Bill's results received with "Boo!"s

BMO cuts target price to $72 from $116 This is 38%

JP Morgan cuts target price to $93 from $136 This is 32%

Mizuho cuts target price to $65 from $95 This is 32%

Piper Sandler cuts target price to $95 from $165 This is 42%

Susquehanna cuts target price to $105 from $145 This is 28%

For anyone still in Bill, these are huge cuts. They average $45 cut. Perhaps “a word to the wise is sufficient”.

Saul

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Best of luck to all.

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Saul can speak for himself, but I think he is just warning people they may want to get out of this stock, in case they haven’t already. He’s done this several times in the past when there was a major slowdown in a company such as when Etsy’s growth fell off a cliff after it lapped the early pandemic quarters.

@Robworldwide Are you not aware that the best performing stock of the last 20 years or so is Monster Energy? And that Celsius is following a very similar playbook given its partnership with PepsiCo.

Growth investors should not be afraid to find the best companies, wherever they may be found. Peter Lynch taught everyone to look around at what is right in front of them - go to the mall he said, if you like the store, you might like the stock. For example, Peter got Legg’s pantyhose rec (owned by Hanes) from his wife and made a killing.

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I saw that post, which took me back to previous discussions, which led me to head for the exits on this one. I appreciated the heads up.
Vince

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@Robworldwide I guess you’ve not been on this board very long. There was a time when we were investing in sneakers, home builders, banks, convenience stores and what all.

Yeah, when SaaS became a thing those kinds of companies were abandoned. And Saul took some heat for it, he wrote a piece justifying his change of focus.

What hasn’t changed is the basic premise that growth gets rewarded. So now the best growth seems to be a fizzy drink and beauty products. I don’t expect either of those to sustain the current pace, but until the don’t, they are among the best investments available, unless you have a different fundamental strategy.

There’s quite a few to choose from. They can all be successful. I don’t think anyone would call Warren Buffet a growth focused investor. He’s done pretty well.

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I want to say few words…

after Saas the board got into enph, tmdx, aehr, rely and all these stocks got busted as well. the story is same the management shows great numbers but finally in the face of tough rates environment everything crumbles. the common mistake I see here is when board members make their purchases, the stock has already seen massive gains. enph was $1 stock that traded as high as $340. ofcourse it had to take a hit at some point.

the original saas stocks this board loved are super sensitive to these higher rates. they got busted first and they will likely be first to recover out of this mess. yes Bill had soft guidance but look at its cashflow, cash on hand and eps. nothing to not like about and at this price its amazing.

all these analysts just go with the flow. at the height they were raising price targets which never materialized. usually they are selling when they are raising targets. and what Saul shared here, rarely happens when every analyst is downgrading.

flushing out all the weak hands today and guess what, market makers were big buyers of bill stock today. In my opinion an all saas stocks will make remarkable recovery as soon as fed is done with raising rates.

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Everything follows the numbers, we must have numbers then we go to know the story.
They may be because short-term factors go down, so you have 2 ways to choose. First, stay and keep going. Second, move to another company. Nothing strategy is absolutely correct, maybe SaaS will be successful, enph、tmdx、aehr、rely may be as well. We can reach our target that’s enough, (beat S&P 500 or beat your target rate of return)
Otherwise, staying in a going-down company and thinking it will be back someday is not a good idea.

Let me use Morningstar’s Fair Value of Shopify make an example.
when the price was 20-40 in 2022 if you had extremely high faith we might have bought at that time, but at that time maybe we had another choice, another company had a better trend, instead of waiting for Shopify back, but in May 2023 Shopify Showed good signs, we will think it ready to take off and maybe we can buy it back.

