Bill Holdings, Inc. Q1 FY2025 earnings call

• Q1 delivered strong financial results with core revenue growth of 19% y-o-y, above expectations and acceleration from previous quarter. - Achieved non-GAAP operating income margin of 19% and expanded free-cash-flow margin to 23%. - Empowered over 475,000 businesses to automate financial operations and managed $80 billion in total payment volume. - Innovated in payment offerings, including real-time funding options and making BILL Divvy card available for AP payments; broadened international payment and local transfer to over two dozen countries. - Scaled working capital solutions like invoice financing with 70% repeat users. - Applied AI to platform experience, e.g., introduced Sync Assist for seamless accounting system syncing. - Built a large and diverse distribution ecosystem including direct sales, partnerships with accounting firms, etc. - Added Mary Kay Bowman to executive team as EVP of Payments and Financial Services. - Repurchased $200 million of shares under the share repurchase program.

In Q1, total revenue was $358 million, up 18% year-over-year. Core revenue, including subscription and transaction fees, was $315 million, up 19% year-over-year. Float revenue was $44 million. Revenue from the integrated platform (including BILL AP/AR and Spend & Expense, excluding the financial institution channel) was $295 million, up 18% year-over-year. BILL AP/AR revenue was $162 million, up 13% year-over-year, with TPV growing 12% year-over-year and TPV per customer growing 2% year-over-year. BILL Spend & Expense revenue was $133 million, up 25% year-over-year, driven by 26% card payment volume growth. Revenue from embedded and other solutions (including the financial institution channel, Invoice2go, and other solutions) was $20 million, up 28% year-over-year. Non-GAAP gross profit in Q1 was $307 million, up 17% year-over-year, with non-GAAP gross margin at 86%. Non-GAAP operating income was $67 million, representing a 19% non-GAAP operating margin. Free-cash-flow margin expanded to 23%.

• Fiscal Q2 total revenue expected to be in the range of $355.5 million to $360.5 million; core revenue expected to be in the range of $316 million to $321 million, reflecting 15% to 17% y-o-y growth; float revenue expected to be $39.5 million. - Q2 non-GAAP operating income expected to be in the range of $47.5 million to $52.5 million; non-GAAP net income expected to be in the range of $48 million to $52 million. - Full-year 2025 total revenue expected to be in the range of $1.439 billion to $1.464 billion; core revenue expected to be in the range of $1.291 billion to $1.316 billion, reflecting 15% to 17% y-o-y growth; float revenue expected to be approximately $148 million. - Full-year 2025 non-GAAP operating income expected to be in the range of $182.5 million to $207.5 million; non-GAAP net income expected to be in the range of $181.5 million to $201.5 million; non-GAAP net income per diluted share expected to be $1.65 to $1.83.

• Uncertainty in the economy which may impact SMBs' investment and growth decisions. - Policy changes or other external factors that could affect the business environment.

Q: Hi, Rene. Hi, John. Thanks for taking my questions and great results here. I wanted to dig in on just BILL AP/AR. It sounds like you're having some success moving upmarket there. If you could just drill down on the strategy and talk about what's working? And then just from a model perspective, maybe a little bit about how that should manifest in terms of TPV or TPV per customer moving forward?

A: Thank you, Andrew. Yes, we really - our focus the past quarter on driving lots more functionality per customer, driving a lot more value for them has actually delivered results. And so we take seriously our commitments and our ability to accelerate revenue and profitability and kind of hit the Rule of 40 is something that we're excited about. It's because of what we're able to do for our customers. So in particular with AP and AR, what we were able to do is we focused on the priorities that we talked about last year, last quarter, I should say, and one of those was go-to-market and really focusing the team on driving more concentration on onboarding customers that are larger and helping them get success with the platform early. And that was one of the examples we quoted in the reported remarks, which was 40% increase in new spend for customers. So definitely, our focused efforts on go-to-market have made a difference. Our focused efforts around the platform made a difference, and we think there is a lot of opportunity to continue to drive adoption across the SMB landscape. Just as a reminder, we have 4% of the AP/AR customers across the country, and we gave the stat there that roughly 5% of the larger businesses have adopted an AP/AR solution. So there's a lot more room to go, and we feel really good about the opportunities that we have in front of us.

Q: Hi guys, congrats on the progress here. Good to see some of the volume pick up. I did want to follow up on take rate, John. It sounded like it came in kind of where you expected it to be. I assume, just thinking about the pluses and minuses going into next quarter, probably more stable. And then a little bit of a pickup, I think, in the second half is what you reiterated. Maybe you can just go through the cadence of the quarter and remind us what causes that pickup in the second half of the year for the volume take rate?

A: Sure. Thanks, Bryan. Yes, we're expecting transaction monetization to be in the ballpark of Q1 as we get into Q2 here. It could be slightly up or slightly down, but this is mainly driven by the seasonally strong TPV volume that we see in the December quarter, which comes at a time when we are growing, as Rene mentioned, our ad valorem volume overall, but it's at a slower-growth rate than that seasonal uptick will present. So we feel good about the opportunity to grow that volume. And as that increases in the second half of the year, we are expecting a modest uptick in that take rate in monetization. Another, I think, point worth making is that we are continuing to grow transaction yields. So our transaction monetization is increasing. So transaction revenue per transaction per BILL AP/AR was up 5% year-over-year and 3% quarter-to-quarter in the first quarter, even though take rate was actually flat quarter-to-quarter. So I think a lot of the things that we're investing in, the levers that we have, will start to show an uptick in the second half of the year.

Q: Hi, thanks so much. Good afternoon here, Rene and John. Just great results, of course. The $45 million investments, I just wanted to maybe get a little bit more there. Are you spending on time, on track with your plan and any learnings so far that's worth sharing?

A: Yes, thanks for the question. We are making progress with our investments, and we're starting to see some of the interesting business results that we highlighted a little bit earlier in the prepared remarks. We do expect that the spend profile associated with that $45 million pull-forward to be a little more back-end loaded throughout the fiscal year. And this has just to do with the timing of hiring and getting people on the ground. We do expect to fully spend that incremental investment amount, and we'll grow into that, and with an increase in the pace of hiring as we get from Q2 to Q4 here. So we feel good about the progress we're making and the cadence of those investments and especially positive about the early signs of progress that we're seeing.