BILL reports their Fiscal Q2

[ExponentialDave]

As of writing, BILL is down 19% after hours. Often, when this happens, it feels like the market is being unfair, but unfortunately I think it’s understandable for Bill to have a decent drop after what it reported.

A few things jumped out to me:
–Bad revenue guidance of -5% contraction for next quarter. They haven’t guided this poorly since 2020.
–Looks increasingly like much of their revenue growth is dependent on float revenue growing, which only increases when interest rates increase.
–Divvy growth, while still high at 78% YoY, seems to only plummet with each passing quarter. 3 quarters ago it was at 155% YoY.

This is not to say the quarter was all bad though:
–QoQ revenue growth was 13% QoQ.
–NG net profit soared to a record $49.4m, much higher than last quarter’s record of $17m.

Everyone should always think for themselves. But my current thoughts are that I’d like to own less of BILL, maybe a lot less.

[stryker82]

here are numbers:

		fq2 23	fq1 23	fq4 22	fq3 22	fq2 22	fq1 22	fq4 21	fq3 21	fq2 21	fq1 21	fq4 20	fq3 20	fq2 20
rev		260	229.92	200.22	166.91	156.48	116.4	78.27	59.74	54.05	46.21	42.11	41.23	39.08
QoQ		13.1%	14.8%	20.0%	6.7%	34.4%	48.7%	31.0%	10.5%	17.0%	9.7%	2.1%	5.5%
guide	245	233.5	208	182.3	157	130	103.2	60.9				37.4	38
GuideQoQ	4.93%	12.26%	14.10%	16.11%	20.77%	25.97%	69.46%					-1.58%

the guide is 4.9% higher then prior guide. yes it is 5% less then current rev but they usually beat their guide by 10% so next Q should come in at around 269.5M…not impressive for sure but atleast not negative and yes i do see QoQ is de-accelerating.

however you should consider the fact that we are in recession and when bigger cloud services are slowing down this is to be expected. the slowdown is not result of TAM saturation or bad execution but rather due to macro conditions.

going into ER I held 5% bill and topped it up back to 5%. Have to see what they say in ER before taking further action.

[laneylawyer]

BILL announced a $300M stock buyback program. That’s pretty unusual for a company in this stage and with such high growth numbers. To me, it signals management’s confidence in the future of the stock from here = slowdown only temporary. Here is what the CFO said:

• “With our strong balance sheet and cash flow generation, we are well positioned to invest for our future growth prospects while also returning capital to shareholders and minimizing dilution,” said Bill.com CFO John Rettig.

[stryker82]

better use of that money is to hire more sales staff at this stage to capture more sales…but regardless its not big money…300m for 12b cap company.

[etagordon]

Stryker82, Not to quibble, but we are not in a recession, and it is questionable whether we will enter a recession. But, we are seemingly in a time when consumers are pulling in their horns. Time will tell whether the latest fed action will make things better.

[sjo]

BILL 2Q FY 2023 Analyst Q/A 02/02/2023
Rene Lacerte, CEO
John Rettig, CFO

The following are my notes from the earnings call that ended a moment ago.

Editorial comment from sjo here before you read the following analyst Q/A: Most all of the above analyst questions dealt with the macro and guidance and felt like the same question being asked in a plethora of ways. Not sure to believe if CEO and CFO were attempting to provide non-answers about what was actually baked into their crystal ball re: guidance, however it felt like the analysts were not fully confident in how forthcoming mgt was being. As the call drew to a close, say 10 minutes before the call ended, it felt like the CEO and CFO were anxious to get off the call.

If there are typos, please understand that this was typed live as the CEO and CFO taking questions from the analysts.

Q Few businesses are groing +50%, little bit surprised re: slowdown in Divvy growth. Compare and contrast, please.
A Pursuing a massive opportunity in front of them as in decades. Putting SMBs on standby mode, as they’re distracted by macros currently. Will grow 50% while balancing profitability at BILL. Most business are looking at their spending. The Divvy customer base is slightly larger and is at an earlier stage than BILL. In near-term, they’ve made some adjustments to reflect how SMBs are managing their business.

Q Where are you having success in go to market and where has it slowed?
A From a macro perspective, as small businesses are being impacted by the stand by and wait & see, this is a point in time, and not something they see to be long-term.

Q Guidance for next couple of quarters, how much is built on December through January vs. what we can expect to see in the quarters to come? Transaction size?
A Trends of seasonal March quarter, which is a softer TPV quarter, so seeing both macros and the seasonal softness in the march quarter. Taken all this into consideration which is reflected in lower transaction volume growth they forsee.

