All right, everyone. We’re very excited to have you here for the next Quarterly. I was going to say all hands. I’m so used to doing that. No, Quarterly Earnings Call for Expensify. We get a lot of exciting stuff to share and so let’s just hop right into it. So to get started, however, we have some very exciting, can you press the link here, here we go on the screen, okay, right there are, one more time. Okay, so let’s get started with, you’re going to read some very exciting legalese to get going.

Okay. Before we begin, please note that all the information presented on today’s call is unaudited and during the course of this call, management may make forward-looking statements within the meaning of the federal securities law. These statements are based on management’s current expectations and beliefs, and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Forward-looking statements in the earnings release that we issued today, along with the comments on this call, are made available only as of today and will not be updated as actual events unfold. Please refer to today’s press release and our filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. We also note that on today’s call management’s will refer to certain non-GAAP financial measures. While we believe these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Please refer to today’s press release or the investor presentation for a reconciliation of these non-GAAP financial measures to their most comparable GAAP measures. And with that, I’ll turn it back to you, David.

Thank you for that fascinating introduction. So we are coming to you live from the San Francisco lounge. And so we have the whole dream team here to discuss any questions you might have. We’re going to go through all of this and then each analyst is going to have one question, one follow up and so let’s get started. So, as a reminder, Expensify’s major plan to launch a success hinges on basically three major pillars. One is that we have a huge untapped market opportunity; the second is that we have a unique bottom-up adoption model; and third that we’re going after this huge, huge billion user opportunity. So the kind of review each of those in turn, and to start, the market is huge and largely untapped. If you just sum up basically all of the customers, of all the competition, we’re talking about 1% of the actual companies in the world. And so the way that we view it is, the opportunity is largely untapped and so the differentiation for Expensify is that we are going after the whole market using radical business law. Now, one thing we’re going to talk about a little bit more is that, we’re doing a lot right now to sort of expand growth in a few different ways. Now you know from the roadshow and a bunch of other videos and so forth, that we have a bottom-up adoption model and things like this. New things that we’re adding to that basically, we’ve dramatically expanded our advertising. If you’re new to the top 20 cities in America, you’ve probably seen our ads everywhere. We’ve also launched new free plan, which basically is allowing you to adopt the Expensify Card and do reimbursements for free. The three is free plan on…

All right. All the good stuff. So let’s talk about how Q4 performed. As you can see on screen, it was our best quarter in terms of paid member growth since the start of the pandemic, something we’re very excited about. All right, so, last quarter, we said that, we were predicting revenue to come in between $38.2 million and $39.2 million, but we actually came in and that was $40.4 million. So that is above expectations. In terms of paid members, we were expecting somewhere between 673,000 and 691,000, we came in at 711,000. So we actually -- we gave this guidance kind of late in the quarter. So we didn’t sandbag these numbers, we actually just had an incredible end of the quarter, which pushed up the numbers of beyond what we were expecting. So that’s great for us. As you know, we have a very reliable subscription or annual subscription business and then it kind of a variable pay per use. Those are customers that sign up without an annual subscription or just existing customers exceeding their annual subscription. So the overage and we had a huge influx of that overage that we were anticipating, which is why we have these above expectation numbers. Some other numbers to point out for Q4, we had 57% year-on-year revenue growth. We increased our paid members in Q4 by 44,000. A very exciting number for us. Our annualized revenue or ARR for Q4 is $161.6 million. On a GAAP basis, we had a $21.9 million loss, but on a non-GAAP basis, so if you take out stock-based comp and the IPO bonuses, which I’m going to touch on in a second, we had a $4.4 million non-GAAP net income and a $7.3 million adjusted EBITDA. I talked a little bit…

First, we have Sterling from J.P. Morgan.

You would think by now we would get the unmute button…

Yeah.

… corrected.

Yeah.

Can you just start, maybe you touched on it in the last part of your comments, but talk a little bit about the seasonality in the paid user, given the expectation that this quarter is going to finish with fewer average paid members than what you did in the fourth quarter?

Yes. And thank you for that.

Okay. Go ahead.

So you’ll see it is actually an increase from the guidance we gave in Q4. We did have an influx of oversubscriptions pile in at the end of, literally the last two weeks of the year, which drove our -- those numbers up higher. So from our perspective, we are seeing, our guidance is increasing. But we did see that influx at the end of Q4 and that was unexpected. We are not expecting that in Q1. So I would go off with the guidance that we’re providing here.

And maybe also to chime in on that, I would say, normally we don’t see the last two weeks of December, which is the holiday period, it is being like major growth opportunity. But Q4 was kind of special in the sense that it was the first clean quarter we’ve had for a very long time. I think the Q4 is a reflection of how the business model performs when the world was normal when everything’s now opened up and there are no major land wars in Europe and people are looking for the end of pandemic. And so I think that Q4 gives a good glimpse of kind of what kind of future we expect and how things behave when the world is normal. And but as we’ve seen that the abnormality of the macro trends throws a lot of volatilities that pay per use and then that sort of compromise on some of this complexity we are forecasting. The next?

