BILL earnings call transcript, November 5, 2026

Good afternoon, everyone. Welcome to Bill's fiscal first quarter 2027. An earnings conference call. We issued our press release a short time ago and filed the related Form 8K with the SEC. The press release can be found on our Investor Relations website at investor.bill.com. Joining me on the call today are Rene Lacerte, Chairman, CEO, and Founder, and Rohini Jain. CFO. Our remarks today include forward-looking statements about our business, products, and expectations that involve many assumptions, risks, and uncertainties. Actual results could differ materially from those expressed or implied by such statements. On today's webinar. On today's call, we will also refer to both GAAP and non-GAAP financial measures. Please refer to our earnings press release and investor presentation posted today and to our periodic reports filed with the SEC for additional information about such risks and uncertainties and for reconciliations of non-GAAP measures. With that, let me turn the call over to Rene.

Good afternoon, everyone, and thank you for joining us. Q1 was a strong quarter for Bill. We continue to drive profitable growth. As core revenue grew 14% year-over-year, and our non-GAAP operating margin reached 39%. In addition to these results, I am encouraged to see momentum building across the business. As you know, we undertook significant, deliberate, and proactive organizations. Restructuring actions during FY26. These actions were designed with one goal in mind, to accelerate our transformation to be an AI-native company. To accomplish this, we are fundamentally reshaping how Bill operates by removing friction. That unleashes greater clarity, velocity, and productivity. The progress we achieved in Q1 from a sales execution, product development, and financial discipline perspective is a strong early indication of our progress towards this goal. I'm proud of the team's ability to adapt quickly and drive these results. Build exists to help SMBs run their businesses by taking care of the operational headaches that plague them. That is the premise upon which I founded the company. Today, we are operating at unprecedented scale. During Q1, we surpassed $2 trillion in cumulative TPV processed on our proprietary payment infrastructure. On an average day, around $1 billion in payments flow through Bill. Behind every dollar moved are financed workflows that have been automated for our customers and risk decisions that have been automated for Bill. These include invoices captured and coded, approvals routed, vendors validated, fraud prevented, and payments sent and reconciled.

Our facilitation of these mission-critical workflows at massive scale gives us unique assets and a strong move. We have captured knowledge of the workflows and pain points specific to small and mid-sized businesses, assembled a massive set of proprietary data, connect... ...a network of more than 9 million members, seamlessly integrated a robust payments infrastructure, and created a valuable and differentiated ecosystem of partners. Together, we believe these assets are unparalleled and provide... ...a strong foundation to build trusted, accurate, and secure AI for the Fortune 5 million. I'd like to provide an update on each of our three strategic priorities for FY27. Our first and most important priority is to deliver trusted... ...with AI-native experiences for customers. Today, most SMBs and other businesses are using AI in finance, but only about one in five trust it completely. The most common concerns center around data quality and security. That bill... We build for builders. We believe AI should take work off of our customers' plates without taking control out of their hands. So we built AI they can watch, switch off, and check. It is designed to catch mistakes before... the money moves. This is how we reinforce the trust customers place in Bill and the trust the market is increasingly demanding from AI solutions. During Q1, we launched five new capabilities as part of our continuous redefinition of intelligent finance. First...

We introduced Bill's risk intelligence agent. One of the most time-consuming and frustrating errors is paying the wrong amount. These types of errors cost businesses days to resolve and create cash flow headaches. Risk intelligence is designed to stop unusual payments before the headaches begin. It flags invoices that deviate from a vendor's billing history during AP approval and shows why. This helps finance teams correct any mistakes faster and keep money moving. It is still early, but the results are already clear. In just the first six weeks since launch, risk intelligence has flagged more than $100 million of unusual or mistaken payments for customer review. We estimate this saves customers more than 1,800 days of manual work. No customer... ...asked for this. We built it proactively because we know our customers' workflows and their pain points. Let me share a customer quote from Christine Remington, Accounts Payable Manager at Device Period. Bills risk intelligence spots and calls out discrepancies. And if an amount seems off, it tells you how and why. I recently had a legal bill 33 times higher than average and bill flagged it quickly once it hit my inbox. Now it's even easier to review and approve bills with confidence so our team can focus on the tasks that matter. Next, we've added an AI control hub. This hub provides a centralized view where customers can monitor the actions Bill AI has taken for them, switch AI tools on or off, and control how much AI does for them.

