — 33
Settlement of liability-classified restricted common shares — — 628,359 — — — —
Repurchase and retirement of common stock — — (4,823,118) — (9,095) — (9,095)
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Expensify, Inc.
Consolidated Statements of Cash Flows
(in thousands)
Year Ended December 31,
Cash flows from operating activities:
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation and amortization 8,460 6,814
Reduction of operating lease right-of-use assets 575 547
Loss on impairment, receivables and sale or disposal of equipment 603 727
Amortization of debt issuance costs 133 54
Deferred tax assets 5 (42)
Changes in assets and liabilities:
Accounts receivable, net (355) 704
Accrued expenses and other liabilities 9,727 (404)
Operating lease liabilities (588) 8
Other liabilities 89 8
Net cash provided by operating activities 20,089 23,877
Cash flows from investing activities:
Purchase of property and equipment (17) —
Software development costs (3,538) (7,628)
Net cash used in investing activities (3,555) (7,628)
Cash flows from financing activities:
Principal payments of finance leases (140) (129)
Principal payments of outstanding debt — (22,671)
Payments for debt issuance costs (153) (71)
Repurchases of early exercised stock options — (35)
Proceeds from common stock purchased under Matching Plan 6,321 4,091
Proceeds from issuance of common stock on exercise of stock options 323 431
Payments for employee taxes withheld from stock-based awards — (2,179)
Repurchase and retirement of common stock (9,095) (1,510)
Net cash used in financing activities (2,744) (22,073)
Cash and cash equivalents and restricted cash, beginning of period 90,834 96,658
Cash and cash equivalents and restricted cash, end of period $ 104,624 $ 90,834
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Supplemental disclosure of cash flow information:
Cash paid for interest $ — $ 1,362
Noncash investing and financing items:
Cashless exercise of stock options $ — $ 335
Restricted cash included in other current assets 18,544 19,980
Restricted cash included in settlement assets, net 23,000 22,082
Total cash and cash equivalents and restricted cash $ 104,624 $ 90,834
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Expensify, Inc.
Notes to Consolidated Financial Statements
NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Description of the Business
Expensify, Inc. (“Expensify”) was incorporated in Delaware on April 29, 2009. Expensify offers a comprehensive expense management platform that integrates with a variety of third-party accounting applications, including QuickBooks Desktop, QuickBooks Online, Xero, NetSuite, Intacct, Sage, Microsoft Dynamics, MYOB and others. Expensify's product simplifies the way that employees and vendors manage and submit expense receipts and bills and provides efficiencies to companies for the payment of those bills. Expensify delivers its services over the internet to corporations and individuals under license arrangements and offers unique pricing options for small and medium-sized businesses and enterprises primarily on a per-active-member basis. Expensify has subsidiaries in the United States (“U.S.”), Australia, Canada, Netherlands and the United Kingdom (“UK”).
Expensify also offers an Expensify charge card (the “Expensify Card”), which is primarily distributed to corporate customers in the U.S. who subsequently distribute the card to their employees for business use. The Expensify Card allows customers to have real-time control over their employees' spending and compliance with spending limits in addition to eReceipt reporting on purchases.
As of December 31, 2025, the Expensify Card substantially consisted of a single card program that launched in February 2024 (the “Updated Card Program”). The Updated Card Program operates under an agreement with the issuing bank, The Bancorp Bank, N.A. (“Bancorp”), to issue Expensify Cards to customers and authorize and settle transactions on the Visa card network.
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Expensify, its wholly-owned subsidiaries, and Expensify.org (collectively, the “Company”) and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, the accompanying consolidated financial statements reflect all normal and recurring adjustments that are necessary for the fair presentation of the Company's financial position, results of operations, equity, and cash flows for the periods presented.
Reclassification Presentation
Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of financial position, operations and cash flows.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and judgments are based on historical experience, forecasted events and various other assumptions that the Company believes to be reasonable under the circumstances. Estimates and judgments are evaluated on an ongoing basis. Actual results could differ from those estimates. Changes in estimates are recorded in the period in which they become known.
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Expensify, Inc.
