Bill Holdings Beats Revenue Expectations in Fiscal Q4

Bill Holdings (BILL -1.42%), a leading provider of financial automation solutions, released stronger-than-expected results for the fourth quarter of its fiscal 2024 on Aug. 22. The company reported revenue of $343.7 million, exceeding the high-end of its guidance range of $320 million to $330 million. Non-GAAP operating income was $60.0 million versus the guidance of $40 million to $50 million.

Source: Guidance figures provided by management in the fiscal Q3 earnings report released May 2.

Understanding Bill Holdings

Bill Holdings provides financial automation solutions tailored for small and medium-sized businesses (SMBs). It offers software to simplify and streamline back-office financial operations such as billing, invoicing, and payment processing.

Currently, Bill boasts a significant market presence with over 474,600 businesses using its solutions as of June 30, 2024, the end of its fiscal 2024. This large network helped it facilitate over $76 billion in total payment volume in Q4 — up 10% year over year — showcasing impressive engagement across its platform. The company’s AI-driven financial automation capabilities enhance efficiency, reduce manual errors, and accelerate financial operations. Moreover, it combines both direct and indirect distribution channels such as accounting firms and financial institutions, broadening its reach.

Quarterly Highlights

During fiscal Q4, Bill Holdings performed well on several key metrics. First, its revenue grew 16.1% year over year to $343.7 million. This rise was largely driven by transaction fees, which increased by 22.0% to $235.5 million.

Furthermore, the company reported a non-GAAP operating income of $60.0 million, up 41.8% from the previous year’s $42.3 million. Its non-GAAP net income also increased to $63.9 million compared to $56.3 million in the prior-year period. Non-GAAP net income per diluted share of $0.57 exceeded the high end of management’s guidance range of $0.41 to $0.49.

Operationally, Bill facilitated 28 million transactions during the quarter, up 19% from the prior period. Additionally, 7.1 million BILL standalone network members utilized its platform for electronic payments, a 22% rise from 5.8 million members a year ago. These metrics reflect heightened user engagement and a growing network effect.

The company also continued to develop its AI-enabled financial automation capabilities. Bill’s platform automates various processes such as data capture and invoice processing, which streamlines back-office operations for SMBs. The reliance on AI is a crucial part of Bill’s strategy to improve operational efficiency and reduce errors. Additionally, Bill has robust distribution channels, leveraging both direct connections with customers and partnerships with accounting firms and financial institutions.

Bill also leverages its proprietary risk engine, trained on millions of transactions, to mitigate financial risks. This ensures low fraud and loss rates, maintaining customer trust in the platform.

Looking Ahead

Management has provided upbeat guidance for fiscal 2025, projecting total revenue between $1.415 billion and $1.450 billion, which would amount to growth of 10% to 12%. Core revenue is anticipated to be between $1.270 billion and $1.305 billion, for growth of 13% to 16%. Non-GAAP operating income is expected to range from $160 million to $195 million, while non-GAAP net income is projected to land between $154 million to $182 million, or $1.36 per diluted share to $1.61 per diluted share.

Investors should pay attention to several key areas. Revenue growth remains crucial, and the stability of transaction fees and further expansion of its network effects will be significant. Attention must also be given to subscription fee trajectories which saw slight declines recently. Moreover, the company’s ability to maintain low fraud and credit loss rates will also be a determinant in sustaining its strong performance. Finally, monitoring management’s progress in addressing its GAAP operating losses, despite strong non-GAAP results, will be vital for assessing long-term financial health.