Q4 2021 Bill.com Holdings Inc Earnings Call
To prove incorrect actual results could differ materially from those expressed or implied by our forward looking statements.
Our discussion of the risk factors associated with our forward looking statements. Please refer to the text in the Companys press release issued today and to our periodic reports filed with the SEC, including our most recent Andrew.
<unk> report on Form 10-K, and quarterly report on Form 10-Q filed with the SEC and available on the Investor Relations section of our website, we disclaim any obligation to update any forward looking statements.
On today's call, we will refer to both GAAP and non-GAAP financial measures the non revenue financial figures discussed.
Annual re are non-GAAP unless stated that the measure is a GAAP number. Please refer to today's press release for the reconciliation of GAAP to non-GAAP financial performance and additional disclosures regarding these measures. In addition, our acquisition of <unk> closed on June one and therefore, our reported fiscal fourth quarter results include one.
One month of <unk> results at times. During this call, we will discuss organic or stand alone results, which exclude <unk> to help listeners understand our organic performance now I will turn the call over to Renee Renee.
Thank you Darrin and good afternoon, everyone. Thank you for joining us today.
That all of you.
And your families are in good health and doing well and have been able to enjoy reconnecting with family and friends. This summer.
I'm incredibly proud of our accomplishments this past fiscal year, we helped F&B is across the country digitally transform their financial operations and adapt quickly to the remote work environment brought on by the pandemic.
With our powerful platform our customer.
Customers and network members were able to simplify and automate their operations get paid faster and better manage their cash flow.
We expanded our footprint enhancing our go to market capabilities. We also acquired <unk> a leader in spend management held businesses better control their spend to budgeting tools expense management software and smart corporate cards.
In fiscal 2021, Vodacom helped more than 120000 customers and $3.2 million network members automate their financial operations and made it even easier for them to connect and do business and.
In the fourth quarter, our customers completed $42 billion in PPV on our platform, reflecting the annualized run rate of nearly 170 billion.
Our customers and network members increasingly adopted our <unk> payment offerings, which enables them to get paid faster and make payments more conveniently.
By helping our customers and network membership fee, we were able to drive strong revenue growth in the fourth quarter, our organic core revenue growth was 73% year over year and for the full fiscal year organic core revenue growth was 50.
53%.
Our revenue trajectory accelerated during the year with strong adoption of our platform among small midsize and mid market firms increasingly businesses are turning to build our com as the mission critical platform that runs their back office financial operations.
Over the last several quarters, we have discussed our strategy to enhance our platform.
With innovative payment solutions.
And our go to market ecosystem and enter adjacent categories.
Succeeding in each of these areas brings us closer to realizing our vision of being the one stop shop for Smbs to manage their financial operations.
In fiscal 2021, we enhanced our E payment collection by further strengthening our virtual card cross border in instant.
Transfer offerings.
We drove adoption of these <unk> payment offerings across our customer network members through in product marketing seamless user experiences and supplier enablement initiatives.
As a result E payments in our organic business represented 65% of our total number of transactions in the fourth quarter compared to 59% a year ago.
Continuous innovation on payment offerings is core to our vision and has enabled us to continue to deliver more and more value to our customers.
This past year, we also expanded our diverse go to market ecosystem with additional strategic partnerships. We now have relationships with six of the top 10 financial institutions in the U S and serve 85 of the top 100 accounting.
And firms in the country and the Bank channel, we launched with Wells Fargo, and Keybank and the accounting channel, we expanded our offering into wealth management made it easier for accounting firms to onboard customers faster and recently signed KPMG spark as a strategic partner joining price Waterhouse Coopers insights officer as our second top four accounting.
Early in fiscal 2021, we began our inorganic growth journey by identifying growth and product priorities.
Concurrently building, our M&A muscles, so that we can efficiently identify purchased and integrate acquired companies.
These foundational elements in place allowed us to identify performed diligence and closing <unk>, our first acquisition within the fiscal.
Full year.
If he has built a sophisticated software solution that combines budgeting and expense management tools with smart corporate cards, our customers have been asking for this type of solution and <unk> spending businesses have also been asking for our bill pay solution.
We've been working with the <unk> team for about 90 days now and our belief in the team and division of what we can build together.
They're only gets stronger.
When we are fully integrated we will provide smbs with one solution on one platform for all of their <unk> spend.
I'll now turn the call over to Blake Marie <unk>, co founder and CEO to share more about duty.
Thank you Rene on behalf of the entire <unk> team I'd like to say how excited we are to be a part of the buildup.
Dot com now that we've had a chance to get under the hood of each other's businesses were more excited than ever about what we can do for smbs since the close we've been developing our joint product roadmap and the integration plan, enabling our sales teams to cross sell our solution and training our customer support teams to seamlessly helps shared users of bill Dot com and <unk>.
Our teams Smbs and strategic partners have been very excited about what our combined solution can do for them we've.
We've talked to many long time built dot com customers, who expressed excitement about rolling out <unk> for example, Nicolette Borlaug Mircea marketing director at turnover <unk> said, we love <unk> because it allows us to give our team at <unk>.
<unk> without too much risk due to each cards defined spending limits.
It takes the guesswork out of expense management, no longer sifting through monthly expense reports and submitted receipts as our geographically dispersed team has grown to over 50 employees <unk> virtual cards have provided us with the expense management solution, we were looking.