Notes to Consolidated Financial Statements
Estimates and assumptions by management affect the Company’s classification of employee and employee-related expenses, the useful lives and recoverability of long-lived assets and deferred contract acquisition costs, income taxes, capitalization of internal-use software costs, and stock-based compensation.
Foreign Currency
The Company uses the U.S. dollar as its functional currency. Foreign currency assets and liabilities are remeasured into the U.S. dollar at the end-of-period exchange rates except for prepaid expenses, property and equipment and related depreciation and amortization, and lease ROU assets and related amortization, which are remeasured at the historical exchange rates. Revenues and expenses are remeasured at average exchange rates in effect during each period. Gains or losses from foreign currency transactions are included within Other income (expense), net on the Consolidated Statements of Operations.
Comprehensive Loss
The Company has no components of other comprehensive loss. Therefore, net loss equals comprehensive loss for all periods presented.
Cash and Cash Equivalents
Cash consists of funds deposited with banks. The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. The recorded carrying amount of cash equivalents, which is cost plus accrued interest, if any, approximates fair value. As of December 31, 2025 and 2024, the Company had no cash equivalents.
Restricted Cash
Restricted cash primarily includes Expensify Card posted collateral, cash held by Expensify.org for social justice and equity efforts of Expensify.org, and earned interchange held for the benefit of the Company until released by the issuing bank. Refer to Note 6 for the breakout of these amounts within Other current assets as of December 31, 2025 and 2024.
Restricted cash also includes amounts within Settlement assets, net for funds held for customers that are deposited into a commercial bank account held by the Company for the benefit of the customers until remitted to the customer's members. Refer to the settlement assets and liabilities policy note below for further detail.
Accounts Receivable and Allowance for Expected Credit Losses
Accounts receivable are recorded at the invoiced amount, net of an allowance for expected credit losses. The allowance for expected credit losses is based on the Company’s assessment of the collectability of the accounts receivable. Management considers the following factors when determining the collectability of specific customer accounts: customer creditworthiness, past transaction history with the customer, current economic industry trends and changes in customer payment terms. The Company recorded an immaterial allowance for expected credit losses as of December 31, 2025 and 2024.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to credit risk consist primarily of cash and cash equivalents and accounts receivable. Cash and cash equivalents are deposited with federally insured commercial banks in the United States that may at times exceed federally insured limits. Management believes that these financial institutions are financially sound, and the Company has not experienced material losses to date. The Company generally does not require collateral or other security in support of accounts receivable except for the restricted cash accounts discussed in the restricted cash policy note
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Expensify, Inc.
Notes to Consolidated Financial Statements
above. No customer represented 10% or more of revenue during the years ended December 31, 2025 and 2024. In addition, there were no customers representing 10% or more of accounts receivable as of December 31, 2025 and 2024.
Settlement Assets, Net and Liabilities and Allowance for Expected Credit Losses
Upon an approved request for expense reimbursement from customers, the Company initiates a transaction facilitated by a third-party vendor to collect funds from customers that are deposited into a commercial bank account held by the Company for the benefit of the customers until remitted to the customer’s members after a clearing period of up to three business days. The Company records a settlement receivable upon approval of the expense reimbursement until funds are cleared in the Company’s commercial bank account. A corresponding liability is recorded upon approval of the expense reimbursement until funds are remitted from the Company’s commercial bank account to the customer’s members.
For customer transactions incurred through the Expensify Card, the Company initiates a transaction facilitated by a third-party vendor to collect funds from customers that are deposited into a commercial bank account held by the Company until remitted to the issuing bank. The majority of customers settle Expensify Card transactions on a daily basis while certain customers settle Expensify Card transactions on a monthly basis. The Company records a settlement receivable for Expensify Card transactions until funds are cleared in the Company’s commercial bank account. A corresponding liability is recorded until funds are remitted from the Company’s commercial bank account to the issuing bank.
Settlement receivables are recorded net of an allowance for expected credit losses. The allowance for expected credit losses is based on the Company’s assessment of the collectability of the settlement receivables. Management considers the following factors when determining the collectability of specific customer accounts: customer creditworthiness, past transaction history with the customer, current economic industry trends and changes in customer settlement terms. The Company recorded a $0.1 million allowance for expected credit losses as of December 31, 2025 and 2024. During the years ended December 31, 2025 and 2024, the Company recorded credit losses of $2.3 million and $0.3 million, respectively, net of recoveries of $0.8 million for both years.
