Thank you for joining us for Expensify's Q3 2026 earnings call. My name is Nikki, and I'm joined today by Ryan Schaefer, our CFO, and David Barrett, our founder and CEO. As usual, I'll kick off with our legal disclaimer. 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 these 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. And with that, I'll hand it over to Ryan.
Thanks, Nikki. And thanks, everyone, for joining today's call. Let's start with the Q3 financials. Revenue for the quarter was $33 million. Average paid members was $630,000. The Expensify forward interchange revenue across both Classic and New Expensify was $5.8 million, up 8% year-over-year. While we continue to see some pressure on the top line, our focus remains firmly on the fundamentals of the business and on executing the work required to return to sustainable growth. We've been hard at work to meaningfully improve profitability and cash flow. Operating cash flow was $4 million and free cash flow was $3.3 million. Our gap net loss was $3.3 million. Non-gap net income was $3.1 million and adjusted EBITDA was $6.1 million. Q3 free cash flow was $3.3 million, which increased 170% from the same period last year. Today, we're raising our full year 2026 free cash flow guidance of $12 to $14 million, up to $13.5 to $15.5 million. As always, we like to give you an early look at next quarter's paid member trend. For October 2026, we had 636,000 paid members. October is generally strong compared to Q3, so this is both expected and welcome. Before I hand it over, a quick note on capital allocation. In Q3, we repurchased 722,121 shares of our Class A common stock for approximately $1.3 million. That's a continued commitment to returning capital as shareholders, even as we keep investing in growth. With that, I'll hand it over to David for a business and product update.
Thanks, Ryan. Q3 was a quarter where the growth engine really started to show up in the numbers. New expensive revenue, the card, travel, our partner ecosystem, and our AI all All moved forward at the same time. Let me walk you through what that looked like. I want to start with the number I think matters most. Revenue from New Expensify, meaning revenue from customers who signed up on New Expensify and never touched Classic, so this excludes all of the Classic customers who simply migrated over, grew 30% from Q2 on up to 212% year-on-year to over $13 million in ARR. Last quarter, we told you it had crossed $10 million. It's growing on top of and separate from the Classic migration. And it's not just that more people People are signing up. They're converting better. Our older cohorts continue to convert into paying customers over time, and each new cohort is outperforming the ones before. That tells us the product is getting better at turning the first expense into a paying customer, which is exactly the flywheel we've been building toward. The Expensify Card kept expanding this quarter, both in where it works and what it can do. On REACH, we're now issuing in pounds and euros, serving 13 European and UK markets, which She opens up a big piece of her international opportunity. On functionality, we've added enhanced pin and biometric controls, one-time and date-bound virtual cards, and 14 new rules that block out-of-policy purchases before they happen, including a rule that blocks international currency transactions. The idea is simple. Stop the bad spin at the swipe instead of chasing it down at month end. Travel had a great quarter too. On economics, we launched consolidated travel billing, which rolls a company's travel booking into a single monthly debit, and that results in substantially more revenue to Expensify from each booking. On volume, trips booked through Expensify Travel grew 13% from Q2 and 40% year-over-year, and Q3 was the biggest quarter in record. We also kept growing the partner ecosystem around Expensify. We launched native integrations with Rillet and DualEntry, two of the fastest-growing AI native ERPs. With Rillet, we signed a revenue share agreement, so both sides are invested in growing it together. We now offer dozens of HR integrations, including Workday, HiBob, and BambooHR. And in September, Expensify became one of the first expense tools in Anthropic's Claude for Small Business plugin. A small business owner on any paid Claude plan can connect Expensify and simply ask, in plain English, things like, which expenses from last month are still missing receipts? Or, when did we spend on software this quarter by vendor? And Claude answers in seconds from the real expense, card, and receipt data. We followed it up with a joint webinar with Anthropic in October that grew more than 1,000 registrants. Every one of these meets customers inside the systems they already run their business on. And earlier this week, we announced a referral agreement with Visa. Visa can now refer eligible clients and corporate card programs to Expensify. That's a big deal for our bring-your-own-card strategy. A business can keep their Visa card, the points, and the banking relationship it already has, And get receipt matching, AI coding, spend controls, and reconciliation with no card switch required. On AI, the Expensify MCP, which lets assistants like Claude and ChatGPT work directly with your expense data, went live last quarter, and adoption is exploding, in part because we were selected for the Claude for Small Business Bundle. More and more of our customers are managing their expenses from inside the AI tools they already use every day. And our agents keep getting more capable. Today, Expensivize Agent handles over 96% of what it's asked to do, without any constraints on what the user can ask. That number goes up a little every day, and every point is work our customers no longer have to do themselves. So to summarize the quarter, we continued returning capital shareholders, repurchasing over 700,000 shares for approximately $1.3 million. Expensify travel and the card program continue to grow, with trips up 40% year-on-year, and interchange revenue up 8% to $5.8 million. AI is expanding across the platform. MCP adoption is exploding, and our agents handle nearly everything they're asked to do, a little better every day. And new Expensify continues to grow, the revenue up 30% from Q2 and 212% year-over-year. Our path forward is the same one we've continued to talk about. Finish migrating the remaining class of customers onto new Expensify, where they get a dramatically better experience, and keep accelerating new customer acquisition into a market that's still almost entirely untapped. Each quarter, the evidence that the plan is working gets a little stronger. With that, thank you all for joining us today, and let's move to Q&A.
