BILL (BILL) - 2025 Q4 - Annual Report

Part I Business Overview BILL Holdings, Inc. provides an AI-enabled financial operations platform for SMBs, automating payables, receivables, and spend management, serving ~493,800 businesses and processing $330 billion in TPV in fiscal 2025 - BILL Holdings, Inc. is a financial operations platform for SMBs, automating payables, receivables, and spend/expense management with AI-enabled solutions[23][24] Fiscal Year 2025 Key Business Metrics | Metric | Value (as of June 30, 2025) | | :-------------------------------- | :-------------------------------- | | Businesses using solutions | 493,800 | | Total Payment Volume (TPV) (in billions) | $329.8 | | Network Members | 8.3 million | | TPV Growth (YoY) | 13% | | Network Member Growth (YoY) | 18% | | BILL AP/AR Customers | 169,500 | | BILL Spend and Expense Businesses | 41,100 | | Embedded Solutions and Other Customers | 283,200 | - The platform offers comprehensive payment services including ACH, card payments (virtual and physical), real-time payments (RTP), checks, cross-border payments to over 130 countries, and invoice financing[37][38] - BILL leverages a unique data asset and AI capabilities to drive product innovation, enhance risk management, and power the development of AI agents for SMB financial operations[46] - The company operates in a highly regulated environment, requiring money transmitter licenses in most U.S. states and Canada, and compliance with AML, CTF, sanctions, and data protection laws (e.g., GLBA, CCPA, GDPR)[77][78][82][83][84] Overview BILL Holdings, Inc. is a leading AI-enabled financial operations platform for SMBs, automating finance for business success and connecting millions of network members - BILL's mission is to simplify business connections and operations through an AI-enabled financial software platform[22][24] Fiscal Year 2025 Operational Scale | Metric | Value (as of June 30, 2025) | | :-------------------------------- | :-------------------------------- | | Businesses using solutions | ~493,800 | | Total Payment Volume (TPV) (in billions) | ~$330 | | Network Members | ~8.3 million | Our Solution The BILL platform automates SMB back-office functions, acting as a control system for accounts payable, accounts receivable, and spend/expense management - The platform automates SMB back-office operations, providing key benefits such as AI-enabled efficiency, integration with critical financial partners, digital security, and transparent cash flow management[27] What Sets Us Apart BILL differentiates itself through an integrated platform leveraging network effects and data for AI-driven innovation, proprietary risk management, and comprehensive payment services - The integrated platform leverages network effects and a large data asset to drive rapid information and fund exchange, product innovation, and proprietary risk management[30][31][46] - Accounts Payable automation includes intelligent bill capture using AI, digital workflows, and collaboration tools, while Accounts Receivable automation offers easy invoicing, digital workflows, and client payment portals[32][35] - BILL Spend and Expense provides smart corporate cards (BILL Divvy Card) with proactive spend controls, real-time budgeting, and mobile management, with credit underwriting performed using proprietary risk management capabilities[33][36] - Payment services include ACH, virtual and physical card payments, Real-time Payments (RTP), checks, cross-border payments to over 130 countries, and 'Pay By Card' for vendors not accepting cards[38] - Value-added services include two-way sync with major accounting systems (QuickBooks, NetSuite, Sage Intacct, Xero, Microsoft Dynamics 365), purchase order matching, cash flow forecasting, treasury services, custom user roles, and integrated mobile functionality[38][39][43] - The company's risk engine, trained on millions of B2B transactions, monitors for suspicious behavior and fraud, resulting in nominal fraud and credit loss rates (0.01% for BILL AP/AR, 0.23% for BILL Divvy Cards in fiscal 2025)[51][56] - Security, privacy, and data protection are prioritized through robust access controls, continuous external testing (SOC1 Type II, SOC2 Type II certified), NIST-800-53 alignment, and close attention to network security and third-party supplier security[57][58][59][60] Competition BILL competes against legacy manual processes, large enterprise firms, niche solutions, and new market entrants, leveraging its comprehensive portfolio and proprietary payments engine - Primary competition is legacy manual processes, alongside large enterprise firms, niche point solutions, and adjacent product providers entering BILL's market segments[62][150][152] - Key competitive factors include product features, AI leverage, ease of deployment and integration, automation capabilities, cloud architecture, security, regulatory compliance, brand recognition, and pricing[64][72][155] Research & Development BILL invests significantly in R&D, with teams focused on understanding customer needs and innovating new functionality, usability, reliability, and performance for its applications - Substantial investment in R&D focuses on understanding customer needs and innovating new functionality, usability, reliability, and performance of existing applications[66] Sales and Marketing BILL uses direct and indirect channels for distribution, with marketing efforts focused on lead generation, brand awareness, partner enablement, and customer growth - Distribution channels include direct sales (self-service, inside sales) and indirect partnerships with accounting firms, financial institutions, and software providers[68][69] - Marketing focuses on lead generation, brand awareness, partner enablement, and customer growth, supported by digital campaigns, referrals, and a card rewards program for BILL Divvy Cards[70][71] Customer Success BILL's customer success team provides onboarding, ongoing support, and training, leveraging insights from millions of transactions to continuously improve the platform - Customer success provides onboarding, ongoing support, and training, leveraging deep understanding of SMB spending and behavior patterns to improve the platform and experience[74] Regulatory Environment BILL operates in a complex regulatory landscape, requiring money transmission licenses and compliance with AML, CTF, sanctions, consumer protection, and data privacy laws - BILL holds money transmitter licenses in most U.S. states and Canada, registered as a Money Services Business with FinCEN and FINTRAC, subjecting it to AML, CTF, OFAC sanctions, record-keeping, bonding, and capital requirements[77][78][82][83](index=83&type=chunk] - Compliance extends to consumer protection laws, Visa/Mastercard rules as a card program manager, and state/federal lending regulations for invoice