The trend is important. When we find a cockroach in the kitchen that means you will find a whole kitchen full of cockroaches

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I bought a lot of BILL between the AH yesterday and today. The latest report showed it’s a cyclical business that is very sensitive to the economy. I’d imagine this stock could do very well coming out of the “anticipated” recession. How much worse will it get, I really don’t know. Valuation matters, and it’s now trading/supported by its FCF - hardly demanding. BILL has the highest annual growth rate over the last 12 quarters of any company I track, this does not happen by coincidence, it takes a superior product market fit, deep domain expertise and an excellent managment team. As for the analysts, its kind of silly that none of them reviewed BILLs job openings, they literally fell of a cliff in the last quarter with less than 20 openings left. The price cuts are not relevant IMO, why would I care about the price target or rely on it? The fact they had to be reduced as much shows it’s not a good source. To sum it up, is there something structurally wrong with the business or is it slowed down temporarily by SMBs more broadly?

Investing is not always about finding the company that’s putting forth the best growth currently. It can be most rewarding if you can see through a future tailwind. A good example this year is Palantir/MDB, it only took a slight acceleration in growth to catapult these stocks (and some AI hype).

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I want to thank a number of people for reminding me courteously that the analysts comments and raising and lowering of price targets are not what we should be about. We should be making those decisions for ourselves based on our own evaluations of the company’s results and our estimates of future prospects.

In explanation, my broker sends emails of those analyst changes of price targets after earnings and I was struck by the unanimity and the huge size of the reductions of price targets, which mirrored a large drop in stock price. It isn’t always that way (for instance I’ve seen a company sell off after hours but analysts raise targets… in this case the analysts are usually correct and the market reverses the sell off).

But enough on this off topic subject. My fault.

Saul

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Saul, all valid points, and not trying to sugarcoat this was not a good quarter. Therefore, the stock has rerated from revenue to FCF multiple, so I do feel the new price targets are now reflective of that. While difficult, some of this could have been predicted by analysts, and the proper rating before was “hold” or “sell”. Analysts must be working with a lack of real time data.

This could get a lot worse the next few quarters before it gets better. I’m willing to hold a position in BILL long term. The market opportunity is very large and a limited number of companies have the ability/expertise to capture it (high entry barriers). Intuit will do ~$16B in annual revenue for 2024.

Some folks are quick to dismiss BILL or discount the achievements.
In Dec 2020 BILL had $54M in quarterly revenues → today it has ~$305M. If you compare that against some other companies it looks rather exceptional.

NET: $99.7M → ~$335M
IOT: $75.9M → ~$225M
CFLT: $70M → ~$200M
MNDY: $50.1M → ~$183M
GTLB: $46M → ~$141M

Some might argue that acquisitions are part of that, but it is very difficult to acquire and integrate succesfuly - otherwise everyone would just do the same :slight_smile: . Especially in this space a domain expert is needed, like the founder of BILL.

I’m not trying to drag this conversation out too far, BILL needs to do better going forward, the past is history :smile:

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I stopped following BILL closely a few quarters ago after exiting a fairly large position that got murdered after the earnings report.

Given that, does the fact that about $40M or 13% of BILL’s revenue comes from float worry you? Interest rates are not going stay in the 5+% range for very long. When they come down, so too will this source of revenue.

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The initial guidance assumed a funds rate of ~4% vs ~5% (rate cuts first half of the year), yield on FBO funds will be adjusted throughout the year based on actuals. This is a difficult metric to forecast, as it is dependend on total funds held for customers. Models I’ve seen are expecting this metric to decline significantly as a percentage of revenue. Anything contrary to that would be a surprise tailwind. To answer your question, I would be worried if total customers and utilization declined.

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Bill Holdings Is Said to Near $1.95 Billion Deal for Melio - Bloomberg

The question for me is not really around dilution, companies dilute shareholders frequently and oftentimes to fund unprofitable business activities. In this case it looks like Bill shareholders are getting a legitimate asset. I’m interested in synergies, market potential, and revenue acceleration. It looks like this leans in more towards the Bill core platform.

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Bill - BILL Responds to Market Rumor

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