I think we have one follow up…

Yeah.

Sterling if you have anything?

Yeah. I muted myself so you can answer there’d be no background noise that wouldn’t allow me to unmute, so…

It’s okay.

All right. So then the second part is, at the time of the IPO, we had talked about pandemic and the way we built our models around business travel, really recuperating more towards pre-pandemic levels, probably, in the back half of 2022. Is there any change in your viewpoint in terms of, I know, you want to get away from the quarterly gyrations…

Yeah.

… forecasting macro, but based on what you’ve seen so far, we still have to build our models. Do you think there’s still anything different with Omicron, war, et cetera, that would prevent that pickup from getting there by the second half?

So we think Q4 is actually a great example of how the business, like David said, functions normally. In Q1, we saw that surge in Omicron. January was actually the peak of the pandemic and now it’s coming back down. So I do think that, again, the pandemic isn’t forever, there’s been these kind of hard to predict flare ups that we saw in Q1. But Q4, I think, is a great example of, everything was trending downwards and everything’s opened up and then we kind of saw of a aggression maybe a little bit in Q1, but obviously, we don’t think that it’s going to be permanent going forward.

Yeah. I think we’re getting back on track.

Understood. Thank you.

Thank you.

Okay. Okay, so next, we have Tamika from Bank of America and I believe we haven’t spoken to you before, so...

Yeah. Welcome.

Welcome.

Hello. Can you hear me?

Yes.

Yeah. Great.

Yeah. Thanks for having me. Koji is actually in Hawaii right now. So I’m on for him. So we’ve been seeing your signage outside of SF, we were in Seattle for an Analyst Day. We have seen good success there with investing outside of the metropolitan, like, around the U.S. Just wanted to understand how you guys thinking about investing for growth? Has the investment profile changed since the IPO? And yeah, just trying to get the spending environment?

Yeah.

So we’ve been taking corporate expenses up and how you think about it going forward?

Great question. So I think that maybe to kind of touching on what we discussed before. In general, so the answer to basically any question you have, more or less is that, whatever we’ve been doing is working and we are going to keep doing. So we make small changes over time and so we don’t make big shifts in general. And so, I would say, in general, we don’t feel that our overall business model or strategy needs any kind of changes. We think that, it’s already designed for a full market approach and so it works incredibly well outside of metropolitan areas. It works internationally. It works basically everywhere people are. And so it’s -- the basis of my answer is, no, not much has really changed in how we are fundamentally planning and growing a long run. That said, we do obviously tweak the formula a bit and I sort of going to touch again what I mentioned earlier. We have increased advertising, especially metro areas, but also just like podcasts, there’s digital, there’s a wide variety of things that go into this. And so you can see us basically anywhere people are or you never -- anywhere people are looking, that’s where we are as well. We’re expanding our account management that will get into that new. We have always provided hands on account management for customers, we’re just making that a more widely available. We are adding outbound news menu, basically calling people in a more proactive fashion. So that’s a new approach and that does reach outside of those metro areas a bit more. We’ve done basically some direct mail as well, for example, contacting TPAs around the nation, which are basically in every state, more channel partner and growing through the accounting firms, which is again, not necessarily limited bias towards metro areas as big as population centers are, but again it’s everywhere. And the free plan is really about just making the work approachable on ramp for customers of all sizes. And so none of these, I would say is, a dramatic change. None of that is specifically targeted outside just like new markets. Our model has already been targeting a global marketplace. Does that helpful, Tamika?

Yeah.

Okay.

Any follow up, Tamika?

Yeah. Just a quick follow up. Is there any update on the visibility on the Marketo [ph] contract, we’ll get into revenue move into GAAP. So any timeline or visibility on that would be helpful. Thanks.

We -- yeah. A good question. So we’ve made actually a tremendous amount of operational progress on that and we’re still on track to get it all done, so we can kind of clean up our financial statements this year. So the ETA is still 2022. We’re still not so close to it that I can give you a better timeline, but maybe next earnings at least we can tell you a little bit in more in detail.

That sounds good. Thank you so much.

Of course.

Thank you.

Next up we have Tyler from Citi.

Hey. Can you hear me okay?

Yeah. How is going on, Tyler?

Hey. Hey. Doing well. Thanks. So, I guess, I just wanted to better understand the comments on what you saw at the end of Q4 and then in terms of the influx of paid members. And then, I guess, specifically, what is driving the drop off into Q1? So was this budget floss? Was this just kind of in response to promotional activities? And then are those members going away in Q1 or is this just kind of the…

That’s a great.