Leases
The Company determines if an arrangement is or contains a lease at inception by evaluating whether there is an identified asset and whether the Company controls the use of the identified asset throughout the period of use. The Company determines the classification of the lease, whether operating or financing, at the lease commencement date, which is the date the leased assets are made available for use.
Operating and finance leases are included in Lease right-of-use assets, Lease liabilities, current and Lease liabilities, non-current on the Consolidated Balance Sheets. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating and finance lease ROU assets and liabilities are recognized at commencement date based on the present value of future minimum lease payments over the lease term. The Company uses rates implicit in the lease, or if not readily available, its incremental borrowing rate, to calculate its ROU assets and liabilities. The operating and finance lease ROU assets also include any lease payments made before commencement and exclude lease incentives.
The Company’s lease terms may include options to extend or terminate the lease, and the Company includes those options in the lease terms when it is reasonably certain it will exercise them. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Lease expense for finance lease payments is recognized on a straight-line basis over the lesser of the lease term or the estimated useful life of the asset. The Company made the policy election to account for short-term leases by recognizing the lease payments in the Consolidated Statements of Operations on a straight-line
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Expensify, Inc.
Notes to Consolidated Financial Statements
basis over the lease term rather than recognizing these leases on the Company’s Consolidated Balance Sheets. Variable lease payments are recognized in the Consolidated Statements of Operations in the period in which the obligation for those payments is incurred. The Company has real estate and data center equipment lease agreements with lease and non-lease components for which the Company has made the accounting policy election to account for these agreements as a single lease component. Modifications are assessed to determine whether incremental differences result in new contract terms to be accounted for as a new lease or whether the additional right-of-use should be included in the original lease and continue to be accounted with the remaining ROU asset.
Property and Equipment, Net
Property and equipment, net are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the respective assets, typically three years for computer equipment, five years for furniture and fixtures and thirty years for buildings. Land has an indefinite useful life and is not depreciated. Leasehold improvements are amortized over the lesser of the lease term or the estimated useful life of the asset. Expenditures for repairs and maintenance are charged to expense as incurred. Upon disposal, the cost and related accumulated depreciation and amortization are removed from the Consolidated Balance Sheets and the resulting gain or loss is reflected in the Consolidated Statements of Operations. Gains or losses from disposition of property and equipment for each of the years ended December 31, 2025 and 2024 have been immaterial.
Construction in progress is stated at cost, which includes the cost of construction and other direct costs attributable to the construction. No depreciation is recorded for construction in progress until the relevant assets are completed and put into use. There was no construction in progress as of December 31, 2025. Construction in progress as of December 31, 2024 represents leasehold improvements under installation.
Capitalized Software Development Costs, Net
The Company capitalizes internal and external costs directly related to obtaining or developing internal-use software during the application development stage of the projects. Additionally, the Company capitalizes qualifying costs incurred for upgrades and enhancements that result in additional functionality to existing software. Maintenance activities or minor upgrades are expensed in the period performed. The Company's internal-use software is reported at cost less accumulated amortization. Amortization begins once the project is ready for its intended use, which is usually when the software code goes into production. The Company amortizes the asset on a straight-line basis over a period of three years, which is the estimated useful life. During the years ended December 31, 2025 and 2024, the Company capitalized $5.3 million and $10.4 million, respectively, in software development costs.
Long-Lived Assets
Long-lived assets, primarily capitalized software development costs, property and equipment and lease right-of-use assets, are evaluated for impairment when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. When indications of impairment are present and the estimated undiscounted future cash flows from the use of the asset are less than the asset's carrying value, the related asset will be written down to fair value. Any impairment losses are included in the same financial statement caption as the related depreciation and amortization for the respective asset class on the Consolidated Statements of Operations. Impairment losses on long-lived assets were immaterial for each of the years ended December 31, 2025 and 2024.
Revenue Recognition
The Company generates revenue from subscription fees paid by its customers to access and use the Company’s hosted software services, as well as standard customer support. Revenue is recognized when control of the promised goods or services is transferred to customers in an amount that reflects the
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Expensify, Inc.
