Bill.com Holdings, Inc. (BILL) Bundle
Understanding Bill.com Holdings, Inc. (BILL) Revenue Streams
Understanding Bill.com Holdings, Inc. Revenue Streams
The revenue for Bill.com Holdings, Inc. for the three months ended September 30, 2024, was $358.5 million, compared to $305.0 million for the same period in 2023, representing an increase of $53.5 million or 18% year-over-year.
Breakdown of Primary Revenue Sources
Bill.com generates revenue primarily from the following sources:
- Subscription and transaction fees: $314.9 million for Q3 2024 compared to $265.1 million in Q3 2023, a 19% increase.
- Interest on funds held for customers: $43.5 million in Q3 2024, up from $39.8 million in Q3 2023, marking a 9% increase.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate is as follows:
- Total Revenue Growth: 18%
- Subscription Revenue Growth: 8% (from $62.4 million to $67.4 million)
- Transaction Fee Revenue Growth: 22% (from $202.7 million to $247.5 million)
- Interest Revenue Growth: 9% (from $39.8 million to $43.5 million)
Contribution of Different Business Segments to Overall Revenue
The contributions from different segments for the three months ended September 30, 2024, are as follows:
| Segment | Revenue (in thousands) | Percentage of Total Revenue |
|---|---|---|
| BILL AP/AR | $162,256 | 45.2% |
| BILL Spend and Expense | $132,604 | 36.9% |
| Embedded and Other Solutions | $20,083 | 5.6% |
| Interest on Funds Held | $43,507 | 12.1% |
| Total Revenue | $358,450 | 100% |
Analysis of Significant Changes in Revenue Streams
Notable changes in revenue streams for the three months ended September 30, 2024:
- Transaction fees increased by $44.8 million, primarily due to a rise in total payment volume driven by customer adoption.
- Subscription revenue rose by $5.0 million due to an increase in customers.
- Interest income increased by $3.7 million due to higher average balances of funds held for customers and rising interest rates.
The total payment volume (TPV) transacted by customers was approximately $79.8 billion in Q3 2024, compared to $70.2 billion in Q3 2023, indicating a 14% increase in transaction volume.
A Deep Dive into Bill.com Holdings, Inc. (BILL) Profitability
A Deep Dive into Profitability
Gross Profit: For the three months ended September 30, 2024, the gross profit was $293,754 thousand, compared to $248,959 thousand for the same period in 2023, indicating an increase of $44,795 thousand or 18%.
Gross Margin: The gross margin for the three months ended September 30, 2024 was 82.0%, slightly up from 81.6% in the previous year.
| Metric | Q3 2024 | Q3 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Gross Profit | $293,754 | $248,959 | $44,795 | 18% |
| Gross Margin | 82.0% | 81.6% | 0.4% | — |
Operating Profit: The operating loss for the three months ended September 30, 2024 was ($7,698) thousand, significantly improved from an operating loss of ($56,647) thousand in Q3 2023.
Net Profit: The net income for the three months ended September 30, 2024 was $8,912 thousand, a recovery from a net loss of ($27,861) thousand in the same quarter of the previous year.
| Metric | Q3 2024 | Q3 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Operating Loss | ($7,698) | ($56,647) | $48,949 | (86%) |
| Net Income | $8,912 | ($27,861) | $36,773 | (132%) |
Profitability Ratios: The profitability ratios for the three months ended September 30, 2024 compared to the previous year are as follows:
| Ratio | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Profit Margin | 2.5% | (9.1%) |
| Operating Margin | (2.1%) | (18.6%) |
Trends in Profitability: The trends in profitability metrics show a significant recovery from losses to profitability in Q3 2024, with a net profit margin of 2.5%, compared to a negative margin in Q3 2023.
Comparison with Industry Averages: The industry average net profit margin for financial technology companies is approximately 10%, indicating room for growth for this company despite recent improvements.
