Financial Data and Key Metrics Changes - In Q1 2025, the company reported strong core revenue growth of 19% year-over-year, up from 16% in the previous quarter [9][40] - Total revenue reached $358 million, an 18% increase year-over-year [43] - Non-GAAP operating income margin improved to 19%, an increase of 8 percentage points from the previous year [9][50] - Free cash flow margin expanded to 23%, reflecting a 7 percentage point increase from last year [10][50] - Non-GAAP net income was $69 million, up 33% year-over-year, with a non-GAAP net income margin of 19% [51] Business Line Data and Key Metrics Changes - Revenue from the integrated platform, excluding the financial institution channel, was $295 million, up 18% year-over-year [44] - BILL AP/AR solution revenue was $162 million, a 13% increase year-over-year, with total payment volume (TPV) growing 12% [45] - BILL Spend & Expense solution revenue was $133 million, up 25% year-over-year, driven by 26% card payment volume growth [46] - Revenue from embedded and other solutions, including Invoice2go, was $20 million, up 28% year-over-year [48] Market Data and Key Metrics Changes - The company managed $80 billion in total payment volume across 29 million payment transactions during the quarter [10] - The annual growth rates for international FX payment volume and revenue increased by 10 percentage points compared to the previous quarter [36] Company Strategy and Development Direction - The company is focused on expanding its lead in the financial operations category for small and mid-sized businesses (SMBs) [15][27] - Investments are being made in enhancing virtual card, international payments, and working capital solutions to drive sustainable revenue growth [34][36] - The company aims to leverage its large distribution ecosystem, which includes partnerships with over 8,500 accounting firms, to enhance market penetration [26] Management's Comments on Operating Environment and Future Outlook - Management noted that while the economy remains uncertain, there are signs of resilience among SMBs, which is expected to support growth [92] - The company is committed to balancing investments for future growth while returning capital to shareholders, having repurchased $200 million of shares [30][31] - Guidance for Q2 2025 expects total revenue in the range of $355.5 million to $360.5 million, reflecting a conservative outlook due to economic uncertainties [54] Other Important Information - The company introduced new payment innovations, including real-time funding options and expanded international payment capabilities [19][21] - The company has added leadership talent to its executive team to drive innovation and growth in payments and financial services [29] Q&A Session Summary Question: Success in moving upmarket with BILL AP/AR - Management highlighted a focus on driving more functionality per customer, resulting in increased value and revenue growth [62][64] Question: Trends in vendor acceptance and take rate - Management noted stable take rates and ongoing efforts to engage suppliers, which have positively impacted overall monetization [68][70] Question: New client growth expectations - Management emphasized a strong focus on different go-to-market strategies, with significant opportunities to increase market penetration among SMBs [80][81] Question: Health of small businesses and durability of TPV increase - Management expressed confidence in the resilience of SMBs and noted positive signals in spending trends, indicating a potential for sustained growth [92][111] Question: Insights on investment spending and risk appetite - Management confirmed that investments are on track and that they are leveraging data to manage risk effectively while scaling new products [84][88]

BILL Holdings (BILL) came out with quarterly earnings of $0.63 per share, beating the Zacks Consensus Estimate of $0.49 per share. This compares to earnings of $0.54 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 28.57%. A quarter ago, it was expected that this payment processing software company would post earnings of $0.46 per share when it actually produced earnings of $0.57, delivering a surprise of 23.91%.Over the last f ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________ FORM 10-Q _____________________ (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2024 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission File Number: 001-39149 _____________________ BILL HOLDINGS, ...

