Home Business Wire BILL Reports Second Quarter Fiscal Year 2023 Financial Results

BILL Reports Second Quarter Fiscal Year 2023 Financial Results

  • Q2 Core Revenue Increased 49% Year-Over-Year
  • Q2 Total Revenue Increased 66% Year-Over-Year

SAN JOSE, Calif.–(BUSINESS WIRE)–BILL (NYSE: BILL), a leader in financial automation software for small and midsize businesses (SMBs), today announced financial results for the second fiscal quarter ended December 31, 2022.

“We delivered strong second quarter results and achieved another quarter of non-GAAP profitable growth as we executed on our strategy to be the essential financial operations platform for SMBs,” said René Lacerte, BILL CEO and Founder. “As champions of SMBs, we are proud that our solutions empowered more than 400,000 businesses to automate their financial operations, gain more visibility and control of their spend, and focus more of their time on running their businesses.”

“In Q2, we delivered revenue growth of 66% year-over-year and record non-GAAP gross margin, non-GAAP net income, and free cash flow,” said John Rettig, BILL CFO. “Our performance demonstrates the durability of our business model regardless of the macro environment and our diligent execution to deliver balanced growth, profitability and cash flow.”

Financial Highlights for the Second Quarter of Fiscal 2023:

The financial measures listed below identified as BILL standalone exclude the results of Divvy and Invoice2go.

  • Total revenue was $260.0 million, an increase of 66% year-over-year.
  • Core revenue, which consists of subscription and transaction fees, was $231.1 million, an increase of 49% year-over-year.
    • Subscription fees were $61.5 million, up 25% year-over-year. This includes $52.7 million of subscription fees from the BILL standalone platform, which increased 31% year-over-year.
    • Transaction fees were $169.6 million, up 59% year-over-year. This includes $80.4 million of transaction fees from the BILL standalone platform, which increased 42% year-over-year, and $86.6 million of transaction fees from our Divvy spend management solution, which increased 78% year-over-year.
  • Float revenue, which consists of interest on funds held for customers, was $28.9 million.
  • Gross profit was $212.5 million, representing an 81.7% gross margin, compared to $122.1 million, or a 78.0% gross margin, in the second quarter of fiscal 2022. Non-GAAP gross profit was $225.4 million, representing an 86.7% non-GAAP gross margin, compared to $133.5 million, or a 85.3% non-GAAP gross margin, in the second quarter of fiscal 2022.
  • Loss from operations was $112.5 million, compared to a loss from operations of $76.1 million in the second quarter of fiscal 2022. Non-GAAP income from operations was $30.8 million, compared to a non-GAAP income from operations of $3.4 million in the second quarter of fiscal 2022.
  • Net loss was $95.1 million, or ($0.90) per share, basic and diluted, compared to net loss of $80.4 million, or ($0.78) per share, basic and diluted, in the second quarter of fiscal 2022. Non-GAAP net income was $49.4 million, or $0.42 per diluted share, compared to non-GAAP net loss of $0.2 million, or ($0.00) per share, basic and diluted, in the second quarter of fiscal 2022.

Business Highlights and Recent Developments

The metrics listed below identified as BILL standalone exclude the results of Divvy and Invoice2go.

  • Completed the acquisition of Finmark, a financial planning and cash flow insights software company.
  • Served 435,800 businesses using our solutions as of the end of the second quarter. This includes 182,700 BILL standalone customers, 24,700 spending businesses that used Divvy, and 228,500 subscribers that used Invoice2go.
  • Processed $67.3 billion in total payment volume in the second quarter, an increase of 15% year-over-year. This includes $63.7 billion of total payment volume on our BILL standalone platform, an increase of 13% year-over-year, and $3.3 billion in total card payment volume for Divvy, an increase of 76% year-over-year.
  • Processed 20.8 million transactions during the second quarter, an increase of 34% year-over-year. This includes 11.0 million transactions on our BILL standalone platform, representing an increase of 12% year-over-year, and 9.4 million Divvy card transactions, an increase of 77% year-over-year.
  • Announced that its Board of Directors approved a share repurchase program with authorization to purchase up to $300 million of BILL’s common stock.

Financial Outlook

We are providing the following guidance for the fiscal third quarter ending March 31, 2023 and the full fiscal year ending June 30, 2023.

