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Deutsche Bank has reiterated its Buy rating on Bill.com Holdings Inc. (NYSE: NYSE:BILL) with a steady price target of $75.00. Bill.com's fourth-quarter results surpassed expectations, showcasing a year-over-year revenue growth of approximately 16%, a 9% year-over-year increase in organic total payment volume (TPV), and adjusted earnings per share (EPS) of $0.57.
The company's organic take rate, a significant metric due to concerns over supplier preference changes impacting monetization, exceeded forecasts and showed a marked improvement from the previous quarter, excluding a one-time benefit in that period. Bill.com is expected to see its take rate climb in the second half of 2025 and further expand in fiscal year 2026.
Bill.com has been successfully gaining market share through new client acquisitions and a resurgence in cross-selling. In response to this growth, the company plans to invest an additional approximately $45 million to further increase its market share. Deutsche Bank views Bill.com's fiscal year 2025 guidance as cautious, suggesting that any economic recovery could provide additional potential upside.
Due to the updated outlook, Deutsche Bank has adjusted its forecast for Bill.com's adjusted EPS, reducing the estimates for fiscal years 2025 and 2026 by $0.76 and $0.07, respectively, to $1.49 and $2.47. The firm has also introduced an adjusted EPS estimate of $2.57 for fiscal year 2027.
In other recent news, Bill.com's fourth-quarter financial results outperformed consensus revenue estimates, primarily due to a surge in transaction revenue. However, Mizuho and Seaport Global Securities have reduced their price targets on the company's stock, despite maintaining neutral and buy ratings respectively.
The adjustment comes in response to Bill.com's net revenue retention rate experiencing a decline and the company's guidance for fiscal year 2025 falling short of market consensus. The company plans to invest around $45 million in fiscal year 2025 to reaccelerate growth, and has announced a new $300 million share buyback program.
Recently, Bill.com also revealed an expansion agreement with Bank of America and a strategic partnership with Xero to enhance its platform. Analysts from Needham maintain a Buy rating for the company, highlighting strong demand and growth prospects.
InvestingPro Insights
Bill.com Holdings Inc. (NYSE: BILL) has seen its market dynamics shift, as evidenced by real-time data from InvestingPro. With a market capitalization of $5.82 billion, the company's aggressive share buyback strategy, as highlighted in one of the InvestingPro Tips, signals confidence from management in the company's value. Additionally, Bill.com's strong gross profit margin of 85.3% in the last twelve months underscores its impressive ability to retain a significant portion of its revenue after accounting for the cost of goods sold.
While the company does not pay dividends, indicating a focus on reinvesting into growth, its stock price has experienced significant volatility, with a 16.66% return over the last month, yet a 53.15% decline over the past year. This aligns with another InvestingPro Tip that points to the stock's price movements being quite volatile. Despite this, analysts predict the company will be profitable this year, which may provide a compelling narrative for potential investors.
For those interested in deeper analysis, InvestingPro provides additional insights with 11 more InvestingPro Tips available, offering a comprehensive look at the company's financial health and market position. To explore these insights, investors can visit the InvestingPro platform.
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