Q Mix of customer distribution you have. Non-Divvy customer growth on the direct growth. Core expenses went up pretty notably, investors want to see the core business being profitable and not just the interest impact.
A They have a diverse business from which to be profitable. The direct side monetizes more quickly for BILL. They see this as the macro environment they see over the next few quarters. They’re in a unique position to balance revenue and costs. Focused on driving near-term profitability while making investments as appropriate. They think their estimates over the next couple of quarters are a balance between both of these.

Q Gross margin very healthy. Will be fluctuation in TPV on second half. Provide color, please.
A Non-GAAP gross margin was the highest due to payments, optimization efforts around transaction costs and float revenue. Operating from a gross margin at ranges above what they projected. Feel good about the margin potential of the business from here.

Q Take rate, was that due to macro?
A Been really successful w/ driving expanded monetization, but it’s not linear. Slight US currency (lower) and much higher ACH vs. check payments. BILL is now 85% electronic, and they’re very confident they’ll increase monetization growth.

Q S&M softening?
A Spend mgt market is still very early in its growth. BILL is less influenced by day to day issues than to the trend and where their business Is going.

Q Factoring in a recession in TPV. Can you site specifics? FITB contribution and TPV growth -please provide.
A Stand-by mode is impacting how SMBs are moving forward in the short term. The levers BILL has continues to drive the growth of transaction monetization and diversity system and expect this to continue in the near-term and long term. TPV is $6.2B, TPV per customer is $441K/customer, which is flat.

Q Customer mix, FI channel contributes over ½ of net adds and in the near-term, this isn’t going to have a significant impact. What will this do for you once you get past the current macros and paint a picture of where you see the FI business long-term.
A BMO Bank will now be a partner and every customer that joins BILL.com allows them to grow and scale their business. More opportunities and providing proof points around white label products, will not take off in the short term, but will grow % of overall business in the long-term. % of BILL and FI channel declined slightly and expecting more of this in the next couple of quarters.

Q Trends you’re seeing in January vs. December and how it impacted your guidance?
A Lower TPD growth across Bivvy and BILL and results in lower monetization which reflects that SMBs are pausing in the short term to adjust for the macro conditions.

Q Does the slower spend impact your risk appetite? Comment on stock buyback reasons.
A Divvy -being proactive on managing growth of Divvy and expanding risk mgt around the charge card that has an average cycle of 10 days. Do take macro conditions into account in making these decisions. Stock buyback is an opportunistic buyback.

Q Guidance, drill in more specifically about TPV, same store sales is down, please break it down and provide your expectations.
A Estimated flat on a y/y basis. Less growth coming from existing installed base and some embedded growth w/ companies just getting onto the BILL and DIVVY platform. Subscription revenue is an important part of their packaging their product. Engagement and retention of customers continues to be very strong.

Q Guidance: We’ve been used to BILL raising guidance. What surprised you that you’ve had to adjust the guide down?
A No surprises. For a few quarters they’ve talked about shifting patterns w/ SMBS and now seeing changes in spend, not discretionary, seeing businesses adjust, seeing slower monetization. Economic conditions need to be taken into account for all businesses longer-term vs. short-term.

Q Encouraged to hear pricing comments. Please unpack this.
A In FY 23, announced price increase that impacts Bill Direct and accountant channel.

Q Core transaction business, lighter monetization -did you see impact on ad velorem services?
A No direct monetization impact due to macro. Beyond this uncertain period, they’re very confident they’ll expand monetization, beyond the short-term impact they see in macro.

Q Understanding the slowdown in the guidance. The magnitude doesn’t exactly square with what other companies such as Facebook and others are seeing.
A Generally, it’s the macro environment causing business to slow, companies announcing lay-offs and spending slowdowns.

Q Working capital management model, revenue model, timing, etc.
A BILL drives the electronification of bill payment and how they get paid. Benefitting from learning from the previous products BILL has launched. BILL has engaged with customers aka listened to them to add products that create value for their customer and best way to monetize this.

Q Big picture fluid macro. How predictable is the macro weakness and how should we guage the macro you’ve baked into your guidance?
A BILL has several sources from which they get input from customers (sort of a non-answer).