[Overall Performance and Outlook](index=1&type=section&id=Overall%20Performance%20and%20Outlook) [Q1 FY25 Financial Highlights](index=1&type=section&id=Q1%20FY25%20Financial%20Highlights) BILL reported strong Q1 FY25 financial results with significant year-over-year growth in total revenue and core revenue, alongside a shift from operating loss to non-GAAP operating income and GAAP net income Q1 FY25 Key Financial Metrics (YoY Change) | Metric | Q1 FY25 Value (millions) | YoY Change | Q1 FY24 Value (millions) | | :-------------------------------- | :-------------- | :--------- | :-------------- | | Total Revenue | $358.5 million | +18% | $305.0 million | | Core Revenue | $314.9 million | +19% | $265.1 million | | Subscription Fees | $67.4 million | +8% | - | | Transaction Fees | $247.5 million | +22% | - | | Float Revenue | $43.5 million | - | $39.8 million | | GAAP Gross Profit | $293.8 million | +18% | $249.0 million | | GAAP Gross Margin | 82.0% | +0.4 pp | 81.6% | | Non-GAAP Gross Profit | $307.0 million | +17% | $262.7 million | | Non-GAAP Gross Margin | 85.7% | -0.4 pp | 86.1% | | GAAP Operating Loss | $(7.7) million | -86% | $(56.6) million | | Non-GAAP Operating Income | $67.1 million | +101% | $33.4 million | | GAAP Net Income (Loss) | $8.9 million | **N/A** (from loss) | $(27.9) million | | GAAP Basic EPS | $0.08 | **N/A** (from loss) | $(0.26) | | GAAP Diluted EPS | $0.08 | **N/A** (from loss) | $(0.26) | | Non-GAAP Net Income | $68.6 million | +33% | $51.6 million | | Non-GAAP Diluted EPS | $0.63 | +43% | $0.44 | [Q1 FY25 Business Highlights and Recent Developments](index=1&type=section&id=Q1%20FY25%20Business%20Highlights%20and%20Recent%20Developments) BILL expanded its customer base and payment processing volumes in Q1 FY25, while also strengthening its leadership team and executing a share repurchase program - Served **476,200 businesses** using BILL solutions as of the end of Q1 FY25[4](index=4&type=chunk) - Processed **$80 billion** in total payment volume in Q1, an increase of **14%** year-over-year[4](index=4&type=chunk) - Processed **29 million transactions** during Q1, an increase of **16%** year-over-year[4](index=4&type=chunk) - Hired payments industry leader Mary Kay Bowman as Executive Vice President, Payments and Financial Services[4](index=4&type=chunk) - Hired Bobbie Grafeld as new Chief People Officer to lead people strategy[4](index=4&type=chunk) - Repurchased approximately **3.7 million shares** of common stock for approximately **$200 million** during the quarter[1](index=1&type=chunk)[4](index=4&type=chunk) [Financial Outlook](index=2&type=section&id=Financial%20Outlook) BILL provided guidance for Q2 FY25 and the full fiscal year 2025, projecting continued revenue growth and increased non-GAAP profitability, while noting targeted investments to accelerate strategic priorities [Q2 FY25 Guidance](index=2&type=section&id=Q2%20FY25%20Guidance) Q2 FY25 Financial Guidance | Metric | Q2 FY25 Guidance (millions) | | :-------------------------------- | :----------------------- | | Total Revenue (millions) | $355.5 - $360.5 | | Year-over-year Total Revenue Growth | 12% - 13% | | Core Revenue (millions) | $316.0 - $321.0 | | Year-over-year Core Revenue Growth | 15% - 17% | | Non-GAAP Operating Income (millions) | $47.5 - $52.5 | | Non-GAAP Net Income (millions) | $48.0 - $52.0 | | Non-GAAP Net Income per Diluted Share | $0.44 - $0.48 | [Full Fiscal Year 2025 Guidance](index=2&type=section&id=Full%20Fiscal%20Year%202025%20Guidance) Full FY25 Financial Guidance | Metric | FY25 Guidance (millions) | | :-------------------------------- | :------------------------ | | Total Revenue (millions) | $1,439.0 - $1,464.0 | | Year-over-year Total Revenue Growth | 12% - 13% | | Core Revenue (millions) | $1,291.0 - $1,316.0 | | Year-over-year Core Revenue Growth | 15% - 17% | | Non-GAAP Operating Income (millions) | $182.5 - $207.5 | | Non-GAAP Net Income (millions) | $181.5 - $201.5 | | Non-GAAP Net Income per Diluted Share | $1.65 - $1.83 | - In fiscal **2025**, BILL is making targeted investments to accelerate strategic priorities, expand