BILL - Earnings call transcript Q3 2020

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Operator

Good afternoon, and welcome to Bill.com's Fiscal Third Quarter 2020 Earnings Conference Call.

Joining us today for today's call are Bill.com's CEO, Rene Lacerte; and CFO, John Rettig. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Thank you.

like introductory the remarks. would John over I for Rettig that, to call turn to With John?

John Rettig

Chairman, earnings is short Thank of Relations third related release conference on our can quarter me Jacqueline. Form our XXXX release Rene you, Welcome of SEC. call, Bill.com. CEO on the earnings website. call. to X-K to be and We With The furnished found ago Founder section and time Bill.com's Lacerte, the fiscal press today the a press issued Investor the

develop Before expressed of involve we prove assumptions and make or statements. about the and risks those begin, please results or actual that materially remember forward-looking incorrect, uncertainties from any operations assumptions, many that implied forward-looking any differ this during course If of future the our Bill.com these uncertainties. may the call, of by could risks results we of statements or

factors to the press statements, the Exchange forward-looking We associated any Commission, Securities of our discussion and today issued forward-looking including filed release in a text periodic statements. with and to the obligation Form XX, dated risk XXXX. For any February reports with disclaim XX-Q, our to update the our refer please Company's

reconciliation number. today's GAAP measures. Please On and measure refer unless GAAP non-GAAP measures. disclosures will today's figures non-GAAP of both discussed regarding are to and a non-GAAP additional to to The release GAAP we call, refer financial today financial financial the the these for non-revenue stated is performance press that

to turn call over I'll the Now Rene.

Rene Lacerte

afternoon, you us good joining thank today. Thanks, and everyone, John, for

I we to send all of our kept response us at our then here the also everyone all detail. we few call will have a on cover discuss financial with opening comment provide want greater the After an that best you third call and quarter the frontline workers and of the John providing the those results quarter to fourth to brief to wishes to and from fiscal healthcare share I'll for service fiscal of to going. want highlights, Bill.com's Q&A. appreciation you up about He'll behalf over COVID-XX, on to be to Speaking Bill.com, our later, a our turn in our before outlook overview of results the

has XXX% because our completely than for let To COVID-XX of first since we give world been Our changed to have our changes to call a of stack be earnings adapted me in switched early in continuity dramatically comprehensive some idea because you customers. plan workforce how our an for proactively tech place, give made remote a less catalyst cloud-based. and examples is new our in we've environment, change. We you this February. a entire employees week, and has we had business

home have Our other their employees dedication, have by am working job each done from to and to missed not a and passion the success and grateful beat. Bill.com phenomenal their commitment customers. driven for our and I is

following businesses, and in actions for three they We've fees for to financially we knew help. rooted mission Our the champions them. COVID-XX. is needed by subscription small taken customers mid-sized being waived impacted assist We of new and months

term distress, in other short of customers existing offered assistance. suspensions and also forms For we've

is as We behind confines Small they coalition started more to Express, tools and hours the to the access partner our to the XX our help a goal millions remote of and small Bill.com Small, Stand American rally businesses We the into within Led funding will COVID-XX. services, of GoFundMe life a have are finally, banded empowering have to partner, valuable of provide extended joined customer provide help support support companies by Relief coalition And work strategic contributed the navigate than impact by the that environment. communities affected, Initiative, it, who to of our along balancing to them. Stand for small expertise. businesses SMBs been family to which that offers, Small for of with together people strategic Business working

not COVID-XX has have been created foreseen. uncertainty that could

focus our is can certainty time. know for Our is to SMBs of supported they're make of at sure along cared the with many this one and That all by we partners us. provide

grew revenue, by let we Now third our plus transaction Core turn quarter subscription to in $XX.X financial year-over-year performance. million. by grew as Total the $XX.X which million. revenue XX% me quarter to year-over-year XX% to define revenue

in quarter. strong of gross delivered margins the non-GAAP also XX.X% We

At year-over-year quarter, representing over we the had of XX,XXX XX% customers end the growth.

of Our payment of million number period. increase X QX, million-plus platform network processed X.X our also large XX% fiscal transactions, reaches year-ago an through the we over In representing SMBs a members.

During more TPV. to capture processed volume rails extend of over customers' payment XX% in transactions see QX $XX.X an our year the the growth and payment to total year. in our and quarter, TPV worked of We've on are strong we over hard pleased billion of increase last or platform, our prior the the

our me a mission-critical how solution greater about for think COVID-XX's we believe in with But a impact on share SMB's accounting business. system, foundational, financial we detail our Similar platform minutes. results an overall you John will discuss to our few in is first, business. let

visibility their to than out SMBs stretch provide we a accelerate to and and the payables need confidently their less spend they We downturn expect receivables.

of all from is more doing this challenging. Bill.com, Without home even

this closely believe old of financial not move accounts work and react accelerate And the our provides forward. to monitor to inherent of going paper-based customers processes. ability The inefficiencies to their sizes. crisis way still lost the doing this business exposed have requirements which companies degree the operations the nor businesses, Remote could is for on not institutions. and platform their work SMBs will rely finances We quickly. that all financial Our manual on digital or

Turning to reasons. model Bill.com's business We resiliency. the now our for durable particularly following that believe is

through on referral marketing strategic like programs in-person events directly our reliant annual not online user to digital market is and We generation partnerships. demand our conferences. First, SMBs platform

In our prior use about fact, platform us they of colleague. heard new and a customer a heard we survey first indicated conducted, in because us customer at the they XXXX half about through respondents company

