Bill Com at Bank of America Conference: Navigating Growth and Challenges

On Wednesday, 04 June 2025, Bill Com Holdings Inc (NYSE:BILL) presented its strategic vision at the Bank of America Global Technology Conference 2025. The company acknowledged the challenging environment for small businesses while emphasizing its focus on innovation and efficiency. Despite slower growth metrics, BILL remains committed to balancing growth and profitability through strategic investments and expanding its distribution ecosystem.

Key Takeaways

• BILL is focused on innovation and expanding distribution channels, particularly through accountants and embedded solutions.
• The company is investing in AI-driven automation to enhance back-office operations for SMBs.
• Financial performance shows a 25% free cash flow margin and a 15% non-GAAP operating margin in Q3.
• BILL aims for a balanced AR/AP approach within 3-5 years to meet customer financial needs.
• Leadership changes reflect confidence in navigating future growth.

Financial Results

• Free cash flow margin stood at 25%.
• Q3 saw a 2% year-over-year decline in TPV per customer, with a 3% sequential increase expected in the current quarter.
• The take rate expanded by 0.6% to 16.2%, with a 60% reduction in FX volatility and losses.
• Virtual card TPV penetration remained stable at 3%.
• Spend and expense card payment volume grew by 22% in Q3.
• Improved non-GAAP operating margin from a negative 3% in Q3 2022 to 15% in the present year.

Operational Updates

• New products launched for larger customers, including procurement and mass payments.
• Enhanced payment capabilities with local transfers for international payments and advanced ACH beta.
• Reached 9,000 accountants on the platform and expanded net new adds for the Spend and Expense business.
• Strong growth in payment volume for the Divvy card business, exceeding 20%.
• Encountered some payment acceptance friction in the advertising merchant category.

Future Outlook

• Doubling down on the accountant channel in fiscal year 2025.
• Expanding partnerships with financial institutions and software companies through an embedded strategy.
• Aiming for a seamless, automated, and self-service initial BILL experience.
• Anticipating Advanced ACH to reach GA by the end of the month and scale in fiscal year 2026.
• Focusing on long-term growth with investments in agentic AI capabilities.

Q&A Highlights

• Concerns about TPV growth slowdown and potential acceleration were addressed.
• The take rate rebound in the core APAR business faces uncertainty due to international tariffs.
• Efforts to drive more automation as virtual card penetration has plateaued.
• New transaction services like Pay by Card and Instant Transfer are growing but remain small relative to overall TPV.
• The accounting firm channel accounts for approximately 50% of customer acquisitions.

For more detailed insights, please refer to the full transcript below.

Full transcript - Bank of America Global Technology Conference 2025:

Brad, Host: We are very fortunate to have John Redding here today. John is the newly appointed COO, former CFO. I assume you’re still CFO But thanks, John. It’s been great. I think we’ve had Bill at the conference ever since the IPO.

Appreciate the support and look forward to the conversation. Thank you, Brad.

John Redding, COO, BILL: Absolutely. Good to be here.

Brad, Host: So maybe we could just start with the news this week on the appointment of the new CFO and your transition to COO. I guess maybe a little bit on your thinking on the transition and why is Rohini the right person for the job and your transition plan.

John Redding, COO, BILL: Yeah, good place to start given the recent announcements. So we’re super excited to have Rohini join the leadership team at BILL. She brings great leadership capabilities, team development, growth experience, scaling payments businesses. Her most recent role as SVP and CFO of the enterprise large merchant category at PayPal speaks to the scale of our experience and where Bill is going down the road. I think it’s a great fit for us.

My role obviously shifts. The focus will be much more on our go to market capabilities, our operational execution, continue to lead, business and corporate development, for the company, in addition to, scaling our risk, capabilities with an eye towards, enhancing our credit business over time. And just generally, we’re feeling really good about the breadth and depth of the leadership team at Bill and think that speaks to how well positioned we are for the next phase of growth.

Brad, Host: Excellent, excellent. Well, look forward to getting to know Rohini and congratulations on your new role. Thank you. So John, why don’t we start with Q3, which you reported roughly a month ago. Any highlights you’d like to point out here and what has been the investor feedback since the results?