its platform, and penetrate the market[2](index=2&type=chunk) - The outlook for Non-GAAP net income considers the use of corporate cash for investment and other strategic capital allocation, including the share repurchase program[7](index=7&type=chunk) [Company Information](index=2&type=section&id=Company%20Information) [About BILL](index=2&type=section&id=About%20BILL) BILL is a leading financial operations platform for SMBs, headquartered in San Jose, California, offering an integrated platform to automate payables, receivables, and spend management, and serving hundreds of thousands of businesses through its network - BILL (NYSE: BILL) is a leading financial operations platform for small and midsize businesses (SMBs)[11](index=11&type=chunk) - The integrated platform helps businesses efficiently control payables, receivables, and spend and expense management[11](index=11&type=chunk) - Hundreds of thousands of businesses rely on BILL's proprietary network of millions of members to pay or get paid faster[11](index=11&type=chunk) - Headquartered in San Jose, California, BILL is a trusted partner of leading U.S. financial institutions, accounting firms, and accounting software providers[11](index=11&type=chunk) [Conference Call and Webcast Information](index=2&type=section&id=Conference%20Call%20and%20Webcast%20Information) BILL will host a conference call and webcast on November 7, 2024, at 1:30 p.m. PT (4:30 p.m. ET) to discuss Q1 FY25 results and future outlook, with replay available on their investor relations website - Conference call for investors at **1:30 p.m. PT (4:30 p.m. ET)** on **November 7, 2024**, to discuss fiscal first quarter **2025** results and outlook[10](index=10&type=chunk) - Live webcast and replay available at the Investor Relations section of BILL's website: https://investor.bill.com/events-and-presentations/default.aspx[10](index=10&type=chunk) [Investor and Press Contacts](index=6&type=section&id=Investor%20and%20Press%20Contacts) Contact information for investor relations and press inquiries is provided for Karen Sansot and John Welton, respectively - IR Contact: Karen Sansot, ksansot@hq.bill.com[27](index=27&type=chunk) - Press Contact: John Welton, john.welton@hq.bill.com[27](index=27&type=chunk) [Non-GAAP Financial Measures and Disclosures](index=2&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Disclosures) [Non-GAAP Financial Measures Explanation](index=4&type=section&id=Non-GAAP%20Financial%20Measures%20Explanation) Non-GAAP financial measures are presented as supplemental information to GAAP, providing additional insights into financial performance and management's decision-making, but are not a substitute for GAAP [Exclusions from Non-GAAP Measures](index=4&type=section&id=Exclusions%20from%20Non-GAAP%20Measures) - Excluded from Non-GAAP Gross Profit and Gross Margin: stock-based compensation and related payroll taxes, depreciation and amortization[15](index=15&type=chunk) - Excluded from Non-GAAP Operating Expenses and Operating Income: stock-based compensation and related payroll taxes, depreciation and amortization, acquisition and integration-related expenses, restructuring[15](index=15&type=chunk) - Excluded from Non-GAAP Net Income and Net Income per Share: stock-based compensation expense and related payroll taxes, depreciation and amortization, acquisition and integration-related expenses, restructuring, gain on debt extinguishment, amortization of debt issuance costs, non-GAAP provision for income taxes[15](index=15&type=chunk) [Rationale for Non-GAAP Measures](index=4&type=section&id=Rationale%20for%20Non-GAAP%20Measures) - Stock-based compensation and related payroll taxes are excluded as they are non-cash expenses, dependent on stock price, and do not correlate to business operations[17](index=17&type=chunk)[18](index=18&type=chunk) - Depreciation and amortization are excluded as non-cash charges to provide meaningful supplemental information regarding operational performance[19](index=19&type=chunk) - Acquisition and integration-related expenses and restructuring costs are excluded as they are