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BILL Holdings, Inc. (BILL)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY26 delivered a clean beat: revenue of $395.7M vs S&P Global consensus ~$391.3M and non‑GAAP EPS $0.61 vs ~$0.51; core revenue grew 14% YoY to $358.0M, and non‑GAAP operating income rose to $68.2M (17% margin) on disciplined cost control and deferral of certain investments .
    Estimates comparison from S&P Global; values marked with * below are from S&P Global.
  • Profitability guidance raised: FY26 non‑GAAP operating income increased to $257–$277M (from $240–$270M), non‑GAAP EPS to $2.11–$2.25 (from $2.00–$2.20), while float revenue was trimmed by $5M on lower rate assumptions; SBC cut to ~$260M (from ~$290M) .
  • Product and distribution catalysts advanced: NetSuite, Paychex, and Acumatica Embed 2.0 partnerships broaden reach; launch of AI agents (W‑9, reconciliation, agentic onboarding/assistant) supports automation and future monetization; BILL Cash Account debuted to deepen TPV and float economics .
  • Key stock narrative: durability of profitability expansion (RIF ~6% executed), Embed scaling and AI monetization vs near‑term mix/rewards normalization and AP/AR take‑rate seasonality (Q2) and tariff/macro sensitivity on SMB discretionary spend .

What Went Well and What Went Wrong

What Went Well

  • Profitability and guidance: Non‑GAAP OI beat by ~$10–11M vs guide; full‑year ex‑float profitability raised by $16M with EPS guide up to $2.11–$2.25; SBC reduced to ~$260M (–$30M vs prior) .
  • Distribution/Embed momentum: Strategic partnerships with NetSuite (embedded into Intelligent Payment Automation), Paychex (AP embedded in Paychex Flex), and Acumatica (embedded AP automation), expanding access to hundreds of thousands of SMBs and mid‑market customers .
  • AI execution: BILL launched agentic AI (W‑9 agent eliminating 80% of manual steps; reconciliation agent), scaling adoption with early evidence of strong automation benefits and a two‑pronged monetization approach (embedded in subs + premium/usage tiers) .

Quote: “We’re off to a strong start in fiscal 2026… core revenue grew to $358 million at 14% year-over-year… non-GAAP operating margin of 17%” .
Quote: “Our new W‑9 agent… eliminates over 80% of the manual steps… now generally available for BILL’s AP customers” .
Quote: “NetSuite Intelligent Payment Automation powered by BILL was announced, and customers are already using it” .

What Went Wrong

  • Rewards pressure in Spend & Expense: Rewards as % of TPV increased to 132 bps (up 10 bps YoY), prompting scrutiny and expected flattening/decline over time as pricing/rewards are optimized .
  • AP/AR TPV per customer softness and mix: TPV per customer saw a slight decrease; AP/AR take-rate tailwind normalized after Q4 FX/tariff pull-forward; Q2 seasonality (lower‑monetization ACH/check) will reduce take-rate sequentially (revenue neutral) .
  • Macro/tariff headwinds: Management is prudently assuming flat volume per customer in FY26 and lower discretionary SMB spend in categories like advertising/T&E due to tariff cost absorption, tempering take-rate in S&E .

Financial Results

Summary Performance

MetricQ3 FY25Q4 FY25Q1 FY26
Total Revenue ($M)$358.2 $383.3 $395.7
Core Revenue ($M)$320.3 $345.9 $358.0
Non-GAAP Operating Income ($M)$53.3 $56.4 $68.2
Non-GAAP EPS (Diluted)$0.50 $0.53 $0.61
GAAP Gross Margin %81.2% 80.8% 80.5%
Non-GAAP Gross Margin %84.9% 84.2% 83.9%
  • YoY: Core revenue +14%; total revenue +10%; non‑GAAP OI +2%; non‑GAAP EPS $0.61 vs $0.63 in Q1 FY25 .
  • Profitability drivers: disciplined expense management, temporary hiring pause, and deferral of investments; float headwind from lower rate path partially offset in OI ex‑float .