Notes to Consolidated Financial Statements
consideration the Company expects to be entitled to receive in exchange for those goods or services. Revenue is recognized net of applicable taxes imposed on the related transaction.
The Company’s contracts are either month-to-month arrangements billed monthly in arrears based on a specified number of members or annual arrangements billed monthly in arrears based on a minimum number of monthly members, with typical payment terms being 30 days. Month-to-month contracts can be terminated by either party at any time without penalty. Annual subscription customers who wish to terminate their contracts before the end of the term are required to pay the remaining obligation in full plus any fees or penalties set forth in the agreement.
The Company charges its customers subscription fees for access to its platform based on the number of monthly members and level of service. The contractual price per member is based on either negotiated fees or rates published on the Company’s website. The Company’s contracts with customers include two performance obligations: access to the hosted software service (“SaaS”), inclusive of all features available within the platform, and related customer support. The SaaS and the support are accounted for as a combined performance obligation because they have the same pattern of transfer over the same period and, therefore, are delivered concurrently. The Company satisfies its performance obligation over time each month as it provides the SaaS and support services to customers and, as such, recognizes revenue monthly based on the number of monthly members and contractual rate per member.
Certain annual contracts provide the customer the option to increase the minimum number of members and extend the contract term on a prospective basis or to purchase members beyond the minimum contracted number of members at a higher rate for a particular month. These options are accounted for when the customer exercises the option as they do not represent a material right and are accounted for as a contract modification.
Under the Updated Card Program, the Company generates revenue from the authorization and settlement of Expensify Card transactions and is contractually entitled to all interchange generated on Expensify Card transactions based on its agreement with the issuing bank. The Company has a stand-ready performance obligation to customers to provide card program management services as part of its SaaS offering, which includes card transaction authorization and settlement services. Interchange fees earned by the Company represent variable consideration. The Company satisfies its performance obligation daily as transactions are authorized and settled, with customers simultaneously receiving and consuming the benefits of these services. Accordingly, interchange fees earned for transactions settled on a given day are recognized as revenue on that day. Based on the Company's agreements with the payment processor and issuing bank, the Company controls the services provided to customers and is the principal in the transaction. As such, the Company recognizes interchange as revenue on a gross basis within Revenue on the Consolidated Statements of Operations.
Cashback Rewards
The Company offers a cashback rewards program to all customers 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. The Company considers cashback rewards as consideration payable to a customer and it is recorded as contra revenue within Revenue on the Consolidated Statements of Operations. Cashback rewards are variable based on the volume of customer spend. Cashback rewards liability was $0.6 million and $0.5 million as of December 31, 2025 and 2024, respectively, and is recorded within Accrued expenses and other liabilities on the Consolidated Balance Sheets. Cashback rewards offset against outstanding customer receivables were $0.4 million and $0.3 million as of December 31, 2025 and 2024, respectively, and are reflected as a reduction to Accounts receivable, net on the Consolidated Balance Sheets.
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Notes to Consolidated Financial Statements
Disaggregation of Revenue
The following table provides information about disaggregated revenue from customers (in thousands):
Year Ended December 31,
Deferred Contract Acquisition Costs
Sales commissions that are incremental costs of the acquisition of contracts with customers are capitalized. These costs are recorded as deferred contract acquisition costs within Other current assets and Other assets on the Consolidated Balance Sheets. The Company determines whether costs should be deferred when the costs are incremental and would not have occurred if the customer contract had not been obtained. The deferred commission amounts are recoverable through future revenue from our customer contracts, all of which are non-cancelable.
Commissions paid upon the acquisition of an initial contract are amortized over an estimated period of benefit which has been determined to be three years based on historical analysis of average customer life, industry benchmarks, and useful life of our product offerings. Amortization is recognized on a straight-line basis and included within Sales and marketing on the Consolidated Statements of Operations. The Company periodically reviews these deferred costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit. The Company did not recognize any impairment of deferred contract acquisition costs during the periods presented.