 

 

Q3 FY23

Guidance

 

FY23

Guidance

Total revenue (millions)

$245 – $248

 

$999 – $1,007

Year-over-year total revenue growth

47% – 49%

 

56% – 57%

Non-GAAP net income (millions)

$26.5 – $29.5

 

$117.5 – $125.5

Non-GAAP net income per diluted share

$0.22 – $0.25

$0.99 – $1.05

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 non-GAAP net income or non-GAAP net income per share guidance measures 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 second quarter 2023 results and our outlook for the fiscal third quarter ending March 31, 2023 and the fiscal year ending June 30, 2023. 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 leader in financial automation software for small and midsize businesses (SMBs). As a champion of SMBs, we are dedicated to automating the future of finance so businesses can thrive. Hundreds of thousands of businesses trust BILL solutions to manage financial workflows, including payables, receivables, and spend and expense management. With BILL, businesses are connected to a network of millions of members, so they can pay or get paid faster. Through our automated solutions, we help SMBs simplify and control their finances, so they can confidently manage their businesses, and succeed on their terms. BILL is a trusted partner of leading U.S. financial institutions, accounting firms, and accounting software providers. BILL is headquartered in San Jose, California. 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, non-GAAP net income, and non-GAAP net income per share for the fiscal third quarter ending March 31, 2023 and full fiscal year ending June 30, 2023, 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 interest rate, inflationary and recessionary environments, fluctuations in foreign exchange rates, instability and the global impact of the ongoing war in Ukraine, the coronavirus pandemic (COVID-19), variants thereof, and their impact on our employees, customers and strategic partners and on supply chains and labor markets, 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, the market, interest rate, foreign exchange and other conditions that the customer funds we hold in trust are subject to, our ability to attract new customers and convert trial customers into paying customers, our ability to develop new products and services, increased competition or new entrants in the marketplace, potential impacts of acquisitions and investments, including our ability to integrate Divvy and Invoice2go, our accounting for and internal controls related to Divvy and Invoice2go operating results, changes in staffing levels, and other risks detailed in registration statements and periodic reports we file with the Securities and Exchange Commission (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 income (loss) from operations, non-GAAP net income (loss) and non-GAAP net income (loss) 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. Items excluded from non-GAAP gross profit and non-GAAP gross margin include amortization of certain intangible assets, stock-based compensation and related payroll taxes, and depreciation expense. Items excluded from non-GAAP operating expenses include amortization of certain intangible assets, stock-based compensation and related payroll taxes, depreciation expense, and acquisition and integration-related expenses. Items excluded from non-GAAP net income (loss) and non-GAAP net income (loss) per share include stock-based compensation expense and related payroll taxes, depreciation expense, amortization of certain intangible assets, acquisition and integration-related expenses, amortization of debt premium and issuance costs, and income tax effect associated with acquisitions. 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 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. 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 expense. We exclude depreciation expense from certain of our non-GAAP financial measures because we believe that excluding this non-cash expense provides meaningful supplemental information regarding operational performance. Depreciation expense does not include amortization of capitalized internal-use software costs.

Amortization of intangible assets. We exclude amortization of acquired intangible assets from certain of our non-GAAP financial measures because we believe that excluding this non-cash expense provides meaningful supplemental information regarding our operational performance.

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.

Amortization of debt premium and issuance costs. We exclude amortization of debt issuance costs associated with our issuance of our convertible senior notes and credit agreement and accretion of debt premium associated with our credit agreement 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.

Income tax effect associated with acquisitions. We exclude the income tax effect associated with acquisitions from certain of our non-GAAP financial measures because we believe that excluding this provides meaningful supplemental information regarding our operational performance.

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 that we calculate as net cash provided by (used in) operating activities, adjusted by purchases of property and equipment and capitalization of internal-use software costs. We believe that free cash flow is an important liquidity measure of the cash (if any) that is available, after capital expenditures, for 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. 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 a strong balance sheet and invest in future growth.

BILL.COM HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
 
December 31,
2022
June 30,
2022
ASSETS
Current assets:
Cash and cash equivalents

$

1,616,758

 

$

1,596,542

 

Short-term investments

 

1,066,538

 

1,108,493

 

Accounts receivable, net

 

31,261

 

24,045

 

Acquired card receivables, net

 

380,895

 

256,392

 

Prepaid expenses and other current assets

 

178,688

 

151,258

 

Funds held for customers

 

3,474,048

 

 

3,142,660

 

Total current assets

 

6,748,188

 

 

6,279,390

 

Non-current assets:
Operating lease right-of-use assets, net

 

72,725

 

 

76,445

 

Property and equipment, net

 

69,383

 

 

56,985

 

Intangible assets, net

 

401,869

 

 

432,583

 

Goodwill

 

2,396,509

 

 

2,362,893

 

Other assets

 

49,600

 

 

47,730

 

Total assets

$

9,738,274

 

$

9,256,026

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable

$

14,262

 

$

9,948

 

Accrued compensation and benefits

 

31,021

 

 

29,004

 

Deferred revenue

 

30,358

 

 

31,868

 

Other accruals and current liabilities

 

181,551

 

 

120,080

 

Borrowings from revolving credit facility, net

 

 

 

75,097

 

