Summary
BILL reported first quarter fiscal 2024 total revenue of $305.0 million, up 32.6% from the prior-year quarter. Core revenue, which the company defines as subscription and transaction fees, was $265.1 million, up 24%. The quarter ended September 30, 2023. Business metrics showed 471,200 businesses using BILL's solutions, total payment volume of $70 billion, up 8%, and 25 million transactions processed, up 26%. BILL also launched an integrated financial operations platform that combines accounts payable, accounts receivable, and spend and expense management. The company promoted John Rettig to President and CFO.
Profitability improved on a GAAP basis. Gross profit was $249.0 million, up 34.7%, and gross margin was 81.6%, up 1.2 percentage points. The operating loss was $56.6 million, up 35.4% from the prior-year quarter, and operating margin was negative 18.6%, up 19.6 percentage points. The net loss was $27.9 million, up 65.9%, and diluted loss per share was $0.26, up 66.7%. On a non-GAAP basis, gross profit was $262.7 million with an 86.1% gross margin, income from operations was $33.4 million, and net income was $63.9 million, or $0.54 per diluted share. Operating cash flow was $53.7 million, up 195.6%, while capital expenditures were $0.4 million, down 70.7%. Free cash flow, a non-GAAP measure, was $47.6 million. Deferred revenue, current portion, was $19.5 million, down 35.9%, and remaining performance obligations were $125.1 million, down 12.6%.
Guidance for the fiscal second quarter ending December 31, 2023 points to total revenue growth of 13% to 17%, non-GAAP net income of $42 million to $52 million, and non-GAAP net income per diluted share of $0.35 to $0.44. For the full fiscal year ending June 30, 2024, BILL guides total revenue growth of 14% to 18%, non-GAAP net income of $195 million to $235 million, and non-GAAP net income per diluted share of $1.64 to $1.97. The company did not provide a reconciliation of non-GAAP net income guidance to the most directly comparable GAAP measures because certain items cannot be reasonably calculated or predicted at this time.
Management pointed to a challenging macro environment. The MD&A says SMB customers and spending businesses have moderated expenditures and, in some cases, shifted to lower-cost payment methods, which has reduced payment volume growth and transaction fee growth relative to historical trends. The company expects these impacts to persist in the near term. Higher interest rates lifted interest on funds held for customers, which supported revenue growth and gross margin. BILL also noted that the rate of growth in the number of businesses using its solutions may be affected by macroeconomic conditions. Risks include inflation, volatile markets, foreign exchange fluctuations, a history of operating losses, rapid growth, the large sums of customer funds transferred daily, fraud and credit losses on BILL Divvy Corporate Cards, competition, acquisition integration, and dependence on accounting firm and financial institution partners. The company also cited the global impacts of the conflicts in Ukraine and Israel. BILL held $1.5 billion in cash and cash equivalents and $1.1 billion in short-term investments as of September 30, 2023. It had $90.0 million undrawn on a $225.0 million revolver commitment and $135.0 million drawn. In March 2023, the company dealt with the closure of Silicon Valley Bank, where it held company and customer funds; all funds were preserved and pending transactions were re-routed through other banking partners.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2024 | Q4 FY2023 | QoQ | Q1 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $305.0M | $296.0M | +3.0% | $229.9M | +32.6% |
| Gross profit | $249.0M | $243.4M | +2.3% | $184.8M | +34.7% |
| Gross margin | 81.6% | 82.2% | -0.6 pp | 80.4% | +1.3 pp |
| Research & development | $89.1M | $81.8M | +8.8% | $75.1M | +18.6% |
| Sales & marketing | $118.4M | $117.2M | +1.0% | $118.6M | -0.2% |
| General & administrative | $85.3M | $73.4M | +16.2% | $66.7M | +27.9% |
| Total operating expenses | $305.6M | $284.8M | +7.3% | $272.5M | +12.1% |
| Operating income (loss) | -$56.6M | -$41.4M | -36.8% | -$87.7M | +35.4% |
| Operating margin | -18.6% | -14.0% | -4.6 pp | -38.1% | +19.6 pp |
| Net income (loss) | -$27.9M | -$15.9M | -75.5% | -$81.6M | +65.9% |
| Net margin | -9.1% | -5.4% | -3.8 pp | -35.5% | +26.4 pp |
| Diluted EPS | -$0.26 | -$0.15 | -$0.11 | -$0.78 | +$0.52 |
Risks
A significant portion of revenue comes from SMBs, which have fewer financial resources to weather downturns, inflation, high interest rates, and banking instability. MD&A states that the macroeconomic environment caused BILL standalone customers and BILL Spend and Expense spending businesses to moderate expenditures and shift to lower-cost payment methods, resulting in lower payment volume growth and lower transaction fee growth than historical trends.
