EXFY 10-K & 10-Q changes, risk factors and insider trading

•our ability to grow or maintain our gross logo retention rate and net seat retention rate (each as described underin thePart sectionII, titledItem "7 “Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Factors Affecting Our Performance—Retaining Existing Customers"”), expand usage within organizations, retain and increase sales to existing customers and attract new members and customers;

•health crises, such as the COVID-19 pandemic,crises or other conditions that impact travel and business spending; and

•grow or maintain current levels of considerationinterchange from a vendorrevenue and/or fees generated through transaction-based features;

•the impact of any future pandemic, epidemic or other public health crisis and the corresponding pace and rate of recovery on our business;

A majority of our subscriptions are driven by bottom-up adoption related to our expense management feature. Although we have added, and expect to continue to add, new features to expand our offerings, and all of our features are accessible under a single subscription, at least in the near term, we expect our expense management feature to continue to drive the majority of our subscriptions. As a result, market acceptance of our expense management feature is critical to our success. Demand for our expense management feature, as well as our other features, is affected by a number of factors, many of which are beyond our control, such as the adoption of our features by new and existing customers; the timing of development and release of upgraded or new features on our platform; products and services introduced or upgraded by our competitors or partners; our ability to determine optimal pricing for our platform, including in international markets; pricing offered by our competitors; technological change; and growth or contraction in our addressable market. We increased our subscription prices in 2020, and although the increased prices have not substantially affected our business to date, we cannot guarantee any future price increases we may choose to implement in the future will not adversely affect our business. If we are unable to meet customer demand for our expense management feature; do not price our subscriptions optimally or make changes to our subscription or pricing models that are not accepted by the market; or fail to convert members of our free expense management feature or trial subscriptions to paying subscribers, our business, results of operations, financial condition and growth prospects will suffer.

These laws, rules, regulations, licensing and other authorization schemes, and industry standards are administered and enforced by multiple authorities and governing bodies in the United States, including but not limited to the U.S. Department of the Treasury, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, Office of Foreign Assets Control, self-regulatory organizations, and numerous state and local governmental and regulatory authorities. These various authorities and governing bodies may enact conflicting laws or regulations that are complex and may change frequently. Responding to such conflicting, complex or changing rules and regulations entails inherent costs, and any actual or perceived failure to comply with existing or new laws and regulations, or orders of any governmental authority, including changes to or expansion of their interpretations, may subject us to significant fines, penalties, criminal and civil lawsuits, forfeiture of significant assets, restrictions and expulsion from card acceptance programs, enforcement actions in one or more jurisdictions, result in additional compliance and licensure requirements, and increased regulatory scrutiny of our business. In addition, we may be forced to restrict or change our operations or business practices, make product changes, or delay planned product launches or improvements. Any of the foregoing could materially adversely affect our brand, reputation, business, results of operations, and financial condition.

Expensify Payments LLC (“Expensify Payments”) is a licensed money transmitter (or its equivalent) in variousmost U.S. states and territories and is in the process of obtaining money transmission licenses in a number of additional states and territories. As a licensed money transmitter, Expensify Payments, its ultimate beneficial owners, and its control persons are subject to a range of restrictions and ongoing compliance obligations under the money transmitter statutes (or their equivalent) administered by the banking departments (or their equivalent) of the various U.S. states and territories where it is licensed, including requirements with respect to the investment of customer funds, financial recordkeeping and reporting, reconciliation of customer funds, bonding, minimum capital, minimum net worth, disclosure, and inspection by regulatory authorities concerning various aspects of its business. In a number of cases, evaluation of our compliance efforts, as well as questions of whether and to what extent our activities in connection with the provision of certain products and services (both current and historical) are considered money transmission, are matters of regulatory interpretation and could change over time. In the past, regulators have identified violations or alleged violations by us of certain statutory and regulatory requirements, and we have been subject to fines and other penalties by state regulatory authorities due to their interpretation and application of their respective state money transmitter regime to our activities. As a result of the laws and regulations applicable to us and our business, we are and could in the future be subject to investigations, inspections, examinations, and supervision, and resulting liability, including governmental fines, restrictions on our business, or other similar enforcement actions, and we could be forced to cease conducting certain aspects of our business with residents of certain jurisdictions, be forced to change our business practices in certain jurisdictions, or be required to obtain additional licenses, regulatory approvals, or other similar authorizations. We cannot make any assurances that we will be able to obtain or maintain any such licenses, regulatory approvals, and other similar authorizations, and there could be substantial costs and potential product changes involved in obtaining and maintaining any such licenses, approvals, or other similar authorizations, which could have a material adverse effect on our business. In addition, there are substantial costs and potential product changes involved in maintaining and renewing any licenses, regulatory approvals, and other similar authorizations, and we could be subject to fines or other enforcement action if we are found to violate disclosure, reporting, anti-money laundering, capitalization, net worth, corporate governance, or other requirements applicable to us, including those required in connection with maintaining such licenses, approvals, or authorizations. These factors could impose substantial additional costs on us, involve considerable delay to the development or provision of our products or services to our customers, require significant and costly operational changes, or prevent us from providing our products or services in any given market.

Our success depends largely upon the continued services of our key executive officers and employees, including our founder and CEO, David Barrett. We also rely on our leadership team in the areas of research and development, marketing, sales, services and general and administrative functions, and on mission-critical individual contributors in research and development. From time to time, there may be changes in our executive management team resulting from the hiring or departure of executives, which could disrupt our business. We do not have employment agreements with our executive officers or other key personnel that require them to continue to work for us for any specified period and, therefore, they could terminate their employment with us at any time. The loss of one or moreboth of our executive officers or other key employees could have a serious adverse effect on our business.

On February 25, 2025, the Executive Committee of our Board of Directors (the “Executive Committee”) authorized a share repurchase program to repurchase up to $50 million of our outstanding Class A common stock, which replacesreplaced the Company's share repurchase program that was approved in 2022. Although the Executive Committee has authorized this repurchase program, the program does not obligate us to repurchase any specific dollar amount or to acquire any specific number of shares. The actual timing, manner, price and total amount of future repurchases will depend on a variety of factors, including business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, restrictions under the terms of loan agreements and other considerations. The share repurchase program may be modified, suspended, or terminated at any time, and we cannot guarantee that the program will be fully consummated or that it will enhance long-term stockholder value. The program could affect the trading price of our stock and increase volatility, and any announcement of a termination of this program may result in a decrease in the trading price of our stock. In addition, this program could diminish our cash and cash equivalents and marketable securities.

