Earnings call transcript Q3 2023

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Operator

Good afternoon. Thank you for attending today's BILL's Fiscal Third Quarter 2023 Earnings Conference Call. My name is Brika [ph], and I'll be your moderator for today's call. [Operator Instructions]

I would now like to pass the conference over to Karen Sansot, Vice President of Investor Relations at BILL. ahead. go Please

Karen Sansot

to Welcome of conference operator. a fiscal quarter the Form third time can press Thank found website be We to at issued earnings on X-K related the call. and Relations release SEC. our XXXX The ago release section you, Investor furnished BILL's the our earnings short press investor.bill.com.

today John CEO and CFO. BILL; and Rettig, With Vice Chairman, me Founder Lacerte, on is Rene the and Executive call President of

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

issued the periodic including refer For the forward-looking company's the statements, any XX-Q to on a of discussion our of release please report Form report and factors our on associated forward-looking the text SEC, in filed Relations and our with We the with today the with to and to SEC most risk website. disclaim quarterly press annual reports Form available any section XX-K update on recent statements. filed Investor obligation our

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

Relations revenue contains posted quarterly information. for and a on appendix supplemental the our deck, investor that of note which please metrics table is website, Investor Additionally,

this accounts and standalone call, will At to-go financial Divvy our which results, spend times Finmark planning receivable management, invoice BILL's solutions. exclude discuss during we

to Now, call the I'll Rene? turn Rene. over

Rene Lacerte

executed on XX% QX everyone. financial across for delivered for the be third our BILL by we essential Good strong Revenue streams. driven Thank broad joining strategy for operations revenue Karen. grew the in you, quarter, year-over-year, profitable growth strength afternoon to as Thank diversified you platform us today. our SMBs.

significant of growing $XX quarter, was which the margin XX%. reflecting We non-GAAP net progress a million also made income, for

of operations QX, automate generate in used payment $XX the businesses during BILL end to than their more XXX,XXX and At volume the quarter. financial billion

included are We uncertainty that and QX our an banking environment significant crisis. a pleased amidst external with results, macro

Our financial and testament are scale performance and platform the a value our to of ecosystem.

on Consistent expenditures of continuing two tightening number the and moderating indicators with highly macro with made as and less. engaged their are In customers QX, per SMBs expenditures environment continued. to reduced last doing quarters, focus from a year-over-year similar earlier basis, transaction our yet this a more tough belt their in on platform with transactions were

the center BILL operations. financial that We our is know customers' of day-to-day

automation process a transaction enables system. received to moment accounting through platform from the syncing completed bill with Our was way all the the

Anchored of Tiny transform is Fair our leverages family-owned California and Customers solutions payable into companies operations operate visibility and Homes cash efficiently increased business accounts gain a we management flows. and leverage to Oaks help gain and financial A example great their more solutions our spend how their homebuilding efficiency that

at real-time from individual checks With to this cards able and to our completely Controller with each projects picture and of operations." costs XX With in we went managing year were finances position. I which and cash BILL have who know XXX XX are more clients. projects. we renovated construction the financial homebuilding to of made past understanding "We BILL exactly easy. on accurate time. never went no Divvy our purchase quote of to take view said associated In having Divvy outstanding an Financial any active Morton, has we knew be from a our Cindy We use having

Our system millions use. platform which bank of with members network Tiny they regardless to accounting of customers enables or like Homes connect Anchored

have choices a a and We two-sided both built offers a and payment for multiple large-scale within secure transaction of frictionless sides experience. network operations automation and that simplifies

we and is long-term increases engagement our network member one-third Today network stand-alone valorem to core new additional BILL by international we acquisition, in believe breadth member card generated ahead the in significant adoption. virtual creation value to who is suppliers choose our ad network, of financing. instant Leveraging enabling drive platform roughly platform further thereby the that, revenue of there transfer and now payments accept add platform, invoice Every payment our across beta platform. growth to

Our transactions of central billions platform for month dollars. millions the is each hub of that facilitates

banking to We reliability. BILL's world-class with crisis. infrastructure it deliver SMBs financial XX/X consistency created This the redundancy platform integrations have payment ensure always-on with means mind of built processors the operational multiple and during recent we for piece were through have to demonstrated availability capabilities need. an and

our Today that SVB-bound we that we another all financial to resolution uninterrupted. pending the transactions Bank to regardless situation. bank continued transactions partner closure behind seamlessly customers at We stand Valley institution redirected Silicon committed the transactions ultimate the of would of so

to make to by helped to operational secure new through Divvy by pay-by-card and solution offered a fast pre-approving funds for lines users to businesses our We utilizing stay to card expanded impacted suite a store cards products. place and their way offering for also BILL to our access access provide of connect a payments. convenient customers We of debit capital credit Balance

our of manage unified we inflows Later all our across cohesive the our mobile in we all and BILL have Recognizing experience and that Divvy solutions power web continue experience place cash customers and and to want to one will look feel BILL an of Recently, view significantly of place. creating the their work solutions. outflows a open this will on one platform our year and blending tasks apps. in and consistent enhanced and a businesses customer acquired spend best integrated

picture offering enhanced and gain By cross-sell operations. discovery their view product we opportunity believe self-service enable further adoption will further product businesses sizable unlock in consolidated we of complete our control will finances simplified The financial a that and more to their

accountant dashboard we are more XXXX-plus making partners of to provide value-added clients. that addition firm enhancing offer In for more services easier accounting our strategic to our it products our their

detecting our AI asset in documents. and We to capabilities make to were developing and are AI invoices, to an automated it continuing our for We expertise enabling leverage more of predicted. that also large managing solutions our early easier adopter use, reading suppliers risks data applying

