Q4 2023 Bill Holdings Inc Earnings Call

All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end.

I would now like to pass the conference over to Karen <unk>, Vice President of Investor Relations at Bill. Please go ahead.

Thank you operator, welcome to Bill fiscal fourth quarter and full fiscal year 2023 earnings Conference call. We issued our earnings press release, a short time ago and furnished the related form 8-K to the SEC. The press release can be found on the Investor Relations section of our website at Investor Day, Bill Dot Com.

With me on the call today are <unk>, Chairman, CEO , and founder of Bill and John Rettig, Executive Vice President and CFO .

Before we begin please remember that during the course of this call. We may make forward looking statements about the future operations and result of bill that involve many assumptions risks and uncertainties.

If any of these risks or uncertainties develop or if any of the assumptions prove incorrect actual results could differ materially from those expressed or implied by our forward looking statements.

Speaker 1: you

Speaker 2: Good afternoon.

Speaker 3: Thank you for attending the bill's physical fourth quarter 2023 earnings conference call.

For additional discussion 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 annual report on Form 10-K, and quarterly reports on Form 10-Q, we disclaim any obligation to update any forward looking statements.

Speaker 3: My name is Sierra and I'll be your moderator for today's call.

Speaker 3: All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end.

Speaker 3: I would now like to pass the conference over to Karen Sanslot, Vice President of Investor Relations at Bill. Please go ahead. Just ahead.

On today's call, we will refer to both GAAP and non-GAAP financial measures. Please refer to today's press release for the reconciliation of GAAP to non-GAAP financial performance and additional disclosures regarding these measures.

Speaker 4: Thank you, operator. Welcome to Bill's fiscal fourth quarter and full fiscal year 2023 earnings conference call. We issued our earnings press release a short time ago and furnished the related Form 8K to the SEC. The press release can be found on the Investor Relations section of our website at Investor.Bill.com. With me on the call today are Renee Lissert, Chairman, CEO and founder of Bill, and John Reddick, Executive Vice President and CFO . Before we begin, please remember that during the course of this call, we may make forward-looking statements about the future operations and results of Bill that involve many assumptions, requests and requests for restores to Congress.

At times during this call, we will discuss <unk> standalone results, which exclude our <unk> spend and expense management invoice to go accounts receivable and Finmark financial planning solutions now I'll turn the call over to Renee Renee.

Thank you Karen and good afternoon, everyone. Thank you for joining us today.

Before diving into our business results I would like to share my thoughts on the awful disaster in Maui I was in Maui, just one mile north of the fires in line when it happened.

Speaker 4: and uncertainties. If any of these risks or insurgencies develop or if any of the assumptions prove incorrect, actual results could differ materially from those expressed or implied by our forward-looking statements. For additional discussion, please refer to the text in the company's press release issued today.

During the fires it was scary on so many levels, mostly because of the lack of communication that played all of west Maui.

Waking up one day to hear the stories of destruction was devastating talking to the Hawaiians, who knew they had lost all of their possessions and we're unsure if they had lost their friends or even worse family members was overwhelming.

Speaker 4: and to our periodic reports filed with the SEC, including our most recent annual report on Form 10-K and quarterly reports on Form 10-Q . We disclaim any obligation to update any forward-looking statements.

And then leaving on Thursday, and driving through the war zone, not just seeing in the scorched earth that smelling. It that's something I'll never forget nor should any of us.

We're behind it is at the heart of the beautiful people of Hawaii.

Speaker 4: On today's call, we will refer to both GAAP and non-GAAP financial measures. Please refer to today's press release for the reconciliation of GAAP to non-GAAP financial performance and additional disclosures regarding these measures.

All of that lined the artifacts to remind us of the heritage had been lost but what cannot be lost is the strong sense of community. The Aloha spirit that makes Hawaii. So special.

Now is the time, if you have ever felt the law spirit of love compassion and respect to give back.

Speaker 4: At times during this call, we will discuss bill standalone results, which exclude our DIBY spend and expense management, invoice to go accounts receivable, and FINMARK financial planning solutions. Now, I'll turn the call over to Renee. Renee? Renee Lewis Gaitherton Dan Let's Comcast Martine?

The wind people need to know that Theyre Aloha spirit is going to come back to them when they need it most.

Our Hearts go out to the Hawaii is from the line of community, we stand ready to assist our customers in all small businesses affected by these fires.

Speaker 5: Thank you, Karen. Good afternoon, everyone. Thank you for joining us today.

Many of us at Bill will be giving to Maui strong.

Speaker 5: Before diving into our business results, I would like to share my thoughts on the awful disaster in Maui. I was in Maui just one mile north of the fires in Lahaina when it happened.

Please give from your heart and let the helium begin thank you for your consideration.

Now on to our business results fiscal 2023, it was a defining year for bill the strength of our business model and talent of our team are on full display as we delivered our commitments to hundreds of thousands of businesses during a year filled with macro challenges in banking turmoil.

Speaker 5: During the fires it was scary on so many levels, mostly because of the lack of communication that plagued all of West Maui.

Speaker 5: Waking up Wednesday to hear the stories of destruction was devastating. Talking to the Hawaiians who knew they had lost all of their possessions and were unsure if they had lost their friends or even worse, family members was overwhelming.

We delivered more than $1 billion in revenue and 65% year over year revenue growth, while achieving our first year of non-GAAP profitability.

Speaker 5: And then leaving on Thursday and driving through the war zone, not just seeing the scorched earth but smelling it is something I will never forget nor should any of us.

Strong demand for our platform combined with our disciplined investment approach and rigorous execution led to non-GAAP net income of $194 million, reflecting an 18% margin.

Speaker 5: L?hana is at the heart of the beautiful people of Hawai'i.

Speaker 5: All of the Lahaina artifacts to remind us of their heritage have been lost, but what cannot be lost is a strong sense of community, the aloha spirit that makes Hawaii so special.

Free cash flow for the year was $157 million.

We are most proud of the significant number of Smbs, we empower each and every day at the end of fiscal 2023 more than 460000 businesses use bill as their central hub of financial operations.

Speaker 5: Now is the time if you have ever felt the aloha spirit of love, compassion, and respect to give back.

Speaker 5: The Hawaiian people need to know that their aloha spirit is going to come back to them when they need it most.

We expanded our network to $5 8 million members that have originated or received an electronic payment through our platform.

Speaker 5: Our hearts go out to the Hawaiians and the Hainanee community. We stand ready to assist our customers and all small businesses affected by these fires.

By making it easy for buyers and suppliers to connect and transact payments, we enable $256 billion in total <unk> payment volume across our platform, reflecting approximately 1% of U S GDP and a significant milestone.

Speaker 5: Many of us at Bill will be giving to Maui Strong.

Speaker 5: Please give from your heart and let the healing begin. Thank you for your consideration.

Speaker 5: Now, on to our business results. Fiscal 2023 was a defining year for Bill. The strength of our business model and talent of our team were on full display as we delivered our commitments to hundreds of thousands of businesses during a year filled with macro challenges and banking turmoil. We delivered more than $1 billion in revenue at 65% year.

Our strong financial performance and significant scale are due to many factors including.

Including the mission critical nature of our platform the breadth of our strategic ecosystem and constant focus to solve the needs of smbs.

17 years ago, Bill was founded with a mission to make it simple for Smbs to connect and do business. We created category as we set out to help businesses automate their financial back office.

Early on we knew it was important to partner with and Smbs, most trusted advisors to develop the market.

Speaker 5: for our platform combined with our discipline and investment approach in rigorous execution, led to non-gap net income of $194 million, reflecting an 18% margin.

That is why we built an ecosystem that strategically integrates with accounting firms and the top banks in the country.

Speaker 5: Pre-cash flow for the year was $157 million.

Driving success for our entire ecosystem this quarter our DNA.

Speaker 5: We are most proud of the significant number of SMBs we empower each and every day. At the end of Fiscal 2023, more than 460,000 businesses use Bill as their central hub of financial operations.

Together with our partners, we can serve smbs at a much faster pace.

We have big ambitions today, we serve hundreds of thousands of smbs, but we want to serve millions more there are 30 million small businesses.

Speaker 5: We expanded our network to 5.8 million members that have originated or received an electronic payment through our platform.

As in the U S and 70 million globally. The majority is still use manual paper based processes to manage their financial back office.

There is a vast opportunity to help these small businesses automate their financial operations to gain better insight to confidently manage their business and cash flow and easily transact trillions of dollars of BTB payments.

As the creator of this category and with our leading platform payments expertise large network partner ecosystem and scale, we are uniquely positioned to capture these large greenfield opportunity.

Speaker 5: Our strong financial performance and significant scale are due to many factors.

Speaker 5: including the mission critical nature of our platform, the breadth of our strategic ecosystem, and constant focus to solve the needs of SMBs.

A great example of how we help companies re imagine their financial operations and create efficiency as talbott firms, a 100 year old family farm in Colorado known for Sweet Palisade Peaches, Deseret Schuman bookkeeper of Talbot firm said and I quote. We previously received invoices in the mail and would manually entered them into our accounting system and need to print and mail.

Speaker 5: 17 years ago, Bill was founded with the mission to make it simple for SMBs to connect and do business.

Speaker 5: We created a category as we set out to help businesses automate their financial back office.

Speaker 5: Early on, we knew it was important to partner with an SMB's most trusted advisors to develop the market.

Speaker 5: That is why we built an ecosystem that strategically integrates with accounting firms and the top banks in the country.

Out checks bills accounts payable and spend management solutions changed how we do our finances I can improve bills on the go and have real time visibility I save on average two hours a day, which is particularly important during our busiest seasonal harvesting time and quote.

Speaker 5: Driving success for our entire ecosystem is core to our DNA.

Speaker 5: Together with our partners, we can serve SMBs at a much faster pace.

Speaker 5: We have big ambitions. Today we serve hundreds of thousands of SMBs, but we want to serve millions more. There are 30 million small businesses in the US and 70 million globally.

Our large scale two sided network serves as a key pillar for frictionless connections and secure payment transactions.

