BILL Q1 Earnings

Good quarter, but forward looking projections suggest slight slowdown in revenue acceleration. Shares were off as a result (price dip back to 1 month prior price). It is my #2 holding in my portfolio. Shares are up 187% since the IPO December 12, 2019.

Core revenue: $43.8 million +53% YOY
Float revenue: $ 2.4 million
Total revenue: $46.2 million +31% YOY

My recollection is that this may be the first time they broke out core revenue:
SaaS Revenue: $24.6 million +36% YOY
Transactional: $19.2 million +83% YOY

Gross Margin: 77%
Employees: +21%

Current Customers: 103,600 +27% growth (no customer makes up more than 3%); 5,500 net new
Clients (customers and suppliers on network): 2.5 million (they hope to leverage this network and do payments for the suppliers as well)

Transaction Payment Volume: $28.8 billion +31% YOY

Core Revenues: $45.4 - $46.2 million - QtQ +3.5 - 5.5%
Float Revenue: $ 1.2 - $ 1.3 million
Total Revenue: $46.5 - $47.5 million

They mentioned that YOY revenue comparisons will not be the best because of a SaaS price increase implemented in 2020. So, expect SaaS growth rate to be impacted. I used sequential above.

Quick Books Partnership: They continue to focus on the transition to the new Quick Books advanced platform. These clients are bigger and have more transaction volume - higher revenue and margin. As that ramps up, basic quick books revenue will be slowing as they transition to the bigger clients. They alluded to the fact that basic quick books in not the business they want - lower revenues and margins. Continuing to work with Intuit on the proper and best offerings, but everything is moving forward very well.

Direct Customers; Unlike basic quick books customers (who must get fee discounts), they continue to seek their own small direct customers.

Accounting Partners: Not much to add here. Last month was a seasonal dip which should pick up. They have lots of penetration with this group.

Financial Institutions: They clearly see this as a high revenue growth area. They currently have 5 of the top 10 small business banks as partners. Yet, they are in the pilot phase with Wells (commercial and SMB business), and Key Banc just went live last week. Revenues need to ramp up this next quarter and will move higher after that.

Growth is moving into more aspects of the big financial institutions. For example, from only commercial to SMB. They are talking to other large financial institutions including regional and online, but nothing to comment on at the moment.

They built the platform as an Accounts Payable solution. They’ve also added AR solution. That is their main focus now. Down the road growth could be other areas such as expense and spend management, HR and payroll, and working capital efficiency, etc. They are thinking of all of these, but at the moment they are clearly focused being the best at AP and AR.

Transaction Revenues: They make a lot of revenue here. They noted that growth of customers will be less important as the current and bigger customers get monetized going forward. Again, the growth rate here was 83%. My take is that transaction revenue will eclipse SaaS revenue. They need the SaaS customers locked in to get their transaction revenues, but keep in mind they also get transaction revenues from the clients’ suppliers on their network.

For transactions, they get revenues based on the $ volume. They also get higher revenue if clients choose virtual card which continues to grow. They like the growth in currency transaction volume when they pay foreign suppliers in their currency - they’d like up to 50% of foreign suppliers to ask for local currency. Bill is around 10% I believe and growing. They also have instituted and building an “instant payment” option. For example, client pays Wednesday. They tell the supplier It will hit their account Tuesday. Supplier wants it now. They can do that and take an ad valorem fee on it. Building it out more now. Apparently, Square has this option.

**Leadership and Business Plan:**Despite what appears to be a slight upcoming reduction in revenue growth for the reasons stated, this company appears to be very well run and executing on all cylinders. CEO has started and sold (to Intuit) a similar company before. He went public with a clear plan to build and grow a very dynamic platform for SMBs.