working addition, generative leverage ways can enhance AI to that we In experiences. are BILL customer on capabilities

broad is AI buyers creator transition to Pai, game Microsoft improve uses to have oversaw Vinay We're He including cloud-based Moss scale. from player enabling team team of executive pioneered and and people seasoned the commerce with decades he Ken joined as excited Arts, our at on the enable BILL, with experience another he who of retiring. the company a technology online sellers engineering executive strategies development and data at also taking brings over at Ken to CTO to recently years speed experience. millions leadership Ken now led will where and front. teams. be technology connecting breakthrough with to Turning of innovation at eight Electronic led Technology Chief Officer. the of in experience through and eBay key and

the automates for and SMBs. trust profitability we creating while a financial serving thank BILL and nervous system operations team strong With BILL for of and closing, quarter the with platform payment our of of variety that and also customers with thank robust a another value SMBs SMBs. to I'd In serves strong they like millions partners thousands us, them for I'd our in financial to connects and and of their network great commitment to for funding members. like delivered as place revenue expanding choices, offers hundreds growth

I'll to talk our John more the quarter. call turn now detail over in about to

John Rettig

and Today, our Thanks, Rene. across an and ahead In fiscal quarter discuss were quarter provide third driven XXXX fiscal of of financial our fiscal for revenue estimates, fourth strong our by full XXXX. multiple overview the streams. well QX, we our results that results outlook I'll delivered year strength financial

expanded margin XX%, gross highest grew or Total and income revenue, million margin quarter-over-quarter. which our $XX X.X points revenue on was was XX% approximately of Non-GAAP record. year-over-year XX% net non-GAAP percentage

third totaled free through million we $XX year-to-date March. addition, positive consecutive which our of quarter flow, delivered cash In

to Our strong our business and commitment diversified our and model of growth balanced profitability. the deliver strength performance highlights

SMBs, Our materialized that results faced notably were the a delivered by macroeconomic amidst most uncertainty ongoing lesser headwinds being and to the backdrop multiple of banking challenges the in extent, March.

customers with value our of we changing their any from business business platform spend patterns SMBs QX. continued are to last that our shows Many though continue remains Even challenging face conditions year cycle. strong reducing engagement BXB and drive throughout expenditures, that and in solutions saw the

transactions of consistent the prior Repeat vendor months. a channel Of approximately defined platform, same payments standalone consistent BILL preceding our initiated these or average and on within XX excluding the were example, ago. with customer FIs, customers are March institution number the the transactions three as transactions repeat subscriber financial between XX% with was quarter year payments, periods. For per

Net standalone from were accounting in net-adds X,XXX FI BILL our channel record. last quarter were BILL XX% which key slightly our adds QX. and solutions. in to customer businesses from Net-adds financial XX,XXX, a XXX,XXX platform was update quarter. on and metrics year-over-year. set an to the includes up This on ended which up results our new with Turning We our grew direct channels the new third XXX,XXX, standalone using customers XX,XXX.

Looking Check customer the QX electing expect sunset their in solution we the to channel commercial to FI legacy to Bank ACH ahead BILL-powered bill pay adds customer of net by used fewer America segment. due and

offerings. commercial We able many will have our active an management direct-to-bill BofA payment platform to spend valorem deliver the of payment our and we experience enhanced choices, ad including and transitioned customers to more many most where be

this transition onetime impact does focused segment. and not count Note, small this partnership on a on impact BofA with will our our their be business customer

the management XX,XXX ended increase spend Divvy our last solution, we from quarter. spending of an For businesses, X,XXX with quarter

on payment volume. Moving to

QX well March continue quarter, the processed in the decrease in we growth quarter. historical of billion TPV of the in December X% from our would seasonally late and trends. sequentially quarter $XX BILL the year saw expectations a TPV of billion standalone slightly QX soft was During total assumed ahead below we payment in which which trends XX% volume last was reflecting $XX.X

growth. also QX, expense we in $X.X representing volume card XX% product in had year-over-year billion spend from our and payment management addition In

This card volumes, the transaction per QX. revenue we $X.XX year-over-year. XX.X transactions. and XX.X on million million reflecting million spend in Total BILL XX% to standalone payments processed platform $XX.X transaction on was of includes Moving payments growth transaction management

a For basis card spend points. take generated of gross our in solution rate payments we QX, management processed approximately through XXX

increased subscription revenue quarters. $XXX.X includes representing XX% which subscription ago. revenue up standalone I'll of and million XX% from of Total million reported the year-over-year revenue XX% reflecting year-over-year. Core direct growth our million, by our Subscription and price a $XXX.X driven year an increase was implemented results. transaction to our QX million Now XX% revenue channels expanding $XX.X review was growth over year-over-year. last and BILL few of was revenue accounting in increase base $XX.X customer a

$XXX.X revenue revenue increased year-over-year of and million million. up $XX.X result reflecting BILL a TPV strong growth XX% million adoption Divvy transaction revenue was growth card management transaction Transaction valorem XX% reflecting revenue million increased year-over-year year-over-year. and totaled XX% totaled payment as to growth. Float volume, ad standalone of $XX.X $XX.X spend of

the Our basis quarter. in yield was points XXX

last few quarters transaction to moderate non-GAAP gross high-margin gross few resulted gross a variable we've quarters. and in operating XX%, a would float higher percentage fee which result QX. of margin revenue. up boat payment peak our was results the X.X we and as points Non-GAAP revenue year-over-year from The for a very which increasing to had revenue in Shifting next has and favorable mix margin margin expect tailwind

