Company Performance - BILL Holdings reported quarterly earnings of $0.50 per share, exceeding the Zacks Consensus Estimate of $0.37 per share, but down from $0.60 per share a year ago, representing an earnings surprise of 35.14% [1] - The company posted revenues of $358.22 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.97% and up from $323.03 million year-over-year [2] - Over the last four quarters, BILL Holdings has consistently surpassed consensus EPS and revenue estimates [2] Stock Performance - BILL Holdings shares have declined approximately 45.2% since the beginning of the year, in contrast to the S&P 500's decline of 4.3% [3] - The current Zacks Rank for BILL Holdings is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.38 on revenues of $381.45 million, and for the current fiscal year, it is $1.94 on revenues of $1.46 billion [7] - The outlook for the Internet - Software industry, where BILL Holdings operates, is currently in the top 37% of Zacks industries, suggesting a favorable environment for performance [8]

Revenue and Growth - Revenue for the three months ended March 31, 2025, was $358.2 million, an increase of 10.9% from $323.0 million in the same period of 2024 [130]. - Total Payment Volume (TPV) for the three months ended March 31, 2025, was $79.4 billion, representing an 11% increase from $71.4 billion in the same period of 2024 [149]. - The number of businesses using the company's solutions increased by 5% to 488,600 as of March 31, 2025, compared to 464,900 in 2024 [149]. - The company processed approximately 29.7 million transactions in the three months ended March 31, 2025, a 16% increase from 25.7 million in the same period of 2024 [149]. - For the nine months ended March 31, 2025, revenue was $1,079.2 million, up 14% from $946.5 million in the same period of 2024 [130]. - Total revenue for the three months ended March 31, 2025, increased by $35.2 million (11%) to $358.2 million compared to the prior year period, driven primarily by a $36.4 million (17%) increase in transaction fee revenue [177]. Financial Performance - The company generated a net loss of $11.6 million for the three months ended March 31, 2025, compared to a net income of $31.8 million in the same period of 2024 [130]. - Net loss for the three months ended March 31, 2025, was $11,589,000, a significant decrease from a net income of $31,809,000 in the same period of 2024 [174]. - Operating loss for the three months ended March 31, 2025, was $28,946,000, compared to an operating loss of $27,622,000 in the prior year [174]. - Other income decreased by 69% to $18,650,000 for the three months ended March 31, 2025, from $59,801,000 in the same period of 2024 [174]. Expenses and Costs - Service costs rose by 29% to $56,733,000 for the three months ended March 31, 2025, compared to $43,845,000 in the same period of 2024 [174]. - Research and development expenses increased by 6% to $86,540,000 for the three months ended March 31, 2025, from $81,594,000 in the prior year [174]. - Sales and marketing expenses grew by 16% to $136,758,000 for the three months ended March 31, 2025, compared to $118,105,000 in the same period of 2024 [174]. - General and administrative expenses increased by 16% to $73,851,000 for the three months ended March 31, 2025, from $63,858,000 in the prior year [174]. - Total cost of revenue increased by $12.2 million (22%) during the three months ended March 31, 2025, leading to a gross profit of $291.0 million, up from $268.0 million in the prior year [179]. Cash Flow and Investments - Free cash flow for the nine months ended March 31, 2025, was $244.1 million, up from $184.8 million in the prior year, indicating a 32.1% increase [200]. - Cash and cash equivalents as of March 31, 2025, totaled $1.0 billion, with available-for-sale short-term investments of $1.1 billion and an undrawn Revolving Credit Facility of $120.0 million [202]. - Net cash provided by operating activities increased to $266.8 million for the nine months ended March 31, 2025, compared to $200.2 million in the prior year, driven by revenue growth [213]. - Net cash used in investing activities rose to $773.8 million for the nine months ended March 31, 2025, from $366.4 million in the previous year, primarily due to increased purchases of investments [215]. - Net cash provided by financing activities was $326.9 million for the nine months ended March 31, 2025, a significant recovery from net cash used of $722.4 million in the prior year [217]. Debt and Financing - The company issued $1.4 billion in 0% convertible senior notes due 2030, with net proceeds of approximately $1.38 billion after costs, used for share repurchases and debt repayment [205]. - The August 2024 Share Repurchase Program allowed for the repurchase of up to $300.0 million in shares, with $201.3 million spent to repurchase 3,711,246 shares by March 31, 2025 [208]. - The company issued $1.15 billion in 0% convertible senior notes due December 1, 2025, with a conversion price of $160.88 per share [223]. - The company has a total borrowing commitment of $300 million under its Revolving Credit Facility, with $180 million borrowed as of March 31, 2025 [227]. Risks and Economic Conditions - Macroeconomic conditions, including interest rate volatility and inflation, may impact the company's future results and operations [135]. - The company is exposed to interest rate risk from its $180 million borrowings indexed to term SOFR, with potential increases in interest costs if market rates rise [243]. - Credit risk is present from card receivable balances with spending businesses, which may default due to various factors [248]. - The company is exposed to foreign currency exchange risk related to its cross-border payment service, which may affect cash flows and operating results [249][252]. - A 10% change in the value of the U.S. dollar relative to foreign currencies is believed to have an immaterial effect on cash flows and operating results [253].

