Hi. Welcome to the Q2 2025 Expensify Earnings. I'm Expensify's CFO, Ryan Schaffer. And with me, I have Founder and CEO, David Barrett. And now we're going to pass it over to Niki for the legalese.

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 laws. 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 forward-looking statements. Forward-looking statements in the earnings release that we issued today, along with the comments on this call, are made 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. Please also note that on today's call, management 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.

Great. Thank you, Niki. All right. Let's talk about the financials. Revenue was $35.8 million, which is up year-on-year, which is really exciting. Average paid members were 652,000 and total interchange was $5.3 million, which is also up year-on-year. Operating cash flow was $8.9 million. Free cash flow was $6.3 million. Again, the difference between those is free cash flow does not include customer funds. Our net loss was $8.8 million. Our non-GAAP net loss was $1.9 million, and our adjusted EBITDA was a negative $1.4 million. Again, these numbers are impacted by the release of the movie as we've discussed in previous earnings calls, the way movie accounting works is we've been making payments for multiple years, but the expense is all recognized this quarter. So the reason these numbers look worse than they normally do is because we just recognized multiple years of payments all in quarter. We expect next quarter for these to go back to normal. Like I just mentioned, our free cash flow of $6.3 million, a 10% increase from last year. Last quarter, we updated our guidance to $17 million to $21 million in annual free cash flow. We're now increasing that free cash flow guidance to $19 million to $23 million. As the year goes on, our confidence in this number increases, and we continue to increase it. We'll let you know next quarter if there's any updates there. July payment members were 641,000. July is usually a pretty soft month. A lot of people are on summer vacation with their families, is usually not a great month for us. And so we saw that seasonality this quarter. We saw the seasonality in July, which was expected. Now let's talk about what everyone wants to hear about, The F1 Movie. So I hope…

That's great. Let's talk about Q2. And so we've been hard at work, in particular, we've been preparing for F1 for a long time and recognizing that F1 is [indiscernible]. We put a lot of work into improving Expensify's availability and performance and just overall experience in a wide variety of F1 sort of familiar sort of countries. And so we've added support for over 10,000 banks globally, a whole bunch of United States, a whole bunch all over the world and just to make sure that -- because one of Expensify's big differentiations is that we're really good for third-party card support. Of course, we prefer to use our Expensify card. But if you don't, you can always bring your own card, and that's a huge thing. We're the best for that in the industry. And so now we're also expanding that strength globally. Additionally, just the nuts and bolts of being able to do reimbursements. Again, Expensify is very good for a reimbursement heavy company that maybe doesn't issue corporate cards to their employees. Now those reimbursements work even more countries around the world. We've added support for buying Expensify in euro. So previously, you could buy it in pounds, U.S. dollar, things like this, but now you can also support the euro as well. Again, just making it a little bit easier to adopt throughout Europe. Also very exciting, the Expensify card itself is being expanded to work in the U.K. and EU. That's coming out very soon here. And so we're very, very excited about that. So overall, it's about basically making sure that the way we capture this long-term investment in F1 is about making sure that the markets where F1 is really popular are also good markets for Expensify. One thing I've been putting…

Perfect. First up, we have Citi. I believe, George, are you on the line with us?

Maybe just to start with the exciting news F1 Movie. I think I'm one of the few people on the planet who has still hasn't seen it. So I'm glad it's coming back to theaters, a lot to catch it in the second round. You guys talked a lot about some of the brand awareness increases there. At least in terms of its conversion to paying users, it seems like that metric hasn't moved much yet at least as it relates to this initiative. Can you just talk to us about what you're expecting on that front? Is this kind of like still to come maybe in the next quarter or 2? Or is this more of a slow and steady type of improvement? How should we think about that?

Yes. Great question. So the movie came out with, I believe, 3 business days left in the quarter, so basically the end of Q2. So in terms of impact for Q2, not a lot, right? These -- all these numbers that we talked about today, those are things that we've seen in since the movie has been released. So they're not in the Q2 results. So we would expect the impact from the movie to be in the future. And again, with the big brand awareness play, it's not performance marketing, right? This isn't an words. So it's not a direct one-to-one. It's kind of a longer time horizon. So we expect that this will kind of rising tide lifts all ships produce kind of a halo effect on everything we do going forward in the future.

Okay. Okay. That's helpful. And then maybe just sticking on this marketing topic. I think one of the topical things in the space of the PLG software, has been changes to the Google search algorithm, kind of that AI blur surfacing up top and changes to web traffic that that's engendered. Is that at all relevant for your guys' business? And have you guys seen any metrics as it relates to that any adjustments to how you guys are thinking about marketing from that channel?

Sure. And so Expensify even before ChatGPT, we've always invested very heavily in SEO. And so I think we've got incredibly good just general search engine sort of placement across a huge range of keywords. I think we've talked about that in the past years or the past quarters and so forth. And nice thing about that is because all of the AIs are trained to the Internet because the Internet is already talking about Expensify. That means the AIs themselves talk primarily about Expensify. I don't have the data off the top of my head, but I know that we've looked into in the past and Expensify this ranks very highly in ChatGPT, Claude, Gemini and so forth. And so I think that our SEO strategy has already put us into a good position to be recommended as a top option by these tools. And furthermore, we've doubled down on that by making sure that we're optimizing for the tools even more. And so I'm with you in terms of the future of search is really about these chat-based AIs, and we are certainly not going to be left unaware about that. And so we're definitely preparing for that and taking advantage of that now.

Great. Aaron, I believe I have you on the line as a dial-in, so let me get you unmuted here.

You put 14% of your payroll into GAAP R&D this quarter, 9% adjusted. Ramp disclosed in March that 50% of payroll goes into R&D there. Do you think the small scale of your business is a headwind to keeping up with the pace of product delivery we're seeing from scaled vendors in the space?

That's a good question. I think that we have an extremely large group of our employees focused on R&D. And I think we're trying to build maybe different products, right? We're building one product that is tightly integrated with each other. And I think the rest of the market is building more siloed products. So you have your expense, then you have a different product, which is your invoicing and they are all kind of like many companies within one large company. And we're building just something different, which is one product, basically one payments engine that can handle everything in the back office no matter what you need. So it's very integrated. It doesn't require as many people. Do you agree?

Yes, I agree with that. And I think that you're right with respect to R&D, I think that is tricky from an allocations perspective because so much of our work is about improving technology that's already in production. And so the separation between what was R&D and sort of expanding something for new use cases as opposed to just, as Ryan was saying, standing up an entirely new system. It just produces kind of different allocations. I'm not an accountant here, but I'd say that fundamentally, I know I spend all my time in R&D and a lot of people do as well. But I understand that the accounting of how that comes out for a public company versus a private company might sort of produce different results as well.

That's really helpful. And then I guess a similar question, a follow-up. Do you think the increasing application of AI product development for expense management use cases has the potential to erode the moat you've built around SMB and VSP customers where historically, you've been the only one who could get the unit economics to work down market and take some of that cost out.

That's interesting. I kind of think it's the opposite in that -- I mean -- so a lot of ink has been spilled on this topic, and we could talk forever about it. But I think that we're going through a shift in user experience design. It just kind of like initially, it was all desktop software, and there's a bunch of patterns built up around that. And then it went to web. And then basically, all the software was reinterpreted through more of a web-centric design. And then mobile came out and then all those existing software was reinterpreted through sort of more of a small screen application design. And I think we're going through kind of a fourth transition here where every application is going to be reimagined through a chat-centric design. And I think I kind of like where you're going in terms of it can be kind of a normalizing effect because it strips away so many differences in that like historically, like the difference between an enterprise app and a consumer app just looks quite visually different, whereas for an AI chat-centric environment, they might look quite similar. But I think it's actually -- the difference, however, is it is much easier to make a simple product complicated than to make a complicated product simple. And I think that the enterprise space is primarily focused on building complicated products sold to a part of the market that can weather and endure and appreciate the complexity. And it's very hard for an existing product, especially very existing complicated products to be reduced down to the simplicity of a chat-based interface. And I think that's why we've worked so hard for a long time to do exactly that. We're speaking from experience here. It's not a straightforward…

It also doesn't fundamentally change their business model. They still have huge sales teams...

The economics aren't...

I mean they're still fielding a huge sales a basically. So it could enable a new challenger to come in and do what we're doing, but we haven't seen competitors do that. They've come at it from a different card-first angle, but that's not AI-based. I mean that's just -- they have a card angle versus an AI angle.

Agreed. Yes, I think they had their big play, and it was a card-first angle, and they leaned really far over their skis to push it, and they did a great job with that. But I think that that's their thing. Their thing is card-based. And with you, I think our thing is more AI-based, and I would be more concerned about some new entrant sort of stealing the industry than them.

Fabulous. Lake Street, I believe, Max, are you on the line?

First one is kind of a 2-parter around go-to-market strategy. Just with the new F1 movie, I'm curious to know -- I'm not sure if you guys get this track this information, but in terms of new customer adds, maybe information that the team would have, but what percentage of these new adds maybe joined Expensify because of the F1 exposure? And then on top of that, I know word of mouth is kind of a big deal with you guys in getting the Expensify name out there. I mean, is there any other investment initiatives you guys can implement to kind of gain traction in like the legacy subscription business?

Great question. So we don't have any F1-based new customer had information to share right now in Q2 because, again, it came out right at the end.

I guess maybe for July and August, I guess.

We don't have anything to share right now. It's something that we can definitely talk about in the future. But to answer your other question, which is do we have other kind of follow-on plans to F1. We are -- we do certainly have more marketing plans in place that we're going to do, obviously, not the scale of this blockbuster movie, but this isn't a one-and-done see in a couple of years type of thing. We're going to continue to invest in marketing and also try to harvest this great awareness that we've created.

Yes. I mean we've been obviously have a cash flow positive business for a reason. I think it has built up quite a nice war chest even while paying off our debt. And so I think that we have shown that we're very willing to take big swings when we think there's a big swing to be taken. And so we don't have any announcements right now, but certainly, this isn't the first time we've done something big and it won't be the last.

Yes. And then last one for me, and I'll get back in the queue, but it looks like the Expensify travel is trending well. Is there any other color you can add around that?

So we just -- I just got back from GBTA, The Global Business Travel Alliance Conference. And it went great. Like we said before, a lot of customer enthusiasm. We saw great quarter-on-quarter growth. And even in July, we saw huge growth just month-on-month. So it is growing extremely well and customers are trying it, loving it. It's kind of a flywheel in terms of the sales cycle is a little longer. They do demos, they do a pilot and then they start to roll it out and then it grows and grows. So I think we're starting to see that. So nothing specific to share than what we did, but I guess the color commentary is that it is continuing to accelerate, and it's great.

Great. And then I have our last one. I apologize. [Operator Instructions]

Little bit of mystery caller.

Authenticated, but it didn't come through.

[indiscernible].

All right. Let's wrap it up.

Cool. All right. Well, thank you so much, everyone. As always, it's a pleasure. Very excited to be sharing the results of Q2 and looking forward to Q3.

All right. Thank you.