Q4.
Another example is from Hunter Thompson head of operations at Golden ratio, who told us.
<unk> Dot Com sold me on the ability to pre scheduled invoices with contractors vendors and suppliers with giving them the ability to control credit limits at the individual level and monitor spending on a dime without banks or.
Our mistakes a key benefit of both products is our ability to have a controlled budget in one place the result.
<unk> room in my head and leaves more time for compliance timelines and production schedules less falls through the cracks when I can plan ahead.
We also recently spoke with many partners who.
Share our vision and excitement Dan Lucy.
Out of ignite spot accounting services said and I quote, bringing bill Dot com and <unk> together can create an enormous foundation for our customers' businesses will fully manage their complete expenses payables and cash outflow in one single system.
I love that Bill Dot com.
Is so simple to use by customers that are not tech savvy customers are always looking for super simple value added tools to help them take the technological leap Debbie creates the same benefit for expense controls without the client having to know anything about tech or finance. The simplicity is what makes these tools so wonderful.
Already our teams have been working side by side to share go to market best practices and leverage our combined R&D expertise across the entire organization.
We are setting our sights on how we can cross sell to our installed base most effectively as well as how joining forces opens up additional opportunities for new customer acquisition.
Our combined team.
Team is excited to achieve our vision faster to become the default financial operations platform for Smbs, we can deliver innovation and platform payments and adjacencies faster and better together.
We're excited that by joining bill Dot com, we can provide an even more delightful experience and create more value for.
The businesses that we serve.
I'll now turn the call back to Rene.
Thank you Blake, we're excited to have you and the team as part of <unk> Dot Com together, we will accelerate the value we can create for millions of smbs.
In addition to spend management given the growth in our network Ah represents a large opportunity and thats been underrepresented on our plan.
Over the last year, we've been evaluating how best to accelerate value creation for our customers.
In July we announced our plans to acquire invoice to go a leading mobile first accounts receivable solution used by more than 225000 small businesses, including sole proprietors and freelancers in the U S Australia, Canada U K.
And more than 150 other countries.
And voiced ago enables small businesses to develop bid proposals send invoices and get paid instantly whether in the office or on the go. They are also built tools to promote engagement with their customers and generate more business such as reminders messaging and reviews.
We think of it as a mobile first solutions.
Power users have their business operations in their back pocket.
Many of invoice that goes customers our service based businesses, such as plumbers electricians and contractors.
<unk> economy is still in early stages when it comes to digital transformation and the shift to online and mobile payments.
And voice to go in dot com or jointly.
And as I mentioned to capture share of this large market opportunity.
Unlike physical product in brick and mortar businesses. Many service based SMB still require a paper checks for payment but.
But this is quickly changing businesses are realizing they need to digitally transform to save time and financial operations manage their receivables and get paid faster.
If as it followed and respected and invoice to go for years lifestyle Dot com. They are customer focused software led company that makes it easy to connect and do business.
Team is passionate about helping small businesses grow and thrive in trans at the.
The acquisition of Invoiced ago, who will bring a talented 100 person team with deep accounts receivable payments and e-commerce experience.
Together, we can more quickly advance our offering and accelerate our innovation agenda for small businesses globally.
We see unique value in having strong AP and AR solutions on one platform, which will enable customers to have visibility into payments coming and going providing more control and managing their cash flows.
And Louis ago will also.
Also give us a footprint or talent and customers beyond the U S.
Teams in San Francisco in Sydney, Australia about 50% of our customers are outside of the U S with the majority being in English speaking countries.
With their international teams and products, we've taken an important step on our journey to expand internationally.
There are more than 20 million.
Small businesses globally and millions more sole proprietors in the markets that invoice to go served.
In addition, this acquisition opens up significant opportunities for us to transition businesses to electronic payments on our platform we.
We believe that we can capture a meaningful share of those payments given our value proposition and the need for businesses to digitize and automate.
Automate their financial operations.
All of US are excited about the value we can create together for millions of small businesses and we look forward to welcoming the invoice to go team when the acquisition closes.
As we head into fiscal 2022, our top priority is integrating and leveraging <unk> and invoiced ago. Once the transaction closes these acquisitions.
Are integral to our vision to be the leading one stop solution that can help millions of businesses around the world manage their financial operations in.
In 2022, we will expand our innovative payment offerings enhance the user experience on our platform and drive monetization of our products and extend our reach.
Over the next 12 months, we intend to leverage our leadership.
Physicians, serving SMB to extend our capabilities to the smallest of businesses at the same time, we will continue to build additional features and partnerships for the mid market.
We also look forward to the launch of our platform with the small business market of one of the top three banks in the U S and are happy to report that we have moved into the testing phase and as always we continue.
Working with our current strategic partners to enhance their offerings with our expanding platform.
In closing, we had a terrific year and have great momentum heading into the new fiscal year. Our continued success is only possible because of the efforts of our 1400 employees I am extremely grateful for the team's dedication to each other and to our customers all of us here at.
Tom are energized by and look forward to what we are doing to help smbs transform and grow.
Thank you for your support and being with US on the journey now I'll turn the call over to John to review our financials John.
Thanks, Renee today I'll provide an overview of our fiscal fourth quarter financial results and discuss our outlook for the fiscal first.
First quarter and full year 2022.