Financial Data and Key Metrics Changes - Core revenue grew 14% year over year, reaching $320 million in Q3 [38] - Non-GAAP operating income margin was 15%, exceeding initial expectations [5][31] - Free cash flow increased by 44% year over year, representing a 25% margin [6][38] - Total revenue for Q3 was $358 million, up 11% year over year [38] - Non-GAAP net income was $59 million, with a net income margin of 16% [45] Business Line Data and Key Metrics Changes - Revenue from the integrated platform, excluding the financial institution channel, was $302 million, up 15% year over year [39] - Revenue from the Bill APAR solution was $164 million, an increase of 10% year over year [39] - Revenue from the Bill Spend and Expense solution was $138 million, up 21% year over year, driven by a 22% growth in card payment volume [42] Market Data and Key Metrics Changes - Total payment volume (TPV) grew 10% year over year, slightly below expectations [39] - TPV per customer decreased by 2% year over year due to SMBs managing expenses more conservatively [40] - Net adds from the accounting channel grew over 60% year over year, indicating strong market penetration [20] Company Strategy and Development Direction - The company is focusing on expanding capabilities for larger businesses and enhancing its payment portfolio [6][9] - An accelerated AI growth strategy is being implemented to transform financial operations for SMBs [23][24] - The company aims to simplify financial operations for SMBs, positioning itself as an essential platform for financial management [8][29] Management's Comments on Operating Environment and Future Outlook - Management noted that SMBs are adapting to a dynamic macro environment, with signs of reduced spending and transaction volumes [28][46] - The company remains confident in its ability to capture market opportunities despite current uncertainties [46][47] - Future guidance for Q4 expects core revenue to be between $335 million and $345 million, reflecting 11% to 15% year-over-year growth [48] Other Important Information - The company has a strong balance sheet with $2.2 billion in cash and short-term investments, providing flexibility for growth investments [45] - The introduction of new advanced ACH solutions aims to simplify payment processes for large suppliers [18][35] Q&A Session Summary Question: Success with accountants adopting Divvy post integration - Management highlighted the significant opportunity within the accountant base, with over 9,000 firms using their product and potential for cross-selling [54][55] Question: Confidence level regarding investments and expected returns - Management expressed increased confidence in internal execution driving results, with a focus on simplifying customer experiences [60][62] Question: Observations from April trends and comparisons to past cycles - Management noted that SMBs are facing significant uncertainty, leading to fewer transactions and decreased spending, but emphasized the resilience of SMBs [64][66] Question: Impact of tariffs on cross-border transaction revenue - Management indicated that the majority of international transactions are for services, with no significant shift between USD and local currency payments observed [73][75] Question: Pricing and packaging of the software platform - Management acknowledged the opportunity for pricing adjustments as the platform becomes more valuable, with plans to discuss this in future calls [80][82] Question: Payments monetization within Bill APAR - Management detailed the drivers of take rate expansion, including volume growth from emerging payment products and reduced FX losses [89][90]

