Expensify, Inc.

Welcome to the Q1 2023 Expensify Earnings Call. Today you have myself, Brian Schaefer, and Anu Murlidharan. Our CEO, David Barrett, is laser focused right now on working with the team to get everything ready for Expensicon, our conference next week. And we'll be doing a number of important product announcements there, and he is working side by side with the team, heads down, to make sure that everything is ready. So today, Anu and I are going to take you through the slides. And without further ado, let me throw it to Anu to read the legalese and take us through the business section.

Thanks, Ryan. Good afternoon, everyone. So first, the Boring Stuff. Before we begin, 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,

small and medium business market.

And if you're looking at a company that has a top-down sales-driven business model, it's not easy or at all possible to profitably acquire the small and medium business segment. So you need a product-led growth model, you need a viral adoption model, and that's why we're interested. Next slide. So just a quick recap on how the bottom-up adoption model works. So Expensify is one of the few products out there that solves a real pain point to a largely ignored segment of the market. That's the employee. So employees have a genuine need, and we are the only ones that built a product and continue to cater to this audience, even when their company has not adopted the product. So an employee can download the app, use it for free, and because it solves a real pain point for them and for free, they end up telling their friends, they end up telling their family, really anybody that they know who has a job who likely has the same pain point. So what ends up happening is, Large swaths of individual users are using us for a business use case. Sometimes it ends up being various groups within the company. And so this is a tidal wave that ends up taking the company with it. And we are able to convert this company into a paying customer without ever reaching them with a salesperson. And that's really the beauty of the bottom-up adoption model. It can be executed at scale across the market because it doesn't depend on us increasing sales. or headcount or spending sales dollars on it. Next slide. So While we acquire companies when they're small, or at least relatively small, our philosophy has always been to never let a customer ever outgrow us. So we are really the only product that is free, caters to an individual, and so has consumer-grade UX. But at the same time, we also have enterprise-level scale. We have cross-sell capabilities, so Next slide. And you've seen this slide many times, but you know, we, this is our robust roadmap. And as you see it more and more, you notice that more and more features that are gray, which means they are planned become green, which means they're in beta. and then go on to becoming blue, which means they are now fully launched. And the way to read this again is to go from left to right. Anything on the far left is aimed at getting more viral lead generation into the platform. And anything on the far right, it's aimed at baking the product, making the subscription richer for existing and targeted companies who are our customers. Next slide. So. Having recapped on the long-term strategy and the value proposition of the company, I want to give you a few strategic Q1 updates before I pass it on to Ryan for financials. So there are three things I want to talk about today. Next slide. The first one is our accounting channel. And we've talked about this channel with you many times. But again, as a reminder, we consider this channel to be our gold mine. That's because every accountant has the ability to bring us hundreds of customers who in turn represent thousands of paid members for us. Now, not only is it a question of scale, it's also a question of quality because these companies are generally set up by the accountant who is well-versed in industry best practices. And we also train them so they're well-versed in our product best practices. So these companies are ideally set up. And so they've become extremely easy to support for us. And also as a result, very easy to retain. So there's high retention in this channel. Now there are two things we've done and we've talked about in the past as well. One is we've assigned a partner manager to the 500 or so accounting firms that are already on our platform. And these partner managers are all Expensify employees. And their job really is to give these accountants one-on-one support as they onboard new customers and white glove support, again, as customers end up having issues or need to you know, evolve their setup because they're growing, so on and so forth. So we keep this channel very warm. We keep them very well supported because it is a great opportunity for us to disproportionately grow our paid members. We're also hosting Expense Account 3. And of course, as the name indicates, we've done it twice in the past. And the idea behind this to bring, and this one is going to bring 140 of the industry leading experts, accountants, and large firms, and we're going to bring them to Italy. And we have top leadership sessions, trading best practices, understanding their pain point even more so we can