Speaker 5: The majority still use manual paper-based processes to manage their financial back office.

It frees our AP and AR customers from the need to share bank information with each other it acts as a payment choice switchboard, enabling both customers and network members to choose their preferred method of payment.

Speaker 5: There is a vast opportunity to help these small businesses automate their financial operations, to gain better insight to confidently manage their business and cash flow, and easily transact trillions of dollars of B2B payments.

Our network doesn't require a subscription is accounting software agnostic and even worse when businesses don't have a general ledger system.

Speaker 5: As the creator of this category and with our leading platform, payments expertise, large network, partner ecosystem and scale, we are uniquely positioned to capture these large greenfield opportunities.

With its ease of use tens of millions of transactions flow through our network each year.

This creates a valuable data asset that we apply our AI engine to which enables us to develop better user experiences such as auto matching customers and suppliers auto populating invoices no matter, how they are received managing risk and providing payment and funding choices for customers and network members.

Speaker 5: A great example of how we help companies reimagine their financial operations and great efficiency as palbitfarm. A 100-year-old family farm in Colorado known for sweet, three-palastic pizzas.

Speaker 5: Desiree Schumann, who keeper of Talbot Farm, said, and I quote, we previously received invoices in the mail and would manually enter them into our accounting system and need to print and mail out checks. Bill's accounts payable and spend manage solutions changed how we do our finances. I can approve Bill's on the go and have real-time visibility.

An example of how network members benefit from our platform and managed payment choice is curious of fire transportation.

The business that provides door to door transportation services to seniors and disabled adults and whose clients include medical nursing and rehabilitation centers.

Speaker 5: I save on average two hours a day, which is particularly important during our busy seasonal harvesting time, end quote. Our large scale two-sided network serves as a key pillar for frictionless connections and secure payment transactions.

There is a fire uses excel as their accounting system to Makiya read the owner said and I quote everyday our drivers helped many people get to the important places they need to go we process lots of money coming in and going out since we pay our drivers daily we need our money from customers quickly built instant transfer helps us a lot by <unk>.

Speaker 5: It frees our AP and AR customers from the need to share bank information with each other. It acts as a payment choice switchboard, enabling both customers and network members to choose the preferred method of payment.

Paid instantly instead of waiting a few days, we can better manage our cash flow and pay drivers quickly end quote.

Speaker 5: Our network doesn't require a subscription if accounting software agnostic and even works when businesses don't have a general ledger system.

This is a great example of how the power and flexibility of our two sided network and suite of payment choices help smbs thrive.

Speaker 5: With its ease of use, tens of millions of transactions flow through our network each year.

Our diverse and broad ecosystem enables us to efficiently reach small and mid sized businesses.

Speaker 5: This creates a valuable data asset that we apply our AI Engine 2, which enables us to develop better user experiences such as auto matching customers and suppliers, auto-populating invoices, no matter how they are received, managing risk and providing payment and funding choices for customers and network members.

Bill is trusted by more than 85 of the top 100 accounting firms and the largest banks in the U S, including Bank of America, and JP Morgan Chase, who all put their brand on our platform to serve their customers.

Payments are complex and our partners Trust us to do payments on their behalf given our deep expertise.

Speaker 5: An example of how network members benefit from our platform and manage payment choice is chariot's a fire transportation.

Over 7000 accounting firms use our platform to provide financial automation bill payment in client advisory services for cash to their clients.

Speaker 5: A business that provides door-to-door transportation services to seniors and disabled adults, and use clients include medical, nursing, and rehabilitation centers.

Our platform empowers accounts with a purpose built console to collaborate with their staff and clients across multiple workflows, enabling them to be more strategic and serve more clients.

Speaker 5: Cherries of fire uses Excel as their accounting system. To Mikiya Reed, the owner said, and I quote, every day our drivers help many people get to the important places they need to go. We process lots of money coming in and going out. Since we pay our drivers daily, we need our money from customers quickly. Those instant transfer helps us a lot.

<unk>, an accounting firm based in Washington D. C is a great example.

<unk> partner, <unk> outsourced accounting and advisory services said and I quote in an environment, where automation is crucial to success of any business Bill remains a key ingredient in the growth of our SaaS practice with roughly 90 clients on our Bill Council, we are able to centralized billing and collection staff assignments and bill implementations.

Speaker 5: By getting paid instantly instead of waiting a few days, we can better manage our cash flow and pay drivers quickly. End quote.

Speaker 5: This is a great example of how the power and flexibility of our two-sided network and suite of payment choices help SMBs thrive.

Transferring new clients start bill console or trading a Newbuild instance for them is breeze and allows us to cross that big piece off of our Onboarding checklist with ease.

Speaker 5: Our diverse and broad ecosystem enables us to efficiently reach small and mid-sized businesses.

Speaker 5: Bill is trusted by more than 85 of the top 100 accounting firms and the largest banks in the U.S., including Bank of America and JP Morgan Chase, who all put their brand on our platform to serve their customers.

We've on boarded dozens of new gas lines over the past three years and our practices doubled in size. Our partnership with Bill is a critical component of our infrastructure and continued growth and quote.

Speaker 5: Payments are complex and our partners trust us to do payments on their behalf given our deep expertise.

Before I lay out our fiscal 2024 priorities I will recap our fiscal 2023 accomplishments at.

Speaker 5: Over 7,000 accounting firms use our platform to provide financial automation, bill payment, and client advisory services, or CAS, to their clients.

At the start of the year, we set our priorities were to develop a unified platform experience further scale, our ecosystem and drive innovation and adoption of our payment solutions, we take our commitments seriously and have accomplished all of these objectives.

Speaker 5: Our platform empowers accountants with a purpose-built console to collaborate with their staff and clients across multiple workflows, enabling them to be more strategic and serve more clients.

We laid the foundation to launch a unified platform experience this fall, bringing our accounts payable and spend and expense management solutions seamlessly together.

Speaker 5: GRF, an accounting firm based in Washington, D.C., is a great example. Eleanor Litwack, partner of GRF Outsource Accounting and Advisory Services, said, and I quote, in an environment where automation is crucial to the success of any business, Bill remains a key ingredient in the growth of our task practice. With roughly 90 clients on our Bill console, Bill remains a key ingredient in the growth of our task practice practice.

Tightly woven solution with consolidated insights and unified data enables businesses to manage more of their financial back office in one place than ever before and.

In parallel we built our cross sell plans and capabilities for the unified platform launch we consolidated our sales teams across channels created single customer identities and preapproved, many customers for spend and expense management credit lines.

Speaker 5: we are able to centralize building selection, staff assignments, and build implementations.

We develop cross sell plans that encompassed in product discovery marketing campaigns partner enablement and direct sales outreach.

In addition, we acquired Finmark to expand our solutions to include financial planning and analysis tools.

Speaker 5: We've onboarded dozens of new CAS clients over the past three years, and our practice has doubled in size. Our partnership with Bill is a critical component of our infrastructure and continued growth.

This is an important step towards evolving our platform to empower smbs with greater insights to run their business and manage their cash flow.

Speaker 5: Before I lay out our fiscal 2024 priorities, I will recap our fiscal 2023 accomplishments.

In fiscal 2023, we expanded our distribution ecosystem by acquiring new partners and strengthened our existing partners by bringing them more solutions to their customers.

Speaker 5: At the start of the year, we set our priorities were to develop a unified platform experience, further scale our ecosystem, and drive innovation and adoption of our payment solutions.

For example, in our financial institution Channel, we extended our agreement with J P. Morgan Chase commercial banking's cash flow of 360 powered by Bill for another five years and expanded it to include additional payment capabilities.

Speaker 5: We take our commitment seriously and have accomplished all of these objectives.

Speaker 5: We laid the foundation to launch a unified platform experience this fall, bringing our accounts payable and spend and expense management solutions seamlessly together. Our tightly woven solution with consolidated insights and unified data enables businesses to manage more of their financial backed office in one place than ever before.

With cash flow of 360, <unk> JP Morgan Chase commercial banking clients connect digitally with suppliers vendors and Bill network members to automate invoicing approvals payments and reconciliation.

Customers can choose from a variety of payment choices today, including Acs check and virtual card.

Speaker 5: In parallel, we built our cross-sale plans and capabilities for the unified platform launch. We consolidated our sales teams across channels, created single customer identities, and pre-approved many customers for spend and expense management credit lines.

We are in the process of expanding our relationship with bank of America to serve more of their SMB customers given the success of our solution and serving their new small business customers.

We are now working together to extend our solution to serve their much larger installed base of SMB customers.

Speaker 5: We developed cross-sale plans that encompass in-product discovery, marketing campaigns, partner enablement, and direct sales outreach.

We have started investing behind this exciting long term initiative the growth in our relationship with Bofa speaks to the strong value proposition of our solutions deep expertise in payments and the collective success of our strategic partner ecosystem today.

Speaker 5: In addition, we acquired Finmark to expand our solutions to include financial planning and analysis tools. This is an important step towards evolving our platform to empower SMBs with greater insights to run their business and manage their cash flow.

Turning to the accounting channel, we acquired many new partners and now serve approximately 7000 accounting firms up from 6000 a year ago.

Speaker 5: In fiscal 2023, we expanded our distribution ecosystem by acquiring new partners and strengthened our existing partners by bringing more solutions to their customers.

We continue to enhance the tools, we provide accounts to manage their clients with simplified workflows more comprehensive reporting and integrated accounts payable and spend and expense management.

Speaker 5: For example, in our financial institution channel, we extended our agreement with JPMorgan Chase Commercial Banking's Cashflow360 powered by bill for another five years and expanded it to include additional payment capabilities.

Now moving onto our agreement with Intuit or co marketing and embedded Bill pay agreement expired in June the customer served through this partnership represented less than 1% of revenue during fiscal 2023. We believe there is a much stronger opportunity for bill to serve micro and small business directly and through our strategic partner ecosystem with banks in accounts we have.