John Redding, COO, BILL: Yes. So it’s a little bit of a challenging environment that our small business customers are operating in. There’s a high degree of uncertainty that is having an impact on our small business base. And I think the highlights for the quarter are that, first, we continue to execute on our innovation agenda. We launched new products specifically for larger customers, which has been a focus of ours.

So things like procurement and multi entity and mass payments and things of that nature. We enhanced some of our existing payment capabilities to drive better traction, share of wallet gains. So local transfer for international payments is one example, and we talked about a beta offering of an advanced ACH solution, which also serves larger suppliers. So in terms of innovation, I think we’re not missing a beat there and continuing to deliver great products for small businesses and their suppliers. We also broaden our distribution ecosystem, doubling down with accountants, 9,000 accountants in our platform now, and we’re starting the next phase of our growth strategy with our embed capabilities, obviously launching announcing that Xero is now in GA availability.

That’s an important step. And then obviously, financial lens is important as well. We’re doing a good job, I think, at balancing growth and profitability, 25% free cash flow margin and some of the metrics that matter the most. We’ve had very consistent net new adds for the bill business, expanding adds for our S and E business, strong payment volume growth for our Divvy card business at north of 20%. So we feel like things are going in the right direction, notwithstanding a little bit more challenging environment that both we and our small business customers are operating in.

Brad, Host: Great. No, thanks, John. And that’s a good segue to the next question here, which is around the environment. I think the expectation heading into the quarter was core APAR TPV growth of 10% It was well, percent and it was a little bit below that at 10%. Yes.

So maybe if you could help us understand the delta there, what drove that and just what are you seeing generally in the SMB spending environment? Please.

John Redding, COO, BILL: Well, think we experience signs or signals in the data that show that small businesses are indeed reacting and adjusting to the environment that they’re seeing externally. On average, spend is stable by small businesses, but it’s not, they’re not in growth mode, and we don’t see any significant, you know, contraction either. There’s some, you know, pockets of spend categories that we’re seeing, you know, some declines in, so things like wholesale trade, real estate, payroll and PEO related third party services and construction. Those are indicators that businesses are pulling back. We also saw larger companies like the mid market and lower mid market businesses begin to pull back on some of their variable or discretionary spend, you know, perhaps being conservative or cautionary in nature.

So and then there was a few industries, one in particular that we called out that appear to be under some pressure. And the one that we talked about was nonprofits, where we serve a lot of nonprofits through our accounting firm relationships. And I think they’re facing more challenges just with the funding environment, and they’re quicker to react to what future funding gaps might look like. So we saw a little bit of a pullback in a number of transactions and things like that. So we’re monitoring closely some of the leading indicators, which tends to be how are small businesses investing in real estate or office footprints?

How are they investing in contractor and third party PEO spend, which speaks to their labor force and whatnot? As we see those spend categories start to expand, other categories usually follow and it signals that there could be an expansion mode down the road, but we’re not quite seeing that yet. Got it. Thank you.

Brad, Host: All right. Well, I guess on that same topic, TPV per customer has been a a key focus amongst investors. And, you know, in the in, you know, years past, company was in that kind of mid high teens level, you know, during the the, you know, the the the good years, know, 2021 and and 2020. And since then, we’ve seen this deceleration to more of a single digit growth level, low single digit growth level. So my question is, what could get you back to maybe high teens is not realistic, but what could drive acceleration in that?

Is there a target for that metric that you guys have in mind that you think is sustainable over the longer term? And what would be the keys to acceleration back to in that metric?

John Redding, COO, BILL: Yeah, I’d say going back a few years ago during the pandemic era, we saw really expansion in small business spending that had sort of never occurred before in recent times. So I don’t think that’s the best reference point. If we look pre pandemic, our TPV per customer growth was mid single digits, so above GDP plus inflation, but not double digits or high teens. So thinking about how we get back to those levels, because today we’re in Q3, our TPV per customer declined, I think 2% year over year. If you adjust for leap year, maybe it’s down a 05% or 1%, something like that on a normalized basis.