fine tune our product to them. And of course, to have a good time because nothing else breeds loyalty as a good time together, right? So that's the accounting channel. Next slide. We are also working on our sales efforts. And, you know, we've talked about this again in the past every quarter because we've been working on it quite consistently. But this effort and this update always leads to a lot of questions around where sales fits in with our bottom-up adoption model and product-led growth model. So I want to address that head-on. The The way we think about our growth opportunity, the shining star of our growth story is really bottom-up adoption. It's product-led growth. But we think of product-led growth and viral growth sort of like a sailboat. When the wind is high, everything is exponentially faster. And the wind really can be thought of, besides a lot of other things, one of the primary drivers is macroeconomic conditions. So of course, right now, given the macroeconomic conditions, wind is a little bit low. And what would be great, what is a very good business is the ability to supplement that growth with something consistent, something steady, albeit modest. And that's what we consider our sales efforts to be. It's sort of like a motorboat that supplements the wind in our sails. And when the wind is low, we want to be able to depend on the motorboat to keep going. And when the wind comes back, we can go much faster once again. So that's the strategic goal behind building the sales program. It's not intended to replace viral growth. It's not intended to even go head to head with it. It is intended to supply a consistent backup. Now, all that said, let's talk a little bit about the results. We've been working on this for a little over a year. Our SDRs, who are really the agents that we've hired, and we've been using a flexible outsourced model for all of it, as a reminder. But our SDRs are really the people that we've hired who hit the phones and call prospect lists and get us more direct outbound lead gen volume. And we've been ramping up this program more recently. And you can see they've really kind of settled into a rhythm in the first quarter of 2023. And you can see here from the green bars that our incoming lead pipeline is growing very healthily as a result. We've also continued doubling down on our guides program. And you might know that externally as our setup specialists and they're, they're, job is to absorb these incoming leads and to convert them at better and better rates. So we've been tracking the deals that guides win and how many paid members they convert. And what's been really encouraging is every month in the first quarter of 2023, the number of paid members and the number of deals that our setup specialists have been able to convert has been consistently doubling. So every month it's doubled versus the previous month, which again is a very encouraging leading indicator for growth and just these efforts overall. Next slide. Now, last but not the least, I want to come back to what we're going to do for product-led growth. Now, of course, the macroeconomic conditions are not under our control, but it's cyclical and what goes down must come up, just like what goes up must come down. So ignoring that for a second, what we want to be ready with is as the market sort of We want our entire product roadmap to be complete, fully launched and polished. Now, that is a very ambitious goal because we have a pretty robust roadmap, as we've shared with you in the past. And so what we've done is leaned on an external contributor community, so more outsourced engineering resources to supplement our internal engineering team. And this graph shows you the number of jobs, the number of pull requests, the number of engineering hours that we have been able to use the external community for. And the idea behind this is not just to use them to launch new products and new features, but to also lean on them simultaneously to keep finding and fixing bugs so that we can move fast without breaking things, or at least without completely damaging the quality of the product that we are building. And again, as a reminder, the point of using contributors is to go fast when we want and slow down when we don't need to go so fast. So when you hire contributors, a lot of engineers, you are kind of bearing that cost on your income statement for a really long time. And, you know, at the risk of damaging morale, you can't really let employees go and hire them back quite as fast. Or as the market has shown us, it doesn't really work because other companies doing that makes the headlines and it's really bad press too. So what we do is lean on this contributor community and there are no contracts. We basically just work with them on a per job basis. So, we are able to sort of expand and contract much more nimbly. And that's the idea behind it. So those are the three major updates, our approved channel, our accounting channel, our sales channel, and our contributor community. And all of the progress we've made in the first quarter has been very encouraging. And we think of it as really setting us up for success as we go into 2023 further. So with all that out of the way, I'm going to pass it back to Ryan to run us through the financials.

