BILL Holdings (BILL) has been a standout performer in the stock market, outpacing both the Zacks Computer & Technology sector and its peer Intuit (INTU) in the past month. BILL shares have climbed 5.7% while Intuit has seen a modest 0.3% gain. The broader sector, meanwhile, has dipped by 0.8%. This strong performance is fueled by BILL’s impressive fourth-quarter fiscal 2024 results, which saw a 16% year-over-year surge in revenues. Core revenues, driven by subscription and transaction fees, also climbed 16% to $301 million. This growth is attributed to BILL’s ability to attract new customers and expand its payment offerings.
During the fourth quarter, BILL added a significant 11,300 net new customers, with 4,600 coming from its direct and accounting channels and 6,700 from financial institutions. The company’s retention rate for standalone customers stood at 83%, highlighting strong customer loyalty. This positive trend begs the question: will BILL’s expanding clientele make its shares a good investment? Let’s delve deeper.
BILL is strategically solidifying its position in the financial technology landscape through a growing portfolio and strong momentum across its Spend & Expense solution. In the fourth quarter, the company upgraded its payment engine and platform, revamped its mobile app, and introduced local transfer options for international payments, as well as FedNow support for instant transfers. These enhancements showcase BILL’s commitment to enhancing its financial solutions. During the same quarter, its solutions were utilized by 475,600 businesses, processing a total payment volume of $76 billion. The Spend and Expense solution, formerly known as Divvy, witnessed a remarkable 26% revenue growth, driven by a 28% increase in card payment volume. This solution added 1,300 net new businesses in the fourth quarter.
BILL’s expansion into the SMB market, partnering with companies like Adyen (ADYEY), Regions Financial (RF), and Xero, has been a key driver of growth. In June, the company joined forces with Regions Bank to launch Regions CashFlowIQSM, a digital solution designed to streamline payments and enhance cash management processes for commercial clients. BILL’s partnership with Adyen integrates advanced acquiring and issuing capabilities into its financial operations platform for SMBs, enriching accounts payable and receivable solutions with Adyen’s technology.
While BILL’s strong demand for its financial operations platform among SMBs is boosting top-line growth, the challenging macroeconomic environment, persistent inflation, and high interest rates are looming concerns. SMBs are tightening their spending budgets on digital initiatives, which could impact BILL’s future growth. For the first quarter of fiscal 2025, BILL anticipates revenues between $346 million and $351 million, indicating year-over-year growth of 13-15%. The Zacks Consensus Estimate sits at $348.07 million, suggesting a year-over-year rise of 14.13%. Non-GAAP earnings per share are projected to be between 48 cents and 51 cents, with the consensus mark for earnings declining 5.7% in the past 30 days to 49 cents.
BILL stock is currently trading at a stretched valuation, as indicated by its Value Score of D. The forward 12-month Price/Sales ratio for BILL stands at 4.32X, exceeding its Zacks Internet – Software sector’s 3.12X. BILL Holdings currently holds a Zacks Rank #3 (Hold), suggesting that it might be prudent to wait for a more favorable entry point in the stock before considering an investment.