Operational Efficiency: The company has managed to reduce its operating expenses, contributing to improved profitability. Operating expenses decreased to $301,452 thousand in Q3 2024 from $305,606 thousand in Q3 2023.
| Expense Type | Q3 2024 | Q3 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Research and Development | $78,685 | $89,065 | ($10,380) | (12%) |
| Sales and Marketing | $126,322 | $118,398 | $7,924 | 7% |
| General and Administrative | $66,771 | $73,251 | ($6,480) | (9%) |
Debt vs. Equity: How Bill.com Holdings, Inc. (BILL) Finances Its Growth
Debt vs. Equity: How Bill.com Holdings, Inc. Finances Its Growth
Debt Levels
As of September 30, 2024, the company has a total debt of $914.8 million. This includes:
-
Convertible Senior Notes:
- 2025 Notes: $167.3 million
- 2027 Notes: $575 million
- Borrowings from Revolving Credit Facility: $180 million
The company’s long-term debt consists of the convertible senior notes, while the short-term debt is primarily related to the revolving credit facility. The effective interest rates for the notes are 0.36% for the 2025 Notes and 0.48% for the 2027 Notes .
Debt-to-Equity Ratio
The debt-to-equity ratio as of September 30, 2024, is calculated as follows:
Total Debt: $914.8 million
Total Equity: $4,013.2 million
Debt-to-Equity Ratio: 0.23
This ratio is below the industry average of approximately 0.5, indicating a relatively conservative capital structure .
Recent Debt Issuances
The company issued $575 million in 2027 Notes on September 24, 2021, and $1.15 billion in 2025 Notes on November 30, 2020. In fiscal 2024, it repurchased $982.7 million of the 2025 Notes, leaving $233.2 million still outstanding .
Credit Ratings
The company's credit ratings reflect its ability to manage debt effectively. The current ratings are not specified, but the low-interest rates on its convertible notes suggest a favorable credit rating .
Balancing Debt Financing and Equity Funding
The company has strategically balanced its use of debt and equity to fund growth. Recent activities include:
- Repurchase of 3.7 million shares for $201.7 million under a new share repurchase program in August 2024 .
- Maintaining cash and cash equivalents of $853.5 million as of September 30, 2024, which provides liquidity to manage operational costs and invest in growth .
| Debt Type | Principal Amount ($ million) | Effective Interest Rate (%) | Maturity Date |
|---|---|---|---|
| 2025 Notes | 167.3 | 0.36 | December 1, 2025 |
| 2027 Notes | 575.0 | 0.48 | April 1, 2027 |
| Revolving Credit Facility | 180.0 | 8.81 | Ongoing |
Assessing Bill.com Holdings, Inc. (BILL) Liquidity
Assessing Liquidity and Solvency
As of September 30, 2024, the liquidity position of the company is reflected in the following key metrics:
- Current Ratio: 1.53 (calculated as Total Current Assets of $6,204,201,000 divided by Total Current Liabilities of $4,055,714,000).
- Quick Ratio: 1.53 (same as the current ratio due to minimal inventory on hand).
The current and quick ratios indicate a strong liquidity position, suggesting that the company can cover its short-term obligations comfortably.
Working Capital Trends
Working capital, defined as current assets minus current liabilities, stands at:
Working Capital: $2,148,487,000
This represents a slight decrease from the previous quarter's working capital of $2,251,793,000, indicating a change in the company's short-term financial health.
Cash Flow Statements Overview
Analyzing the cash flow statements for the three months ended September 30, 2024, we see the following trends:
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net Cash Provided by Operating Activities | $88,582 | $53,661 |
| Net Cash Used in Investing Activities | ($139,538) | $301,774 |
| Net Cash Used in Financing Activities | ($105,153) | ($111,909) |
The increase in cash provided by operating activities reflects a significant improvement in revenue generation, contributing to the overall liquidity.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company has:
- Cash and Cash Equivalents: $853,470,000
- Short-term Investments: $619,596,000
- Undrawn Revolving Credit Facility: $120,000,000
The total liquidity available amounts to:
Total Liquidity: $1,593,066,000
This robust liquidity position, coupled with the company's ability to generate cash from operations, suggests that it is well-prepared to meet its financial obligations for the foreseeable future. However, the significant cash outflow in investing activities indicates ongoing investments that could impact liquidity if not managed carefully.
