Summary
Bill.com reported total revenue of $46.2 million for its fiscal 2021 first quarter, up 31% from the first quarter of fiscal 2020. Gross profit was $34.1 million, up 31.0%. Gross margin was 73.8%, down 0.2 percentage points from the prior-year quarter. Non-GAAP gross profit was $35.6 million, a 77.0% non-GAAP gross margin, compared with $27.2 million and 77.2% in the prior-year quarter. The company said demand was strong as SMB customers returned to more normal activity and adopted a broader mix of payment methods. Management highlighted the rollout of Instant Transfer in pilot mode, which lets businesses make real-time payments to vendors.
Profitability went the other way. Operating loss widened to $13.8 million from the prior-year quarter. Operating margin was -29.8%, down 12.0 percentage points. Net loss widened to $13.0 million from the prior-year quarter. Diluted EPS was ($0.16), narrowing from the prior-year quarter. On a non-GAAP basis, loss from operations was $3.7 million, and non-GAAP net loss was $2.8 million. The non-GAAP figures exclude items such as stock-based compensation and amortization of deferred costs. Management attributed the wider GAAP losses to higher headcount, public-company costs, and investments in product development.
The customer base and payment activity kept growing. Bill.com served 103,600 customers as of September 30, 2020, up 27% year over year. Total Payment Volume was $28.8 billion, up 31%. Transactions processed were 6.5 million, up 10%. Average subscription revenue per customer increased 7%, and average transaction fees per customer increased 43%. The company expanded its executive team with Tom Clayton as Chief Revenue Officer. It also added Colleen Taylor and Allie Kline to its board of directors.
Cash flow showed the strain of investment. Net cash used in operating activities was $2.4 million, up 1.0% from the prior-year quarter. Capital expenditures were $5.9 million, up 202.9%. Free cash flow, a non-GAAP measure that subtracts purchases of property and equipment and capitalized internal-use software costs, was negative $8.6 million, compared with negative $4.5 million in the prior-year quarter. Deferred revenue was $6.2 million at September 30, 2020, and remaining performance obligations were $151.2 million. The average daily balance of customer funds in transit increased to approximately $1.6 billion from approximately $1.3 billion, an increase of 23%.
Management said the conference call would cover the outlook for the second quarter of fiscal 2021. The release pointed to risks including the COVID-19 pandemic and its impact on customers, partners, and vendors; the company's history of operating losses; the large sums of customer funds it transfers daily; the risk of loss, errors, and fraudulent activity; and market, interest rate, foreign exchange, and other conditions affecting customer funds held in trust. The company also said it had no off-balance sheet arrangements as of September 30, 2020.
The quarter's results reflect a company investing heavily for growth. Revenue and gross profit rose, but GAAP operating and net losses widened. Non-GAAP losses were smaller, which shows how much of the GAAP loss came from non-cash and other excluded expenses. The business remains sensitive to interest rates because it earns revenue on customer funds held while payments clear. The average rate of return on customer funds was 0.62%, down 147 basis points from the prior-year quarter. That pressure matters because interest on funds held for customers is part of total revenue. The company faces execution risk as it adds customers, partners, and products while managing the effects of the pandemic.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2021 | Q4 FY2020 | QoQ | Q1 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $46.2M | $42.1M | +9.7% | — | — |
| Gross profit | $34.1M | $32.0M | +6.5% | — | — |
| Gross margin | 73.8% | 76.0% | -2.2 pp | — | — |
| Research & development | $17.8M | $14.9M | +19.1% | — | — |
| Sales & marketing | $12.9M | $11.8M | +9.4% | — | — |
| General & administrative | $17.2M | $15.5M | +10.6% | — | — |
| Total operating expenses | $47.9M | $42.3M | +13.3% | — | — |
| Operating income (loss) | -$13.8M | -$10.3M | -34.3% | — | — |
| Operating margin | -29.8% | -24.4% | -5.4 pp | — | — |
| Net income (loss) | -$13.0M | -$9.5M | -36.4% | — | — |
| Net margin | -28.0% | -22.6% | -5.5 pp | — | — |
Risks
The company has a history of operating losses, with net loss widening to $13.0 million in the quarter ended September 30, 2020 from $5.7 million in the prior-year quarter, and an accumulated deficit of $161.7 million as of September 30, 2020. Management expects costs and expenses to increase, and operating margin declined to -29.8% in the current quarter from -17.9% in the prior-year quarter.