Next, the our street. not upon on model is go-to-market feet reliant

Bill.com anywhere Our less as affordable They a makes sales sales XXX% is points These XX easy two quickly. complicated for up, as Once for days, which to any start to are $XX device. without our it new time-consuming cycles. than can trial or With customers on price implementation of inside subscription using low SMBs. cycle anytime, starting month, sales. signed self-onboard with per from short risk-free lead first motion get points direct combined customers the platform our

sheet Finally, cash, balance investments XXst, Bill.com a short-term million over strong in at March has $XXX and with cash XXXX. equivalents

solid come are and COVID-XX. market that being In a unique said, summary, as out We be trends Bill.com we That share seeing. we to the support well-positioned and transparent believe financial in place. in position want and of through foundation to have they small is the we a businesses recent

have of In some terms we churn. related and acquisition COVID experienced customer retention,

have continuity also seen some increased from for we that for However, inflow enable operations. looking prospective financial customers solutions

these customers both on. our in float later revenue. float. of see business, transactions of we being topics by during half federal the discuss reduction lastly, in our detail John transaction funds the on Obviously, will And impact some to side March. more and number second of TPV adversely the Looking impacts the the the started processed at rate

discuss to changes impact some business. Let COVID-XX address we on me the of have our initiated

critical mitigate except As OpEx for for a pause in have our the credit refined the payment payment the hiring quarter platform. on company, headcount. increases SaaS of potential In related to to majority losses our risk also positions. with flows policies new is associated spend we management our near-term, We've

our quarter, last gears, use direct cases Shifting we customers. featured from

to partners. how accounting our we're I showcase helping quarter, This want

because past SMBs. the accounting X,XXX accounts firm part US. developed over of is valuable we've the our XX years, Over are channel advisors trusted in a firms The with accounting relationships ecosystem

Our their profitably. seen firms satisfy client serve firms can strategically advisory the establish grow more same practices, more advantage a clients traction their accounting increased needs. and channel. our that With this competitive and account-specific have COVID-XX, we clients' help platform, in more With SMB tools

Let me clients' of the payments new to eased accounting one leveraged transition Bill.com's how partners digital example give our normal. have you just platform firm their

new and go a a or believe clients environment. The and operate to an is electronically to you deposit outsourced transient process, being imperative with Officer, of Bookminders to allowing receive in able providing the bank capability. this digital payments has small workflow to Chief in to and on our businesses email. value ability rely our meet the can't world Bill.com praised accounting approve, Bookminders transform working Jessica services bookkeeping Minkus challenges Operating stated service firm bookkeeping is Pittsburgh-based quote, meet Bookminders, for rapidly that Bookminders' of safely our and where is outsourced I and securely clients, to remotely. the necessity Bill.com

trusting customers solutions benefits customers. that accounts, trust businesses partners institutions digital us, to directly institution SMBs our look our provide the many provide flow many to cash their institutions. By management, and meet with financial us for turned end-to-end to their addition financial of banking those to needs. customers' acquired working financial realized with partners In their of can their by

several a the and their Chase, partners banking with and solution. Express. institutions white-label Bill.com including American platform into typically United is Bank the basis in largest financial on JPMorgan currently of better of America, integrated These online States,

see about opportunities doing our more have partner with to to with additional continue to together and We many great continue partners institutions. we conversations existing

in to I'm Fargo portal. Today, time clients cash newest with integrating solution Wells mid-sized any helping a small shares and online that we've agreement Wells Bill.com treasury and our its from commercial their into improve Fargo. for digital partner know AR its office anywhere time. will Wells at electronic you mission management power let excited by businesses flows Fargo AP reached save our new and of

launch you call. small AR relationship information a earnings reinforces financial workflow we next as the in leading of solutions later institutions. market provider This will mid-sized to business expect and service on AP update XXXX with major position and and our Bill.com's for We additional

you enhancements of Next, Bill.com to are. on Innovation to latest the and to our platform. I payments who core we few a update want is

years, Over cross-border payment. the card we launched have and past virtual few

several we've months, the been ACH For out rolling same-day payments. past

Our been expedited use transaction this have payment to been $XXX,XXX. making the increased now good of especially have limits customers capability, that

payments with using to we get begun being payments from real-time RTP new the come ability rail, offer and contractors also later, foresee More this able to on independent XX/X. but our this Clearing paid the have network House. vendors, testing We customers, to The

more to that for As our CashflowXXX. month, we card Chase's in continue Last virtual thrive existing integration partner our CashflowXXX a enhanced offering reconciliation. its delivery into with Chase and faster and We This with grow. through our our payment digital platform pay bills is of Chase, seamless forward ago, virtual businesses to relationships payment, integration. JPMorgan Bill.com. to another volume simplified of this Chase's integrated mentioned way card controls will I partners to includes moment look Chase customers evolve spending support helping

Looking payment and growth our focus ahead, direct progress of demonstrates more we on to rails and card goal. existing our of continue The our flows and for the overall against partners. capturing payment both business-to-business new of institution program the customers our expansion financial in virtual will strategic

In do conclusion, and connect mission. commitment reinforce our to make to to our want We business. I it simple

We financial purpose-built are work managing operations way coping will with anymore. now back-office, platform SMBs, that reality who even that resonate the doesn't the with our more old are just optimistic of

call to our financials the turn I'll Now, detail. John? in John more discuss to over