The Expensify Card is an important element of our growth strategy, and we believe that, over time, the Expensify Card will be a prominent corporate card solution for SMBs in our core markets. For our previous card program (the “Legacy Card Program,Program”), launched in 2020, we rely on a single third-party vendor, Marqeta, for the Expensify Card, who also manages the relationship with the card's issuing bank, Sutton Bank, and the card network, Visa. In the annual periodsperiod ended December 31, 2025, consideration from this vendor representing monetized Expensify Card activities reduced our cost of revenue by an immaterial amount. In the annual period ended December 31, 2024, 2023 and 2022, consideration from this vendor representing monetized Expensify Card activities reduced our cost of revenue by $7.2 million, $10.1 million, and $6.2 million, respectively.million. Our agreement with Marqeta initially had a three year term that was renewed in June 2022 and now automatically renews annually thereafter unless either party provides 90 days’ notice prior to renewal.

Under our updated card program (the “Updated Card Program,Program”), which launched in February 2024,2024 and covers substantially all cardholders, we rely on Marqeta as the payment processor, Bancorp as the card’s issuing bank, and Visa as the card network. In the annual periodperiods ended December 31, 2025 and 2024, interchange revenue earned under the Updated Card Program was $21.3 million and $9.2 million.million, respectively. Under the Updated Card Program, our agreement with Marqeta has an initial term of approximately four years, and will automatically renew annually thereafter. Our agreement with Bancorp has an initial five year term, and will automatically renew annually thereafter.

IfWe we orand our third partythird-party providers failare exposed to protectcybersecurity ourrisks ITand Systemsincidents against security incidents, or otherwise to protect our Confidential Information, therethat may be damage to our reputation and brand, cause material financial penalties, and result in legal liability, any of which could substantially harm our business, financial condition, and results of operations.

We face numerous and evolving cybersecurity risks that threaten the confidentiality, integrity, and availability of our IT Systems and Confidential Information, through diverse attack vectors, such as social engineering/phishing, malware (including ransomware), malfeasance by insiders, human or technological error, and as a result of malicious code embedded in open-source software, or misconfigurations, “bugs” or other vulnerabilities in commercial software that is integrated into our (or our suppliers’ or service providers’) IT Systems, products, or services. Attacks upon information technology systems are increasing, and expected to continue increasing, in their frequency, levels of persistence, sophistication and intensity – including through the use of artificial intelligence – and are being conducted by diverse threat actors including sophisticated and organized groups and individuals with a wide range of motives and expertise. Furthermore, because the techniques used to obtain unauthorized access to, or to sabotage, systemssystems, including tools that circumvent security controls, evade detection, and remove forensic evidence, change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. We may also be subject to vulnerabilities or experience security incidents that may remain undetected for an extended period as attacks may circumvent security controls, evade detection, and remove forensic evidence. As a result, we may be unable to detect, investigate, remediate or recover from future attacks or incidents, or to avoid a material adverse impact to our IT Systems, Confidential Information, or business.

There can be no assurance that our cybersecurity risk management program and processes, including our policies, controls, or procedures, will be fully implemented, complied with or effective in protecting our IT Systems and Confidential Information. Because we make extensive use of third party suppliers and service providers, successful cyberattacks that disrupt or result in unauthorized access to third party IT Systems can materially impact our operations and financial results. Additionally, many of our employees and service providers work remotely, in part due to a significant increase in remote work stemming from the COVID-19 pandemic that has been maintained.remotely. As a result, we may be more vulnerable to cybersecurity-related events such as phishing attacks and other security challenges.challenges associated with managing remote computing assets and security vulnerabilities that are present in many non-corporate and home networks. Many companies that provide cloud based services have reported a significant increase in cyberattack activity since the beginning of the COVID-19 pandemic and related increase in remote work. Additionally, any integration of artificial intelligence in our or any service providers' operations, products or services is expected to pose new or unknown cybersecurity risks and challenges.

We and certain of our third-party providers regularly experience cyberattacks and other incidents, and we expect such attacks and incidents to continue in varying degrees. While to date no incidents have had a material impact on our operations or financial results, we cannot guarantee that material incidents will not occur in the future. Any adverse impact to the availability, integrity, or confidentiality of our IT Systems or Confidential Information can result in intentional or accidental unauthorized access to our IT Systems or our customers’ or partners’ sites, networks, systems and accounts; unauthorized access to, and misappropriation or disclosure of Confidential Information; viruses, worms, spyware, ransomware, or other malware being served from our platform, mobile application, networks, or systems, including as a result of supply chain attacks; deletion or modification of content or the display of unauthorized content on our platform; interruption, disruption, or malfunction of operations; costs relating to incident response, system restoration or remediation, future compliance, deployment of additional personnel and protection technologies, and response to governmental investigations and media inquiries and coverage; engagement of third-party experts and consultants; or risk of loss, litigation,litigation or proceedings (such as class actions), regulatory actionaction, fines and penalties, and other potential liabilities. If any of these adverse impacts should occur, we cannot guarantee data loss can be prevented. Additionally, if any adverse impacts occur, our reputation and brand could be damaged, our business may suffer, and we could be required to expend significant capital and other resources to alleviate problems caused by such breaches. Actual or anticipated cyber security attacks may cause us to incur increasing costs, including costs to deploy additional personnel and protection technologies, train employees and engage third-party experts and consultants. Any computer malware, viruses, computer hacking, fraudulent use attempts, phishing attacks, or other data security incidents among other things, could harm our reputation and our ability to retain existing customers and attract new customers. Any or all of the foregoing could materially adversely affect our business, results of operations and financial condition.

We believe that the brand identity that we have developed has significantly contributed to the success of our business. We also believe that maintaining and enhancing the “Expensify” brand is critical to expanding our customer base and establishing and maintaining relationships with partners. Successful promotion of our brand will depend largely on the effectiveness of our marketing efforts, our ability to ensure that our platform remains high-quality, reliable, useful and competitively priced, the quality and perceived value of our platform, our ability to successfully differentiate our platform and features from those of our competitors and the ability of our customers to achieve successful results by using our platform and features. Maintaining and enhancing our brand may require us to make substantial investments not just in our core expense management service but also in newer features, such as our financial chat services, and to make substantial investments in foreign markets, and these investments may not be successful. We also plan to enhance our brand and drive interest in our overall platform by introducing certain consumer-focused features, which may not be successful. Substantial advertising expenditures may be required to maintain and enhance our brand, which may not prove successful. Advertising and other brand promotion activities may not generate customer awareness or increase revenue, and even if they do, any increase in revenue may not offset the expenses we incur in building our brand. For example, in 2023 we opened the Expensify Lounge in San Francisco, CA as a brand awareness campaign, but it ultimately did not yield the expected results and was shut down in late 2023. Further, in 2023 we hosted our third ExpensiCon, an invite-only, all-expenses paid industry conference set in an exotic location that included a full itinerary of events and excursions. We spent significant resources on ExpensiCon and achieved mixed results. There can be no assurance that similar initiatives will achieve desired results. Additionally, there could be a negative reaction to certain advertising campaigns and values-based activity and communications. If we fail to promote and maintain the “Expensify” brand, or if we incur excessive expenses in this effort, we may fail to attract or retain customers necessary to realize a sufficient return on our brand-building efforts or to achieve the widespread brand awareness that is critical for broad customer adoption of our platform and features. We anticipate that, as our market becomes increasingly competitive, maintaining and enhancing our brand may become more difficult and expensive.

