Expensify, Inc. (EXFY) Stock

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Contributor, Benzinga
November 8, 2021
$2.45
-0.02[-0.81%]
Last update: 4:00PM (Delayed 15-Minutes)
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Open2.470Close2.450
Vol / Avg.464.284K / 681.257KMkt Cap205.153M
Day Range2.400 - 2.58452 Wk Range1.520 - 11.650

It’s not how much money you make but how much money you keep that counts. A common adage, this basic guidance offers profound insights to those willing to exhume practicality from the banal. Primarily, multidimensional factors affect revenue totals. That is, without controlling expenses, your budget can rapidly spiral out of control.

For businesses, though, the management of expenses fundamentally involves the concept of differential calculus, or the discipline in determining the rate at which quantities change. In other words, an arithmetic protocol focuses on cutting cash outlays to a minimum. A differential protocol, on the other hand, seeks to determine if the target activity is even worth pursuing because of the other involved expenditure: time.

As companies of all sizes (but particularly smaller firms) attempt to salvage what they can from the lost year of 2020, time is truly of the essence. While occasional idleness and pockets of inefficiencies may have been the norm in the pre-pandemic era, in the new normal, management cannot allow such “silent” costs to disrupt the bottom line.

Fortunately, the cloud-based software platform undergirding Expensify, Inc. may provide the answer, drawing considerable interest in its upcoming initial public offering (IPO).

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When Is the Expensify IPO Date?

One of the most hotly anticipated debuts for the week beginning Nov. 8, Expensify’s platform — which helps manage employee and supplier costs through cost-and-time-effective solutions such as scanning and reimbursing receipts — justifies the fervor by putting businesses on the right foot for the post-pandemic economy. As well, the company enjoys robust backing from institutional investors, making Expensify an intriguing idea for speculation.

On Nov. 1, 2021, management set terms for its IPO, which involves the distribution of $9.7 million shares at a price range between $23 and $25 per unit. Per its prospectus filed with the U.S. Securities and Exchange Commission (SEC), Expensify aims to raise $234 million in gross proceeds in its public market debut. At the midpoint of the pricing spectrum, the expense management platform will command a valuation of $2.4 billion.

On Nov. 10, Expensify will ink its introduction in the IPO calendar, pitting the company in tight competition with other debutantes. Shares will trade on the Nasdaq exchange under the ticker symbol EXFY. Financial heavyweights JPMorgan Chase & Co. (NYSE: JPM), Citigroup Inc. (NYSE: C) and Bank of America Corp. (NYSE: BAC) represent the joint bookrunners for the IPO.

As a much-anticipated debut, you may want to consider applying for pre-IPO access for EXFY stock or the ability to purchase shares at their initial offering price. For instance, online brokerage Freedom24 offers an early bird special, so to speak. While buying shares ahead of the crowd may sound appealing, you should note important logistical and risk factors.

For starters, Freedom24’s application for pre-IPO access will close on Nov. 8 at 16:00 (UTC+2), translating to 9 a.m. PST / 12 p.m. EST. As well, the minimum order amount for participation is $2,000. Further, depending on demand, you may receive a lesser portion of EXFY stock than you ordered.

Beyond these considerations, you must also recognize that expense management platforms don’t necessarily excite the senses for retail investors. Therefore, the public market debut of Rivian Automotive Inc. may compete for eyeballs. As an electric vehicle firm looking to knock Tesla Inc. (NASDAQ: TSLA) from its pedestal, Rivian may have more sway with investors.

Expensify Financial History

While the global travel and expense management software market isn’t exactly an exhilarating industry, it nevertheless holds its own. According to information compiled by Grand View Research, the sector commanded a valuation of $6.9 billion in 2019. Despite the ravages of the COVID-19 pandemic, expense management specialists in aggregate contributed to a sector size of $7.7 billion.

Even more impressive for prospective investors of EXFY stock, insiders expect the total addressable market to constantly expand, with revenue projections for 2027 reaching $17.4 billion. If so, that tally would translate to a compound annual growth rate (CAGR) of 12.4%. Critically, the forecast is a credible one.

A concept that most individual employees ignore, the reality of commerce in the U.S. is that it remains tied to physical processes. For instance, 44% of businesses still use paper on a daily basis. As well, the average office worker in this country goes through approximately 10,000 sheets of paper.

It’s not just the paper consumption (and its associated environmental impact) that’s a challenge to enterprises everywhere. Rather, handling that paperwork can be an onerous task. According to a Record Nations analysis, labor costs for an average-sized business with a single dedicated office manager runs up to slightly over $30,000 a year.

