BILL Reports First Quarter Fiscal Year 2025 Financial Results

Business Wire 7-Nov-2024 4:05 PM

• Accelerated Q1 Core Revenue Growth to 19% Year-Over-Year
• Increased Q1 Total Revenue Growth to 18% Year-Over-Year
• Repurchased $200 Million of Common Stock, or 3.7 Million Shares, During the Quarter

BILL (NYSE:BILL), a leading financial operations platform for small and midsize businesses (SMBs), today announced financial results for the first fiscal quarter ended September 30, 2024.

"We delivered strong financial results and drove a fast pace of innovation as we executed well on our strategy to expand our leadership position in the financial operations category for SMBs," said René Lacerte, BILL CEO and Founder. "We empower SMBs to simplify their operations, have access to capital, and gain valuable insight and control of their cash flow. With our category defining platform, broad payment capabilities, and large and expanding ecosystem, we are helping nearly 500,000 SMBs better run their businesses and thrive."

"Our continued strong financial performance demonstrates the durable business model and the rigor of our execution in driving growth and increasing profitability," said John Rettig, BILL President and CFO. "In fiscal 2025 we are making targeted investments to accelerate our strategic priorities, expand our platform, and penetrate the market. We are building BILL to be a durable high growth, highly profitable business over the long-term."

Financial Highlights for the First Quarter of Fiscal 2025:

• Total revenue was $358.5 million, an increase of 18% year-over-year.
• Core revenue, which consists of subscription and transaction fees, was $314.9 million, an increase of 19% year-over-year. Subscription fees were $67.4 million, up 8% year-over-year. Transaction fees were $247.5 million, up 22% year-over-year.
• Float revenue, which consists of interest on funds held for customers, was $43.5 million.
• Gross profit was $293.8 million, representing an 82.0% gross margin, compared to $249.0 million, or an 81.6% gross margin, in the first quarter of fiscal 2024. Non-GAAP gross profit was $307.0 million, representing an 85.7% non-GAAP gross margin, compared to $262.7 million, or an 86.1% non-GAAP gross margin, in the first quarter of fiscal 2024.
• Operating loss was $7.7 million, compared to an operating loss of $56.6 million in the first quarter of fiscal 2024. Non-GAAP operating income was $67.1 million, compared to $33.4 million in the first quarter of fiscal 2024, an increase of 101% year-over-year.
• Net income was $8.9 million, or $0.08 per basic and diluted share, compared to net loss of $27.9 million, or ($0.26) per basic and diluted share, in the first quarter of fiscal 2024. Non-GAAP net income was $68.6 million, or $0.63 per diluted share, compared to non-GAAP net income of $51.6 million, or $0.44 per diluted share, in the first quarter of fiscal 2024.

Business Highlights and Recent Developments:

• Served 476,200 businesses using our solutions as of the end of the first quarter.¹
• Processed $80 billion in total payment volume in the first quarter, an increase of 14% year-over-year.
• Processed 29 million transactions during the first quarter, an increase of 16% year-over-year.
• Hired payments industry leader Mary Kay Bowman as Executive Vice President, Payments and Financial Services.
• Hired Bobbie Grafeld as new Chief People Officer to lead people strategy.
• Repurchased approximately 3.7 million shares of BILL common stock in the first quarter for a total cost of approximately $200 million.

____________________ ¹ Businesses using more than one of our solutions are included separately in the total for each solution utilized.

Financial Outlook

We are providing the following guidance for the fiscal second quarter ending December 31, 2024 and the full fiscal year ending June 30, 2025.

The outlook for non-GAAP net income and non-GAAP net income per diluted share includes a non-GAAP provision for income taxes of 20%. The outlook for Non-GAAP net income takes into account the use of corporate cash for investment and other strategic capital allocation, including but not limited to the share repurchase program announced in August 2024. The outlook for Non-GAAP net income per diluted share does not take any future repurchases of BILL shares into account, as its impact on a per diluted share basis is not reasonably estimable.