I will also review our results and expectations with regards to the <unk> acquisition.
As a reminder, today's discussion includes non-GAAP financial measures. Please refer to the tables in our earnings press release for a reconciliation from non-GAAP to the most directly comparable GAAP financial measure.
In addition, the <unk>.
<unk> closed on June one and therefore, our reported fiscal fourth quarter results include one month of duty.
Also related to the acquisition on August 16th we filed an amended form 8-K, which can be standalone historical GAAP financials, along with pro forma financials for the combined company as of June 2020, and March 2021.
Before we discuss our reported financial results I'll provide an overview of our standalone organic results for the fiscal fourth quarter, excluding Debbie as the guidance that we provided in may was without <unk>.
Also provide an update on our key metrics.
We delivered strong fourth quarter organic financial results with revenue non-GAAP.
Gross margin and non-GAAP loss per share all well ahead of our expectations.
Total revenue for Q4 was $67.9 million and core revenue was $67.2 million.
Our core revenue growth in Q4 accelerated to 73% year over year, driven by 32% growth in subscription fees and 103.
10% growth in transaction fees.
Strong transaction revenue growth was mainly the result of a step up in TPP growth combined with the ongoing mix shift towards our AD valorem payment products.
The core revenue performance demonstrates that our customers are leveraging the platform to automate more of their financial operations.
We're very pleased with the <unk>.
37, making investing in new platform features innovating with payments and enhancing our go to market capabilities are.
Our continued focus on operational rigor and solid execution drove our strong results.
We also benefited from a strong demand environment as businesses increasingly prioritize digitally transforming their financial operations.
Turning to an update on our key metrics note that these figures reflect our organic business excluding Debbie.
We ended the quarter with 121200 customers representing growth of 24% year over year.
During the quarter, we added 5600, net new customers, which once again exceeded our expectations as we experienced strong demand across.
Yes for channels.
In addition to strong customer acquisition in recent quarters. We've also seen success improving our customer retention is.
Excluding customers from our financial institution partners are annual customer retention rate increased to 85% as at the end of Q4 up from 82% in June of 2020.
We've experienced expansion and.
Across our throughout the pandemic and we're also seeing newer customer cohorts with higher retention rates.
Those are comments core to helping smbs efficiently manage their financial operations and our value proposition resonated well over the last year as remote and hybrid work environments became the norm.
In addition to our growing customer base, we have developed.
With a large network of members, who receive or make electronic payments through our platform.
As of the end of Q4, we had over $3.2 million network members, an increase of 28% year over year from the $2.5 million members. We reported at the end of Q4 last year.
Network members provide a significant opportunity for E payment adoption build dot com brand awareness.
Warehouse and future customer acquisition.
As a result, our network creates a virtual flywheel for us to drive additional adoption.
Another important metric is our net dollar based revenue retention rate.
As of Q4 2021, our revenue retention rate was 124% an increase from 121% as of fiscal Q4.
For 2020.
This improvement was driven primarily by the increased adoption of variable priced transaction products, including cross border FX and virtual card payments as well as the positive customer retention trends I mentioned earlier.
Looking at total payment volume for the quarter, we processed $41.7 billion and TPB an increase of 64.
4% year over year and 19% sequentially.
We processed over $8.2 million payment transactions during Q4 up 46% from Q4 of last year and an increase of 14% from Q3 as we generally saw customers across all segments, increasing their level of activity on our platform.
During fiscal 2021.
We made substantial progress driving adoption of our variable priced payment products in Q4 cross border payments represented four 1% of our TPB for the full year ending in June we delivered over $5.4 billion in TPP to international suppliers on behalf of our U S customers more than doubled to $2.3 billion, we delivered in fiscal 2020.
We saw a significant increase in both U S dollar and FX payment volume across.
Cross border foreign currency TPB represented approximately 25% of cross border volume similar to our historical trends.
Our virtual card payment volume for Q4 was approximately two 2% of our total TPB and virtual card TPB in fiscal 2021.
<unk> grew more than 300% from fiscal 2020.
We have had ongoing success driving adoption from our supplier enablement investments combined with the value proposition of virtual card payments increasingly resonating with suppliers.
We continue to have favorable customer acquisition economics, and this guidance many of our investment decisions.
Our efficient direct and indirect go to market strategy combined with our predictable recurring revenue model and strong revenue retention results and a short payback period. This is the metric we primarily used to measure our customer acquisition capital efficiency for customers acquired during fiscal 2020. The average payback period was approximately five quarters consistent with our.
Historical performance.
Now I'll review, our reported Q4 financial performance, which includes <unk> for the month of June 2021.
Total revenue for Q4 was $78.3 million an increase of 86% over Q4, 2020 core revenue, which represents subscription and transaction fees was $77 five.
$5 million in Q4 up 100% year over year.
Subscription revenue increased to $31.2 million up 32% from Q4 2020, driven by an increase in the number of <unk> dot com customers and expansion in the average subscription revenue per customer.
Transaction revenue increased to $46.3 million in Q4.
Growth of 204% year over year, driven mainly by increased adoption of AD valorem payments strong TPB and Davies interchange revenue in June.
Is that the vast majority of revenue from dubious transaction based with minimal subscription fee revenue.
Moving on to float revenue, we generated 800000 and float revenue in Q4 and our annualized.
<unk> rate of return on customer funds held in Q4 was approximately 15 basis points.