Core Revenue Breakdown

MetricQ3 FY25Q4 FY25Q1 FY26
Subscription Fees ($M)$68.2 $68.8 $70.8
Transaction Fees ($M)$252.1 $277.1 $287.2
Float Revenue ($M)$37.9 $37.4 $37.7

KPIs and Operational Metrics

KPIQ3 FY25Q4 FY25Q1 FY26
Total Payment Volume (TPV)$79B $86B $89B
Transactions Processed (M)30 33 33
Businesses Using Solutions488,600 493,800 498,100

Additional Q1 details:

  • Spend & Expense revenue $157M (+19% YoY); card payment volume +21% YoY; rewards 132 bps of TPV (+10 bps YoY) .
  • AP/AR transaction revenue $123M (+12% YoY); monetization +0.3 bps YoY; TPV per customer “slight decrease” .
  • Card spend per S&E customer reached a record $145K .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($M)FY26$1,590–$1,630 $1,596.5–$1,626.5 Slight raise at midpoint
Core Revenue ($M)FY26$1,450.5–$1,490.5 $1,462.5–$1,492.5 Raised
Float Revenue ($M)FY26—$134 (–$5 vs prior assumption) Lowered
Non‑GAAP Operating Income ($M)FY26$240–$270 $257–$277 Raised
Non‑GAAP Net Income ($M)FY26$236–$260 $249–$265 Raised
Non‑GAAP EPSFY26$2.00–$2.20 $2.11–$2.25 Raised
SBC Expense ($M)FY26~$290 ~$260 Lowered
Total Revenue ($M)Q2 FY26—$394.5–$404.5 New
Core Revenue ($M)Q2 FY26—$359.0–$369.0 New
Non‑GAAP OI ($M)Q2 FY26—$62.5–$67.5 New
Non‑GAAP NI ($M)Q2 FY26—$62.5–$66.5 New
Non‑GAAP EPSQ2 FY26—$0.54–$0.57 New
Notes: Non‑GAAP tax rate assumption = 20% . Float yield updated to include one additional 2025 rate cut; Fed Funds exit FY26 at ~3.25% .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 FY25)Q4 FY25Current Period (Q1 FY26)Trend
AI/TechnologyExpanded platform; innovated at scale Agentic AI platform built; agents to roll out in FY26 Launched W‑9, reconciliation, agentic onboarding/assistant; early results and two‑pronged pricing path Accelerating deployment/monetization
Embed PartnershipsBroadened distribution ecosystem Fortune 500 embed deal pipeline; Embed 2.0 strategy Signed NetSuite, Paychex, Acumatica; customers already using NetSuite embedded payments Executing, scaling
Mid‑Market FocusSuite of mid‑market solutions Mid‑market growth outpaced overall; 2x TPV vs SMB Deliberate shift to higher‑ARPU/higher‑ROI segments Increasing mix shift
Take Rate/MonetizationN/AEmerging ad valorem +37% YoY (FY25) AP/AR monetization +0.3 bps YoY; Q2 seasonal dip; SPP early scale Mixed near‑term; constructive LT
Rewards (S&E)N/ARewards +5 bps YoY; losses down 14 bps Rewards at 132 bps; expect flattening then decline with optimization Managing down
Macro/TariffsN/AQ4 spend benefited from tariff pull-forward Prudence: flat volume per customer assumption; discretionary spend pressure Headwind
Cash AccountN/AN/ALaunched BILL Cash Account; TPV capture and float/monetization tailwind New LT lever
Supplier Payments PlusN/ALaunched SPP in Q4; strong supplier interest Early commercial scaling; longer enterprise cycles Early ramp