Expensify resolves the mountainous obstacle of addressing paper through a multi-pronged approach. On the frontlines, the expense management platform provider delivers conveniences such as 1-click receipt scanning, enabling greater efficiencies for paper-based enterprises. Enterprise-level clients also have the option of using Expensify’s payment systems for automatic receipt merging and coding.

In addition, the company facilitates full integration of software solutions, ranging from multi-level workflow management, accounting, expense tracking and auditing and compliance measures, to name a few. To be sure, such integrations cost money, but it could be the most effective outlay due to cost and time savings.

Not surprisingly, Expensify posted impressive financial performance. For instance, revenue in 2020 amounted to $88 million, up 9.5% from 2019’s tally despite the severe disruption of the pandemic. In the 6 months ending June 30, 2021, the cloud-based platform rang up sales of $65 million, up 60% from the year-ago comparison.

Finally, Expensify posted net income of $14.7 million in the first half of this year, a quadrupling-plus from the first half of 2020. As companies fight to regain lost time, EXFY stock could play favorably in this equation.

Expensify, Inc. Potential

Although the Expensify IPO doesn’t jump off the pages because of its behind-the-scenes business protocol, this very fact is what actually gives EXFY stock incredible potential. For instance, with so many tech firms being narrative-driven plays, Expensify is already profitable. Indeed, substance in the bottom line pits it well against IPO rival Rivian, which has net losses as its operations are presently based on pre-orders, not actual deliveries.

More importantly, companies of various industries have been devastated by the far-reaching impact of the COVID-19 pandemic. Additionally, mitigation measures imposed a long crackdown on non-essential activities, putting pressure on businesses already stretched to the limits. With Expensify’s cloud-based platform, injured enterprises can at least mitigate paperwork, which can be a frustrating drag on operations.

Strangely, even the SARS-CoV-2 virus provided a strange bedfellow for EXFY stock. As the global health crisis inspired many individuals to take hold of what’s truly important in life, commercial enterprises quickly suffered a labor shortage, even with financial stimulus measures drying up. In fact, CNN warned that if the situation persists, the economy won’t be able to recover.

However, Expensify can cushion the labor crisis’ overall impact to business by improving efficiencies or automating mundane manual processes. As such, EXFY stock may be worth consideration for the risk-on side of your portfolio.

How to Buy Expensify, Inc. IPO (EXFY) Stock

If you don’t want the constraints of pre-IPO access, you can always buy new issues at the open, which is straightforward if you already know how to buy stocks. If not, follow the steps below.

Step 1: Pick a brokerage.

With brokerages competing on similar incentives, you can afford to take your time, narrowing your criteria of best brokers to platforms that suit your investing style and ambition.

Step 2: Decide how many shares you want.

No matter how you break it down, an IPO is a step into the unknown. To mitigate this risk, choose a balanced share count.

Step 3: Choose your order type.

Before placing your first trade, understand these market concepts.

  • Bid: The buyer’s best offer for a stock.
  • Ask: The seller’s lowest acceptable price.
  • Spread: The difference between the bid-ask price, the spread indicates market risk as this is also the profit margin for market makers.
  • Limit order: Buy or sell requests at a predetermined price, limit orders provide transparency but no execution guarantees.
  • Market order: Market orders guarantee fulfillment but only at the current rate.
  • Stop-loss order: Stop-loss orders automatically exit your position at either a predetermined price or anything lower.
  • Stop-limit order: Stop-limit orders only leave positions at a specified price, but they also carry non-fulfillment risks.

Step 4: Execute your trade.

Follow these steps to execute a market order:

  1. Select your action type (buy or sell).
  2. Enter the shares you want to acquire (or sell).
  3. Hit the Buy (or Sell) button.

Follow the same sequence for limit orders (but include your execution price).

EXFY Restrictions for Retail Investors

Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons before participating. Don’t invest in companies in which you have privileged (non-public) information.

EXFY Pre-IPO

In generations past, regular retail investors lacked access to pre-IPO shares. However, companies like ClickIPO help democratize the rarefied process by distributing new issues of select enterprises to their members.

Boring Doesn’t Mean Unprofitable

Judging Expensify purely by its underlying industry may not serve investors well since expense management software isn’t necessarily page-turning stuff. But it’s the processes in the background that keep the ship afloat, representing the central thesis of EXFY stock.

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