non-recurring, exceptional charges not incurred in the normal course of business operations[20](index=20&type=chunk)[21](index=21&type=chunk) - Gain on debt extinguishment and amortization of debt issuance costs are excluded as non-cash items to provide better insight into operational performance[22](index=22&type=chunk)[23](index=23&type=chunk) - Non-GAAP provision for income taxes consists of an assumed provision based on the statutory tax rate[24](index=24&type=chunk) - Non-GAAP financial measures are presented for supplemental informational purposes only and are not intended to be considered in isolation or as a substitute for GAAP[14](index=14&type=chunk) - These measures provide useful information about financial performance, enhance understanding of past performance and future prospects, and allow for greater transparency in management's decision-making[16](index=16&type=chunk) - There are material limitations associated with the use of non-GAAP financial measures, and the items excluded may differ from those used by other companies[15](index=15&type=chunk)[25](index=25&type=chunk) [Free Cash Flow Definition](index=6&type=section&id=Free%20Cash%20Flow%20Definition) Free cash flow is a non-GAAP liquidity measure defined as net cash provided by operating activities, adjusted for purchases of property and equipment and capitalization of internal-use software costs, indicating cash available for future operations and investments - Free cash flow is a non-GAAP measure defined as net cash provided by operating activities, adjusted by purchases of property and equipment and capitalization of internal-use software costs[26](index=26&type=chunk) - It is an important liquidity measure of cash generated for future operational expenses and investment in the business[26](index=26&type=chunk) - Limitations include not reflecting future contractual commitments or the total increase/decrease in cash balance for a given period[26](index=26&type=chunk) [Note on Forward-Looking Statements](index=2&type=section&id=Note%20on%20Forward-Looking%20Statements) The report contains forward-looking statements based on current expectations, subject to various risks and uncertainties, including macroeconomic factors, operational risks, and competitive pressures, and actual results may differ materially - Forward-looking statements are based on expectations as of the press release date and are subject to risks, uncertainties, and assumptions beyond the company's control[12](index=12&type=chunk) - Risks include macroeconomic factors (interest rates, inflation, market volatility, foreign exchange), operating losses, rapid growth, large customer funds transfers, risk of loss, errors, fraudulent activity, and credit risk related to BILL Divvy Corporate Cards[12](index=12&type=chunk)[13](index=13&type=chunk) - Other risks involve attracting new customers, investing in new products, increased competition, impacts of acquisitions, relationships with partners, geopolitical conflicts, and other risks detailed in SEC filings[13](index=13&type=chunk) - Readers should not rely on these statements as actual results may differ materially, and the company assumes no obligation to update or revise them[13](index=13&type=chunk) [Condensed Consolidated Financial Statements (GAAP)](index=6&type=section&id=Condensed%20Consolidated%20Financial%20Statements%20(GAAP)) [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a slight decrease in total assets from **$9,178.8 million** at June 30, 2024, to **$9,045.1 million** at September 30, 2024, primarily due to changes in cash and acquired card receivables, while customer fund deposits remained significant Condensed Consolidated Balance Sheets (in thousands) | ASSETS | Sep 30, 2024 (in thousands) | Jun 30, 2024 (in thousands) | | :------------------------------------ | :----------- | :----------- | | Cash and cash equivalents | $853,470 | $985,941 | | Short-term investments | $619,596 | $601,535 | | Accounts receivable, net | $31,934 | $28,049 | | Acquired card receivables, net | $628,274 | $697,216 | | Prepaid expenses and other current assets | $283,756 | $297,169 | | Funds held for customers | $3,787,171 | $3,704,907 | | Total current assets | $6,204,201 | $6,314,817 | | Total assets | $9,045,061 | $9,178,813 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Accounts payable | $11,181 | $7,447 | | Accrued compensation and benefits | $23,305 | $34,158 | | Deferred revenue (current) | $21,730 | $17,006 | | Other accruals and current liabilities | $212,327 | $299,506 | | Customer fund deposits | $3,787,171 | $3,704,907 | | Total current liabilities | $4,055,714 | $4,063,024 | | Convertible senior notes, net | $734,814 | $733,991 | | Total liabilities | $5,031,816 | $5,044,612 | | Total stockholders' equity | $4,013,245 | $4,134,201 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended September 30, 2024, BILL reported a net income of **$8.9 million**, a significant improvement from a net loss of **$27.9 million** in the prior year, driven by increased total revenue and reduced operating loss Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | Three Months Ended Sep 30, 2024 (in thousands) | Three Months Ended Sep 30, 2023 (in thousands) | | :------------------------------------ | :------------------------------ | :------------------------------ | | Subscription and transaction fees | $314,943 | $265,142 | | Interest on funds held for customers | $43,507 | $39,843 | | Total Revenue | $358,450 | $304,985 | | Total Cost of Revenue | $64,696 | $56,026 | | Gross Profit | $293,754 | $248,959 | | Research and development | $78,685 | $89,065 | | Sales and marketing | $126,322 | $118,398 | | General and administrative | $66,771 | $73,251 | | Provision for expected credit losses | $20,661 | $12,075 | | Depreciation and amortization (operating) | $9,013 | $12,817 | | Total Operating Expenses | $301,452 | $305,606 | | Operating Loss | $(7,698) | $(56,647) | | Other income, net | $17,878 | $29,308 | | Income (loss) before provision for income taxes | $10,180 | $(27,339) | | Provision for income taxes | $1,268 | $522 | | Net Income (Loss) | $8,912 | $(27,861) | | Basic Net Income (Loss) per share | $0.08 | $(0.26) | | Diluted Net Income (Loss) per share | $0.08 | $(0.26) | | Weighted-average basic shares | 105,672 | 106,817 | | Weighted-average diluted shares | 107,322 | 106,817 | - Total stock-based compensation decreased to **$54.7 million (15% of total revenue)** in Q1 FY25 from **$65.1 million (22% of total revenue)** in Q1 FY24[30](index=30&type=chunk)[31](index=31&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q1 FY25, net cash provided by operating activities increased to **$88.6 million** from **$53.7 million** in the prior year, while investing activities resulted in a net cash outflow of **$139.5 million**, a significant change from a net inflow of **$301.8 million** in Q1 FY24, largely due to changes in investments. Financing activities resulted in a net cash outflow of **$105.2 million**, including **$200 million** for common stock repurchases Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Three Months Ended Sep 30, 2024 (in thousands) | Three Months Ended Sep 30, 2023 (in thousands) | | :------------------------------------ | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $88,582 | $53,661 | | Net cash provided by (used in) investing activities | $(139,538) | $301,774 | | Net cash used in financing activities | $(105,153) | $(111,909) | | Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents | $(156,236) | $243,346 | | Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period | $3,351,399 | $4,224,840 | | Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period | $3,195,163 | $4,468,186 | - Repurchase of common stock amounted to **$(200,002) thousand** in Q1 FY25, contributing to the net cash used in financing activities[33](index=33&type=chunk) [Reconciliation of GAAP to Non-GAAP Financial Measures](index=12&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) [Non-GAAP Gross Profit Reconciliation](index=12&type=section&id=Non-GAAP%20Gross%20Profit%20Reconciliation) Non-GAAP gross profit for Q1 FY25 was **$307.0 million**, representing an **85.7%** margin, compared