Management Commentary

  • “We’re off to a strong start… core revenue grew to $358 million at 14% year-over-year… non-GAAP operating margin of 17%” (René Lacerte) .
  • “NetSuite Intelligent Payment Automation powered by BILL was announced, and customers are already using it” (John Rettig) .
  • “Non‑GAAP operating income was $68 million, $10 million ahead of the high end of our guidance… driven by disciplined expense management and some deferred investment timing” (Rohini Jain) .
  • “We introduced new AI agents… These new agents allow SMBs to bypass step‑by‑step processes and complete tedious tasks instantly” (John Rettig) .
  • “For fiscal 2026, we expect core revenue… $1.46B–$1.49B… non‑GAAP operating income $257M–$277M… non‑GAAP EPS $2.11–$2.25” (Rohini Jain) .

Q&A Highlights

  • Mid‑market move‑up: Strategy now deliberate; mid‑market customers have ~2x TPV and higher multi‑product adoption, improving unit economics and ARPU (builds quality of revenue over net adds) .
  • AI monetization: Two‑pronged approach—embed essential agents to raise subs value/pricing and offer higher‑value agents via access/usage pricing; align pricing with demonstrated savings (e.g., W‑9 agent) .
  • Take‑rate dynamics: AP/AR take‑rate expansion similar to FY25 (~0.4 bps) with seasonal Q2 dip from ACH/check mix; emerging ad valorem (invoice financing, pay‑by‑card, instant transfer) near 40% YoY growth drives LT uplift; SPP to contribute exiting FY26 .
  • Rewards optimization: Rewards up to 132 bps; company is tightening rewards as an acquisition lever to focus on higher‑monetization customers; expects flattening then decline as % of TPV by year‑end .
  • BILL Cash Account: Expected to pull more TPV on‑platform and extend balances, supporting ad valorem monetization and incremental float (beyond funds‑in‑transit float) .

Estimates Context

Actual vs S&P Global consensus

PeriodRevenue Actual ($M)Revenue Consensus ($M)*EPS (non‑GAAP) ActualEPS Consensus*
Q3 FY25358.2356.00.500.37
Q4 FY25383.3376.30.530.41
Q1 FY26395.7391.30.610.51

Values retrieved from S&P Global.
Data source: S&P Global (GetEstimates). Q3 FY25, Q4 FY25, Q1 FY26 estimates and actuals*.

Implications: Consensus will likely raise FY26 EPS and OI on higher profitability guidance, adjust float down modestly (–$5M) and fine‑tune Q2 take‑rate seasonality; revenue revisions modest given tight guide range .

Key Takeaways for Investors

  • BILL posted a clean top‑ and bottom‑line beat, with significant non‑GAAP margin expansion (17%) driven by cost discipline and deferred investments; FY26 profitability guide was raised despite a lower float outlook .
  • The Embed 2.0 strategy is translating into marquee distribution (NetSuite/Paychex/Acumatica) and tangible usage—key to accelerating adoption across SMB and mid‑market cohorts .
  • AI agents have moved from roadmap to production with a credible pricing path (bundled + premium/usage), providing medium‑term ARPU levers and operating efficiency for customers .
  • BILL Cash Account and SPP open incremental monetization vectors (greater TPV capture, longer balances, supplier‑side ad valorem); near‑term SPP ramp has enterprise‑like cycles but strong interest .
  • Near‑term watch‑items: Q2 AP/AR take‑rate seasonality, S&E rewards normalization, and SMB discretionary spend under tariffs—management guides prudently (flat volume/customer) .
  • Execution bar: Maintain OPEX discipline (6% RIF executed), deliver Embed partner roll‑outs to GA, and demonstrate AI monetization and SPP contribution exiting FY26 .
  • Strategic framing: Management intends to outline Rule of 40 framework at Investor Day (1H CY26); durable profit trajectory plus distribution/AI catalysts support a constructive multi‑year setup .

Citations:

  • Q1 FY26 press release & 8‑K:
  • Q1 FY26 call transcript:
  • Prior quarters: Q4 FY25 PR & call: ; Q3 FY25 PR:
  • AI/Embed press releases: