If a stock is priced for perfection and something less than perfection is delivered during an earnings conference call, the subsequent price action often resembles what happened to BILL today.
It’s always interesting to observe how the valuation-insensitive people on the Saul’s Investing Discussions board react to this kind of negative surprise.
Someone named Silviocast concluded that today’s price movement was wrong.
I don’t think that BILL’s ER deserves a -22% punishment.
The stock market agrees with him. A 26% decline was deemed more appropriate.
Another participant, MajorFool20, remains steadfastly optimistic.
I see Bill as a coiled spring,…
He’s right. It’s a coiled spring in the form of a Slinky going down a flight of stairs.
In recent months, the words “hope” and “hoping” are appearing more frequently in comments on Saul’s board. Evidently, hope is a strategy after all.
4 Likes
Well done…
I also enjoy the “sbc doesnt matter” posts over there.
Sbc increases mkt cap…plain and simple.
Valuation never matters apparently.
Take a look at mkt cap of BILL competitors.
Dreamer
3 Likes
I am going to take the other side of the argument here. No doubt BILL got ahead of itself the week before earnings.
I just edited out my angst over my lost hour of excel spreadsheet data analysis. It is a lot of work to extract data from 10 filings. And these companies that start a FY in March or June of the previous year ought to be delisted. Grump grump grump. And those that don’t present Q4 so you have to subtract out Q1, Q2 and Q3 from the full year… @)(#_!*!!!
My concern is that BILL 1) is out of control on sales and marketing expense and 2) (I’m shocked) revenue growth is falling. Still over 100% growth current TTM over year ago TTM, but markedly slowing. Valuation wise it is EV/S of about 8 on a FY 23 basis and somewhere around 11 (?) on TTM basis. Number of shares are up only 3% in the last year and they will buy back about 1% (I know, with my money, but count it as a dividend. I am still extracting and formatting. I think that customer growth number is key. If they are adding customers, the revenue growth will by cyclical but will come back.
O.k., that’s all, folks. When I have my motor recharged I will finish the analysis and post again as to why I prefer BILL to any of the security SaaS stocks.
KC
11 Likes
I have now spent the better part of four days researching Bill. The spreadsheet is now 41 rows and covers 14 quarters. 14 quarters of 10-k’s and 10-Q’s, a few conference calls plus transcripts and press releases. The post is a work in progress. Each time I think I have it nailed, I think, “yes, but what about this, will it support that? Is that really true?” And I blow holes in the whole argument. The analysis is complicated by the acquisitions of Divvy and Invoices2Go and sifting through a press release for the TPV ex-Divvy… that sort of thing. It is complicated because the customers that they have via the financial institutions generate only about 20% of revenue compared to the customers acquired by S&M–and this last quarter the FI customer adds were slightly more than the Bill acquired customers. Etc., etc., etc., as it were.
That 41 x 14 matrix of numbers tell me that the business is just fine. Its the economy. Their customers are generating less business, fewer and smaller invoices, less transaction fees. But the SMB’s are not slowing adoption of software/platform. The gross margins are increasing. The percentage of customer adds has increased. The are increasing prices. They are adding revenue generating features. Management did a decent job of explanation in the prepared remarks, but IMO, they blew the Q&A, particularly regarding the guidance on revenue.
I think that the growth during 3 quarters in the June to June, 2021-2022 period led to a tripled growth rate which rising interest rates has dampened. Maybe I can share that bit of data:
2020 2021 2022 2023
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Q-o-Q Rev Gr,% 11 6 2 10 17 11 31 49 34 7 21 14 1 -5 9
Customer Gr, % 6 6 6 6 5 6 5 5 6 9 8 9 9 ? ?
You can see the steady percentage growth in customers but the revenue was growing at 5 to 10 times the customer growth during those three quarters.
It is almost tomorrow here. I’m tired. Market is down. BILL is dead cat bounce. VERI up another 12%. My port about flat, negative bias.
KC
12 Likes