Customer fund deposits

 

3,474,048

 

 

3,142,660

 

Total current liabilities

 

3,731,240

 

 

3,408,657

 

Non-current liabilities:
Deferred revenue

 

2,013

 

 

2,159

 

Operating lease liabilities

 

78,207

 

 

82,728

 

Borrowings from revolving credit facility, net

 

112,570

 

 

 

Convertible senior notes, net

 

1,701,397

 

 

1,697,985

 

Other long-term liabilities

 

28,970

 

 

20,803

 

Total liabilities

 

5,654,397

 

 

5,212,332

 

Commitments and contingencies (Note 12)
Stockholders’ equity:
Common stock

 

2

 

 

2

 

Additional paid-in capital

 

4,811,780

 

 

4,598,737

 

Accumulated other comprehensive loss

 

(6,361

)

 

(10,217

)

Accumulated deficit

 

(721,544

)

 

(544,828

)

Total stockholders’ equity

4,083,877

 

4,043,694

 

Total liabilities and stockholders’ equity

$

9,738,274

 

$

9,256,026

 

BILL.COM HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands except per share amounts)
 
Three Months Ended
December 31,
Six Months Ended
December 31,

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

$

260,006

 

$

156,478

 

$

489,930

 

$

274,827

 

Cost of revenue
Service costs (1)

 

36,965

 

 

24,338

 

 

71,786

 

 

45,051

 

Depreciation and amortization of intangible assets (2)

 

10,502

 

 

10,048

 

 

20,789

 

 

19,170

 

Total cost of revenue

 

47,467

 

 

34,386

 

 

92,575

 

 

64,221

 

Gross profit

 

212,539

 

 

122,092

 

 

397,355

 

 

210,606

 

Operating expenses
Research and development (1)

 

78,910

 

 

51,377

 

 

154,030

 

 

93,261

 

Sales and marketing (1)

 

164,683

 

 

69,896

 

 

283,308

 

 

123,525

 

General and administrative (1)

 

69,381

 

 

64,965

 

 

136,119

 

 

122,480

 

Depreciation and amortization of intangible assets (2)

 

12,028

 

 

11,929

 

 

24,055

 

 

21,620

 

Total operating expenses

 

325,002

 

 

198,167

 

 

597,512

 

 

360,886

 

Loss from operations

 

(112,463

)

 

(76,075

)

 

(200,157

)

 

(150,280

)

Other income (expenses), net

 

17,022

 

 

(5,000

)

 

22,970

 

 

(8,475

)

Loss before benefit from income taxes

 

(95,441

)

 

(81,075

)

 

(177,187

)

 

(158,755

)

Benefit from income taxes

 

(365

)

 

(635

)

 

(471

)

 

(4,056

)

Net loss

$

(95,076

)

$

(80,440

)

$

(176,716

)

$

(154,699

)

 
Net loss per share attributable to common stockholders, basic and diluted

$

(0.90

)

$

(0.78

)

$

(1.68

)

$

(1.56

)

Weighted-average number of common shares used to compute net loss per share attributable to common stockholders, basic and diluted

 

105,906

 

 

102,910

 

 

105,494

 

 

99,401

 

 
____________________________________
(1) Includes stock-based compensation expense as follows:
 

Three Months Ended

December 31,

Six Months Ended

December 31,

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 
Cost of revenue

$

2,298

 

$

1,285

 

$

4,299

 

$

2,412

 

Research and development

 

26,981

 

 

14,280

 

47,831

 

24,840

 

Sales and marketing

 

69,522

 

 

11,039

 

98,779

 

19,153

 

General and administrative

 

20,641

 

 

23,080

 

41,152

 

41,166

 

$

119,442

 

$

49,684

 

$

192,061

 

$

87,571

 

 
(2) Depreciation expense excludes amortization of capitalized internal-use software costs.
 
BILL.COM HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 
Three Months Ended
December 31,
Six Months Ended
December 31,

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Cash flows from operating activities:
Net loss

$

(95,076

)

$

(80,440

)

$

(176,716

)

$

(154,699

)

 
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation

 

119,305

 

 

49,684

 

 

191,925

 

 

87,571

 

Amortization of intangible assets

 

19,994

 

 

19,768

 

 

39,763

 

 

36,440

 

Depreciation of property and equipment

 

2,535

 

 

2,221

 

 

5,081

 

 

4,350

 

Amortization of capitalized internal-use software costs

 

977

 

 

414

 

 

1,901

 

 

673

 

Amortization of debt premium and issuance costs

 

1,771

 

 

1,399

 

 

3,483

 

 

1,955

 

Amortization of premium (accretion of discount) on investments in marketable debt securities

 

(8,186

)

 

3,781

 

 

(10,401

)

 

6,638

 

