EPS of $-0.11 decreased by 136.7% from previous year
Gross margin of 81.2%
Net income of -11.59M
""Core revenue grew 14% year-over-year. Non-GAAP operating income margin was 15% and was well ahead of the expectation we set at the beginning of the quarter as we continue to drive efficiency across the business."" - Rene Lacerte
Billcom Holdings delivered a resilient Q3 2025 demonstrating disciplined execution of a broad platform strategy that combines an expanding product suite, ecosystem reach, and a disciplined go-to-market approach. Core revenue grew 14% year-over-year to $320.0 million, while total revenue reached $358.2 million, up 11% YoY. Non-GAAP operating income reached $53.0 million (15% margin), aided by a one-time $5.7 million reserve-credits adjustment, with non-GAAP net income of $59.0 million ($0.50 non-GAAP diluted EPS). GAAP results remained negative at the bottom line due to ongoing investment and integration costs, with GAAP net income of -$11.6 million and GAAP operating income of -$6.1 million. Free cash flow totaled $91.0 million (FCF margin 25%), underscoring robust cash generation as BILL scales. The quarter featured notable monetization acceleration via ad valorem payment offerings (instant transfer, card, and invoice financing) and continued gains from the BILL spend & expense and procurement modules. Billcom also highlighted strong adoption across its ecosystem, including more than 7 million supplier connections, 9,000 accounting firms, and a GA-enabled Embed platform with Xero, signaling meaningful network effects and stickiness. The company remains laser-focused on AI-driven automation, expanding its supplier experience, procurement capabilities, and API-enabled integrations to lay the groundwork for long-term growth. Management guided for Q4 core revenue of $335–$345 million and full-year 2025 core revenue of $1.29–$1.30 billion, while signaling that 2026 planning and the pace of monetization expansion will be outlined in the August earnings call. Investors should monitor (i) the trajectory of monetization through ad valorem offerings and API-enabled cross-sell, (ii) the pace of AI-enabled automation adoption and its impact on long-run take rates and margins, (iii) FX dynamics and cross-border payments exposure, and (iv) the evolution of pricing and packaging, including the potential emphasis on subscription-based revenue alongside transaction revenue.
Key Performance Indicators
Revenue
358.22M
QoQ: -1.20% | YoY:10.89%
Gross Profit
291.01M
81.24% margin
QoQ: -1.67% | YoY:14.95%
Operating Income
-6.14M
QoQ: -181.84% | YoY:75.92%
Net Income
-11.59M
QoQ: -134.54% | YoY:-136.43%
EPS
-0.11
QoQ: -78.57% | YoY:-136.67%
Revenue Trend
Margin Analysis
Key Insights
Revenue: Total Q3 2025 revenue of $358.2 million, up 11% YoY; core revenue (subscription and transaction fees) of $320.0 million, up 14% YoY; float revenue $38.0 million; yield on FBO funds 423 bps.
Profitability: Non-GAAP gross profit of $304.0 million for Q3 2025, non-GAAP gross margin 85.0%; non-GAAP operating income $53.0 million, non-GAAP operating margin 15% (including a $5.7 million benefit from credit loss reserve methodology refinement; non-GAAP margin excluding float revenue ≈ 5%).
Net income and EPS: Non-GAAP net income of $59.0 million, non-GAAP net margin 16.0%, non-GAAP diluted EPS $0.50 (beat guidance by $0.12). GAAP net income of -$11.6 million and GAAP operating income of -$6.1 million.
Cash flow and liquidity: Net cash provided by operating activities $99.5 million; free cash flow $97.98 million (FCF margin 25%); cash, cash equivalents and short-term investments combined totaled approximately $2.17 billion at quarter end; cash balance ~$1.05 billion; short-term investments ~$1.13 billion.
Monetization and mix: Core BILL AP/AR monetization expanded via ad valorem products (instant transfer, pay-by-card, invoice financing) and favorable payment mix; spend & expense solution revenue $138.0 million, up 21% YoY with card spend growth of 22%; embedded and other solutions (FI channel, I2Go, etc.) $19.0 million.
Financial Highlights
Financial highlights and trends:
- Revenue: Total Q3 2025 revenue of $358.2 million, up 11% YoY; core revenue (subscription and transaction fees) of $320.0 million, up 14% YoY; float revenue $38.0 million; yield on FBO funds 423 bps.
- Profitability: Non-GAAP gross profit of $304.0 million for Q3 2025, non-GAAP gross margin 85.0%; non-GAAP operating income $53.0 million, non-GAAP operating margin 15% (including a $5.7 million benefit from credit loss reserve methodology refinement; non-GAAP margin excluding float revenue ≈ 5%).
- Net income and EPS: Non-GAAP net income of $59.0 million, non-GAAP net margin 16.0%, non-GAAP diluted EPS $0.50 (beat guidance by $0.12). GAAP net income of -$11.6 million and GAAP operating income of -$6.1 million.
- Cash flow and liquidity: Net cash provided by operating activities $99.5 million; free cash flow $97.98 million (FCF margin 25%); cash, cash equivalents and short-term investments combined totaled approximately $2.17 billion at quarter end; cash balance ~$1.05 billion; short-term investments ~$1.13 billion.