Great. Thanks, Anu. All right. Hey, everyone. Happy to see everybody again. I'd love to take you through the Q1 financials. So revenue was $40.1 million. That is just a tad hair down year over year. But one thing to consider is that our cashback is contra revenue. So as the card continues to grow, and it has been growing quite nicely, that actually pulls down that revenue number. If you were to adjust for cash back, you would see that revenue is actually higher. We have more users than we had last year, but actually the card is more successful. That pulls down revenue. So we get a flattish, slightly down revenue year over year. Our average paid members were 747, up about 6% year over year. And our gross interchange, 2.3 million for the quarter, which is up 87%. 5% year over year, so the card continues to grow quite nicely despite some headwinds elsewhere in the business. Next slide. Our operating cash flow was $7.6 million. Our free cash flow was $10.2 million, which we're quite happy about. Our gap net loss was $5.9 million. Our non-gap net income was $4.1 million. And the difference, again, between gap net loss and non-gap net income is stock-based compensation. And our adjusted EBITDA was 8.7 million. All right, so let's talk about what happened in Q1. So our customer count was up in Q1. However, we did see activity across our customers decrease, which resulted in a net decrease in paid members from Q4. So basically what that means is let's say the average customer Customer has 14 paid members, and we basically saw that decrease to 13 or 13.3, something like that. So we saw a kind of a decrease across the board, a small decrease, but we have so many customers that even a small decrease in activity kind of outstripped the increase in net new we saw. So subscription members did increase in Q1, but our pay-per-use member decrease decreased. with larger than the growth in subscriptions. So this wasn't a big turnoff of customers. It was just an average decrease in activity across the board. The good news is that we believe, because it's not a big turnoff of customers, that we believe the activity... a decrease is due to economic conditions we think that is expected given the environment and ultimately we think it is temporary no one thinks the economy is going to you know be bad forever cyclical right it's going to come back up and as long as we retain these customers when activity goes back up you know their user counts will increase so we want to make sure we're retaining the customers and if there's kind of some choppiness in terms of Their activity going up and down will weather that storm, obviously, because we are cash flow positive, and it's just kind of a sign of the times. Next slide, please. All right, so we don't give guidance, but what we do do is that we let you know how the first month in the current quarter is trending. So as you can see in April, it's the yellow bar furthest to the right. We're continuing to see some volatility. It actually looks remarkably similar to the kind of up and down we saw in 2021, if you look over on the left-hand side. But as you can see, in every single one of these months, we are having our subscription numbers increase, but the paper use is kind of going up and down a lot. So we are not through the woods yet on the volatility. Next slide, please. Let's talk about free cash flow. So we had a strong free cash flow in Q1, 10.2 million. And People say, okay, what are you going to do with it? Great, free cash flow. What do you do with it? Obviously, we're spending it more and more on sales and marketing, but also in Q2, we're going to take the free cash flow from Q1. We're going to do a $3 million buyback in the open market. That starts tomorrow. Also, we're going to reduce our debt by $8 million. And as Anu said, we are positioning ourselves for success in the future. Our sales efforts are starting to show some real results and free trials have seen a huge jump. So we are optimistic for the future. We think that the investments we made there are starting to show kind of some early green shoots data that makes us quite encouraged. We're well capitalized and our free cash flow is strong. And we're using that positive free cash flow to reduce our debt. And we're also returning value to our shareholders via buybacks. And very soon, we'll be starting the migration of our users to our NextGen platform. So nothing to announce today, but expect more announcements from us soon during ExpenseCon 3, which is May 18th, 22nd. We have a lot of product changes that we've been in the lab cooking for a while. So we're excited to get those out in the open here pretty soon. Next slide. And just as a reminder, this is the future we've been building. A lot of our efforts on the engineering side have been really focused on this new platform we've been working on. And we've put so much work into it and not very many people have seen it yet, which is why we're so excited to start getting actual paying members onto it. But as a reminder, the super app that we're building right now is, uh, it's expense management, corporate guard with cashback, invoicing, billing, chat, corporate travel management, personal travel management, P2P money transfer, bill splitting, and a personal wallet all for $9 all in one app and coming to you, uh, very soon. So we're all very excited about that. All right. Now we'll throw it over to Q and a, and I believe our first analyst is, uh, Natalie Howe from Bank of America.

Thanks. So my question for you guys is, so pay per user went down and you guys have previously said that they do pay a premium price and you're trying to find a good balance of subscriptions and pay per use. I think you guys have mentioned 20% would be your ideal number. Have these trends sort of had you guys on that path or have you guys started thinking about that balance earlier than you anticipated?