According to our customer research, almost 9 in 10 finance teams surveyed want centralized or in-workflow control of their AI. AI control hub addresses this exact market need. As we continue to deliver more agentic capabilities for our customers, this hub will play an essential role in how finance teams deploy and control AI across their business. Third, we've simplified onboarding with our AI assisted onboarding. This agent enables new customers to get up and running on our platform faster. BuildNow personalizes the business profile, recommends products based on how a business works, and helps users add vendors and assign default approvers. Importantly, customers stay in control to review and adjust anything before it's applied. New users can cut platform setup time by up to 50% and vendor customization time by up to 70%. These actions and others are showing stronger engagement earlier in the customer lifecycle. Fourth, we have launched chat with Bill to help customers understand their business better and get support with Bill. We have all experienced the power of natural language chat. Finance teams want and need the ability to engage with their tools and data at a conversation level. Chat with Bill, currently in beta, enables finance teams to talk to Bill in plain language across AP, AR, and S&E. Customers can... ...and easily ask questions such as which vendors need paying and when, where an invoice stands, what's driving card spend, how month-end close and receivables are tracking, and which bills and subscriptions recur.

We expect these capabilities to grow and to continue to act as an extension... of the company's finance team. Customers have relied on chat with Bill for customer support over the last 12 months and those AI-handled support conversations have grown to 45% since launch a year ago. Moving forward... they will be able to rely on chat with Bill the same way they would rely on any other team member. Finally, we've created an external MCP connector for the Frontier Labs. This enables customers to connect the AI chat tools they already use to Bill. We all know and understand that... the proliferation of software tools means we need to be where our customers are. We have been building our API capabilities and thousands of developers build on Bill's APIs. This usage has grown 7x in two years. The learning... ...from these customers has gone into our external MCP connectors. We are excited to share that Bill is now available in the cloud marketplace and we expect others will follow soon. We have seen strong adoption across our existing agents and believe these... These new AI capabilities will continue to add to the value we are creating for customers with AI. Adoption of our previously introduced AI functionality continues to increase among our customer base. To date, we've had over 200,000 businesses use our agents to... improve their financial operations across AP, AR, and S&E. The number of businesses using our W9 agent increased almost 50% sequentially to over 60,000. Bill's invoice...

...voting agent has now been used by over 70,000 businesses in just seven months since launch. Furthermore, the number of transactions our new pay-for-you agent completed without any human interaction during Q1 increased over 20% sequentially. AI Native is... ...not just about capabilities and experiences for customers. It is also integral to how we build, execute, and scale internal processes inside of Bill. For example, over the past year, our RISC team has built more than 100 AI agents that actively perform work 24-7 across several different functions. These agents complete defined tasks on their own, such as pulling case files, drafting credit assessments, or writing model documentation. Together, we estimate these agents now return over 1400 hours per month to our teams, which is equivalent to about eight full-time employees while improving our results and driving real efficiency. One specific illustration comes from our S&E business. We have developed three AI agents that now work together as a suite. Nick named Robin, to handle underwriting cases. Before, an underwriter had to piece each case together by hand to decide whether to approve or change a customer's credit line. This required chasing requests through chat messages and email while pulling customer payment and behavior data from separate dashboards. Now, Robin sends each request to the right underwriter, pulls the customer's data into one summary, and provides a one-click link to make a decision. As a result, each case and customer wait time now takes about 12 minutes instead of three hours.

This means faster, better, and more personalized experiences for SMBs and more focused team members at Bill. Our second priority is to acquire higher ROI customers, increasing the number of partners we work with through our embed tool. This strategy broadens our reach and strengthens the value proposition for them and their customers. In Q1, we were pleased to announce a new strategic partnership with Blackbaud. Blackbaud is the foundational ERP for nonprofits and educational organizations. Those organizations perform some of the most meaningful work in our communities. All of us are excited that Bill will now be embedded in Blackbaud Financial Edge Next through its payment assistant platform. Nonprofit and education finance teams will now be powered by Bill. manage their vendor payments, approvals, and reconciliation without leaving systems they use and trust every day. These new capabilities are planned for a phased rollout over time. Our existing embed partnerships are making progress as well. One partner's TPV units and transaction revenue... All doubled sequentially from Q4 to Q1, and we're just getting started. Partnerships take commitment from both sides, and every partner's path to success looks different. As these relationships progress, we are aligning more closely on go-to-market and adding more of our ad valors. From capabilities, which enhances product market fit. Multi-product adoption is also a key area of focus at Bill to drive ARPU expansion. We are early on this journey and are making good progress. In Q1,