Revenue from interest on funds held for customers decreased to $2.4 million in the quarter ended September 30, 2020 from $6.6 million in the prior-year quarter, a decrease of 63%, due to a lower yield after the Federal Reserve cut rates; this revenue was 5% of total revenue in the current quarter versus 19% in the prior-year quarter.
The pandemic may cause customers to go out of business, request discounts or extended payment terms, or cancel subscriptions, and it has already contributed to lower interest rates and remote work disruptions. The filing also notes vendor and facility construction delays and increased uncertainty for future results.
The company is responsible for verifying customer identities and monitoring transactions, and its platform has been and will continue to be targeted by fraud techniques such as stolen identities, compromised business email, account takeover, and check fraud. Risk management processes may not prevent all fraud, and a single customer or small number of customers could cause material losses as usage grows.
The company transfers large sums of customer funds daily, with over 103,000 customers processing approximately $28.8 billion in TPV in the quarter ended September 30, 2020. Errors, credit losses, software defects, service disruptions, or employee misconduct could cause financial losses, reputational damage, or loss of customer trust.
Accounting firm partners, nearly 5,000 in total, accounted for approximately 50% of total customers and 46% of total revenue as of and during the quarter ended September 30, 2020. The Intuit agreement terminates on June 26, 2023 unless earlier terminated, and Intuit has integrated another third-party bill pay solution into QuickBooks.
The company is licensed as a money transmitter in all required U.S. states and is subject to anti-money laundering, BSA, and other requirements. Regulators have previously identified violations and imposed fines, and third-party auditors have identified gaps in its anti-money laundering program; failure to maintain licenses or controls could materially harm the business.
The market for financial back-office solutions is fragmented and competitive, and competitors, including Intuit, financial institutions, and accounting software providers, may bundle competing solutions at lower prices or develop or acquire products that compete with the platform. New entrants and AI-based services could reduce demand.
The company relies on risk-free trials and digital marketing, but many trial customers never convert to paid customers, and conversion often requires extensive follow-up and internal advocacy. Lower-priced products or promotions offered to attract new customers may reduce profitability.
Most customer and accounting firm contracts are open-ended arrangements that can be terminated by either party without penalty at any time, and the company cannot accurately predict renewal or expansion rates. If customers do not renew or reduce usage, revenue and operating results would decline.
The platform depends on third-party cloud and data center providers including AWS, Equinix, Iron Mountain, and Digital West. The company is migrating systems to AWS with limited operating history on AWS, and interruptions, migration issues, or AWS termination could cause service disruptions and additional costs.
The company depends on banks including JPMorgan Chase, The Bancorp Bank, and Silicon Valley Bank for ACH and check processing, Cambridge Mercantile for cross-border wires, and Comdata for virtual card program management. Termination of these agreements could cause service interruptions, delays, and additional expenses.
The company depends on founder and CEO René Lacerte and other key employees, has no key person insurance, and notes that some key employees have fully vested equity that is publicly tradable. Loss of key personnel, including due to COVID-19 illness, could harm the business and replacements may not be found.
The company handles personal and business information subject to evolving privacy and data protection laws, including the California Consumer Privacy Act and potentially the GDPR. Compliance failures could lead to investigations, fines, litigation, and required changes to products or practices.
The Senior Facilities Agreement provides a revolving credit facility up to $50.0 million, is secured by substantially all assets, and contains restrictive covenants including minimum Net Revenue levels. A default could allow lenders to accelerate borrowings and foreclose on collateral, adversely affecting liquidity and operations.
Revenue grew to $46.2 million in the quarter ended September 30, 2020 from $35.2 million in the prior-year quarter, up 31.4%, but management expects the growth rate to decline and rapid growth strains risk management, internal controls, and infrastructure. Failure to scale could lead to service interruptions, lower renewal rates, or reduced customer satisfaction.
SaaS KPIs
All quarters →Free Cash Flow
Non-GAAP Gross Margin
Total Payment Volume
Transactions Processed
Number of customers
Non-GAAP Gross Profit
Non-GAAP loss from operations
Summary, forecast, risks and KPIs are extracted from BILL Holdings, Inc.'s SEC filings for Q1 FY2021 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.