The following table presents the change in deferred contract acquisition costs (in thousands):
Amortized during the year (439) (222)
Stock-Based Compensation
The Company accounts for stock-based compensation under the fair value recognition and measurement provisions of GAAP. Those provisions require all stock-based awards granted to employees, including stock options and restricted stock units, to be measured based on fair value at the date of grant, with the resulting expense generally recognized in the Consolidated Statements of Operations over the period during which the employee is required to perform service in exchange for the award.
The Company utilizes the Black-Scholes option pricing model to determine the estimated fair value of stock options. The Company recognizes stock-based compensation costs on a straight-line basis over the requisite service period of the award, which is generally the option vesting term of four years. Forfeitures are recorded as they occur.
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Notes to Consolidated Financial Statements
The fair value of the Company’s underlying common stock is determined by the closing price, on the date of grant, of its Class A common stock, which is traded on the Nasdaq Global Select Market (“Nasdaq”). Costs associated with restricted stock units (“RSUs”) granted to employees, consultants and directors (collectively, “Service Providers”) with a service condition only are recognized using the straight-line method over the requisite service period of the award. This includes RSUs granted to Service Providers with a service condition only that are subject to a graded vesting schedule, ensuring that the amount recognized is at least equal to the vested portion of the award at each reporting date. Costs associated with RSUs granted to Service Providers with both a performance condition and service condition are recognized using the accelerated graded method over the requisite service period of the award.
The Company will grant RSUs to non-employee directors on an annual basis at each annual stockholders' meeting that will be recognized on a straight-line basis over the requisite service period of the award, which is one year. Furthermore, RSUs will be granted to non-employee directors on a quarterly basis as a retainer for their services, which will be recognized on a straight-line basis over the requisite service period of the award, which is three months.
Forfeitures are recorded as they occur for all RSUs. Refer to Note 9 for further detail over stock-based compensation and the stock incentive plans of the Company.
Employee and Employee-Related Expenses
Allocating 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 the Company to make estimates and judgments as a result of a generalist model and organizational structure. The Company bases the estimates for allocating employee and employee-related expenses on defined teams. 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.
Cost of Revenue, Net
Cost of revenue, net primarily consists of personnel-related expenses, including stock-based compensation, attributable to supporting customers and maintenance of the Company's platform, amortization expense on capitalized software development costs, expenses related to hosting the Company’s service, including the costs of data center capacity, credit card processing fees, third-party software license fees, amortization of finance lease right-of-use assets, outsourcing engineering costs to maintain the Company's platform, outsourcing costs to support customer service and outsourcing costs to support the Company's patented scanning technology SmartScan, net of consideration from a vendor under the Updated Card Program for certain volume-based incentives from Visa and consideration from a vendor under the previous card program (the “Legacy Card Program”), of which an immaterial number of cardholders continue to operate within, for monetizing Expensify Card activities.
This consideration under the Updated Card Program is included as a reduction to cost of revenue of $1.5 million and $0.3 million for years ended December 31, 2025 and 2024, respectively.
This consideration under the Legacy Card Program is included as a reduction to cost of revenue of an immaterial amount for the year ended December 31, 2025 and $7.2 million for the year ended December 31, 2024.
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Notes to Consolidated Financial Statements
Research and Development
Research and development expenses primarily consist of personnel-related expenses, including stock-based compensation, and external contributor expenses incurred in the planning and preliminary project stage of new products or enhancing existing products or services. The Company capitalizes certain software development costs that are attributable to developing or adding significant functionality to our internal-use software during the application development stage of the projects. All research and development expenses, excluding capitalized software development costs, are expensed as incurred.
General and Administrative
General and administrative expenses primarily consist of personnel-related expenses, including stock-based compensation, for any employee time allocated to administrative functions, including finance and accounting, legal and 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, external professional services, including finance and accounting, audit, tax, legal and compliance, and human resources, third-party software license fees, settlement losses, net of recoveries, and legal settlements. General and administrative expenses are expensed as incurred.
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 the Company provides to its referral and affiliate partners. In general, the Company expenses the costs of sales and marketing, including promotional expenses, as incurred. For media advertising arrangements, the Company expenses the costs related to producing advertisements as incurred, and the costs related to communicating the advertisement when the advertisement first takes place or is released.