Financial Data and Key Metrics Changes - Core revenue grew 14% year over year, reaching $320 million in Q3 [38] - Non-GAAP operating income margin was 15%, exceeding expectations [4][38] - Free cash flow increased by 44% year over year, representing a 25% margin [5][38] - Total revenue for Q3 was $358 million, up 11% year over year [38] - Non-GAAP net income was $59 million, with a net income margin of 16% [44] Business Line Data and Key Metrics Changes - Revenue from the integrated platform, excluding the financial institution channel, was $302 million, up 15% year over year [39] - Revenue from the Bill APAR solution was $164 million, up 10% year over year [39] - Revenue from the Bill Spend and Expense solution was $138 million, up 21% year over year [42] - Total payment volume grew 10% year over year, although TPV per customer decreased by 2% [39][40] Market Data and Key Metrics Changes - The accounting channel saw net adds grow over 60% year over year, with 9,000 accounting firms using the platform [20] - Local transfer capabilities were enabled in dozens of countries, enhancing international payment solutions [32] - The company processed $79 billion in total payment volume, representing over 1% of GDP [6] Company Strategy and Development Direction - The company is focusing on expanding capabilities for larger businesses and enhancing its payment portfolio [5][12] - An accelerated AI growth strategy is being implemented to transform financial operations for SMBs [23][24] - The introduction of advanced solutions for procurement and multi-entity management aims to simplify complex financial processes [9][14] Management's Comments on Operating Environment and Future Outlook - Management noted that SMBs are adapting to a dynamic macro environment, with signs of reduced spending and transaction volume [28][46] - The company remains confident in its ability to capture market opportunities despite current uncertainties [29][46] - Future guidance for Q4 expects core revenue to be between $335 million and $345 million, reflecting 11% to 15% year-over-year growth [48] Other Important Information - The company ended the quarter with $2.2 billion in cash and short-term investments, providing liquidity for growth investments [44] - Stock-based compensation expenses are expected to be approximately 17% of total revenue, reflecting a reduction from earlier estimates [50] Q&A Session Summary Question: Success with accountants adopting Divvy post integration - Management highlighted the significant opportunity within the accountant base, with over 9,000 firms using the product and potential for cross-selling [55] Question: Confidence level regarding investments and expected returns - Management expressed increased confidence in internal execution driving results, with ongoing investments in key priorities [62] Question: Observations from April trends and comparisons to past cycles - Management noted that SMBs are facing significant uncertainty, leading to fewer transactions and decreased spending, similar to conditions seen during COVID [66][68] Question: Impact of tariffs on cross-border transaction revenue - Management indicated that the majority of international transactions are for services, with no significant shift between USD and local currency observed [75][76] Question: Pricing and packaging of the software platform - Management acknowledged the opportunity for pricing adjustments as the platform's value increases, with plans to discuss this in future quarters [82] Question: Payments monetization within Bill APAR - Management detailed that take rate expansion in Q3 was driven by volume growth in emerging payment products and reduced FX losses [90][91]

Company Overview - BILL is positioned as a champion for small and midsize businesses, offering an essential financial operations platform[5,9] - The company's mission is to simplify business connections and operations[8] - BILL's platform integrates spend management, accounts payable, and accounts receivable[10] Key Metrics - BILL has 488,000 businesses using its solutions[14] - The platform boasts a network of 71 million members[14] - The net dollar retention rate is 92%[14] - Non-GAAP gross margin stands at 85%[14] Market Opportunity - The U S opportunity includes 34 million SMBs and sole proprietors[21] - The U S SMB software spend is estimated at $75 billion[21] - The global B2B payment volume opportunity is $135 trillion[21] Financial Performance - The trailing 12 months revenue is $1423 million[47] - Core revenue year-over-year growth is 14%[47] - 89% of core revenue comes from existing customers[47]

