Bill.com (NYSE:BILL) Reports Strong Q3 But Stock Drops 19.4%

Kayode Omotosho /
2022/05/05 4:15 pm EDT
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Payments and billing software maker Bill.com (NYSE:BILL) announced better-than-expected results in the Q3 FY2022 quarter, with revenue up 179% year on year to $166.9 million. On top of that, guidance for next quarter's revenue was surprisingly good, being $182.8 million at the midpoint, 8.31% above what analysts were expecting. Bill.com made a GAAP loss of $86.7 million, down on its loss of $26.7 million, in the same quarter last year.

Is now the time to buy Bill.com? Access our full analysis of the earnings results here, it's free.

Bill.com (BILL) Q3 FY2022 Highlights:

  • Revenue: $166.9 million vs analyst estimates of $157.9 million (5.7% beat)
  • EPS (non-GAAP): -$0.08 vs analyst estimates of -$0.16
  • Revenue guidance for Q4 2022 is $182.8 million at the midpoint, above analyst estimates of $168.7 million
  • Free cash flow of $22.7 million, up from negative free cash flow of $16 million in previous quarter
  • Customers: 146,600, up from 135,000 in previous quarter
  • Gross Margin (GAAP): 77.6%, up from 74.1% same quarter last year

“We delivered a great quarter driven by robust demand for our solutions,” said René Lacerte, Bill.com CEO and Founder.

Started by René Lacerte in 2006 after selling his previous payroll and accounting software company PayCycle to Intuit, Bill.com (NYSE:BILL) is a software as a service platform that aims to make payments and billing processes easier for small and medium-sized businesses.

Finance and accounting software benefits from dual trends around costs savings and ease of use. First is the SaaS-ification of businesses, large and small, who much prefer the flexibility of cloud-based, web-browser delivered software paid for on a subscription basis than the hassle and expense of purchasing and managing on-premise enterprise software. Second is the consumerization of business software, whereby multiple standalone processes like supply chain and tax management are aggregated into a single, easy to use platforms.

Sales Growth

As you can see below, Bill.com's revenue growth has been incredible over the last year, growing from quarterly revenue of $59.7 million, to $166.9 million.

Bill.com Total Revenue

This was another standout quarter with the revenue up a splendid 179% year on year. But the growth did slow down compared to last quarter, as the revenue increased by just $10.4 million in Q3, compared to $40 million in Q2 2022. We'd like to see revenue increase by a greater amount each quarter, but a one-off fluctuation is usually not concerning.

Guidance for the next quarter indicates Bill.com is expecting revenue to grow 133% year on year to $182.8 million, improving on the 85.8% year-over-year increase in revenue the company had recorded in the same quarter last year. Ahead of the earnings results the analysts covering the company were estimating sales to grow 56.1% over the next twelve months.

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Customer Growth

You can see below that Bill.com reported 146,600 customers at the end of the quarter, an increase of 11,600 on last quarter. That is a fair bit better customer growth than last quarter and quite a bit above the typical customer growth we have seen lately, demonstrating that the business itself has good sales momentum. We've no doubt shareholders will take this as an indication that the company's go-to-market strategy is working very well.

Bill.com Customers

Key Takeaways from Bill.com's Q3 Results

With a market capitalization of $18.1 billion, more than $2.78 billion in cash and the fact it is operating close to free cash flow break-even, we're confident that Bill.com has the resources it needs to pursue a high growth business strategy.

We were impressed by the very optimistic revenue guidance Bill.com provided for the next quarter. And we were also excited to see the really strong revenue growth. Zooming out, we think this was a great quarter and many shareholders will likely feel excited about the results. But the market might have been expecting more and the company is down 19.4% on the results and currently trades at $122.75 per share.

Bill.com may have had a good quarter, so should you invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.