Speaker 5: With Cashflow 360, JPMorgan Chase commercial banking clients connect digitally with suppliers, vendors, and bill network members to automate invoicing, approvals, payments, and reconciliation.

Speaker 5: Customers can choose from a variety of payment choices today, including ACH Check and Virtual Cart.

Offer them, a richer experience with our defining a platform that has a broader suite of workflow and payment capabilities.

Speaker 5: We are in the process of expanding our relationship with Bank of America to serve more of their SMB customers. Given the success of our solution in serving their new small business customers, we are now working together to extend our solution to serve their much larger installed base of SMB customers.

Delivering payment innovations and increasing AD valorem payment adoption has been an important priority for bill and we made significant progress in fiscal 2023.

By providing choice and helping customers in network members find the best solutions for their needs AD valorem penetration, excluding the Fi channel expanded to 13% of our payment volume across solutions up from 10% a year ago.

Speaker 5: We have started investing behind this exciting long-term initiative. The growth in our relationship with B of A speaks to the strong value proposition of our solutions, deep expertise in payments, and the collective success of our strategic partner ecosystem today.

Our easy and secure payment experience drives growth in our network members now at $5 8 million up from $4 7 million a year ago.

Speaker 5: Turning to the accounting channel, we acquired many new partners and now serve approximately 7,000 accounting firms, up from 6,000 a year ago.

We expanded our AD valorem solutions by broadly rolling out pay by card and bill balanced and introducing a beta version of invoice financing to a select group of network members.

Speaker 5: We continue to enhance the tools we provide accountants to manage their clients with simplified workflows, more comprehensive reporting, and integrated accounts payable and spend and expense management.

We are continuing to test the solution and we'll make it available to more businesses in fiscal 2024.

Speaker 5: Now, moving on to our agreement with Intuit. Our co-marketing and embedded bill pay agreement expired in June .

Our large data asset and risk management expertise provides us a competitive advantage to serve smbs with working capital and cash flow solutions.

Speaker 5: The customers served through this partnership represented less than 1% of revenue during fiscal 2023. We believe there is a much stronger opportunity for Bill to serve micro and small businesses directly and through our strategic partner ecosystem with banks and accountants.

Looking ahead to fiscal 2024, we are prepared to operate in a constricted macro environment, while executing our top priorities.

Our overarching goal is to help small businesses thrive by providing the tools and insight they need to efficiently and confidently manage their financial operations and cash flow and supported this goal. We have set out. These three top priorities for fiscal 2024 first is to drive adoption of our integrated financial operations platform that empowers smbs easily manage their AP and spending.

Speaker 5: We will offer them a richer experience with our defining platform that is a broader suite of workflow and payment capabilities.

Speaker 5: Delivering payment innovations and increasing ad valorem payment adoption has been an important priority for Bill, and we made significant progress in fiscal 2023.

Speaker 5: By providing choice and helping customers and network members find the best solutions for their needs, At Valor and Penetration, excluding the FI channel, expanded to 13% of our payment volume across solutions, up from 10% a year ago.

Expense operations together.

Second we will expand our ecosystem by bringing more innovation to our partners and attracting new partners.

And third we will continue to enrich our payment experiences and drive penetration of our active Orange solutions.

Speaker 5: Our easy and secure payment experience drives growth in our network members, now at $5.8 million, up from $4.7 million a year ago.

In closing, we delivered a strong defining year as we surpassed more than $1 billion in revenue and achieved meaningful non-GAAP profitability.

Speaker 5: We expanded our ad valorem solutions by broadly rolling out Pay-by-Guard and Bill Balance and introducing a beta version of invoice financing to a select group of network members.

This threshold as a reminder, that we have built and are building a new category around financial operations for Smbs.

We are the leader and continue to innovate across our platform and ecosystem.

Speaker 5: We are continuing to test the solution and will make it available to more businesses in fiscal 2024. Our large data asset and risk management expertise provides us a competitive advantage to serve SMBs with working capital and cash flow solutions.

<unk> built this category to bring automation efficiency and insights around the underlying financial operations that make any business tick for most of our existence no. Other company that is doing let alone thinking about how to help smbs on this front at scale.

Speaker 5: Looking ahead to fiscal 2024, we are prepared to operate in a constricted macro environment while executing our top priorities.

Our mission has just begun and we will continue to innovate across our platform and ecosystem of customers partners and suppliers to serve more and more smbs.

Speaker 5: Our overarching goal is to help small businesses thrive by providing the tools and insight they need to efficiently and confidently manage their financial operations and cash flow.

We wanted to thank our customers partners and employees, who are on this journey with us to help smbs changed the way they do business now I'll turn the call over to John to talk in more detail about our quarter.

Speaker 5: In support of this goal, we have set out these three top priorities for fiscal 2024. First, is to drive adoption of our integrated financial operations platform that empowers SMBs to easily manage their AP and spending expense operations together.

Today, I'll provide an overview of our fourth quarter and full fiscal year 2023 financial results and discuss our outlook for the first quarter and full fiscal year 2024.

Speaker 5: Second, we will expand our ecosystem by bringing more innovations to our partners and attracting new partners.

We achieved significant financial milestones in fiscal 2023, while investing to expand our category and extending our lead in serving the financial operations and BW payment needs of Smbs.

Speaker 5: And third, we will continue to enrich our payment experiences and drive penetration of our ad valorem solutions.

Speaker 5: In closing, we delivered a strong defining year as we surpassed more than $1 billion in revenue and achieved meaningful non-GAAP profitability.

Revenue exceeded 1 billion and we were meaningfully non-GAAP profitable and free cash flow positive for the year.

Total revenue for fiscal 2023 was 1.058 billion.

Speaker 5: This threshold is a reminder that we have built and are building a new category around financial operations for S&Ps.

Collecting 65% year over year growth.

Speaker 5: We are the leader and continue to innovate across our platform and ecosystem.

Core revenue was $945 million and increased 49% year over year.

Speaker 5: We've built this category to bring automation, efficiency, and insights around the underlying financial operations that make any business tick. For most of our existence, no other company was doing, let alone thinking about how to help SMBs on this front at scale. Our mission has just begun and we will continue to innovate across our platform and ecosystem of customers, partners, and suppliers to serve more and more SMBs.

Annual revenue growth for Bill Standalone platform, and our <unk> spend and expense management solution was 40% and 69% respectively.

Global revenue was $114 million.

Float revenue is an important part of our business model is it gives us the opportunity to invest in our platform and payments innovation and expand our ecosystem through economic cycles.

Speaker 5: We want to thank our customers, partners, and employees who are on this journey with us to help SMBs change the way they do business.

We made significant investments this past year, while delivering our first year of non-GAAP profitability.

Speaker 5: Now, I'll turn the call over to John to talk in more detail about our quarter.

non-GAAP net income for the year was $194 million, reflecting an 18% margin and free cash flow was $157 million, representing a 15% margin importantly, we also delivered profitability for the full fiscal year on a non-GAAP operating income basis, excluding the impact of float revenue.

Speaker 6: Thanks, Renee. Today I'll provide an overview of our fourth quarter and full fiscal year 2023 financial results and discuss our outlook for the first quarter and full fiscal year 2024.

Speaker 6: We achieved significant financial milestones in Fiscal 2023 while investing to expand our category and extending our lead in serving the financial operations and B2B payment needs of SMBs.

This demonstrates the progress we have made efficiently scaling our non-GAAP operating expenses.

Speaker 6: Revenue exceeded $1 billion and we were meaningfully non-GAAP profitable and free cash flow positive for the year.

Bill's durable business model combined with excellent execution drove these strong results as we carefully navigate it macro and banking turmoil challenges.

Speaker 6: Total revenue for Fiscal 2023 was $1.058 billion, reflecting 65% year-over-year growth.

Now to a few highlights of our Q4 results.

Speaker 6: Core revenue was $945 million. It increased 49% year over year.

The headline is that we delivered strong and profitable growth.

Total revenue was $296 million up 48% year over year non-GAAP gross margin was 86, 9% non.

Speaker 6: Annual revenue growth for our bill standalone platform and our DIBY spend and expense management solution was 40% and 69% respectively.

non-GAAP net income was $69 million or 23% of revenue.

Speaker 6: Float revenue is $114 million.

Compared to a non-GAAP net loss of $3 million a year ago.

Speaker 6: Float revenue is an important part of our business model as it gives us the opportunity to invest in our platform and payments innovation and expand our ecosystem through economic cycles.

In addition, we generated a free cash flow margin of 25% in Q4.

Our strong financial performance in Q4 was achieved despite macro headwinds as smbs continue to moderate their spend during the quarter in Q4, our <unk> results exceeded our expectations, but also showed a continuation of our customer base scaling back spend compared to a year ago.

Speaker 6: We made significant investments this past year while delivering our first year of non-GAAP profitability.

Speaker 6: non-GAAP net income for the year was $194 million, reflecting an 18% margin, and free cash flow was $157 million, representing a 15% margin.

GPU per customer, excluding financial institution channel customers or <unk> increased 4% quarter over quarter.

Speaker 6: Importantly, we also delivered profitability for the full fiscal year on a non-GAAP operating income basis excluding the impact of float revenue.

However, it declined 5% year over year, demonstrating that smbs are still facing macro pressures.

Speaker 6: This demonstrates the progress we have made efficiently scaling our non-GAAP operating expenses.

Smbs use our platform as the center of their financial operations and engagement with our platform remains strong for example on our Bill Standalone platform. Excluding F is the average number of transactions per customer was <unk> 76 in fiscal Q4 up from 74 the prior quarter.

Speaker 6: Bill's durable business model, combined with excellent execution, drove these strong results as we carefully navigated macro and banking turmoil challenges.

Speaker 6: Now to a few highlights of our Q4 results.

Speaker 6: The headline is that we delivered strong and profitable growth.

Our annual Bill Standalone customer retention rate, which excludes <unk> remained consistent compared to a year ago and is at a very healthy level of 86%.

Speaker 6: Total revenue was $296 million, up 48% year over year. Non-gap gross margin was 86.9%.