the number of joint customers leveraging both our AP and spend and expense solutions grew 30% year over year. The value of the joint solution drives strong net revenue retention improvement from this cohort of customers. We expect to see more progress going forward as our sales team is now trained to sell bill as a single platform and we are in the process of implementing changes to incentives to fully align the team to drive continued success. We expect those changes to roll out for Q3. Our third priority is to expand value through Bill's platform. One example of this is how we are extending payment solutions to suppliers on our network. In a very short time, we worked with our partners to create what we believe is a first-of-its-kind innovative solution that creates a do-it-for-me approach. for both customers and their suppliers. We worked with Visa and BillTrust to launch the first live pilot for trusted AI agent payments between buyer and supplier platforms. Even after invoices are approved, and payments are scheduled, someone still has to log into a supplier portal and type in a card number. We're changing that. The bill payment agent, registered as a trusted agent through Visa Intelligent Commerce, completes invoice payments. and supplier portals using tokenized credentials. There are no share supplier portal logins and the agent makes no payment decisions. It only executes payments the buyer has already approved. As agents proliferate

it will be trusted agents that drive adoption. This pilot offering is a great example of how we simplify the financial operations for our customers. Agents are going to change how businesses pay each other. Control is paramount to make this happen successfully. Bill provides this control by centralizing every payment in one system and capturing every action in the complete audit trail. Trust is non-negotiable when it comes to agenda commerce. So the biggest priority for us in building the bill payment engine was not only speed and accuracy, but also security. With Visa and bill trust. Friction is removed. The payments get done, the supplier gets paid faster, and finance teams get their time back. This pilot shows the trust we have built in the ecosystem, as well as the speed at which we are innovating. Visa, the world's largest money mover, trusted us to innovate in a short window. We developed this solution together in just four weeks. This is what it means to operate with speed, ownership, and urgency. Our ad valorem portfolio is another key driver of our growth and illustrates how we can expand value through Bill's platform. As we provide greater... ...value for customers, this creates greater value to Bill from a monetization perspective. Bill connects and automates more B2B payments than just about anyone. We understand the solutions suppliers need, and we have a broad and robust portfolio.

...to serve them. This enables us to solve specific supplier pain points by improving working capital and reducing manual work while monetizing TPV through multiple products. In Q1, volume growth in our ad valorem portfolio accelerated sequentially. ...by 700 basis points. One of the main contributors to that strength was increased momentum in virtual cards. Two factors drove that result. First, we are working with partners to route more of their customers' receivables as card payments utilizing straight-through processing. ...by... ...identifying which invoices are card-able, we can align with supplier preferences to enable payments to arrive faster than they would have otherwise. Based on these results, we believe that straight-through processing can be a retention lever for suppliers. We have previously expressed friction around a card payment. Second, we have been maturing a native AI model that is deeply embedded within our core virtual card stack to optimize payment routing. This model identifies and routes payments to... suppliers that are already card accepting, even if they aren't explicitly flagged as such on our network. Both straight through processing and our AI model contributed roughly equally to the strong performance we saw from virtual card in Q1. Our SPP offering is another key area of focus. to expand value for both customers and suppliers. SPP is built for suppliers of all sizes and adoption across multiple channels is encouraging. We expect SPP volume to be an excellent complement to virtual card payments and also address a significant portion.

of our ACH volume over the intermediate term. We are assigning an increasing variety of customers across both size and industry vertical. In Q1, these included law firms, healthcare and life science companies, SPP. Business service providers and large technology companies. One of our early customers, DocuSign, is using SPP to automate payment processing and reconciliation, supporting faster collections, fewer manual touches and lower operational risk. Additionally, the solution transitions customers from check and offline credit card payments to ACH, significantly reducing credit card fees and lockbox processing times. Another customer we landed in Q1 now represents our largest signed TP. deal to date. This global software company had payments arriving through a sprawl of portal accounts with fragmented processes managing multiple bank accounts, remittance emails, and complex multi-entity reconciliation. This created operational confusion, payment delays, and reconciliation nightmares. With bill, supplier payments plus payments are consolidated into one centralized enterprise portal with user controls, accelerated by moving checks to electronic payments, and reconciled through integrations instead of people. Suppliers like this achieve faster collections, fewer manual touches, and lower operational risk. We continue to see momentum building across our suppliers as we demonstrate increasing value from our