QX spend. million, variable management managing included Non-GAAP were expense management an Rewards which and closely pace operating from reducing card proactive percentage X% increase was million quarter. points an year-over-year. expenses our hiring for and of cash of expenses from year-over-year. are of income costs of $XX.X XX% income, to operating including an due higher XX% in just Non-GAAP and $XX.X sales and compared to XX.X%, $XX.X $XXX.X spend other of increase expenses marketing margin our prior of corporate other was was XX net million benefited improvement in yields investment portfolios. Non-GAAP on operating million, Non-GAAP the revenue

$X.XX XX% non-GAAP outstanding. of resulting million diluted $XX.X Our income income diluted weighted million net was revenue $XXX.X average share or of net per in based on shares non-GAAP

of disciplined our revenue ahead our Our non-GAAP approach net was income significantly managing due outperformance to estimates to as expenses we with combined scale.

of balance $X.X billion. at the to equivalents on sheet. Moving short-term cash Cash, and the investments QX were end

more continuing needs platform on to in focused and SMBs. capitalized serve of to well our are We invest

sheet will position track both free is into and playbook translating dilution we and organic we for and strong our balance cash continue Our record of capital With investing a growth allocate our share to generation to that deploy. inorganic investments in are reducing a opportunities growth efficient buyback flow those in investing through for program. and

for per $XX.XX repurchased million $XX at an share. price In March, XXX,XXX shares we of average

of we had million authority As remaining. share approximately March of XX, $XXX repurchase

for Before we our to XXXX, see share and quarter environment the shifting on financial I'd fourth to fiscal like how our outlook our the impacting SMBs and business. year view macro full

seen elevated continuing we've the in into translate tightening reduce to of levels will challenging beginning and from trends environment we signs that initial term While credit of pandemic the spend macro the customers conditions spend years. anticipate the stabilize, to near

on roughly to per TPV to QX slightly BILL QX basis customer the quarter-over-quarter. For down expect platform, a standalone be and we flat

headwinds persist in long-term near trends transformation and of in cyclical the serve aspiration digital about we to the likely our ability secular to While we're confident term, the strong millions optimistic driving will achieve are our businesses.

Through and valorem platform strong payment ad are driving engagement customer offerings, adoption. our robust and we

We for and value ourselves. more SMBs innovating at to rapid differentiate further create are pace a to

to our outlook. Now turning

million, revenue For be in $XXX range to to we which expect $XXX year-over-year million fiscal of the total reflects XX% QX, growth. XX% to

run subscription sequential result, in our subscription rate As recent recent our a a history. to increase and compared price a now as is we revenue increase reminder, expect smaller numbers

points. yield which revenue will on million We approximately basis to assumes $XX be float XXX in expect funds FBO be our QX,

line, $XX.X a count expect to on to based bottom in non-GAAP per XXX.X shares we income the for of diluted report of million of $X.XX diluted and in range non-GAAP QX, $XX.X million the income the outstanding. million net share to weighted range net $X.XX, On average share

to expect For be OIE million. of QX, other expenses net income, or we $XX other

QX of expenses and stock-based capital in expect million approximately of we We expect compensation $XX $XX million approximately expenditures $XX million. to

guidance. year full to on Moving

to be range we of billion For $X.XXXX year-over-year XXXX, revenue XX% to expect growth. which fiscal $X.XXXX billion, total in the represents

fiscal a float revenue of million in expect yield XXXX, basis We which for the to XXX points approximately year. funds $XXX be on FBO assumes

million report $XXX.X fiscal to the range non-GAAP XXXX of net to expect in million. year We for $XXX.X income

share We expect outstanding. to non-GAAP to million share a net diluted based be of $X.XX count income weighted per XXX $X.XX, shares diluted on average

millions positioned financial transform platform, our large to scale, a and opportunity of are market ecosystem SMBs. In we closing, capture well to with operations for

growth, efficient, an while for flow invest to stream cash driving profitability creation business in multi-revenue and and us have value that our enables our innovation, We for customers non-GAAP delivering significant investors. free revenue

now take Operator, we're to ready questions.

Operator

have you Instructions] of Citgroup. from Thank Schmidt [Operator We the question Andrew first

Andrew Schmidt

John. just It's see quarter. does more Thanks Hi, the wanted a results you're the it the kind but trends comment. questions afternoon. Good stabilization of expecting terms comment just just spend to for sound hear about moderation. Rene. I taking in Good Hi, in of good about stabilization, like the to about to ask the

you're what what you're seeing reconcile lot of kind the helpful. you're could of just seeing would setting the on comments currently, outlook? kind be Any a environment Thanks you about, maybe up So in versus how

Rene Lacerte

proven tells that us able part, saw, the comment Okay. the can something quarter, happy Super seen not stabilization. the platform comfortable we so to help hard Thank to this the and really that. And what SMBs again platform. and And that that is, have had did you, quarter, Andrew. through in be we uncertainty our capability feel that we with and that continue very end their once the the see because that to that's proven they what as across and quarter into we we of being, that strongly manage around do be at last do, deterioration started able resilient. able to that manage is to really the They've have SMBs business, worked we to be use to seen

support for drive quarters our to XX,XXX. we the to great ways, net one continue growth addition, the opportunities drive be able strongest In multiple around business across total be monetization ever us to across our us see new to enabled of that drive to to customer able adds and for customers to platform, in execution

this So, if this. would say know, bodes to that I well of anything on environment, future. in John, else macro I don't say, if you all our have for

