Bill.com (NYSE:BILL) Reports Bullish Q1, Provides Optimistic Full Year Guidance

Jabin Bastian /
2022/11/03 4:20 pm EDT

Payments and billing software maker Bill.com (NYSE:BILL) reported Q1 FY2023 results that beat analyst expectations, with revenue up 94.2% year on year to $229.9 million. On top of that, guidance for next quarter's revenue was surprisingly good, being $243 million at the midpoint, 4.06% above what analysts were expecting. Bill.com made a GAAP loss of $81.6 million, down on its loss of $74.2 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) Q1 FY2023 Highlights:

  • Revenue: $229.9 million vs analyst estimates of $210.9 million (9.01% beat)
  • EPS (non-GAAP): $0.14 vs analyst estimates of $0.06 ($0.08 beat)
  • Revenue guidance for Q2 2023 is $243 million at the midpoint, above analyst estimates of $233.4 million
  • The company lifted revenue guidance for the full year, from $964.5 million to $1 billion at the midpoint, a 3.73% increase
  • Free cash flow of $12 million, up from negative free cash flow of $14.9 million in previous quarter
  • Customers: 172,000, up from 157,800 in previous quarter
  • Gross Margin (GAAP): 80.3%, up from 74.9% same quarter last year

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 quarterly revenue of $46.2 million in Q1 FY2021, to $229.9 million.

Bill.com Total Revenue

This was another standout quarter with the revenue up a splendid 94.2% year on year. But the growth did slow down a little compared to last quarter, as Bill.com increased revenue by $29.7 million in Q1, compared to $33.3 million revenue add in Q4 2022. So while the growth is overall still impressive, we will be keeping an eye on the slowdown.

Guidance for the next quarter indicates Bill.com is expecting revenue to grow 55.2% year on year to $243 million, slowing down from the 189% 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 38.4% over the next twelve months.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.

Customer Growth

You can see below that Bill.com reported 172,000 customers at the end of the quarter, an increase of 14,200 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 Q1 Results

Sporting a market capitalization of $12.3 billion, more than $2.64 billion in cash and with positive free cash flow over the last twelve months, we're confident that Bill.com has the resources it needs to pursue a high growth business strategy.

We were impressed by the exceptional revenue growth Bill.com delivered this quarter. And we were also excited to see that it outperformed Wall St’s revenue expectations. On the other hand, it was less good to see the pretty significant deterioration in gross margin. Overall, we think this was a strong quarter, that should leave shareholders feeling very positive. The company is up 3.45% on the results and currently trades at $120.01 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.

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 70% 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.