solution. In closing, our success in Q1 combined with the underlying actions we have taken across the company make me confident in our strategy. We are successfully attacking a large and still untapped market for financial operations. We have significantly restructure the company and raise the bar for performance while continuing to deliver on our commitments. AI is changing what's possible for us and it shows in our product velocity. Five new launches this quarter and the Visa Pilot built in four weeks. With a strong financial foundation, we're well positioned to serve the millions of businesses that still need help. simplifying their finances. With that, I'll turn it over to Rahini.

Q1 represented another strong quarter as we met or exceeded our guidance ranges on all key metrics. I'm pleased with that. Our execution, given this was the first full quarter after our restructuring. Before going into more detail about the quarterly performance, I'll first give an update on the three key pillars of our financial framework that we provided on our prior earnings call. First, Bill has built a durable business model, and we remain well-positioned to deliver low double-digit to mid-teens core revenue growth with expanding margins over time. We achieved this outcome in Q1 as core revenue grew 14% year-over-year. Our non-GAAP operating margin expanded by 1,700 basis points. Second, we are focused on sustaining performance as a Rule of 40 company. We define this metric as growth in total net revenue plus non-GAAP operating margin. Our Rule of 40 score in Q1 improved to 51, achieving the highest level. since FY24. We continue to expect to exceed the Rule of 40 threshold, exiting FY27. Third, Bill is focused on achieving meaningful GAAP profitability in FY27 and expanding from there. Our Q1 GAAP net income of $60 million exceeded our expected expectations and has set a strong foundation for us to increase our GAAP profitability guidance for the year. Turning to our Q1 results, as a reminder, this will be our first quarter reporting revenue net of rewards. Please refer to our...

...filing from October 15th for more information on this change and the retrospective impact to our prior quarterly results. In Q1, we delivered $316.4 million in core revenue, growing 14% year-over-year. Non-GAAP operating margin was 39%, expanding 900 basis points sequentially. Non-GAAP net income was $119.1 million, representing a 27% improvement sequentially and a 70% improvement year-over-year. The large profitability beat this quarter. Was driven by a combination of factors that ended in a favorable result. These included a flow through from revenue outperformance, lower fraud and credit losses, and a slower than anticipated ramp of planned spend. Within our integrated platform, we saw double digit growth in both APAR and spend and expense. APAR core. Revenue grew 12% with subscription ARPU increasing by 3.7% year over year. Core ARPU grew 4.1% year over year and acceleration of more than 300 basis points from the prior quarter. In the direct channel, core ARPU growth from recently acquired customers accelerated by 800. basis points sequentially as we continue to focus on acquiring higher quality customers. Additionally, unit retention for our ideal customer profile has now improved for five straight quarters. In Q1, we added approximately three. 30,000 net new customers at the high end of our guidance range for the quarter. APAR transaction revenue was $137.7 million of 12% year over year. We saw very strong TPV in Q1 exceed.

our expectations by almost 250 basis points. This came from a combination of both strong ACH and a significant improvement in ad valorem volumes. Ad valorem TPV grew in high teens driven by strong virtual card performance. This TPV mix resulted in APA. AR take rate of 16.2 basis points which expanded by 0.2 basis points slightly ahead of our expectations. TPV on a same store sales basis grew seven percent year-over-year representing a sequential acceleration of one point and the highest since q1 f by 23. Almost all seconds experienced better growth than last quarter. Particular areas of strength included manufacturing, administrative services, and information technology. We saw lower spending in wholesale trade and healthcare. Customers spend to AI businesses increased over 30% year-over-year in Q1. In addition, on a same-store sales basis, spend to and from AI businesses contributed 1% point of overall 7% growth in this metric. Payment volume to or from the Forbes top 50 AI companies on bill grew. More than 200% year-over-year in Q1, with nearly 40 out of the 50 active on our platform this quarter. In spend and expense, Q1 net revenue totaled $92 million, up 22% year-over-year, outpacing card payment volume growth of 12% year-over-year. We saw strength in software and health services, which was partially offset by softness in advertising, entertainment, and business services sectors.