We may also review or revise our software architecture as we grow, which may require significant resources and investments. For example, in 2021 we releasedhave thebeen firstmigrating versionusers ofonto New Expensify, an open-source financial group chat optimized for financial conversations, designed to be used both in and outside of work, and maintained by a community of open source developers. We expect our open-source offering to be a complete rewrite of the Expensify front end, built on a new React Native platformconversations that useswe thehave samebeen codebasedeveloping acrosssince iOS,2021, Android,but web and desktop once it is completed. Therethere can be no assurance that this directioninitiative will achieve customer acceptance or that we will realize the anticipated return on our investment even if and when the feature complete version is released.investment.

If we experience increasing demand for our features, we may not be able to augment our infrastructure quickly enough to accommodate this demand, which may limit our growth or cause disruptions, outages and other performance problems that could lead to financial liabilities or affect our brand and reputation. If our subscription sales decrease, certain of our fixed costs, such as for capital equipment, may make it difficult for us to adjust our expenses downward quickly.

For example we use AI Technologies to optimize our internal processes, includingincluding, but not limited to, analyzing and processing receipts, bills, and invoices, responding to customer support requests, and drafting personalized marketing communications.

In particular, if the models underlying our AI Technologies are: incorrectly implemented; reliant on incomplete, inadequate, inaccurate, biased or otherwise poor quality data; used without sufficient oversight and governance to ensure their responsible use; and/or adversely impacted by unforeseen defects, technical challenges, cybersecurity threatsthreats, data privacy concerns, or material performance issues, the performance of our products, services and business, as well as our reputation, could suffer or we could incur liability resulting from the violation of laws or contracts to which we are a party or civil claims.

We use AI Technologies licensed from third parties, such as OpenAI,OpenAI and Anthropic, in our technologies and our ability to continue to use such technologies at the scale we need may be dependent on access to OpenAI’ssuch specific third parties' software and infrastructure. While we believe that there are alternative third-party AI Technologies which would be suitable, we cannot control the availability or pricing of such third-party AI Technologies, especially in a highly competitive environment, and we may be unable to negotiate favorable economic terms with the applicable providers. If any such third-party AI Technologies become incompatible with our solutions or unavailable for use, or if the providers of such models unfavorably change the terms on which their AI Technologies are offered or terminate their relationship with us, our solutions may become less appealing to our customers and our business will be harmed. In addition, to the extent any third-party AI Technologies are used as a hosted service, any disruption, outage, or loss of information through such hosted services could disrupt our operations or solutions, damage our reputation, cause a loss of confidence in our solutions, or result in legal claims or proceedings, for which we may be unable to recover damages from the affected provider.

Additionally, our reliance on third-party AI Technologies, such as those licensed from OpenAI,OpenAI and Anthropic, involves certain data privacy and security risks. While we generally seek to obtain contractual commitments from the applicable providers that prohibit the use of our data to train or refine their AI models, we may not be able to implement technical measures to prevent such providers from doing so in contravention to their contractual obligations. For more information on data privacy and security risks, see the risk factor “We receive, process, store and use business and personal data, which subjects us to governmental regulation and other legal obligations related to data privacy, protection and security, and our actual or perceived failure to comply with such obligations could harm our business and expose us to liability.”

The regulatory framework for AI Technologies is rapidly evolving as many federal, state and foreign government bodies and agencies have introducedenacted or are currently considering additional laws and regulations.regulations governing AI. Additionally, existing laws and regulations may be interpreted or enforced in ways that would affect the operation of our AI Technologies, or could be rescinded or amended as new administrations take differing approaches to evolving AI Technologies. As a result, implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, and we cannot yet completely determinepredict the impact future laws, regulations, or standards, or the market perception of their requirementsrequirements, may have on our business and may not always be able to anticipateor how towe will respond to these laws or regulations.

Already, certain existing legal regimes (e.g., relating to data privacy) regulate certain aspects of AI Technologies, and new laws regulating AI Technologies have been enacted in China and either entered into force in the United States and the EU in 2024 and 2025 or are expected to enter into force in 2025.2026.

It is possible that further new laws and regulations will be adopted in the United States and in other non-U.S. jurisdictions, or that existing laws and regulations, including competitioncompetition, antitrust, data privacy and antitrustconsumer protection laws, may be interpreted or enforced in ways that would limit our ability to use AI Technologies for our business, or require us to change the way we use AI Technologies in a manner that negatively affects the performance of our products, services, and business and the way in which we use AI Technologies. We may need to expend resources to adjust our products or services in certain jurisdictions if the laws, regulations, or decisions are not consistent across jurisdictions. Further, the cost to comply with such laws, regulations, or decisions and/or guidance interpreting existing laws, could be significant and would increase our operating expenses (such as by imposing additional reporting obligations regarding our use of AI Technologies). Such an increase in operating expenses, as well as any actual or perceived failure to comply with such laws and regulations,expenses could adversely affect our business, financial condition and results of operations. In addition, if we fail or are perceived to fail to comply with these laws and regulations, we may face lawsuits (including class actions), investigations, enforcement actions, negative reputational impacts, and other penalties that materially impact our business.

In order to continue to execute on our business strategy and growth plans, including the development of new features, and to maintain and upgrade our existing features, we will need to attract a sufficient number of highly qualified personnel, especially software engineers. Competition for software engineers and other key personnel in our industry is intense, especially for engineers with high levels of experience in designing and developing software for Internet-related services. As we become a more mature company, we may find our recruiting efforts more challenging.

We believe that a critical component of our success has been our culture, which is deeply embedded in everything we do. Our culture is centered on a belief that a life well lived is one that enables you to achieve the following three goals: Live Rich, Have Fun and Save the World. We have invested substantial time and resources in building our team with an emphasis on collaboration and innovation,innovation ensuringand customerpromoting success andfor aboth commitmentour to diversitycustomers and inclusion.our employees. We invest in our culture to create fun, diverseinclusive and memorable experiences for our employees, including certain employee travel to company-wide meetings in the U.S. and abroad.abroad from time to time. As we continue to grow and develop the infrastructure associated with being a public company, we will need to maintain our culture among a larger number of employees dispersed in various geographic regions. Any failure to preserve our culture could negatively affect our future success, including our ability to retain and recruit personnel.

