Spending Market Hikes After IPO In Vote Of Confidence For “Rare And Profitable Tech Company”
Shares of Expensify Inc. climbed more than 50% on Wednesday after the expense management firm debuted on the public market.
Expanding EXFY actions,
opened at $ 39.75 on Wednesday before rising to $ 42 recently. The shares traded Tuesday night at $ 27, which was in the upper end of the company’s high range. The company raised $ 70.2 million when it went public, after offering 2.6 million shares.
The company aims to simplify the expense reporting process, especially for small businesses that rely heavily on paper-based processes. Although the company also serves multinational corporations, the bulk of its revenue comes from small businesses.
Expense reports for the typical business are based on “an email, Excel and a manila file” with employees “scanning receipts on a flatbed scanner” before submitting them to the boss, the chief financial officer told MarketWatch Ryan Schaffer. Expensify has a technology-driven offering that allows employees to quickly snap photos of receipts from their phones and submit a report that is automatically emailed to the boss for approval and quick reimbursement.
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One of the things that differentiates Expensify is that the company focuses on marketing the product to employees rather than CFOs, according to Schaffer. “We don’t talk to CFOs about the efficiency gains of their staff and the payback period,” he said. “We tell employees that we do expense reports that aren’t bad. “
As such, Expensify generates 60% of its revenue from people “downloading the app for free” without “asking the boss’s permission.” These employees will then often show the service to their co-workers, and eventually the boss can purchase a company-wide package. Expensify operates on a freemium model such that employees pay nothing for the service, but companies will pay for tools such as reimbursement and imports to INTU from Intuit Inc.,
The company also offers its Expensify card, which allows it to monetize customer spending through interchange, or the fees that merchant banks pay card-issuing banks when cardholders make purchases. Expensify estimates a total addressable market of $ 17 billion for the card by next year, according to its prospectus.
Expensify reported revenue of $ 65.0 million in the first six months of 2021, compared to $ 40.6 million in the first six months of 2020. The company also reported net profit of 14 , $ 7 million in the first six months of 2021, compared to $ 3.5 million recorded. in the first six months of 2020.
“Profit and growth don’t need to be enemies,” Schaffer said, calling Expensify a “rare profitable technology company” and noting that the company’s profitability is based on generally accepted accounting principles, or GAAP. Revenue grew 60% in the first six months of the year, but he and his team “don’t think we need to spend 100% of the revenue to keep this growth going.”
The main motivation behind Expensify’s IPO was to provide liquidity to investors, Schaffer said, rather than allowing the company itself to access additional capital: “We have an unlimited track as as a profitable business ”.
While Expensify’s business has been affected by the pandemic, Schaffer stressed that the company exploits business travel very extensively, beyond cross-border flights to meetings with customers. A “typical” trip for an Expensify customer might involve a drive from Toledo, Ohio to Fort Wayne, Indiana with an overnight stay.
“Mileage is a huge expense for us,” he said. Home Depot Inc. HD,
is also one of the company’s top 10 merchants, powered by customers who travel to pick up supplies before delivering them to job sites.
IPO is the IPO of the Renaissance IPO ETF,
has risen 5.6% in the past three months and like the S&P 500 SPX,
increased 5.4% during this period.