Great question. So yes, we are being successful in converting people over from pay-per-use to subscription. We are seeing increases in subscription. However, we also saw a decrease in pay-per-use this quarter. And again, that doesn't mean the customers left. It just means that they had less employees that were active. So we are seeing pay-per-use come down. But this quarter, it was kind of a little bit of column A, a little bit of column B. We're moving people over to subscription. but also they also decreased. So yes, our paper use percentage did go down, but part of that is attributed to general less activity and also part because we've been successful in converting. So it's a little bit of both.

Okay, cool. Thanks. And then a quick follow-up. It appears that sales and marketing as a percentage of revenue went down, but you guys mentioned you're doing like more investments into that SDR program. Can you provide a bit of color there?

Sure. So we've been, We ramped down some of our marketing as we ramp up our sales, but they didn't coincide perfectly. So we added 100 SDRs in Q1, but a lot of those came on board kind of towards the tail end. So the cost wasn't fully baked into the quarter. So we should expect to see an increase in sales and marketing in Q2, especially because we have expense con three also. So it's kind of a...

double whammy there we have our big conference and then also our sdr costs are made fully baked in for the full quarter so um we should expect to see um an increase in sales and marketing going forward okay thank you but that program is also getting more and more efficient like all of our setup specialists and sdrs are getting more and more trained and becoming better and better so we don't think that we need to keep ramping it up to get a higher roi So, or rather we don't need to keep ramping it up to get bigger results. We can just improve the ROI. So there's a little, so Ryan's right. Like we, the full cost is not baked in. So Q2 is going to come in a little bit higher on that cost alone. But I don't think I would expect that it's going to keep ramping up because we are investing in the channel. We're investing in the channel, not just in terms of growing the headcount of those agents, but also making them better and more efficient.

Yeah, that's a good point. We added 100 SDRs in Q1, but we are not adding 100 SDRs in Q2. We are training and making more efficient and maybe even cutting low performers. So it's not 100 per quarter that we are adding.

Got it. Thank you.

Thank you. All right. Next, we have Stephen Enders from Citi.

Thanks for taking the question here. There you go. I guess I just want to ask a little bit about the new expensive buy that you talked about, both in the press release and hinted at in the caller and the transcript here. I guess what is the biggest change that we should be, I guess, looking for and kind of any early preview for how we should be kind of thinking about what that could potentially look like, but from an app basis and how it might change the business overall?

Great question. So we are expanding the use cases in which you might use Expensify. So right now people use it for expense management or if you're on a business trip. You can actually go to new.expensify.com right now and sign up. There's also an app in the App Store. And what is available to the public right now is basically like Slack or WhatsApp type functionality. And we have more... Product announcements, again, coming in ExpenseCon 3, but very shortly we are going to be adding all the functionality that we have in our existing ExpenseBy product onto the new platform. And then once we have parity there, then we're going to start launching into all of our new use cases. And there's a lot of really exciting new use cases you can have when you have all these on one platform. So it'll be a mix of new functionality that we haven't had and also bringing existing functionality onto the new platform. And that will ultimately result in more activity, basically. So let's say maybe you don't go on a business trip, but you do talk to someone within your business through the ExpenseBy platform. That's activity as well. So we're trying to add use cases beyond, you know, I had an expense this month. So I didn't have an expense, so I wasn't active. So we're just making it, trying to turn expense buying into something that you use every day instead of maybe once a month or sometimes for some people less than once a month.

Gotcha. Having viral lead gen, like if the goal is to have bottom-up adoption, then you want to turn every one of your individual users into sort of your champion, right? And the more functionality we give them to live easier lives the more they're going to talk about us so that's really both there are some features that are aimed at increased activity simply to turn more uses into paid members and there are others that are aimed at better viral legion so it gives individuals more opportunities to talk about us so there's a bit of both okay so i guess is the view here that

It's A, both to increase growth, the viral nature, but also to maybe to have a more consistent subscription user number instead of the pay-per-use. Okay, that's helpful. And then I wanted to ask on the credit card side, I mean, it looks like pretty good growth here, but I guess where are we in terms of the ramp up curve to having that move from contra revenue to revenue and being recognized in a more traditional way?

