Shares of the business payments software provider Expensify Inc. were in freefall today, down more than 19% in the after-hours trading session.

The plunge happened after the company posted third-quarter earnings results that missed Wall Street’s expectations, with a sharp drop in revenue resulting in a loss rather than a profit. The company reported a loss before certain costs such as stock compensation of eight cents per share, well below Wall Street’s target of a two-cent-per-share profit.

Revenue for the period declined 14% from a year ago to $36.5 million, well below the analysts’ consensus estimate of $38.6 million. All told, Expensify reported a net loss for the quarter of $17 million, rising from a loss of $8.2 million in the same period a year earlier.

Founded in 2008, Expensify targets small and medium-sized businesses with its cloud-based software that’s used for expense reimbursement, invoices and bill payments. The software allows users to scan and reimburse receipts from flights, hotels, coffee shops, office supplies, ride shares and so on. In addition, Expensify offers payment cards that tie all of that together.

In a statement, Expensify founder and Chief Executive David Barrett (pictured) admitted that the company faced a “challenging quarter,” but said it was trimming its costs and that should improve its profitability for years to come. “Additionally, the competitive environment is shifting back in our favor,” he said. “Previously free competitors are announcing expensive pricing plans compared to our cost of $6 per employee.”

Barrett also said that the company is getting closer to achieving its long-awaited migration from Expensify Classic to New Expensify. The CEO explained that New Expensify is a vision of a “financial superapp” that combines its existing functionality with WhatsApp-style direct messaging and group chats, Venmo-style request/send money features with integrated receipt scanning and distance requests. It will also provide Splitwise-style bill splitting, and Slack-like business chat, but without so many different and confusing ways to invite people.

“[All of this will be] married with Expensify-style real-time expense management, simplified for a largely untapped VSB and SMB market,” Barrett said.

Despite all the talk and promise of what’s to come, Expensify declined to provide revenue guidance for the coming quarter, a decision that also may have had an impact on its after-hours stock drop. Wall Street is forecasting fourth-quarter revenue of $39.1 million.

Constellation Research Inc. analyst Holger Mueller said that when public companies fail to manage expectations effectively, investors can quickly lose trust in their management, and that is what appears to be happening with Expensify.

“It was business as usual from a cost perspective, but the company’s revenue dropped fairly significantly, resulting in a 50% greater loss in the quarter compared to a year earlier,” Mueller said. “Now, the pressure is on David Barrett and his team to steady the ship and regain investors’ trust, before it’s too late. The next quarter would be a good place to start.”

Expensify’s stock has been declining steadily throughout the year. Prior to today, its shares had already lost 68% of their value in the year to date.

Photo: JD Lasica/Flickr