financing products[79][80][81](index=81&type=chunk] - Data handling is subject to GLBA, CCPA, GDPR, and other global privacy laws, with increasing regulatory scrutiny on privacy, data protection, and cybersecurity practices[84][85](index=85&type=chunk] - The company is also subject to anti-corruption laws like the FCPA and similar international statutes, with policies and controls in place to ensure compliance[86] Culture, Inclusion and Sustainability BILL is committed to a sustainable future, guided by core values, focusing on diverse talent attraction, inclusive workplace culture, and environmental responsibility - BILL's culture is centered around five core values: Humble, Authentic, Passionate, Accountable, and Fun, guiding operations and employee interactions[91][97] - The company had 2,364 employees as of June 30, 2025, with a focus on recruiting, developing, and retaining talent through equitable compensation, comprehensive benefits, and leadership development programs, including AI training[91][92][94][95][98](index=98&type=chunk] - Inclusion is fostered through eight Employee Resource Groups (ERGs) and community outreach programs, such as partnerships with local high schools and the African Diaspora Network's ABLE program[101][102](index=102&type=chunk] - Environmental efforts include LEED Gold and Energy Star certified headquarters, free EV charging stations, and a hybrid work model to reduce commute-related energy consumption and pollution[103] Intellectual Property BILL protects its intellectual property through patents, trademarks, copyrights, trade secrets, and contractual measures, holding 26 issued U.S. patents and 12 U.S. trademark registrations - As of June 30, 2025, BILL held 26 issued U.S. patents (expiring 2028-2042) and 9 pending applications, along with 12 U.S. trademark registrations and international applications[106][107](index=107&type=chunk] - The company relies on trade secrets and confidential information, secured through confidentiality and invention assignment agreements with employees and third parties[109] Available Information BILL makes its SEC filings available free on its investor relations website, which also serves as a channel for disclosing material non-public information - SEC filings (10-K, 10-Q, 8-K) are available free on www.bill.com, which also serves as a channel for disclosing material non-public information[112][113](index=113&type=chunk] Risk Factors Investing in BILL's stock carries risks from operating losses, economic downturns, competition, credit/fraud, regulatory compliance, debt, and stock volatility - BILL has a history of operating losses and may not sustain profitability, with a net income of $23.8 million in fiscal 2025 but accumulated deficit of $1.5 billion as of June 30, 2025[119][121](index=121&type=chunk] - A significant portion of revenue comes from SMBs, which are highly susceptible to macroeconomic conditions (e.g., inflation, interest rates, recessions), potentially impacting demand for products and services[119][122][127](index=127&type=chunk] - The BILL Divvy Card offering exposes the company to credit risk, as it bears the entire credit risk for most card balances, and proprietary risk models may not accurately predict creditworthiness, leading to potential charge-offs[119][141][142](index=142&type=chunk] - The company transfers large sums of customer funds daily, exposing it to risks of financial losses from credit losses, operational errors, software defects, employee misconduct, and security breaches, which could damage reputation and financial results[119][154][156](index=156&type=chunk] - Reliance on third-party service providers for transaction processing and other services means significant disruptions could prevent transaction processing and adversely affect business[186] - The use of AI in business presents risks related to development success, competitive harm, reputational damage from inaccurate/biased outputs, cybersecurity incidents, and evolving regulatory frameworks (e.g., EU AI Act)[119][187][188](index=188&type=chunk] - The company is subject to extensive and evolving governmental regulations and legal obligations, particularly concerning payments, financial services, data privacy (GLBA, CCPA, GDPR), and anti-money laundering/counter-terror financing, with non-compliance potentially leading to significant fines, litigation, and business restrictions[124][242][245][249][255][256][257][258][260][262][263][273][274](index=274&type=chunk] - Debt service obligations from convertible senior notes ($1.5 billion outstanding as of June 30, 2025) and revolving credit facilities may adversely affect financial condition and results of operations, with potential liquidity challenges for cash settlements upon conversion or repurchase[124][286][288][292](index=292&type=chunk] Summary of Risk Factors This section provides a high-level overview of the key risks facing BILL Holdings, Inc., including financial performance, economic conditions, customer acquisition, credit/fraud, competition, and regulatory compliance - Key risks include operating losses, economic downturns affecting SMBs, inability to attract/retain customers, credit/fraud risks from BILL Divvy Card, intense competition, large daily fund transfers, reliance on accounting firms/financial institutions, growth management, AI development challenges, loss of key management, acquisition integration, regulatory non-compliance, debt obligations, and stock price volatility[119][124](index=124&type=chunk] Risks Related to Our Business and Industry This section details risks inherent to BILL's business model and industry, such as operating losses, macroeconomic vulnerability, customer acquisition challenges, credit/fraud risks, and operational dependencies Net Income (Loss) and Accumulated Deficit (Fiscal Years) | Fiscal Year | Net Income (Loss) (in millions) | Accumulated Deficit (as of June 30) (in billions) | | :---------- | :------------------------------ | :------------------------------------------------ | | 2025 | $23.8 | $1.5 | | 2024 | $(28.9) | N/A | | 2023 | $(223.7) | N/A | - Fluctuations in financial results are expected due to factors like demand, pricing, customer retention, partner relationships, AI development costs, macroeconomic conditions, and competition[128][133](index=133&type=chunk] - Revenue growth depends on attracting new customers, converting trial users, and increasing charge card usage, with potential for reduced profitability from lower-priced products or increased rewards expenses[130][131][135](index=135&type=chunk] - Customer retention and increased adoption are critical, but many contracts are open-ended and can be terminated, making renewal and expansion rates unpredictable[137][138](index=138&type=chunk] - The BILL Divvy Card exposes the company to credit risk, with proprietary risk models potentially