Advertising costs were $12.7 million and $2.5 million for the years ended December 31, 2025 and 2024, respectively.
Other Income (Expense), Net
Other income (expense), net, primarily consists of interest income. It also includes the results of operations of our Fifth & Harvey, LLC subsidiary, realized gains and losses on foreign currency transactions, foreign currency remeasurement, and interest paid under the Company's credit facilities with Canadian Imperial Bank of Commerce (“CIBC”).
Income Taxes
The Company is subject to income taxes in the U.S. and several foreign jurisdictions. The Company records a provision for income taxes utilizing the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities, as well as net operating losses (“NOL”) and tax credit carryforwards. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts more likely than not expected to be realized.
The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on examination, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Company classifies any liabilities for unrecognized tax benefits as current
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Notes to Consolidated Financial Statements
to the extent that the Company anticipates payment (or receipt) of cash within one year. Interest and penalties related to uncertain tax positions are recognized in the provision for income taxes.
The Company is subject to the global intangible low-taxed income (“GILTI”) provisions of the Tax Cuts and Jobs Act (“TCJA”) due to its foreign operations. H.R.1 renamed GILTI to Net Controlled Foreign Corporation Tested Income (“NCTI”) for tax years beginning after December 31, 2025. The Company's accounting policy with respect to GILTI, or NCTI in future periods, is to account for it as a period cost.
The Company's provision for income taxes does not include provisions for foreign withholding taxes associated with the repatriation of undistributed earnings of certain foreign subsidiaries that the Company intends to reinvest indefinitely in its foreign subsidiaries.
Net Loss Per Share
Basic net loss per share is computed by dividing Net loss for the period by the weighted average number of outstanding shares of common stock during the period, less weighted average shares subject to repurchase. Diluted net loss per share is computed by dividing Net loss for the period by the weighted average number of outstanding shares of common stock and, when dilutive, potential shares of common stock outstanding during the period using the more dilutive of the treasury stock method or if-converted method, as applicable. For periods in which the Company reports net losses, diluted net loss per share is the same as basic net loss per share, because potentially dilutive common shares are anti-dilutive.
Share Repurchases
When common stock is repurchased for retirement, the Company's policy is to allocate the excess of the repurchase price over the par value of shares acquired to both accumulated deficit and additional paid-in capital. The Company estimates the additional paid-in capital carrying value per common stock by dividing the Additional paid-in capital balance from our most recent quarterly financial statements preceding the repurchase by the number of common shares issued and outstanding from our most recent quarterly financial statements preceding the repurchase. The calculated additional paid-in capital carrying value per share is then applied to the number of shares to be retired to determine the portion to be allocated to additional paid-in capital.
Segment Reporting
The Company operates as one reportable segment because its chief operating decision maker (“CODM”), a committee that consists of the chief executive officer, the chief financial officer, and the chief strategy officer, reviews the Company’s financial information on a consolidated basis for purposes of making decisions regarding allocating resources and assessing performance. Accordingly, the CODM uses Net loss on a consolidated basis to measure segment profit or loss and reviews significant segment expenses on a consolidated basis to manage the Company's operations, which includes Cost of revenue, net, Research and development, General and administrative, and Sales and marketing. All significant segment expenses for the years ended December 31, 2025 and 2024 are presented on the Consolidated Statements of Operations. Interest income is recorded within Other income (expense), net on the Consolidated Statements of Operations. Interest income was $1.9 million and $1.1 million for the years ended December 31, 2025 and 2024, respectively. The measure of segment assets is Total assets as reported on the Consolidated Balance Sheets. Substantially all long-lived assets are located in the United States.
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Notes to Consolidated Financial Statements
The table below provides the Company’s revenue by geographic region based on the transaction currency (in thousands). No other individual country outside of the United States accounted for more than 10% of total revenue.
Year Ended December 31,
Recently Issued Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires the disaggregation, in the notes to the financial statements, of certain cost and expense captions presented on the face of the Company's Consolidated Statements of Income to provide enhanced transparency to investors. The ASU is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027 and allows for adoption on a prospective or retrospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the accounting for internal-use software. The ASU removes all references to software development stages and requires capitalization of software costs when management has committed to the software project and it is probable the software will be completed and perform its intended use. The ASU is effective for annual periods beginning after December 15, 2027, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.
