Expensify, Inc. Class A Common Stock 2026 Q2 Earnings Call

Thanks, Nikki. Thanks, everyone, for joining today's call. Let's start with the Q2 financials. Revenue for the quarter was $33.9 million. Average paid members were 640,000. Expensify Card interchange revenue across both Classic and New Expensify was $5.9 million, up 12% year-over-year. While we continue to see some pressure on the top line, our focus remains firmly on the financials of the business and on executing the work required to return to sustainable growth. Even though revenue has declined year-over-year, we've been working hard to meaningfully improve profitability and cash flow. Operating cash flow was $8.4 million, and free cash flow was $6.4 million. Our GAAP net loss improved to $3.9 million from $8.8 million a year ago. Non-GAAP net income was $3.4 million compared to a non-GAAP net loss last year, and adjusted EBITDA improved to $6.6 million from a negative adjusted EBITDA a year ago. These results reflect the discipline with which we're managing the business as we focus on improving execution, returning to growth, and creating long-term value. Q2 free cash flow of $6.4 million was up 2% from the same period last year and up 162% from the previous quarter. Given that trajectory, we're raising our full year 2026 free cash flow guidance from $6 million-$9 million, up to $12 million-$14 million. As always, we like to give you an early look at next quarter's paid member trends. For July 2026, we had 634,000 paid members. As you can see from previous years, July tends to run a bit lower as people take vacations and travel less for business.

Non-GAAP net income was $3.4 million compared to a non-GAAP net loss last year, and adjusted EBITDA improved to $6.6 million from a negative adjusted EBITDA a year ago. These results reflect the discipline with which we're managing the business as we focus on improving execution, returning to growth, and creating long-term value. Q2 free cash flow of $6.4 million was up 2% from the same period last year and up 162% from the previous quarter. Given that trajectory, we're raising our full year 2026 free cash flow guidance from $6 million-$9 million, up to $12 million-$14 million. As always, we like to give you an early look at next quarter's paid member trends. For July 2026, we had 634,000 paid members. As you can see from previous years, July tends to run a bit lower as people take vacations and travel less for business.

This is the usual summer dip, we'd expect things to pick back up as we move through Q3. Turning to capital allocation, this was an active quarter for us. We commenced and completed a modified Dutch auction tender offer, repurchasing approximately 6.1 million shares of Class A common stock at $1.20 per share. That tender was actually substantially undersubscribed despite the premium we offered on the stock price. Following its completion, we went into the open market and purchased an additional 712,000 shares at an average price of $1.63 per share. Altogether, that brings our total Q2 repurchase to approximately 6.8 million shares of Class A common stock, which represents roughly a 7% reduction in shares outstanding. We think this reflects real conviction in the value of this business and is a continued commitment to returning capital to shareholders even as we keep investing in growth.

With that, I'll hand it over to David for a business and product update.

Thanks, Ryan. Q2 was a quarter where I think the product itself tells the story better than any single number could. We made real progress in AI, on product velocity, and as Ryan just covered, in capital allocation. Let me walk you through what that actually looked like for our customers. I want to start with something a customer told us this quarter, because it captures exactly what we're building towards. Laura Redmond of Redmond Accounting put it this way. "Expense approvals used to sit in my inbox for days, waiting on me to eyeball a $40 lunch receipt. That's not judgment. That's just routing. I set up an agent rule that clears anything in policy on its own. I got back hours a week I didn't even know I was losing." That's the whole thesis in one sentence. Most approval work isn't judgment.

It's routing is exactly what we should be automating away. That's what agent rules do. It's what we call level 3 workflow automation. Tag, categorize, edit, route, hold, approve, reject, or pay based on natural language rules that get evaluated with LLM judgment inside a real-time workflow. Instead of writing rigid if this, then that logic, you just tell it what you want in plain English, it handles judgment calls the way Laura's example showed. The next step up from that is custom agents, what we call level 4. These are prompt-driven agents that collaborate over chat, email, and SMS with employees, vendors, or clients. They're both reactive, responding to internal or external events as they happen, and proactive, taking scheduled actions on their own. Where agent rules handles routing within a workflow, custom agents can actually go and have that conversation on your behalf.