- Monetization and mix: Core BILL AP/AR monetization expanded via ad valorem products (instant transfer, pay-by-card, invoice financing) and favorable payment mix; spend & expense solution revenue $138.0 million, up 21% YoY with card spend growth of 22%; embedded and other solutions (FI channel, I2Go, etc.) $19.0 million.
- Customer and adoption metrics: 4,200 net new BILL AP/AR customers in Q3, totaling ~164,800 customers; spend & expense base now ~39,500 merchants; FX losses abated ~65% in Q3 due to hedging; cross-border payments improvements via local transfer capabilities launched in dozens of countries.
- Platform and ecosystem: 9,000+ accounting firms using BILL; six banks leveraging ad valorem products; Xero now GA on the Embed platform; API adoption for spend & expense remains strong with higher TPB per customer when APIs are used.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
358.22M
10.89%
-1.20%
Gross Profit
291.01M
14.95%
-1.67%
Operating Income
-6.14M
75.92%
-181.84%
Net Income
-11.59M
-136.43%
-134.54%
EPS
-0.11
-136.67%
-78.57%
Key Financial Ratios
currentRatio
1.69
grossProfitMargin
81.2%
operatingProfitMargin
-1.72%
netProfitMargin
-3.24%
returnOnAssets
-0.12%
returnOnEquity
-0.3%
debtEquityRatio
0.41
operatingCashFlowPerShare
$0.97
freeCashFlowPerShare
$0.96
priceToBookRatio
1.21
priceEarningsRatio
-101.19
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management takeaways from the Q3 earnings call:
- Strategy and AI emphasis: Rene Lacerte highlighted acceleration of AI-driven growth, with plans to deploy AI agents across payables, receivables, procurement and cash management processes to dramatically reduce mundane tasks for SMBs. Notable quotes include: "We are accelerating our AI growth strategy to change the game again for SMBs" and "We are building a team of AI powered finance agents... the backbone is our proprietary data assets."
- Platform expansion and large customers: Lacerte cited multi-entity management, procurement and mass payments as new advanced solutions for large businesses, with customer anecdotes such as AdvicePeriod illustrating efficiency gains from multi-entity functionality.
- Supplier experience and advanced ACH: John Rettig discussed the beta release of an advanced ACH solution to reconcile payments at scale for large suppliers and the plan to roll out more broadly; this is positioned as a core part of an ad valorem monetization strategy.
- Ecosystem and distribution: Rettig noted expansion in the Embed channel with Xero GA; accounting channel cross-sells comprised about half of spend and expense cross-sell activity; emphasis on embedding BILL workflows via APIs to drive volume growth and higher TPB per customer.
- Macro and product pricing: The team acknowledged macro uncertainty affecting SMB spend patterns; management signaled pricing and packaging changes as levers, with March price increases on checks and ACH being applied to existing customers from May, and more pricing/planning discussions anticipated for FY2026.
"Core revenue grew 14% year-over-year. Non-GAAP operating income margin was 15% and was well ahead of the expectation we set at the beginning of the quarter as we continue to drive efficiency across the business."
— Rene Lacerte
"In Q3, total revenue was $358 million, up 11% year-over-year. Core revenue, which includes subscription and transaction fees, was $320 million, up 14% year-over-year."
— John Rettig
Forward Guidance
Outlook and strategic context:
- Q4 2025 guidance: Core revenue in the range of $335–$345 million (up 11–15% YoY); total revenue guidance of $370.5–$380.5 million; float revenue around $35.5 million; non-GAAP operating income guidance of $43–$48 million; non-GAAP net income guidance of $46.5–$50.5 million; non-GAAP EPS $0.39–$0.43 on ~118 million diluted shares.
- Full-year 2025 guidance: Core revenue $1.29–1.30 billion (≈15–16% YoY growth); total revenue $1.45–1.46 billion; float revenue ~ $160 million; non-GAAP net income $236.7–$240.7 million; non-GAAP diluted EPS $2.06–$2.09; SBC ~17% of total revenue; net effect of price increases and product mix signals toward higher ARPU over time.
- 2026 outlook: Management affirmed that color on the fiscal 2026 growth and profitability outlook would be provided at the August earnings call, signaling a transition to outlining longer-term monetization milestones tied to AI-driven automation, expanded procurement capabilities, and API-based embedding; the near-term commentary cautions that B2B spend patterns may remain constrained in the near term, implying a cautious path to revenue growth but with multiple monetization levers and cost efficiency to drive long-run margin expansion.