Yeah, so we have all of our like operational perspective. We have all our work done. So we have all the contracts done. We have the revenue recognition related like memos from the auditor. So the tough part is over. But as you probably noticed, like this roadmap right in front of you and the slide I was presenting around like using contributors more and more in order to keep executing on this project. at more rapid pace. The challenge is always engineering resources and sort of prioritizing what is going to bring the most return to our business. So that's kind of where we are. Like we are right now working on implementing the new program, but then launching it only to ourselves. So like moving all of the expenses by employees off the old program into the new program for our part. So that'll give us good testing ground because we are all super users of our card. Obviously like every single employee uses the card every single day. So we are going through the motions on that right now. And then once we are done with that, I think we'll start to build it out or rather like launch it to specific companies. Maybe we launch it just to someone adopting the card new. So we don't, we go to the recording exercise, but it'll have to get prioritized in a sense, but everything is about like, what is going to get us the biggest bang for our buck from an engineering perspective. So that's, that's going to be the consistent answer going forward because we are done with everything that we, we are actually done with everything that we don't control. And now we control this. So it's about prioritizing it appropriately.

Perfect. Okay. Appreciate the response there. And both of you for taking the questions here. Of course.

Thank you. All right. Next we have a Maro Molina from Piper Sandler.

You can hear me okay. So I just have a couple questions around the SDR initiative. So just first off, what sort of drove the decision to outsource the SDR functions out to that vendor that you mentioned? And in what scenario might it make sense for Expensify to bring that sort of initiative in-house over the long term? And then second thing around that is how long might you expect this initiative to sort of How long might it take to reach sort of a break even or a flip to a positive ROI? Thanks.

Yeah, good question. So let me start by just kind of summarizing like our general approach to doing something in-house versus outsourcing and SDR sort of classic example. Whenever we have a job that is repeatable, that you can write down and it's simple and someone can execute it over and over again. So it's a matter of doing it many times. and requires very little skill and is repeatable, that's when we outsource it. Because what we can do then is hire a large number of agents, give them a very clear set of instructions, even diversify across multiple vendors. And that way we have some negotiating power in terms of pricing and we can get better bang for our buck. But what we then do is manage them internally. So we the way we've structured the sales program is we have internal employees on our sales team who do things like partner management with our accounting channels. They handle the more strategic pieces of the business and then they manage the setup specialists. And so the setup specialists have something of a lower skill than our internal employees job because they are converting incoming leads. So they need to be able to anticipate and block and tackle, but it's not so high skill that they, the kind of training and kind of experience and generalist tendencies that we've hired internal employees for. And then the setup specialists and our internal employees manage the SDR pipeline. And their job is really very repeatable. And they have a script and they hit the script and they just do it over and over again. So that's sort of how we've structured it. And Never say never, but I don't think the SDRs are the type of job requirements or the type of job profile that we would ever take internally because we could do it much more cost effectively and ramp up and down much more easily if we outsource it. So let me stop there and see if that answers your question.

Yes, that's helpful on that front. And actually, just as a follow up to that part before touching on the ROI, how long, how easy is it, so to speak, to ramp up the SDR headcount month over month or quarter over quarter? And that's all I have there.