John Rettig

No, of We was some late I spend. that drop quarter, expect quarter, the the which good. into think we did that was saw pretty materialized the a December heading in trends in off sizable

those environment, assumed the continue the macro conservative, businesses reacting had in As that frankly. we would expenses, quarter to it to were reducing and proved trends be and

slightly consistent of XX% trends. flat, TPV ended year-over-year down quarter-to-quarter, versus estimates growth being our normal pretty of which with We and seasonal up is with initial

really SMB So the of is and customer feel customers. base our that the good the about the we for utility have, strength providing we platform

Andrew Schmidt

got more better maybe profile. but you in under you BILL think Super to we quarter lot. in XFI Rene, about how the still I And terms Are decisions since I SMBs should were of helpful. seeing quarters? out. net [ph], net adds could bit for in, add a pushing delays It kind X,XXX sneak of like that. few Thanks one there the the Thanks cycles just software little normalization mentioned a decision-making there? X,XXX some seems next remember mark. improvement better, last new that over And

Rene Lacerte

Yeah. Thank you, Andrew.

great things about our go-to-market business the One strategy. our of is

We businesses for. which they're wherever approach, allows may support very businesses have a whatever distribution and robust us looking small and they multi-channel to be

financial operations for the that's Solutions and we how become to help automate system them SMBs. really their nervous financial

continue they business. to businesses have mode to our mode we channel on growth different and a is continue of the make to in versus so decisions add to their see play wait-and-see macro expenses waited kind see in this be to continue the so we smallest And to what that direct out in

business it when we then in focused business macro accountants serve, to we customers comes their see see. and a condition their we when perspective it accountants drive strategic really we being Ultimately across to our the impacts to like the as not robustness with we manage they're busy shows to when how ads of our operations, would believe to saw we they here very channel And to as something, that it's new we on platform to help when efficiency that that customers institution because also talked that is the what adding focused need And BILL. see they're comes financial their it hence financial on this the using from so they're that about net going the capabilities channels opportunity new the come today. SMBs

Andrew Schmidt

much, Got helpful. it. Very Rene. you very Thank

Rene Lacerte

Andrew. you, Thank

Operator

The of Josh comes next KeyCorp question [ph]. from Beck

Josh Beck

for wanted question. you Certainly with Thank taking the little I Divvy. about a BILL. the to ask experience started bit unify to you've

you I certainly across more the think web really talking and seem have mobile were apps plans. but to you

may what So some just have potential us really understand in about maybe be coming how should we the the just years? of learnings help been? think early cross-sell And the

Rene Lacerte

focus From and offer to that with to the interconnected of the to building platform. SMBs continue time have allows the do the they we how types us we the around that beginning, platform Thank multiple on as placed serve taken to able to our effort And need. you, be purposely robust been extend a acquisition payment them Josh. has Divvy, products of

platform something focused we it's defined unified this our on. very have we're as that so And

able first also you with the us if both unified that started which begin ability and that. approach, view to data into customer to And have And to brand having being we experience the single sign is shared system the feel see of you data a will one branding. have we're about across see unifying is and this we led platforms and saw customers that a integration, that unified as And fall on, look how one one that that It's identity. the an color actually what now. in quarter announced one thinking released we where example lake

cross-sell unified is to and but which think look important across the sizable phase a feel, software perspective the from opportunity have integrated an first is more just of unified platforms the features we focus perspective, different be which from experience to step that is going we phase, a Not about, to after experience. us allows That capabilities experience. integrating now which talked an go on and that to color next that

getting so that calendar about that done we we're where And very this that calendar that's execution committed feel year. the good been about And all our business. mean to And opportunity. in cross-sell going It's requirement for at we this excited along to deliver year. the plan for of are that what we're to

we it. that and BILL is are Like customers believe the see We the really a it of already get opportunity. Divvy, sizable said, we value using they from out both

together. and spend also the when they work both across usage We platforms see increased

something forward becomes It that and And that that later about very, we we're out application the very sticky to year. service the provide. and this rolling excited that's look

Josh Beck

really then maybe relationship. question, on Okay. a option white-label more related Great. the in SMB zeroing over And direct it looking put sounds the of like maybe and a commercial is the for BofA to segment to

applicable How So swath of finding to do broader hear. product SMB and interesting you think really strong customers the market particular? this in within fit FI is across that's a certainly

Rene Lacerte

Yeah.

creating and think focused that we've serve I thing them. partners is value there really being for our on the to always

have so with of America. multiple Bank And relations do we

we have And relationship. business small a the relationship. commercial have We

relationship legacy that call already the bank what into did we had. years a XX commercial when were the And I ago, integrating we platform would

a And direction a the now in just supported and and later, where platform product so, has to point really a years at perspective. we're different capabilities platform from BILL decision XX now check legacy sunset go pay this a made the that bank ACH that

do to kind Bank And including all this and our institution perspective partners When is of financial across so the at our we of America. a partners of with one-off more more you from situation. continue look

financial channel the continue those becomes important super we're FIs. to every going serving And fabric think be SMB this so, and to operations of focus of we as to is part going on

more more on products capabilities. serving the of We're to continue top with out six and and to have them focus XX. We more going

Josh Beck

that. for Thanks

Rene Lacerte

Thank you, Josh.

