October 3, 2019
Ren Lacerte
Chief Executive Officer
Bill.com Holdings, Inc.
1810 Embarcadero Road
Palo Alto, California 94303
Re: Bill.com Holdings, Inc.
Draft Registration Statement on Form S-1
Submitted September 6, 2019
CIK 0001786352
Dear Mr. Lacerte:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so we may
better
understand your disclosure.
Please respond to this letter by providing the requested information and
either submitting
an amended draft registration statement or publicly filing your registration
statement on
EDGAR. If you do not believe our comments apply to your facts and circumstances
or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
Draft Registration Statement on Form S-1
Prospectus Summary
Overview
Our Opportunity, page 3
1. We note your disclosure that North American companies make $25 trillion
of business-to-
business payments annually. For context, please disclose the dollar
amount of business-
to-business payments made by small and midsize businesses.
Ren Lacerte
FirstName LastNameRen Lacerte
Bill.com Holdings, Inc.
Comapany 2019
October 3, NameBill.com Holdings, Inc.
Page 2
October 3, 2019 Page 2
FirstName LastName
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Net Dollar-Based Retention Rate, page 64
2. Please revise to disclose how net dollar-based retention rate is used
to monitor your
business. Also, revise to provide the actual percentage of net
dollar-based retention for
each of the eight fiscal quarters preceding the quarterly period ended
June 30, 2019 and
discuss any significant fluctuations in such rates.
Cohort Analysis, page 65
3. Please revise to disclose why you exclude customers acquired through
financial
institutions from your cohort analysis.
4. We note your disclosure on page 66 that contribution margin is not
calculated in
accordance with GAAP. Please revise to clarify how your calculations
of revenues and
expenses differ from GAAP.
Key Factors Affecting Our Performance, page 66
5. Please discuss your dependence on your relationships with accounting
firms, financial
institutions and Intuit and how they impact the key factors affecting
your performance.
For example, we note your disclosure on page 17 that your
relationships with accounting
firms accounted for approximately 54% of your total customers and 47%
of your revenues
for fiscal 2019 due, in part, to being an exclusive provider of
business bill payment
services for CPA.com. Please similarly discuss and quantify how your
relationships with
accounting firms, financial institutions and Intuit impacted these and
other key
performance factors for all periods presented. Discuss trends and
whether you expect
the trends to continue. To provide further context, describe the
material terms of your key
relationships, such as with CPA.com.
Key Business Metrics, page 67
6. Please clarify whether your total payment volume metric is net of
reversals.
7. We note that you generate revenue from transaction fees that you
charge on either a fixed
or variable rate per transaction and, therefore, your revenues are
influenced by both the
number and value of transactions. Please revise to discuss and
quantify the number of
transactions for each period.
Business
Overview, page 84
8. Please confirm that you have obtained consents from each individual
quoted on pages 84
and 85.
Ren Lacerte
FirstName LastNameRen Lacerte
Bill.com Holdings, Inc.
Comapany 2019
October 3, NameBill.com Holdings, Inc.
Page 3
October 3, 2019 Page 3
FirstName LastName
Consolidated Financial Statements
Consolidated Statements of Cash Flows, page F-7
9. Please tell us where cash flows from "funds held for customers" and
"customer fund
deposits" are reflected in the cash flows statements and explain your
basis for such
classification.
Notes to Consolidated Financial Statements
Note 1. The Company and Its Significant Accounting Policies
Revenue recognition, page F-10
10. We note your disclosure that the transaction price from non-cancelable
annual contracts,
including subscription and estimated transaction fees, is recognized
based on the
proportion of transactions processed to total estimated transactions.
Please explain the
basis for your accounting and refer to the authoritative guidance you
relied upon. As part
of your response, please tell us how you considered ASC 606-10-32-40.
Also, please tell
us the amount of revenue recognized from non-cancelable annual
contracts in the periods
presented.
Deferred costs, page F-12
11. Revise to disclose if additional sales commissions are paid upon
contract renewal and, if
so, whether such amounts are commensurate with the initial
commissions. In addition,
disclose how commissions paid for renewals are considered in your
estimated benefit
period and the period of time over which you amortize commission costs
related to
contract renewals. Refer to ASC 340-40-35-1 and 340-40-50-2.
12. You disclose on page 69 that sales and marketing expense includes
costs to market and
promote your platform through partnership arrangements. Please tell us
how you
determined such classification. Refer to ASC 606-10-32-25 and 26. As
part of your
response, please quantify these expenses for the period presented.
New accounting pronouncements, page F-14
13. Please tell us what consideration was given to disclosing the
potential effects of the
adoption of ASU 2016-15, ASU 2016-18 and ASU 2017-01. Refer for SAB
Topic 11M.
Note 4. Funds Held for Customers, page F-20
14. Please revise to describe the restrictions applicable to the customer
fund assets. In this
regard, it appears that the assets are intended for the specific
purpose of satisfying client
fund obligations and therefore not freely available for general
business use. Refer to Rule
5-02(1) of Regulation S-X.
Ren Lacerte
FirstName LastNameRen Lacerte
Bill.com Holdings, Inc.
Comapany 2019
October 3, NameBill.com Holdings, Inc.
October 3, 2019 Page 4
Page 4
FirstName LastName
Note 8. Stock-Based Compensation, page F-24
15. Please provide us with a breakdown of all stock-based compensation
grants during
2019 and the fair value of the underlying common stock used to value
such grants. To the
extent there were any significant fluctuations in the fair values from
period-to-period,
describe for us the factors that contributed to these fluctuations,
including any intervening
events within the company or changes in your valuation assumptions or
methodology.
Please continue to update this analysis through effectiveness of the
registration
statement.
Note 14. Subsequent Events, page F-32
16. Please disclose any stock-based issuances subsequent to the most
recent balance sheet
date and the expected financial statement impact, if material. Refer
to ASC 855-10-50-2.
General
17. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications.
18. Please supplementally provide us with copies of any graphical
materials or artwork you
intend to use in your prospectus. Upon review of such materials, we
may have further
comments. For guidance, refer to Question 101.02 of our Securities Act
Forms
Compliance and Disclosure Interpretations.
19. Please disclose the basis for the following assertions in your
prospectus:
you are a leading provider of cloud-based software (pages 1, 61 and
84); and
you maintain a leading position in the market (page 67).
You may contact Eiko Yaoita Pyles, Staff Accountant, at (202) 551-3587
or Christine
Dietz, Senior Staff Accountant, at (202) 551-3408 if you have questions
regarding comments on
the financial statements and related matters. Please contact Jeff Kauten, Staff
Attorney, at (202)
551-3447 or Kathleen Krebs, Special Counsel, at (202) 551-3350 with any other
questions.
Sincerely,
Division of
Corporation Finance
Office of
Technology
cc: James D. Evans, Esq.