BILL Q3 2025: Emerging Payment Volumes Drive Take Rate Gain
- Emerging Payment Products: The Q&A highlighted strong volume growth in emerging ad valorem products (including Instant Transfer, Pay By Card, Invoice Financing, and AR payments), indicating robust monetization potential for the company’s payment portfolio.
- Operational Efficiency: Lower FX losses combined with favorable seasonal factors were cited as key drivers of the Q3 take rate expansion, demonstrating management’s effective cost control measures.
- Positive Early Feedback on New Modalities: Early constructive readings on new payment methods such as advanced ACH and enhanced invoice financing point to promising adoption and potential revenue expansion for future fiscal periods.
- No Q&A content provided: The available transcripts only include opening remarks and prepared statements. The Q&A section, which might provide bear case insights, is not included in the documents available.
- Absence of direct bear case arguments: Without explicit questions or challenges from analysts in a Q&A section, we cannot definitively extract any additional bear case arguments solely from the transcript provided.
Metric | YoY Change | Reason |
---|---|---|
Total Revenue | Increased 11% YoY (from $323.03M to $358.22M) | Total Revenue improved by 11% YoY due to stronger performance in core areas like subscription and transaction fees as well as enhanced platform offerings that built on previous quarter growth. This incremental increase from prior periods indicates that sustained investments in product integration and customer acquisition continued to pay off. |
Transaction Fees | Increased 17% YoY (from $215.71M to $252.10M) | Transaction Fees rose by 17% YoY driven by increased Total Payment Volume and higher transaction counts, reflecting heightened adoption of advanced payment solutions that were also highlighted in earlier quarters. The jump from $215.71M to $252.10M signals that both market and customer-level growth trends are compounding previous gains in the transaction segment. |
Interest on Funds | Declined 9% YoY (from $41.73M to $37.92M) | Interest on Funds fell by about 9% YoY likely due to a combination of lower float balances and changing market interest rates compared to Q3 2024. This decrease mirrors broader market conditions that impacted prior float revenue, suggesting external macroeconomic trends have had a persistent effect. |
Operating Loss | Widened (from $(22.22)M to $(28.95)M) | Operating Loss expanded by roughly 30% YoY as the cost pressures increased, partly due to higher incremental operating expenses compared to Q3 2024. This worsening loss, from $(22.22)M to $(28.95)M, reflects challenges in scaling operations and absorbing additional costs despite revenue gains, echoing similar cost challenges seen in previous periods. |
Net Income | Swung from a profit of $7.60M to a loss of $(11.59)M | Net Income reversed sharply, moving from a positive $7.60M to a negative $(11.59)M YoY, influenced by the expanded operating loss and the impact of non-operating adjustments compared to Q3 2024. The net deterioration indicates that while revenue growth was positive, increased costs and potential market-driven charges (e.g., FX impacts or derivative losses) eroded profitability, building on issues observed in earlier periods. |
Metric | Period | Previous Guidance | Current Guidance | Change |
---|---|---|---|---|
Core Revenue | Q3 2025 | $317.5 million to $322.5 million (13% to 15% year-over-year growth) | no guidance provided | no current guidance |
Total Revenue | Q3 2025 | $352.5 million to $357.5 million | no guidance provided | no current guidance |
Float Revenue | Q3 2025 | $35 million (assumes a yield on FBO funds of approximately 390 basis points) | no guidance provided | no current guidance |
Non-GAAP Operating Income | Q3 2025 | $38 million to $43 million | no guidance provided | no current guidance |
Non-GAAP Net Income | Q3 2025 | $42 million to $46 million | no guidance provided | no current guidance |
Non-GAAP Net Income Per Diluted Share | Q3 2025 | $0.35 to $0.38 (based on 119.5 million diluted weighted average shares outstanding) | no guidance provided | no current guidance |
Core Revenue | FY 2025 | $1.297 billion to $1.312 billion (16% to 17% year-over-year growth) | no guidance provided | no current guidance |
Total Revenue | FY 2025 | $1.454 billion to $1.469 billion | no guidance provided | no current guidance |
Float Revenue | FY 2025 | Approximately $157 million (assumes a yield on FBO funds of approximately 430 basis points and an exit Fed funds rate of 425 basis points as of June 2025) | no guidance provided | no current guidance |
Non-GAAP Operating Income | FY 2025 | $207.5 million to $222.5 million | no guidance provided | no current guidance |
Non-GAAP Net Income | FY 2025 | $216 million to $228 million | no guidance provided | no current guidance |
Non-GAAP Net Income Per Diluted Share | FY 2025 | $1.87 to $1.97 (based on 115.5 million diluted weighted average shares outstanding) | no guidance provided | no current guidance |
Stock-Based Compensation Expenses | FY 2025 | Expected to be less than 20% of total revenue | no guidance provided | no current guidance |
Metric | Period | Guidance | Actual | Performance |
---|---|---|---|---|
Core Revenue | Q3 2025 | $317.5 million to $322.5 million | $320.298 million | Met |
Total Revenue | Q3 2025 | $352.5 million to $357.5 million | $358.217 million | Beat |
Float Revenue | Q3 2025 | $35 million | $37.919 million | Beat |
Topic | Previous Mentions | Current Period | Trend |
---|---|---|---|
Emerging Payment Products & New Payment Modalities | Q2 2025 calls emphasized virtual card enhancements, advanced ACH beta testing, and newer ad valorem products. Q1 2025 highlighted real‑time funding options, international payment local transfers, invoice financing and risk management. Q4 2024 focused on card payments and product improvements. | Q3 2025 discussions centered on strong volume growth in ad valorem products, enhanced instant transfer and card portfolio capabilities, and a positive outlook on ROI. | Recurring theme with evolving sentiment: The focus has consistently been on innovating payment products, with earlier phases in beta now maturing into robust adoption and strong volume growth. |
Revenue Growth & Monetization Dynamics | Q2 2025 and Q1 2025 featured strong core and integrated platform revenue growth with notable ad valorem payment contributions; Q4 2024 reported 16% year‑over‑year revenue increases and scaling of existing offerings. | Q3 2025 reported 14% year‑over‑year core revenue growth, 21% growth on Spend & Expense revenue, and improved monetization dynamics with strategic take rate expansion. | Steady strength with cautious nuances: Consistently healthy revenue growth and monetization are reported, with recent commentary acknowledging seasonality and carefully monitoring TPV trends. |
Strategic Investments & Execution Risks | Q2 2025 described strategic priorities around virtual card enhancements, advanced ACH, and embedded finance along with risks from product transitions. Q1 2025 noted targeted investments to accelerate market opportunities and hiring delays. Q4 2024 emphasized a $45 million planned investment, share repurchase and balance between growth and near‑term profitability. | Q3 2025 detailed significant investments in AI strategy, international payment enhancements, new channel distributions, coupled with execution risks from macroeconomic uncertainty and shifting SMB behavior. | Increasing focus on innovation amid challenges: The company continues to invest strategically—now with an added emphasis on AI and international capabilities—while acknowledging persistent execution risks in a turbulent macro environment. |
Ecosystem Partnerships & Channel Expansion | Q2 2025 and Q1 2025 stressed robust partnerships with banks, thousands of accounting firms, and an expansive network (over 7 million members), including a key beta with Xero; Q4 2024 had no discussion on this topic. | Q3 2025 highlighted strengthened accounting channel performance, new embed platform launches, and expanded financial institution partnerships driving broader channel expansion. | Growing emphasis on collaborations: While consistently a focus, recent discussions show increased momentum on deepening ecosystem partnerships and launching new distribution channels, even as previous period Q4 lacked mention. |
Customer Acquisition & Spending Trends | Q2 2025 and Q1 2025 reported significant net new customer additions, targeting of larger and mid‑market customers with strong acquisition numbers and increased card spend; Q4 2024 showcased robust joint customer growth and solid retention metrics. | Q3 2025 noted the acquisition of 4,200 net new AP/AR customers and 1,800 new spending businesses, though spending trends show moderated TPV per customer with a modest 3% increase in card spend. | Consistent acquisition with cautious spend: While customer acquisition remains robust, recent trends reveal a moderation in spending per customer likely due to heightened economic caution, with a shift toward increased card usage. |
FX Impact & Currency Volatility | Q2 2025 noted FX volatility negatively impacted monetization by about 0.3 basis points, while Q1 2025 introduced international local transfers to mitigate FX volatility; Q4 2024 had no coverage on FX issues. | Q3 2025 reported a 65% reduction in FX losses via improved hedging, increased FX trading frequency, and progressive international payment product enhancements. | Notable improvement: The topic has been consistently addressed with early caution in Q1–Q2 2025 and significant mitigation improvements reported in Q3 2025, reflecting enhanced strategic focus on controlling currency risks. |
Operational Efficiency & Cost Control | Q2 2025 emphasized strong margin expansion, efficient growth through cost management and share buybacks; Q1 2025 cited robust operating income margins and operating leverage; Q4 2024 detailed decisive cost controls, share repurchases, and improved non‑GAAP margins. | Q3 2025 maintained a 15% non‑GAAP operating margin, 44% year‑over‑year free cash flow growth, reduced stock‑based comp expenses, and integration of AI to further drive operating efficiencies. | Stable and improving: Operational efficiency and cost control remain a core focus with continued improvements in margins and cash flow, now enhanced further by AI integration and disciplined expense management. |
Economic Uncertainty & External Environment | Q2 2025 and Q1 2025 acknowledged macroeconomic uncertainties including fiscal policy shifts and SMB caution; Q4 2024 detailed adaptation to cyclical headwinds and stable TPV amidst uncertainty. | Q3 2025 highlighted significant SMB uncertainty reminiscent of early COVID‐like conditions, resulting in moderated spend and fewer transactions, while noting challenges from evolving trade policies and FX risks. | Consistently cautious: The uncertainty remains a persistent external factor affecting SMB behavior; the company continues a prudent outlook while reinforcing its platform’s resilience, though the environment remains challenging. |
Legacy Emphasis on Customer Retention Metrics | Q4 2024 discussed customer retention through dollar‑based net revenue retention (NRR) at 96%, increased joint customer adoption, and integrated platform benefits driving low attrition. | Q3 2025 did not include any discussion of legacy customer retention metrics. | Shift in focus: Whereas previous periods (Q4 2024) emphasized retention metrics, recent discussions have moved away from this topic, indicating a potential strategic shift in focus away from legacy retention emphasis. |
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Price Increase Impact
Q: Impact of ACH and check fee hike on take rate?
A: Management raised ACH fees from $0.49 to $0.59, expecting these pricing changes to boost ARPU modestly, with most benefits to be seen in fiscal 2026 rather than immediately in Q3. -
Take Rate Sustainability
Q: Will AP/AR take rate remain steady into Q4?
A: Management expects Q4 take rates to mirror Q3 levels, noting caution due to muted discretionary spending but remaining confident in sustaining monetization into FY '26. -
Take Rate Decomposition
Q: What drove Q3 take rate expansion?
A: The expansion was driven by stronger volume in emerging ad valorem products, lower FX losses, and a seasonality effect that provided early positive signals for FY '26 monetization. -
Cross-Border Impact
Q: How are tariffs affecting cross-border revenue?
A: Management indicated that most international transactions are for services, with little shift to local currencies. Product enhancements like local transfers have increased wallet share while FX losses were significantly cut. -
Investment Confidence
Q: Has investment return expectation improved after 90 days?
A: Management remains upbeat, citing strong execution and product adoption that reinforce their anticipated ROI and support continued take rate expansion. -
Expenditure Trends
Q: What spending trends are observed in April?
A: They observed fewer transactions and modestly lower discretionary spend amid macro uncertainty, though overall fundamentals remain healthy for SMB customers. -
Pricing Strategy
Q: How will new platform capabilities affect pricing?
A: Management is considering a holistic update to pricing and packaging to capture the enhanced product value, as evidenced by recent adjustments in transactional pricing. -
Accountants Cross-Sell
Q: Does integration boost cross-sell among accountants?
A: They noted strong adoption by over 9,000 accounting firms that are leveraging the integrated solution to expand cross-selling within their advisory services. -
Advanced ACH
Q: What is unique about the advanced ACH offering?
A: By utilizing its vast proprietary data and high payment volume, management is simplifying ACH processes to enhance supplier engagement, with promising beta feedback on its future monetization potential. -
AI Deployment
Q: How will AI agents enhance platform usage?
A: AI agents are expected to streamline processes like payables and receivables, freeing SMBs from routine tasks and likely increasing both transaction volume and wallet share over time. -
Spend Mix
Q: What changes are noted in spend mix trends?
A: There is robust card spend growth in travel, entertainment, and retail, though management remains cautious on overall discretionary spending amid ongoing macro uncertainties.
Research analysts covering BILL Holdings.