John Rettig

outlook financial I brief results will provide XXXX our quarter Today, fiscal for our overview fourth fiscal our a Rene. Thanks, and quarter. discuss of third

to quick comparable tables GAAP to financial our reconciliation reminder, turn discussion a a earnings me the non-GAAP for Please measure. our let refer to third non-GAAP the includes With As financial most measures. quarter metrics. release key in today's background, directly that from

we're than accounting broad-based the direct and partner our to the growth plan firm, data. we channels. with of additional quarter X,XXX the to investors. experienced demand year-over-year institution will quarter, customer provide same XX% basis, details On be also we ended financial COVID and information customers, Given net an in hope situation, level the be monthly including disclosure. disclosing We ongoing the of helpful XX,XXX representing across as We more don't adds

who've look customers, experienced in that to prospects also operations for new and we increase existing clear solutions presented to in March began continuity and At taken a for addition that it impacted. challenges impact and a those both April, number been time, financial trial some was enable the we've as of prospective In environment. new sign-ups an would remote working COVID-XX during to for COVID-XX customers, negatively and steps businesses, assist same

like As fee Rene an seeing provide new actions. to on provided customers. impact basis, pre-subscriptions we're from offered subscription and waivers outlined existing earlier, as-needed these I'd customers for the transparency for we XX-day into

over joined impacted will who We XXth, end quarter. X,XXX under of on prospective we've offer new trail this Regarding the rate free XX-day so introduced who the had offer support conversion position March our assess in towards by through XXth. of subscription customers customers new a April these COVID-XX, to for we current be customers the were

For existing less reduction of were XX,XXX their customers representing X% than through in impacted COVID-XX, subscription $XXX,XXX than a by our revenue waived, customers portion had a who negatively less of subscription fees April. of

fee earlier. COVID-XX customers' The accumulation majority our fees changes the we payment or on trends rolling our businesses. subscription mentioned haven't their customers The observing we experienced are through deferrals a monthly are of outside and And any of plan aging with their in given early, subscription fee are impact arrears. customers monthly requesting I still receivables auto-pay relief customers requesting

While monitoring the will date, trends looking haven't any impact experienced negative carefully be material we underlying forward. we to

on payment volume. Moving to

in on or we quarter, transactions, of over prior basis, TPV payment processed with sequential down the During year we both usually platform, a $XX.X of where fiscal increase XX% QX typical processed slightly XX% our $X seasonal million year-over-year. total over pattern is the were the On an transactions payment of flat versus representing an relatively billion QX. increase and volume TPB and QX

trend During second COVID-XX and into being half started March, to on and by of processed the both number April. we transactions an impact the from our this TPV customers, of see continued TPV April, payment per of transactions an the April. the and total X.X% from approximately down impact, number you To XX% customer and was in between idea decreased give March March of

As year. into want know, visibility the revenue seeing I we're on situation, trends, on rate to net important plan the additional metrics. provide as given two retention and dollar-based customer fiscal we But the each you you update metrics retention such end rate at these our to COVID-XX current of

we from for the As In customers XXXX. an reported mentioned mainly metrics. that our I retail XX% a to net to revert to April, macro increase XXX%, We XXth, of see attrition customers Through April, will in attrition in rate conditions of that retention cadence by June XXX%, normalize consumer-facing approximately our on dollar-based in our a XXX% transaction institution by was The decline we materially quarantine March, these additional restaurants go-forward on versus annual trends customers retention financial revenue where impacted reflecting increased March, basis, existing began revenue an increased were last monthly as experienced updates number from businesses. excluding earlier. segments rate came orders, from from partners. especially industry other attrition and the

our to update customer like rate. you retention I'd on annual

end rate This of partners, our with of XXXX. from as XXXX, customers April the XXth, XX% April XXth, financial customers still institution Excluding of of XX% customers as were reported is as XXXX. our consistent of retention the fiscal we

year-over-year margins. core XX% million, revenue growth QX for 'XX. well QX non-GAAP strong financial solid gross with as Turning Total delivered strong total $XX.X was in revenue in of as to a representing QX our growth results. We financial performance from and

revenue, strength our During driven revenue. growth QX, subscription excludes revenue transaction represents our mainly total the which was fees of by and and float core

was average year-over-year. platform million last the increasing subscription to the revenue QX growth To XX% core per revenue Core from customers revenue customer. in representing QX customers we This subscription the the and increase break on growth. year, in and revenue by increased our the growth $XX.X million, of or number revenue, and in in from accelerated to XX% per The up serve million revenue by core subscriptions in both was increase of $XX.X an $XX.X year-over-year driven growth driven of strength transactions. in customer down

to to shifting year million card first year, quarters driven in of mix of increased last new this growth revenue and benefited was cross-border and our of three transaction customer in transaction offerings base strong transactions adoption. the of an The virtual from in $X.X number from adoption the continued products. Transaction in from of XXX% growing payment increase increase QX, $XX.X up revenue million QX the and revenue by processed Growth of year-over-year. product fiscal variable-priced

compared $X.X float float XX% QX in in million to revenue $X.X revenue. We year-over-year. 'XX, to on Moving of QX a delivered million decrease in

the customer of basis in a due XX decrease Our of Reserve's return decrease the was significantly rate QX points approximately on annualized federal rate. QX held was representing 'XX. to The funds yield X.X%, over to cut primarily action in funds Federal

funds our this and forward. more much we the rate funds quarter, decline near impact a the will in expected was than zero move going the we float rate planned, Fed significant to during the lower to While revenue Fed

Our viewed for last points gross the QX float the range to increase rate our the Fed for impact of foreseeable likely revenue. year-over-year due partially funds to of negative the 'XX's be quarter. float QX as extended the X non-GAAP was points non-GAAP points XX.X%, margin was on an for The basis from basis XX in an an new and the XX% driven increase XXX by our was margin results period in should margin basis quarter given XX over gross that the decline gross of by in offerings peak of of improvement product being offset margin basis time. be non-GAAP and primarily margins points to Note the future, adoption