… typical seasonality that you see Q4 to Q1, just because it’s a softer travel time?

Yeah. So that’s a great question. So this is not a churn-off of customers or anything like that. It is a decrease or any kind of the volatility of the pay per use members. So, again, we saw an unprecedented level of customers exceeding their subscriptions in the back half of December, which is traditionally kind of a quiet time for us. And we don’t predict that level of pay per use surge in Q1, especially in light of what we’ve seen with Omicron in Q1. So that’s we’ve adjusted our guidance appropriately.

Yeah.

But also by definition, because the pay per use an overage and customers use it when they feel the need, it’s much harder to predict. So, when we say, we don’t anticipate it, there is nothing that tells us that we’re going to keep seeing that sort of pay per use surge, but we might, we might not, like it literally is a total unknown.

Yes. The core revenue growth is very reliably, very sustainably growing at a solid 2% to 3% rate. It’s the exceeding…

Yeah.

The customer is exceeding their subscriptions, which is difficult to predict, especially in light of kind of what’s going on in the world now.

Right. Does the customer is exceeding the subscription that wouldn’t -- that’s kind of more revenue volatility versus average paid member volatility, right?

The pay per use numbers are in the total paid members. So it moves them so.

I see. Okay. And then, just as we think about maybe some of the new product initiatives. So, obviously, you -- this free plan was announced recently. I guess, first, is that having any cannibalization on the paid users?

Okay.

And then, secondly, any just early updates on the invoicing and bill pay…

Yes.

…made around?

So I’d say, so first off, no, it’s designed not to cannibalize. Basically the free plan, the paywall was calibrated to basically ensure that people who are currently paying get paid. And so, no, it’s -- this is adding a new group of customers, especially cardholders that are generating interchange, but they’re actually just not paying any subscriptions. And so, no, it’s not cannibalizing, it’s purely additive. To answer the second part of that and sort of attraction with invoice and bill processing, I don’t know that we’ve split any that out quite yet. But we’re very, very pleased with the growth of both of those. I think that’s very much to say is the platform playing. We are perfecting the art of cross-selling these different use cases into existing customer base. And so I think once it becomes more material and like my, over 10%, I think, is what we typically say…

Yeah.

… then we’ll probably break it out. But at this point, we’re still under that threshold,

One a maybe tip that we can give you, we’ve seen, in Q4, we’ve had over 3,000 customers -- new customers sign up for the free plan, which is really exciting traction…

Yeah.

… for how little it’s been out, and obviously, we’re going to continue talking about the free plan in the progress of this next quarter as well. It’s very encouraging and something that we’re all excited about here.

Yeah.

Thank you.

Next up we have Brent from Piper.

Hi, Brent.

Hello. Good afternoon. A couple questions if I could. I guess, David for you, we’ll start things off here. I was actually, on my first, so, returned to travel trip actually this week at…

Yeah. Okay. Best of luck.

…in Vegas and there were a lot of people there. Quite a few people more than I anticipated. I guess as we just think about your business, as we think about paid members, maybe just walk through expectations around this return to travel. If we do see it coming back earlier in the year, would you will see that trend…

Good question.

… towards SMB is a little bit different…

Yeah.

… in expectation versus maybe some of these bigger conferences where they’re larger enterprise oriented companies that showed up at the Shoptalk this week?

Yeah. Those are all great questions. And so I think that you’re absolutely right, in the sense that, there are these indicators, are leading indicators that things are coming back to normal. Like, just last night, we went out to a team dinner with about, I don’t know, like maybe 15, 20 people there and I was sitting there and talked to the person. The next thing like this is the most people I’ve had to dinner with in two years and I’m looking around the bars packed, everything is, like, this feels so weirdly normal and that’s just like a tiny tidbit of like that was a business dinner, like, does that get put down on our Expensify card that generates revenue and it’s an active thing or even if we think about Q4, like, remember, I booked the Disney Cruise for me and my seven year old daughter, before we knew anything about Omnicom. And so I remember Q4 was like a brief window of hope and joy. And then, basically, as we got closer and closer to December, I was like, oh, my gosh, we even go in this trip. And as we’re pulling into port, all their ships are basically shutting down and being turned away. And so it’s like, Q4 was a weird time, but it’s a reminder of like, we can get back to normalcy and I think that we’re seeing that again now. Like, these indicators are just positive indicators are like, buds in springs, like it’s coming back. Now, when you ask about like conferences, specifically, I know that we have robust conferences in this year, much more than previous year. And so I think we’ve just speaking for ourselves and our own sort of like marketing, we’re much more active in the conference circuit than we have in the past. I think we’re seeing conferences in the past were basically, like, partially virtual and things like this and now they’re actually, no, it’s actually fully in person. Vaccine mass mandates are going away, that increases sort of just more participation. So these are all sort of anecdotal. Again, like, I’m not Fauci, I can’t tell you what defendants going to do. But I do think that if, from our perspective, we see far more signs for hope and optimism in the upcoming quarters and there’s pessimism.

