Bill.com Holdings, Inc. (BILL) Earnings

Management highlights

### AI Capability Development and Adoption - Over 175,000 businesses now use Bill's AI agents across S&E and AP workflows. W9 agent usage tripled sequentially to over 40,000, collecting over 240,000 validated W9s automatically without customer effort. - The recently launched Invoice Coding Agent has been adopted by over 60,000 companies, eliminating 90% of invoice coding steps and cutting AP processing time by nearly half. - The generally available touchless transactions agent has automated over 7 million transaction fields for 30,000 customers, and the pay-for-you agent completed over 30,000 fully automated card transactions in Q4. - An AI-powered underwriting model for invoice financing improved expected loss rates by over 50% while driving 30% year-over-year growth in invoice financing volume and revenue, leveraging Bill's proprietary transaction network data. - Customer spend on AI-powered Bill features grew over 50% year-over-year in Q4, and TPV from AI-first customers nearly doubled from Q3 to Q4. ### Organizational Restructuring - Bill completed major organizational changes in Q4 to become an AI-native company, simplifying hierarchy, moving from a hybrid general manager structure to a functional model to speed execution and accountability. - New leadership appointments include Jonathan Leaf as Chief Revenue Officer (leading all go-to-market activities), Mike Cieri promoted to Chief Product Officer (leading end-to-end platform experience), and founding engineer Eric Chan appointed as Chief Technology Officer. ### 2027 Strategic Priorities 1. **Deliver AI-native customer experiences**: Bill is pivoting to an agentic platform that automates financial operations by default for its ~500,000 total customers, leveraging its 9+ million member network, proprietary data, and SMB domain expertise to build trusted, secure AI solutions tailored to small and mid-sized businesses. 2. **Acquire higher ROI customers**: The entire sales team is now trained to sell Bill as a single integrated platform rather than individual products, after 35% year-over-year growth in joint AP and S&E customers that delivered 111% net revenue retention. The firm is refocusing its bank channel strategy to align with the scalable, standardized Embed 2.0 embedded finance strategy, exiting custom 1.0 solutions for some existing partners. Embed 2.0 partner TPV and units tripled sequentially from Q3 to Q4. 3. **Expand platform value and monetization**: The firm is prioritizing adoption of Supplier Payments Plus (SPP), a new platform extension for large suppliers. Early SPP adoption was slower than expected due to Bill's inexperience with the required enterprise sales motion, but the firm has built out this go-to-market capability and now sees accelerating deal momentum, with committed SPP TPV reaching almost $800 million across early adopter clients. ### Financial Framework Update - Bill's long-term target is to deliver low double-digit to mid-teens revenue growth with expanding operating margins, and to exceed the Rule of 40 (defined as net core revenue growth plus non-GAAP operating margin) by the end of FY27. The firm already achieved Rule of 40 status at the end of Q4 FY26, and targets meaningful GAAP profitability in FY27. ### Capital Allocation - Bill repurchased $300 million of common stock in Q4 FY26 at an average price of $35.31 per share. Since Q3 FY26, the firm has retired ~15 million shares, equal to nearly 14% of outstanding common stock, with $400 million remaining on the $1 billion repurchase authorization announced in May 2026.

Guidance

- **Accounting Presentation Change**: Starting in Q1 FY27, Bill will present revenue net of rewards expense (with no impact on total operating or net income) to improve peer comparability and focus on profitable unit economics. All future guidance will be reported on this net basis. - **Q1 FY27 Guidance (historical presentation basis)**: Total revenue is expected to be $432.5 million to $442.5 million, with core revenue of $398 million to $408 million, representing 11% to 14% year-over-year core revenue growth. Non-GAAP operating income is expected to be $112.5 million to $117.5 million, with non-GAAP EPS of $0.96 to $1.00 based on a 102 million fully diluted share count. Key assumptions include: AP/AR TPV growth in line with FY26 levels, S&E TPV growth of mid-teens year-over-year, flat AP/AR take rate relative to Q4, and S&E take rate of ~260 basis points. - **Full Year FY27 Guidance (historical presentation basis)**: Total revenue is expected to be $1.807 billion to $1.857 billion (9% to 12% year-over-year growth), with core revenue of $1.669 billion to $1.719 billion (11% to 14% year-over-year growth). Guidance includes 3 percentage points of year-over-year growth headwind: 2 points from S&E industry dynamics and 1 point from the bank channel strategic shift. Q2 FY27 is expected to be the growth trough for the year due to a difficult year-over-year comparison. - **Full Year FY27 Bottom Line Guidance**: Non-GAAP operating income is expected to be $421 million to $451 million, for a non-GAAP operating margin of 23% to 24%, representing ~590 basis points of ex-float operating margin expansion at the midpoint. Non-GAAP EPS is expected to be $3.56 to $3.79, representing 33% year-over-year growth, based on a 104 million fully diluted share count that includes the impact of planned share repurchases. Bill expects to generate well over $125 million in GAAP net income for the full year, with stock-based compensation expected to equal 10% of total revenue, down from 14% in FY26.