R&D firms Turning additional and long-term to increase investments revenue, 'XX. quarter growth we was accounting differentiation. from to to expense important partners. add this as new continues believe it of area of set more us financial $XX.X hiring detail, an as was competitive be the QX investment product features the million these R&D operating customer and relates discuss outlook due or XX% The our I'll and management talent. will to in functionality primarily up growing our and for of in And QX. for for institution expenses. in We including XX% up base, strategic support engineering

and marketing year's were in of prior QX, an of in expenses revenue quarter. Sales $XX.X from increase or revenue million the XX% XX%

continue quarter, to well including including on-demand we've the brand the our During sales as awareness and generation demand in expanding from increasing capabilities, social spend as customers, programs. experienced we to go-to-market our mid-market meet SCM, team invest increased

historically you and continue experienced and efficiency customer we've be to know, acquisition and vigilant marketing. driving in we As capital economics, sales efficient

money XX% transmitter XX% of or from of million we $XX.X expenses, our licenses. compliance G&A SaaS the our and in insurance, of reflects investments, G&A were capabilities help believe and full D&O of expenses company operating achieve some leverage revenue This long expect costs payment results as including software regulatory the We public as the in fiscal with as This of the over area associated being first quarter revenue, well create costs up G&A XXXX. percentage and QX than in competitive peers. to our a differentiation, higher these us term. regulatory

quarter, in company. go with combined $X.X being loss platform to versus continue associated non-GAAP a market QX and new our Our public operating with to we in million make million $X.X capabilities, expenses was as investments the year-ago

our was non-GAAP based shares loss was outstanding. net basis, loss weighted a basic on EPS had GAAP the calculations. we Our share $X.X a million as GAAP million same $X.XX both per diluted share basic share a loss non-GAAP for count count of the $XX.X and on Because or

sheet; from were million down short-term $XXX.X balance of end Moving investments and cash, the the million, cash $XXX QX. ending equivalents on to at

billion had to with total up ended We customer we funds was of volume our balance in quarter due the in employees, the lower XXXX, $X.XX March. of the on from XXX end XX, payment March from down QX slightly as sheet, of of which end XXX QX. As

of fiscal our three call. earnings and a to is we quarter from fourth really on are do when playing have our ball impact COVID-XX unprecedented world just than economic The out. move let's different months the ago and economic XXXX place the the impact at outlook. not had is Now, beginning We a stages crystal we last

results didn't impact. the we QX financial COVID-XX, any accurately While to pertaining on see to challenging is impact direct future our it materials assess

near business float looking COVID-XX in revenue come our The a from impact most decline zero. down. our yields is This rates impact to on will as ahead, immediate interest

our data made deteriorate. including For throughout purposes our to not business of a us seen the trends QX we've based on guidance, of number assumptions in we've continue assumption business through the today, that available QX, materially April the about but

million million be quarter For to XXXX, million. to of XX basis rate is points total in Float assumes quarter the in revenue the approximately to during range of million range of $XX.X that to XX funds XXX range the basis be Fed revenue continue revenue core comprised approximately the $XX.X to will $X.X that points. float average the $XX.X and of fourth expected will and June points basis the yield of $XX.X fiscal revenue in be our to $X.X

to expenses, In new plan continue institution customers, mid-market on terms where in capabilities, investing partners. of we larger are R&D platform operating focused building support we financial features to including our and

We will investments, market levels aligning investment marketing sales with remain conditions. with diligent and

with In being the overhead addition, our associated continue we ongoing spending company. expect to public to a G&A reflect

weighted On QX. bottom to to a in of based we million net of average a reported non-GAAP on line, range basis the a million approximately count million non-GAAP basic of $X.XX loss for on per shares loss to $X $XX.X $X.XX expect share EPS share $X and the

compensation stock-based of approximately in expect We expense QX. million $X

on an update expenditure to and new capital facility on our plans. Moving headquarters

expenses over The completion XXXX, in interim. additional was we for improvements space shift we in had to or Bay at reminder, new in and delay Construction incremental on agreement quarters a next shelter-in-place in As orders. signed end to tenant the few more Area. location capacity secure an the of building office will space will Palo early we in Alto. a the maximum to our due the the XX-year project headquarters lease existing result At and a in December, cost-effective the were operating calendar the the a of paused

in We expect capital expenditures QX. to to million be million approximately $X $X

the visibility out on this To topic, will longer-term the navigate to outlook. we until ahead, increased for COVID-XX Looking given guidance cadence guidance allows we're to on uncertain well-positioned plan close provide quarterly period. we believe a a circumstances,

the We circumstances a term. our plans committed we are business profitable prepared adjust to remain as over long and change operating to building

Now, Rene for the open Operator? will and I questions. up your call

Operator

Instructions] from Brad Sills first Your [Operator Securities. question from comes BofA

open. is line Your

Brad Sills

hear taking made comments to ask thanks attrition the wanted And stable. you question. doing glad Hey, everybody guys, is about for on safe I my being to and well.

