Payments and billing software maker Bill.com (NYSE:BILL) reported Q2 CY2024 results topping analysts’ expectations, with revenue up 16.1% year on year to $343.7 million. The company also expects next quarter’s revenue to be around $348.5 million, coming in 3.4% above analysts’ estimates. It made a non-GAAP profit of $0.72 per share, improving from its loss of $0.14 per share in the same quarter last year.
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Bill.com (BILL) Q2 CY2024 Highlights:
- Revenue: $343.7 million vs analyst estimates of $328 million (4.8% beat)
- Adjusted Operating Income: $59.97 million vs analyst estimates of $45.99 million (30.4% beat)
- EPS (non-GAAP): $0.72 vs analyst estimates of $0.47 (53.7% beat)
- Management’s revenue guidance for the upcoming financial year 2025 is $1.43 billion at the midpoint, missing analyst estimates by 0.7% and implying 11% growth (vs 22.4% in FY2024)
- EPS (non-GAAP) guidance for the upcoming financial year 2025 is $1.49 at the midpoint, missing analyst estimates by 33.1%
- Gross Margin (GAAP): 81%, down from 86.1% in the same quarter last year
- Free Cash Flow Margin: 21.3%, up from 19.5% in the previous quarter
- Market Capitalization: $5.41 billion
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
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 75.6% annualized revenue growth over the last three years has been incredible, and its sales came in at $343.7 million this quarter.
This quarter, Bill.com’s quarterly revenue was once again up 16.1% year on year. We can see that Bill.com’s revenue increased by $20.64 million quarter on quarter, which is a solid improvement from the $4.53 million increase in Q1 CY2024. This acceleration of growth was a great sign.
Next quarter’s guidance suggests that Bill.com is expecting revenue to grow 14.3% year on year to $348.5 million, slowing down from the 32.6% year-on-year increase it recorded in the same quarter last year. For the upcoming financial year, management expects revenue to be $1.43 billion at the midpoint, growing 11% year on year compared to the 21.9% increase in FY2024.
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Cash Is King
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Bill.com has shown robust cash profitability, driven by its attractive business model that enables it to reinvest or return capital to investors while maintaining a cash cushion. The company’s free cash flow margin averaged 20% over the last year, quite impressive for a software business.
Bill.com’s free cash flow clocked in at $73.09 million in Q2, equivalent to a 21.3% margin. The company’s cash profitability regressed as it was 3.4 percentage points lower than in the same quarter last year, but it’s still above its one-year average. We wouldn’t read too much into this quarter’s decline because investment needs can be seasonal, leading to short-term swings. Long-term trends carry greater meaning.
Over the next year, analysts’ consensus estimates show they’re expecting Bill.com’s free cash flow margin of 20% for the last 12 months to remain the same.
Key Takeaways from Bill.com’s Q2 Results
It was great to see Bill.com’s optimistic revenue guidance and outlook for next quarter, which exceeded analysts’ expectations. We were also excited its revenue outperformed Wall Street’s estimates. On the other hand, its revenue guidance for next year suggests a significant slowdown in demand and its gross margin shrunk. Overall, this quarter was mixed, with some positives and some negatives. The stock traded up 1.8% to $51.68 immediately following the results.
So should you invest in Bill.com 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.