- Key drivers to monitor: (1) Take-rate trajectory from ad valorem payment products and new pricing/packaging, (2) adoption and monetization of AI-enabled automation and analytics, (3) growth in cross-sell through accountants and suppliers, (4) embedded API integrations (Embed) and partnerships (Xero) expanding addressable market, (5) FX exposure management and international payments product enhancements, and (6) macro conditions impacting SMB spend.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
BILL Focus
81.24%
-1.72%
-0.30%
-101.19%
DDOG
80.00%
2.94%
1.97%
187.83%
ASAN
89.20%
-32.70%
-24.00%
-11.96%
GTLB
88.70%
-14.70%
4.08%
73.32%
TEAM
83.80%
-0.92%
16.50%
61.84%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, BILL presents a favorable long-term investment thesis grounded in a scalable, AI-enabled platform with a large, underserved SMB market. The Q3 2025 results underscore disciplined execution of a multi-year strategy: expanding advanced solutions for large customers, deepening supplier/partner capabilities, broadening the ecosystem, and accelerating AI initiatives. Near-term performance faces macro headwinds, with Q4 and FY2025 guidance incorporating cautious expectations for monetization expansion and TPV per customer growth. However, the company’s strong liquidity, diverse revenue mix, and sizable embedded platform opportunities (Embed, Xero, API-driven integrations) support a path to sustainable revenue growth and margin expansion over time. Key value drivers to monitor include: (1) progression of ad valorem monetization and pricing optimization, (2) adoption and monetization of AI-enabled workflows and automation, (3) breadth and depth of cross-sell in accountants and suppliers, (4) effectiveness of procurement expansion, and (5) execution on international payments and risk management. Given management’s plan to discuss 2026 growth and profitability in August, investors should expect a more explicit long-horizon plan, with potential for mid-to-high-teens revenue growth and improving margins as AI-driven efficiency scales and monetization ramps.
Key Investment Factors
Growth Potential
- AI-enabled financial operations agents to automate payables, receivables, procurement and cash management with data-backed insights; scalable platform to accelerate SMB productivity and cost savings; procurement module and multi-entity management broaden the addressable market beyond traditional AP/AR.
- Expansion of ecosystem, including Embed partnerships (Xero) and API-driven integrations, driving higher transaction volume, wallet share, and cross-sell on BILL's platform.
- International payments capabilities (local transfer in dozens of countries) expanding cross-border TAM and wallet share across services-related spend; potential for cross-border monetization with improved FX hedging.
- Profitable growth trajectory with higher-value monetization levers (subscription and transaction-based) and potential for higher take rates as product mix shifts toward value-added services and AI-enabled workflows.
Profitability Risk
- Near-term macro uncertainty and anticipated normalization of SMB spend patterns, which may constrain near-term TPV per customer growth and monetization expansion.
- FX exposure and cross-border regulatory/trade policy risk, though hedging has reduced volatility; sensitivity to currency movements remains a consideration for earnings.
- Execution risk in deploying/pricing AI-driven solutions at scale and in broadening procurement and supplier-focused offerings; reliance on enterprise adoption to unlock meaningful monetization.
- Competition in SMB payments, spend management, and embedded/AI-enabled financial automation; dependence on partner ecosystems (accountants, FI partners, and software platforms) for go-to-market velocity.
Financial Position
- Strong liquidity and balance sheet: approximately $2.17 billion in cash and short-term investments; operating cash flow of $99.5 million in Q3; free cash flow of $98.0 million (FCF margin 25%), supporting strategic investments and potential buybacks.
- Solid leverage and coverage profile: debt ratios in the mid-teens with long-term debt and total debt modest relative to cash, providing optionality for growth investments; float revenue and FBO yield provide a stable, diversified revenue stream.
- Gross margins and profitability: non-GAAP gross margin ~85%; non-GAAP operating margin 15% in Q3 (excluding a one-time reserve-credits adjustment); ongoing investments in AI and procurement aimed at long-term margin expansion and monetization scalability.
SWOT Analysis
Strengths
Leading SMB financial operations platform with a broad product suite (AP/AR, spend & expense, procurement) and a high-value ecosystem (7+ million supplier connections; 9,000+ accounting firms).
Significant scale (1% of GDP transacted on BILL platform) and strong cash generation (FCF $91m, 25% FCF margin in Q3).
Diversified monetization with ad valorem payments, card-based solutions, invoice financing, and API-enabled integrations (Spend & Expense API; Embed platform with Xero).
Robust balance sheet and liquidity (roughly $2.17B in cash and short-term investments).
AI-led product roadmap anchored on data assets and deep customer understanding.
Weaknesses
Near-term GAAP profitability remains negative due to ongoing investments; variability in TPV per customer due to macro uncertainties (leap year effects and cautious SMB spend).
Some monetization levers (FX, cross-border, checks/ACH pricing) are sensitive to macro policy and currency movements.
Complex pricing/packages require ongoing refinement; early-stage monetization for new products (advanced ACH, procurement) may take time to scale.
Opportunities
AI agents to automate core financial workflows can unlock substantial productivity gains and higher ARPU over time.
Procurement expansion complements AP/AR, broadening the platform’s value and cross-sell opportunities.
Global expansion via local transfers and improved international payments can capture incremental cross-border volume.
Embed platform and partnerships (Xero) expand the addressable market and create network effects.
Threats
Macro headwinds and policy shifts (tariffs/trade) may dampen near-term SMB spend and TPV growth.
FX volatility and currency policy changes could impact international margins and cross-border payments adoption.
Competitive landscape in SMB payments, accounting tech, and AI-enabled financial ops may pressure pricing and growth rates.
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