I think that's I in saw given some a overall, It folks' on kind attrition. of think lot of renewal environment. within the like of affected you minds you're -- sounds your the some most April. industries, But SMB consistent rate was

So points, elaborate could you just on two please? those data

Rene Lacerte

to Brad. to you, Good Sure. talk

So market, for that think the need is we have the step we're our type -- massive -- after businesses, of and are XX,XXX about a customers just a and service. million back today, them many plus and overall that of this supporting X we have going XX,XXX market

And, out as I'll in around quarter so rolls but COVID-XX speak -- in some of waiting we comments think and that John And March the the here did April where we additional uptick was that inflows still the see and plays and months saw specifically the saw our what how but shared attrition, rest also let to additional comments the see attrition, so that we were inflows, we did while say the we're can that see on the we ever, of script in we I out. saw impact and attrition. we strongest an

that add to to John, you But want anything comment? have do you

John Rettig

earlier you increase of measuring on And as you impact. our from expect describe way COVID those that would relationships severely revenue wasn't would the in to of our would I just of customers. well retention sort situation the on how when industries do we that and attrition we across customer as focus I concentrated primary saw in as base. know, having necessarily impacted serving our broad-based that entire discussions, say notice be attrition customer It short health calls we're an the started Yes. most the and net

numbers on April, to we success at see rate. And so did preliminary our to Notwithstanding, a based for revenue continue decline expanding have slight we retention XXX%. that

at Rene in period. situation. feel the so early early we opportunity far after But a it's this in good pretty mentioned, So obviously and COVID about as market going this same time, large there's we're progress the

Brad Sills

That's then may very helpful. if one Thanks, guys. I more please. And

Your any that TPV, percentage looks with customer cross-border rate, transaction there a you Any color some like segments kind on or up where success D any you've and transaction mentioned as types? Card. it uptake seeing two? the on going transaction TPV and revenue on so of those of has you're been has take on been Thank much. Are progress how

Rene Lacerte

cross-border letting we their manage form. our to know the us have that capability rely The payments payments on customers international

in So is are product there is we messaging as marketing that efforts. doing, there sales efforts

so And market we're that the at to making better progress just to we're of part is getting that how our those services that understanding is existing customers.

the beginning because latter there payments Of course, around and March part of trade with world in just of was less cross-border the in general, took COVID a hit April.

that for we is business there but us. continue grow help to do us that -- opportunity for So part of to and the an impact know

our way Comdata market the suppliers customers the the we in reminder, pay with virtual card have matching on are a As that network. are suppliers the offering, the that that we with is gone product to

to our pay find is of able those the Comdata So if match a card a payment, be payment, partner transaction. that a accept we as then card we and suppliers transaction to the and card part can they supplier the actually way we're with

so can hard pay enable their been have that matching payments, particular network, card can things. we with better working suppliers customers that doing is reconciliation suppliers virtual what So understanding more so suppliers those and we've faster, and at all those

and of opportunities that. for good us hard at have So both we lots about to businesses to work really feel those continue

John Rettig

bit XX% mainly we that add which as just continue. we adoption the of that would transaction I newer Yes. that products mentioned, -- of the in and just continued about heels quarter, was customer think and year-over-year, did that XX% by sequentially and up will under about little $X.XX our a per on the Rene comes base

Brad Sills

great. guys. That's much, so Thanks

Rene Lacerte

you. Thank

Operator

Beck. question from Your comes next Josh

is open. line Your

Josh Beck

everyone glad Thanks, Rene doing is hear Yes. John, and to well.

same increased verticals seems this there to I'm activity get channel? this Or of the if that about seeing. trying think to is it's you be from that ask the traction? ways, in wanted it's inbound expanding Just you some -- maybe maybe to type would gaining solution. typically understand Are where about it of just it certain more are that audience in that might awareness

Rene Lacerte

really I effect an it seeing, awareness that we're is right. think

we about and actually the when I the to economy. was from to think home March, March that needed financial were operations. the or office, was had And mid-March to probably so manage larger their mid home, now all of that are in now work think beginning businesses February back Bay started If through way see saying companies guidelines, a the they shelter-in-place in you cascaded to to or late Area find the their end that from whenever what work of

able base. and that, that comment the are entire channel much we with do so And did were help. accounts businesses We see did the pretty they have accounts we highlight to We attraction. trust reason need place highlighted not accounting the is that and any the vertical across because when our

accountant they how pay have when gosh, reach their be to my don't the to they to out to able their so, and bills And reach oh business I to out shelter-in-place. bank. know anymore, is saying, I

to help able kind their and banks able platform and So serve to well were customers. to accounts our we support our and messaging them both take partners as be of our

really a awareness different broad from concentration. any fact and need was that see situation. didn't or It have the people we just So

Josh Beck

feel it a then bit I to I ways? month, more But ask a if tough something helpful. Okay, realize be think discern. helps might obviously, it's also rate? of I'm some really about benefit, you wanted an you bit last of indirect been your where do sit, that to the attrition And and be over customers recipients like some those Could you buffer in funds effectively that the have maybe wondering just PPP,

Rene Lacerte

quickly their think saw how shelter-in-place manage mean made numbers -- the I to to of it. immediate across unemployment just in impact the folks that business to the we able I country, and be changes

PPP that continued climb, is I think right. news that good the mitigated to

as unemployment rate weeks, speed probably call three four -- on but the others and So of for as the I'm the declining I numbers been the have has think can numbers numbers last you decline been the the right. not over see unemployment are at unemployment or

helpful of given So but businesses, think don't PPP I prove a not a that result point, really PPP. help. data have no we're I a have is to believe to was it didn't any them program I reason I seeing, think lifeline. give data And keep that that that to the