Turning to an update on our key metrics and financial results in Q4. As this is our year end earnings call I will provide additional disclosures on certain metrics you under our regular quarterly updates.

Speaker 6: non-GAAP net income was $69 million, or 23% of revenue.

Speaker 6: compared to a non-GAAP net loss of 3 million a year ago.

Speaker 6: In addition, we generated a free cash flow margin of 25% in Q4.

We ended the fourth quarter with 461000 businesses using our solutions fueled standalone customers grew to 201000 up 27% year over year. This included 5300 net adds from the direct and accounting channels, including approximately 700 Bank of America commercial customers, who migrated to our direct channel from our FA channel.

Speaker 6: Our strong financial performance in Q4 was achieved despite macro headwinds as SMBs continued to moderate their spend during the quarter. In Q4, our TPV results exceeded our expectations but also showed a continuation of our customer base scaling back spend compared to a year ago.

During the quarter.

Speaker 6: TPV for customer, excluding Financial Institution Channel customers, or FIs, increased 4% quarter over quarter. However, it declined 5% year over year, demonstrating that SMBs are still facing macro pressures.

We ended the quarter was 61600 customers in the Fi channel, which declined approximately 2200 quarter over quarter.

The decrease was primarily due to the sunset of our legacy platform for Bofa as commercial customers, which impacted approximately 6000 customers.

Speaker 6: SMBs use our platform as the center of their financial operations, and engagement with our platform remains strong. For example, on our bill standalone platform, excluding FIs, the average number of transactions per customer was 76 in fiscal Q4, up from 74 the prior quarter.

For our JV spend management solution, we ended the quarter with 29200 spending businesses, an increase of 2100 from last quarter at.

At the end of Q4, approximately 7200 businesses use both our AP and spend and expense management solutions.

Speaker 6: Our annual bill standalone customer retention rate, which excludes FIs, remained consistent compared to a year ago and is at a very healthy level of 86%.

Moving on to payment volume during the quarter, we managed $69 1 billion at TPB.

Bill Standalone total payment volume was $65 1 billion in Q4, reflecting 7% growth from Q4 last year, and an increase of 7% sequentially well.

Speaker 6: Turning to an update on our key metrics and financial results in Q4, as this is our year-end earnings call, I'll provide additional disclosures on certain metrics beyond our regular quarterly updates.

While this was below historical trends TPP trends in the quarter exceeded our expectations. In addition in Q4, we had $3 8 billion and card payment volume from our spend and expense management product, representing 42% year over year growth.

Speaker 6: We ended the fourth quarter with 461,000 businesses using our solutions.

Speaker 6: Bill's standalone customers grew to 201,000, up 27% year over year. This included 5,300 net ads from the direct and accounting channels, including approximately 700 Bank of America commercial customers who migrated to our direct channel from our FI channel during the quarter.

We experienced macro driven change in customer spend patterns during the year, leading to lower TPB growth, which is a key driver for transaction revenue growth. This directly impacts our annual net dollar based revenue retention rate, which includes subscription and transaction fees.

Speaker 6: We ended the quarter with 61,600 customers in the FI channel, which declined approximately 2,200 quarter over quarter.

As of June 30 of 2023, our net dollar based revenue retention rate was 111%, which is a great result, considering two consecutive years of outsized expansion.

Speaker 6: The decrease was primarily due to the sunset of our legacy platform for B of A's commercial customers, which impacted approximately 6,000 FI customers.

We made substantial progress driving adoption of variable price payment products as reflected in our annually reported metrics in Q4, Houston transferred cross, 1% of Bill Standalone, TPB and virtual cards with three 2% of Bill Standalone TPB.

Speaker 6: For our JiviSpend Management Solution, we ended the quarter with 29,200 spending businesses, an increase of 2,100 from last quarter.

Speaker 6: At the end of Q4, approximately 7,200 businesses used both our AP and spend and expense management solutions.

Cross border payments totaled four 7% of Bill Standalone TPB in Q4 with foreign currency payments, representing 36% of total cross border payment volume.

Speaker 6: Moving on to payment volume, during the quarter we managed $69.1 billion in TPV.

Speaker 6: Bill's standalone total payment volume was $65.1 billion in Q4, reflecting 7% growth from Q4 of last year, and an increase of 7% sequentially.

For Q4, our total variable price payments, which includes AD valorem payments transacted through our AP AR and spend management solutions was 13% of consolidated payment volume, excluding <unk> from the EFI channel, which is up from 10% a year ago.

Speaker 6: While this was below historical trends, TPP trends in the quarter exceeded our expectations.

Speaker 6: In addition, in Q4 we had $3.8 billion in card payment volume from our spend and expense management product, representing 42% year-over-year growth.

We believe there is a significant runway for AD warm adoption across our solution in the years ahead.

Moving on to transaction volumes, we processed $23 4 million payments in Q4. This includes $11 6 million payments on the Bill Standalone platform of which 72% were electronic payments.

Speaker 6: We experienced macro-driven changing customer spend patterns during the year, leading to lower TPV growth, which is a key driver for transaction revenue growth. This directly impacts our annual net dollar-based revenue retention rate, which includes subscription and transaction fees. Since USAID is consistently selling these specific symbols in economic markets, registered

In addition, we processed a $11 4 million spend management car transactions.

Total transaction revenue per transaction, which includes transactions for our bill Standalone JV and invoice to go solutions was $8 23.

Speaker 6: As of June 30, 2023, our net dollar-based revenue retention rate was 111%, which is a great result considering two consecutive years of outsized expansion.

Reflecting growth of 7% year over year for a bill Standalone solution transaction revenue per transaction was $7 88 growth of 20% year over year.

Speaker 6: We made substantial progress driving adoption of variable price payment products as reflected in our annually reported metrics.

Speaker 6: In Q4, Instant Transfer crossed 1% of bill standalone TPV and virtual cards were 3.2% of bill standalone TPV.

The gross take rate on card payments processed through our spend management solution in Q4 was approximately 265 basis points.

Speaker 6: Cross-border payments total 4.7% of bills standalone to BBN Q4 with foreign currency payments representing 36% of total cross-border payment volume.

For fiscal 2023, our contribution margin for our <unk> spend and expense management solution increased to approximately 33%.

An improvement of approximately three percentage points year over year, driven by ongoing improvements in our credit underwriting capabilities.

Speaker 6: For Q4, our total variable price payments, which includes ad valorem payments transacted through our AP, AR, and spend management solutions, was 13% of bill consolidated payment volume, excluding TPV from the FI channel, which is up from 10% a year ago.

Now I'll review, our reported Q4 results.

Total revenue was $296 million, an increase of 48% from a year ago core revenue, which includes subscription and transaction revenue was $259 5 million representing growth of 33% year over year.

Speaker 6: We believe there is a significant runway for ad warm adoption across our solution in the years ahead.

Speaker 6: Moving on to transaction volumes, we process 23.4 million payments in Q4. This includes 11.6 million payments on the bill stand-alone platform, of which 72% were electronic payments.

Subscription revenue increased to $66 9 million up 21% year over year Bill.

<unk> Standalone subscription revenue was $57 8 million, reflecting growth of 25% year over year, driven by our expanding customer base and a price increase implemented in our direct and accounting channels during the fiscal year.

Speaker 6: In addition, we processed 11.4 million spend management card transactions.

Speaker 6: Toml Transaction Revenue per Transaction, which includes transactions for our bill standalone, DIVI, and invoice-to-go solutions was $8.23.

Transaction revenue increased to $192 6 million up 38% year over year.

Speaker 6: reflecting growth of 7% year over year. For our bill standalone solution, transaction revenue per transaction was $7.88, growth of 20% year over year. The gross take rate on card payments processed through our spend management solution in Q4 was approximately 265 basis points.

Bill Standalone transaction revenue totaled $91 5 billion or growth of 33% year over year, and Debbie transaction revenue totaled $99 9 million, reflecting growth of 44% year over year.

<unk> revenue was $36 5 million or yield on FBR funds was 453 basis points in the quarter.

Speaker 6: For fiscal 2023, our contribution margin for our DIVI Spend and Expense Management Solution increased to approximately 33%.

non-GAAP gross margin was 86, 9% up two seven percentage points year over year as a result of higher float revenue and increasing variable transaction fee revenue.

Speaker 6: An improvement of approximately three percentage points year over year, driven by ongoing improvements in our credit underwriting capabilities.

As discussed previously we are expecting our non-GAAP gross margin to moderate as our payment type composition matures and float revenue tail winds subside for fiscal 2024, we expect non-GAAP gross margin to be in the low to mid eighties.

Speaker 6: Now I'll review our reported Q4 results.

Speaker 6: Total revenue was $296 million, an increase of 48% from a year ago. Core revenue, which includes subscription and transaction revenue, was $259.5 million, representing growth of 33% year over year.

non-GAAP operating expenses were $214 8 million, an increase of 6% from Q3 rewards expenses, which are included in sales and marketing expenses were 49% of spend management card revenue compared to 48% in the prior quarter.

Speaker 6: Subscription revenue increased to 66.9 million, up 21% year over year.

Speaker 6: Bill's standalone subscription revenue was $57.8 million, reflecting growth of 25% year-over-year, driven by our expanding customer base and a price increase implemented in our direct and accounting channels during the fiscal year.

non-GAAP operating income was $42 3 million, representing a margin of 14%.

This was an increase of $45 5 million from a loss of $3 2 million a year ago.

Speaker 6: Transaction revenue increased to $192.6 million, up 38% year over year. Bill's standalone transaction revenue totaled $91.5 million, or growth of 33% year over year, and DIVI transaction revenue totaled $99.9 million, reflecting growth of 44% year over year.

non-GAAP other income net of other expenses was $28 million and benefited from higher yields on corporate cash and investment portfolios are.

Our non-GAAP net income was $69 4 million or 23, 5% of revenue, resulting in non-GAAP net income per diluted share or 59.

