Thinking about Bill, might buy some here

Bill is down today. Not on financials , but on news.

I see Bill shares are trading at a little under 70 a share with about 110 million shares outstanding. meaning the company has a market cap of about 7 or 8 billion dollars.

Bill has a free cash flow of roughly 200 million dollars. Zero short term debt and maybe 100 million in long term debt. There is a large 1.6 billion in cash held for customers and a liability for the same.

(I wonder if Bill gets to keep the interest on that float)

Backing that 1.6 billion out, it looks like to me that Bill has about 900 million in cash to play with.

So for every share of Bill you get about 9 dollars in cash and about 67 cents in free cash flow.

That is not terribly exciting to me.

But, I have serious doubts about how I handled these numbers and even more about my analysis.

In any case I an considering adding some Bill in the next few days as panic about the bank spreads. At 10 dollars a share you would be buying the cash and interest on customer cash and getting the company for free.



I will put here my 2c, by no means an expert opinion.

I think there was a very good reason not to discuss valuation on this forum and that this reason remains in place even if the desire to find an anchor point is always very strong.

First, no research until at least several years ago had successfully tied valuations to returns with Shiller PE being best and yet only accounting for 40% of returns per Vanguard. Second, growth companies are valued only in relation to growth and so we concentrate on the degree, direction, and durability of growth because that is the primary factor and the valuation is merely its byproduct.

And so if you want to invest in airlines, railroads, miners, etc, then valuation games are absolutely fair. But for growth? And I don’t think that companies like AAPL are anywhere close to cheap either. And so on.

I have been watching various valuation metrics for SaaS for 2 years and I have seen nothing that had any predictive value. Notably, this includes the Jamin Ball tables. Pricey can remain pricey and cheap can remain cheap as the overall floor adjusts up or down.

Company performance will determine that, primarily, though I would not discount the social media and retail factors for companies with deep retail following.

One can argue that some growth companies are approaching traditional valuation metrics, but then for BILL or TWLO or FSLY the question becomes how you value goodwill because some online aggregators like the one I use give you very favorable P/B ratings and you could nominally say, look, our companies are now objectively cheap! But then if you remove the goodwill…still not cheap by traditional metrics.

For FCF, BILL has a FCF yield per my aggregator of less than 1%. While this is better than negative, ZS is near 2%, CRWD and ENPH are 2.4%, FOUR is 3%, MELI is 5% and for comparison BRKB is 3% AAPL is 4% and JPM is 28%. So is BILL cheap? Cheap relative to what? We can say that MELI and FOUR are on par with some of the most highly regarded businesses and that CRWD and ENPH are by no means crazy pricey but BILL? Then again are BRKB and AAPL cheap? Relative to what? To the realities of 1960? Of 2000? And so on, there is no anchor point that is “true.”

And this is why, although I like it when a growth company that I like also happens to be cheap, this is true only if there is something that can be called a pivot in its performance trajectory that will result in a better performance and hence higher multiple. That could be a new ceo and product (AYX), a new ceo (FSLY), a new focus on efficiency (TWLO), a new pricing model (AI), in any case there has to be something about product, leadership, and market opportunity rather than valuation to get me interested. It is like buying an IPO all over again, essentially.

As for the news, ROKU said they have like half a billion in SVB, unsecured. I don’t know how this SVB situation will affect other mature companies but I sure don’t like seeing this kind of news.


As your analysis noted, if you are looking to invest in or value BILL based upon traditional value-investor metrics, I think its exceedingly unlikely you will ever invest in BILL (or any of the companies discussed on this board).

We are growth investors. The case for investing in BILL centers on their ability to return to 40%+ growth. I personally think they will get back there. But they have massive headwinds at present. It’s a pretty bad environment, but I bet (with my portfolio) they will continue to grow. Once we get through this, whatever this turns out to be, I think they will accelerate. But hey that is one persons view. My team uses BILL every day and we can’t do business without them.

I do note, BILL did not issue a press release concerning their exposure to SVB. Many other companies did. The news could be anywhere from minor to major (or I guess, even, tragic). I trust management that they wouldn’t have been so foolish as to consolidate their business with any one bank. But we are going to have to see how this plays out.



I agree!

Additionally, the “pivot” is in the eye of the beholder. We might have different perspectives on whether the pivot is actually a pivot or worth putting our money in the stock. e.g. I believe TWLO is late to their efficiency efforts and their product set is quickly becoming commoditized. On the other hand AYX is worth watching.

Here are BILL’s forward growth projections by quarter. The table shows the projected quarterly revenue and the estimated yoy% growth rate.

There does not seem to be a pivot back to higher growth for a while (2025?)


there is a new catalyst that could spark a change in trajectory…an M&A, a new product or a soft landing (macro) for SMBs.



Absolutely agree. And that increases both the risks and the rewards. I wonder if it is very different from an IPO though where some invest immediately and others wait a couple quarters or even a year to see if the promises can be backed up in the “real world” of public companies.