BILL: March 8 and 9 conferences

This post contains my highlights of the March 8 Wolfe conference and March 9 KeyBanc conference with

  1. As per the posted press release yesterday (…), the agreement was also mentioned in the conference as another extension of the go-to-market tentacle with accounting firms. Big cross-sell opportunity.

CFO: …this morning, we also announced an agreement that Divvy’s reached with, which is one of the groups that accounting firms work with for expense management, corporate cards and spend management, and this is an example of the types of synergies that our go-to-market motion can create when adding new product capabilities to our platform

…one of the thesis that we had with adding Divvy to the platform is that we could sell through to our existing distribution partners, the accounting firms, which we mentioned the arrangement as the first step there.

  1. The robust customer addition each quarter is a result of a deep moat constructed with the thousands of accounting firms, and the majority of the top firms in the US (as I recall, 85 of the top 100). I just don’t see any of’s competitors go-to-market as strong enough to slow BILL down in the near term.

CFO: The customer add strength that we saw in the last quarter really came across all of our channels. …but we did note the accounting channel, which I mentioned earlier, showed the largest quarter-over-quarter growth. And we’ve spent years investing in our relationships with accounting firms, and it’s one of the reasons that our platform resonates with accountants.

  1. The market opportunity for is vast and they remain incredibly early in the opportunity.

CFO: …the market is 6 million businesses in the U.S. have employees, tens of millions more small businesses if you include sole props and then there’s 70 million businesses globally. The vast majority of the businesses still use these legacy manual paper-based processes… We’re about 2% penetrated in the U.S. alone. And so when you look at the overall global market opportunity, it’s huge, and we have a long way to go.

  1. The Bank of America opportunity is also yet to get started. The customer additions just reported this past quarter were all organic contribution from and we have yet to see additions coming in from BofA!

CFO: The 8,000 adds that we had…that was all organic and very little contribution from BofA. We really just started to get in market with Bank of America. It led to recognizing revenue for the first time, but no material customer adds. So that’s an opportunity that’s still ahead of us as we look at scaling from here.

  1. More clarity on the expansion of their BofA partnership. They are providing a product to BofA small business customers with a path to let them upgrade to the complete platform. And they see this as a way to later tack on other bank partners in the future.

CFO: Historically, our financial institution partners have used our platform on a white label basis for their commercial customers. [Small] businesses that have revenue in the range of, call it, $5 million to $50 million. And for BofA, we created a small business-focused basic product with an upgrade path to the full advanced platform. And this is what launched in the last quarter with BofA.…And with driving success there, I think it opens up 2 other opportunities. One, is to sell into the small business segment of our existing bank partners; and then two, the potential to go acquire additional bank partners through our business development cycle. So the relationship with BofA is important.

  1. There’s no pandemic “one time pull forward” here. CFO sees COVID as just an accelerant to adoption of their back office products as businesses now want to go more digital.

CFO: It used to be pre-pandemic that a small business would try our solution perhaps and be in that test-and-trial mode for some period of time without the urgency to actually change the way they operate…we see customers coming to the platform much more quickly getting up and running, adding users and converting all of their processes and transactions and documents to the platform and going digital. And I think that’s a trend that continues. Like that’s not a onetime event.

  1. There’s a more granular detail on what exactly the products has developed to attract upmarket, larger customers given in this conference.

CFO: …our sweet spot really is small businesses, but we continue to see demand from larger mid-market companies. And we define a mid-market company as $10 million or more in revenue…we’ve started to invest in some additional product features that we know are important to bigger businesses. These – it includes things like single sign-on from a security standpoint, dual controls, bulk and batch payments and integrations with some of the larger ERP systems like Microsoft Dynamics…These are all things that a small business can use also, so it’s not unique to larger businesses, but sometimes it’s – those features that are required for adoption of the mid-market companies.

  1. CFO believes take the terminal take rates they can achieve and payment penetration is MULTIPLES above what they currently have!

CFO: To give you a couple of stats, our virtual card penetration was 2.2% of TTV in the June quarter versus our target range of 5% to 10%. International payments was about 4% versus our range of 10% to 20%. And real-time payments is really just getting started, and the demand has been good…It’s obviously not going to be a straight line with linear growth quarter-to-quarter. But over the longer term, we think there’s – it’s still a big opportunity.