Helpful color. I guess, then for Ryan, obviously, historically, this has been a very profitable business. And just wanted to pick your brain here, as you think about the coming year ahead, walk me through your view around where could free cash flow kind of be, what your intentions there, what could EBITDA be going forward, just trying to think through the past back to generating a meaningful amount of free cash flow and EBITDA going forward, just trying to think through that equation here as on a full year basis? Thanks.

Yeah. So when the pandemic started, we had pulled back on a lot of our spend and as we see kind of the economy waking back up we have ramped up our spend accordingly. And we feel that for 2020, we’re probably going to be spending more than we spent in 2021. So I do think that we’re going to be profit -- very profitable in 2022. But maybe I -- if I had to directionally give you an indication, it’ll be probably less than what we were in 2021, just because our spend will be ramped up for the entire year instead of kind of incrementally as the year goes on.

Helpful. Thanks for color.

Next up we have Pat from JMP.

All right. Great. Thank you. Congratulations to you guys. So I guess I’m going to follow up where Brent just left off. You gave us sort of long-term revenue guidance. How should we think about the bottomline and the gross margins over the long-term?

Good question.

I think we did that during the roadshow. I don’t think anything really changed...

Yeah.

…operational long-term...

I think…

… target.

The long-term targets that we’ve discussed in the past, I think, we’re about in the same race, that might vary a little bit, but fundamentally, not much has changed in the business, we have increased our sales and marketing spend. So I think we’ll see those margins go down. But in general, the overall economics of business are still very strong, very profitable.

Okay. You want just for the benefit of people who don’t know on this call, you want to just tell us what they are?

The -- which margins?

Well, start with your long-term, the bottomline you just get start with?

The top of my head, I believe it’s…

Yeah. It’s in a…

… 30%, I believe, is what we’ve indicated in the past.

All right. Great.

We don’t…

And then…

So, obviously, we’re -- obviously we are above that right now. But we think in the long-term it is going to probably trend more towards 30%.

Okay. And Dave for you, what do you smaller business does have a lot of options. What do you view is the biggest competitive threat and what’s the plan to counter it?

Good question. And I don’t think anything’s really changed. I mean, I think that I feel like the competitive environment. We have more clones of the same kinds of competitors, whether there’s like one or 10 of the same business, it’s basically the same thing. And the sum of all of them is still just like the same, sort of like the same kind of concept. And so, I’d say by and large, we don’t think that the competitive environment has like meaningfully changed. We have more names, perhaps, that’s led more of our confusion and so that can drive the benefit of advertising as a cut through some of that noise, if you will. But fundamentally, I don’t think the business models change, we don’t think the opportunity has changed, we don’t think the strategies needs to change. Fundamentally, it’s about getting to the customer first and we think that a viral word of mouth model is still unquestionably, the best and most scalable and cost effective way to get to the to the broader market. If there’s more players in sort of the shallow end of the pool, that doesn’t really affect anything in the event.

All right. Great. Thank you, guys.

Next up we have Mark [ph] from Loop Capital.

Hi. Can you hear me okay?

Yeah.

Okay. Great. Well, thank you for taking my call. Going back to the margins, with respect to the 25% to 35% long-term margin, not margin, excuse me, revenue guidance that was given, how should we think about long-term, is -- should we -- is it two years, five years, and then why not just provide annual guidance for that group?

Good question. So, when we say long-term, we actually mean a multiyear period. So the company before the pandemic we had a basically 10 years, very, very predictable, up into the right growth and the last few years have been very weird. But in general, we feel very confident in our ability to deliver these ranges over multiple years. So you say two years, five years, I think, that sounds great.

Yeah. Okay. Great. Thanks. And then moving on here, in the current environment pricing increases or price increases are on pretty much everyone’s mind these days. What are your thoughts on the potential for a price increase…

Good question.

…coming here?

Yeah. I’d say we have no immediate plans for a price increase. We have survey customers and we know that compared to the basket of functionality that we replaced, so if you were to purchase each point solution, Expensify is actually an incredibly attractive price point for what it would take to replace at all. But currently, we think that we’re at a great price, we think it provides an extreme amount of value and we want to continue just penetrating more and more businesses throughout the world. So I think that that is a lever we can pull, but it’s not when we intend to pull in the short-term.

Yeah.

Great. Thank you. That’s helpful.

I think we’re…

Cool. So, well, it’s been a real pleasure. We’ll see you here again, same that time, same that channel, one quarter from now. So there’s nothing else, any questions, no, again, great. Well, it’s been a real pleasure. Thank you so much and talk to you soon.

Thank you, everyone.

Thank you, everyone.

Everyone good-bye.