Operator

now with We Research. Darrin have Peller Wolfe you. Thank

Darrin Peller

I expansion direct guess, the it you. than it's could with Thank know I if rate of we output just Guys. more and necessarily. take that's not focus start -- an Hey is a

after it know sequentially much seen before. had didn't However, last I expand as quarter as you

talked areas see more that categories. other some We said guys supply front, you that's proactive mean, of I material about and be did a expansion this there or we on quarter. it being whether may enablement

I think roughly two more three been sequentially. times before, times had or it than

you look if just drove moves of are on can if some Thanks You And any you're sustainability So comment what on? there's guys. making? some strength? proactive that there or we can count

Rene Lacerte

I'll Thank add more you, Darrin. start let and some color. John, then

we've products. to allows First multiple and foremost to a our platform monetization across payment uses levers very of more built that strong us business use and drive the

experimenting a in to get be given things linear ultimate expansion we're going let of us more And talk is And capability. said I'll worked good kind we've testing driving that example. different our that lot the John approach And it's quarter, that and always well any doing a to not monetization with quarter. to customers. this of this for that. a to great We experiments had of

John Rettig

into and that saw suite payment both We valorem are tied strong Darrin. Yes, with the that's adoption of suppliers. ad quarter and buyers the and offerings during resonating those we really have

smaller headwind around products, and our shift that with a both last more as penetration payments called saw FX well with a losses foreign lower we're U.S. virtual quarter. transactions continued and payment we international transactions versus pay-by-card really card we seeing Specifically, mix currency and solution, good out adoption our where dollar as

any the to -- typical it's the valorem average performance is subject some the small I good quarterly expansion there are Looking have behavioral fair resonating plus in here assume think we feel we with quarter I really how rates. fluctuation sort mentioned to of products quarterly that our Rene mean, macro-induced customers. ad ahead, changes. and increasingly about business But Obviously,

Darrin Peller

update. macro on very a really just quarter. mean follow-up comments That's change quick Is guys. an the Just a next encouraging made again I conservatism? Are you there on real into seeing element behavior a the just in you customers? quick Thanks guys. of

John Rettig

that ahead platform patterns assuming ultimately their looking be adjust this as environment quarter, are and we're what say, inflation is to environment. to macro in the the our interest small I'd rates going June TPV through spend continuing relatively that And businesses credit. external stable flows light of to

those and are of react. continuing our to things to force customers SMBs, All

assuming the that environment but would we no worsening we're from So where see SMB. continues, changes significant of major

of feel like it's that of a So we in quarter. we March the kind continuation trends experienced the

Darrin Peller

Thanks. Nice guys. job

Rene Lacerte

you Darrin. Thank

Operator

of now Brent We have Bracelin Sandler. Piper

Brent Bracelin

Maybe SMB start you. John. talk bit than months tied clearly that It sounds afternoon. Can a Good to I'll Core Thank linearity little with about expected TPV partially monthly color linearity did trends off banking core TPV regional basis? of the was like just there the all on Thanks. And given a helpful. you ago. stabilization. would trend issues? any that stronger at three of some was March in be Just on

John Rettig

Brent. Yes.

standpoint that had quarter with pretty didn't the spend really aberration March see seen in the quarter didn't the First, seasonally and historically. softer We we March trends that assumed experience quarter. that would the December continue we've patterns quarter like seasonal historical spend uptick quarter a were seasonal normal December the throughout remind that from the saw that we so consistent in We typically everyone I'd just is and in that.

consistent overall the is patterns I spend of that's the Now and as some level scaling pretty about are -- commentary as to spend reduced led be to quarter in mentioned what initial stabilization their throughout back of our trends. the SMBs But seem spending. signs we before

Brent Bracelin

That's helpful.

Rene Lacerte

about you regional the kind one asked bank. I'd just Just add of thing

can about that things add is the accounts. multiple bank customers and beautiful platform our of One our switch

care them our of for so this we And was customers. a and non-event stood we up because took

Brent Bracelin

you I maybe then, one Intuit here on June? And your in Intuit. could co-marketing the investors partner color. at get how just And biggest a from you view there Intuit? Rene, as agreement of the Helpful about competitor potential versus just I lapse someday, wondering could talk differentiation questions given was if And and Thanks.

Rene Lacerte

Thanks, Brent.

with is would larger which opportunity And First material continues We that. not out our approximately prove the the of institutional see businesses, it's and contract to the we of businesses platform, of direct I is off, are our just channels. coming say financial so the the the have that to business, where that, business. X% we lots on revenue believe in we of focused, large with so current

over And of company what only that so, is from may decades the really rather payment simple for SMBs broadly more difficult look would just solutions and doing to building not say the the is decades I the and team has I guess, outside build. I'm for I've what on person been this. that, three experience

allows spend bill -- make to to that our execute, things that ability process and the ability all management payment complexities payments the one able into financial pay and take involved automation operations knowledge, to are of So expertise, platform. and and be we've all integrated it is the the capabilities simple. with that something, capabilities receivables us that and and to that because And workflow complex do

not capabilities engagement and record regulatory And a in world. of and that out regional we of quarter challenges just for showed system compliance our the a behind We're we this have bank redundancy We're March system for also financial that the customers. proved of our with customers. all the

three we year really the are into the say, really and that years tomorrow we setting the were we and so what year did after complexity what operations have the customers have we doing their leadership So data entry would on, annual at an all in innovation the I financial busy looking of and past. ago movement the modeling perspective, and speaks money and the kind we go-to-market that at for two have, or the the we others and $XXX we're while really the have, basis, the agenda next from with of our for on ultimately, billion-plus from the experiences, taking that learnings to

to continue the so to going and really we're We're So to more We're mess SMBs going to to payment continue plate more innovate, their going We're worry on make capabilities, continue that to focus continue working away. go capital off about. and less future. to to that have capabilities. add going take it to do mess continue add to

Brent Bracelin

helpful and Thank you. clear Very explanation.

Rene Lacerte

you, Brent. Thank

Operator

from Suchoski We Autonomous. now have Kenneth

Kenneth Suchoski

questions. the and John. afternoon, Rene Hi. taking for Good Thanks

mentioned adds any We the of this accelerate going like FI acceleration quarter adds just ex you of bit so X,XXX a of versus saw X,XXX an range? net of the should I'm type why last, then, you that right net just this is of is number that to forward. on And channel kind this curious right think visibility little the thoughts or I type back have the into kind of number, X,XXX kind number.

