Expensify, Inc. Just Reported A Surprise Loss: Here's What Analysts Think Will Happen Next

It's been a good week for Expensify, Inc. (NASDAQ:EXFY) shareholders, because the company has just released its latest yearly results, and the shares gained 3.0% to US$18.26. Revenues came in at US$143m, in line with estimates, while Expensify reported a statutory loss of US$0.36 per share, well short of prior analyst forecasts for a profit. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Expensify

Taking into account the latest results, the most recent consensus for Expensify from six analysts is for revenues of US$177.2m in 2022 which, if met, would be a huge 24% increase on its sales over the past 12 months. Earnings are expected to improve, with Expensify forecast to report a statutory profit of US$0.04 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$181.7m and earnings per share (EPS) of US$0.29 in 2022. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.

It'll come as no surprise then, to learn that the analysts have cut their price target 38% to US$27.33. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Expensify analyst has a price target of US$47.00 per share, while the most pessimistic values it at US$17.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Expensify's revenue growth is expected to slow, with the forecast 24% annualised growth rate until the end of 2022 being well below the historical 62% growth over the last year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 14% per year. So it's pretty clear that, while Expensify's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded their revenue estimates, although industry data suggests that Expensify's revenues are expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Expensify analysts - going out to 2024, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Expensify that you need to take into consideration.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.