Is Bill.com Holdings, Inc. (BILL) Overvalued or Undervalued?
Valuation Analysis
To determine whether the company is overvalued or undervalued, we will analyze key valuation ratios, stock price trends, and analyst consensus on stock valuation.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the company reported a net income of $8,912,000. With approximately 107,322,000 diluted shares outstanding, this results in a diluted earnings per share (EPS) of $0.08. Given a stock price of approximately $53.15, the P/E ratio is calculated as follows:
P/E Ratio = Stock Price / EPS = $53.15 / $0.08 = 664.38
Price-to-Book (P/B) Ratio
As of September 30, 2024, the total stockholders' equity was $4,013,245,000 with 103,489,000 shares outstanding. The book value per share is:
Book Value per Share = Total Equity / Shares Outstanding = $4,013,245,000 / 103,489,000 = $38.79
With the stock trading at $53.15, the P/B ratio is:
P/B Ratio = Stock Price / Book Value per Share = $53.15 / $38.79 = 1.37
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value (EV) is calculated as follows:
- Market Capitalization: $53.15 107,322,000 = $5,696,810,800
- Total Debt: $914,822,000
- Cash and Cash Equivalents: $853,470,000
EV = Market Cap + Total Debt - Cash = $5,696,810,800 + $914,822,000 - $853,470,000 = $5,758,162,800
For the three months ended September 30, 2024, EBITDA was approximately $11,094,000 in depreciation and amortization, and operating loss was ($7,698,000). Given the adjustments, EBITDA is:
EBITDA = Operating Loss + Depreciation + Amortization = ($7,698,000) + $11,094,000 = $3,396,000
Thus, the EV/EBITDA ratio is:
EV/EBITDA = EV / EBITDA = $5,758,162,800 / $3,396,000 = 1695.25
Stock Price Trends
Over the last 12 months, the stock price has ranged from a low of approximately $34.00 to a high of $66.00. As of the last recorded date, the stock price is at $53.15, reflecting a significant recovery from its lows.
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, resulting in a dividend yield of 0% and a payout ratio of 0%.
Analyst Consensus on Stock Valuation
As of the latest reports, the analyst consensus rating for the company is Hold, with a price target range of $45.00 to $60.00.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 664.38 |
| P/B Ratio | 1.37 |
| EV/EBITDA Ratio | 1695.25 |
| Stock Price (Current) | $53.15 |
| 52-Week Low | $34.00 |
| 52-Week High | $66.00 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing Bill.com Holdings, Inc. (BILL)
Key Risks Facing Bill.com Holdings, Inc.
Understanding the risks associated with a company is essential for investors. For Bill.com Holdings, Inc., several internal and external factors could significantly impact its financial health.
Industry Competition
The company operates in a highly competitive environment characterized by rapid technological changes and evolving customer needs. Key competitors include established financial services firms and emerging fintech startups. As of September 30, 2024, the total payment volume processed by Bill.com was approximately $79.8 billion, reflecting a 14% increase from the previous year.
Regulatory Changes
Changes in financial regulations could affect the company's operations. As the company provides financial services, it must comply with various federal and state laws, which could result in increased compliance costs or operational restrictions. For instance, the provision for expected credit losses increased by 71% to $20.7 million in the three months ended September 30, 2024.
Market Conditions
Macroeconomic factors, including inflation and interest rates, can affect the company's performance. The recent volatility in interest rates has impacted revenue generated from customer funds, which amounted to $43.5 million for the three months ended September 30, 2024, compared to $39.8 million in the same period of 2023.
Operational Risks
Operational risks arise from internal processes, systems, and personnel. The company has seen a substantial increase in its operational scale, processing 28.6 million transactions during the three months ended September 30, 2024, up from 24.8 million a year earlier. This growth necessitates robust internal controls to manage increased complexity and potential system failures.
Financial Risks
Financial risks include liquidity risks and credit risks. As of September 30, 2024, the company had cash and cash equivalents of $853.5 million and available-for-sale short-term investments of $619.6 million, alongside a drawn revolving credit facility of $180 million. However, any significant downturn in business could strain these resources.
