QuickBooks has decided to compete with BILL’s core bill pay product, and since well over 50% of BILL’s customers use QuickBooks, this is likely to be devastating for BILL. This is happening in several phases. The only phase complete so far is the QuickBooks Business Network. This is a product that is almost like a social network for small businesses, and while it is likely causing some drag on BILL, there should be significant additional losses as QuickBooks builds out its own payment function.
In a downside case, the impact to BILL from Intuit’s actions has yet to be fully felt, and BILL management has overestimated 2023 revenue and/or 2024 revenue is lower than 2023 revenue. This seems very possible because QuickBooks is absolutely the most important factor in BILL’s space and QuickBooks switching from a promoter to a competitor has the potential to be totally devastating. In this case the market will essentially assume that BILL falls further and further behind the competition and will never be profitable, and the stock is valued something along the line of 2x net cash, or just over $3 billion, which would be close to $30 per share.
My understanding is that Bill is deeply entrenched in a very wide and deep web of financial institutions and that a deflection from Intuit/QuickBooks would be far from great, but not “totally devasting” as the short case makes it out to be. Competition is to be expected, obviously. But there seems to be smoke here, so is there also fire?
Bill’s product seems to me more sophisticated than Intuit’s because it reaches deeper into the many payment approval processes that take real work; a high level broad software layer like Quickbook’s doesn’t solve those real billing approval process complications.
I know others on the board have direct experience with Bill as a product from the inside and understand the long-term machinations here much better than I do. What do you make of the short claims? The entire Seeking Alpha post includes many more details.
“Our digital-first payments and invoicing platform helps businesses improve efficiencies and focus on what matters most. As a company that champions small businesses, we’re thrilled to bring BILL’s capabilities to BMO, so we can support their customers across the U.S., and help their businesses to thrive.”
Bill has seen their business moderating as SMB’s pivot in this new economic environment.
Bill is pivoting with them and increasing their offerings avenues introducing BMO Bill Connect, powered by BILL - a bill pay and invoicing platform designed to streamline and secure payments processes.
Seeking Alpha has some thought provoking articles and is worth the price, imho. But I always make sure and check the author on tipranks.com before I give too much credence to someone I don’t know. The author of this article, Kingsley Park Research, has a pretty bad track record. He or she is 0/8 and averages losing -39.30% per recommendation: Kingsley Park Research | Seeking Alpha Financial Blogger - TipRanks.com
In contrast, Bert (who runs Tickertarget) is one of the top 10 people (out of 31,000) on Tipranks, and he recently wrote an article recommending Bill’s shares:
The article talks about Bill facing headwinds in the short term but being well positioned for a “multi-year growth opportunity.”
Another thought that comes to mind in relation to the short article from Kingsley Park Research is that “bigger” does not always mean “better.” I remember Amazon introducing a competing product to MDB, which caused a big scare in the MDB share price but ended up being fud. AMZN was not able to credibly compete. CRWD v. Microsoft is another example that comes to mind.
Hang in there everybody.
Long Bill (but my smallest position). @laneylawyer on twitter