Speaker 6: Float revenue was $36.5 million. Our yield on FDO funds was 453 basis points in the quarter. non-GAAP gross margin was 86.9%, up 2.7 percentage points year over year as a result of higher float revenue and increasing variable transaction fee revenue.

Based on $117 million diluted weighted average shares outstanding are.

Our non-GAAP net income was significantly ahead of our estimates due to our revenue results combined with proactive expense management.

We ended the quarter with $2 7 billion in cash cash equivalents and short term investments.

Speaker 6: As discussed previously, we are expecting our non-gap gross margin to moderate as our payment type composition matures and float revenue tailwinds subside. For fiscal 2024, we expect non-gap gross margin to be in the low to mid 80s.

Before shifting to our financial outlook for the first quarter and full fiscal year 2024, I'd like to share our latest views on the impact of macro conditions are having on smbs and our business.

Speaker 6: non-GAAP operating expenses were $214.8 million, an increase of 6% from Q3. Rewards expenses, which are included in sales and marketing expenses, were 49% of spend management card revenue, compared to 48% in the prior quarter.

The spend patterns, we experienced in fiscal Q4 are an indicator that the sharp reduction in spending that occurred in the second half of calendar 2022 is now moderated though our customers are still in contraction mode.

The trends pointing to payment volume stabilization are encouraging, but we are expecting continued TPP headwinds throughout the year, given higher interest rates tighter credit conditions in an uncertain macro environment.

Speaker 6: non-GAAP operating income was $42.3 million, representing a margin of 14%.

Speaker 6: This was an increase of $45.5 million from a loss of $3.2 million a year ago.

While we expect approximately mid to high single digit growth in TPB in fiscal 2024, we anticipate that bill Standalone TPB per customer excluding the Fi channel will decrease low single digits percentage for fiscal 2024 compared to a year over year decline of 5% in Q4.

Speaker 6: non-GAAP Other Income, net of other expenses, was $28 million and benefited from higher yields on corporate cash and investment portfolios.

Speaker 6: Our non-GAAP net income was $69.4 million, or 23.5% of revenue, resulting in non-GAAP net income per diluted share of $0.59 based on 117 million diluted weighted average shares outstanding.

Near term, we expect Q1 to be a continuation of the trend we experienced in Q4.

We also expect that near term macro distractions will continue to impact smbs.

Speaker 6: Our non-GAAP net income was significantly ahead of our estimates due to our revenue results combined with proactive expense management.

For the next couple of quarters, we expect Bill Standalone net adds excluding the Fi channel to be approximately 4000 per quarter, excluding the impact of the expiration of our contract with Intuit as.

Speaker 6: We end the quarter with $2.7 billion in cash, cash equivalents, and short-term investments.

Speaker 6: Before shifting to our financial outlook for the first quarter and full fiscal year 2024, I'd like to share our latest views on the impact macro conditions are having on SMBs and our business.

As of June 2023, approximately 12000 of our more than 400000 customers used our embedded feature an intuitive simple bill pay solution.

While we expect the majority of these micro businesses to churn over the next two quarters, we expect some of the larger businesses to become build direct customers, where there will be an opportunity to provide them with a more advanced workflow capabilities and a much broader suite of payment solutions, including AD valorem payments.

Speaker 6: The spend patterns we experienced in Fiscal Q4 are an indicator that the sharp production in spending that occurred in the second half of calendar 2022 has now moderated, though our customers are still in contraction mode. The trends pointing to payment volume stabilization are encouraging, though we are expecting continued TPP headwinds throughout the year given higher interest rates.

As Rene discussed earlier, we are enhancing and expanding our solution with bank of America to serve their large installed SMB customer base. In addition to their new SMB customers.

Speaker 6: tighter credit conditions, and an uncertain macro environment.

Speaker 6: While we expect approximately mid to high single digit growth in TPB in fiscal 2024, we anticipate that bill standalone TPB per customer, excluding the FI channel, will decrease low single digits percentage for fiscal 2024 compared to a year-over-year decline of 5% in Q4. Near term, we expect Q1 to be a continuation of the trend we experienced in Q4.

Together with Bofa, we will both be accelerating our investments to address this very large market opportunity as a part of this initiative. We are restructuring the contractual minimums to push out subscription fees planned for fiscal 2024 to future years.

While this impacts our fiscal 2020 for revenue and profitability, we expect it to unlock a significantly larger revenue opportunity in the future and accelerate the adoption of financial operations for Smbs. We believe this strategic partnership is an important step towards driving awareness and accelerating adoption of our solutions. The market is ripe for smbs to automate and stopped using <unk>.

Speaker 6: We also expect that near-term macro distractions will continue to impact SMBs. For the next couple of quarters, we expect bill standalone net ads, excluding the FI channel, to be approximately 4,000 per quarter, excluding the impact of the expiration of our contract with Intuit. As of June 2023, SMBs have been

Annual legacy processes, we're investing in our platform and ecosystem of strategic partners to collectively capture this large opportunity even with the stepped up investments we plan to expand our non-GAAP operating income for the year.

Speaker 6: approximately 12,000 of our more than 400,000 customers used our embedded feature and Intuit's simple bill pay solution.

Speaker 6: While we expect the majority of these micro businesses to churn over the next two quarters, we expect some of the larger businesses to become Bill Direct customers, where there will be an opportunity to provide them with more advanced workflow capabilities and a much broader suite of payment solutions, including ad-blarm payments.

Now turning to our outlook for.

For fiscal Q1, we expect total revenue to be in the range of 295, 5% to $298 5 million, which reflects 28% to 30% year over year growth. This assumes our subscription revenue in Q1 will increase a mid single digit percentage year over year as we factor in our initiatives with Bofa and a comparison to the subscription price increase plus.

Speaker 6: As Renee discussed earlier, we are enhancing and expanding our solution with Bank of America to serve their large installed SMB customer base in addition to their new SMB customers.

Year.

We expect float revenue to be $38 million in Q1, which assumes our yield on FBR funds will be approximately 460 basis points.

Speaker 6: Together with B of A, we will both be accelerating our investments to address this very large market opportunity. As a part of this initiative, we are restructuring the contractual minimums to push out subscription fees planned for fiscal 2024 to future years.

On the bottom line for Q1, we expect to report non-GAAP net income in the range of 56, 5% to $59 5 million and non-GAAP net income per diluted share in the range of 48 to 50.

Speaker 6: While this impacts our fiscal 2024 revenue and profitability, we expect it to unlock a significantly larger revenue opportunity in the future and accelerate the adoption of financial operations for SMBs.

Based on a share count of $118 5 million diluted weighted average shares outstanding.

For Q1, we expect other income net of other expenses or or E to be $27 million.

Speaker 6: We believe this strategic partnership is an important step towards driving awareness and accelerating adoption of our solutions.

We expect stock based compensation expenses of approximately $70 million in Q1, and we expect capital expenditures of approximately $8 million to $10 million.

Speaker 6: The market is ripe for SMBs to automate and stop using manual legacy processes.

Speaker 6: We're investing in our platform and ecosystem of strategic partners to collectively capture this large opportunity. Even with these stepped-up investments, we plan to expand our non-GAAP operating income for the year.

Speaker 6: we're investing in our platform and ecosystem of strategic partners to collectively capture this large opportunity. Even with these stepped up investments, we plan to expand our non-GAAP operating income for the year. Now turning to our outlook.

Moving on to full year guidance.

For fiscal 2024, we expect total revenue to be in the range of $1 $288 $5 million to 1 billion $306 5 million, which represents.

Speaker 6: For fiscal Q1, we expect total revenue to be in the range of $295.5 to $298.5 million, which reflects 28% to 30% year-over-year growth.

<unk>, approximately 22% to 23% year over year growth. This assumes our subscription revenue for the full year will increase a mid single digit percentage compared to fiscal 2023, as we factor in the temporary impact related to our initiatives with Bofa and the lapse of our subscription price increase last year.

Speaker 6: This assumes our subscription revenue in Q1 will increase a mid single digit percentage year over year as we factor in our initiatives with B of A and our comparison to the subscription price increase last year. We expect float revenue to be 38 million in Q1, which assumes our yield on FBO funds will be approximately approximately 460 basis points.

We expect quote revenue to be approximately $136 5 million in fiscal 2024, which assumes a yoga and FBR funds of approximately 415 basis points for the year, reflecting our assumption that the fed funds rate begins to decline at the beginning of calendar 2024.

Speaker 6: On the bottom line, for Q1 we expect to report non-GAF net income in the range of $56.5 to $59.5 million and non-GAF net income per diluted share in the range of $0.48 to $0.50 based on a share count of 118.5 million diluted weighted average shares outstanding.

We expect to report non-GAAP net income for fiscal year 2024 in the range of $217 million to $235 million.

We expect non-GAAP net income per diluted share to be $1 82 to $1 97.

Speaker 6: For Q1, we expect other income net of other expenses or OIE to be $27 million. We expect stock-based compensation expenses of approximately $70 million in Q1. And we expect capital expenditures of approximately $8 to $10 million.

Based on a share count of $119 5 million diluted weighted average shares outstanding.

We expect to achieve this profitability, while accelerating our investments in our platform and partnerships in.

In addition for fiscal 2024, we expect other income net of other expenses to be approximately $90 million, we expect stock based compensation expenses of approximately $300 million and expect capital expenditures to be approximately $35 million to $40 million for the full year.

Speaker 6: Moving on to full year guidance.

Speaker 6: For fiscal 2024, we expect total revenue to be in the range of $1,288,500,000 to $1,306,500,000, which represents approximately 22 to 23% year-over-year growth. This assumes our subscription revenue for the full year will increase a mid-single-digit percentage compared to fiscal 2023.

In closing, we delivered exceptional financial performance during the year with multiple challenges faced by Smbs, We made significant investments in our platform expanded our ecosystem and delivered our first year of non-GAAP profitability. Looking ahead, we are accelerating our pace of investments to unlock the significant opportunity to automate financial operations for many more smbs.

Speaker 6: as we factor in the temporary impact related to our initiatives with B of A and the lapse of our subscription price increase last year.