Josh Beck

helpful. Rene. Really Thanks,

Rene Lacerte

you. Thank

Operator

comes question Sachs. from Chris next from Goldman Your Merwin

is Your open. line

Chris Merwin

area like you a taking about the particular really Thanks any healthy know, an for I whether strength customer is been first just any Yes. more. accounting financial there in think if or the direct and It to ask had firms of where Yes. I direct? investing much question. channels, bit for adds adds had looks wanted it's your I curious net institutions, a quarter in quarter. you're so

strong So the just curious which particularly if channels any were those of quarter. in

Rene Lacerte

distribution that capability have the we others. across think that -- channel any see this about the did our dominate see broad fact channels. not is all powerful We and one success did to we model We the compared one of things

home, to platform, the in late help from that started we what think good nothing work messaging start thinking specific believe you did any messaging was work February was I as across remotely. think business the we that, and that it strong you And saying, -- we just It channel. matter coming February, the any for we demand they We that help so I were was base. so about

Chris Merwin

card. on another one just talked for repayments. maybe how far supplier you anything, virtual virtual XX% Okay, so So doing the opportunity think in mix card to has the great. past, there [ph] in of an be to just I curious to anyway card own incentivize to you're trending about maybe then XX% Is expectations? particular, acceptance? been your And relative virtual

Rene Lacerte

with incentivize payments do supplier customers. We not our

most make efficient acceptable pay decide to our and Our supplier say initiate hard they a want fastest that we we to payments way work the find to for a payment -- payment. They payment. and customers supplier the the receive to how and

with their their Our payment. does incentivize JPMorgan partner, Chase suppliers

So which American has -- with incentivize. program supplier partner -- our and a they, card our Express, virtual

the we've taken good approach So model learn we see the on to feel about to opportunities and that and different that date. impact have

Chris Merwin

you. Thank Great.

Rene Lacerte

welcome. You're

Operator

comes Your from from Jefferies. Samana next question Samad

Your line open. is

Samad Samana

financial are are inbound are new you partner with? couple from doing that everybody bank's well. your their on And partners institutions with for Bill.com's embedded Hi, is in questions. features financial on good -- partner currently this overwhelmed interest to A Rene, institution you you existing environment customers side, Great marketing accelerating and their focus to the hear glad of calendar afternoon 'XX. their seeing think customers? quarter to do start that end feeling

Rene Lacerte

we we right. everyone your financial it, definitely conference changes changed bills. and thinks they how hands operations, about you COVID-XX and manage pay has I about as how how And it our mean way go to we the can't escape their think washing

firms their the to to it's something for help that been is our is opportunity to that businesses. is And I help what the financial They so also this. their about have to to the that more do digital. that migrate been for the be have. why with and partners important partners we last businesses. SMBs to other a from is I us their this they And their can they from institution lots month But digitize hope discussions seen PPP help think all operate existing automate help we or That primarily them help wakeup they business to processes how has customers to a looked have had just they in are So keen we've through partners, have able PPP. of call our understand It's great anywhere. be of opportunity the been want them really and help their that programs there and businesses reminder help

We since stuff and have interest to IPO partners opportunities continue increased see together. about seen from the do to

everybody understand be where for all just of of and filing back a So, manage cabinets checks is using it's a to folks think your been kind of data But and kind to hard clear bit I has this the kind that that's together. that reminder believe we comes little for office. market and paper to

Samad Samana

then, if percentage the would -- that very the for trials new just growth. guidance, fair small payments Is and of that higher helpful. the one the quarter? for John, or not maybe And even wave on accepted healthy still base that growth been assume to the it June have the the the sub-rep core-rep That's that

John Rettig

Samad. Good question,

think it's reasonable. I

customers Let of that the just we sort -- me up convert our to how trends as customer I churn about can on have and say, day for customers. paying some promotion the to well into assumptions offer as we've acquisitions new may new factored guidance

things those the bit are a that. we're headwind So assuming of in a quarter,

into of probably so higher we're And absent those, that are factors think a at. all guide. and taken to taking all we a have things would look view balanced we able yes, had consideration But we've the pretty we

Samad Samana

And the what exposure third looks squeeze I one. But asking apologize for Great. -- your letting idea vertical just in. like? Thanks one that me any for

Rene Lacerte

Yes.

lot plus like we will So look thing is we expect, don't is from US that's to is in our We churn so good going you can do just we self-reported that vertical base, feel or know customer kind from would customers, have that what months it. at [ph] to of And at what hard of our months And that looked a not numbers. XX,XXX are the two about vertical we represent kind we exposure. how means you one have And just to and the we And that's we now now. if what think risk say accurate is census want XXX% of economy. businesses three share It data. that across kind about vertical. it's be our and there's any of -- we helping

Samad Samana

and quarter. Great. Thanks. Really helpful, strong a guys, congrats on

Rene Lacerte

Samad. Thanks,

Operator

comes question Scott Your from next Berg from Needham.

open. is Your line

Scott Berg

John, you additional me. two large We'll with number from And today, maybe either as contract, guess partnership at Rene, a I helpful. the questions you look that [indiscernible] or quite large with, disclosures, customer a thanks institutions, good quarter. and at the Wells other Chase? for announced Rene from off John, institution structure different on a congrats they're what does financial But obviously Hi, it JPMorgan with start all base. the of one, have

Rene Lacerte

the pick happy, is The country banks, really three there banks all -- you one the support top proud, excited of the [indiscernible] things to largest their customers their -- the customers. bigger the mid-market particular chosen Bill.com of I'm that have in largest

we So wouldn't perspective, financial types disclose material. of businesses, don't their Wells But really with the those a Fargo deal structurally America be there be and it between and mid-sized Morgan is can JP and of differences Bank supporting from with Chase, -- their differences. them

of So good about three it's them. we're partnership a having excited all and

Scott Berg

if from quarter? typical signings, sense customer it's month it's against first get increase how to kind January that to been to Got see? month typically away it the the does follow-up of that trying you compare like on it, of whether with in or and kind to from then that been leads sounds Just that leads you've X,XXX-plus free base today, giving April the those quarter, it a or of kind a April, trial another regards gain And in a helpful. in that material a kind compared continues of question you've what from or able of from