Turning to gross margin and our operating results for Q4, our non-GAAP gross margin for the quarter was 79, 7% up from 76, 9% last quarter as our organic margin improved and <unk> generated a higher non-GAAP gross margin in Bilbao.
I'm on a standalone basis.
I'll provide more context on <unk> business model in a few minutes.
Operating expenses for Q4 were $68.6 million, an increase of $20.5 million from Q3.
We continue to invest in R&D to improve our platform and build integrations with financial institutions. R&D also includes technology and pro.
Product activities associated with the <unk> integration.
We increased sales and marketing expenses by $9.1 million over last quarter, mainly due to increased customer acquisition and card rewards expense associated with Covid.
We will continue to invest here as we are encouraged by the early results and expanding our market penetration.
Regarding G&A our expenses increased by.
$6.7 million from Q3, due mainly to consulting and related fees for M&A activity as well as additional expenses from <unk>, including credit and fraud losses.
In Q4, our non-GAAP operating loss was $6.2 million and our non-GAAP net loss was $5.8 million or a loss of <unk> <unk> per share based on 87 million basic.
Weighted shares outstanding.
Excluding the <unk> results in a corresponding increase in share count our non-GAAP net loss per share for Q4 would have been <unk>.
Moving onto the balance sheet, ending cash cash equivalents and short term investments were $1.2 billion down from $1.7 billion at the end of Q3 as a result of using approximately.
<unk> $556 million in net cash for the acquisition of <unk>.
As of June 30, we had $2.2 billion in customer funds on our balance sheet, which was up 14% from the end of Q3 due to the significant increase in <unk> during Q4.
Before I turn to our fiscal 2000, Twenty's outlook I'd like to provide an overview of <unk> business model.
To provide some insight into our pending acquisition of invoice to go.
Echoing comments from Rene and Blake earlier <unk> is a leader in the spend management space and has developed a sophisticated software solutions to help businesses spend smarter have greater control over card spend and better manage their cash flow.
We believe this merger significantly expands.
Our market opportunity and enhances our long term growth runway.
The foundation of <unk> business model is transaction monetization through interchange fee revenue on card spend.
Similar to Bill Dot Com <unk> focus their efforts on serving smbs with an emphasis on slightly larger businesses.
The foundation of <unk> go to market strategy is digital.
Marketing and referrals supported by inside sales, which results in an efficient engine for acquiring spending businesses.
We're excited to bring the <unk> spend management capabilities to our Buildout com customers and strategic partners and feel this presents a great opportunity to accelerate customer adoption of spend management.
DB interchange.
<unk> revenue is included in our core revenue the interchange fees range from 200 to 250 basis points of card spend.
Pending upon the brand of the card issued.
Other variables that influenced interchange fees on individual transactions include the transaction size as well as the rate the merchant base to accept cards.
<unk> non-GAAP.
Gross margin was approximately 10 percentage points higher than bill about comps on a standalone basis in.
In addition, <unk> has variable cost tied to card spend that are classified in operating expenses, including rewards expense in the sales and marketing line as well as credit and fraud losses that are reflected in the G&A line item.
There is also interest expense associated.
Credit facilities used to fund card purchases, which is classified in other income and expense.
In total these expenses have been between 140 to 150 basis points of card spend over the last year.
Over the longer term, we expect to create efficiencies in these expenses as we leverage our combined capabilities, including our data assets risks.
Management expertise and balance sheet scale.
As of the end of Q4, <unk> had 10700 spending businesses on their solution of which approximately 1000, where bill dotcom customers and are included in the Bill Dot com customer count that I shared earlier.
In June these businesses completed $437 million in card spend across.
Cross $1.4 million transactions and gross transaction revenue yield was approximately 230 basis points.
The typical <unk> spending business takes approximately six months to get fully ramped similar to the ramp time for a newbuild dot com customer.
Now I would like to give you some color on our pending acquisition of invoice to go.
Under the terms.
The definitive agreement there are alot com will acquire invoice to go for $625 million, consisting of approximately 75% build at Comstock and 25% cash.
The transaction is subject to customary closing conditions, including regulatory approval.
Invoice to goes most recent annualized recurring revenue as of the month of June 2020.
Terms of approximately $35 million and more than 90% of its revenue is from subscription fees over the last 12 months invoice to goes customers sent out approximately $25 billion in invoices of which approximately $1 billion were paid online through their platform.
We believe there is a significant opportunity over time to enable invoice to goes customers to get paid.
Electronic payments.
Invoice to go has an efficient self service sales model and when the transaction closes we don't expect a material impact on our consolidated non-GAAP net loss.
Now, let's move on to our financial outlook for fiscal Q1 in fiscal 2022.
Note that we are providing additional disclosure on.
On <unk> Com Standalone revenue growth given the <unk> transaction has just closed and we haven't reported a complete quarter together yet on.
On a go forward basis, we don't expect to provide details that bill dotcom or give you a separate businesses as we are managing one consolidated P&L.
While our guidance is inclusive of <unk>. It excludes our pending acquisition of invoice to go.
As we look ahead, we have never been more excited about the large market opportunity were pursuing and the momentum we have helping smb's automate their financial operations.
The pandemic has been a wakeup call for businesses of all sizes and Smbs are increasingly realizing that investments in digital capabilities for the financial back office are mission critical and can.