Provision for losses on acquired card receivables

 

8,431

 

 

5,486

 

 

15,042

 

 

9,535

 

Non-cash operating lease expense

 

2,376

 

 

2,123

 

 

4,718

 

 

4,083

 

Deferred income taxes

 

(527

)

 

(399

)

 

(826

)

 

(3,822

)

Other

 

(414

)

 

 

 

516

 

 

 

Changes in assets and liabilities:
Accounts receivable

 

(2,278

)

 

(4,618

)

 

(7,052

)

 

(3,420

)

Prepaid expenses and other current assets

 

(3,284

)

 

(14,868

)

 

(4,623

)

 

(8,547

)

Other assets

 

(742

)

 

286

 

 

(1,880

)

 

(1,099

)

Accounts payable

 

2,000

 

 

(1,291

)

 

3,511

 

 

(2,023

)

Other accruals and current liabilities

 

11,161

 

 

6,500

 

 

15,408

 

 

(11,430

)

Operating lease liabilities

 

(2,408

)

 

(2,160

)

 

(4,794

)

 

(2,952

)

Other long-term liabilities

 

1

 

 

(1,577

)

 

35

 

 

(1,698

)

Deferred revenue

 

(406

)

 

761

 

 

(1,709

)

 

4,381

 

Net cash provided by (used in) operating activities

 

55,230

 

 

(12,930

)

 

73,382

 

 

(34,064

)

Cash flows from investing activities:
Cash paid for acquisition, net of acquired cash and cash equivalents

 

(28,902

)

 

(89

)

 

(28,902

)

 

(144,541

)

Purchases of corporate and customer fund short-term investments

 

(781,282

)

 

(843,867

)

 

(1,641,193

)

 

(1,452,419

)

Proceeds from maturities of corporate and customer fund short-term investments

 

845,314

 

 

348,947

 

 

1,683,413

 

 

667,854

 

Proceeds from sale of corporate and customer fund short-term investments

 

5,088

 

 

27,510

 

 

5,088

 

 

44,744

 

Increase in acquired card receivables, net and other

 

6,090

 

 

(44,796

)

 

(101,353

)

 

(77,459

)

Purchases of property and equipment

 

(1,785

)

 

(1,063

)

 

(3,161

)

 

(2,467

)

Capitalization of internal-use software costs

 

(5,746

)

 

(2,081

)

 

(10,510

)

 

(5,023

)

Proceeds from beneficial interest

 

 

 

 

 

2,080

 

 

 

Net cash provided by (used in) investing activities

 

38,777

 

 

(515,439

)

 

(94,538

)

 

(969,311

)

Cash flows from financing activities:
Proceeds from issuance of common stock upon public offering, net of underwriting discounts and other offering costs

 

 

 

(445

)

 

 

 

1,341,152

 

Proceeds from issuance of convertible senior notes, net of discounts and issuance costs

 

 

 

(2,629

)

 

 

 

560,075

 

Purchase of capped calls

 

 

 

 

 

 

 

(37,893

)

Increase (decrease) in customer fund deposits liability and other

 

347,210

 

 

947,805

 

 

332,661

 

 

1,171,446

 

Proceeds from line of credit borrowings

 

37,500

 

 

 

 

37,500

 

 

 

Proceeds from exercise of stock options

 

4,316

 

 

14,448

 

 

8,217

 

 

22,784

 

Proceeds from issuance of common stock under the employee stock purchase plan

 

 

 

 

 

8,494

 

 

5,726

 

Net cash provided by financing activities

 

389,026

 

 

959,179

 

 

386,872

 

 

3,063,290

 

Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents

 

459

 

 

97

 

 

182

 

 

(75

)

Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents

 

483,492

 

 

430,907

 

 

365,898

 

 

2,059,840

 

Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period

 

3,425,121

 

 

3,438,625

 

 

3,542,715

 

 

1,809,692

 

Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period

$

3,908,613

 

$

3,869,532

 

$

3,908,613

 

$

3,869,532

 

 
Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows above:
Cash and cash equivalents

$

1,616,758

 

$

1,672,166

 

$

1,616,758

 

$

1,672,166

 

Restricted cash included in other current assets

 

103,809

 

 

16,364

 

 

103,809

 

 

16,364

 

Restricted cash included in other assets

 

6,724

 

 

6,724

 

 

6,724

 

 

6,724

 

Restricted cash and restricted cash equivalents included in funds held for customers

 

2,181,322

 

 

2,174,278

 

 

2,181,322

 

 

2,174,278

 

Total cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period

$

3,908,613

 

$

3,869,532

 

$

3,908,613

 

$

3,869,532

 

 

Contacts

IR Contact:

Karen Sansot

ksansot@hq.bill.com

Press Contact:

Mark Heller

mheller@hq.bill.com

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