Fantastic. Mark, I believe you're on the line if you want to start us off with a couple questions.
Mark
Analyst — Audience Member
Hi, thanks for taking my questions here. David, a question for you on the relatively new travel offering. Maybe you could just talk about how it's changing your competitive positioning. So, for example, are you seeing travel help you win new customers that would otherwise not have considered Expensify? Or is the primary benefit just increasing wallet share among your existing customers?
Yeah, great question. I definitely want Ryan's take on this as well, because he's a bit closer to it. But I would say my general take is that, I mean, there's three major pieces to growth. One is acquiring new customers, one is expanding existing customers, and then of course, retaining customers. I would say the most important of those is probably the retention to start in that basically historically, you know, travel was seen as a major churn cause, a churn. So bringing in native travel is primarily to address a known cause of churn, and I think it was really effective in that regard. However, of course, it's also a major lead generator as well as a tool for expanding existing customers. So it hits on all three of those pistons, but I would say for me, the most important and urgent at the start was actually to reduce churn. I'm curious, Ryan, what do you think about that?
Yes, I agree. I think before we had travel, we would see customers leave Expensify for T&E solutions like Navon or similar programs that have both travel and expense. And we only had the expense now. So it was basically a one-way direction, right? They would leave the expense-only product for a T&E product. Now we see, we pull customers from Navon. Obviously, there's kind of. Battling it out both ways, but it used to just be a one-way battle, people going to a T&E solution. Now we're pulling customers from Navon as well, so we're very competitive in that space. And with our new consolidated travel billing, which we announced earlier this year, we've gotten very competitive on price as well. So I think the travel product continues to improve, is getting more competitive, and will continue to be even more competitive. Every day, and especially, you know, the next quarter, next year. So I still think travel is ramping up and getting better and better. So it's a part of the business I'm very excited for, and I think could eventually rival the Expensify card. Obviously, it's not there yet, but I have a lot of confidence and hope in the travel.
Mark
Analyst — Audience Member
Thanks, that's helpful. And then switching gears a little bit here, David, I was wondering if you could just provide some more details on the new cloud business bundle and the strategic opportunity it represents to the company. You know, more specifically, you know, how should investors think about the bundle's potential impact on things like customer acquisition and retention in your view?
I mean, that's a good question. I mean, I would say I think it was very flattering to be picked by Anthropic for this. I think it's a testament to the strength of our AI integration or MCP server and basically the overall capabilities of the platform. So at a minimum, I think it's a strong validation of our position in the market. I think that when it comes to long term customer acquisition, I mean, that remains to be seen. I think that out of the gate, we've been really happy with how much attention is driven to our MCP server, and I think we've been really happy with the joint marketing that we've already done. I don't think we have anything to announce right now about basically future joint marketing with them, but I would say we view this as a start of long-term partnership with Anthropic.
Mark
Analyst — Audience Member
Thank you. That's all for me.
I'm going to hold a new scene. Erin, can you hear me?
How's it going? Hey, guys. Pretty well. My first question is, as New Expensify continues to scale, and with the majority of users now on New Expensify, can you talk to your visibility on how we should think about the inflection point where growth from net new customers on New Expensify consistently exceeds the revenue attrition from Classic such that we can get back to top-line growth, whether you can speak to that in terms of, I guess, qualitatively or quantitatively?
Yeah, I can take that, David, if you want to jump in. So, that is a huge focus for us right now, Aaron. So, what we basically have is an exciting technology startup company hidden inside of our kind of legacy technology company. And one is slowly declining and one is growing quite rapidly. And we're trying to figure out when exactly the... The break-even point is where the new, exciting company is outpacing the growth of the decline of the larger kind of legacy company. We think if things stay the same, that that will happen next year, and if things go a little bit better than what we projected will happen earlier, if it happened a little worse, it will happen a little later. But we think we're getting very close to that point.