Our revenue generated from customers outside the United States was $12.4$12.5 million (9% of our revenue), $13.3 million (9% of our revenue), and $14.7$12.4 million (9% of our revenue) for the annual periods ended December 31, 2024, 20232025 and 2022,2024, respectively. Our core geographies are the United States, the United Kingdom, Canada and Australia. In the future, we may pursue expansion of our international operations. Operating in international markets requires significant resources and management attention and subjects us to regulatory, economic and political risks that are different from those in the United States. In addition, we face risks in doing business internationally that could adversely affect our business and results of operations, including:

Our wholly owned subsidiary, Expensify Payments LLC, is registered as a “Money Services Business” with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”), and subject to regulatory oversight and enforcement by FinCEN under the Bank Secrecy Act, as amended by the USA PATRIOT Act of 2001 (“BSA”). Among other things, the BSA requires money services businesses to develop and implement risk-based anti-money laundering programs, report large cash transactions and suspicious activity and maintain transaction records. The BSA prohibits, among other things, our involvement in transferring the proceeds of criminal activities. Regulators in the United States and globally may require us to further revise or expand our compliance program, including the procedures we use to verify the identity of our customers and to monitor international and domestic transactions. In addition, we are contemplating offering certain products in the future that may require us to obtain licenses to operate as a money transmitter (or its equivalent) in various states and territories where such licenses are required. We have already obtained such licenses in certainmost states and have pending license applications in others.states. If we are unable to obtain a license to operate as a money transmitter, our ability to grow certain of our services may be limited. As a licensed money transmitter, we would be subject to obligations and restrictions with respect to the handling and investment of customer funds, record keeping and reporting requirements, bonding requirements and inspection by state regulatory agencies.

We receive, process, store and use business and personal data relating to our employees, business contacts, members and customers around the world (collectively, “Personal Data”), including the United States and the European Economic Area (“EEA”). As a result, our business is subject to a number of federal, state, local and foreign laws, regulations, regulatory codes and guidelines governing data privacy, data protection and security, including with respect to the collection, storage, use, processing, transmission, disclosure and protection of Personal Data.Data, and those that are specific to certain industries, sectors, contexts, or locations.

If we are unable to develop and offer features that meet legal requirements or help our members and customers meet their obligations under the laws or regulations relating to privacy, data protection, or information security, or if we violate or are perceived to violate any laws, regulations, or other obligations relating to privacy, data protection, or information security, we may experience reduced demand for our platform, harm to our reputation and become subject to investigations, claimsclaims, proceedings and other remedies,actions by individuals, consumer rights groups, government agencies, or others, which would expose us to significant costs in investigating and defending such claims and, if found liable, pay significant fines, penalties and other damages,damages or be required to make changes to our business, all of which would harm our business.business, results of operations, and financial condition. Further, given the breadth and depth of changes in global data protection obligations, compliance has caused us to expend significant resources, and such expenditures are likely to continue into the future as we continue our compliance efforts and respond to new interpretations and enforcement actions.

•computer viruses, malware,malware (including ransomware), vulnerability exploits, social engineering/phishing, or cyber-attacks;

In the future, we may raise additional capital through additional debt or equity financings to support our business growth, to respond to business opportunities, challenges, or unforeseen circumstances, or for other reasons. On an ongoing basis, we evaluate sources of financing and may raise additional capital in the future. Our ability to obtain additional capital will depend on our development efforts, business plans, investor demand, operating performance, the condition of the capital markets, and other factors. We cannot assure you that additional financing will be available to us on favorable terms when required, or at all. If we raise additional funds through the issuance of equity or equity-linked securities, those securities may have rights, preferences, or privileges senior to the rights of existing stockholders, and existing stockholders may experience dilution. Debt financing, if available, may involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which could reduce our operational flexibility or make it more difficult for us to obtain additional capital and to pursue business opportunities. In addition, subject to limited exceptions, our loanLetter of Credit Facility and securitySecurity agreementAgreement with Canadian Imperial Bank of Commerce ("“CIBC"”), asentered amended and restatedinto on FebruaryOctober 21,9, 2024 and as amended on February 13, 2025, and as may be further amended from time to time,2025 ("2024 Amended Loan and“LOC Security Agreement"”), restricts us fromand incurringour indebtednesssubsidiaries’ withoutability theto, prioramong writtenother consentthings, incur certain additional indebtedness, create or incur certain liens, permit a change of thecontrol, lender.sell Further,or iftransfer weassets, arepay unabledividends or make distributions, subject to obtaincertain additional capital when required, or are unable to obtain additional capital on satisfactory terms, our ability to continue to support our business growth or to respond to business opportunities, challenges, or unforeseen circumstances would be adversely affected.exceptions.

Our operating activities may be restricted as a result of covenants related to the indebtedness under our 2024 Amended Loan andLOC Security Agreement and/or future indebtedness, and we may be required to repay theany outstanding indebtedness in an event of default, which would have an adverse effect on our business.

Our 2024 Amended Loan andLOC Security Agreement consists of a $25.0$7.5 million revolvingirrevocable linestandby letter of credit, which matures inon SeptemberMarch 2025,20, 2026, and subjects us, and any future indebtedness would likely subject us, to various customary covenants, including requirements as to financial reporting, insurance and certain liquidity and leverage thresholds and restrictions on our ability to maintain cash deposits outside of CIBC above certain thresholds, to dispose of our business or property, to change our line of business, to liquidate or dissolve, to enter into any change in control transaction, to merge or consolidate with any other entity or to acquire all or substantially all the capital stock or property of another entity, to incur additional indebtedness, to incur liens on our property, to pay any dividends or other distributions on capital stock other than dividends payable solely in capital stock, to redeem capital stock, to engage in transactions with affiliates, to encumber our intellectual property and certain other restrictions on our activities. Our business may be adversely affected by theseany such restrictions on our ability to operate our business.