Revenue Performance - Q3 total revenue was $358.2 million, an increase of 11% year-over-year[6] - Q3 core revenue, consisting of subscription and transaction fees, was $320.3 million, up 14% year-over-year[6] - Subscription fees were $68.2 million, a 4% increase year-over-year, while transaction fees reached $252.1 million, up 17% year-over-year[6] - Guidance for Q4 FY25 total revenue is projected between $370.5 million and $380.5 million, with year-over-year growth of 8% to 11%[7] - Total revenue for the three months ended March 31, 2025, was $358,217,000, representing a 10.9% increase from $323,028,000 in the same period of 2024[32] - Subscription and transaction fees increased to $320,298,000 for the three months ended March 31, 2025, up from $281,294,000 in 2024, marking a growth of 13.9%[32] Profitability Metrics - Gross profit was $291.0 million, representing an 81.2% gross margin, compared to 83.0% in Q3 of fiscal 2024[6] - Operating loss was $28.9 million, compared to a loss of $27.6 million in Q3 of fiscal 2024[6] - Net loss was $11.6 million, or $(0.11) per share, compared to net income of $31.8 million in Q3 of fiscal 2024[6] - Gross profit for the three months ended March 31, 2025, was $291,005,000, compared to $268,016,000 in 2024, reflecting an increase of 8.6%[32] - Operating loss for the three months ended March 31, 2025, was $(28,946,000), slightly higher than the loss of $(27,622,000) in 2024[32] - Net loss for the three months ended March 31, 2025, was $(11,589,000), compared to a net income of $31,809,000 in the same period of 2024[32] Cash Flow and Liquidity - Cash flows from operating activities for the three months ended March 31, 2025, were $99,530,000, an increase from $66,809,000 in 2024[35] - Cash, cash equivalents, restricted cash, and restricted cash equivalents at the end of Q1 2025 totaled $3,171,150, down from $3,335,803 at the end of Q1 2024[36] - Net cash used in financing activities for Q1 2025 was $(105,573), compared to $(801,215) in Q1 2024, showing a significant reduction in cash outflow[36] - The company reported a net decrease in cash and equivalents of $(649,557) for Q1 2025, compared to $(1,352,777) in Q1 2024, indicating improved cash management[36] - Net cash provided by operating activities for Q1 2025 was $99,530 thousand, up 48.9% from $66,809 thousand in Q1 2024[43] Balance Sheet Highlights - Total current assets increased to $6,803,834,000 as of March 31, 2025, compared to $6,314,817,000 as of June 30, 2024, representing an increase of 7.8%[30] - Total liabilities rose to $5,762,175,000 as of March 31, 2025, compared to $5,044,612,000 as of June 30, 2024, indicating an increase of 14.2%[30] - Stockholders' equity decreased to $3,870,461,000 as of March 31, 2025, down from $4,134,201,000 as of June 30, 2024, a decline of 6.4%[30] Research and Development Expenses - Research and development expenses for the three months ended March 31, 2025, were $86,540,000, up from $81,594,000 in 2024, reflecting a growth of 6.0%[32] - GAAP research and development expenses for Q1 2025 were $86,540, an increase from $81,594 in Q1 2024[38] - Non-GAAP research and development expenses for Q1 2025 were $57,987, compared to $55,532 in Q1 2024, reflecting a 4.4% increase[38] Performance Obligations and Share Metrics - Remaining performance obligations to be recognized as revenue total $74,430 thousand as of March 31, 2025, down from $86,845 thousand in the previous year[45] - Shares used to compute GAAP net income per share, diluted, for Q1 2025 were 102,219 thousand, compared to 111,176 thousand in Q1 2024, a decrease of 8.1%[41] - Non-GAAP net income per share attributable to common stockholders, diluted, for Q1 2025 was $0.50, down from $0.60 in Q1 2024, a decline of 16.7%[39] Other Financial Metrics - Non-GAAP net income for FY25 is expected to be between $236.7 million and $240.7 million, with non-GAAP net income per diluted share projected at $2.06 to $2.09[7] - Free cash flow for Q1 2025 was $90,541 thousand, an increase of 43.9% from $62,960 thousand in Q1 2024[43] - Total depreciation and amortization for Q1 2025 was $18,336 thousand, compared to $23,429 thousand in Q1 2024, a decrease of 21.8%[39] - Stock-based compensation and related payroll taxes charged to cost of revenue and operating expenses for Q1 2025 were $63,909 thousand, up from $60,619 thousand in Q1 2024, an increase of 3.8%[39] - Capitalization of internal-use software costs for Q1 2025 was $(7,460) thousand, compared to $(3,833) thousand in Q1 2024, an increase of 94.3%[43]

Core Insights - BILL Holdings is expected to report quarterly earnings of $0.37 per share, reflecting a decline of 38.3% year-over-year, while revenues are forecasted to increase by 9.8% to $354.78 million [1] Earnings Estimates - Over the last 30 days, the consensus EPS estimate has been revised upward by 8.2%, indicating analysts' reassessment of their initial forecasts [2] - Changes in earnings estimates are crucial for predicting investor reactions, as empirical research shows a strong correlation between earnings estimate revisions and short-term stock performance [3] Revenue Breakdown - Analysts estimate 'Revenue- Interest on funds held for customers' to be $35.26 million, a decrease of 15.5% from the prior-year quarter [5] - 'Revenue- Subscription and transaction fees' is projected to reach $320.12 million, representing an increase of 13.8% year-over-year [5] Key Metrics - The consensus estimate for 'Total Payment Volume' is $80.34 billion, up from $71 billion a year ago [6] - Analysts predict 'Transactions Processed' will reach 30.79 million, compared to 26 million in the same quarter last year [6] Stock Performance - Over the past month, shares of BILL Holdings have returned +12.8%, outperforming the Zacks S&P 500 composite's +11.5% change [6] - BILL Holdings currently holds a Zacks Rank 3 (Hold), suggesting its performance may align with the overall market in the near future [6]

