Inside Expensify’s IPO filing

Expensify filed to go public late last Friday, adding its name to the growing roster of technology companies looking to list during this period of hot valuations and strong recent debuts.

GitLab, for example, went public last week. The DevOps giant raised its price range, priced above that interval and then shot higher once shares began to trade. It’s a great time to go public for tech companies with growth stories.

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Expensify is one such company, though things have been turbulent this past year and a half. The Portland, Oregon-based expense management company had a tough COVID-19 cycle. As we’ll see, COVID impacted the company’s growth rate as well as its retention metrics. But things have since turned around, fortunately.

For more on the Expensify story, our own Anna Heim wrote the definitive series on the company.

This morning, let’s get into the guts of this profitable, growing technology company that hasn’t raised material primary capital since its 2015-era Series C. The company was valued at around $143 million, per PitchBook data, in the $17.5 million fundraise.

That valuation is a bit out of date, so we’ll have to come up with some new estimates.

So we’re digging into the Expensify S-1 filing, looking at its 2019, 2020 and H1 2021 results through the lens of COVID’s impact on the company’s operating results and its rebound. We also want to understand how the company is profitable, and how its SMB focus has turned out to be more of a boon than a burr.

Let’s have some fun!

How Expensify makes money

Let’s talk about Expensify’s business model first.

The company mostly sells to SMBs, or smaller companies. Venture investors have historically viewed SMB-focused businesses as less valuable than those selling to larger customers, as the latter tend to have lower churn and better upsell metrics. That may be true, but Expensify’s results indicate that you can actually do quite well selling software to SMBs, provided you have the right go-to-market motion.