And then we also saw some impacts on TPV per customer, which was at 70 versus 73 a year ago, down from 76 in the December. So these are signs that, as I mentioned before, the external environment is having an impact. I think on a normalized basis going forward, once businesses are less reacting to the external environment, and they’re in more of an expansion mode, it’s reasonable to expect that we can get to that mid single digit number, maybe above. We should be growing faster than the rate of the overall economy. Because in part, we have some levers that are in our control separate from what’s happening with macro, the most important of which is the products that we offer to small businesses influence how much of a share of wallet we get of their overall spend.

We don’t influence their overall spend, but we notice things like when we deliver faster payment products, we capture more TPV from our customers because it takes from what they might otherwise do, say wires at their bank or something like that. So the combination of increasing our share of wallet, plus some expansion mode from SMBs are, I think, point to the potential for expanding from here. For the current quarter for June, we indicated that we expect about a 2% decline on a year over year basis, but 3% sequential increase in TPV per customer acknowledging that there’s still a positive seasonal impact in the June quarter that we expect to flow through to small businesses. Got it. Got it.

Brad, Host: Okay, thank you for that. And then why don’t we shift to the take rate in the core APAR business this quarter was it was a nice rebound at six tenths of a basis point quarter on quarter. Are you back to kind of a steady level of take rate expansion and monetization? And what are some of the core drivers of that? And how should we think about that going forward?

John Redding, COO, BILL: Yes. The Q3 results expanded 0.6% to 16.2% was as expected. We knew that there was a number of initiatives that we had, combined with, some seasonal impacts in that March that would lead to expansion, and it played out pretty much like we thought, on the heels of continued progress with our ad valorem payment portfolio, particularly the newer products versus some of the established products. We’ve done a very good job, I think, at reducing the impact negative impact of FX volatility and losses. We saw a 60% reduction in the March and then just that lower seasonal impact.

I think it’s a little bit early to suggest that we’re back to a normal cadence of every quarter linear growth for the current quarter. We originally expected back in August guidance that the whole second half of the fiscal year would see expansion in payment volume growth and monetization. And we’ve tempered that a little bit, suggesting that Q4 from an overall take rate standpoint would be similar to Q3. The biggest contributor to that revised view is really the potential impact on tariffs for the international payment component of our product suite, where it doesn’t impact our overall revenue or even overall international payments. But the FX component, I think there’s a bit of uncertainty there, and we’ve seen some changes in inflows by small businesses and their international suppliers.

And so I think we need to get through some of the uncertainty that exists now in order to feel more confident that some of the existing mature products plus the new products that we’re bringing to market will lead to sustained quarter to quarter expansion.

Brad, Host: Okay, understood. Thank you. Why don’t we pivot to virtual card? It has been such a nice tailwind to the business and an adoption cycle has gone well over the years. Where are we in that cycle?

And when you think about penetration levels, how would you describe it? Where we are today and where could that go going forward? Is there still more TPV expansion see in virtual card?

John Redding, COO, BILL: I think there is. So the journey has been from launch of that product to today at the end of the last fiscal year, we’re at about 3% overall TPV penetration for the virtual card product. Since then, it’s been stable. So penetration has been flattish. That’s not to say there isn’t new volume or growth, but that growth in new volume that comes from, penetrating existing suppliers more or bringing new suppliers onto the platform from our new customer acquisition has been offset somewhat by spend attrition that is driven by a heightened sense of just cost sensitivity and friction that we’ve seen in the system.

We’ve seen a little bit of that on our S and E product as well, but with virtual cards in particular, there’s definitely a sense of friction and sensitivity that’s led to minimal expansion. So what we’ve been doing in response to that is working hard to drive more automation with the product. So create more efficiency with the product that actually brings down the total cost of acceptance. Maybe the marginal price for a card payment is still relatively high, but by eliminating the manual activities, driving more direct integrations with large suppliers, working with third parties to do straight through processing and just creating better integration. We think that will be an unlock to volume growth on the virtual card product over time.

I think it’s our future monetization roadmap and the products we have will be less one dimensional, perhaps one or two dimensional than we’ve been historically, where virtual card will be a driver, but it will be one of a portfolio of products that ultimately lead to increasing ad valorem payment adoption growth. So we feel like we feel good where we’re positioned now, but there’s more cycles to go through in driving adoption and volume growth.