to GAAP gross profit of **$293.8 million (82.0% margin)**, primarily adjusted for depreciation and amortization, and stock-based compensation Non-GAAP Gross Profit Reconciliation (in thousands) | Metric | Three Months Ended Sep 30, 2024 (in thousands) | Three Months Ended Sep 30, 2023 (in thousands) | | :------------------------------------ | :------------------------------ | :------------------------------ | | GAAP Gross Profit | $293,754 | $248,959 | | Add: Depreciation and amortization | $11,094 | $11,122 | | Add: Stock-based compensation and related payroll taxes charged to cost of revenue | $2,183 | $2,628 | | Non-GAAP Gross Profit | $307,031 | $262,709 | | GAAP Gross Margin | 82.0% | 81.6% | | Non-GAAP Gross Margin | 85.7% | 86.1% | [Non-GAAP Operating Expenses Reconciliation](index=12&type=section&id=Non-GAAP%20Operating%20Expenses%20Reconciliation) Non-GAAP operating expenses for Q1 FY25 showed reductions across R&D, Sales & Marketing, and G&A compared to GAAP, primarily by excluding stock-based compensation and related payroll taxes Non-GAAP Operating Expenses Reconciliation (in thousands) | Metric | Three Months Ended Sep 30, 2024 (in thousands) | Three Months Ended Sep 30, 2023 (in thousands) | | :------------------------------------ | :------------------------------ | :------------------------------ | | GAAP Research and Development Expenses | $78,685 | $89,065 | | Less: Stock-based compensation and related payroll taxes | $(23,976) | $(27,887) | | Non-GAAP Research and Development Expenses | $54,709 | $61,178 | | GAAP Sales and Marketing Expenses | $126,322 | $118,398 | | Less: Stock-based compensation and related payroll taxes | $(10,894) | $(14,082) | | Non-GAAP Sales and Marketing Expenses | $115,428 | $104,316 | | GAAP General and Administrative Expenses | $66,771 | $73,251 | | Less: Stock-based compensation and related payroll taxes | $(17,718) | $(21,387) | | Less: Acquisition and integration-related expenses | $0 | $(97) | | Add: Restructuring | $92 | $0 | | Non-GAAP General and Administrative Expenses | $49,145 | $51,767 | [Non-GAAP Operating Income Reconciliation](index=12&type=section&id=Non-GAAP%20Operating%20Income%20Reconciliation) BILL achieved a non-GAAP operating income of **$67.1 million** in Q1 FY25, a **101%** increase year-over-year, compared to a GAAP operating loss of **$7.7 million**, after adjusting for non-cash expenses like depreciation, amortization, and stock-based compensation Non-GAAP Operating Income Reconciliation (in thousands) | Metric | Three Months Ended Sep 30, 2024 (in thousands) | Three Months Ended Sep 30, 2023 (in thousands) | | :------------------------------------ | :------------------------------ | :------------------------------ | | GAAP Operating Loss | $(7,698) | $(56,647) | | Add: Depreciation and amortization | $20,107 | $23,939 | | Add: Stock-based compensation and related payroll taxes charged to cost of revenue and operating expenses | $54,771 | $65,984 | | Add: Acquisition and integration-related expenses | $0 | $97 | | Add: Restructuring | $(92) | $0 | | Non-GAAP Operating Income | $67,088 | $33,373 | [Non-GAAP Net Income Reconciliation](index=13&type=section&id=Non-GAAP%20Net%20Income%20Reconciliation) Non-GAAP net income for Q1 FY25 was **$68.6 million**, a **33%** increase from **$51.6 million** in Q1 FY24, significantly higher than the GAAP net income of **$8.9 million**, primarily due to adjustments for non-cash expenses and non-recurring items Non-GAAP Net Income Reconciliation (in thousands) | Metric | Three Months Ended Sep 30, 2024 (in thousands) | Three Months Ended Sep 30, 2023 (in thousands) | | :------------------------------------ | :------------------------------ | :------------------------------ | | GAAP Net Income (Loss) | $8,912 | $(27,861) | | Add: GAAP provision for income taxes | $1,268 | $522 | | Loss before taxes | $10,180 | $(27,339) | | Add: Depreciation and amortization | $20,107 | $23,939 | | Add: Stock-based compensation and related payroll taxes charged to cost of revenue and operating expenses | $54,771 | $65,984 | | Add: Acquisition and