Recently Adopted Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. The ASU is effective for annual periods beginning after December 15, 2024 and allows for adoption on a prospective or retrospective basis. The Company adopted this ASU for the 2025 annual period on a prospective basis. Refer to Note 10 to the consolidated financial statements for such new disclosures.
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Notes to Consolidated Financial Statements
NOTE 3 – CAPITALIZED SOFTWARE, NET
Capitalized software, net consisted of the following (in thousands):
As of December 31,
Capitalized software development costs $ 36,393 $ 32,332
Amortization expense related to capitalized software development costs is recorded within Cost of revenue, net on the Consolidated Statements of Operations. Amortization expense for the years ended December 31, 2025 and 2024 was $7.7 million and $5.9 million, respectively.
NOTE 4 – PROPERTY AND EQUIPMENT, NET
Property and equipment, net consisted of the following (in thousands):
As of December 31,
Computers and equipment $ 165 $ 170
Construction in progress — 2,570
Less: accumulated depreciation (10,189) (9,630)
Depreciation expense related to property and equipment is recorded within General and administrative, Sales and marketing, and Other income (expense), net on the Consolidated Statements of Operations. Depreciation expense related to property and equipment for the years ended December 31, 2025 and 2024 was $0.6 million and $0.8 million, respectively.
NOTE 5 – LEASES
The Company has operating leases for real estate and a finance lease for data center equipment. The operating and finance leases contain options to extend or terminate the leases. However, these were not included in the original accounting treatment of the leases as the Company is not reasonably certain to exercise these options.
During the years ended December 31, 2025 and 2024, the Company did not enter into any new operating or finance lease agreements.
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Notes to Consolidated Financial Statements
The components of lease cost reflected on the Consolidated Statements of Operations were as follows (in thousands):
Year Ended December 31,
Finance lease cost:
Amortization of ROU assets $ 136 $ 136
Interest on lease liabilities 13 24
Total finance lease cost 149 160
Other information related to leases was as follows (in thousands, except percentages or as noted within):
As of December 31,
Finance lease ROU asset (included within Lease right-of-use assets) $ 91 $ 227
Weighted average remaining lease term (in years):
Weighted average discount rate:
Supplemental cash flow information related to leases was as follows (in thousands):
Year Ended December 31,
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 1,079 $ 516
Operating cash flows from finance leases $ 13 $ 24
Financing cash flows from finance leases $ 140 $ 129
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Notes to Consolidated Financial Statements
Maturities of lease liabilities as of December 31, 2025 were as follows (in thousands):
For the year ending: Finance leases Operating leases
Total future lease payments 102 7,613
Less: imputed interest (2) (1,974)
Less: lease liabilities, current (100) (578)
Lease liabilities, non-current $ — $ 5,061
NOTE 6 – SIGNIFICANT BALANCE SHEET COMPONENTS
Other Current Assets
Other current assets consisted of the following (in thousands):
As of December 31,
Expensify Card posted collateral for funds held for customers $ 10,530 $ 12,415
Expected insurance recoveries 6,710 —
Expensify.org restricted cash 6,181 5,972
Earned interchange restricted cash 1,654 1,442
Deferred contract acquisition costs 508 339
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Notes to Consolidated Financial Statements
Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consisted of the following (in thousands):
As of December 31,
Estimated putative class action liability $ 9,500 $ —
Partner payouts and advertising fees 1,559 1,194
Sales, payroll and other taxes payable 1,484 2,538
Matching Plan payroll liability 672 408
Credit card processing fees 477 411
Accrued expenses and other liabilities $ 17,893 $ 8,240
NOTE 7 – FINANCING ARRANGEMENTS
Amortizing Term Mortgage
In August 2019, the Company entered into an $8.3 million amortizing term mortgage agreement with CIBC for the Company's commercial building located in Portland, Oregon. The agreement required principal and interest payments to be made each month over a five-year period. Interest accrued at a fixed rate of 5.00% per year until August 2024, at which point the remaining outstanding principal balance on the amortizing term mortgage was due in full. The borrowings were secured by the building. On August 29, 2024, the Company repaid in full the then-outstanding balance of $7.6 million and terminated the associated mortgage agreement with CIBC and secured promissory note.