Segment performance

Bill delivered $400.5 million in total core revenue in Q4 FY26, growing 16% year-over-year. The firm has two core product segments: 1. **AP/AR**: Core revenue grew 10% year-over-year, accounting for approximately 53.7% of total core revenue. Transaction revenue for AP/AR reached $131 million, up 10% year-over-year. Subscription ARPU increased 1.4% year-over-year, and mid-market core ARPU from newly acquired customer cohorts grew 31% year-over-year. Q4 AP/AR TPV exceeded expectations by 300 basis points, with same-store TPV growth accelerating 2 percentage points sequentially to 6% year-over-year, the highest rate since Q1 FY23. The AP/AR take rate was 16.0 basis points, a 0.5 basis point contraction driven by higher-than-expected ACH volume from new large customers. 2. **Spend and Expense (S&E)**: Q4 revenue totaled $185 million, growing 23% year-over-year, accounting for approximately 46.3% of total core revenue. Card payment volume grew 20% year-over-year, driven by growth in travel, entertainment, and health services that offset softness in advertising spend. The S&E take rate was 261 basis points, supported by a favorable mix of high-interchange industry verticals. The reward rate was 133 basis points, up 3 basis points sequentially.

Risks & headwinds

- Organizational restructuring from the shift to a single platform sales model created near-term disruption, leading to lower-than-trend net new customer additions in Q4 FY26, with near-term revenue headwinds from sales team training and ramp. - There is ongoing dynamic uncertainty around card acceptance for a small number of large S&E merchants, creating near-term S&E volume growth headwinds. - The strategic shift to standardized Embed 2.0 embedded solutions will result in the exit of some existing custom bank channel partnerships, creating a 1 percentage point headwind to FY27 growth. - Higher than expected volume in high-reward S&E customer tiers created margin pressure, leading Bill to renegotiate these commercial contracts for FY27. - The enterprise sales motion required for SPP is new to Bill, and early adoption missed initial expectations, though the firm has now adjusted its go-to-market approach.

Analyst Q&A

• Q: Restructuring came in with a higher-than-expected charge. Where did headcount reduction, savings, and reinvestment land relative to prior plans, and when will savings be realized in FY27? /

  A: Restructuring went exactly as planned. The firm hit its initial gross savings target of ~$110 million, and is anchoring reinvestment into the business at $30 million, putting net annual savings at ~$80 million, in line with prior guidance ranges.

• Q: With the new CRO and go-to-market organizational changes, what key learnings have you had from employees, customers, and partners? /

  A: The key learning is that customers prefer a full, unified platform experience instead of individual point products for financial operations. The organizational changes aligned product and go-to-market teams around selling the full integrated AP/AR and S&E platform, which already drove 35% year-over-year growth in multi-product customers. This unified approach leverages Bill's unique network and proprietary data advantage to deliver value no other competitor can offer at scale, including new products like SPP, invoice financing, and Bill Cash. Early adoption of Bill Cash is already bringing previously offline spend onto the platform.

• Q: Now that you have concrete AI adoption data, what is your AI monetization strategy going forward? /

  A: First, AI will drive better customer conversion and retention in the first 90 days, growing the overall customer base. Looking forward, the firm will shift strategically to new pricing models: moving from per-seat pricing to platform-based fees that reflect the value of AI capabilities, plus consumption-based usage fees for AI agents. AI agents will be grouped into different subscription tiers based on the value they deliver to customers, shifting customers from a do-it-yourself to a do-it-for-me operating model.

• Q: Q4 AP/AR TPV outperformed expectations. What drove this upside, and what is driving the recent acceleration in subscription ARPU growth? /

  A: The upside was driven primarily by strong growth in ACH volumes from the mid-market customer segment, particularly in construction and manufacturing verticals. Mid-market customers have higher ARPU and TPV than average customers, though they also have lower average take rates, which modestly compressed the overall AP/AR take rate. Higher TPV also delivers additional float income, which drove a $3 million beat in Q4 float revenue. For subscription ARPU, the recent sequential acceleration after several quarters of stagnation is driven by a shift up-market to larger customers and tactical pricing changes, a trend that management expects to continue as it rolls out new value-based pricing frameworks.

• Q: What is the nature of the card acceptance headwinds impacting S&E growth, and how long will they last? /

  A: The headwind is concentrated in a small number of large volume customers, and the impact on net income is much smaller than the impact on top-line growth because these customers are also the highest reward tier customers, which have lower margin. The impact is expected to be transitory, with growth expected to reaccelerate after the near-term disruption.