No longer be deferred.
We plan to capture more of this addressable market by increasing our investment levels and leveraging our strong unit economics to acquire new customers and drive adoption of payment products.
Our key investment areas for fiscal 2022 include integrating our technology and go to market teams with JV scaling our relationships with financial institutions.
<unk> and ramping our newest payment offerings.
These investments will increase operating expenses across all line items during the year and also position us to scale further as a company.
While there is significant uncertainty regarding the next phase of the pandemic for purposes of our fiscal 2022 outlook, we've assumed no material negative impact on our customer.
Base business.
For fiscal Q1, we expect our total revenue to be in the range of 103, two to $104.2 million, which assumes organic core revenue growth of approximately 60% for bill Dot com on a standalone basis.
We expect to float revenue to be approximately 500000 in Q1, given short term interest rates are near.
Zero, we expect our float revenue results will remain at this level for the foreseeable future.
In terms of operating expenses, we expect to increase investments associated with R&D and platform integration with <unk> as well as our joint go to market initiatives on the bottom line in Q1, we expect to report a non-GAAP net loss in the range.
Range of $20 million to $19 million and a non-GAAP loss per share of 21% to 20 <unk>.
Based on a share count of $95.1 million basic weighted shares outstanding.
Turning to our outlook for fiscal 2022, we expect total revenue to be in the range of $476 million to $480 million. This.
This assumes organic or standalone.
Standalone Bill Com core revenue growth of approximately 45% in fiscal 2022.
For the year, we expect our non-GAAP gross margin to be in the range of <unk>, 77% to 79%.
On the bottom line for fiscal 2022, we expect to report a non-GAAP net loss in the range of 89% to $85 million and a non-GAAP loss.
Per share of <unk> 92 to <unk> 88.
Based on a share count of $96.9 million basic weighted shares outstanding.
Regarding the increased investment levels that I mentioned earlier, we expect this will have the most impact on Q2 and Q3 before we begin to realize synergies and leverage beginning in Q4.
In.
In addition for fiscal 2022, we expect stock based compensation expenses of approximately 30% to $35 million per quarter and capital expenditures to be approximately 11% to $13 million for the year.
With our leadership position in the SMB market and our expanded capabilities with Debbie. We believe now is the right time to accelerate investments in fiscal 2022 to capture.
The larger combined bill Dot com and <unk> market opportunity, which we believe can result in a multibillion dollar revenue business by leveraging our strong unit economics and operational rigor. We're confident we can create operating efficiency over time, we remain committed to running a profitable business in the long term.
In summary, we're excited about the opportunity to build the one.
One stop financial operations platform for Smbs, there's a massive opportunity to help millions of businesses around the world digitally transform and we believe we are creating a durable long term growth runway for <unk> com in the SMB market.
I'll now hand, the call back to Karen.
Thanks, John.
Turning up for Q&A, we request that you limit yourself.
Captured to just one question do we have enough time to get everyone on the call. Today. If you have a follow up question. We ask that you jump back in the queue. Thanks, operator, we're now ready for questions.
As a reminder to ask a question simply press star one on your telephone keypad again that is star one to.
I'll ask a question and.
And our first question comes from Scott Berg with Needham <unk> Company.
Hi.
John Blake and Rene Congrats on a fantastic quarter and thanks for taking my questions.
I guess lots.
Lots of lots of questions here is.
As.
Shannon.
It's RNA on that transaction volumes in the quarter, they jumped significantly about it.
1 billion transactions. There can you help us understand why the significant increase on a quarter over quarter basis, because it's by far the largest on both a percentage basis and an absolute basis that we've seen in the model.
Two years.
Yes, I'll take that Scott Thanks for the question and.
We've generally seen.
Strong activity from our customer base throughout the pandemic over the last couple of quarters and as you mentioned this most recent Q4 an uptick in activity in.
Engagement in the platform, we think that's a really good sign for the health of the small business customer base, where.
We're serving and we saw similar results with our <unk>. So both transactions in and TPB were up significantly both on a year over year basis and on a sequential basis and we think that just has to do with a higher level of.
Economic activity amongst our.
Our customer base and in the fact that we're we're gaining a larger share of.
Their spend share of wallet. If you will on that's showing up as strong growth in transactions and TPB.
And your next question is from Josh <unk> with GBM.
Thank you for taking the question and my congrats as well on all the progress.
Really just wanted to.
Zero in on the customer momentum.
Obviously in the going back a year or so you really saw a pick up and I think there was probably some expectation that you would maybe start to normalize but certainly it seems like there has been.
Ongoing heightened awareness of modernizing the back office. So I'm just I'm just curious how big.
Big of a surprise, maybe the customer additions was within the quarter and really how youre trying to think and balance that outlook as we go into your fiscal 'twenty two.
Thanks, Josh good to hear your voice.
We've been working on building this platform to make it simple to connect into the business.
For 15 years, and so Covid did provide I would say a wakeup call for a number of businesses.
But at the same time the reason I start off that we've been doing the platform we've been building the financial operational.
Platform to manage all of the stuff that happens in the back office for a while and that enables us to be able to offer serve.
Services and integrated services.
We're getting ready to do with the obviously the integration of <unk> into an invoice to go so what we're seeing across the ecosystem is that people are quite interested in getting the back office out of the paper based systems that they're in into a digital system.