Other remarks in addition to analyst Q/A:
Recently launched w/ BMO Bank as a new customer
Highest revenue growth in a quarter since inception
No partner exceeds 3% of revenue
435,800 businesses used BILL in 2022
Lower net adds were to customers pushing out transformation decisions due to macros
Gross margin 86.7%
Net income was 19% of revenue
$300M share re-purchase program
Macro environment on SMBs and BILL’s business will impact near-term growth of BILL.
Have proactively decided to slow short-term hiring
Guidance: 47 to 49% y/y growth
SBC of $73M in Q3

sjo

[rhill0123]

The drop after hours is really painful to endure as BILL is my largest holding. I was originally VERY turned off by the idea of a stock buyback. In fact, I still hate it. I just think the optics of announcing a buyback on a day when you know your stock is going to tank isn’t a good look and they should have done it another time.

This said, after looking at the numbers, it seems perfectly justified. BILL generated 55M in operating cash flow in the quarter. Now I realize that amount doesn’t sound huge if you are used to looking at CRWD’s financials (who generates 5x per quarter). But it’s double the highest amount BILL has ever reported before. BILL is also a third CRWD’s market cap too.

BILL’s forecast is pretty bad. And the stock deserves a sell off as a result. Bear in mind they beat Q2 by 5.5%, and they raised full year guidance slightly. I’m guessing they will beat the rest of the year too. But if you are a growth investor, as all of us on this board are, it is troubling that they forecast essentially no growth over Q3 and Q4.

For me, I am still a believer, but I totally get some people being ruthless and selling out or reducing exposure (and I may do the same). I discount that future guidance some and look at the real numbers which are really good.

This was a good quarter and BILL is making TREMENDOUS progress in becoming a real company (cash-generating). I am sure the macro headwinds are real for BILL’s customers and thus for BILL as a good chunk of the revenue is consumption based.

Good luck to you all and I think the market is going to be pretty choppy.

Rob

[HannesRS]

While the guide is concerning, the supporting numbers don’t look that bad:

• Customer growth healthy with 10700 added customers. Aside from the last quarter with an unusual large number of adds (one time migration) they added around 11500 customers on average in the quarters before. Pretty decent.

• Revenue per transaction trending higher. From 5.79, $6.20, $6.54, $7.06 to $7.30 this quarter. Looks healthy to me.

• Huge improvements in FCF and operating margins.

The important question for me is, if the forecasted slowdown is only related to the macro economic conditions (to which BILL is obviously quite exposed to) - and therefore a short term problem.

Existing customers just cutting back and new customers not ramping as expected? Or is there some underlying bigger problem?

I have to think more about it, but from the first glance at the numbers I tend towards a healthy business with short term headwinds.

Could only hear 75% of the call and have to wait for the transcript. So if I got anything wrong, please correct me.

Honestly a little frustrating, really difficult to make the right decisions right now. Normally I would trim quite a bit, maybe more. But I’m not sure where to put it then. Not an easy environment, at least for me.

[rmtzp]

I find Bill to be the company where one can get lost in the ‘trees’ fairly quickly, so I’ll try to express what I see in the ‘forest.’ I also realize it is difficult to attempt to provide an unbiased assessment after witnessing the -20% share price.

Key takeaway #1: Their SMB customers are suffering at Bill’s expense

Evidence: The word “macro” was mentioned 26 times on the call, 10 of which came from management before any analysts brought it up on questions.

“Macro conditions are impacting small businesses, and they are taking action to moderate expenses” → We’re struggling to expand

"Spending trends weakened throughout Q2 and notably in December, when we typically see a seasonal spike in payments volume" → Our seasonal tailwinds dissipated

“We attribute the lower net (customer) adds to businesses pushing out transformation decisions” → We’re struggling to land

–

Key takeaway #2: Management doesn’t see things improving anytime soon

Evidence: We didn’t just get a weak guidance, we saw alarming guidance for next quarter (lower than this quarter), and flat FY guidance.

“We anticipate the trends we’ve experienced in recent quarters to continue in the second half of 2023. This will impact our business” → We see the headwinds continuing

"We took all data points into consideration as we updated our estimates…most notably those include lower TPV growth across Bill and Divvy as well as slightly lower monetization expansion → We’re unable to raise this quarter as we had hoped to do when we set our FY guidance last quarter"

–

Key takeaway #3: Management is proving to be serious about profitability

Evidence: We saw MASSIVE bottom-line improvements → FCF at $48M (-$16M) in Q2’22; and OpMargin (non-Gaap) of 12%.