Yeah, so that's also a very interesting question. So we started this effort late last year, I want to say like Q4, like October, November. And we did, in fact, think that it could be like we told these vendors, we started with very few just to like test if this thing can work at all. And You know, when we saw that it could work, we wanted to scale it to 100. So we started with like 10 and then we wanted to scale it to 100. And we did notice that it took those vendors up to a month to hire them. And then a few more weeks after that to just like give them some basic training and let them hit the phones. So that's why while we started this initiative and kind of announced that we're ramping up in Q4, we didn't fully ramp up till maybe mid Q4. Q1. So it was a continuous process. It didn't go from 10 to 100 overnight, but it went from 10 to 25 to 45, so on and so forth. So it seems like it takes them something of a quarter to get to 100. But that said, it's also behind us and going forward. And I think we were responding to another one of your questions earlier, but we're not trying to keep growing the headcount. And this is where maybe I'll come back to your second question. The idea behind this entire arm of our growth model will be to make it yield something consistent, something steady, something modest that we are happy with and to do it more and more cost effectively. So right now we have something like 70 set up specialists and 100 SDRs. And the idea isn't even to maintain that. The idea is to sort of deploy that, identify the real winners and and then very aggressively performance manage the bottom of the team, if you will, and then keep optimizing so we can kind of identify the 20% of the team that contributes to 80% of output, because that's generally how it ends up being. So that's the challenge now, like over the next few quarters, that's what we're going to be focused on identifying the winners, identifying, you know, the losers, so to speak, and then being aggressive about managing this program for ROI. And I'll let Brian add anything that he wants to as well.

Yeah, I would just say it's pretty flexible in that we can drastically upscale and downscale the numbers interquarter. So we're not locked into annual numbers or anything like that. It's very flexible, which is one of the reasons we like it.

All right. Thank you all very much.

Thank you. All right. Up next, we have Daniel Jester from BMO. BMO.

Thanks for taking my question, Daniel. Thank you. So maybe on the paid or should I say free program growth there. In fact, I had pretty strong growth file now. It looks like really the avenue of growth is

I think there's a little bit of an echo. Anu, could you mute yourself real quick? Sorry about that, Daniel. Sorry, could you repeat the question? Sorry about that.

Is this better now?

Yes.

Awesome. All right. So on the free product or the free trials, you've talked about growth there for a while. It's been pretty good for a bit. Can you give us any sort of like color about the conversion rate of those free to subscription? Or is it more important to look at those free trials as drivers of growth for interchange?

Good question. So the free trials... I see. So the free trials are not related to the free... So there's a free plan where you can use Basic Expense by Light for free. You can run a simple business off of it for free. The free trials are for the paid clients. the paid program. So what we've seen is basically we're really focusing on our sales and marketing. We've seen a substantial increase in the number of free trials for the paid product in Q1 versus previous quarters. And basically what we're saying is that's some encouraging data because it's a huge lift in the free trials. So it's actually, it's not related to the free plan. I understand that. Now that you say that, I'm like, yeah, that is actually kind of confusing. Yes, we have a free plan. And then when you are trying to pay for our product, we give you a free trial. And we've seen those free trials increase substantially in QI.

Gotcha. Okay. That is helpful. And then maybe, you know, philosophically, I know you're not going to give guidance, but as you think about sort of the growth trajectory this year, obviously the macro is what the macro is. Do you think that interchange growth is really going to be a big potential overall growth this year, or maybe kind of walk through the puts and takes for the different variables in terms of getting the top line moving again?

Yeah. Great question. So yes, I think now the interchange isn't revenue. I know a lot of people adjust for it in their models, but by gap, it's not revenue, but yes, interchange is growing well. And, um, when we do get that moved over into the interchange, uh, you know, line item, uh, we think that it is reaching a point where it's going to be, um, you know, a good contributor to the top line revenue. Now, in terms of the subscription, so we're adding new customers every quarter. You know, subscription numbers are going up. The paper use has just been kind of all over the place. So I think that if we continue to retain our customers and kind of continue to add more when this kind of decreased activity from you know economic conditions um uh stops we're going to be in a much better place um in the future so we're kind of just like waiting out the uh waiting out the storm and making sure that we don't lose you know our customers and if their activity decreases obviously we you know that we don't love that but we want to make sure we're holding on to the customers and we do believe that As everything kind of opens up, people are hiring, activity overall increases. Also, we're adding new use cases to our platform, which gives people more opportunity to be active on our platform. We'll see those activity numbers increase. So we ultimately believe that the decrease in activity is temporary. But obviously, in the short term, I think you want it to decrease, which kind of hurts us a little bit.