These statements are forward-looking and actual results may differ materially. Refer to the Forward-Looking Statements safe harbor below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

BILL has not provided a reconciliation of its non-GAAP operating income, non-GAAP net income or non-GAAP net income per share guidance to the most directly comparable GAAP measures because certain items excluded from GAAP cannot be reasonably calculated or predicted at this time. Accordingly, a reconciliation is not available without unreasonable effort.

Conference Call and Webcast Information

In conjunction with this announcement, BILL will host a conference call for investors at 1:30 p.m. PT (4:30 p.m. ET) today to discuss fiscal first quarter 2025 results and our outlook for the fiscal second quarter ending December 31, 2024 and fiscal year ending June 30, 2025. The live webcast and a replay of the webcast will be available at the Investor Relations section of BILL's website: https://investor.bill.com/events-and-presentations/default.aspx.

About BILL

BILL (NYSE:BILL) is a leading financial operations platform for small and midsize businesses (SMBs). As a champion of SMBs, we are automating the future of finance so businesses can thrive. Our integrated platform helps businesses to more efficiently control their payables, receivables and spend and expense management. Hundreds of thousands of businesses rely on BILL's proprietary network of millions of members to pay or get paid faster. Headquartered in San Jose, California, BILL is a trusted partner of leading U.S. financial institutions, accounting firms, and accounting software providers. For more information, visit bill.com.

Note on Forward-Looking Statements

This press release and the accompanying conference call contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are statements other than statements of historical facts, and statements in the future tense. Forward-looking statements are based on our expectations as of the date of this press release and are subject to a number of risks, uncertainties and assumptions, many of which involve factors or circumstances that are beyond our control. These statements include, but are not limited to, statements regarding our expectations of future performance, including guidance for our total revenue, core revenue, non-GAAP operating income, non-GAAP net income, and non-GAAP net income per share for the fiscal second quarter ending December 31, 2024 and full fiscal year ending June 30, 2025, our planned investments in fiscal year 2025, our revenue growth, margin expansion and profitability profile in future years, activity under our previously-announced share repurchase program, our expectations for the growth of demand on our platform and the expansion of our customers' utilization of our services. These risks and uncertainties include, but are not limited to macroeconomic factors, including changes in interest rates, inflation and volatile market environments, as well as fluctuations in foreign exchange rates, our history of operating losses, our recent rapid growth, the large sums of customer funds that we transfer daily, the risk of loss, errors and fraudulent activity, credit risk related to our BILL Divvy Corporate Cards, our ability to attract new customers and convert trial customers into paying customers, our ability to invest in our business and develop new products and services, increased competition or new entrants in the marketplace, potential impacts of acquisitions and investments, including our ability to integrate acquired businesses, incorporate their technology effectively and implement appropriate internal controls at such businesses, our relationships with accounting firms and financial institutions, the global impacts of ongoing geopolitical conflicts, and other risks detailed in the registration statements and periodic reports we file with the SEC, including our quarterly and annual reports, which may be obtained on the Investor Relations section of BILL's website (https://investor.bill.com/financials/sec-filings/default.aspx) and on the SEC website at www.sec.gov. You should not rely on these forward-looking statements, as actual results may differ materially from those contemplated by these forward-looking statements as a result of such risks and uncertainties. All forward-looking statements in this press release are based on information available to us as of the date hereof. We assume no obligation to update or revise the forward-looking statements contained in this press release or the accompanying conference call because of new information, future events, or otherwise.

Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain, and the conference call will contain, non-GAAP financial measures, including non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income and non-GAAP net income per share, basic and diluted. The non-GAAP financial information is presented for supplemental informational purposes only and is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP.

Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool.

We exclude the following items from non-GAAP gross profit and non-GAAP gross margin:

• stock-based compensation and related payroll taxes
• depreciation and amortization

We exclude the following items from non-GAAP operating expenses and non-GAAP operating income:

• stock-based compensation and related payroll taxes
• depreciation and amortization
• acquisition and integration-related expenses
• restructuring

We exclude the following items from non-GAAP net income and non-GAAP net income per share:

• stock-based compensation expense and related payroll taxes
• depreciation and amortization
• acquisition and integration-related expenses
• restructuring
• gain on debt extinguishment
• amortization of debt issuance costs
• non-GAAP provision for income taxes

It is important to note that the particular items we exclude from, or include in, our non-GAAP financial measures may differ from the items excluded from, or included in, similar non-GAAP financial measures used by other companies in the same industry. We also periodically review our non-GAAP financial measures and may revise these measures to reflect changes in our business or otherwise, including our blended U.S. statutory tax rate.