We think there's lots of opportunity and we're going to continue to invest behind that to bring those people along and that help them save time, and obviously do more there.
Around their passion and what we're doing.
Doing today.
Thanks Renee.
Are you.
And your next question is from Brent <unk> with Piper Sandler.
Thank you and good afternoon, I guess Rene John Blake I haven't seen a business model like this since the late nineties super impressive growth.
A question are you sure. This is back office accounting invoicing software.
So in all seriousness, we just not used to seeing this type of growth for our back office software Rene.
What type of demand pull or you're seeing within the existing biller com customer base for <unk> corporate cards, and then could you just talk a little bit about the early uptake in the newest.
<unk> $500 JV sign up promo it seems like big opportunity to cross sell here, but would love to get your view on how quickly that could happen.
Sure. Thank you, Brian we were very focused on making accounting in the back office as as sexy as it can be right.
To your point, it's really feel like this is an opportunity to really change the way business gets done and.
For us the <unk>.
National operations and integrating <unk> Super important so we're in the early early days of actually making the planning and integration around the roadmap that's going to be combined.
Fine.
<unk> started the cross selling and all of this is going going well and everything is going as planned and it's an opportunity for us to continue.
To enhance the offering to customers and the opportunity.
For customers to save time, and we've said before it's over 50%.
The customers timing.
Time that they are able to save when they get onto the dotcom platform. So lots of lots of reasons why people are coming on the platform I think the payment execution is also something that's bringing a lot of people along as well.
Thank you.
Okay.
Your next question is from Samad Samana with Jefferies.
Hi, good evening, Thanks for taking the question Greg.
Continued strong results, John maybe could you unpack the guidance a little bit.
You get the organic growth outlook for Bill, but are you assuming revenue synergies between the two companies and if not what can.
We start to think about maybe the revenue synergies kicking in between.
Okay.
Yes sure. Thanks for the question <unk>.
Yes, we feel really good about.
The momentum we have and I think thats reflected in the in the guidance, we provided including the organic core revenue growth of 60% in the first quarter, 45% for the year. So we have a strong base.
Base and then with the addition of DB.
We have great momentum in the market as well and we expect that to continue on the synergy front, while we've started.
Integrating teams and and combined product Roadmaps and go to market strategies I think that takes some time to evolve.
As you know it takes businesses time to change their financial operations adopt new products and then ultimately ramp similar to when somebody adopts spill dot com. So we haven't quantified any specific synergy number within within the guidance, but we would expect that to take a number of quarters before we start to see.
And impact on the numbers.
Great and maybe I can just squeeze one in for Renee I know you guys aren't answering your question, but the company said a couple of deals that are both transformative I'm just curious on the M&A philosophy should we think about this more as a digestion period for maybe the next six to 12 months or should we think.
About M&A as something that's that are kind of core to the flywheel going forward.
So we definitely expect there will be future.
Future M&A, but at this point, we are very focused on integrating the <unk> team and the great software they've built with our core platform and Tim will be focus.
On doing the same with invoice to go so our focus is going to be to deliver for customers. A one stop shop when to do with the excellence that we have always done and we're going to focus on that right now.
Great. Congrats again on the very strong results and outlook.
Thanks, so much.
Your next question is from Robert Napoli with William Blair.
Thank you.
I'll add my congratulations pretty pretty exciting story.
And test.
Guess, maybe for Blake or for Renee just the competition in the.
Debbie market are you seeing I mean, maybe.
Maybe just talk about the runway for the kind of growth that <unk> been driving.
And are you seeing additional competition from the likes of <unk> or a ramp or others or American Express I know you I think you get a lot of business from Meritage special So a partner.
With Rene.
Syed.
Yeah, Hey, Robert This is Blake it really really good question.
First this is a huge market and so we don't anticipate.
Slowing down as an independent company that we haven't faced those headwinds historically and were not facing them now.
Those that business is lumpy.
<unk> <unk> solution.
To us it's easy to use it's great from a budgeting perspective, obviously from a spend management perspective, they get to control, who spends what where when and why at any given time the expense automation.
The cash flow management as well from a business perspective, and then you add that to the.
The combined and kind of the aggregate effect of what they already love and our kind of attached to.
What buildup, Tom brings to the equation and that's powerful.
It's something that we've heard and listened to from the businesses that we work with for years that they have been clamoring and asking for a consolidated solution.
Because they are tired of using disparate systems and Thats what exists right. That's what there's a lot of our mini.
Many different systems.
We're from the corporate card from legacy spend management or legacy expense management and so we're really excited about the combined effort of what we bring to the table we.
We know that is what businesses have been asking for and frankly, we're able to accomplish it.
Faster and better together.
Great.
Thank you I appreciate it.
Your next question is from Brad Sills with Bank of America Securities.
Oh.
Great Hey, guys I'll Echo the congratulations on just an exceptional quarter here and outlook congratulations again so.
Wanted to ask about the gross retention uptick that you saw this quarter is this in your opinion.
Some some.
Kind of.
Reopening headwind or tailwind rather that are helping that metric.
Trick that you might've seen earlier on in the pandemic or is this an indication of something else, perhaps moving up market into that kind of lower end of the mid market, where you tend to see less.
SMB mortality there any color on just what drove that uptick.
And the gross retention. Thank you so much.
Yes.