failing to predict creditworthiness, leading to charge-offs and reliance on warehouse facilities for funding[141][142][143][177](index=177&type=chunk] - Fraudulent activities by customers or third parties pose significant financial loss and liability risks, requiring continuous investment in evolving risk management techniques[146][147][148][149](index=149&type=chunk] - Competition is intense and evolving, with new entrants and existing players (e.g., Intuit, Brex, Ramp) potentially offering competing solutions or bundling services, challenging BILL's market position[150][152][153](index=153&type=chunk] - Transferring large sums of customer funds daily carries risks of financial losses from operational errors, software defects, and security breaches, which could damage reputation and lead to regulatory action[154][156][157](index=157&type=chunk] - Interest earned on customer funds, a significant revenue component, is subject to market interest rate fluctuations and could decrease with lower rates or increased adoption of expedited electronic payments[163] - Dependence on relationships with accounting firms and financial institutions means any damage to reputation or inability to establish/grow partnerships could weaken growth prospects[164][165][167](index=167&type=chunk] - Rapid growth requires scaling platform, infrastructure, and internal systems, with failure to do so effectively impacting future operating results and profitability[169][170](index=170&type=chunk] - The BILL Divvy Card offering is dependent on relationships with Issuing Banks, and challenges to legal structures or bank failures could disrupt product offerings[174][176](index=176&type=chunk] - Maintaining compatibility with popular software solutions (e.g., QuickBooks, NetSuite) is crucial; changes to APIs or competitors developing their own solutions could diminish platform value[182][183][184](index=184&type=chunk] - Reliance on third-party service providers for transaction processing means disruptions could interrupt business operations[186] - Challenges in developing and deploying AI tools, or managing AI use, could lead to reputational harm, competitive disadvantage, and legal liability, especially with evolving AI regulations[187][188](index=188&type=chunk] - Loss of key management or inability to attract/retain qualified talent, particularly in software development and compliance, could harm business growth[189][190](index=190&type=chunk] - Future acquisitions carry risks of difficult integration, diversion of management attention, increased liabilities (especially cybersecurity and compliance), and potential dilution of stockholder value[191][192][194][195][196][197](index=197&type=chunk] - Failure to provide high-quality customer support or if support becomes too expensive could harm business and reputation[198] - Inability to adapt to rapidly changing technology, industry standards, and regulations could make products less competitive and increase R&D expenses[199][200](index=200&type=chunk] - Pricing pressures or inability to attract/retain customers at current prices could harm revenue and gross profits[201] - Interruptions or delays in services from cloud providers (e.g., AWS) or other third-party data centers could impair platform delivery and damage business[202][203](index=203&type=chunk] - Failure to meet service level commitments in financial institution partner agreements could lead to credits, refunds, or contract terminations[204] - Ineffective sales and marketing efforts, including challenges in recruiting personnel or managing online advertising costs, could harm customer base expansion[205][206][207](index=207&type=chunk] - International expansion and cross-border payments introduce operational challenges and risks related to foreign regulations, macroeconomic conditions, and geopolitical conflicts[208][209][210](index=210&type=chunk] - A substantial portion of revenue from interchange fees exposes the company to variability due to changes in card network rules, legal scrutiny (e.g., antitrust litigation), and competitive pressures[211][212][213][214][216](index=216&type=chunk] - Failure to maintain and enhance brands, especially during rebranding efforts (e.g., phasing out Divvy brand), could impair customer base expansion[215] - Need for additional capital to support growth, which may not be available on acceptable terms, leading to dilution or increased debt obligations[217][220](index=220&type=chunk] - Ability to use net operating losses (NOLs) and tax credits may be limited by ownership changes or future tax law changes (e.g., Section 382/383 of the Code)[221](index=221&type=chunk] - Potential for increased sales tax collection obligations due to evolving state laws (e.g., Wayfair ruling) could increase costs for customers and administrative burdens[222](index=222&type=chunk] - Changes in effective tax rate or tax liability due to differing statutory rates, new tax laws (e.g., Inflation Reduction Act, One Big Beautiful Bill Act), or audit outcomes could adversely affect operating results[223][224](index=224&type=chunk] - Natural catastrophic events, pandemics, and man-made problems (e.g., cyber-attacks, war) could disrupt business operations, leading to system interruptions, data breaches, and reputational harm[225][226][227](index=227&type=chunk] - Failure to maintain effective disclosure controls and internal control over financial reporting could impair ability to produce timely and accurate financial statements, leading to investor loss of confidence and potential SEC sanctions[228][229][230][231](index=231&type=chunk] - Reported financial results may be adversely affected by changes in GAAP or incorrect estimates/judgments related to critical accounting policies[232][233](index=233&type=chunk] - Market opportunity estimates and growth forecasts may be inaccurate, and even if the market grows, BILL's business may not grow at similar rates[234](index=234&type=chunk] - Reliance on assumptions and estimates for performance metrics means inaccuracies could harm reputation and negatively affect business[235](index=235&type=chunk] - Future litigation could be costly, time-consuming, and divert management attention, potentially harming business and financial condition[236](index=236&type=chunk] - Failure to maintain company culture during growth, especially through acquisitions, could negatively affect talent retention and corporate objectives[237][238](index=238&type=chunk] - Exposure to foreign currency exchange risk, particularly with Canadian operations, can affect financial results due to transaction gains or losses[239](index=239&type=chunk] - Actions by activist stockholders could be costly, disrupt business, divert management attention, and impact stock trading value[240](index=240&type=chunk] Risks Related to Government Regulation and Privacy Matters