Revenue from interest on funds held for customers increased 160% to $39.8 million and was 13% of total revenue in the quarter ended September 30, 2023, up from 7% in the prior-year quarter. Management does not expect this interest revenue expansion to continue and says revenue would decrease if interest rates decline or customers increasingly use instant transfer or BILL Divvy Corporate Card.
BILL Divvy Corporate Card exposes the company to the entire credit risk on participation interests it purchases, and it does not file UCC liens or take security interests on card balances. General and administrative expense increased $18.6 million in the quarter ended September 30, 2023, including a $7.8 million increase in provision for expected credit losses and fraud losses mainly due to an increase in acquired card receivables.
The BILL Divvy Corporate Card program relies on warehouse facilities and purchase arrangements with funding sources; if these are not renewed or finance partners stop purchasing participation interests, BILL may have to fund purchases with corporate cash. As of September 30, 2023, $135.0 million was drawn under the Revolving Credit Facility, which matures in June 2024 and is secured by BILL Divvy Corporate Card receivables.
Extensions of credit are originated through Cross River Bank and WEX Bank, and the bank-nonbank program structure faces true lender and valid when made challenges plus increased regulatory scrutiny. Adverse orders against the Issuing Banks could restrict their ability to extend credit through the platform or impose tighter underwriting and compliance controls.
The market is highly fragmented and competitive, and Intuit announced in September 2022 its intention to launch a native bill payment solution. Accounting software providers and financial institution partners may bundle competing solutions at lower or no additional cost, potentially harming BILL's pricing and market acceptance.
The company is responsible for verifying customer identities and monitoring transactions for fraud, and it has been and will continue to be targeted by account takeover, stolen identities, check fraud, and other techniques. Risk management failures could expose BILL to material financial losses, liability, regulatory sanctions, and reputational harm.
As of September 30, 2023, BILL had $1.15 billion aggregate principal amount of 0% convertible senior notes due December 1, 2025 and $575.0 million aggregate principal amount of 0% convertible senior notes due April 1, 2027. The conversion condition was not triggered as of September 30, 2023 but had been triggered for the 2025 Notes in several prior quarters, and cash settlement or repurchase obligations could strain liquidity.
Founder and CEO René Lacerte is critical to management, product development, partnerships, and culture, and BILL does not have key person insurance for any employees. Some key employees have fully vested and publicly tradable equity, and competition for software developers and compliance and risk personnel is intense.
Relationships with more than 7,000 accounting firm partners contribute a significant portion of consolidated revenue, and BILL has an exclusive partnership with CPA.com to market certain products to accounting firms. If its reputation in the accounting industry suffers or it cannot grow these relationships, growth prospects would weaken.
Competitors may introduce new platforms or services that are easier to use or more advanced, especially related to AI-based services, and competition includes data asset size and ability to leverage AI to grow faster. BILL's AI-enabled platform faces rapid technological change that could reduce demand.
Revenue increased 32.6% to $305.0 million in the quarter ended September 30, 2023, but management expects its growth rate will decline in the future as a result of increasing scale. Growth depends on factors including pricing, payment volume, interest income on customer funds, and international expansion.
SaaS KPIs
All quarters →Free Cash Flow
Non-GAAP Gross Margin
Businesses using our solutions
Core Revenue
Non-GAAP Income from Operations
Summary, forecast, risks and KPIs are extracted from BILL Holdings, Inc.'s SEC filings for Q1 FY2024 (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.