“Operating expenses increased 4% from Q1, due to proactive expense management and moderating our pace of hiring” → We’re not pushing pedal to the metal to grow

“We’re taking a balanced approach to investing for growth over the longer-term while addressing short-term challenges delivering increased profitability” → We are aware that we cannot grow at all costs in this environment

RMTZP: While I appreciate the emphasis on profitability, I would have liked to see more aggressiveness in capturing the opportunity ahead. Just two quarters ago, Bill issued their FY Operating Income guidance at $46M. Today, they raised it to $126M!!!

It’s great to see that the business can become a cash-generating machine, but I would have preferred to see incremental increases while putting the rest of the money to work otherwise. This coupled with the stock buybacks, makes me seriously question the capital allocation strategy.

–

@HannesRS

The important question for me is, if the forecasted slowdown is only related to the macro economic conditions (to which BILL is obviously quite exposed to) - and therefore a short term problem.

How do we know that macro is a short-term problem? We hope it is, but we don’t really know. Regardless, I think management is answering this question for us by failing to raise FY guidance.

–

In conclusion: I think it’s important to remember that on top of this quarter’s challenges, Bill’s subscription business represents 24% of their total revenue, growing at 5.8% sequentially (25% annualized) on a seasonally strong quarter.

Putting everything else aside, I just don’t know if that’s what I want to be invested in.

-RMTZP

[HannesRS]

Good summary, thanks.

@rmtzp

@HannesRS

The important question for me is, if the forecasted slowdown is only related to the macro economic conditions (to which BILL is obviously quite exposed to) - and therefore a short term problem.

How do we know that macro is a short-term problem? We hope it is, but we don’t really know. Regardless, I think management is answering this question for us by failing to raise FY guidance.

Guess what I was trying to say is, that I do give more weight to the long term outlook (2024+) of my companies this year. I assume there will be very, very few companies reporting good numbers. I just read the Google and Amazon transcripts - AWS growth is in the mid-teens. So everybody will be struggling, but who will reaccellerate after this period and continue hypergrowth?

Regarding BILL I looked at QoQ growth when Covid started:

╔═══════╦═══════╦═══════╦═══════╦═══════╦═══════╦═══════╗
║ Jun19 ║ Sep19 ║ Dec19 ║ Mar20 ║ Jun20 ║ Sep20 ║ Dec20 ║
╠═══════╬═══════╬═══════╬═══════╬═══════╬═══════╬═══════╣
║ 12.2% ║ 11.0% ║ 11.1% ║ 5.5%  ║ 2.1%  ║ 9.7%  ║ 16.9% ║
╚═══════╩═══════╩═══════╩═══════╩═══════╩═══════╩═══════╝

They grew at an annualized growth rate of roughly 8% in June20. That means they slowed from a CAGR of 60% to 8% and accelerated back to over 90% in roughly 12 months. So it doesn’t seem unrealistic to expect a big acceleration when the economy improves.

I had hoped that BILL would profit more from customers that are looking to get more efficient this year - sadly not manifesting. Would be nice to hear from somebody using BILL how/if they changed their usage and what his/her thoughts are.

[SaulR80683]

How about a few positive thoughts among all the gloom and doom. Let’s see:

Adj Gross Margin was a record at a very high 86.7%, up both year over year and sequentially.

Adj Op Income was a record at $30.8 million, at nine times last years $ 3.4 million, and more than tripling sequentially from $9.1 million.

Adj Net Income was a record at $49.4 million, up from a small loss of $0.2 million last year and roughly tripling sequentially from $16.9 million.

Adj EPS was 42 cents, a record, up from breakeven yoy, and tripling sequentially from 14 cents

And, oh yes, $48 million in Free Cash Flow, for an 18.5% FCF Margin.

And they announced a $300 million stock buyback over the next year, “which we believe will enhance shareholder value and minimize dilution without compromising our ability to invest in future growth”.

No disaster here, although perhaps underwhelming.

Saul

[PaulWBryant]

@rmtzp

“Operating expenses increased 4% from Q1, due to proactive expense management and moderating our pace of hiring” → We’re not pushing pedal to the metal to grow

But GAAP opex was up 19% sequentially. Kinda tells a different story. Why should we NOT care? Because GAAP expenses jump around a bunch and don’t indicate a trend? Well in this case, I think it is a trend, because the main cause for the increase in GAAP opex was the SBC increase. I don’t think that’s temporary…at least, they didn’t say so on the call!

So I’m taking all the FCF and profitability gains with a mountain of salt. Other than that, I agree with Saul and others who think that the current disappointing/underwhelming core revenue growth of 49% (and guide) is mostly macro-caused.

I trimmed the shares I had bought in the $100ish range over the last couple months. I still have a huge BILL position at 15%+ (at the moment), but I want to be a little more cautious about it to see if this business is truly scaling toward real profits. I will be watching GAAP and non-GAAP expenses.

Bear

[PaulWBryant]

@PaulWBryant

I think it is a trend, because the main cause for the increase in GAAP opex was the SBC increase. I don’t think that’s temporary…at least, they didn’t say so on the call!

Wait a minute. I was 100% wrong on this. Last quarter, they actually guided for SBC to be approx 130m this quarter, which includes a 75m run rate plus the impact of the GAAP accounting treatment related to the change in role of our chief revenue officer to a strategic advisor. So at 119.4m this quarter, SBC actually came in lower than this. Wow, and they even guided for 73m SBC next quarter.

I apologize! This correction of my error actually gives me a lot of confidence – and the profits are much more promising! Man, that’s huge!

Bear

[silviocast]

I 100% agree with Saul’s view on this.

Let me just add a few more points:

They grew revenues at 13.1% sequentially and 66.2% Y/Y, which might look like a major slowdown on a Y/Y basis. The reality is that they had a very tough comp, as the same Q last year was a big quarter and they grew 189.5% Y/Y (granted, acquisitions and all, but still).

They added 16k customers in the Q, down from 20.3k last Q, but much higher than the 13.4k and the 12.6k of the previous 2 Qs. So I see a healthy business, quickly approaching half a million customers (that’s a lot of SMEs) and the $1bn mark in annual revenues.

BILL looks like one of those rare businesses that are capable of modulating their priorities depending on exogenous (macro) circumstances. They are seeing growth slowing down and so they prioritize profitability and FCF. Not every business has this kind of flexibility. I think that if the slowdown were due to structural business problems, they wouldn’t be able to report such profitability this quarter, or guide for such an increase in profitability for the year (guide for Adj NI went from $70m last Q to $125.5m this Q, with the same amount of revenues).

I think that market reactions to earnings in this environment should be taken with a grain of salt: they look hysterical and largely macro-fueled and not reflective of structural business issues. I don’t think that BILL’s ER deserves a -22% punishment.

Silvio

[MajorFool20]

@HannesRS

So it doesn’t seem unrealistic to expect a big acceleration when the economy improves.

This is how I am currently looking at things. I see Bill as a coiled spring, ready to explode once things improve in the economy. The question is, how long will that be and how much worse can/will things get with the macro situation?

The revenue guide is disappointing, no question, but not all too surprising given Q3 is always their weakest and we are seeing major slowdowns with the hyperscalers indicating a big pullback in software spending. Additionally, consider the fact that 2/3 of Bill’s revenue is transaction based and the writing is on the wall.

While the economy contracts, their revenue growth look tepid but on the flip side, the transactional revenue should act as a big tailwind once things begin to improve. Again, who knows when that will be but I expect growth to accelerate when this inevitably happens. It reminds me of the Datadog situation from a couple years ago during covid when sequential revenue growth dropped from 15% to 7%. This created easier comps and eventually, their growth rebounded thanks to the consumption based nature of their business model and led to big YoY growth numbers. I can foresee a similar situation playing out with Bill.

During this challenging macro environment, I am keeping my eye on two things in particular for Bill:

1. Are they continuing to land customers? While these customers may not bring much transaction revenue in the short-term, they should help provide a bigger tailwind once they resume their normal spending patterns.

I would say so far so good on this front. I am most interest in the number of Bill customers and they added a good number of customers this quarter following up their strongest performance in Q1. This is encouraging to see as it indicates to me new customers are still drawn to the solutions that Bill offers even during the challenging market.

2. Are they making good on their promise towards achieving profitability? I want to see evidence that Bill can become a cash flow machine.

This is a resounding yes, as Saul pointed out. Record gross margins, FCF and EPS are all great signs and give me confidence Bill will be able to produce significant amounts of cash flow in the future.

With these two items still on track, I would argue Bill is doing the best they can to manage this storm and come out the other side stronger. In the meantime, my hope is the float revenue will continue to act as a safety net to keep their growth going until things with the economy improve.

All this being said, I can see why others would be looking to jump ship. I will be the first to admit I have done a poor job of exiting a position in the past as I tend to give the benefit of the doubt and hold on longer than I should but I don’t see Bill’s revenue growth collapsing into perpetuity. Short-term headwinds, no doubt, but I think the easier comps and transaction based revenue could lead to large growth once again down the road.

Anyone see it differently?

Rex

[MAS4R]

@MajorFool20

I see Bill as a coiled spring,

This has been a great thread so I will jump in to ruin it a little

Very interesting you put it this way because that was my thought exactly. I have never owned BILL but I followed at times since it was brought to the board. They insisted on SMB being on STANDBY rather than in trouble, which is what made me think of a coil spring compression. The overall tone of the call was not positive though it was far better than others over the last 1.5 years or so.

I don’t know that one can ever take the macro out of BILL and focus exclusively on the company’s performance while holding the rest as ceteris paribus. They seem to be a barometer for the general state of SMB and as such act as a sort of a leveraged bet on business realities and/or sentiment at large.

And they seem to be getting the worst of both worlds at present. Like consumer-facing businesses, they have a very broad exposure, but like more specialized BtB companies they are getting the short end of the stick as it is businesses and not consumers that have cut back significantly.

It stands to reason that when this reverses, so long as business have not become damaged and BILL’s operational performance remains on point, they will end up with best of both worlds.

So that’s the reason I see it as you do. I will be watching BILL with greater interest than before (I stay fully invested at all times, so I don’t have cash anyway).

[HorsePlayAndrew]

BILL’s move to profitability and positive cashflow are all good moves and things we want to see. But I think no matter how you cut it, the stock is going to struggle for as long as SMB’s are reigning in spend and hiding in the bunker until this economic storm passes. So for me, one to watch for now.

[SaulR80683]

One more positive thought:

For what it’s worth I see that Bill’s March quarter (coming up) is always their weak quarter sequentially.

In 2021 it was up 10.6% sequentially and the next 3 quarters were up 31.2%, 48.7%, and 34.5% sequentially.

In 2022 it was up 6.6% sequentially and the next 3 quarters were up 20.0%, 14.8%, and 13.1% sequentially (just reported).

For both of those March quarters their guidance was for 1% to 2% growth at the high end. So maybe their guidance this year (-4.6%) isn’t so striking considering the macro?

Saul

[stryker82]

I have sold all my bill after looking at price action yesterday. this stock is substantially underperforming all its peers on the board. for the right reasons I assume. that money can be better allocated in things that are weathering this better.

I don’t see it outperforming its peers until it shows better results and that means just on watch until it does.

just take a look at this bill vs snow chart. the fact that prior relative low didn’t hold is not a good omen for BILL. yes converting to snow feels paying too high for it but it will likely continue on this path until atleast next er.

[silviocast]

Let me ask you a question, stryker:

Are you looking for a good company or a good stock?

The reason why I’m asking is that I think it’s easy (and dangerous) to get overly influenced by what the stock price does, especially after a -27% after ER. I wish I were wrong, but my sense is that we’re going to see this price action (hopefully a little less pronounced) for pretty much all of our companies this quarter.

And I think this will be the case for two reasons:

1. Even if I don’t see any real signs of a recession (and Friday’s jobs report is proof of that), the widespread narrative out there is that there is one underway (or incoming). In such an environment, companies that do not have any serious problems tend to get on the narrative bandwagon and take advantage of this historical moment to “clean up”, be more cautious, maybe lay off some workers or cut more costs at the expense of growth. And manage expectations. The stock market in the short term is all about managing expectations.

2. All of our companies have been experiencing a slowdown, to different extents and proportions, obviously; but I haven’t seen one yet reporting Y/Y growth higher than the previous Q’s (for now, only BILL has reported, but for the other companies I’m referring to the last ER – and this one is going to be even more so). I think there’s the macro component, as said above (a sort of self-fulfilling view driven by the fact that everybody thinks that there are macro issues – again, I don’t think we are in a recession and there’s not really an inflation fear but a FED-reaction-to inflation fear) but also, and more importantly in my opinion, the size component (these businesses are getting bigger and there’s no way they can continue to grow at the same rates they were experiencing when they just had 200m in annual revenues – this is just a fact to come to terms with).

Does this mean that all of these businesses are having problems? That these are – all of the sudden – bad companies? Of course not. A company that grows at 66% Y/Y and 13% Q/Q does not have any problems, even though last Q they were growing at 98% and 15%, respectively. I think that business problems have a difference face.

You may say that you have better places to put your money. Which ones are they? These are still the best businesses there are out there and there’s a concrete chance that after this incoming earnings season they all will have shown a slowdown. If that happens (again, to me very likely), there won’t be any places left to put your money in.

Sorry for my rant but please take this as a genuine desire from my part to better understand how can we (all) try and figure out this particular moment better.

Silvio