This section details BILL's extensive regulatory and legal obligations, particularly concerning financial services, data privacy, and anti-corruption, with non-compliance posing significant risks - BILL is subject to extensive local, state, federal, and international laws governing banking, money transmission, lending, AML, CTF, sanctions, and data security, with non-compliance potentially leading to investigations, fines, and business restrictions[242][243][245][246][247][248][249](index=249&type=chunk] - Data handling is subject to GLBA, CCPA, GDPR, and other global privacy laws, with increasing regulatory scrutiny and potential for significant fines, lawsuits, and required business changes if practices are inconsistent with evolving interpretations[255][256][257][258][260][261][262][263](index=263&type=chunk] - Improper or unauthorized use, disclosure, or access to sensitive data (including cybersecurity incidents) could harm BILL's reputation, lead to financial losses, regulatory scrutiny, and significant costs for remediation[264][266][267][268][269][271][272](index=272&type=chunk] - Compliance with U.S. economic and trade sanctions (OFAC) and international AML/CTF laws is critical; past gaps in IP blocking and subscriber onboarding in sanctioned countries led to a cautionary letter from OFAC[273][274](index=274&type=chunk] - The company is subject to anti-corruption and anti-bribery laws (e.g., FCPA, UK Bribery Act), with non-compliance potentially leading to criminal/civil liability and reputational harm, especially as international operations expand[275][276][277](index=277&type=chunk] Risks Related to Our Intellectual Property This section outlines risks related to BILL's intellectual property, including inadequate protection, costly litigation from disputes, substantial indemnification liability, and open-source software use - Failure to adequately protect proprietary technology (patents, copyrights, trademarks, trade secrets) could impair competitive position, lead to loss of valuable assets, and incur costly litigation[279] - Intellectual property disputes are costly, time-consuming, and can divert management attention, potentially leading to significant liability or the need to limit/stop sales of software[281][282](index=282&type=chunk] - Indemnity provisions in agreements with financial institution partners and larger customers could expose BILL to substantial, uncapped liability for intellectual property infringement or data protection losses[283] - Use of open-source software could subject the company to litigation or require the release of proprietary software source code under certain licenses[284](index=284&type=chunk] Risks Related to Our Indebtedness This section addresses risks associated with BILL's debt obligations, including convertible senior notes and revolving credit facilities, which may adversely affect financial condition and liquidity Outstanding Debt as of June 30, 2025 | Debt Instrument | Principal Amount (in millions) | | :---------------------- | :----------------------------- | | 2025 Convertible Senior Notes | $33.5 | | 2027 Convertible Senior Notes | $123.5 | | 2030 Convertible Senior Notes | $1,400.0 | | 2021 Credit Facility (drawn) | $180.0 | - Debt service obligations could adversely affect financial condition, limit flexibility, and make the company more vulnerable to adverse economic changes, potentially leading to default if cash flow is insufficient[286][287](index=287&type=chunk] - The company may not have sufficient cash to settle conversions of notes or repurchase them upon a fundamental change, and future debt agreements could impose limitations[288][291](index=291&type=chunk] - Conditional conversion features of the Notes, if triggered, could require cash payments, adversely affecting liquidity, or reclassify debt as current liability, reducing net working capital[292](index=292&type=chunk] - Capped Call transactions, designed to reduce dilution, expose the company to counterparty credit risk, which is unsecured and could lead to adverse tax consequences or increased dilution if a counterparty defaults[293][294][297](index=297&type=chunk] Risks Related to Ownership of Our Common Stock This section highlights risks associated with owning BILL's common stock, including price volatility, anti-takeover provisions, management experience, dividend policy, and potential dilution - The market price of common stock has been and will likely remain volatile due to factors like financial performance, analyst expectations, macroeconomic conditions, competition, and geopolitical events[299] - Anti-takeover provisions in charter documents (e.g., staggered board, limitations on stockholder actions) and Delaware law (Section 203) could make acquisitions more difficult and limit stockholders' ability to influence management[301][304][305](index=305&type=chunk] - The management team has limited experience managing a public company, which could divert attention from business operations[306] - The company does not intend to pay dividends in the foreseeable future, requiring investors to rely on stock price appreciation for gains[307] - Sales of substantial amounts of common stock by directors, executive officers, or significant stockholders, or the perception of such sales, could cause the market price to decline and dilute existing stockholders[309][311](index=311&type=chunk] - The timing and amount of share repurchases are subject to uncertainties, and excise taxes on repurchases (e.g., Inflation Reduction Act) may increase costs and reduce the number of shares repurchased[313][314][315](index=315&type=chunk] Unresolved Staff Comments No unresolved staff comments from the SEC regarding the company's filings - No unresolved staff comments[316] Cybersecurity BILL maintains a robust cybersecurity program, overseen by its board and CISO, aligning with NIST/ISO standards, with no material incidents reported - Cybersecurity risk management is integrated into overall risk systems, overseen by the board's cybersecurity committee and managed by an interim CISO[317][318][323](index=323&type=chunk] - The information security program is based on NIST, ISO, and industry standards, featuring continuous threat assessment, incident response, third-party risk management, and regular employee training[317][320][321](index=321&type=chunk] - As of the report date, the company is not aware of any cybersecurity threats that have materially affected or are reasonably likely to affect its business strategy, operations, or financial condition[322] Cybersecurity Risk Management and Strategy BILL's cybersecurity strategy involves an information security program aligned with NIST and ISO frameworks, managed by an interim CISO and a dedicated team - The information security program, managed by an interim CISO, aligns with NIST-800-53 and ISO standards, focusing