And later on in the call:
CFO: As I mentioned earlier, we expect to be able to continue to expand our take rate multiples of where it is today

  1. Management has mentioned this way before (as far back as the S1 filing), but this is still great to emphasize. 80% of transactions are REPEAT transactions. Talk about a reliable payment stream – this is exactly why BILL could weather the COVID uncertainty storm back in Q2 2020. BILL grew 5% QoQ, while other consumer facing type companies got destroyed (for example, UPST revenues fell 80% QoQ). That being said, a recession or economic downturn will still be nasty towards BILL, but at least there is a cushion here.

CFO: …our most recent number was approximately 80% of transactions are repeat transactions between buyer and supplier on our platform.

The CFO also provided some detail on how they enhance this repeat transaction flow:

CFO: So we’re really focused on building better relationships with suppliers to be able to serve their needs because it might be different than their buyers’ needs. An example is in the case of a cross-border payment, a U.S. buyer might want to be invoiced in U.S. dollars and pay in U.S. dollars. But an international supplier might not even have a multicurrency bank account, so they’re going to get a payment converted at the highest probably marginal exchange rate upon deposit. So we can offer them an FX payment even though their buyer didn’t want to pay. So it’s things like that, that we’re doing to reduce friction in the system and support the needs of both buyers and suppliers.

  1. It was asked whether subscription price increase is planned. As we all already know, the answer here is they keep the price point low to attract users, and users stay on the sticky platform the instant they land, as the payment volume flow is what really allows expansion.

CFO: It has been about a little over 2 years since our last price increase. We’re very confident with our pricing today. It’s a low price point. It minimizes is barriers to adoption. It isn’t really a standard use case where somebody doesn’t adopt the platform because of price. But at the same time, we’re able to increase overall revenue per customer as we scale with the payment volume from our customers.

  1. This has been talked at length on the board by others, but yeah this was just highlighting how incredible the Divvy acquisition has been for BILL – a super ‘sweetheart deal’, as Bear has mentioned before.

CFO: I can tell you from first-hand experience that the Divvy spend management solution is life-changing for the back office in all seriousness. There’s lots of credit providers out there, and we actually partner with many of them in our FI channel, but it’s the software is where the innovation happens, and that’s where we were able to create value. And Divvy’s been a leader in the space in doing this. Control and visibility for businesses combined with credit or prepaid card is really like the game changer.So we think the momentum that you’ve seen with the numbers from Divvy have been all organic.

Management also believes in the near term, 50% of BILL’s existing customer base can easily adopt/benefit from Divvy.

We think approximately 50% of the base is a great candidate for the Divvy product. And it’s probably the largest 50%, right, because they have the financial profile to get credit, go through underwriting and things like that.
And then the bottom half, if you will, the smaller 50%, there’s still the opportunity to deliver the software solution, perhaps combined with a prepaid card or another solution for them to create value in running their financial operations. So we think there’s a potential solution with the Divvy product for really all of the customers.

  1. Regarding Invoice2Go’s acquisition, the goal is for faster international/global expansion. There’s some color here provided about the percent of I2Go payment volume being monetized, which I don’t think I recall hearing about before today.

CFO: …with Invoice2go, they have north of 200,000 customers. These are very small businesses, smaller on average in the SMB. Their customer base is global. So 40% North America, 60% other countries, 150 countries in the world. …it’s about $25 billion a year in invoice volume, of which only $1 billion or so is being monetized with payments. And that has a lot to do with the disjointed payment experience that I mentioned. So we think there’s a large opportunity to introduce a branded payment experience, leveraging capabilities.

  1. Ah, and an all important question at the end of this conference about macroeconomic problems. The CFO says he has NOT seen any significant impact on their SMB base from ongoing geopolitical and inflation concerns. We’ll see on the next quarter, of course, but this is slightly reassuring!!!

Analyst: …what’s the health of the SMB right now? Are you starting or are you expecting to see any churn increase given the oil shock to consumers or demand or businesses?
CFO: …we haven’t seen any signs of distress or other negative implications for the SMB base today. We’re obviously monitoring the situation closely. But as we learn through the early months and quarters of the pandemic, we have a very resilient customer base. And this horizontal go-to-market insulates us from vertical industry issues that could arise. And so far, the signs continue to look positive

  1. Moving onto today’s KeyBanc’s conference with the CEO. The CEO sees parallels with automation of the back office for SMB’s just like with the cloud adoption. And he believes can become the de-facto go-to standard for SMB financial operations.