We believe that these non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects, and allow for greater transparency with respect to important metrics used by our management for financial and operational decision-making. We believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry.

We adjust the following items from one or more of our non-GAAP financial measures:

Stock-based compensation and related payroll taxes charged to cost of revenue and operating expenses. We exclude stock-based compensation, which is a non-cash expense, and related payroll taxes from certain of our non-GAAP financial measures because we believe that excluding these items provide meaningful supplemental information regarding operational performance. In particular, companies calculate stock-based compensation expenses using a variety of valuation methodologies and subjective assumptions while the related payroll taxes are dependent on the price of our common stock and other factors that are beyond our control and do not correlate to the operation of our business.

Depreciation and amortization. We exclude depreciation and amortization from certain of our non-GAAP financial measures because we believe that excluding this non-cash charge provides meaningful supplemental information regarding operational performance. Depreciation and amortization do not include amortization of capitalized internal-use software costs paid in cash.

Acquisition and integration-related expenses. We exclude acquisition and integration-related expenses from certain of our non-GAAP financial measures because these costs would have not otherwise been incurred in the normal course of our business operations. In addition, we believe that acquisition and integration-related expenses are non-recurring charges unique to a specific acquisition. Although we may engage in future acquisitions, such acquisitions and the associated acquisition and integration-related expenses are considered unique and not comparable to other acquisitions.

Restructuring. We exclude costs incurred in connection with formal restructuring plans from certain of our non-GAAP financial measures because these costs are exceptional and would have not otherwise been incurred in the normal course of our business operations.

Gain on debt extinguishment. We exclude gain on debt extinguishment associated with our repurchases of certain of our outstanding 0.0% Convertible Senior Notes due 2025 in fiscal 2024 because we believe that excluding this non-cash gain provides better insight regarding our operational performance.

Amortization of debt issuance costs. We exclude amortization of debt issuance costs associated with our issuance of our convertible senior notes and credit arrangement from certain of our non-GAAP financial measures because we believe that excluding this non-cash interest expense provides meaningful supplemental information regarding our operational performance.

Non-GAAP provision for income taxes. Consists of assumed provision for income taxes based on the statutory tax rate taking into consideration the nature of the taxed item and the relevant taxing jurisdiction.

There are material limitations associated with the use of non-GAAP financial measures since they exclude significant expenses and income that are required by GAAP to be recorded in our financial statements. Please see the reconciliation tables at the end of this release for the reconciliation of GAAP and non-GAAP results.

Free Cash Flow

Free cash flow is a non-GAAP measure defined as net cash provided by operating activities, adjusted by purchases of property and equipment and capitalization of internal-use software costs. We believe free cash flow is an important liquidity measure of the cash that is generated, after incurring operating expenses, purchases of property and equipment and capitalization of internal-use software costs, for future operational expenses and investment in our business. Free cash flow is useful to investors as a liquidity measure because it measures our ability to generate or use cash in the ordinary course of business. One limitation of free cash flow is that it does not reflect our future contractual commitments. Additionally, free cash flow does not represent the total increase or decrease in our cash balance for a given period. Once our business needs and obligations are met, cash can be used to maintain strong balance sheets and invest in future growth.

⁽¹⁾ Includes stock-based compensation charged to revenue and expenses as follows (in thousands):

^* Consists of acquisition related equity awards (Acquisition Related Awards), which include equity awards assumed and retention equity awards granted to certain employees of acquired companies in connection with acquisitions, and non-acquisition related equity awards (Non-Acquisition Related Awards), which include all other equity awards granted to existing employees and non-employees in the ordinary course of business. The following table presents stock-based compensation recorded for the periods presented and as a percentage of total revenue (in thousands):

⁽²⁾ Depreciation and amortization do not include amortization of capitalized internal-use software costs paid in cash. ⁽³⁾ Provision for expected credit losses was included in general and administrative expenses in first fiscal quarter 2024.

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