BILL Q1 Earnings Call Highlights

Key Points

• Revenue and profitability strengthened: Fiscal Q1 core revenue rose 14% to $316.4 million, while non-GAAP operating margin climbed to 39% and non-GAAP net income increased 70% to $119.1 million. BILL raised its full-year GAAP profit outlook to more than $180 million.
• Full-year outlook calls for continued growth: BILL expects core revenue of $1.28 billion to $1.31 billion, up 11% to 14%, and non-GAAP EPS of $3.99 to $4.15. It cautioned that Q1’s lower-than-planned spending is not a new baseline as hiring and marketing ramp up.
• AI and payments are central to its strategy: BILL introduced five AI capabilities, including a risk tool that flagged more than $100 million in unusual or mistaken payments during its first six weeks. Same-store payment volume growth reached 7%, its strongest rate since fiscal Q1 2023, and the company repurchased about $300 million of stock.

BILL NYSE: BILL reported 14% growth in core revenue and a sharp increase in profitability in its fiscal 2027 first quarter, as the financial operations software company continued a restructuring aimed at becoming an AI-native business.

Core revenue rose to $316.4 million, while non-GAAP operating margin reached 39%, up 17 percentage points from a year earlier. GAAP net income was $60 million, and non-GAAP net income increased 70% year over year to $119.1 million.

Chief Financial Officer Rohini Jain said BILL met or exceeded its guidance ranges on all key metrics in the first full quarter after the restructuring. The company raised its full-year GAAP profit outlook to more than $180 million.

Profitability Gains and Spending Plans

Jain attributed the quarterly profitability outperformance to stronger revenue, lower fraud and credit losses, and a slower-than-expected ramp in planned spending. The company beat its operating income guidance by approximately $22 million, about half of which came from operating expenses, she said.

Jain cautioned analysts against treating first-quarter expenses as a new baseline. BILL plans to fill some roles after cutting deeper in certain areas and increase marketing for its product releases. She also expects normal business costs, including compensation, software and cloud expenses, to rise during the year.

The CFO said fraud and credit losses were roughly $2 million better than expected in the quarter. Incoming fraud pressure continues to increase, she said, but BILL has improved its ability to prevent losses through its risk controls and use of AI.

For the full fiscal year, BILL expects core revenue of $1.28 billion to $1.31 billion, representing growth of 11% to 14%. It forecast non-GAAP operating income of $466 million to $486 million and non-GAAP earnings per share of $3.99 to $4.15. The company expects total revenue of $1.4 billion to $1.5 billion.

For the fiscal second quarter, BILL projected core revenue of $315.5 million to $325.5 million, or growth of 10% to 13%, and non-GAAP earnings per share of $0.97 to $1.01. Chief Executive Officer and Founder René Lacerte said the outlook reflects a difficult comparison with the prior-year holiday season and continuing adjustments to the company’s sales organization.

Payments Growth and Customer Spending

Accounts payable and receivable core revenue grew 12% in the first quarter. Transaction revenue in that business rose 12% to $137.7 million, and BILL added approximately 3,000 net new customers, at the high end of its guidance range.

Payment volume on a same-store sales basis rose 7% year over year, its highest growth rate since the first quarter of fiscal 2023. Jain said manufacturing, administrative services and information technology were areas of strength, while wholesale trade and healthcare saw lower spending. BILL expects same-store sales growth of a little more than 5% over the remainder of the fiscal year.

Spend & Expense net revenue rose 22% to $92 million, outpacing 12% growth in card payment volume. Its rewards rate declined 5 basis points sequentially to 128 basis points as contract negotiations began to take effect.

The company is now reporting revenue net of rewards, a change that also applies retrospectively to prior quarterly results, Jain said.

Volume in BILL’s ad valorem portfolio grew in the high teens, with growth accelerating by 7 percentage points sequentially. Lacerte credited stronger virtual card performance to payment routing and straight-through processing, which helps suppliers receive card payments with less manual work.

AI Products and Sales Strategy

Lacerte highlighted five new AI capabilities launched during the quarter, including a Risk Intelligence agent that flags invoices with unusual amounts for review. In its first six weeks, the tool flagged more than $100 million in unusual or mistaken payments, he said. BILL estimates the tool saved customers more than 1,800 days of manual work.

Other releases include a hub for controlling AI tools, AI-assisted onboarding and a beta version of Chat with BILL that lets finance teams ask questions about their operations in plain language. Lacerte said more than 200,000 businesses have used BILL’s agents across its products.

BILL also launched a pilot with Visa and Billtrust in which a payment agent uses tokenized credentials to complete previously approved payments in supplier portals. The agent does not make payment decisions, Lacerte said.

The company is training its sales team to sell its products as a single platform and plans to roll out further incentive changes in the fiscal third quarter. Customers using both accounts payable and Spend & Expense products increased 30% year over year in the first quarter.

During the quarter, BILL repurchased approximately $300 million of stock at an average price of $44.18 per share. Jain said the company expects to execute its remaining repurchase authorization within its established parameters.

About BILL (NYSE:BILL)

BILL Holdings, Inc provides financial operations software for small and midsize businesses, accountants and financial institutions. Its cloud-based platform is designed to automate and simplify back-office processes, including accounts payable, accounts receivable, expense management, budgeting and payments.

The company's offerings enable businesses to receive and pay bills, send invoices, manage expenses, establish spending controls and connect financial workflows with accounting systems.

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