Q2 2025 Earnings Summary
- Introduction of new payment solutions, including advanced ACH and virtual card enhancements, is expected to drive revenue growth. The company is beta testing its advanced ACH solution, which is receiving strong interest from suppliers handling high payment volumes, and expects to roll it out within this calendar year, believing it will have an impact on the business. ,
- Strategic investments are showing promising early results, with expectations for accelerating growth in the second half of FY 2025 and into FY 2026. The company is confident in its initiatives, seeing early success ("green shoots") in areas such as new ad valorem products (e.g., Pay By Card, Spend & Expense integration, invoice financing) and enhanced supplier relationships, which are expected to contribute to growth re-acceleration to 20% core revenue growth exiting the year. , , ,
- Expansion of distribution channels and ecosystem partnerships, particularly with accounting firms and mid-market customers, is driving increased adoption and larger deal sizes. Net new adds in the accounting channel increased 38% year-over-year, and deal sizes are 30% higher than a year ago, reflecting strong progress with mid-market customers and accounting firms. , ,
- Lower than expected monetization and take rates due to currency volatility and shifts in payment types. The company acknowledged that monetization was slightly lower than expected in Q2, impacted by factors including currency volatility causing FX losses and a mix shift towards lower monetization payment types such as check and ACH, which grew 6% quarter-over-quarter. This led to a lower overall take rate. , , ,
- Slower core revenue growth projected in Q3 and slightly reduced full-year guidance. The company guided for core revenue growth of 13% to 15% year-over-year in Q3, down from 16% growth in Q2. Additionally, the full-year core revenue guidance was slightly reduced by about $4 million at the high end, reflecting potential challenges in sustaining growth momentum. ,
- Uncertainty around the effectiveness of $45 million in targeted investments and potential impact on profitability. While the company is investing $45 million in strategic initiatives aimed at driving future growth, there is increased spending backloaded into the year, which may impact near-term operating expenses and margins. It's unclear if these investments will yield the expected returns in the near term.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +14% | The continued increase in subscription and transaction fees (driven by payment volume from SMB customers), along with higher float revenue from increased interest rates, contributed to this YoY growth. The broadening customer base and expanded go-to-market strategies also played a role ( ). |
Net Change in Cash | +184% | The large increase in net cash primarily reflects stronger operating cash flow from higher revenues, as well as favorable shifts in customer fund deposits. It was further influenced by reduced investing outflows compared to the prior period and timing of financing activities ( ). Market conditions, particularly rising interest rates, also enhanced returns on short-term investments, contributing to the surge in cash balances. |
Short-Term Debt | -75% | The significant reduction suggests active repayment or restructuring of short-term obligations, in line with the company’s focus on strengthening its balance sheet. Previously, short-term debt had been relatively stable, but the recent quarter’s actions seem aimed at reducing leverage to lower financing costs and minimize risk ( ). |
Retained Earnings | -28% | The negative balance continues to reflect accumulated losses from prior periods and the impact of share repurchases, despite recent improvements in net income. The net loss in some recent quarters also contributed to the overall deficit, although the company has shown signs of improved profitability in Q1 2025 that could moderate further declines ( ). |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Total Revenue | Q2 2025 | $355.5 million to $360.5 million | $362.55 million | Beat |
Core Revenue | Q2 2025 | $316 million to $321 million | $319.61 million (67.71+ 251.90) | Met |
Float Revenue | Q2 2025 | $39.5 million | $42.94 million | Beat |
-
Monetization Rates and FX Impact
Q: How did FX volatility affect monetization, and what are expectations ahead?
A: Management noted that Q2 monetization was slightly lower than expected due to factors like seasonality and increased FX volatility. FX losses impacted international payments monetization by 0.3 basis points below expectations. They remain confident in monetization expansion in the second half of fiscal '25, with no change in outlook. -
$45 Million Targeted Spend
Q: Are you on track with the $45 million incremental spend?
A: Management confirmed they are making good progress with the $45 million incremental spend for FY '25, with some spending backloaded into the year. They expect these investments to have a more material impact on growth rates as they get further into fiscal '25 and into fiscal '26. -
TPV per Customer Trends
Q: What are the trends in TPV per customer and volume?
A: TPV per customer is in line with expectations, with consistent overall trends. The March quarter is seasonally lower, but emphasis on larger businesses is expected to expand spend per customer over time. -
Take Rate and Supplier Acceptance
Q: How did supplier acceptance and virtual card growth perform excluding FX losses?
A: Excluding FX losses, ad valorem volume grew and accelerated versus the prior two quarters, driven by newer products like invoice financing, Pay By Card, and real-time payments. Virtual card volume was consistent with the prior quarter, with no significant growth, and similar trends in card acceptance. -
Product Development Progress
Q: Has there been a change in the product development cycle?
A: Management attributes the significant step-up in product rollouts to the benefits of scale and added leadership, leading to clarity and focus on execution. They are excited about how AI is helping drive innovation. -
Core Revenue Guidance
Q: Why was core revenue guidance slightly reduced for the full year?
A: Management reaffirmed the midpoint of core revenue guidance, adjusting the mix between Q3 and Q4. They increased Q4 and brought down Q3 slightly, resulting in a tighter range as they move through the year. -
Enhanced ACH Rollout
Q: What's the timing and interest level for enhanced ACH?
A: Enhanced ACH is now in beta, and management expects to roll it out within this calendar year. They note strong supplier interest, with some suppliers processing 5,000 payments per quarter through check or ACH. -
Treasury and Banking Products
Q: Do you plan to participate in treasury and banking products?
A: Management stated they are already in that space with their BILL Balance product, which allows customers to have a balance account and make instant payments. They aim to give customers insights to manage their cash flow, effectively democratizing treasury functions. -
Reaccelerating Core Revenue Growth
Q: Are you still confident in reaccelerating core revenue growth to 20%?
A: Management remains excited and confident about reaching the 20% core revenue growth target exiting the year. They cited confidence in their initiatives and progress in investment areas. -
Caution in New Guidance
Q: Any increased caution in your new guidance due to macro factors?
A: Management stated there's no real change in philosophy or view, but they are watching the macro environment more closely due to more moving parts. They didn't explicitly factor in macro considerations into guidance but acknowledged it's top of mind. -
Growth Initiatives and Monetization Improvement
Q: Which growth initiatives will drive second-half monetization improvement?
A: Management highlighted multiple initiatives, including working with suppliers on products like virtual cards and advanced ACH, and newer ad valorem products like Pay By Card and Spend & Expense. They have initiatives around each and are seeing progress.