Rene Lacerte

Yes. for Thanks, the question. Yes. Ken,

spend, more opportunity. and and I've First AR been years much this times, see of we and said is for and in Like, there's financial is payable defining what opportunity operations capabilities creating our a of customers this future for in front and many that, number of foremost, so category a automating expense us. massive have the we this

create with general wait What we've that macro that means are that the businesses take to expense they grow and more talked waiting forward environment to about actually in on not are some opportunities move is businesses in that, and this efficiency. mode means see, before that additional

we the will change light as that economy of we this believe that just us that network. side at building to continue end that see. of really multichannel we can approach well continue we wait continue that allows this to all a So, other of base see tunnel us that And the our have we across to build the what means and channels. is distribution do serve when And see the as customer our we could think will reminder that the

us be grow and see with continue and allows value I have experience we the the the do. our do experience and network that thing to we continue And really that the all time the as that we well. to customers provide every And savings customer how think to for product use just the and satisfaction things they is they customers excited about most direct

believe more to we to grow continue we're a the opportunity learning simplicity every on this to day capabilities So, that we're there's going work and that customers. available and more leverage to bigger make

Kenneth Suchoski

we about it TPV better If Rene. down just year-over-year. channel down just we feeling the I question. FI quarter the my per side second, at Okay, the ex-FI, follow-up business the was year-over-year sounds look put last and macro. you're a to X% like customer the for great. And Thanks It guess X% was as

about and TPV medium metric we customer term think change how about you can that the talk year-over-year do the should blocks per has you troughed? just in ex-FI And the of of So, over growth this building think that? normalized

John Rettig

Good Thanks Ken. question. Yes.

the growth the more trends reversion about think trough on little normal pretty in I good right But to a felt to You're the call or a like stats starting to patterns. mode. there. see We TPV it's and quarter in what early a looked

spend the to mentioned, for so Rene we businesses scaling still expect our and we As estimates reflect QX this softer expect -- in back, near-term. would be seem

intermediate there's what's environment dependencies the situation credit Over still think rates of on the there. I out lot and happening a term, the with macro interest and

patterns update into we'll these and by certainly to get call time some definitely of our FY everyone we XXXX the August So, more visibility we'll have then.

Kenneth Suchoski

Thanks great. John. Okay,

John Rettig

Thank you, Ken.

Operator

have McGinnis now from Taylor We you. UBS. Thank

Taylor McGinnis

of so the off reacting the share just can that discretionary being post-December, anything to you you're seeing Thanks a to mix that favorable what And of question. level taking potentially you on are that all the much macro my stabilization the of Maybe fixed? is versus might When that hi. maybe seeing stabilization the be reflection Yes, a spend about for mix today? at last more in more piggyback we SMBs terms more guys question. at think with

Rene Lacerte

are that I you, -- the businesses question. and this something really see is Yes, This wait macro think is thank really for is Taylor this the tightening.

broad maybe that spend across about have have swath across and businesses one that of and to serve we insights right? unique. we all We see and of sizes Just so the businesses all into industries a think we is perspective think segments is economy,

what the of matter than businesses and more that belt consistent of no And larger have that discretionary industry they one more things is their the spend tighten is is smaller businesses.

on so what which the all impacted tightening overall And even businesses though by would impact on means that platform are larger that sense. the make the TPV is businesses more is our

the stabilizing. signs it we're is of that starting to what so early And see

little we a in than bit be they're not. BILL better more think when enables what -- their think a they're need about businesses that's I really any they're position when the about spend more but data it and we platform thoughtful before to on it say is manage we

Taylor McGinnis

very much Thanks for Great. the taking question.

Rene Lacerte

Thank you, Taylor.

Operator

William Sachs. have Goldman Nance of now We

William Nance

wanted Hey, that kind could parameters to we're a guys. you you to guess Thanks about the those how the up BofA follow move direct in around the some customers partnership. talking I for taking of made questions. With customers point on on large BofA just here? channel channel put I of my moving the from

think in come that in could the being FI Thanks. versus in something that significantly between as customers going direct the might monetization the generally upfront talk we then to as we're And And movements over? see revenue? of kind about channel these channel. Is about how than transaction higher that near-term differ you subscription the

Rene Lacerte

you, great Thank and Will question.

about would and that strength partnership I kind out customers because very it's partnership think, call helping them bank able migrating of decision the the migrating make with is first thing work that of we on those of over. have I been strong with that a the a and we've to

to bank of X was out. -- our many the the seen active we've customers May platform that already are And set it's effective that the date been and only migrate

but us capabilities. are that they come very, very to the your point leverage it's to of customers have all those many of And they early So over. active we feel ability the over coming customers good when for payment our

delivering for on relative relationship and sure expect for an be those make into we're instant is customers anything are will we future invoice And serve all contributor financing. it's virtual to payments direct them. the cross-border important something kind the the the that card and that And from so be in we to built transfer things customers the to know up working will These which that could overall. ARPU to us happy drive experience that to that capital of we're

William Nance

it. Got capital. just on And working a appreciate I maybe then that. question

kind I about that rates what think we over have how just about any been in that and time? that think guys you and are out. you talk around Could like rolling you look initial where might of attach product thoughts

Rene Lacerte

Thanks.