Additionally, our ability to meet our debt obligations and other expenses will depend on our future performance, which will be affected by financial, business, economic, regulatory and other factors, many of which we are unable to control. We may be required to repay any outstanding indebtedness if an event of default occurs under the 2024 Amended Loan andLOC Security Agreement.Agreement, or under any future indebtedness. Under the 2024 Amended Loan andLOC Security Agreement, an event of default will occur if, among other things, we fail to make payments under such agreement if due; we breach certain of our covenants under such agreement, subject to specified cure periods with respect to certain breaches; we or our assets become subject to certain legal proceedings, such as bankruptcy proceedings; we are unable to pay our debts as they become due; or we default on contracts with third parties which would permit CIBC to accelerate the maturity of suchany outstanding indebtedness or that could have a material adverse change on us. We may not have enough available cash or be able to raise additional funds through equity or debt financings to repay suchany outstanding indebtedness at the time any such event of default occurs. CIBC could also exercise its rights as collateral agent to take possession of, and to dispose of, the collateral securing the loan,letter of credit, which collateral includes substantially all of our personal property (including intellectual property). Our business, financial condition and results of operations could be materially adversely affected as a result of any of these events. We may seek to enter into an extension of the 2024 Amended Loan andLOC Security Agreement or enter into a new facility with another lender. We may not be able to extend the term or obtain other debt financing on terms that are favorable to us, if at all, and we could be subject to additional restrictions on our business operations. If we are unable to obtain adequate financing or financing on satisfactory terms when required, our ability to support our business growth and to respond to business challenges could be significantly impaired, and our business may be harmed.

We lease servers and other hardware in order to provide our services. These servers are highly custom, built to order servers, which from time to time need to be upgraded, repaired or replaced. Many of these servers contain parts that are manufactured in Taiwan, China, and other international regions. The Trump Administration has threatened to impose severeSevere tariffs on imports from some or all of these regions.regions have been imposed in the recent past, and could be imposed in the future. The imposition of such tariffs could materially increase the cost of maintenance for our servers or prevent us from being able to obtain parts all together. While our systems are designed to be redundant and fault tolerant, our inability to upgrade or repair them could result in our inability to continue to provide services to the expectations of our customers, which could lead to a loss of customers and materially adversely affect our results of operations.

The preparation of financial statements in conformity with generally accepted accounting principles in the United States ("“GAAP"”) requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “Management’s discussion and analysis of financial condition and results of operations.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities and equity, and the amount of revenue and expenses that are not readily apparent from other sources. Significant assumptions and estimates used in preparing our consolidated financial statements include those related to the Company's classification of employee and employee-related expenses, the useful lives and recoverability of long-lived assets,assets theand fairdeferred valuecontract acquisition costs, income taxes, capitalization of commoninternal-use stocksoftware prior to being a publicly traded companycosts and stock-based compensation expense, as well as those used to allocate our employee and employee related expense, 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 due to our generalist model and organizational structure.expense. Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the trading price of our Class A common stock.

We are subject to regular review and audit by U.S. federal, state, and foreign tax authorities. Tax authorities may disagree with certain positions we have taken, and any adverse outcome of such a review or audit could increase the amount of taxes imposed on our business, and harm our financial position, results of operations, and cash flows. In particular, we are currently under examination by the Internal Revenue Service ("IRS") for our 2021 and 2022 tax years. We are continuing to respond to inquiries related to these examinations. These examinations could result in challenges to various positions we have asserted in our tax filings and could impact our tax liability. The ultimate resolution of these examinations, and any other reviews, audits or litigation, may differ from the amounts recorded in our financial statements and may materially affect our financial results in the period or periods for which such determination is made.

In addition, economic and political pressures to increase tax revenue in various jurisdictions may make resolving tax disputes in our favor more difficult. While to date no material adjustments have been requested by tax authorities, including by the IRS related to its examination of the 2021 and 2022 tax years, an unfavorable outcome from any tax examination or audit could result in higher tax costs, penalties and interest, thereby adversely affecting our financial condition or results of operations. We regularly assess the likely outcomes of any audits and other tax disputes to determine the appropriateness of our tax provision and establish reserves for material, known tax exposures. However, the calculation of such tax exposures involves the application of complex tax laws and regulations in many jurisdictions. Therefore, there can be no assurance that we will accurately predict the outcomes of any tax examination, audit or other tax dispute or that issues raised by tax authorities will be resolved at a financial cost that does not exceed our related reserves.

Additionally, for as long as the Voting Trust holds securities representing at least 50% of the voting power of our outstanding capital stock, our amended and restated certificate of incorporation delegates to the Executive Committee all of the power and authority of the Board of Directors in the management of our business and affairs, provided that the Executive Committee will not have power or authority in reference to (i) matters that must be approved by the Audit Committee of the board, (ii) matters that must be approved by a committee qualified to grant equity to persons subject to Section 16 of the Exchange Act for purposes of exempting transactions pursuant to Section 16b-3 thereunder, (iii) matters required under Delaware law to be approved by the full Board of Directors, or (iv) as otherwise required by SEC rules and the rules of Nasdaq. The members of the Executive Committee currently are, and their successors are generally expected to be, directors who are also our employees or service providers, and the Executive Committee currently consists of David Barrett, Ryan Schaffer, AnuCarlos Muralidharan,Alvarez, Jason Mills and Daniel Vidal.

We have never declared or paid any cash dividends on our capital stock, and we do not intend to pay any cash dividends in the foreseeable future. Our current indebtedness, including our loanLOC andSecurity security agreementAgreement with CIBC, contains, and our future indebtedness may contain, restrictions on our ability to pay cash dividends on our capital stock. Any determination to pay dividends in the future will be at the discretion of our Executive Committee, for as long as the Voting Trust controls a majority of the voting power of our outstanding common stock, and at the discretion of our Board of Directors thereafter. Accordingly, investors in our Class A common stock must rely on sales of their Class A common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.

Our business could be materially and adversely affected by the risks, or the public perception of the risks, related to a pandemic, epidemic, or other health crises. TheFor example, the COVID-19 pandemic disruptedresulted ourin business and impacted our employees, partners, third-party service providers and customers. In particular, effects of the COVID-19 pandemic, such as economic instability, remote work and travel restrictions negatively affectedlower demand for our platformplatform, as employees incurred fewer work- and travel-related expenses and submitted fewer expense reimbursement requests to their employers,requests, and as SMBs downsized or went out of business. Many very small businesses ("VSBs") and SMBs experienced substantial revenue and cash liquidity declines in the early months of the COVID-19 pandemic, and there were high observed rates of small business failures. The COVID-19 pandemic also negatively impacted theespecially amount of expenses incurred by our paid members, our annual gross logo retention, our net seat retention, the launch of our Expensify Card and the roll-out of our co-working spaces.negatively.

We monetize transactions from the Expensify Card by receiving a percentage of the 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.

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. Additionally,For example, in 20232024 and 2025, we hostedinvested ourin thirda ExpensiCon,promotional anmarketing invite-only,opportunity all-expensesto paidhave industryExpensify conference,heavily withfeatured thein goalApple's ofbiggest increasingbudget ourfilm, marketF1® consensusThe amongMovie, ourwhich Approved!was Accountingreleased partnersin andtheaters increasingon adoptionJune of27, our platform.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. In 2024 we invested in a promotional marketing opportunity to have Expensify heavily featured in Apple's biggest budget film, F1, which is scheduled to be released in theaters on June 27, 2025. Our goal is that this will increase our brand awareness and support our bottom-up, word of mouth marketing.