Brad, Host: Makes sense, makes sense. Okay, thanks for that, John. And while we’re on that topic, what are some of those other newer transaction services that you’re excited about and what should we be thinking about there? You mentioned advanced ACH is one, so maybe you can touch on that. But what what does that portfolio look like of some of these newer services that kind of collectively add up to better monetization?

John Redding, COO, BILL: MR. Yeah. So in the third quarter, mentioned the newer ad valorem portfolio driving some of that monetization expansion. So things like pay by card, which is a sense of more time to pay for, you know, for buyers, for AP customers, instant transfer, which is a real time payment product that creates much better cash flow solutions for small receivers, and then invoice financing, which is a part of our working capital portfolio. It’s the primary product that we have now, and we’re offering that also to small suppliers who have established relationships with AP customers of Bill.

Total, these products are small relative to our overall TPB, but we’re seeing really good repeat usage, we’re seeing growth in volume, and ultimately they’ll make up a bigger percentage of our overall payment volume and lead to monetization expansion going forward. Individually, none of those three that I mentioned are probably significant share of our overall payment volume versus the newer product that we talked about, Advanced ACH, that is in beta mode now. It will go GA at the end of this month, and then we’ll start to scale with suppliers in fiscal twenty six. That has the potential to be a, I think, a much bigger volume driver for us than, say, some of the other newer emerging products. It’s also ad valorem.

So, monetization will be much, much higher than, say, a flat rate payment product like a check or an ACH payment. And more importantly, it’s targeted at large suppliers who are have some experience with similar products, maybe from other providers that they work with. So we know that there’s a market there. We’re driving significant automation and efficiency with the product, and we think there’s tens of billions of dollars of existing payment volume that’s potentially addressable. Now, that won’t be an overnight growth driver, but over time that could be a material contributor to increasing overall ad valorem adoption and expanding monetization.

Wonderful. Great.

Brad, Host: Thank you. Why don’t we shift to net ads? And in this quarter you saw 4,200 net adds, which is within that range of 4,000 to 5,000 that you’ve targeted. Where are we in the adoption cycle? Is that a sustainable level?

And where is the next small business to go get? How are you thinking about the TAM and the sustainability of that 4,000 to 5,000 net adds that have been pretty consistent?

John Redding, COO, BILL: Yeah. So that’s on the bill side. I think we feel good about the progress we’ve made this year pretty consistently in that 4,000 to 5,000 range. It speaks to the fact that the product resonates with new customers, and we’re continuing to see progress there. So in the near term, I think that’s still the right range for us to be operating in.

We do have some levers though to accelerate growth and penetrate the market faster. The first of which, which is an important priority in fiscal twenty twenty five, was doubling down on the accountant channel. So working even closer with accountants to serve their customers. We’ve already started to see progress there. We had 60% growth in net new adds in from our accountant channel versus a year ago in the March, so we feel really good about that.

A little bit longer cycle, but equally important in terms of penetrating the market is our embedded strategy, which is taking what we’ve learned from working with financial institutions to software companies and making our solutions available, particularly for the small customers where it might not make as much financial or unit economic sense to go target them and bring them to our platform. Instead, we take our platform via APIs and other embedded widgets to the other companies that they’re working with from a software perspective. And I’d say there’s also some product levers that are important for us. So we’re working hard to make experience the initial exposure to bill much more seamless, much more automated and much more self-service. As we do that, we see improving conversion rates.

We see better multi product adoption. As those things happen, it gives us more flexibility to accelerate go to market investment and ultimately, you know, grow our penetration faster. And then I’d say the final piece that we’re always keeping in our sights is this cross sell and upsell, making sure that as we bring new customers in, it’s not just the number, but it’s the value of those customers. On average, they’re a little bit larger now than they were a year ago. And on average, they’re using more products than they were a year ago.

So from a revenue growth trajectory, as we look at the cohorts we’re acquiring in fiscal twenty twenty five, say, versus fiscal twenty twenty four, we feel better about the setup and how we’re positioned to grow with those customers. Maybe it takes a little bit of improvement in the macro environment to see that, but I think we’re making progress there. Wonderful.

Brad, Host: Great. Thanks, John. Maybe we could shift to the competitive environment. How would you characterize the competitive environment today? Who do you see in the sales cycle for core bill?

Has that changed over the last several years? And any observations on that?