Speaker 6: We expect float revenue to be approximately $136.5 million in fiscal 2024, which assumes a yield on FBO funds of approximately 415 basis points for the year, reflecting our assumption that the Fed funds rate begins to decline at the beginning of calendar 2024.

With our proven track record of investing in organic and inorganic opportunities. We will continue to invest to pursue this large market opportunity while laying the foundation for long term profitability.

We created a category and this is just the beginning we are building our business an ecosystem to bring the transformative experience of our platform to millions of businesses and facilitate trillions of their <unk> spend while building a multibillion dollar revenue business.

Speaker 6: We expect to report non-GAAP net income for fiscal year 2024 in the range of $217 to $235 million.

Speaker 6: We expect non-GAAP net income per diluted share to be $1.82 to $1.97 based on a share count of 119.5 million diluted weighted average shares outstanding.

Operator, we're now ready to take questions.

If you would like to ask a question. Please press star followed by one on your telephone keypad.

Speaker 6: We expect to achieve this profitability while accelerating our investments in our platform and partnerships.

Sure move your question kind of star followed by Tim.

Speaker 6: In addition, for fiscal 2024, we expect other income, net of other expenses, to be approximately $90 million. We expect stock-based compensation expenses of approximately $300 million and expect capital expenditures to be approximately $35 million to $40 million for the full year.

And if you are using a speakerphone. Please pick up your handset before asking your question.

Our first question today comes from Scott Berg with Needham <unk> Company.

Please proceed.

Hi, everyone. Congrats on the nice quarter and thanks for taking my questions.

Speaker 6: In closing, we delivered exceptional financial performance during a year with multiple challenges faced by SMBs. One of bout as many have been did today, the first day of the getting started contract

I guess, a couple I don't know where they are John who wants to take the first one John you talked about your assumptions for this year are slowing accelerating <unk> TV growth, which I think we understand but your core bill customer ads quarterly ads guidance for 4000, a couple of quarters, just kind of in line with what <unk> seen all year help us kind of analysts what youre seeing.

Speaker 6: We made significant investments in our platform, expanded our ecosystem, and delivered our first year of non-GAAP profitability. Looking ahead, we are accelerating our pace of investments to unlock the significant opportunity to automate financial operations for many more SMBs. With our proven track record of investing in organic and inorganic opportunities, we will continue to invest to pursue this large market opportunity while laying the foundation of our

On the new customer adds versus the <unk> sounds like unique customer acquisition channels continue to Hum along pretty well.

Yes, thanks for the question Scott.

We're feeling good about our our levers and our ability to penetrate the market and acquire customers and retain and serve them I think the some of the influences of the macro environment on Smbs. Today also have an influence on the timing and the rate of adoption adopting new technology.

Speaker 6: to millions of businesses and facilitate trillions of their B2B spend while building a multi-billion dollar revenue business.

Speaker 3: Operator, we're now ready to take questions. If you would like to ask a question, please press star followed by one on your telephone keypad.

Speaker 3: To remove your question, press star followed by 2.

So I think we're well positioned to accelerate net new adds after making a transition from I think some some changes in the market and dynamics related to macro that we saw in the December quarter.

Speaker 3: And if you are using a speakerphone, please pick up your handset before asking your question.

Speaker 3: Our first question today comes from Scott Berg with Needham & Company. Please proceed.

Speaker 7: Hi, everyone. Congrats on the night's quarter and thanks for taking my questions. I guess a couple, I don't know if Renee or John , who wants to take the first one. John , you talked about your assumptions for this year are slowing, accelerating TPD growth, which I think we understand.

We're still sort of measured in our estimates about how fast that is going to happen. So I think the setup is good the multichannel distribution strategy is working well and I feel like.

For this year, we're confident in being able to accelerate but it's likely the year has got a progress in the macro environment needs to resolve itself before we see any sort of outsize step up in net new adds.

Speaker 7: But your core bill customer ads quarterly ads guidance for 4,000 next couple quarters is kind of in line with what you've seen all year. Help us kind of balance what you're seeing on the new customer ad versus the TPV. Cuz it sounds like your new customer acquisition channels continue to hum along pretty well.

Got it helpful and then.

On the I think it was the Bofa contract John you mentioned, pushing some subscription revenues out of fiscal 'twenty four to future periods.

Speaker 6: Thanks for the question, Scott. We're feeling good about our levers and our ability to penetrate the market and acquire customers and retain and serve them. I think some of the influences of the macro environment on SMBs today...

We have good relationships with them and other bank.

Customers out there partners, but how should we think about the impact on your 24 revenue guidance with education of the contract.

Yes. Good question Scott. So I mean, we're actually really excited about this moment in time, we have been.

Speaker 6: also have an influence on the timing and the rate of adopting new technology. So I think we're well positioned to accelerate net new ads after making a transition from, I think, some changes in the market and dynamics related to macro that we saw in the December quarter.

Think building towards an inflection point like this for a long time and the progress that we've made working closely with Bofa has resulted in the opportunity to bring forward working with a much larger installed base of customers versus where we've been for the last year or so which was with the new customers to the bank.

Speaker 6: we're still sort of measured in our estimates about how fast that is gonna happen. So I think the setup is good, the multi-channel distribution strategy is working well, and I feel like for this year, we're confident in being able to accelerate, but it's likely the year's gotta progress.

So we think the trade off is a no brainer simple decision to bring forward the larger opportunity for.

For fiscal 'twenty, four well I can't give specific numbers I can say our subscription revenue estimates probably would've been in the range of 8% to 10% higher.

We had an adjusted some of the.

Contractual terms with Bofa, but looking at this opportunity over the next couple of years, we feel really good about where this is headed.

Speaker 7: helpful. And then on the B of A contract John you mentioned it's pushing some subscription revenues out of fiscal 24 in a future period. You certainly have good relationships with them and other bank FI customers out there partners but how should we think about the impact on your 24 revenue guidance with that changing the contract.

And maybe I'd just add.

Sure.

Yes, just a few comments on the opportunity with the financial institutions right. So in general when we think about.

How adoption happens across payment products and payment rails.

Speaker 6: Yeah, good question, Scott. So I mean, we're actually really excited about this moment in time. We've been, you know, I think building towards an inflection point like this for a long time, and the progress that we've made working closely with B of A has resulted in the opportunity to bring forward the development and growth of B of A, and that as we move forward struggled with as much of its beta content. In typically the case of B of A is going to be, you know, the

Banks have been instrumental in making that happen over the years they've had if you think about credit card solutions debit card solutions Bill pay on the consumer side banks have been responsible for kind of driving that adoption and like John said. This we see this as an opportunity for an inflection point with adoption across a broader market not just within the existing customers and partners we have to.

Speaker 6: working with a much larger installed base of customers versus where we've been for the last year or so, which was with the new customers to the bank. So we think the trade-off is a no-brainer, simple decision to bring forward the larger opportunity. For fiscal 24, well I can't give specific numbers, I can say our subscription revenue estimates.

Hey, this is an opportunity for us to invest behind that and we're super excited about it.

Thanks, so much for all the additional color congrats again.

Thank you Scott.

Our next question comes from Bryan Keane with Deutsche Bank. Please proceed.

Speaker 6: probably would have been in the range of 8 to 10% higher if we hadn't adjusted some of the contractual terms with B of A, but looking at this opportunity over the next couple of years, we feel really good about where this is headed.

Okay.

Hey, guys. Thanks for taking my questions I guess, just following up on the Bofa contract just understanding you gave up some near term revenue, but what are we gaining in the out years, how does how might the revenue inflect.

In fiscal year, 'twenty, five or 'twenty six.

Speaker 5: Yeah, maybe I just add a few comments here.

Yes, great question Brian .

Speaker 5: Yeah, just a few comments on the opportunity with the financial institutions, right? So in general, when we think about how adoption happens across payment products and payment rails, banks have been instrumental in making that happen over the years. They've had, if you think about ATM, credit card solutions, debit card solutions, bill pay.

Maybe continue the conversation the comments that you just add the opportunity that we had started with bank of America was really to serve their new small business customers coming into the bank.

Always invested behind that with the opportunity to serve their existing customers. DNA is one of the largest providers of financial services to small businesses in the country with millions of customers on their platform across the country and so for US this opportunity and the investment that's needed for both US and Bank of America has really had to do something.

Speaker 5: opportunity for us to invest behind that and we're super excited about it.

Transformative, it's really the kind of change the way business gets done for all of their Smbs and that's something that we will invest in consistently.

Speaker 7: Thanks so much for all the additional color. Congrats again.

Speaker 7: Thanks so much for all the additional color. Congrats again. Thank you, Scott.

Speaker 7: Thanks so much for all the additional color. Congrats again. Thank you, Scott.

Consistently to make happen because we've been building in defining this space. This category for it for a decade or more and actually 17 years to be exact and we're going to take all of these opportunities as we can.

Speaker 3: Our next question comes from Brian Keene with Dolcha Bank. Please proceed.

Speaker 8: Hey guys, thanks for taking my questions. I guess just following up on the B of A contract, just understanding you gave up some near-term revenue, but what are we gaining in the out years? How might the revenue inflect in fiscal year 25 or 26?

Got it got it and John any comments on just looking at the organic volume take rate increase I think it was a little less than last quarter, and then kind of what to expect for.

Take rate increase as we head into this fiscal year 'twenty four.

Speaker 5: Great question, Brian . Just to maybe continue the conversation, the comments that I just had. The opportunity that we had started with Bank of America was really to serve their new small business customers coming into the bank. We always invested behind that with the opportunity to serve their existing customers.

Yeah. Thanks, Thanks, Brian I think we've.

We've got a pretty consistent track record now of delivering <unk>.

<unk> monetization.

As you know from from prior discussions, it's not perfectly linear on a quarter to quarter basis, but the overall portfolio is performing really well if you think about.

Speaker 5: B of A is one of the largest providers of financial services to small businesses in the country with millions of customers on their platform across the country. And so for us, this opportunity and the investment that's needed for both us and Bank of America is really to do something transformative. It's really to kind of change the way business gets done for all of their SMBs.