This one's no longer in beta. It's live. The Expensify MCP gives third-party AI assistants a direct connection to Expensify, so tools like ChatGPT, Claude, and Cursor can access expense data through natural language right from within those apps. We think this is a meaningful differentiator and is a good example of us meeting customers inside the tools they are increasingly using. Beyond the AI work, Q2 is one of our strongest shipping quarters yet, with more than 30 features and enhancements. I want to hit a few highlights from each month rather than read the whole list. The slide has the details for anyone who wants them. In April, the headline was really bring your own card.

We shipped personal card imports directly into the Expensify wallet and shared card feeds across workspaces so customers can keep using the corporate cards they already have and still get full expense automation with no card migration required. In May, we focused on giving admins more control without more overhead. Card freeze and unfreeze and CSC company card imports both extend that same bring your own card thesis, making it easier for finance teams to bring existing card programs into Expensify. We also expanded prohibited expense detection, a good example of AI quietly doing enforcement work that used to be manual. In June, as I just covered, the Expensify MCP went live alongside real-time Expensify card rules and automatic VAT capture via SmartScan, which starts to open up more of our international opportunity. It's been gratifying to see that work recognized externally, too.

We were named Expense Management Platform of the Year at the TravelTech Breakthrough Awards this quarter. I want to step back because I think the simplest way to understand Expensify right now is that we're not really one company or two. Expensify Classic is the gold standard for traditional expense management. It established what's now the traditional design in the category: web and mobile app, credit card import, plus scanning, plus GPS mileage tracking in an end-to-end workflow with export to cloud accounting and next-day reimbursement. That was our focus for the first 12 years, culminating in our IPO. Here's the thing. Less than 1% of global businesses are actually interested in traditional expense management approach. New Expensify is the new standard for AI expense management. A mobile-first, chat-first design that puts humans and AI agents in the same workflow.

With a stripped-down, AI-centric experience that works over email and meets users wherever they already are. New Expensify is what lets us go after the other 99%. Each of those two products plays a different role for us financially. Classic is a steady profit engine. It requires minimal engineering and direct investment, but it produces a substantial cash flow. New signups only ever see New Expensify now. Classic is a large but deliberately shrinking set of customers. That's fine. Classic has given us the platform and the resources to build New Expensify in the first place. We believe New Expensify, on the other hand, is our rapid growth engine into a genuinely untapped market. Essentially, all of our engineering has been devoted to it for years now, and most of our customers and users, including both net new signups and migrated Classic customers, are on it today.

It's extremely competitive and growing rapidly on top of and separate from the Classic migration itself. You can see that growth directly in the numbers. Net new revenue from New Expensify, meaning revenue from customers who signed up on New Expensify and never touched Classic. This excludes all of the Classic customers who simply migrated over, grew more than 250% year-on-year to over $10 million in ARR. To summarize the quarter, our Classic to New Expensify migration has entered its long tail. Virtually all Classic customers have been nudged towards New Expensify. Most of them choose to stay, and now we have more users on New Expensify than on Classic. New Expensify itself grew rapidly, with net new revenue up over 250% year-on-year to more than $10 million in ARR.

Our card program continued to scale, with combined Classic and New Expensify card interchange revenue up 12% year-over-year to $5.9 million. We launched a wide range of customer-requested features, more than 30 this quarter, including the MCP server and our new AI agents, which ultimately earned us a Platform of the Year award. We returned capital to shareholders, repurchasing approximately 6.8 million shares of Class A common stock, representing about 7% reduction in our shares outstanding. Our path forward is the same one we've talked about since the IPO. Keep migrating the remaining Classic customers onto New Expensify, where they get a dramatically better experience, and keep accelerating new customer acquisition into a market that's still almost entirely untapped. What's different today is that now we have increasingly solid evidence the plan is working. With that, thank you all for joining us today, and let's move to Q&A.