Thanks for the question Brad This is John.
If you recall back through the pandemic, we had really strong retention right. After the start of the pandemic, we saw sort of a recovery and improving retention rates and that's that's really continued I think as much as anything.
Our platform.
Great.
Many of the customers we serve becomes their go to system for managing financial operations and once that's in place.
And customers have adapted how they operate and they've gone digital it's hard to change and they stick with the solution. So I think we're seeing that.
We're seeing really good strength.
For us.
Our multiple go to market channels, as well and so I wouldn't say it's.
We see anything that suggests a reopening phenomenon as much as a continuation of kind of the mission we've been on to deliver value for customers.
Makes sense. Thanks, so much John.
Sure.
The next question is from Jeff Cantwell with Guggenheim Securities.
Hey, Thanks for taking my question can you hear me okay.
Yes, we can thanks, Jeff.
Great Great. Congrats on the results I wanted to I wanted to ask a.
Follow up if I may.
Earlier question on.
Okay.
Now to this part of the platform can you talk a little more about the customer acquisition strategy.
And the opportunities you see to increase it to the customer base as Youre looking ahead, meaning how do you plan to grow that customer base further from here.
And what are the underlying reasons why do you think theres opportunity.
Where do you see opportunity.
And as far as sizing opportunity are there are there any particular verticals you think very nice match for the expense management capabilities activity, just would like to kind of help us think about what could get through these 10000 customer base to expand from here. What if you can drill down on the operational strategy and how you think about things here.
Debbie.
Great I'll start off and then let Blake chime in with more specific details, but ultimately one of the things that we saw in the acquisition was an opportunity to extend the diverse ecosystem that we've built one of the key competitive advantages that we have as a company is that we work with accounts, we work with financial institutions, we work obviously.
Thanks for that with Smbs.
From the smallest of businesses to the large mid market companies and so there is the cross sell opportunity, which we think can help obviously the results from Debbie.
Davey has like place already talked about a great go to market story of its own so I'll, let blake kind of talk to that those points.
Not to be overly redundant.
We think there is three primary things that make us comfortable and certainly confident on a go forward basis in the first is that we have an incredibly strong go to market motion and team.
Top down from our marketing teams, so our inside and outside sales direct sales is an unmitigated strength of our team.
Though is.
But its tapping into a different strengths and that's on the bill Dot Com site and Thats on the channels.
<unk> just mentioned the five and the accounting channel and at the beginning there was some overlap already from the accounting side, meaning that we speak that language with accountants, we're already servicing many of their needs and building for them and so we.
We look at that as a really attractive way to scale into and to penetrate more of that market with the debit product and certainly garner more spend there and then lastly, it's the installed base that we collectively have with the businesses that <unk> already has you mentioned the greater than 10000 in over 120000.
It's really <unk> dot com.
We've already been able to stand up some teams and it's the early days and that will take some time to scale into that but the cross sell is already in motion.
And where.
Pretty happy with how that's going so far.
Okay, great much appreciate it thanks for all detail.
And congrats on the results.
Thank you Jeff.
The next question is from.
Matt.
With BTG.
Taking my question guys and great job on the quarter for sure maybe expanding on the last question a little bit.
Right.
Different angle.
You talk about in terms of the 10000 plus customers already on <unk> or I guess, maybe the 9000 or so that werent already built with customers is there any reason to think that you can't.
Cross sell the Bill legacy platform across is there anything unique about some of those customers.
From a size or.
Use case perspective that.
That wouldn't make that correct and then Conversely on the 120000, plus bill customers are any of them.
It's sort of too small to embrace the <unk> platform, how should we think about the the long run opportunity.
Across the two existing basis now.
Yes, Great question, Matt, we think that businesses.
Small to the mid market that we serve they need us they need financial operations in their back pocket they need to automate paper processes, they need to get it online COVID-19 was a wakeup call for them and the opportunity.
<unk> is across all of those businesses, we believe that there is significant.
Synergies for business once they get their systems digitize and so so we have done our own analysis to look at kind of which are the most likely customers who start in and that's the cross selling efforts that we're focused on right now is to start.
With those but there's a there's a good opportunity in front of us and we're excited about it.
Alright, great. Thank you.
Thank you Matt.
The next question is from John Coffey with F E.
Hi, great. Thank you very much for taking my question.
Had one question it was sort.
Considering that.
Hey that you released about a couple of weeks ago.
That had the historical do the financials and on the income statement. There was a I think about for the whole of the year 2020, there was a provision for losses of about I think $10 million.
My first question is how should we think about the provision expense going forward on the income statement.
And which.
Steve and Lyne will that be built and in general how should we think about what those provision expenses will be in the second part is related it looks like when I look at your balance sheet for this last quarter you added about $147 million of acquired card receivables shall I understand the rate that you would never earn interest.
Statements I'm on that that's probably where you're going to go to some kind of balance sheet partner because you Didnt mentioned I think you just mentioned the the interchange opportunity. So I just want to make sure im not missing any potential revenue sources.
Sure. Thanks for the question, Jon I'll take that one regarding the provision for.
Kristin glosses Thats, an item that shows up in G&A expenses, and we have provided an estimate in the prepared remarks around the combination of rewards expense.
Credit and fraud losses, and interest expense combined being.
Credit 140 to 150.
Basis points.
In total cost and of that amount.