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 2024each of 2025 and 2023,2024, our annual gross logo retention was 81% and 74%, respectively.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 20242025 and 2023,2024, our net seat retention was 86%88% and 99%,86%, respectively. Our growth will depend on our ability to retain 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.reports on a monthly basis.

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.

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 theBancorp. issuing bank. Under the Updated Card Program, weWe are the principal in the transaction and recognize interchange as revenue on a gross basis within Revenue on the accompanying Consolidated Statements of Operations. Interchange revenue was $21.3 million and $9.2 million for the yearyears ended December 31, 2024.2025 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 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 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. Additional costs include amortization of finance right-of-use assets, amortization expense on capitalized software development costs and personnel-related expenses, including stock-based compensation and employee costs attributable to supporting our customers and maintenance of our platform.

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 expand our research and development team to develop new products and product enhancements.

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 andtechnology, external professional services, including finance and accounting, audit, tax, legal and compliance, and human resources.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.

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 increasedecrease as we expandfollowing our brandtitle marketing.sponsorship of F1® The Movie, which was released in theaters in June 2025.

Interest and Other Expenses,Income (Expense), Net

InterestOther andincome other expenses,(expense), net, consistconsists primarily of interest paid under our credit facilities with Canadian Imperial Bank of Commerce ("CIBC").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 andtransactions, foreign currency remeasurement.remeasurement, We expectand interest andexpense otherunder expenses,our netcredit willfacilities decreasewith asCanadian allImperial outstanding debt has been paid off asBank of DecemberCommerce 31, 2024.(“CIBC”).

The following table sets forth our results of operations for the periods presented (in thousands, except percentages, share and per share data):

(1)Includes stock-based compensation expense as follows (in thousands):

Revenue decreasedincreased $11.5$2.9 million, or 8%,2%, for the year ended December,December 31, 20242025 compared to the same period in 2023,2024, 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. These decreases were partially offset by an increase in interchange revenue driven primarily by a shift in cardholder spend from the Legacy Card Program to the Updated Card Program.

Cost of revenue, net decreasedincreased by $2.6$6.3 million, or 4%,10%, for the year ended December 31, 20242025 compared to the same period in 2023. Cost of revenue, net decreased2024, primarily due to (i) a decrease in outsourcingconsideration activitiesearned relatedunder tothe maintainingLegacy ourCard platform, and (ii) a decrease in total employee and employee related expenses subject to allocation. These were partially offset by a decrease in Consideration from a vendor, netProgram driven primarily by a shift in cardholder spend from the Legacy Card Program to the Updated Card Program.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 54%50% infor 2024the year ended December 31, 2025 compared to 56%54% in the same period in 20232024 due to the factors described in the preceding paragraphs for Revenue and Cost of revenue, net.

Research and development expenses increaseddecreased by $1.3$4.0 million, or 5%,16%, for the year ended December 31, 20242025 compared to the same period in 2023,2024, primarily due to ana increasedecrease in employee and external contributor time spent on project initiatives and new product features,features partially offset byas a decreaseresult of increased focus on sales and marketing efforts related to our title sponsorship of F1® The Movie, which was released in totaltheaters employeein andJune employee related expenses subject to allocation.2025.

General and administrative expenses decreasedincreased $10.8$3.7 million, or 22%,10%, for the year ended December 31, 20242025 compared to the same period in 2023,2024, primarily due to (i) athe decreaseestimated 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 totallegal employeefees, related expenses subject to allocation,and (ii) aan decreaseincrease in settlement losses, andnet (iii)of recoveries. This increase was partially offset by a decrease in business insurance expense.costs.

Sales and marketing expenses decreasedincreased $31.6$13.9 million, or 71%,109%, for the year ended December 31, 20242025 compared to the same period in 2023,2024, primarily due to (i) aan decreaseincrease in outsourcingadvertising activitiesspend related to salesour title sponsorship of F1® The Movie, which was released in theaters in June 2025, and product demos, (ii) aan decrease in total employee and employee related expenses subject to allocation and a decreaseincrease in time spent on sales and marketing activities, (iii) a decrease in advertising spend, and (iv) a decrease in marketing event spend.activities.

Interest and Other Expenses,Income (Expense), Net

InterestOther andincome other expenses,(expense), net decreasedchanged by $3.8$3.3 million, or 70%,210%, for the year ended December 31, 20242025 compared to the same period in 20232024 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 term loan component of the 2021 Amended Loan and Security Agreement (as defined below), the revolving line of credit facility and the amortizing term mortgage.mortgage in 2024 discussed below under “Liquidity and Capital Resources—Credit Facilities”, and (iii) an increase in interest income.

We recorded a provision for income taxes of $7.7$5.1 million for the year ended December 31, 20242025 compared to a $3.0$7.7 million provision for income taxes for the year ended December 31, 2023.2024. 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, 20242025 and 2023,2024, we recorded an incremental valuation allowance of $0.9$4.3 million and $3.7$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 (320.431.3)% and (7.7320.4)%, for the years ended December 31, 20242025 and 2023,2024, 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 limitationslimits imposed by the Internal Revenue Code ("IRC") Section 162(m), and the change in the valuation allowance. The effective income tax rate differs from the statutory rate in 2023 primarily due to nondeductible stock-based compensation, the change in the valuation allowance, and the compensation limitations imposed by IRC Section 162(m).

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, 2024,2025, we had $48.8$63.1 million in cash and cash equivalentsequivalents, with no outstanding indebtedness and $24.0a $7.5 million of capacity available for borrowings under the revolving lineletter of credit.credit outstanding.

The following table summarizes our cash flows for the periods indicated (in thousands):

Net cash provided by operating activities was $23.9$20.1 million for the year ended December 31, 20242025 as compared to $1.6$23.9 million for the same period in 2023. The increase is2024, primarily due to a(i) decreasean 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 outsourcingsubscription activitiesrevenue. relatedThis todecrease sales and product demos,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 revenue.SmartScan costs.

During the year ended December 31, 2024, netNet cash used in investing activities was $7.6$3.6 million,million for the year ended December 31, 2025, primarily consisting of software development costs.

Net cash used in investing activities increaseddecreased for the year ended December 31, 20242025 compared to the same period in 2023,2024, primarily due to ana increasedecrease in employee and external contributor software development costs offset by a decrease in the purchase of property and equipment.costs.