integration-related expenses | $0 | $97 | | Add: Restructuring | $(92) | $0 | | Add: Gain on debt extinguishment | $(78) | $0 | | Add: Amortization of debt issuance costs | $894 | $1,761 | | Non-GAAP net income before non-GAAP tax adjustments | $85,782 | $64,442 | | Less: Non-GAAP provision for income taxes | $(17,156) | $(12,888) | | Non-GAAP Net Income | $68,626 | $51,554 | [Non-GAAP Net Income Per Share Reconciliation](index=13&type=section&id=Non-GAAP%20Net%20Income%20Per%20Share%20Reconciliation) Non-GAAP diluted net income per share for Q1 FY25 was **$0.63**, an increase from **$0.44** in Q1 FY24, significantly higher than the GAAP diluted EPS of **$0.08**, reflecting adjustments for non-cash and non-recurring items Non-GAAP Net Income Per Share Reconciliation | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | | :------------------------------------ | :------------------------------ | :------------------------------ | | GAAP Net Income (Loss) per share, diluted | $0.08 | $(0.26) | | Non-GAAP Net Income per share, diluted | $0.63 | $0.44 | | Shares used to compute GAAP net income (loss) per share, diluted | 107,322 | 106,817 | | Shares used to compute non-GAAP net income per share, diluted | 109,749 | 117,948 | [Free Cash Flow Reconciliation](index=15&type=section&id=Free%20Cash%20Flow%20Reconciliation) Free cash flow for Q1 FY25 increased to **$81.5 million** from **$47.6 million** in Q1 FY24, reflecting higher net cash provided by operating activities offset by capital expenditures and capitalized internal-use software costs Free Cash Flow Reconciliation (in thousands) | Metric | Three Months Ended Sep 30, 2024 (in thousands) | Three Months Ended Sep 30, 2023 (in thousands) | | :------------------------------------ | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $88,582 | $53,661 | | Purchases of property and equipment | $(17) | $(403) | | Capitalization of internal-use software costs | $(7,039) | $(5,645) | | Free Cash Flow | $81,526 | $47,613 | [Remaining Performance Obligations](index=16&type=section&id=Remaining%20Performance%20Obligations) [Remaining Performance Obligations Details](index=16&type=section&id=Remaining%20Performance%20Obligations%20Details) As of September 30, 2024, BILL's total remaining performance obligations to be recognized as revenue amounted to **$82.1 million**, with the majority expected within the next year Remaining Performance Obligations (in thousands) | Period | September 30, 2024 (in thousands) | | :----------------------------------------------- | :----------------- | | Over the next 1 year | $29,068 | | Between 1 to 2 years | $16,707 | | Thereafter | $36,367 | | Total | $82,142 |

Investment Philosophy - The analyst is a retail investor with a director-level job in Accounting/Finance, investing for 5 years with a cumulative return of +20% CAGR [2] - The investment strategy focuses on low-risk investments, avoiding overpriced stocks, and achieving significant alpha through 5-10 ideas at a time [2] - The analyst believes generating alpha is achievable for individuals who dedicate time to researching companies within their circle of competence and exhibit patience and discipline [2] Community Engagement - The analyst publishes ideas on Seeking Alpha to create a community for discussing investment ideas and encourages interaction through comments and social media [2] Disclosure - The analyst holds a beneficial long position in the shares of BILL through stock ownership, options, or other derivatives [3] - The analyst does not receive compensation for the article other than from Seeking Alpha and has no business relationship with any company mentioned in the article [3]