Loan and Security Agreement
In February 2024, the Company entered into a Second Amended and Restated Loan and Security Agreement (as amended by the amendments described below, the “2024 Amended Loan and Security Agreement”) with CIBC. The 2024 Amended Loan and Security Agreement provided for a $25.0 million revolving credit facility that was set to expire in September 2025. Borrowings under the revolving credit facility accrued interest at CIBC’s reference rate plus 1.00% and were secured by substantially all of the Company's assets.
In April 2024, the Company entered into an irrevocable standby letter of credit (the “Letter of Credit”) issued under the 2024 Amended Loan and Security Agreement to reduce cash collateral requirements in connection with the Updated Card Program. The Letter of Credit was issued in the amount of $1.0 million for the benefit of Bancorp. The Letter of Credit was renewed on February 28, 2025 and expires on March 20, 2026.On April 16, 2025, the Company entered into an amendment to the irrevocable standby letter of credit to increase the Letter of Credit to $7.5 million.
On July 10, 2024, the then-outstanding balance of $15.0 million and an immaterial amount of accrued interest under the revolving credit facility were repaid in full.
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Notes to Consolidated Financial Statements
On July 1, 2025, the Company terminated the revolving credit facility under the 2024 Amended Loan and Security Agreement. At the time of such termination, the Company had no borrowings under the revolving credit facility, and certain terms of the 2024 Amended Loan and Security Agreement, including collateral security, survived the termination with respect to outstanding Contingent Obligations (as defined in the 2024 Amended Loan and Security Agreement) arising from Bank Services (as defined in the 2024 Amended Loan and Security Agreement). The Letter of Credit, which had no amounts drawn, also remained outstanding. There were no penalties incurred by the Company as a result of the termination of the revolving credit facility.
As of December 31, 2024, there were no borrowings outstanding under the revolving credit facility Interest expense included within Other income (expense), net on the Consolidated Statements of Operations for the years ended December 31, 2025 and 2024 was $0.1 million and $1.1 million, respectively.
Letter of Credit Security Agreement
On October 9, 2025, the Company entered into a Letter of Credit Facility and Security Agreement (the “LOC Security Agreement”) with CIBC. The LOC Security Agreement, among other things, provides for the issuance of additional irrevocable standby letters of credit, governs the terms of the outstanding Letter of Credit originally issued under the 2024 Amended Loan and Security Agreement, and grants to CIBC, for the ratable benefit of the lenders, a security interest in substantially all of the assets of the Company and its subsidiaries, and also replaces the 2024 Amended Loan and Security Agreement with respect to the Contingent Obligations described above. Under the LOC Security Agreement, the Letter of Credit remained at $7.5 million with an expiration date of March 20, 2026. No amounts had been drawn on the Letter of Credit as of December 31, 2025.
NOTE 8 – STOCKHOLDERS’ EQUITY
Share Repurchase Program
On May 10, 2022, the Executive Committee of our Board of Directors (the “Executive Committee”) approved a share repurchase program with authorization to purchase up to $50.0 million of shares of Class A common stock (“2022 Share Repurchase Program”). The 2022 Share Repurchase Program authorized the Company to repurchase shares from time to time through open market purchases, in privately negotiated transactions or by other means, including the use of trading plans intended to qualify under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), in accordance with applicable securities laws and other restrictions. The 2022 Share Repurchase Program, which would have expired in March 2025, was replaced with the 2025 Share Repurchase Program described below.
On February 25, 2025, the Executive Committee approved a new share repurchase program with authorization to purchase up to $50.0 million of shares of Class A common stock that expires on March 31, 2028 (“2025 Share Repurchase Program”). Under the 2025 Share Repurchase Program, the Company may repurchase shares from time to time through open market purchases, in privately negotiated transactions or by other means, including through 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. The actual timing and total amount of future repurchases are subject to business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, restrictions under the terms of the Company's current and future debt agreements and other considerations. The 2025 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 by the Company at any time at its discretion without prior notice.