on enterprise information security governance and product development security[317][318](index=318&type=chunk] - Key components include routine assessment of cybersecurity threats, an incident response program, a 'red team' of engineers, third-party evaluations, and technical safeguards like firewalls and access controls[317][320][321](index=321&type=chunk] Governance A standing cybersecurity committee oversees BILL's cybersecurity program, meeting quarterly to review risks, controls, and incident responses, coordinating with the audit committee - A standing cybersecurity committee, formed in spring 2023, meets quarterly to review cybersecurity risks, controls, and processes, receiving updates from the interim CISO and legal department[323](index=323&type=chunk] - The committee coordinates with the audit committee on financial reporting risks and receives prompt information on material cybersecurity threats or incidents[323][324](index=324&type=chunk] - Cybersecurity insurance is maintained to mitigate the financial impact of incidents[326](index=326&type=chunk] Properties BILL leases its San Jose headquarters (138,000 sq ft) and a Draper, Utah office (155,000 sq ft), deeming current facilities adequate - Corporate headquarters in San Jose, CA (138,000 sq ft) and an office in Draper, UT (155,000 sq ft, 26,000 sq ft subleased) are leased, with leases expiring in June 2031 and May 2031, respectively[327](index=327&type=chunk] - Current office facilities are deemed adequate for the immediate future, with ongoing evaluation of real estate strategy for expansion[328](index=328&type=chunk] Legal Proceedings The company is not currently involved in any material legal proceedings, though litigation can arise in the ordinary course - The company is not currently a party to any legal proceedings considered material to its business or financial condition[329] - Litigation, which can arise in the ordinary course of business, is inherently unpredictable and may result in substantial costs and diversion of management resources[329][330](index=330&type=chunk] Mine Safety Disclosures This item is not applicable to BILL Holdings, Inc - Not applicable[331] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities BILL's common stock trades on NYSE; the company has 151 record holders, no dividends, and active share repurchase programs - Common stock trades on The New York Stock Exchange under the symbol "BILL"[333] - As of June 30, 2025, there were 151 holders of record of common stock[334] - The company has never declared or paid cash dividends and intends to retain future earnings for operations, acquisitions, repurchases, or debt repayment[335] - In April 2025, the company issued warrants to CPA.com, Inc. to purchase 312,682 shares of common stock, which were net exercised for 312,607 shares[339] - A new $300 million share repurchase program (2025 Share Repurchase Program) was authorized in August 2025, with no mandated end date[341][342](index=342&type=chunk] Share Repurchase Activity (Q4 Fiscal 2025) | Period | Total Shares Purchased (thousands) | Average Price Paid Per Share | | :----------------------------- | :------------------------------- | :--------------------------- | | April 1, 2025 - April 30, 2025 | — | — | | May 1, 2025 - May 31, 2025 | — | — | | June 1, 2025 - June 30, 2025 | 776 | $45.09 | | Total | 776 | | - The August 2024 Share Repurchase Program, which had $65.0 million remaining as of June 30, 2025, was completed in July 2025[343] Market Information BILL Holdings, Inc.'s common stock is listed and traded on The New York Stock Exchange under the ticker symbol "BILL" - Common stock trades on The New York Stock Exchange under the symbol "BILL"[333] Holders of Record As of June 30, 2025, there were 151 holders of record for BILL Holdings, Inc.'s common stock, excluding beneficial owners - As of June 30, 2025, there were 151 holders of record of the company's common stock[334] Dividend Policy BILL Holdings, Inc. has not declared or paid cash dividends and does not anticipate doing so, intending to retain future earnings for business operations - The company has never declared or paid cash dividends and does not intend to in the foreseeable future, prioritizing retention of earnings for operations, acquisitions, repurchases, or debt repayment[335] Stock Performance Graph The report includes a stock performance graph comparing BILL's common stock return from June 30, 2020, to June 30, 2025, against market indices - A stock performance graph compares BILL's common stock return from June 30, 2020, to June 30, 2025, against the S&P 500 and S&P 500 IT Indices[337] Recent Sales of Unregistered Equity Securities On April 7, 2025, warrants for 312,682 shares of common stock were issued to CPA.com, Inc. and net exercised, exempt from registration - On April 7, 2025, warrants for 312,682 shares of common stock were issued to CPA.com, Inc. and net exercised on April 13, 2025, for 312,607 shares[339] - The issuance was exempt from registration under Section 4(a)(2) of the Securities Act[340] Purchase of Equity Securities by the Issuer In August 2025, BILL's board authorized a new $300 million share repurchase program, following the completion of a previous $300 million program in July 2025 - A new $300 million share repurchase program (2025 Share Repurchase Program) was authorized in August 2025[341][342](index=342&type=chunk] - The August 2024 Share Repurchase Program, which had $65.0 million remaining as of June 30, 2025, was completed in July 2025, with $235 million repurchased by June 30, 2025[314][343](index=343&type=chunk] - An additional $200 million in shares were repurchased in December 2024, concurrent with the issuance of the 2030 Notes[314] - Share repurchases are subject to a 1% non-deductible excise tax under the Inflation Reduction Act of 2022[315](index=315&type=chunk] Reserved This item is reserved and not applicable - Not applicable[345] Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes BILL's financial condition and results, showing $1.5 billion revenue and $23.8 million net income in fiscal 2025, discussing revenue models, metrics, and liquidity Revenue and Net Income (Loss) (Fiscal Years) | Fiscal Year | Total Revenue (in billions) | Net Income (Loss) (in millions) | | :---------- | :-------------------------- | :------------------------------ | | 2025 | $1.46 | $23.8 | | 2024 | $1.29 | $(28.9) | | 2023 | $1.06 | $(223.7) | - Macroeconomic conditions, including interest rate volatility and inflation, have impacted SMB spending patterns, leading to reduced TPV per customer in fiscal 2025 and a shift to lower-cost payment methods[355][356](index=356&type=chunk] - Revenue is primarily generated from subscription fees (fixed monthly/annual rate) and transaction fees (fixed/variable rate per transaction), including interchange fees from card