And then one more if I can squeeze it in. The product roadmap has been very compelling. You've made a lot of progress there. Can you just help us think about customer usage of the various products and how that has trended? You know, I'm just trying to get a sense for what the demand pull for your customer base is for some of the new products that you're launching and some of the new pipeline that, you know, we'll hear at ExpenseCon. Thank you.

Yeah, so I can't say too much because David's got all these big announcements lined up. I don't want to spoil them. But basically, almost everyone uses Expense Management, right? It's Expensify. People know us for that. Also, we're seeing more and more people using the Expensify card. Actually, all the kind of turmoil in the banking sector has been a big boon to us card-wise. We saw a lot of customers come over to the Expensify card. Yeah. After that, you know, we are seeing people want to use the invoicing solution. I don't have any official numbers to give there, but we have also, we're getting a lot of good feedback from the chat product. And, but that's currently, you know, only available if you go to, you know, new docs inside.com. So we do have people actually actively using it. But I think that's kind of all the, all that I can say right now without spoiling anything. I would just say stay tuned. ExpenseCon is coming up May 18th. So we're going to have a number of announcements there, but we're excited to start migrating customers over to the new platform. We think it's going to be a big boon to the business and it's something we've been working on for the last couple of years. So we're all just excited to get it in the hands of more of our customers.

Great.

Thank you very much. Thank you. All right, next up we have Sam Flynn from Lake, no, we have Mark Schappel from Loop Capital.

Guys, can you hear me okay? Yes. Oh, perfect. Thanks for taking my question. Sort of two quick ones for you. The first thing, have you seen, obviously subs are up in the quarter, which is great, but just wondering if you've seen any turnover from your larger accounts

So churn has been quite low. The decrease in paid members is more just kind of an overall decreasing activity across the user base. uh what we see actually is most churn being in the smallest segments of the business so like the ones and twos i wanted to employ businesses and in general the larger the business the less likely they are to churn and the higher our um seat retention is so um it's i think maybe the um Kind of the opposite, right? The bigger customers are not churning and the smaller customers, those are the more likely to go out of business kind of in an environment like this or kind of be there for a couple of months and bounce off type of thing. But they're also our smallest, the one in two customer segments is our lowest revenue customer segment. So in general, it's not from a turnoff of customers. It's just the decrease in activity across the board, which we feel is attributed to the macro element. perfect that's helpful i appreciate it and then secondly uh and then i'll hop up um just wondering what sort of uh trends you're seeing in business travel recently i think we've seen a um a return in business travel but also the as a reminder business travel isn't a one-to-one well we don't need people to take you know, two or three trips a month in order to be active on the platform, we need them to expense one item, right? They need to buy a cup of coffee from Starbucks or, you know, a dinner with a client type of thing. And then they're active on the platform. So it's not, if let's say travel increased 3x, that doesn't mean our subscribers are getting increased 3x. We need the unique number of business travelers to increase. We don't need the actual current audience of business travelers to travel 3x more. So it's a little different, I think, than what people expect. But one thing, a boon that business travel does for Expensify is it creates more opportunities for word of mouth growth because you are experiencing the pain point that we solve. So the worst part of expense management is going on a trip or maybe back-to-back trips and you have this huge pile of receipts and then you start complaining to your network. And then if you're complain about you have this problem, you're more likely to hear about Expensify and that creates an overall lift. So business travel is good for the business, but it's a little different than what the way you think is. We're not like pulling transactional revenue off of business trips. We just, business travel creates activity and that's how we monetize. Great.

Thanks again for taking my questions.

Thank you. It's the end. That is the end of our call. Sorry. I was operating off an old list. All right. Well, thank you everyone for joining the call. We really appreciate it. We love talking about the business with you all. Just kind of as a closing, we're all very excited. I think we had a little bit of a shareholder letter in our earnings release from David, but we're all very excited about the future of the business here. We've been, um, cooking in the lab for a long time on our new platform and it's so close to being released. So we are excited to get that in the hands of all of our users and we'll see you all next quarter. Thank you all very much.

Thank you.