Yeah, and I guess I would add to that, I think the real challenge is that we're sort of balancing two largely unrelated systems that seem to be counteracting each other. Like, we have this quickly growing new Expensify platform, and then we have this large but slowly declining sort of legacy classic customer base. And I think what I find exciting about this is it doesn't take – it needn't take a lot to have significant changes. Now, it's hard to predict when those changes will happen, but even a relatively small decrease in churn can have a really rapid impact upon pipeline revenue growth. And so I would say I think we're very happy with the growth of New Expensify. I know I'm putting a lot of time in just churn reduction, which is not nearly as exciting, but it's much more impactful. And so we've been putting a lot of work into our customer support organization, to our account management, and just, you know, the nuts and bolts of making everything work super reliably. Like we talked about how one of the major motivations for travel was to reduce churn. That's a kind of a big ticket way to do that. But there are 100 smaller ways that we're just focusing on the small wins that aggravate customers that cause them to look around. And I think we've been making a lot of steady progress on that. So it's hard to project when that tipping point will happen. And there's a lot of different ways, a lot of different paths to that point. But I know it's one that we feel confident is coming. And it's just kind of, you know, chipping away at that problem every day.
Got it. That's really helpful. And then as a follow-up, New Expensify is designed to target the 99% of businesses that you guys believe are uninterested in a traditional expense management solution. So it's great to see the more than $13 million in ARR from net new customers using New Expensify. When we think about that 99% that you weren't going to reach before, are you seeing any common characteristics of those customers, whether by vertical geography or employee count? Where you're getting traction with parts of the market you couldn't previously access with Classic.
Maybe I'll take a crack at this one, and Ryan, you can go up to that. I would say one of the challenges with Expensify from the start is that we've never really had a particular vertical alignment. I would say we have customers in every single industry, you know, all over the world. And so I don't think we've seen... That there are specific, I mean, like manufacturing is less than like professional services just because, you know, from like a headcount perspective and who does expense reports and so forth. But every business does expense management. Like before you have revenue, you have expenses. And so it's the very first accounting problem. It's like universal with business. And so as a consequence of that, I think that's why we've seen traction kind of across the board. I would say. And one of the sort of thesis that we have going into this is that it asks the question, so why? Why has 90% of the market opted out of traditional expense management? And I would say a big reason for that, I believe, is that people don't want necessarily a new app, a new website, a new thing to think about. They need something that's going to – and they don't want to adapt their processes. As janky as they might be, they don't want to wake up in the morning and be like, hmm, today's the day I rethink my expense management, and I want to adapt my company to whatever the tool can do. And I think we're moving away from – I think the future is moving away from highly configurable tools where you have to adapt your process to what the tool can do. And I think it's moving towards more sort of highly programmable tools, tools that adapt to your processes. Now, that sounds like maybe just, you know, marketing buzzwords, and I can get behind that. But I would say I think that's one reason we invest so much in our agents and what's so exciting about the progress we're making. Like one of the stats I threw out there is that. Agents currently, you know, are able to do about 96% of what they're asked to do. And that's not 100%, it's true, we're working on that. But it's kind of crazy to think without any constraints. And so there's an infinite number of things that a customer could ask us to do. Truly, anything that they can possibly imagine, they can ask us. And currently, we get about 96% of it right, which is pretty wild. And I think that's sort of, as we, and it's never going to be worse than today, it's only going to get better. And so over time, I think our ability to adapt to their existing processes gets better and better. Additionally, I think our ability to engage them in the tools they already use. So whether they're using Claude, whether they're just using email, because you can just email concierge at Expensify.com, and you can use pretty much the entire product that way. You don't actually have to sign into our app. You can just text us and things like this. From the employee experience, it doesn't require that they actually change their behavior. And so I think the way that we capture that 99% is by making a tool which adapts to their needs and meets them on the platforms that they operate on. And I think it's a radically different design than we've seen sort of elsewhere in the market. So I think it is going to take something different to capture the other 99%. And I think that's why we've optimized for this design. And I think the results are speaking for themselves. I mean, new expensive growth is pretty strong. And I think that's, you know, a consequence of the design decisions that have been put into it. And so there's still a long path to go, absolutely. But I'd say I think there's a broad opportunity across every industry, across every country, if we can just meet them where they are with a tool that adapts to their needs. And that's what we're aiming for.
All right. That brings us to a close.
All right. Thanks, everyone. Really appreciate your time here.
I'll see you next quarter.