What we've done over the last four years or so our average revenue per customer is up about forex. It's.

It's grown virtually every quarter in the last four years, we crossed an annualized ARPA of $4000 in this fiscal fourth quarter for the first time.

Speaker 5: that's something that you know we will invest in you know consistently to make happen because we've been building and defining this space this category for a decade or more and actually 17 years to be exact and we're going to take all these opportunities we get.

And so we think.

The tools and the portfolio of payment products that we have that have led to that or something that's going to continue to support expansion.

24, and 25 and beyond and I would say starting with our historical quarterly expansion rate is probably a good estimate obviously subject to puts or takes from from the macro environment any influences that might have in individual payment choices.

Speaker 8: Got it, got it. And John , any comments on just looking at the organic volume take rate increase? I think it was a little less than last quarter and then kind of what to expect for take rate increase as we head into this fiscal year 24.

Got it thanks for taking the questions.

Speaker 6: Thanks, Brian . I think we've got a pretty consistent track record now of delivering expanded monetization. As you know from prior discussions, it's not perfectly linear on a quarter to quarter basis, but the overall portfolio...

You bet. Thank you.

Our next question comes from William <unk> with Goldman Sachs. Please proceed.

Hey, guys I. Appreciate you taking the question I just wanted to ask about the commercial partnership on Bofa. The 700 customers that you added this quarter.

Is that process over and should we expect kind of further transitions a culture based on future quarters.

Speaker 6: is performing really well. If you think about what we've done over the last four years or so, our average revenue for customers up about 4x, it's grown virtually every quarter in the last four years, we crossed.

Okay.

Thank you, Brian we've got really strong adoption not just.

The customer numbers, but more from the spend that was actually happening in the bill pay that was actually happening across the platform. So the vast majority of the spend has come across are ready and we're already starting to see early days of AD valorem penetration. So I would say going forward, we expect the opportunity to continue to grow for bill.

Speaker 6: annualized ARPU of $4,000 in this fiscal fourth quarter for the first time. And so we think the tools and the portfolio of payment products that we have that have led to that are something that's going to continue to support expansion in 24 and 25 and beyond. And I'd say starting with our

I would just add in turn in terms of the transition the sunsetting of that product with.

Speaker 6: historical quarterly expansion rate is probably a good estimate, obviously subject to puts or takes from the macro environment and any influences that might have in individual payment choices.

The commercial customers.

We have seen the initial group migrate that's the 700, we talked about we're feeling really good about the revenue opportunity probably being larger with those then the entire population previously which was 6000.

Speaker 8: Thanks for taking the questions.

Speaker 3: You bet. Thank you. Our next question comes from William Mance with Goldman Sachs. Please proceed.

But the transition has has finished now there could be some longer tail of new customers that come in but for the most part that adjustment has already taken place.

Speaker 9: Hey guys, I appreciate you taking the question. I just wanted to ask about the commercial partnership on B of A, the 700 customers that you added this quarter. Is that process over and should we expect further transition across the base of future quarters?

Got it I appreciate you taking the question and then on.

Some of the moving pieces around Avalon payment adoption declined to 13 very nice to see.

What are some of the adoption trends underneath the hood that youre seeing across the different products. It seems like cross border saw very nice adoption you guys have talked about that what are the what are the trends and against the payment and virtual card ban and we saw some relatively strong.

Speaker 5: Thank you, William. We've got really strong adoption, not just from the customer numbers, but more from the spend that was actually happening, the bill pay that was actually happening across the platform. So the vast majority of the spend has come across already, and we're already starting to see early days of ad valorem penetration.

Orders in this past year.

Is there anything that you guys have line of sight to see an acceleration of adoption in the coming year.

I think the.

One of the more important things about the platform. We've built is that we give customers choice.

Speaker 6: sunsetting of that product with the commercial customers. We have seen the initial group migrate, that's the 700 we talked about. We're feeling really good about the revenue opportunity probably being larger with those than the entire population previously which was 6,000 but that transition has has finished now. There could be some you know longer.

Suppliers choice, we give our customers choice and all of the payment products and services. We offer is because we believe choices, what's actually going to make the market happened, we didnt get into build and create something that wasn't going to actually make an impact on the world. We want to make a big impact on the world and so the choice matters and what we're seeing is that there's lots of iteration required on the platform.

At scale to actually make this stuff happen, that's why we kind of say from quarter to quarter, it's not going to be exact but we believe in the long term opportunity and what we know is that the capabilities. We've already built on the platform allow us to continue to scale each of the categories of our payment rails and we've talked about so we do feel good about the virtual card adoption, we do feel good about the international.

Speaker 9: And then on some of the moving pieces around ad war and payment adoption of the 10 to 13 very nice to see What are some of the adoption trends underneath the hood that you're seeing across the different products? It seems like cross-border saw very nice adoption You guys have talked about that, you know, what what of the what are the trends in like instant payment and virtual card bin? And you know, we saw some relatively strong

Payment option, we feel good about the instant transfer adoption, we feel good about all the products and opportunities that are still to come such as the.

The invoice financing that we've got out and kind of Alpha beta mode. These are all things that we know customers want then they need the choices out there.

And I think we're just super happy that we've got a platform that can kind of scale with customers and scale with the opportunity.

Speaker 5: I think one of the more important things about the platform we built is that we give customers choice. We give suppliers choice, we give our customers choice, and all the payment products and services we offer is because we believe choice is what's actually going to make the market happen. We didn't get in to build and create something that wasn't going to actually make an impact on the world. We want to make a big impact on the world.

Great. Thanks for taking the questions.

Thank you.

Our next question comes from Brent <unk> with Piper Sandler. Please proceed.

Yeah.

Good afternoon, Rene maybe wanted to shift gears, a little bit to Debbie I mean, this has been a key growth engine for the business over 30% of the revenue.

How are you thinking about the <unk> growth opportunity in the next year and are there any catalysts that you're looking at that could help accelerate adoption. Thanks.

Speaker 5: quarter to quarter, it's not going to be exact, but we believe in the long-term opportunity. And what we know is that the capabilities we've already built on the platform allow us to continue to scale each of the categories of our payment rails that we've talked about. So, you know, we do feel good about the virtual card adoption. We do feel good about the international payment option. We feel good about the instant transfer adoption.

Great question Brian .

So very excited about.

Pulling together and launching our our unified platform later, this fall, which we talked about in the script, we've been working on that obviously since the acquisition.

Speaker 5: We feel good about all the products and opportunities that are still to come, such as the invoice financing that we've got out in kind of alpha data mode. These are all things that we know customers want. They need the choices out there. And I think we're just super happy that we've got a platform that can scale with customers and scale with the opportunity.

This into having the capabilities.

The product we've also been working very hard on the capabilities to kind of go to market and so the opportunity for us to really drive.

The option of the spend expense solution and capabilities. We have is going to be dependent on not just that go to market for the <unk> customers that we already have in the platform, but it is going to be for the go to market broadly and so this year, we expect to start.

Speaker 10: Thanks for taking the questions.

Speaker 10: Thanks for taking the questions. Thank you.

Speaker 3: Our next question comes from Brent Brison with Piper Sandler. Please proceed.

Shifting that focus on our financial operations that obviously all of our marketing and go to market will include all of the capabilities. We have and we think that's important so John do you have anything else you want to add.

Speaker 8: Good afternoon, Renee. Maybe want to shift gears a little bit to Divi. I mean, this has been a key growth engine for the business, over 30% of the revenue. How are you thinking about the Divi growth opportunity in the next year? And are there any catalysts that you're looking at that could help accelerate adoption? Thanks.

That all makes sense I think.

We could see some some obviously building momentum throughout the year associated with our integrated product in the attached.

Cross sell and go to market motion with that four for guidance purposes like the estimates that we have that are embedded in our assumptions call for.

Speaker 5: Great question, Brent. We are super excited about pulling together and launching our unified platform later this fall, which we talked about in the script. We've been working on that, obviously, since the acquisition, in addition to having the capabilities around the product.

Do you have to have.

Mid <unk> growth for the year, which we think is something that reflects all of the moving parts, both macro and otherwise.

And we're obviously going to going to work hard to to drive the cross sell and other upside opportunities.

Speaker 5: We've also been working very hard on the capabilities to kind of go to market. And so, you know, the opportunity, you know, for us to really drive, you know, adoption of the spend expense solution, the capabilities we have is going to be dependent on not just, you know, that go to market for the bill customers that, you know, we already have in the platform, but it's going to be for the go to market broadly. And so this year.

Helpful color there and then just John quick follow up on the Q1 guide itself implies.

Sequential increase here, that's a little below normal seasonality that we've seen in the last couple of years.

Is that factoring in this step down at bank of America, and subscription revenue or are there other factors baked into that guide just trying to think through the seasonality in the guide here in Q1, we should factor in thanks.

Speaker 5: we expect to start shifting the focus on financial operations. And obviously, all of our marketing and go-to-market will include all the capabilities we have, and we think that's important. So, John , do you have anything else you want to add? No, that all makes sense. I think…

Yes. Thanks for the question Brett that's exactly right. So there is obviously some seasonality that we believe still holds in this environment. It is included in our estimates, but the more material change is.

Speaker 6: You know we could see some some obviously building momentum throughout the year Associated with our integrated product and the attached you know cross sell and go-to-market motion with that for for guidance purposes like the estimates that we have that are embedded in our assumptions call for

Assumption around the Bofa subscription revenues and that's something that will.

Be reflected is reflected throughout our FY 'twenty guidance, but starting in Q4.

And the drop off in Q1, I think is where you see that change being most prominent.

Speaker 6: ideally to have mid-30s growth for the year, which we think is something that reflects all of the moving parts, both macro and otherwise. And we're obviously gonna work hard to drive the cross-cell and other upside opportunities.

Thank you.

Thank you.

Our next question comes from Kenneth Celski with Autonomous. Please proceed.

Hey, good afternoon, Renee and John Thanks for taking the questions.

