BILL (BILL) - 2025 Q1 - Quarterly Results

Overall Performance and Outlook Q1 FY25 Financial Highlights 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 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] - Processed $80 billion in total payment volume in Q1, an increase of 14% year-over-year[4] - Processed 29 million transactions during Q1, an increase of 16% year-over-year[4] - Hired payments industry leader Mary Kay Bowman as Executive Vice President, Payments and Financial Services[4] - Hired Bobbie Grafeld as new Chief People Officer to lead people strategy[4] - Repurchased approximately 3.7 million shares of common stock for approximately $200 million during the quarter[1][4] Financial Outlook 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 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 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] - 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] Company Information About BILL 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] - The integrated platform helps businesses efficiently control payables, receivables, and spend and expense management[11] - Hundreds of thousands of businesses rely on BILL's proprietary network of millions of members to pay or get paid faster[11] - Headquartered in San Jose, California, BILL is a trusted partner of leading U.S. financial institutions, accounting firms, and accounting software providers[11] Conference Call and Webcast Information 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] - 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 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] - Press Contact: John Welton, john.welton@hq.bill.com[27] Non-GAAP Financial Measures and Disclosures Non-GAAP Financial Measures Explanation 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 - Excluded from Non-GAAP Gross Profit and Gross Margin: stock-based compensation and related payroll taxes, depreciation and amortization[15] - 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] - 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] Rationale for Non-GAAP Measures - 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][18] - Depreciation and amortization are excluded as non-cash charges to provide meaningful supplemental information regarding operational performance[19] - 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][21] - Gain on debt extinguishment and amortization of debt issuance costs are excluded as non-cash items to provide better insight into operational performance[22][23] - Non-GAAP provision for income taxes consists of an assumed provision based on the statutory tax rate[24] - 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] - 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] - 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][25] Free Cash Flow Definition 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] - It is an important liquidity measure of cash generated for future operational expenses and investment in the business[26] - Limitations include not reflecting future contractual commitments or the total increase/decrease in cash balance for a given period[26] Note on Forward-Looking Statements 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] - 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][13] - 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] - 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] Condensed Consolidated Financial Statements (GAAP) Condensed Consolidated Balance Sheets 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 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][31] Condensed Consolidated Statements of Cash Flows 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] Reconciliation of GAAP to Non-GAAP Financial Measures Non-GAAP Gross Profit Reconciliation 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 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 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 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 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 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 Remaining Performance Obligations Details 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 |