John Redding, COO, BILL: Yeah, we haven’t seen a lot of on the ground changes. Obviously we have multiple motions in our distribution ecosystem. So accountants, as I mentioned, is the foundation of our go to market. We also do direct, you know, outbound and digital demand gen. And our customer acquisition trends are very consistent, including the types of accounting systems that our new customers use.

We haven’t seen any big shifts there. Our retention rate of customers continues to be very strong. It’s been consistent for the last several years. And so we think the product, as I mentioned a minute ago, continues to resonate with small businesses. And I think our focus is mainly doubling down on the things we do really well that are differentiated in the market, and that’s around workflow automation, helping companies go digital, collaboration, tapping into the large network that we have, and over time turning that network into delivering value on both sides of the transaction such that there’s a viral component.

Right now, we acquire very few customers from the network on a quarterly basis, but as we’re increasing the value proposition there, and you’ve heard us talk about more solutions for suppliers, that’s the network side of things, we expect to have a much more balanced customer acquisition. So I think we’re positioned really well to continue to compete and scale in the market. That’s great.

Brad, Host: And while we’re on that topic, I think accounts receivable has been another kind of component of that flywheel network effect that you’re referring to. Can you talk about that acquisition channel and some of the efforts there? Invoice2Go was an effort to build a customer experience on the receivables side.

John Redding, COO, BILL: Yeah, we have a couple hundred thousand customers approximately on the Invoice2Go solution. That continues to be somewhat of a standalone AR product with a global customer base. I think it’s less than 50% in The U. S. Or North America.

But AR is an important priority. When we talk about the network and suppliers and payment acceptance, that’s just one step removed from an accounts receivable persona. And so we’re taking learnings that we have developed from the Invoice2Go acquisition, from our other, you know, bill AR capabilities, and increasingly turning that to create value for network members and changing the way they interact with our product to be much more integrated into their AR solution. So as opposed to at the end of the AR process, maybe the cash applications or the payment receipt part moving much further upstream from that into how do they invoice customers, how do they do estimates, how they acquire customers, do contracting and things like that. We’re a ways away from that, but we think fast forwarding, say three to five years, we’re very indexed to AP today and spend.

We think over time there will be a much more balanced approach between AR and AP, and that’s what we’re investing in is create value on

Brad, Host: both sides. Excellent, excellent. Thanks John. Why don’t we pivot to the accounting firm channel? It’s been a key source of your customer acquisition over the years.

Could you elaborate on the channel? What is it comprised of? And what portion of the business is coming through that channel? And what are some of the initiatives there to continue to drive growth?

John Redding, COO, BILL: Yeah, we work with about 9,000 accounting firms. There’s about 40,000 accounting firms in The U. S, One Hundred Thousand Bookkeeping firms, so we have really good penetration but a ways to go. And more importantly, the firms that we work with, we’re not fully penetrated those firms. So often there’s a geographic decision making process with partners in charge in different geos.

So we’re continuing to acquire customers from all of our existing firms. One of the unique things and maybe not widely known about the BILL platform is that not only do we offer solutions for the end small businesses to automate their operations, but we have unique solutions for accounting firms to automate how they work with their clients. So there’s like a dual ROI process. We create value for accounting firms. It helps them be more efficient.

When they drive efficiency, they can up level the types of services and advice and insights that they provide to small businesses. So it reinforces the value proposition for accounting firms. We have direct relationships with the firms. We listen closely to the product needs. Some of the things I mentioned earlier, like procurement and multi entity and mass payments, those are applicable to accounting firms because they’re helping their more complicated or larger clients with those sorts of things.

So it’s about 50% of customers and has been really the foundation of our go to market. Got it. Great.

Brad, Host: No, thank you for that. Okay. And why don’t we shift to spend and expense, the corporate card business, 22% card payment volume in Q3. It’s down from low-30s level heading into the last fiscal year, but can you comment on some of the key growth drivers there? How has that business been affected by the macro?

And how are you thinking about the growth trajectory in that business going forward?

John Redding, COO, BILL: Yes. The twenty two percent card payment volume growth in the March, I think, is really strong. We feel good about that number because it also, comes at a time when we’ve seen some payment acceptance friction, in particular in fiscal twenty twenty five in the advertising merchant category for spend and expense, where there were some changes to card acceptance policies by a a couple of large advertisers, one in particular. So that created a little bit of a headwind, and we’re still delivering north of 20% payment volume growth. So that suggests that the product is resonating and customers are consolidating spend on the product.