the me we test be The deliver robust stand start let is let to build of about shareholders. customers I'll something think additional John color. time to way and that's going some then So deliver add for always for things

in out roll customers learning beta our financial far are see manage continue making And as this the going to as out the way us And actually what we how we have. to so into encouraged work on it a we're our capabilities what customers' experience. the about as opportunity rolling has in future want that that to contributes so to the we is that and well sure we experience that program, about

So John else? anything

John Rettig

follow-up that. quick to Yes, a just

flow been One of and customers. vast was out I platform improve middle we our help very flow that we're still and rolling see alternatives this We it's mentioned of launch the we is spend the previously majority things transaction platform. offer in on the with It's BXB think to product the spot a that at wouldn't say yet. our learning. and we've That that liquidity cash full in and small. with our testing our initially of for thesis perfect customers we're

to that to been nature. usage and about repeat initial we're able the many starting things product of be and assumptions and has had validate we feedback that The very positive of adoption

product, ways is be needle moves that away a business. the in really think for on from ad it we're say Perhaps interesting a phase product. scaling longer addition we I'd the that our near-term can it valorem believe the nice to But really the not overall our we over term, So a but portfolio. something

William Nance

today. Appreciate it. taking Got questions. Nice results

John Rettig

Thank you.

Rene Lacerte

Thanks Will.

Operator

comes Stanley. Weiss Morgan next from Your question of Keith

Jonathan Lee

in with valorem Hey, it you SMBs Thanks perhaps taking Can Rene. our where for customer adoption? question. across smaller seeing Does unpack middle your resonate help Keith. larger strength more SMBs, for Hey John. ad on It's you're market? base, Jonathan

Rene Lacerte

right? definitely invoice for there's supplier acceleration insta there. the question. would capital, that see -- more example, the But across on our payments product, transfers be strength of businesses, cross-border so for working then and our We Jonathan about you, built. we the you kind more Thank network Larger probably depends really that think have

want they the how when those of get get is allow that by we that to paid in script network XX% they driven the want choose suppliers to One around the is connections to revenue our in shared things paid. and of

of our So product that goes is we direct the see virtual customers. card something all across

customer And all there. see so segments strength across we

our of it's strength we've the and business these to results what point and to depending build worked hard it that the it business that it, proof very that's a And something something needs proud across not they the years do have It's to I on the when something of we pull think that properly durability overnight. a I happy and think many and customer and testament again we're just build. need to takes happens and today. It's the have across we levers

Jonathan Lee

And follow-up. Thanks. That's helpful color. a

Rene Lacerte

you. Thank

Jonathan Lee

You you're especially but can you had whether the traction there? in the go-to-market briefly offered before, trials any seeing in on the this touched free motion, through talk impact And this environment? that were three-month

Rene Lacerte

wait customers of Yes. The is macro their holistic not And going looking the see are a environment. in for and macro -- the the the what's on now environment that that with because focused uncertainty definitely supporting the at now. channel adoption see accountants are that expenses customer where that's a believe economy accounting any the businesses managing we see to the and right business. increase to smaller very while in perspective, headwind we they really across existing happen direct We

which more direct network, to strategy a factor out institution serve add and Accountants stronger more allows a strategy, customers what's awareness our build have for for us stronger is that that's us of to to of opportunities play to that means more strategy, distribution able multi-channel get platform. create multiple customers interact also need that because at we're that's of us across stronger to more challenge The us. also with out the serve financial really well we because have be accounting businesses for clients the playing a their a so and there. and businesses, What allows with we ways because They labor. the and seeing our experience and the people more fact that to more

Jonathan Lee

Thank context. Helpful you.

Rene Lacerte

Jonathan. Thanks,

Operator

unmute Bryan, line, Bryan of your muted Deutsche as We please could lightly? I Keane Bank. now have you

Bryan Keane

you can me? hear Hello,

Rene Lacerte

Yes, we can.

John Rettig

Bryan. Hi,

Bryan Keane

guys. Hey,

what happened Sorry, I'm not there. sure

XX% last was quarter. we And but conservatism seasonally quarter the know on growth now third Just a held that the TPV patterns be Seasonal baked some clarification in on XXXX of guess TPV growth BILL in and materially into year-over-year it will I XQ than did the I year. flat TPV. different suggests there guidance core for

guide just trying levels? to about How versus is So think to seasonally it conservative those it is the really kind slowdown? to of are we seeing finally the slowdown

John Rettig

deviation Thanks December from trends. seasonal the out question, was it I'd Brian. clear for The Yes. spend say, played the looked historical normal closer way patterns was the a to a quarter, March seasonality. lot quarter

on basis, performance larger so our per X% a would customer be performance. than Now TPV we've little going to typically is down QX – was a or similar that and bit quarter-to-quarter period see so a we on of a decline time assumed the

with quarters estimates a still to a back trends trends back of We're at get I like a I get expand we trends we At quite we if that even sort overall outlined a lower December that's historical some level spend we've continuation these is going to think But to our seasonal of seen March quarters. feel the and we've extent probably that trends of when again true some point lesser the QX, think for are to are few trough start to the and out. seasonal in patterns. to not or it's normal when a still businesses see

Bryan Keane

Yes what year that get that to the question XXXX, place think When be I to back or Is trends? second ask you of the will not turn probably was first is will going half? that until fiscal take half seasonal about visibility. to that

John Rettig

with a I'd have But see They we super external to is the on They estimate healthier to engagement businesses. difficult for the us small environment dependencies are seen the interest with characterize segment say I'd it's some very say, and resilient as It's could a are adjusting. obviously of we the businesses. precision the for rates and environment in question. here good given business is small credit continue from platform. set patterns including high it of you from what

think I us things but turn ahead there's that it's to tells that starts open. when So good still

Bryan Keane

and the so Thanks congrats execution. much Okay. on

John Rettig

Thank you.