Core Insights - The earnings season for the quarter ending September has started strong, with 79% of S&P 500 companies beating expectations [1] - Duolingo and Bill.com are highlighted as companies with a track record of consistently exceeding their forecasts, with upcoming earnings reports on November 6 and November 7 respectively [1] Duolingo - Duolingo is the largest digital language education platform globally, boasting 103.6 million monthly active users (MAU) as of Q2 2024, a 40% increase year-over-year [2] - The company generated $178.3 million in revenue during Q2 2024, reflecting a 41% growth and surpassing its guidance range, leading to an increased full-year revenue forecast of $738.3 million [2] - A new AI-powered subscription, Duolingo Max, is expected to enhance revenue growth, with features like personalized feedback and AI chatbot interactions [3] - Q3 revenue expectations are between $186.7 million and $189.7 million, with significant profitability growth of 554% year-over-year in Q2 [4] - Duolingo's stock is trading at an all-time high with a price-to-sales (P/S) ratio of 20.9, above its historical average, but long-term growth could justify the valuation [4] Bill.com - Bill.com provides software solutions for small and mid-sized businesses (SMBs) to streamline financial workflows [5] - The company has consistently beaten revenue guidance throughout fiscal 2024 and is expected to continue this trend in Q1 fiscal 2025 [6] - Bill.com's flagship product is a cloud-based digital inbox for invoice management, which integrates with major accounting software [6] - The company serves 474,600 business customers, with a significant addressable market of over 70 million SMBs globally [7] - Bill.com generates revenue primarily through transaction fees, having processed over $1 trillion since 2018, against a global B2B payment volume of $125 trillion annually [8] - The stock is currently trading 83% below its all-time high, with a P/S ratio of 4.6, indicating a potentially attractive buying opportunity given its growth prospects [8]

Group 1 - Bert Hochfeld has a strong educational background with a degree in economics from the University of Pennsylvania and an MBA from Harvard [1] - Hochfeld has extensive experience in the tech industry, having worked for notable companies such as IBM, Raytheon Data Systems, and BMC Software [1] - He established Hochfeld Independent Research Group in 2001, providing research services to major institutions like Fidelity and SAC Capital [1] - The Hepplewhite Fund, operated by Hochfeld, was recognized as the best performing small-cap fund for the five years ending in 2011 by Hedge Fund Research [1] - Hochfeld has published over 500 articles on Seeking Alpha, focusing on information technology companies [1] - He ranks in the top 0.1% of Tip Ranks analysts for his successful selection of information technology stocks [1] Group 2 - In 2012, Hochfeld was convicted of misappropriating funds from the hedge fund he managed [1]

BILL Holdings (BILL) shares have plunged 33.9% on a year-to-date (YTD) basis, underperforming the Zacks Computer & Technology sector's return of 22%. BILL shares have also underperformed the Zacks Internet - Software industry and peers like Intuit (INTU) . Over the same time frame, INTU shares have lost 3.6%. The industry has appreciated 22% YTD. The underperformance can be attributed to challenging macroeconomic conditions, which hurt the spending power of small and mid-size businesses as they tightened th ...

Michael Wiggins De Oliveira is an inflection investor. This means buying into cheap companies at the moment when their narrative is changing and the business is on a path toward becoming significantly more profitable over the next year. With a focus on tech and "the Great Energy Transition (including uranium)", Michael runs a concentrated portfolio with approximately 15 to 20 stocks and an average holding period of 18 months. Through his 10+ years analyzing countless companies, Michael has accumulated outst ...

Sometimes, a discounted stock can present a valuable opportunity. The market has discounted a fair number of stocks over the last few years, and some for good reason. At the same time, share price alone tells you relatively little other than what the broader market seems to think the stock is worth at that given moment in time. A stock can easily be overvalued or undervalued, and it's important to understand the drivers behind the stock's performance before you decide whether it's a good fit for your portfo ...