Rene Lacerte

color make it's give to just on clear. me a Let sure that more little offering, just

impact. businesses most manage is kind self-report and is impacted financial So COVID-XX, are itself a and that businesses need reason saying, but office. selecting, -- back It that by in coming something aren't hey, of I'm offering is what the for clarity significant to that given my they're [ph] they're I that

have up kind flow So of if we will. to you sign

have from we offer. COVID We flow the doing then and our them signup were had what -- before we

clear flows. our help offer additive offer of just across I Does want that is that more to clarify? normal so, be an we're than what that And seeing

Scott Berg

Congrats again It the good does. Rene. quarter. on Thanks,

Rene Lacerte

Thank you.

Operator

from question Bhavan Your from comes Suri Blair. next William

open. is line Your

Bhavan Suri

you little And But you Hey, XXXX-XXXX, it one. formation but we the while obviously follow-up job, newer and to will formation, nice thanks new around looks? maybe here. it's got forward-looking for a under this to business for tremendous is next formation market. a that see more you penetration guys, you more saw sort tech-savvy, you quickly? XXXX-XXXX, my cabinets, the compare small they're you companies, took ramp. is not question do with to business small coming as growth also maybe about file the on How question. business year, same an think there think gets Do about in do think Or [indiscernible] my normal probably and a them said, QX you taking to I've that very QX or time And the going out of business if you think return to question there? were

big you say there Do you stabilize once of look may trying of what of just given the for is at that recovery path in focus top funnel market? the sort get guys sense XX on that like the the things enough there think there's I'm than to months? actually enough faster we SMB

Rene Lacerte

in quarter the is that Yes. the just we big is month I what we market, businesses. comment was X that The And saw in market that a strongest April March in it we April, strongest gave the was in was reason just this million the This reported really right. -- the on March had. is month yes, and

change. there I've the list. on So we got had X -- million my got out I've saying, there that are I've change. is are this plenty -- of of to businesses plenty to

And us in. is us opportunity they're that we sure go those so make to that of for can actually aware bring there customers

new of then businesses. there said you And is like opportunity the

it. are you the cycle. that out that's that come the to So up is on of new happen that something recession and going and churn what's in there the to what's stuff start happen. more does of that's get now with is it's unknown businesses right that hard that rate is and in me happen for duration It to businesses that predict every through going After people part

Bhavan Suri

Got it.

Rene Lacerte

Thank you.

Operator

question Hynes from David from Canaccord Your Genuity. comes next

is Your open. line

David Hynes

on quarter, congrats and John. and the guys, thanks Hey, Rene

traction this little environment? of Is increased there? kind that what's customer? you me it maybe understand seen happening what's giving in just a Rene, and serve double-click they why and on resiliency of Or kind accounting more that of there the channel help bit to So larger just tend channel a you've

Rene Lacerte

firm. don't support was know turn do over it help. to X,XXX be how we've worked operations. And a accounts accounts know having businesses today. that the something And for And but can say, with US. clients I to experiences, financial wherever I build better. that, doing The that track to I to aren't more help, strategy just to necessarily to relationship X,XXX, some for I across that wanted from We want record XX and X,XXX than that all efficient. day plus else by years accounting want business us one, add having today they without they those benefit are of one do all our with the have meant on more manage platform my

they And two, network do that those talk trends accounting own their X,XXX of accounts have with with. business a and

I what that. the going to knew, that saying my to this run get solution? use business, business, going mails, a become there are so I'm other this need to office so their to to can't am -- this a to the it a COVID-XX, help I digital but catalyst don't And say, running for to can't we with this and pick I am example I I client their if Bookminders. office. employees I up do I is know when if already do And mean stuck, my I somebody but my wouldn't got saying, already with were able this business. I've is to customer, how have accounts run don't the How hey, go as how that has that's that run how going becomes was have I'm were seen clients get to do to is lost, use it this, already am And to to business, acute They remotely. they a a business significant their that very I the

tools make the very have powerful and we They reason the that as it's accounts. have that to for that's They reach so have their been life unfolds we something And their channel them continue a believe has will and awareness. market for just easier. us

additional and few here. it some why together that's all were see So we to weeks able why comes traction past these

David Hynes

of thinking fiscal is kind of mean helpful. follow-up I QX. into of maybe terms delta a for John, way profit? as about as in to gross basis float the that And take should guided and Yes, of near revenue in right kind about kind for the it out that simple margins sequential you just to that's the that XXX% on then gross we think it? margin a Is pull

John Rettig

Directionally, look that to right -- it. way I at think that's the

such nature. XXX% some and costs margin. We as Our quite of management a have asset things that float isn't revenue fees do

David Hynes

Sure.

John Rettig

sales sort issues mainly item. we're are pressure. margin into immediate no float obstacles that of there It of or that other that is translate disruptions cost of line sort seeing within would or But

David Hynes

Yes.

Okay, very good. Thanks, guys.

Rene Lacerte

Thank you.

