BILL (BILL) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q3 was $323 million, an increase of 19% year-over-year [31][77] - Non-GAAP operating income increased 68% year-over-year to$ 59 million, with a non-GAAP operating margin of 18% [31][78] - Non-GAAP net income in Q3 was $68.6 million, up 42% year-over-year, with a non-GAAP net income margin of 21% [87] Business Line Data and Key Metrics Changes - Spend & Expense revenue grew 29% year-over-year, with card payment volume reaching$ 4.4 billion [47][80] - BILL stand-alone transaction revenue increased 20% year-over-year, while subscription revenue, excluding financial institution partners, increased 9% year-over-year [81][82] - BILL stand-alone payment volume was $67 billion, an increase of 9% year-over-year [49] Market Data and Key Metrics Changes - The company reported strong customer acquisition, adding 4,100 net new customers in Q3, excluding attrition from the sunset of Intuit's Simple Bill Pay solution [50][145] - The financial institution channel saw a decline in customer count due to the removal of inactive customers, despite an increase in new enrollments [83][133] Company Strategy and Development Direction - The company aims to be the essential financial operations platform for SMBs, focusing on driving adoption of its integrated financial operations platform and expanding its ecosystem [31][37] - The introduction of cash flow insights and forecasting capabilities is part of the strategy to enhance the platform and serve SMBs better [25][39] - The company is prioritizing larger businesses with a higher propensity to spend, which is expected to drive revenue growth [10][47] Management's Comments on Operating Environment and Future Outlook - Management noted that while there are signs of stabilization in the B2B spend environment, SMBs continue to face pressures from high inflation and interest rates [88] - The company expects total revenue for Q4 to be in the range of$ 320 million to $330 million, reflecting 8% to 11% year-over-year growth [56] - For fiscal 2024, the company raised its revenue outlook to$ 1.267 billion to $1.277 billion, representing 20% to 21% year-over-year growth [90] Other Important Information - The company has a strong balance sheet and generates significant free cash flow, allowing it to fund long-term opportunities while delivering profitable growth [84] - Float revenue increased 26% year-over-year to$ 42 million in Q3, serving as a counterbalance to economic trends [51] Q&A Session Summary Question: What is the current status of the negotiations with Bank of America? - Management indicated that they are actively working with Bank of America and will provide updates as more information becomes available [94][137] Question: Can you quantify the revenue benefit from migrating volumes across processing providers? - Management confirmed that the expansion in monetization was consistent with expectations, driven by increased volume on ad valorem products and a one-time uptick from migrating volumes [98][119] Question: What impact did the BILL Pay rolloff have on net adds for BILL stand-alone FI? - Management noted that the decline in customer adds was mainly due to the removal of inactive customers, but engagement within the financial institution channel remains strong [105][133] Question: What is driving the uptick in embedded distribution? - Management attributed the increase to greater awareness of the opportunity in financial operations and the success of their platform, which has driven interest from software partners [108][110]