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📮The Sunday Newsletter archive

Super Easy Expense Management

Everyone knows about Shopify ($SHOP) and Spotify ($SPOT) but not about Expensify ($EXFY). This unknown fintech startup simplifies the way small and midsized businesses (SMBs) manage their expenses. Its cloud-based platform helps them replace manual, inefficient processes and modernize their operations. Users can reimburse receipts from flights, hotels, coffee shops, office supplies, and rideshares with just a simple scan 📲.

Today EXFY has 639,000 paid members across 53,000 companies who pay monthly subscriptions to access the platform and manage business expenses. In the first half of the year, revenue jumped 60% to $65 million, and the company reported a very strong operating margin of 29%. EXFY is one of the few high-growth SaaS firms that are already profitable. That’s because it spends only 10% of its revenue on sales and marketing as most new users discover the platform via word-of-mouth; that’s impressive. 


📫Originally posted as part of the Sunday Newsletter
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Commentary

While there are already business spend management platforms for large companies such as Coupa Software ($COUP), SMBs have been left behind. Even today, the majority of SMBs rely on manual, cumbersome methods, such as spreadsheets to manage expenses. EXFY offers a modern and easy to use solution to help them manage their money in the digital age. The fact that it spends little on sales and marketing is a sign of strong market position and easy customer adoption, which is a great competitive advantage.

EXFY has a promising future potential as all companies, not just the large ones are modernizing and digitizing their operations. It estimates its total addressable market at $16 billion in the US alone, which includes SMBs with 1,000 employees or less so there’s plenty of room for growth ahead.

The company has priced its IPO at a midpoint price of $24 apiece which gives us a market cap of $1.9 billion and a P/S ratio of 17. Given its strong growth, profitability, and promising future potential, the stock is very reasonably valued at current prices. EXFY starts trading on Wednesday.

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