Strategic Risks
The company's growth strategy involves expanding its product offerings and entering new markets. As of September 30, 2024, the total number of businesses using Bill.com's solutions was approximately 476,200, showing a marginal growth of 1% year-over-year. Failure to execute this strategy effectively could hinder revenue growth and market share.
Mitigation Strategies
To address these risks, the company has implemented several strategies, including strengthening its compliance frameworks, enhancing customer service capabilities, and investing in technology infrastructure. The total operating expenses for the three months ended September 30, 2024, were $301.5 million, reflecting efforts to bolster operational efficiency.
| Risk Factor | Description | Impact on Financial Health |
|---|---|---|
| Industry Competition | High competition from fintech and traditional financial services | Pressure on pricing and market share |
| Regulatory Changes | Compliance with evolving financial regulations | Increased compliance costs, potential operational restrictions |
| Market Conditions | Effects of inflation and interest rate fluctuations | Impact on revenue from customer funds |
| Operational Risks | Increased complexity from rapid growth | Potential for system failures and control issues |
| Financial Risks | Liquidity and credit risks affecting cash flow | Strain on resources during downturns |
| Strategic Risks | Failure to execute growth strategy | Hindered revenue growth and market share |
Future Growth Prospects for Bill.com Holdings, Inc. (BILL)
Future Growth Prospects for Bill.com Holdings, Inc. (BILL)
Key Growth Drivers
- Product Innovations: The company has focused on enhancing its core accounts payable and receivable platform, introducing features that streamline financial operations for businesses. The revenue from subscription and transaction fees rose to $314.9 million for the three months ended September 30, 2024, reflecting an increase of 19% compared to the previous year.
- Market Expansions: As of September 30, 2024, the total number of businesses using their solutions reached approximately 476,200, a growth of 1% year-over-year. The company has expanded its market presence through partnerships with financial institutions and embedded solutions.
- Acquisitions: Strategic acquisitions have been pivotal, with a focus on enhancing technology and customer access. The company has also repurchased 3.7 million shares under its share repurchase program, reflecting confidence in its growth trajectory.
Future Revenue Growth Projections
Analysts project continued revenue growth, with estimates suggesting a compound annual growth rate (CAGR) of approximately 18% over the next five years. For the fiscal year ending June 30, 2025, revenue estimates are around $1.5 billion, driven by increased adoption of digital payment solutions.
Earnings Estimates: The net income for the three months ended September 30, 2024, was reported at $8.9 million, a turnaround from a net loss of $27.9 million in the same period last year. Analysts expect earnings per share to improve, targeting $0.32 for the fiscal year 2025.
Strategic Initiatives and Partnerships
The company has formed strategic partnerships with various financial institutions, enhancing its embedded solutions. This initiative has resulted in a total payment volume (TPV) of approximately $79.8 billion for the three months ended September 30, 2024, up 14% from the previous year.
Competitive Advantages
The company benefits from a strong brand reputation and a comprehensive suite of financial solutions tailored for small and medium-sized businesses. Its gross margin stands at 82%, indicating efficient cost management and a robust business model. The reduction in personnel-related costs due to restructuring has further positioned the company to scale effectively while maintaining profitability.
| Metric | Q3 2024 | Q3 2023 | Growth % |
|---|---|---|---|
| Total Revenue | $358.5 million | $305.0 million | 18% |
| Net Income | $8.9 million | ($27.9 million) | 132% |
| Gross Margin | 82% | 81.6% | 0.4% |
| Businesses Using Solutions | 476,200 | 471,200 | 1% |
| Total Payment Volume | $79.8 billion | $70.2 billion | 14% |
As of September 30, 2024, the company maintains cash and cash equivalents of $853.5 million, enhancing its liquidity position to support future growth initiatives. The company’s strategic focus on product development and market expansion is set to drive sustained growth in the coming years.
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Resources:
- Bill.com Holdings, Inc. (BILL) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of Bill.com Holdings, Inc. (BILL)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Bill.com Holdings, Inc. (BILL)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.