CEO: …when you ask the state of the cloud and adoption, it really comes back to that we’re really at the beginning of this massive adoption cycle. And it’s the beginning of a massive adoption cycle for, I would say, really kind of the new types of services that can happen because of centralized data. And that’s all new…so for me, that’s kind of the beginning, 2% market share of employers that have U.S…And that’s just the beginning…The goal is to be the de facto standard for SMBs when it comes to financial operations.

  1. As I mentioned above what the CFO said about the go-to-market with accounting firms as a deep moat, the CEO says it better here. What BILL has today is the culmination of many years of establishing relationships with the thousands of firms which now feeds the strong customer adoption today. He had great vision to see this early on!

CEO: So in the early days of the company in 2008, I signed a partnership with I knew lots of accountants on my own, but I signed that partnership because that division of the ACPA – ACPA serves in every 300,000 firms accountants across the country, 40,000 firms. They serve all of that. That division is responsible for educating and moving the industry forward when it comes to new technologies. And so became a platform for us to reach accounting firms. That’s why we have 85 of the top 100 accounting firms. That’s why we have the penetration we do with the top 1,000 firms…The 5,000 firms across the country, the 6 of the top 10 banks, the partnerships that we have with our accounting software partners.

  1. The CEO sees the data they generate from being in the “middle” of everything related to payment flows between businesses as another way to differentiate themselves with future products and strengthen the ecosystem. He gives some detail about how he sees Divvy.

CEO: … what we’re doing with Divvy and the spend management, [it is] really an extension of credit. It might be short term, but it’s an extension of saying, “Hey, let’s use the spend management card that we have with the Bill Divvy platform to be able to manage all the expenses so that you can actually control those budgets.” That leads to things like invoice acceleration, working capital term loans, all of that data is going to be necessary for us to do that well and to do that in a way that’s differentiated.

  1. The CEO reiterates the 80% repeat transaction figure said by the CFO earlier above, as critical to their visibility. And it’s why I view BILL as “SaaS like”, combined with their subscription portion.

CEO: …one of the things I love about our business is that we have high visibility back to the last question on subscription transaction. We have high visibility and performance. So one data point that we do track is repeat transactions. So 80% of the transactions that happen are going to go between the same buyer, supplier again in the future. That’s because these relationships happen and so we know that. And that allows us to predict revenue across quarters and years and all that, and that’s super, super helpful.

  1. Why primarily creates value for its customer: the time savings. 90% save at least 5 hours a month

CEO: how many firms tell us that they save more than 5 hours a month of accounting firms. That’s 90%.

  1. The analyst asked about the increase in sales/marketing expense over the years and the payback on it. The target has been 15 months, as mentioned before in the S1 filing, and seems it hasn’t changed since.

CEO:We’ve been growing the revenue adoption, and that allows us to kind of invest more and still maintain the payback that we’re comfortable with, right? So that’s been our focus. 5-quarter payback is kind of our target, and that’s something that we feel really good about being able to deliver and drive and understand with all the different channels that we have, how to kind of make that success for the business as we scale.

  1. The CEO capped the conference with a statement that succinctly sums up why I am invested in BILL. The strong moat and flywheel model that has been built combined with a massive market opportunity. (That said, I’m still nervous about its outsized macro exposure versus the other SaaS-like companies I own)

CEO:…Like the moat there is strong and it’s something that we’re proud of, and we’re making them bigger every day with new products and services and more agreements, channel agreements like we just announced with, and Bank of America, right? So these are things that I think are super important. It leads to this notion of scale begets scale and the opportunity with our network.


This post contains my highlights of the March 8 Wolfe conference and March 9 KeyBanc conference with

I don’t encourage people filling up the board with posts saying “Nice post, thanks!” but I just have to say that I am awe-struck by JonWayne’s post about ten posts back summarizing two conferences in which Bill participated, but what he really did was explain Bill in a way that makes it really clear. I guess I was awe-struck because it was a really awesome post. I have to thank him, as well, since Bill is my second largest position (after Datadog).