Bill.com (NYSE:BILL) Beats Q4 Sales Targets But Full-Year Guidance Underwhelms

Radek Strnad /
2023/08/17 4:16 pm EDT

Payments and billing software maker Bill.com (NYSE:BILL) reported Q4 FY2023 results beating Wall Street analysts' expectations, with revenue up 47.8% year on year to $296 million. However, next quarter's revenue guidance of $297 million was less impressive, coming in 1.06% below analysts' estimates. Bill.com made a GAAP loss of $15.9 million, improving from its loss of $84.9 million in the same quarter last year.

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Bill.com (BILL) Q4 FY2023 Highlights:

  • Revenue: $296 million vs analyst estimates of $282.6 million (4.75% beat)
  • EPS (non-GAAP): $0.59 vs analyst estimates of $0.41 (43.9% beat)
  • Revenue Guidance for Q1 2024 is $297 million at the midpoint, below analyst estimates of $300.2 million
  • Management's revenue guidance for the upcoming financial year 2024 is $1.3 billion at the midpoint, missing analyst estimates by 0.51% and implying 22.6% growth (vs 67.9% in FY2023)
  • Free Cash Flow of $72.9 million, up from $24 million in the previous quarter
  • Customers: 201,000, up from 197,900 in the previous quarter
  • Gross Margin (GAAP): 82.2%, down from 98.1% in the same quarter last year

“Fiscal 2023 was a defining year for BILL. We exceeded $1 billion in annual revenue, delivered our first year of non-GAAP profitability, and transacted payment volume that accounted for approximately 1% of U.S. GDP,” said René Lacerte, BILL 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 two years, growing from $78.3 million in Q4 FY2021 to $296 million this quarter.

Bill.com Total Revenue

Unsurprisingly, this was another great quarter for Bill.com with revenue up 47.8% year on year. On top of that, its revenue increased $23.4 million quarter on quarter, a very strong improvement from the $12.5 million increase in Q3 2023. This is a sign of acceleration of growth and great to see.

Next quarter's guidance suggests that Bill.com is expecting revenue to grow 29.2% year on year to $297 million, slowing down from the 94.3% year-on-year increase it recorded in the same quarter last year. For the upcoming financial year, management expects revenue to be $1.3 billion at the midpoint, growing 22.6% year on year compared to the 64.9% increase in FY2023.

The pandemic fundamentally changed several consumer habits. There is a founder-led company that is massively benefiting from this shift. The business has grown astonishingly fast, with 40%+ free cash flow margins. Its fundamentals are undoubtedly best-in-class. Still, the total addressable market is so big that the company has room to grow many times in size. You can find it on our platform for free.

Customer Growth

Bill.com reported 201,000 customers at the end of the quarter, an increase of 3,100 from the previous quarter. That's a little slower customer growth than what we've observed in past quarters, suggesting that the company's customer acquisition momentum is slowing.

Bill.com Customers

Key Takeaways from Bill.com's Q4 Results

Sporting a market capitalization of $11.2 billion, more than $2.66 billion in cash on hand, and positive free cash flow over the last 12 months, we believe that Bill.com is attractively positioned to invest in growth.

It was good to see Bill.com beat analysts' revenue expectations this quarter, driven by higher transaction fees. That really stood out as a positive in these results. On the other hand, its revenue guidance for next year suggests a significant slowdown in demand. Overall, the results could have been better, but this was a milestone year for Bill.com as its transacted payment volume accounted for approximately 1% of U.S. GDP. The company is down 2.58% on the results and currently trades at $98.99 per share.

Bill.com may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 50% year on year and best-in-class SaaS metrics it should definitely be on your radar.

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