During the year ended December 31, 2024, netNet cash used in financing activities was $22.1$2.7 million,million for the year ended December 31, 2025, primarily consisting of the repayment of the revolving line of credit and the amortizing term mortgage, and the repurchase and retirement of common stock, which was partially offset by proceeds from common stock purchased under ourthe 2021 Stock Purchase and Matching Plan ("the “Matching Plan"”).

During the year ended December 31, 2023, netNet cash used in financing activities was $45.3$22.1 million,million for the year ended December 31, 2024, primarily consisting of principalthe paymentsrepayment onof the revolving credit facility and the amortizing term loan,mortgage, and the repurchase and retirement of common stock, and payment for employees taxes withheld from stock-based awards, which was partially offset by proceeds from common stock purchased under the Matching Plan.

The 2022 Share Repurchase Program was scheduled to expire on March 31, 2025. On FebruaryMay 25,10, 2025,2022, the Executive Committee of the Board of Directors (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 ("2025“2022 Share Repurchase Program"”). that replaces theThe 2022 Share Repurchase Program.Program Pursuantauthorized us to the 2025 Share Repurchase Program, we may 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,Act of 1934, as amended (the “Exchange Act”), in accordance with applicable securities laws and other restrictions. The actual2022 timing,Share manner,Repurchase priceProgram, andwhich totalwould amounthave ofexpired futurein repurchasesMarch will2025, dependwas onreplaced a variety of factors, including business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, restrictions underwith the terms of loan agreements and other considerations. The 2025 Share Repurchase Program doesdescribed 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.below.

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 condensed consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further information.

2021 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, and as may be further amended from time to time, the "“2024 Amended Loan and Security Agreement"”) with CIBC. The 2024 Amended Loan and Security Agreement amended and restated the 2021 Amended Loan and Security Agreement in its entirety, to extend the maturity date of the revolving line of credit from September 2024 to September 2025, remove certain provisions related to the term loan that was repaid in full in October 2023, and make certain changes to the positive and negative covenants intended to better align with our operations. The 2024 Amended Loan and Security Agreement providesprovided for a $25.0 million revolving credit facility.facility that was set to expire in September 2025. Borrowings under the revolving line of credit accruefacility accrued interest at CIBC’s reference rate plus 1.00% and arewere secured by substantially all of our assets.

In May 2024, we entered into a First Amendment to theThe 2024 Amended Loan and Security Agreement,Agreement whichwas 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 providedprovide a waiver for our non-compliance during prior periodsperiods, with(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 previouscovenant versionrestricting the amount of suchrepurchases covenant.of common stock to allow for certain additional net share settlement activity.

TheOn July 10, 2024, the then-outstanding balance of $15.0 million and an immaterial amount of accrued interest onunder the revolving linecredit of creditfacility were repaid in full on July 10, 2024.full.

If our stock price continues to remainfalls below $1.00,$1.00 for an extended period of time, our Class A common stock may be subject to delisting from Nasdaq.

On April 17, 2026, we received a deficiency letter from the Nasdaq Listing Qualifications Department (“the Staff”) of Nasdaq notifying us that, for the last 30 consecutive business days, the closing bid price for our Class A common stock had been below the minimum $1.00 per share required for continued listing on The Nasdaq Global Select Market pursuant to Nasdaq Listing Rule 5450(a)(1) (the “Minimum Bid Price Requirement”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we havehad 180 calendar days, or until October 14, 2026 (the “Compliance Date”), to regain compliance with the Minimum Bid Price Requirement. To regain compliance, the closing bid price of our Class A common stock mustwas required to be at least $1.00 per share for a minimum of ten consecutive business days before the Compliance Date. On May 28, 2026, we were notified by Nasdaq that we had regained compliance with the Minimum Bid Price Requirement and that Nasdaq considers this matter closed.

WeAlthough intendwe tohave monitor the closing bid price of our Class A common stock and may, if appropriate, consider available options to regainregained compliance with the Minimum Bid Price Requirement, includingit potentiallyis seeking to effect a reverse stock split. However, there can be no assurancepossible that we willcould befall ableout of compliance again in the future. If we fail to regainmeet complianceall withapplicable Nasdaq requirements in the Minimumfuture Bid Price Requirement or will otherwise be in compliance with otherand Nasdaq Listing Rules. To the extent that we are unabledetermines to resolve the listing deficiency, there is a risk thatdelist our Class A common stock may be delisted from Nasdaq,stock, which would adversely impact liquidity of our Class A common stock and potentially result in an even lower share price for our Class A common stock.

Expensify is a leading 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 1.9 billion expense transactions on our platform as of MarchJune 31,30, 2026, freeing people to spend less time managing expenses and more time doing the things they love. For the quarter ended MarchJune 31,30, 2026, an average of 632,000640,000 paid members across an average of 41,50045,700 companies and over 200 countries and territories used Expensify to make money easy.

Our business and the operations of our customers, the majority of which are small and medium-sized businesses, 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, theThe economy continues to be impacted by elevated inflation rates and faces further inflation risk. Tariff and trade issues, as well as geopolitical uncertainty and instability, including the conflict in the Middle East, also continue to cause overall uncertainty with respect to the economy. See Part I, Item 1A. "Risk Factors" in our 2025 Annual Report and our subsequent filings 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.

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 $30.9$30.8 million and $33.2$32.9 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Revenue earned from subscription fees was $61.7 million and $66.1 million for the six months ended June 30, 2026 and 2025, respectively.

Under the Expensify 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, net on the Condensed Consolidated Statements of Operations. Interchange revenue was $5.5$5.9 million and $5.0$5.3 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Interchange revenue was $11.5 million and $10.3 million for the six months ended June 30, 2026 and 2025, respectively.

We offer a cashback rewards program to all customers under the Expensify 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 in the following month. We consider our cashback rewards as consideration payable to a customer, and they are recorded as contra revenue within Revenue, net on the Condensed Consolidated Statements of Operations. Cashback rewards applied against outstanding customer receivables are reflected as a reduction to Accounts receivable, net on the Condensed Consolidated Balance Sheets. Cashback rewards liability is recorded within Accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets. The cashback rewards fluctuate over time as customers meet eligibility requirements and based on the timing of payments made to customers. The cost of cashback rewards was $2.6$3.0 million and $2.3$2.5 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The cost of cashback rewards was $5.6 million and $4.8 million for the six months ended June 30, 2026 and 2025, respectively.

Under the Expensify 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 Condensed Consolidated Statements of Operations as they are earned. The amountsAmounts earned under these volume-based incentives were $0.3$0.2 million and $0.2$0.8 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Amounts earned under these volume-based incentives were $0.5 million and $1.0 million for the six months ended June 30, 2026 and 2025, respectively.