Operator

of with Sills Brad Merrill have Lynch America now We Bank

Brad Sills

the Wonderful. here. I a ask Obviously, quarter. rate question you. take around strong real Thank this wanted to

think I bit little past the pressure – in a macro could John on on with suppliers in price see some card. you from sensitivity taking perhaps you virtual said more particular the

doesn't It the like be case. a to saw this We ramp quarter appear basis full looks a point. nice

macro relative the you regard impact ad expectations? quarter quarter on services? out to your So with heading curious, how valorem did to the uptake were And shape what the just expecting then into on the

John Rettig

that about good suppliers Yes. emphasis the Thanks, The our products. proposition the Brad. value continues on the around an feel and cash to gone so and well. to more adoption of see proposition card adoption access think the We value and suppliers. our many and of that's the I with it part speed payments on ad We establish performance part of products really in resonate. virtual of really of quarter valorem There's larger of

by pay FX includes have then levels we solution the And overall small seeing still universe well. card is international payment Our healthy increasingly the adoption. as payments transaction see we to of which that it's in while transactions, very international of offerings continue

so and linear of be that we've seem there not things as our quarter prior right happened it's calls, on perfectly said expansion. this all fluctuation some So direction definitely in those is going the to quarter-to-quarter

monetization rates might what are expect any that a quarterly exist. for we and our would so average probably quarter-to-quarter looking variation And proxy going subject growth that we ahead expect forward to good normal

Brad Sills

core hear. We're channel and Divvy Divvy? potential Thank the thoughts And for That's for the what of I you. on BILL Curious Thanks, to the into integration Divvy that potential on cross-sell from any into the please. there real BILL John. do one BILL. feedback may more hearing and positive great progress if might with

Rene Lacerte

Brad. you, Thank

with moving think the talk BILL across for joint of America. the platform platform. both about how that We businesses same things customers the and use things have are and when spend our place. all actually talk that in from us They allows to thing of expense value Divvy spend to it to the the -- confidently are is all It's more one one that have definitely BILL we that definitely we hearing the core

from so cross-sell unlock perspective experience. really we is fully opportunity And our the going integrated sizable to once this have

make way part platform just platforms got to done of execution. talk the all that We've create look the and heavy kind to covers good a underneath of the each other the lifting we're now one like to we So there. to

same true value that to your and then cross-selling ours customers sure obviously that's we're both So get make to motion. of we love the as execute and are the going checks that continue into when

Brad Sills

That's great. Thanks, Rene.

Rene Lacerte

Brad. Thanks,

Operator

Thank you. Tien-Tsin We JPMorgan. now of have Huang

Tien-Tsin Huang

lot a afternoon. Hi. lot a I of know Thanks, good covered good you've already, answers.

wanted of very very, margin. a you to the was clarifications strong. Just John moderate. gross It on mentioned couple ask

callouts I can explain maybe any the we the missed think monetization drive factors et the or I again that gross that margin? would or just lot that moderation, heard but factors there cetera, are a you quarter about in with third rank

John Rettig

revenue yields increasing with float the have allowances. had Yeah the obviously great. a question. associated and with Yeah. our say, of Thanks we I'd tailwind for associated benefit FDO

the margin We've have mix As ad on that of potentially to of interest it's rates the term points XXXX. the FY float had begin call that we've benefit margins been here see XX higher had historically. to start basis favorable throughout on the That's gains some payment supported our we'll as versus adoption that gross revenue it well. peak flatten a positive gross high-monetizing XXX non-GAAP to products very also in valorem near been on curve a the meaning

of is smaller we will back out bit well that. operating gross visibility in and margins above revenue as our term wanted margins. XX% the a to quarters quarter mix than realize float non-GAAP near start last a as I XX% starts payment this our If of had to peak call associated We shift we just benefit think expansion. go a higher that the you few probably kind was be that We've XX% been to with

Tien-Tsin Huang

That's for Bank America. the don't just, through that. fair. And if mind of just you Thanks going clarifying

basis? transaction some of different So related, going to on that's to in off the is somewhat average on then user drive that than the side so piece the the why difference just is going And roll that customer so count and direct? FI per the commercial

Rene Lacerte

transaction part Thank -- take So you customer right? is has and for second in transaction we would institution than if side. the our we both America, the much we average segments The of just have customer the commercial financial business the they side that because, question. each partners we different larger business of side. Bank have different take one, I'll commercial per The first. the serve, small side a small per have

because when you units so, channel the drives the look across seeing we're is I smaller of serve with that financial more reason the the overall businesses, average different institutions think and banks, there's success And it's that down. the there the the that

us. of also the the it think goes a I banks customers, the point work that's and why to our size matter ton for value no with we that, provide

working this customers so, to we've pay BILL that decided bank the and migrate are And ACH they platform good legacy success they doing product to to want far with those to when with sunset customers our and us so had, to the Check do that. had decision the make so that and us worked

more have question? Sorry. -- that one Okay? you Well, Follow-up? with do

Tien-Tsin Huang

don't go want on for education that for It Bank you No nothing. If I But you if the me. back of Rene. know to the the helpful -- can I America. if not thanks already was transcript. clarified

question. simple a that's Sorry

Rene Lacerte

you. Thank Okay. No problem.

Rene Lacerte

forward financial essential execute today. be have to strategy like to everyone thanks as look operations to our you I'd for and platform our the a Thank us great say SMBs. we evening. joining against for to communicating just progress We

Operator

disconnect today's lines. can does you call. conclude now have lovely Please may I you. a and your confirm Thank this day

Bill.com (BILL) 4 May 232023 Q3 Earnings call transcript