payments, and interest on funds held for customers[359][360][361][385][386][387][388][389][390][391](index=391&type=chunk] - The company's business model relies on direct and indirect go-to-market strategies, with over 89% of fiscal 2025 subscription and transaction revenue from existing BILL AP/AR customers, indicating strong retention[369][370](index=370&type=chunk] Net Dollar-Based Retention Rate (Fiscal Years) | Fiscal Year | Net Dollar-Based Retention Rate | | :---------- | :------------------------------ | | 2025 | 94% | | 2024 | 92% | | 2023 | 111% | - The increase in net dollar-based retention rate in fiscal 2025 (94% from 92%) was due to increased revenue from financial institution partners and growth in total payment volume[372] Overview BILL is a leading AI-enabled financial operations platform for SMBs, automating payables, receivables, and spend/expense management, achieving significant revenue and net income in fiscal 2025 - BILL is a leading AI-enabled financial operations platform for SMBs, automating payables, receivables, and spend/expense management[350][351](index=351&type=chunk] - The company partners with over 85 of the top 100 accounting firms and six of the top ten largest U.S. financial institutions for SMBs[352](index=352&type=chunk] Fiscal Year 2025 Financial Highlights | Metric | Fiscal 2025 | | :---------------- | :------------------------ | | Revenue (in billions) | $1.5 | | Net Income (Loss) (in millions) | $23.8 (net income) | Macroeconomic and Other Factors Macroeconomic conditions, including interest rate volatility and inflation, have impacted SMBs and BILL's business, affecting TPV per customer and interest income - Macroeconomic conditions (interest rates, inflation, trade changes) have impacted SMBs, leading to reduced spending and a shift to lower-cost payment methods, affecting TPV per customer in fiscal 2025[355][356](index=356&type=chunk] - Reductions in interest rates, while potentially improving SMB financial conditions, also decrease interest income earned on customer funds[356](index=356&type=chunk] Our Revenue Model BILL generates revenue primarily from subscription fees, transaction fees (including interchange), and interest earned on customer funds held during payment processing - Primary revenue sources are subscription fees (fixed monthly/annual per user/account) and transaction fees (fixed/variable per transaction, including card payments, ACH, checks, cross-border, invoice financing)[359][360](index=360&type=chunk] - Interest is earned on customer funds held during payment clearing, deposited in highly liquid investments, with revenue fluctuating based on fund volume and market interest rates[361](index=361&type=chunk] Our Receivables Purchases and Servicing Model BILL markets its Spend and Expense software and BILL Divvy Card, issuing cards through partner banks and using proprietary risk management, obligated to purchase 100% of receivables - BILL markets its Spend and Expense software and BILL Divvy Card, issuing cards through partner banks (Cross River Bank, WEX Bank) using proprietary risk management for credit underwriting[363][364](index=364&type=chunk] - BILL is obligated to purchase 100% participation interests in receivables generated from BILL Divvy Card transactions from Issuing Banks, funded by credit facilities or corporate cash[365][367](index=367&type=chunk] Our Business Model BILL acquires SMBs through direct and indirect channels, with strong retention indicated by over 89% of fiscal 2025 subscription and transaction revenue from existing customers - Customer acquisition is through direct digital marketing/inside sales and indirect partnerships with accounting firms, financial institutions, and software providers[369] - Over 89% of fiscal 2025 subscription and transaction revenue from BILL AP/AR customers came from those acquired prior to the fiscal year, indicating strong retention (86% for BILL AP/AR customers as of June 30, 2024, retained as of June 30, 2025)[370](index=370&type=chunk] Net Dollar-Based Retention Rate (Fiscal Years) | Fiscal Year | Net Dollar-Based Retention Rate | | :---------- | :------------------------------ | | 2025 | 94% | | 2024 | 92% | | 2023 | 111% | - The increase in fiscal 2025 retention was due to increased revenue from financial institution partners and growth in total payment volume, while the decrease in fiscal 2024 was due to changes in customer spending patterns and macroeconomic softness[372] Key Business Metrics BILL tracks 'Businesses Using Our Solutions,' 'Total Payment Volume (TPV),' and 'Transactions Processed' to reflect customer adoption, transaction value, and payment activity Key Business Metrics (Fiscal Years) | Metric | 2025 | 2024 | 2023 | % Growth 2025 | % Growth 2024 | | :-------------------------------- | :----- | :----- | :----- | :------------ | :------------ | | Businesses using our solutions | 493,800 | 474,600 | 461,000 | 4% | 3% | | Total Payment Volume (billions) | $329.8 | $292.4 | $266.0 | 13% | 10% | | Transactions processed (millions) | 121.3 | 103.8 | 85.1 | 17% | 22% | - As of June 30, 2025, BILL AP/AR customers totaled 169,500**, BILL Spend and Expense businesses 41,100**, and Embedded Solutions and Other customers 283,200**[381](index=381&type=chunk] - In fiscal 2025, TPV by BILL AP/AR customers was **$279.0 billion, BILL Divvy Card volume **$21.5 billion, and Embedded Solutions and Other TPV **$29.3 billion[381](index=381&type=chunk] - In fiscal 2025, BILL AP/AR customers executed ~47.8 million transactions, BILL Divvy Cards ~66.4 million, and Embedded Solutions and Other ~7.1 million[381](index=381&type=chunk] Components of Results of Operations This section details revenue from subscriptions, transactions, and interest, alongside service costs, R&D, sales/marketing, G&A, credit loss provisions, depreciation, and restructuring expenses - Revenue sources: subscription fees (fixed per user/account), transaction fees (fixed/variable per transaction, including interchange), and interest on funds held for customers[385][386][387][388][389][390][391](index=391&type=chunk] - Service costs include direct transaction processing costs (e.g., check printing, card fees), customer success personnel, outsourced support, and cloud infrastructure[392] - R&D expenses are primarily personnel-related for developing new/enhanced products, including AI tools, with a portion capitalized[393] - Sales and marketing expenses include card rewards, personnel, commissions, advertising, and marketing events[394] - General and administrative expenses cover finance, operations, risk, legal, HR, external professional services, and fraud losses[396] - Provision for expected credit losses reflects management's estimate of uncollectible balances on acquired card receivables, loans, and accounts receivable[397][399](index=399&type=chunk] - Depreciation and