Operator

from William comes question next from Your Napoli Blair. Bob

Your open. line is

Bob Napoli

move are Good up the as items platform not AR other that you you of maybe smallest that invoices if and you. and question and move apply can [ph] but on customer love afternoon, A I'm the Rene the time. market, AP, you sure you R&D, invoices, per upmarket. might a the color on maybe building little not, be way the items John. through adding investment, out revenue it to Thank and customers over would and or through build that other and the

Rene Lacerte

history we've is, Yes. been right. The and just around be to mid-market, a it mid-market, on into pulled R&D more little give clear

we're And the using that the and looked in a had So we [indiscernible] data distant for saw we mid-sized product that we companies have time. a and serving many long out businesses application.

BofA, examples now Fargo. there gave because partners a need and had of had pooled Wells terms of us I they Our in JPMorgan, the

seen we've we rounding capabilities the that been features really that So out are so I need say have. the that adding, we've would and

we've on I more want experience to that past that we the talked us do, think add. year, in we've been almost and user to platform the demand that to complete. allows for respond the functionality that's And R&D one of the has to the we had new about over of transition that that quickly past things the is want a part

timing real-time innovation, from and payments bit or payment We've the been The Clearing with the same card, talked And whether on about then, was platform I House. international now think our payment right. investing we that [indiscernible] a virtual fair the payment rails,

do quickly I that lives as to lots So that their will we doing do want But and going always that. can understand then of improve as things ways to customers and and it's we continue to for think and how our they look innovate to us we're possible. effectively what are

Bob Napoli

Thanks.

we So very the around virtual payments a in And may companies there a and follow-up card industry, other mid-market. rates any in the get question. as BXB differences early penetration this rate. you color color that be by you days, And maybe question it transaction, if I check wide that we in is back could you just give penetration that think on have but the lot wondered penetration would lot driving could what us because to -- in it's and the further? any that virtual the have per card seems you it revenue you push what rate, of room like a And become

Rene Lacerte

our that works get well for the I for mean is where -- they a by. Yes. creating are and platform we works focused I think the pay solution and or customers they paid on who who well

this case, suppliers that are paid. so the And in it's getting

matching that the days X% given our like win-win. is and our the actually supplier the so known remarks, on the neighborhood we're somewhere we making for early time, focus network. focused we're the prepared And very in customers of XX% but for the like we're on We really on suppliers with is our a I focused sure believe that to a call, on size provide said, over of experience you think customers we our said and that penetration -- is

We're right have we crazy don't that a here. so do it And doing need anything everybody wins. so to

Bob Napoli

Nice you. to all doing well. you Great. see, are Thank glad and to great guys job, see

Rene Lacerte

very you much, Bob. Thank

John Rettig

Thanks.

Operator

from Your Fargo. Wells comes next from question Tim Willi

open. is line Your

Tim Willi

good afternoon, Two Rene. John Thanks and questions. and

guess new expense standard support First I in way that in over should one, think whether And we Wells, be that of getting contract to think up a just know, we should see mind. Or just in with the the ready relationship, the regarding of our we or you any stand John, the some just there costs if couple quarters -- front about that's there just with of is for associated launch? about typically keep next to terms something we models I as curious revenue. large [ph] guess, it'd

John Rettig

experience JPMorgan. large Yes, our question, with Tim. financial as happens given integration [indiscernible] We've Well. launching There got this, a that an in partnerships such and a is of institution, with lots of good other with element and of advance Amex

into material of So would from our guidance, and incremental the call. we our launch to process We've we color a and streamline that the developed pretty view the as likely numbers. will expense change trajectory relationship some provide in a future, our factored ultimately. wouldn't cost QX now next additional got I on on that the

As timing. we the launch get to closer

Tim Willi

prepared per than payments revenue Do was, of way ACH, acquisition around Great. they your find same-day real-time customer the curious if their they'd transaction, in around but testing, referenced side back revenue so And ways mainstream? products. count two going believe there were making those probably opinion, products then as transaction we about see transaction my well. core follow-up be as around probably of of to up you just per as transaction I payment terms customers and I as just the believe remarks, I funnel the comments revenue customer, growth the the and in may you those the think in I'm some lower-cost and open your think your offset or into more and sort play viewed of an

Rene Lacerte

market and different ACH there are, done the Yes. it monetization and increase but in we've real-time model same-day we what we was in with other probably today. our of we've prepared the will that payments, give revenue will think than color the think per platform do The be a price included in the than than built transaction that our will be be reason will different options with that And to And capabilities before. cheaper what the it what pricing do you payment change to we building. we remarks just that about the we

I questions the transaction just is So, kind just really two of revenue what's there transactions, you to different? of were think more that kind going be of the Tim, revenue. per answered So around one kind I I and heard then get

like and business. we'll we'll sure we it's have good and I a monetize just on on and that good for work payments, for international sure card find our we'll as work a think way with to customers making that us making it's

that other it introduced particularly, allow bring volume in have number transactions types more we've international, does seen transaction payment like us of to the different And TPV we with potentially.

This early predict too And the you early R&D. say kind give know. early just so we to don't it's to would It's the -- We sense days. days. we're of a trying is very But available what businesses be. paper model think migrate payments for them the in of I impact digital an call. important to that. able be of vehicle their do part to our to from the business it's to we will have going be every to

Tim Willi

Thanks insight. Understood. the very much for

Rene Lacerte

you. Thank

Operator

remarks. will I over call. turn the final for conference now Rene today's concludes to call This

Rene Lacerte

macroeconomic and durable to ahead business committed we long-term call mission, us. We are despite believe sustainable today. joining backdrop, the Thanks the again, of opportunity a our in uncertain the everyone for building for

for Thank participation Goodbye. your you today.

Bill.com (BILL) 9 May 202020 Q3 Earnings call transcript