(Provision for) Benefit from Income Taxes

Income taxes primarily consist of income taxes in the United States, United Kingdom, Australia, Netherlands and Canada, as well as states inwithin the United States in which we do business.

COMPARISON OF THE THREE MONTHS ENDED MARCHJUNE 31,30, 2026 AND 2025

Revenue, net decreased $2.1$1.9 million, or 6%,5%, for the three months ended MarchJune 31,30, 2026 compared to the same period in 2025, primarily due to (i) a decrease in billable activity across our user base, 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. This decrease was partially offset by an increase in interchange revenue driven by the adoption of the Expensify Card program.

Gross margin decreased to 48% for the three months ended MarchJune 31,30, 2026 compared to 51%52% in the same period in 2025 due to the factors described in the preceding paragraphparagraphs for Revenue, Net.Net and Cost of revenue, net.

Research and development expenses decreased by $0.1$0.2 million, or 2%,3%, for the three months ended MarchJune 31,30, 2026 compared to the same period in 2025, primarily due to a decrease in internal employee and external contributor time spent on project initiatives and new product features.

General and administrative expenses decreasedincreased $1.7$0.2 million, or 16%,2%, for the three months ended MarchJune 31,30, 2026 compared to the same period in 2025, primarily due to aan decreaseincrease in (i) settlement losses, net of recoveries, (ii) employee time spent on general and administrative activities, and (iii) accounting and audit fees. This decrease was partially offset by an increase in legal fees related to the Putative Class Action discussed in Part II, Item 1. "Legal Proceedings".activities.

Sales and marketing expenses increaseddecreased $0.2$9.7 million, or 6%,67%, for the three months ended MarchJune 31,30, 2026 compared to the same period in 2025, primarily due to anelevated increaseadvertising spend in advertising2025 spend.related to our title sponsorship of F1® The Movie, which was released in theaters in June 2025.

Other income, net changeddecreased by $0.2$0.7 million, or 47%,77%, for the three months ended MarchJune 31,30, 2026 compared to the same period in 2025, primarily due to the net impact of period-over-period foreign currency gains and losses.

We recorded a provision for income taxes of $0.5$1.7 million for the threesix months ended MarchJune 31,30, 2026 compared to a provision for income taxes of $2.0$1.3 million for the same period in 2025.

During the threesix months ended MarchJune 31,30, 2026 and 2025, our effective income tax rate was (29.836.9)% and (172.512.7)%, respectively. The effective income tax rate differs from the statutory rate in 2026 and 2025 primarily due to non-deductible stock-based compensation and the change in the valuation allowance,allowance partiallyin offset by Section 162(m) of the Internal Revenue Code compensation limitations.2025.

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 MarchJune 31,30, 2026, we had $66.5$65.8 million in cash and cash equivalents with no outstanding indebtedness and a $7.5 million letter of credit outstanding.

Net cash provided by operating activities was $0.1$8.6 million for the threesix months ended MarchJune 31,30, 2026 as compared to $7.9$16.0 million for the same period in 2025. The decrease is primarily due to (i) a decrease in subscription revenue, and (ii) the settlement payment related to the Putative Class Action discussed under Part II, Item 1. "Legal Proceedings" and related legal fees. This was partially offset by a decrease in advertising spend due to elevated advertising spend in 2025 related to our title sponsorship of F1® The Movie, which was released in theaters in June 2025.

Net cash used in investing activities was $1.4$2.5 million for the threesix months ended MarchJune 31,30, 2026, consisting of software development costs.

Net cash used in investing activities increased for the threesix months ended MarchJune 31,30, 2026 compared to the same period in 2025, primarily due to an increase in employee and external contributor software development costs.

Net cash providedused byin financing activities was $6.3$1.1 million for the threesix months ended MarchJune 31,30, 2026, primarily consisting of the repurchase and retirement of common stock primarily due to the Tender Offer and additional share repurchases described below. This was partially offset by (i) the change in customer funds, netnet, and (ii) proceeds from common stock purchased under the 2021 Stock Purchase and Matching Plan ("Matching Plan").

Net cash providedused byin financing activities increaseddecreased for the threesix months ended MarchJune 31,30, 2026 compared to the same period in 2025, primarily due to (i) the change in customer funds, net.net, and (ii) proceeds from common stock purchased under the Matching Plan, partially offset by the repurchase and retirement of common stock primarily due to the Tender Offer and additional share repurchases described below.

As of MarchJune 31,30, 2026, we had $41.0$39.8 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 condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further information.

In February 2024, we entered into a Second Amended and Restated Loan and Security Agreement (as subsequently amended, the "2024 Amended Loan and Security Agreement") with Canadian Imperial Bank of Commerce (“CIBC”). The 2024 Amended Loan and Security Agreement provided for a $25.0 million revolving credit facility, which was terminated onin July 1, 2025. 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 and Security Agreement) arising from Bank Services (as defined in the 2024 Amended Loan and Security Agreement). There were no penalties incurred by us as a result of the termination of the revolving credit facility.

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 Expensify Card program. The Letter of Credit was issued in the amount of $1.0 million for the benefit of Bancorp. OnIn 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. The Letter of Credit remained outstanding following the termination of the revolving credit facility.

OnIn 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, grants to CIBC, for the ratable benefit of the lenders, a security interest in substantially all of our assets and our subsidiaries, and also replaces the 2024 Amended Loan and Security Agreement with respect to the Contingent Obligations (as defined in the LOC Security Agreement). Under the LOC Security Agreement, the Letter of Credit remained at $7.5 million and expires onin March 20, 2027. The Letter of Credit automatically renews for successive one-year periods unless we or the issuing bank provide notice of non-renewal prior to the expiration date. No amounts had been drawn on the Letter of Credit as of MarchJune 31,30, 2026.

We define adjusted EBITDA as net loss excluding provision for (benefit from) income taxes, other income, net, depreciation and amortization and stock-based compensation expense. We define adjusted EBITDA margin as adjusted EBITDA divided by revenue, net 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.

Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) Margin

We define non-GAAP net income (loss) as net loss excluding stock-based compensation expense. We define non-GAAP net income (loss) margin as non-GAAP net income (loss) divided by revenue, net for the same period. We are focused on profitable growth and we consider non-GAAP net income (loss) 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 expense, which is not considered indicative of the core operating performance of our business.

We define free cash flow as net cash provided by operating activities excluding changes in settlement assets, net and settlement liabilities, reduced by the purchases of property and equipment and software development costs. We define free cash flow margin as free cash flow divided by total revenue, net for the same period.

As of MarchJune 31,30, 2026, there have been no material changes in our contractual obligations and commitments as disclosed in our 2025 Annual Report.