In terms of growth drivers, it has a lot to do with how we target this product. So it’s larger businesses on average than the core Bill AP products. So these are mid market companies. They’re leveraging the software tools to gain more visibility and control over their spend. Sometimes they have a geographically distributed workforce, including internationally, that we’re able to help them.

And then we’re acquiring about 1,500 on average customers, 1,800 in the March, but the number of customers acquired is actually down from a couple of years ago, but the value of the cohorts that we’re acquiring is actually much larger. So we’ve directed our go to market efforts at larger businesses where, you know, they’re more financially stable. They’re easier to underwrite, which means we have better loss experience and we manage that exposure better, and ultimately we grow with them. So these larger businesses tend to grow much faster than, smaller businesses. So we saw some strength in spend across T and E and some other categories in the March.

We’re not exactly expecting that to continue in this June. We haven’t talked about FY ’26 yet, but given the near term uncertainty that exists in the market, this product category is still in its infancy. So AP is still a maturing market. Spend and expense and software automation tools around card spend is even earlier. So we know there’s a long way to go.

Brad, Host: Okay, excellent, great. Let’s see here, oh margin, wanted to get your thoughts on how you’re thinking about balancing growth and margin, what’s the philosophy there, and you know within that context what are some of the investment cycles?

John Redding, COO, BILL: Yeah, so we’ve tried to adopt a balanced approach to you know revenue growth and profitability, and I think over the last few years we’ve demonstrated that as the business has gotten larger, we proactively identified levers to create margin expansion. In the third quarter of twenty twenty two, we had, I think, a negative three percent non GAAP operating margin loss, in the most recent, you know, third quarter March, we were at 15%. So a significant progress over the course of three years, and I mentioned the free cash flow margin of 25%. So we’re committed to this balance, but at the same time, the market is large that we’re going after. It’s early in its development.

We have a lead and we think it makes sense to invest with a multi year time horizon in order to create the biggest outcomes and the most leverage and growth for the company as we look ahead three to five years. So our bias is to invest for growth. We’re going to do it in a disciplined way. But we’re focused on not getting, you know, reacting too much to the immediate cycle that we’re in. So investing through the cycles and providing continuity, and like I said, we’ll do that in a smart way.

We have levers that we think will lead to future growth beyond the current cycle. This is continued growth in ad valorem products, continued growth in penetrating the market from larger small businesses. We’re increasing the number of solutions that are in our platform to address the needs So expanding beyond just payment and transaction, you know, financial operations automation to other parts of the back office, including these credit products. So with all of these levers that we have, we feel like it makes sense to have a bias for growth right now.

That’s how we’re approaching it.

Brad, Host: Excellent. Well John we only have a couple minutes here left and I can’t end the session without talking about AI. So I wanted to ask you on that topic what is your what are your thoughts on AI? Is there an opportunity here in the agentic AI cycle for Bill in back office for SMBs?

John Redding, COO, BILL: MR. Yeah. It’s a great question. I’m glad we’re touching on it. Actually, in our last earnings call, Renee had quite a bit to say about our more recent thinking around AI, and we were actually early with machine learning and other capabilities to create automation small businesses, but the way our platform works, it’s we create the levers that the small businesses use to drive automation.

The future is going to be about agents autonomously completing tasks and doing jobs that need to be done on behalf of small businesses. We’re going to create the capabilities for our small business customers to drive agentic use autonomously or have assistance where they want control over money movement. And we just think there’s so many opportunities to revolutionize the way small businesses think about their financial operations. And so we’re we’re deep into this investment cycle. We’re prioritizing it above, say, some of our historical investments because we think we’re in a unique position given the richness of the data assets that we have.

So depth, breadth, context of customers, their suppliers, their transaction volume and all those sorts of things is really hard to replicate and that’s what we’re using in developing these agents.

Brad, Host: Super exciting. Well John, great to have you here. It was a pleasure hosting you at the conference. Thank you so much for your time and I really enjoyed the conversation. Thanks Brad.

Yeah. Thanks again.

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