Expensify Q2 FY26 earnings call EXFY

Despite facing top-line pressure, Expensify demonstrated significant improvements in profitability and cash flow during Q2 FY26. Operating cash flow reached $8.4 million, and free cash flow increased to $6.4 million, marking a 162% quarter-over-quarter rise and a 2% year-over-year increase. The GAAP net loss narrowed to $3.9 million from $8.8 million in the prior year, while non-GAAP net income turned positive at $3.4 million, compared to a non-GAAP net loss previously. Adjusted EBITDA also improved to $6.6 million from a negative figure a year ago, underscoring disciplined business management.

The company highlighted the rapid expansion of its "New Expensify" platform, with net new revenue (excluding migrated Classic customers) growing over 250% year-on-year to exceed $10 million in ARR. New Expensify is positioned as the primary growth engine, designed to capture the 99% of global businesses not served by traditional expense management solutions. It features a mobile-first, chat-first, and AI-centric design, with the majority of current customers and users, including new sign-ups and migrated Classic users, now operating on this platform.

Expensify Classic continues to serve as a stable profit engine, requiring minimal engineering investment while generating substantial cash flow. Although it represents a large customer base, it is deliberately shrinking as new sign-ups are exclusively directed to New Expensify. The cash flow generated by Classic has been instrumental in funding the development and expansion of the New Expensify platform.

Q2 was marked by strong product velocity, particularly in AI-driven features. Key introductions include "agent rules" for Level 3 workflow automation, leveraging LLM judgment for routing, and "custom agents" (Level 4) that facilitate chat-based collaboration. The Expensify MCP (Multi-Cloud Platform) was launched, enabling third-party AI assistants like ChatGPT to access expense data. The company shipped over 30 features and enhancements, including personal card imports, card management tools, prohibited expense detection, real-time card rules, and automatic VAT capture.

Expensify actively engaged in capital allocation during the quarter, repurchasing approximately 6.1 million shares of Class A common stock at $1.20 per share through a modified Dutch auction tender offer. An additional 712,000 shares were bought in the open market at an average price of $1.63 per share, totaling 6.8 million shares repurchased in Q2. This activity resulted in a 7% reduction in shares outstanding, demonstrating the company's conviction in its valuation and commitment to shareholder returns.

Expensify Card interchange revenue, encompassing both Classic and New Expensify, reached $5.9 million, an increase of 12% year-over-year. The company's "Bring Your Own Card" (BYOC) marketing strategy has proven effective, allowing customers to integrate their existing corporate cards with Expensify's automation. This approach differentiates Expensify from competitors that mandate the use of their proprietary cards, catering to users who prefer their current card programs. Payment volumes showed a modest quarter-over-quarter increase.

A new feature, Consolidated Travel Billing, was introduced to streamline travel expense management. This offering is considered unique in the market and is generating significant interest, with a substantial list of waitlisted customers. The company views this as a lucrative opportunity to attract larger enterprise clients and reinforce travel as a core pillar of its business.