Q1 2025 Earnings Summary
- Strong Customer Acquisition and Increased Spend per Customer: The company reported adding 4,800 net new BILL AP/AR customers, reaching over 156,000 customers on this solution. They also added 1,600 net new spending businesses, with over 36,000 spending businesses on their Spend & Expense solution, making them one of the largest providers of software-powered corporate card solutions. Their focus on larger, higher propensity to spend businesses is producing stronger engagement among new cohorts, leading to a 40% increase in card spend among spending businesses acquired in the last two quarters compared to the preceding two quarters.
- Early Positive Results from Targeted Investments: The company's targeted investments in enhancing their platform and go-to-market capabilities are yielding positive results. They are seeing "green shoots" in spend volume trends among larger customers, indicating positive signals in customer psychology and outlook. Additionally, International FX payment volume and revenue increased by 10 percentage points compared to last quarter due to the expansion of international payment local transfers.
- Raised Guidance Reflects Strong Performance and Confidence: The company beat core revenue expectations by $7.3 million in the first quarter and raised the full-year core revenue guidance by $16 million at the midpoint, reflecting 17% year-over-year growth at the high end of the range. Management stated that this speaks to the stability they see with the customer base, success with larger businesses, and continued growth in card spend across their platform.
- Delays in executing strategic investments due to slower-than-expected hiring may impact future growth plans. John Rettig mentioned that the $45 million investment is "a little more back-end loaded throughout the fiscal year" due to "the timing of hiring and getting people on the ground."
- Total Payment Volume (TPV) per customer is expected to remain flat for the rest of the year, indicating limited growth in per-customer transaction volume. John Rettig stated, "For the rest of the year, we're expecting that to be flattish, so pretty consistent with current results. And that just reflects some of the uncertainty that exists in the external environment."
- Economic uncertainty and a cautious SMB spending environment may limit the company's growth in the near term. René Lacerte acknowledged, "We still see uncertainty in the economy... And so we're just going to be prudent until we see that clarity because we don't want to obviously get in front of anything that we haven't seen yet."
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Raised Revenue Guidance
Q: Why is core revenue guidance being raised?
A: We beat core revenue by $7.3 million in the first quarter , and our full-year '25 guidance was raised by $16 million at the midpoint, achieving 17% year-over-year growth at the high end. This reflects stability in our customer base, success with slightly larger businesses, and continued growth in card spend and ad valorem payments. We feel confident about our ability to scale this year. -
Revenue Deceleration Explanation
Q: Is Q2 revenue deceleration due to conservatism?
A: The deceleration reflects ongoing uncertainty in the economy. We're waiting for clarity so SMBs can make decisions about investing and growing. We're being prudent until we see that clarity. -
Long-Term Growth Outlook
Q: Do you still expect 20%+ long-term growth?
A: Absolutely, we believe in driving growth for multiple years ahead. We've demonstrated our capabilities and expect to accelerate revenue growth from where we are today. Our key initiatives increase our confidence in our ability to accelerate growth. -
Take Rate and Monetization
Q: What is the outlook for take rate?
A: We expect transaction monetization to be similar in Q2, possibly slightly up or down. In the second half of the year, we anticipate a modest uptick as volume increases. Transaction revenue per transaction was up 5% year-over-year and 3% quarter-to-quarter in Q1, despite a flat take rate. -
Margins and Hiring Plans
Q: Why was margin outperformance strong in Q1?
A: Our incremental investments are backloaded, so we didn't see the full effect of hiring in Q1. We had a revenue beat that flowed through to operating income; we beat by $12.6 million, and increased the full year by $13.8 million at the midpoint. We're always looking for efficiencies and creating operating leverage. -
Spend Volume Trends
Q: What are you seeing in spend volume and TPV?
A: TPV per customer was $433,000, up 2% year-over-year and quarter-to-quarter in Q1. We expect it to be flattish for the rest of the year due to external uncertainty. We're seeing positive signs with expansion in categories like real estate and facilities after four quarters of contraction , indicating a more positive outlook among SMBs. -
Invoice Financing Risk Management
Q: How are you managing risk with invoice financing?
A: With our massive scale of $220 billion a year on the platform and 12 different payment products, we leverage data to manage risk. We take a targeted approach on credit products, and higher loss rates are normal early on. We're investing in automation and data assets, and feel good about our progress. -
$45 Million Investment Progress
Q: Are you on track with the $45 million investment?
A: Yes, we're making progress and seeing early results. The spend is back-end loaded due to hiring timelines. We expect to fully spend the incremental amount, increasing hiring pace from Q2 to Q4. -
New Client Growth
Q: What are your expectations for client growth?
A: We continue to see healthy growth in total client count. We have 4% of SMBs with employees across the country, and see tremendous opportunity to increase that. Our teams are focused on reaching them through digital marketing and improving sales processes. -
Strategic Initiatives Success
Q: What went well this quarter strategically?
A: We progressed on our three priorities: enhancing the platform, expanding payments, and deepening the ecosystem. We enhanced local FX transfers and supplier onboarding. We integrated the Spend & Expense platform into the BILL platform , and progressed our partnership with Xero, reaching beta. -
Accounting Partner Traction
Q: What traction are you seeing with accounting partners?
A: We're focusing on accountants, bringing in new leadership and connecting more regularly. Our Sync Assist tool is helping accounts supporting various platforms. Accountants are interested in our Spend & Expense product, and adoption is growing.