Take rate net of rewards was 134 basis points ahead of our expectations. Rewards rate was 128 basis points, down 5. basis points sequentially as our contract negotiations begin to flow through. Our focus on higher quality TPV combined with loss improvements continues to enhance the unit economics of our S&E solution. Turning to capital allocation. In the first quarter, we repurchased approximately $300 million of stock at an average... price of $44.18 per share. Given our confidence in Bill's durable growth profile and free cash flow generation, we expect to execute the remaining authorization within the parameters we have established. Before turning to formal guidance, I want to... provide an update to the three factors shaping our near-term outlook, as I had discussed last quarter. First, we are still navigating through the changes that resulted in a significant improvement in cost structure and operating margin profile. We see good signals already with our product velocity. Our go-to-market organization is coalescing under the new structure. and unified single platform sale. Nonetheless, there are still some adjustments regarding our new assignments and incentive plans that are in the process of being implemented. Second, on S&E, we remain cognizant of a dynamic environment regarding card acceptance. Additionally, we are still working through the process of taking proactive commercial actions on certain high reward tiers and contracts. Third, as Renee noted last quarter, we are concentrating our embed channel on the new embed 2.0 platform. We continue to expect to move away from custom 1.0 solutions we built for small number of bank partners. We anticipate that this

phenomena will also create headwind to our overall customer count. I will now detail our guidance that incorporates the factors I just articulated for our second quarter and fiscal year 27. For fiscal Q2 27, we expect total revenue to be in the range of $353 to $370. $63 million and core revenue to be in the range of $315.5 to $325.5 million, reflecting 10% to 13% year-over-year growth. Here are a few key assumptions that underpin our Q2 revenue guidance. First, on volume, we expect APAR-TPV volume growth to be approximately 12%. Spend and expense volume growth faces a tough compare from Q2 last year, resulting in expected volume growth to be approximately 10%. Second, turning to monetization, we expect. We expect APAR take rate to decline by approximately 0.4 basis points from Q1 and S&E net take rate to be slightly lower. Both reflect typical seasonality. On the bottom line for Q2, we expect to report non-GAAP operating income in the range. of 112.5 to 117.5 million dollars. We expect non-GAAP EPS to be between 97 cents and one dollar and one cent. These EPS figures are based on a fully diluted share count assumption of approximately 101 million shares. Welcome to full year guidance. For fiscal year 2027 we now expect total revenue in the range of 1.4 billion to 1.5 billion dollars reflecting 10 to 12 percent year-over-year growth. We expect core revenue in the range of 1.28. billion to 1.31 billion dollars reflecting 11 to 14 percent year-over-year growth. Our guidance reflects the assumptions I mentioned earlier. Turning to the bottom line, for fiscal year 27 we expect to report non-GAAP operating income in the range of 400 and

66 million to 486 million dollars, which represents a non-GAAP operating margin of approximately 33 percent. This implies an ex-float operating margin expansion of approximately 1,000 basis points year-over-year. At the midpoint, we expect non-GAAP net income in the range of 409 million to 425 million dollars and non-GAAP EPS to be between $3.99 to $4.15, representing 47% year-over-year growth. These EPS figures are based on a fully diluted share count assumption of approximately 102.5 million shares. This includes dilution of approximately 12 million shares from our two outstanding convertible notes. GAP profitability is now a key focus for Bill, and we are raising our full-year outlook. We now expect more than $180 million of GAP profit in FY27. This includes stock-based compensation of approximately $185 million. Because of our move to net revenue reporting, we are now framing our stock-based compensation target as a percentage of total net revenue. On that basis, we expect SBC to be 13.5% in FY27, down from 17.6%. in FY26 on an apples-to-apples basis. Q1 was the first full quarter after the big changes in our structure and strategy, and it delivered clear proof points. We are confident and realistic about the journey ahead. The full benefits of our new go-to-mortem market model, our actions in spend and expense, and the new product experiences will show up in results over time. The foundation is in place, a durable business model, a leaner organization, and an integrated platform serving a large market. We are executing with discipline, and we are excited about our path to

Your first question comes from Chris Quintana.

with Morgan Stanley. Your line is now open.

Your line is now open. All right.