Venture capital investors once claimed that FinTech was eating the world, but now it appears that artificial intelligence (AI) is eating FinTech.
That, at least, was the message shared Thursday (Feb. 27) from the executives of financial management app Expensify during the company’s fourth quarter and full year 2024 earnings call.
The Portland-based and self-described payments super app reported significant strides in financial performance, strategic debt reduction and deep integration of artificial intelligence (AI) within its operations.
While Expensify missed Wall St. consensus estimates for the quarter, its stock was up high single digits in after-hours trading as of reporting.
The company generated $23.9 million in Operating Cash Flow and $23.9 million in free cash flow in fiscal year 2024, beating the high end of its 2024 full year estimate; while Q4 revenue increased 5% from Q3.
Expensify also paid off $22.7 million in debt — making the business debt free.
“These results weren’t easy, and are the early results of our integration of “deep AI” — not surface level, gimmicky features, but AI applied to complex systems that have previously required large teams of human agents,” Expensify Founder and CEO David Barrett said on Thursday’s investor call.
Read more: Expensify Adds Unlimited Virtual Cards to Spend Management Platform
AI Innovations Drive Efficiency
AI is a foundational technology that enhances existing sectors. Startups and established FinTech companies are increasingly leveraging AI for fraud detection, customer support, process automation and more. Rather than FinTech being the end goal, AI has become the critical tool that supercharges FinTech solutions.
Barrett used much of Thursday’s call to emphasize to investors that Expensify’s advancements in AI were critical to the company’s improved performance. Expensify’s focus on embedding “deep AI” within its core systems and this strategic approach during the fiscal year led to impressive efficiency gains that not only optimized costs but also enhanced customer experience and internal productivity.
“Granted, it’s tough to talk about AI because it is so cliche and noisy, with everyone clamoring to outdo each other with ever more grandiose claims. It’s hard to say anything without earning eye rolls in return. But make no mistake: Expensify is gunning for AI supremacy in FinTech. And I think we are better positioned than any competitor to achieve it,” Barrett said.
The company recently expanded its AI-powered enterprise client relationship with OpenAI, enabling 80% of tier 1 support through automated responses. The upgraded hybrid-AI Concierge system has reduced human escalations while allowing the team to focus on proactive customer engagement.
Per Expensify’s financials, its SmartScan process now operates with minimal human intervention, utilizing AI to deliver faster, more accurate scans across more languages and complex formats at 25% of the previous cost.
Read more: Expensify Opens Travel Management Tool to All Customers
“We are evaluating the transcripts of every customer call based on documented best practices, providing real-time feedback to our sales team and support staff (as well as detailed performance indicators to their managers). This has resulted in a 97% increase in ‘perfect calls’ (as measured by our team covering every point correctly before hanging up) in January ‘25 alone,” said Barrett in his shareholder letter.
These AI implementations, he added, are helping to set the stage for future innovations like “Concierge everywhere,” which aims to transform Expensify’s chat-first design into an AI-first experience.
On a full-year basis, Expensify’s reported revenue of $139.2 million, an 8% decline compared to the prior year. Nevertheless, the company made headway in profitability metrics, with a net loss of $10.1 million — down from $41.5 million in fiscal 2023. The adjusted EBITDA surged by 199% year over year (YoY), reaching $39.4 million.
Notably, the company’s Expensify Card performed well. The card’s spend increased by 44% YoY, with interchange revenue up by 54%. During Q4, interchange-derived revenue grew to $5.1 million, marking a 62% increase from the same period last year. This growth is attributed to the company’s completed migration to a new card program that classifies interchange as revenue and enhances per-swipe earnings.
Expense management is undergoing a revolution, but many firms still use “legacy infrastructure and traditional rails for payments that have yet to fully support the latest in digital payment innovation,” PYMNTS reported in October.
Expensify’s financial outlook for fiscal 2025 is cautiously optimistic, with a projected free cash flow between $16 million and $20 million. As the company positions itself for Barrett’s AI vision, its progress in 2024 could offer a promising foundation.
Source: https://www.pymnts.com/