On Thursday, Seaport Global analyst Jeff Cantwell downgraded two companies — PayPal Holdings PYPL and Bill Holdings BILL — as he has lost confidence that either will eventually meet their previously stated guidance in this new paradigm.PayPal went from Neutral to Sell and Bill went from Buy to Neutral.What Happened: Cantwell adjusted his numbers and price targets lower across the board in Fintech ahead of earnings. This reflects how this new, emerging ‘tariff-heavy’ paradigm will eventually impact names und ...

Core Viewpoint - BILL Holdings (BILL) has experienced a significant decline in share price, dropping 49.7% year-to-date, compared to declines of 10.4% in the Zacks Computer & Technology sector and 5.6% in the Zacks Internet - Software sector, primarily due to broader market weaknesses and regulatory concerns [1] Group 1: Company Performance and Market Position - The company is benefiting from increased platform adoption, AI-driven automation, expanded payment solutions, and partnerships that enhance its small and medium-sized business (SMB) ecosystem [2] - BILL is strengthening its position in the financial technology sector with an expanding portfolio, which has been crucial for its success [3] - In Q2 of fiscal 2025, BILL's platform was utilized by over 480,000 businesses, with nearly $85 billion in payment volume processed across 30 million transactions, indicating strong engagement and effectiveness in streamlining financial processes for SMBs [5] Group 2: Product Enhancements and Client Engagement - In December 2024, BILL introduced new features, including embedded 1099 functionality, which simplified tax form filing and increased the platform's appeal to SMBs, with 5% of customers completing nearly 200,000 1099 filings [4] - The company's partnerships with Regions Financial and Adyen have been key catalysts for expanding its SMB clientele, enhancing digital payment solutions and integrating advanced capabilities into its financial operations platform [6][7] Group 3: Financial Guidance and Earnings Estimates - For Q3 of fiscal 2025, BILL expects revenues between $352.5 million and $357.5 million, reflecting a year-over-year growth of 9-11%, with non-GAAP earnings projected between 35 cents and 38 cents per share [8] - The Zacks Consensus Estimate for Q3 revenues is $355.27 million, indicating a year-over-year growth of 9.98%, while the consensus for earnings is 38 cents per share, showing a year-over-year decline of 40% [9][10] - For fiscal 2025, revenues are expected to be between $1.45 billion and $1.47 billion, implying a 13-14% year-over-year growth, with non-GAAP earnings projected between $1.87 and $1.97 per share [8] Group 4: Competitive Landscape - Despite expanding its SMB clientele, BILL faces stiff competition from accounting software providers like SAP and Intuit, which are enhancing their offerings in the SMB sector [11] - Intuit's recent launch of Tap to Pay on iPhone for QuickBooks Online customers highlights the competitive pressure on BILL, as it enables seamless, secure payments for SMBs [12]

Core Insights - Bill Holdings is a SaaS company that provides a platform for small and midsize businesses to manage financial operations, leveraging AI technology for efficiency [1] - The company experienced significant revenue growth during the COVID-19 pandemic, but growth has since slowed, with the stock currently around 85% below its all-time high despite a revenue growth rate above 20% [2] - Bill's net dollar-based retention rate is 92%, indicating a decline in customer spending, which is lower than most other SaaS companies [3] Financial Performance - Bill Holdings reported a 22% year-over-year revenue growth in fiscal 2024, with an adjusted gross margin of 85% and an adjusted operating margin of 17% [4] - The company serves over 480,000 businesses, highlighting its substantial market presence [4] Market Opportunity - There are 34 million small and midsize businesses in the U.S. and over 72 million globally, indicating a large market opportunity for Bill Holdings [5] - The demand for automation in complex processes continues to grow, and the company is investing in innovation to enhance its platform [5] Stock Volatility - Bill's stock has shown significant volatility, trading between approximately $27 and $349 per share over the past five years, suggesting a turbulent future [6] - If the company can maintain rapid growth and capture market share, it has the potential for a bright future [6]