This will be a brief post on BILL.com’s 2nd qtr. earnings report. I believe a small number of us here own it. It’s more like a 40% grower. So, some of you who concentrate heavily have commented that you have companies growing faster and haven’t bought it. (Search for more detailed reviews by me and others using ===> search tool links if interested.)
As I type, BILL is up +33% (mid-day) after reporting last night.
Basically, it is an accounts payable platform SAAS with recurring subscription revenues primarily targeting SMbs but moving into mid-size area. (They now offer accounts receivable as well.) They have a multi-prong approach based on customers: (1) Large financial institutions (JPM, BOA, WELLS, AXP…); (2) accounting firm partners; (3) accounting software partners (adv. quick books etc); (4) direct customers; and recently (5) wealth management firms (multi-family office etc).
In addition, they are a payment platform and receive transaction based revenue for payments. This revenue has really been increasing and now makes up nearly half of the core revenue. They also have “float” revenue (interest earned on customer money). As a result of current interest rates, float is down and impacts the YOY comparison of total revenue. (I ignore float revenue).
2nd QTR Highlights YOY:
Total Revenue (SAAS, PMTs, and Float): +38%
Core Revenue (SAAS and PMTs): +59%
- Transaction Revenue(PMT): +98%
- Subscription Revenue (SAAS): +33%*
Total PMT Volume: +40%
*Their subscription revenue tends to be a bit staggered because of price increases when they roll out upgrades to their platform. So, that hasn’t happened in a few qtrs. Call noted that the growth this qtr was increased customers on the platform (implying little to no price increases).
Expansion notes from product lines:
Fin Inst. - they already serve an number including the top 3 SMB banks in the US. They are rolling out an SMB offering later this year with a major financial institution (guess: Citi?). They expanded Wells relationship with “Bill Manager” that rolled out in Q2. They serve only commercial/smb clients for some of these institutions and can expand into other areas as well.
Account Plat: “We currently serve mid-market customers with the integrations to Sage Intacct, Oracle NetSuite and Intuit’s QuickBooks Enterprise. I’m happy to announce that we are building integrations with both Microsoft Dynamics Business Central and Great Plains. Tens of thousands of mid-market companies rely on Microsoft Dynamics ERP systems, so we expect these integrations to allow us to better serve these companies. We plan to launch this product integration in the second half of calendar 2021.”
Wealth Management: New market segment improving and growing.
Accounting Firms: We continue to see strong increasing adoption by our existing firms, while we continually add to our base of over 5,000 accounting firms, including 80 of the top 100 firms.
- Added Steve Fisher to the BOD - former CTO of eBay and EVP of Technology at Salesforce.com, Steve has built some of the world’s largest technology and payments platforms and developed multibillion-dollar businesses.
- CEO/Founder has built (and sold) companies before including one he sold to Intuit.
- Payments and transactions revenues really improving and accelerating including cross border payments, currency conversions and virtual cards. (Note, they are licensed bill payment provider in all 50 states. This is a hassle and a bit of a moat.)
- I frequently check ARK’s holdings. Ark - Fintech ETF just bought BILL recently (maybe yesterday?).
- “90% of SMBs still use paper checks as a primary form of payment.”