amortization relate to property, equipment, and acquired intangible assets[400] - Restructuring costs primarily include employee severance and contract termination expenses from the December 2023 Restructuring Plan[401](index=401&type=chunk] Results of Operations In fiscal 2025, total revenue grew 13% to $1.46 billion, leading to a net income of $23.8 million, driven by subscription and transaction fees despite lower interest income Consolidated Statements of Operations (Fiscal Years, in thousands) | Metric | 2025 | 2024 | 2023 | Change 2025 vs 2024 (Amount in thousands) | Change 2025 vs 2024 (%) | | :------------------------------------ | :--------- | :--------- | :--------- | :--------------------------- | :---------------------- | | Subscription and transaction fees (in thousands) | $1,300,804 | $1,122,733 | $944,710 | $178,071 | 16% | | Interest on funds held for customers (in thousands) | $161,766 | $167,439 | $113,758 | $(5,673) | (3)% | | Total revenue (in thousands) | $1,462,570 | $1,290,172 | $1,058,468 | $172,398 | 13% | | Total cost of revenue (in thousands) | $272,103 | $234,616 | $193,977 | $37,487 | 16% | | Gross profit (in thousands) | $1,190,467 | $1,055,556 | $864,491 | $134,911 | 13% | | Research and development (in thousands) | $340,059 | $336,754 | $314,632 | $3,305 | 1% | | Sales and marketing (in thousands) | $543,711 | $478,540 | $515,858 | $65,171 | 14% | | General and administrative (in thousands) | $281,913 | $277,662 | $249,054 | $4,251 | 2% | | Provision for expected credit losses (in thousands) | $72,749 | $60,105 | $32,224 | $12,644 | 21% | | Depreciation and amortization (in thousands) | $32,637 | $49,072 | $48,496 | $(16,435) | (33)% | | Restructuring (in thousands) | — | $27,587 | — | $(27,587) | (100)% | | Total operating expenses (in thousands) | $1,271,069 | $1,229,720 | $1,160,264 | $41,349 | 3% | | Operating loss (in thousands) | $(80,602) | $(174,164) | $(295,773) | $93,562 | (54)% | | Other income, net (in thousands) | $111,012 | $147,845 | $72,856 | $(36,833) | (25)% | | Income (loss) before provision for income taxes (in thousands) | $30,410 | $(26,319) | $(222,917) | $56,729 | (216)% | | Provision for income taxes (in thousands) | $6,611 | $2,559 | $808 | $4,052 | 158% | | Net income (loss) (in thousands) | $23,799 | $(28,878) | $(223,725) | $52,677 | (182)% | Revenue Breakdown (Fiscal Years, in thousands) | Revenue Type | 2025 | 2024 | Change (Amount in thousands) | Change (%) | | :----------------------------- | :--------- | :--------- | :-------------- | :--------- | | Subscription fees (in thousands) | $272,136 | $257,143 | $14,993 | 6% | | Transaction fees (in thousands) | $1,028,668 | $865,590 | $163,078 | 19% | | Interest on funds held for customers (in thousands) | $161,766 | $167,439 | $(5,673) | (3)% | | Total revenue (in thousands) | $1,462,570 | $1,290,172 | $172,398 | 13% | - Gross margin decreased slightly to 81.4% in fiscal 2025 from 81.8% in fiscal 2024, primarily due to a change in the mix of payment processing costs[409] - Sales and marketing expenses increased by $65.2 million (14%) in fiscal 2025, mainly due to a $52.2 million increase in BILL Divvy Card rewards expense and higher advertising/marketing costs[412][413](index=413&type=chunk] - Provision for expected credit losses increased by $12.6 million (21%) in fiscal 2025, driven by growth in loans held for investments, partially offset by a $6.8 million decrease in acquired card receivables due to methodology refinements and improved delinquency trends[416](index=416&type=chunk] - Other income, net decreased by $36.8 million (25%) in fiscal 2025, primarily due to a $31.4 million reduction in interest income from corporate funds and a lower gain on debt extinguishment[419][422](index=422&type=chunk] Non-GAAP Financial Measures BILL uses non-GAAP measures like Gross Profit, Gross Margin, and Free Cash Flow to provide a clearer view of core operating performance, excluding certain non-cash and capital items - Non-GAAP financial measures (Non-GAAP Gross Profit, Non-GAAP Gross Margin, Free Cash Flow) are used to understand core operating performance, excluding items like depreciation, stock-based compensation, and capital expenditures[424][425][427][428](index=428&type=chunk] Non-GAAP Gross Profit and Margin (Fiscal Years, in thousands) | Metric | 2025 | 2024 | 2023 | | :---------------------------------------------------- | :--------- | :--------- | :--------- | | Revenue (in thousands) | $1,462,570 | $1,290,172 | $1,058,468 | | Gross profit (in thousands) | $1,190,467 | $1,055,556 | $864,491 | | Add: Depreciation and amortization (in thousands) | $42,298 | $44,722 | $42,967 | | Add: Stock-based compensation and related payroll taxes (in thousands) | $9,920 | $9,594 | $9,428 | | Non-GAAP gross profit (in thousands) | $1,242,685 | $1,109,872 | $916,886 | | Gross margin | 81.4% | 81.8% | 81.7% | | Non-GAAP gross margin | 85.0% | 86.0% | 86.6% | Free Cash Flow (Fiscal Years, in thousands) | Metric | 2025 | 2024 | 2023 | | :------------------------------------------ | :--------- | :--------- | :--------- | | Net cash provided by operating activities (in thousands) | $350,644 | $278,771 | $187,768 | | Purchases of property and equipment (in thousands) | $(4,335) | $(976) | $(7,589) | | Capitalization of internal-use software costs (in thousands) | $(33,767) | $(19,917) | $(23,614) | | Free cash flow (in thousands) | $312,542 | $257,878 | $156,565 | Liquidity and Capital Resources As of June 30, 2025, BILL had $1.0 billion in cash, $1.2 billion in short-term investments, and $420.0 million in undrawn credit, believing current liquidity is sufficient for the next 12 months Liquidity Sources (as of June 30, 2025, in billions) | Source | Amount (in billions) | | :-------------------------------- | :----- | | Cash and cash equivalents | $1.0 | | Available-for-sale short-term investments | $1.2 | | Undrawn Revolving Credit Facilities | $0.42 | - In December 2024, $1.4 billion in 2030 convertible senior notes were issued, with net proceeds used to repurchase 2025 and 2027 notes ($130.8 million and $408.6 million, respectively), repurchase $200.0 million of common stock, and pay $93.0 million for capped call transactions[432] - The company believes current liquidity is sufficient for the next 12 months but may raise additional capital through equity or debt, potentially diluting existing stockholders or increasing fixed payment obligations[433](index=433&type=chunk] - Share repurchase programs include the completion of the August 2024 program ($300.0 million) in July 2025 and the authorization of a new $300 million 2025 Share Repurchase Program in August 2025[437][438](index=438&type=chunk] Cash Flows Net cash from operating activities increased to $350.6 million in fiscal 2025, while investing activities used $817.4 million, and financing activities provided $666.5 million Consolidated Cash Flows (Fiscal Years, in thousands) | Cash Flow Type | 2025 | 2024 | 2023 | | :-------------------------------- | :--------- | :--------- | :--------- | | Net cash provided by operating activities (in thousands) | $350,644 | $278,771 | $187,768 | | Net cash provided by (used in) investing activities (in thousands) | $(817,390) | $(409,374) | $259,285 | | Net cash provided by (used in) financing activities (in thousands) | $666,522 | $(742,599) | $235,110 | - Net cash from operating activities increased due to revenue growth[443] - Net cash used in investing activities increased due to decreased proceeds from maturities of corporate/customer short-term investments and increased purchases, offset by changes in acquired card receivables[445](index=445&type=chunk] - Net cash provided by financing activities was driven by proceeds from new convertible senior notes, decreased payments for note repurchases, and increased prepaid card deposits, partially offset by increased common stock repurchases and capped call purchases[447](index=447&type=chunk] 2030 Notes On December 6, 2024, BILL issued $1.4 billion in 0% convertible senior notes due April 1, 2030, with an initial conversion price of approximately $119.45 per share - Issued $1.4 billion in 0% convertible senior notes due April 1, 2030, on December 6, 2024[448] - Notes are senior, unsecured obligations, convertible under specific conditions (e.g., stock price exceeding 130% of conversion price)[448](index=448&type=chunk] - Initial conversion price is approximately $119.45 per share, with intent to settle conversions using cash for principal and common stock for excess value[448](index=448&type=chunk] 2027 Notes BILL issued $575.0 million in 0% convertible senior notes due April 1, 2027; $451.5 million principal was repurchased in December 2024, leaving $123.5 million outstanding - Issued $575.0 million in 0% convertible senior notes due April 1, 2027, on September 24, 2021[449] - In December 2024, $451.5 million principal amount was repurchased for $408.6 million, leaving $123.5 million outstanding[452](index=452&type=chunk] - Initial conversion price was approximately $414.80 per share, with intent to settle conversions using cash for principal and common stock for excess value[449][451](index=451&type=chunk] 2025 Notes BILL issued $1.15 billion in 0% convertible senior notes due December 1, 2025; repurchases reduced the outstanding principal to $33.5 million - Issued $1.15 billion in 0% convertible senior notes due December 1, 2025, on November 30, 2020[453] - Repurchases in fiscal 2024 and December 2024 (totaling $982.7 million and $133.9 million principal, respectively) reduced the outstanding amount to $33.5 million[454](index=454&type=chunk] - Initial conversion price was approximately $160.88 per share, with intent to settle conversions using cash for principal and common stock for excess value[453](index=453&type=chunk] Revolving Credit Facilities BILL has two revolving credit facilities totaling $600.0 million capacity, secured by BILL Divvy Card receivables, with $180.0 million drawn from one and $150.0 million from the other - Total borrowing capacity from Revolving Credit Facilities is $600.0 million[431] - The 2021 Credit Facility has a $300.0 million capacity, with $180.0 million drawn as of June 30, 2025, maturing in June 2026[455](index=455&type=chunk] - The 2025 Credit Facility, established in May 2025, has a $300.0 million capacity, with $150.0 million borrowed in July 2025, maturing in November 2027[456](index=456&type=chunk] - Both facilities are secured by BILL Divvy Card receivables and subject to limited guarantees by BILL Holdings, Inc. and compliance with covenants[455][457](index=457&type=chunk] Off-Balance Sheet Arrangements BILL is contractually obligated to purchase all card receivables from Issuing Banks, including $76.0 million in authorized but uncleared transactions, and has $3.6 billion in unused credit available - Contractually obligated to purchase all card receivables from Issuing Banks, including $76.0 million in authorized but uncleared transactions as of June 30, 2025, which are off-balance sheet[458](index=458&type=chunk] - Approximately $3.6 billion in unused credit was available to spending businesses and invoice financing borrowers as of June 30, 2025, not expected to be fully utilized[460](index=460&type=chunk] Critical Accounting Estimates BILL's financial statements require significant estimates for expected credit losses, goodwill impairment, and accrued rewards, involving substantial judgment and periodic review - Critical accounting estimates include expected credit losses on acquired card receivables and loans held for investment, goodwill valuation, and accrued rewards liability[463](index=463&type=chunk] - Estimates for expected credit losses involve models incorporating historical loss experience, current/future economic conditions, and portfolio segmentation by credit limit size, with qualitative reserves for unrepresented factors[464][465](index=465&type=chunk] - Goodwill is monitored annually for impairment, with potential for non-cash impairment charges if financial results or macroeconomic conditions negatively impact fair value[467](index=467&type=chunk] - Accrued rewards liability is estimated based on historical redemption trends and weighted-average redemption costs, assuming substantially all earned rewards will be redeemed[468](index=468&type=chunk] Recent Accounting Pronouncements BILL adopted ASU 2023-07 retrospectively for fiscal 2025, and has several new ASUs (2023-09, 2024-03, 2024-04, 2025-05) effective in fiscal years 2026-2027 - Adopted ASU 2023-07 (Reportable Segments) retrospectively for fiscal year ended June 30, 2025, enhancing segment expense disclosures[594][595](index=595&type=chunk] - New ASUs not yet adopted include ASU 2023-09 (Income Tax Disclosures, effective fiscal 2026), ASU 2024-03 (Disaggregation of Income Statement Expenses, effective fiscal 2027), ASU 2024-04 (Induced Conversions of Convertible Debt Instruments, effective fiscal 2026), and ASU 2025-05 (Financial Instruments - Credit Losses, effective fiscal 2026)[596][597][598][599](index=599&type=chunk] Quantitative and Qualitative Disclosures About Market Risk BILL faces market risks from interest rate fluctuations on investments and customer funds, credit risk on receivables, and immaterial foreign currency exchange risk - Investment portfolio includes corporate investments and funds held for customers, primarily in highly liquid, investment-grade marketable securities and cash equivalents[471] - Exposed to interest rate risk on corporate cash and customer funds, with interest earned on customer funds recognized as revenue. The annualized interest rate earned decreased to 4.50% in fiscal 2025 from 5.07% in fiscal 2024[474][475](index=475