About two thirds, it's associated with rewards.
And then.
The credit and fraud losses as the next biggest item in interest expenses the smallest of the three.
<unk>.
And to your second question about the balance sheet I would just view that as transitory.
The way transaction flow through the system. There is no interest, earning or interest component of the <unk> business model.
Perfect. Thank you very much.
Your next.
About Ken.
<unk> with autonomous research.
Hey, good afternoon, everyone. Congrats congrats on the solid quarter and thanks for taking the question here.
I just wanted to ask about the transaction take rate.
I exclude <unk> and.
And look at the trend.
Question actually take rate on a quarter over quarter basis, it increased but it increased at a slower rate than prior quarters.
And I just wanted to know what what caused that I mean, which transaction types are less momentum this quarter versus versus prior quarters or maybe you just had a strong ramp in payment volume and Thats impact.
Impacting it thank you.
Sure. Thanks for the question Ken Yes, we're really pleased frankly with the expansion in our.
Monetization.
And take rate is one measure of that we also look at revenue per transaction in the profile of businesses, we're driving really strong.
<unk> year over year growth in all of those metrics youre right about the quarter to quarter change in our take rate it was a little bit lower this quarter than in prior quarters, but generally speaking there is a different mix of payment types in each quarter and it's not a perfect perfectly linear expansion that we expect but.
We feel very optimistic about our opportunity over time to continue to drive increased monetization, particularly on the payment side.
Okay. Thanks, a lot appreciate it.
Sure.
Your next question is from Joseph <unk> with Canaccord.
But we are.
Hey, guys. Good afternoon, obviously, great results Echo that just a question on guidance.
This year.
<unk>.
It is a fast growing company, but obviously a slightly different business model than core Bill how did you approach guidance relative.
Chip to incorporating TVN versus.
What you've done.
In previous years on the core business before <unk> and then maybe you could just comment on travel related volumes that may or may not be in duty right now thanks.
Sure.
<unk> for the question and I will take that one.
I mean, we approach guidance using all the information that we have.
Looking at key metrics in the business and trends within the customer base.
Our understanding of our of our unit economics, and as I said previously.
We feel good about not only our core business going into the year, but the <unk> business as well both.
All of our products are performing well and we're seeing increasing.
Customer adoption so.
The guidance that we provided kind of reflects the latest thinking that we have.
Have on on how the business may evolve. This this coming year and I would say just at a high level.
I hand, it over to Blake to add any color that he would like but at a high level.
The <unk> business.
Spending businesses leveraging the card it doesn't create any significant concentration in any particular.
Spend type or or category, it's a well diversified.
Set of spending businesses and merchants that they're spending with it.
We're seeing pretty consistent results, obviously growth throughout the pandemic from the early days rapid growth, but beyond that I'm not sure there's any real dynamics to point out.
<unk> Lake if you want to add anything and maybe just to call out kind of the product itself right I think historically you were.
Wood corner Pigeon hole <unk> product, but from the very beginning and by design, that's where we're trying to break them out we knew that small businesses wanted control over all of their spend and they wanted to singular platform.
Now at through which they could do that and so that's where <unk> budgets from a software perspective really come to life and shine is there a dynamic there agile youre able to use it from a mobile perspective or a web perspective.
And so we really broke out of that mold of a T N E and travel focused business.
And <unk> been able.
To scale really effectively across AD spend different software services.
The food and normal expenses, our business outside of Teenie, So nothing comes or called out.
Thank you very much for that.
And we have time for one last question our final question.
<unk> comes from Darrin Peller with Wolfe.
Hey, guys. Thanks, when we look at the monetization potential just Renee if you could start off reminding us again of the strategy for now for the next 12 months going into fiscal 'twenty two on supplier enablement.
What if it was good to see the metrics again at around only 2% to 3%.
Still virtual card what what do you think that can get to over the next 12.24, and then longer term as a percentage of your mix and then also on the international side and really what you're doing proactively to enable that it's maybe an update on that thanks, guys nice job.
Thank you Darren you know, we've got a lot of that's been going into growing and excel.
Percentage visit SEC the results that we just announced and how we feel about the business in the next 12 months and it's across all segments and across all products and so the payment offerings are super important in particular, when we think about virtual card international.
Effects capabilities, we still believe there is a good amount in front of us so.
Accelerating the ranges that we provide in the past are something that we're going to kind of continue to march towards end to make sure that we develop the right product.
The right customer experience and the right go to market to bring those customers into the fold. So.
That's all the investments that we're doing across the business with respect to that we're also investing.
Obviously, the number one thing is to make the integrations with with Debbie and soon Invoiced to go successful and that's that's creating that one stop shop platform that unique position that we're in to be that one stop shop for Smbs and then the third thing that we're investing in over the year is going to be.
Maintaining our go to market with a financial institution.
Institution partners that we have in rolling out the SMB solutions that we've talked about so lots of investment the payment products are a part of that and we feel good about continuing to grow that take that we're getting from both.
Payment products, we have and the ones that we are in the process about it.
I will now hand, the call back over to Renee lessor today CEO.
Great. Thank you thanks, everyone for joining us today, we're kicking off the new fiscal year with momentum and looking forward to communicating our progress as we take on the tremendous opportunity ahead of us. Thank you goodbye.
Thank you again for joining us today this does conclude.
Presentation, you may now disconnect.
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