Speaker 8: John , quick follow up on the Q1 guide itself implies a million sequential increase here. That's a little below normal seasonality that we've seen the last couple years. Is that factoring the step down at Bank of America subscription revenue or are there other factors baked into that guide? Just trying to think through the...

It's nice to see the continued adoption of the variable rate payments I think you've mentioned recently that there are several additional areas to invest around supplier enablement to drive more adoption, whether it's virtual card or cross border payments Theres. Some interesting stuff you can do in terms of passing along reconciliation data and offering choice. So can you just talk about some of the.

Speaker 6: the seasonality in the guide here in Q1, what we should factor in. Thanks. Yeah, thanks for the question, Brent. That's exactly right. So there is obviously some seasonality that we believe still holds in this environment that is included in our estimates, but the more material change is...

Vic things that you're working on now that will drive that next leg up in terms of penetration of these variable rate payment types and then I guess when can we expect some of these initiatives to be rolled out. Thanks.

Thank you Ken.

As always a lot of things going into.

Speaker 6: an assumption around the B of A subscription revenues, and that's something that will be reflected, is reflected throughout our FY24 guidance, but starting in Q4, and the drop-off in Q1, I think is where you see that change being most prominent.

How we execute across the.

Creating the choice of suppliers and customers need and integrating with the customers on the platform. So I would say that the things you mentioned there is always going to be more reconciliation capabilities for us to develop theres always going to be more supplier matching capabilities for us to develop we use AI to do a bunch of that but theres more that we can do to kind of drive.

Speaker 3: Thank you. Thank you. Our next question comes from Kenneth with autonomous. Please proceed.

Better connectivity.

On that front when you think about international payments, which is an important part of the overall app the arm portfolio.

Speaker 11: Hey, good afternoon, Renee and John . Thanks for taking the questions. It's nice to see the continued adoption of the variable rate payments. I think you've mentioned recently that there are several additional areas to invest around supplier enablement to drive more adoption, whether it's virtual card or cross-border payments. There's some interesting stuff you could do in terms of passing along reconciliation.

This is going to be influenced by macro.

If you just looked at kind of international payments in general, we see that being kind of a choppy sideways environment has been for the last few quarters and yet we're still making progress on our penetration. So I think some of this is going to be us continuing to execute and create choice, which is obviously one of the themes hitting on here the way our suppliers.

And in Canada and soon in other countries will be are able to kind of like how they wanted to pay what currency that's going to help that adopt and then you have a choice on how suppliers want to get paid to they want to get paid now or they wanted to pay tomorrow I want to get paid 30 days before the bills paid these are all things that we're working on and the platform has the capabilities to deliver it.

Speaker 11: rate payment types, and then I guess when can we expect some of these initiatives to be rolled out. Thanks.

Speaker 5: Thank you, Ken. There's always a lot of things going into how we execute across the creating the choice that suppliers and customers need and integrating with the customers on the platform. So I would say that the things you mentioned, there's always going to be more reconciliation capabilities for us to develop. There's always going to be more.

Something that we think creates a competitive advantage in the marketplace.

Great and maybe just for my follow up I wanted to ask about TPB per customer sat Fi and I think the expectation is for that to decline low single digits in fiscal year 'twenty four it sort of feels like SMB spending has stabilized here. The results this quarter trended in line with <unk>.

Speaker 5: supplier matching capabilities for us to develop. We use AI to do a bunch of that, but there's more that we can do to kind of drive better connectivity on that front. When you think about international payments, which is an important part of the overall app BORM portfolio, part of this is going to be influenced by macro.

Analogy, if you model out seasonality over the next few quarters. You know you can easily get to kind of low single digit to mid single digit growth in TPB per customer except five so I guess is the guidance on TPB per customer for SMB.

Speaker 5: If you just looked at, you know, kind of international payments in general, you know, we see that being kind of a choppy sideways environment, has been for the last few quarters, and yet we're still making progress on our penetration. So I think, you know, some of this is going to be, you know, us continuing to execute and create choice, which is obviously one of the themes I'm hitting on here.

SMB spend to soften from here or to hit your revenue guidance, so you're relying on more take rate expansion. Thank you.

Yes, Thanks, Ken.

I don't think we're looking at any material.

Speaker 5: the way our suppliers in Canada and soon other countries will be, you know, are able to kind of select how they want to be paid, what currency, that's going to help that adopt. And then you have, you know, choice on how suppliers want to get paid. Do they want to get paid now or do they want to get paid tomorrow? Do they want to get paid 30 days before the bill is paid? These are all things that we're working on and the platform has the capabilities to deliver.

Softening in spend as Rene mentioned.

We view it as more of like a sideways environment from here, but we.

Still see numerous categories of spend by SME Smbs that are declining real estate is a good example of that where theres lots of adjustments happening with the way people work and where they are spending dollars for core facilities. There is also some rebounding categories. TNT continues to be strong advertising seems to be coming back. So there's going to be puts and takes we try.

Speaker 11: and are something that we think creates a competitive advantage in the marketplace. Great and maybe just for my follow-up I wanted to ask about TPB per customer XFI and I think the expectation is for that to decline kind of low single digits in fiscal year 24. You know it sort of feels like SMB spending has stabilized here you know the results this quarter trended.

To estimate.

This based on all the information we have available we havent really seen.

In the last couple of quarters, a like a turnaround where it's clear that smbs are are going to be in expansion mode across all spend categories and thats. How we came up with our estimates of a low single digit decrease on a year over year basis.

Speaker 11: in line with seasonality. If you model out seasonality over the next few quarters, you can easily get the kind of low single digits and mid single digit growth and TPV per customer XFI. So I guess that's the guidance on TPV per customer for SMB spend to soften from here or to hit your revenue guidance so you're relying on more take rate expansion. Thank you.

Okay, great. Thank you.

Thank you.

Our next question comes from Robert Napoli with William Blair. Please proceed.

Okay. Thank you and good afternoon I appreciate your comments on La <unk>, we spent a lot of time, there it's pretty amazing.

Speaker 6: Thanks, Ken. I don't think we're looking at any material softening in spend. As Renee mentioned, we view it as more of like a sideways environment from here, but we do still see numerous categories of spend by SM.

What's happened there.

Thank you Jess.

So the intuit relationship just.

Some color on that.

Essentially the relationship as is ending.

The contract is up and Youre not going forward with them does that open up opportunities I know you mentioned a little bit Renee that.

Speaker 6: SMBs that are declining. Real estate is a good example of that where there's lots of adjustments happening with the way people work and where they're spending dollars for facilities. There's also some rebounding categories. T&E continues to be strong. Advertising seems to be coming back. So there's going to be puts and takes. We tried to estimate this based on all the information we have available. We haven't really seen...

Going direct but where are you prevented from doing certain things under that contract that you are now freed up from.

Thank you Bob for the question and then I think the.

First thing that I would just kind of call out is that intuit has decided to compete on payments.

Rather than partner.

Speaker 6: in the last couple of quarters, a turnaround where it's clear that SMBs are going to be in expansion mode across all spend categories. And that's how we came up with our estimates of a low single digit decrease on a year over year basis.

So.

As we think about what kind of unfolds for US there is nothing contractually.

That was a shifting us from doing anything, but we do think that our ability to really help customers understand the benefits and the value of our platform.

Speaker 10: Okay, great. Thank you.

Speaker 10: Okay, great. Thank you. Thank you.

<unk>, it's built at scale and just as a kind of a reminder here.

1% of GDP rolls through Bill if you just step back and think about the size and scale of that means we're not a financial institution and yet 1% is going to build this is a meaningful accomplishment and it's because of all the capabilities, we have around risk around the platform around how we we've documents and workflow and payment reconciliation.

Speaker 3: Our next question comes from Robert Napoli with William Blair. Please proceed.

Speaker 9: Thank you. Good afternoon. Appreciate your comments on Lahaina. We spent a lot of time there. It's pretty amazing what's happened there.

Speaker 9: Thank you. Just so the intuit relationship, just some some color on that. So essentially the relationship is is ending the contract is up and you're not going forward with them. Does that open up opportunities? I know you mentioned a little bit Renee that going direct, but were you prevented from doing certain things under that contract that you're now freed up from?

And risk decision into one solution for our customers and so I think.

How we think about this is that the market is maturing and theres more competitors coming into the space and we are leading we are defining and folks are looking to us to follow and we don't look to anybody to follow that we always are going to be leading.

Speaker 5: Thank you, Bob, for the question. And I think the first thing that I would just kind of call out is that Intuit has decided to compete on payments rather than partner. And so as we think about what kind of unfolds for us, there was nothing contractually that was restricting us from doing anything. But we do think.

Thank you.

And then just on the invoice financing the strategy around that and I don't know if thats part of the incremental investment that you're making this year that you had mentioned upfront Rene but what is the timing of rolling out that would you be doing it for both bill.

Core Bill and for Debbie.

Speaker 5: that our ability to really help customers understand the benefits and the value of our platform, the robustness of it, it's built at scale. And just as a kind of a reminder here, you know, 1% of GDP rolls through bill. If you just step back and think about the size and scale that that means, we're not a financial institution and yet 1% is going through bill. This is a meaningful accomplishment.

And just your confidence now that you have the data that you would need to be able to build that.

Yes, I think it is.

Great question, it's something we are excited about because.

Suppliers businesses, they need cash so I wanted to the testimonials that we put into the script was.

<unk> remember that used instant payments to be able to fund and pay the drivers because they need to pay people today or tomorrow, and we know that there's going to be demand for businesses to manage their cash flow.

Speaker 5: And it's because of all the capabilities we have around risk, around the platform, around how we weave documents and workflow and payment reconciliation and risk decisions into one solution for our customers. And so I think, you know, how we think about this is that the market is maturing, there's more competitors coming into the space.

Cross longer Timeframes, and so invoice financing gives our suppliers in our networks the choice and the opportunity to actually accelerate their cash flow and help them manage their business and make it work a lot better and so what we've seen to date and it's early days, but what we've seen to date is that suppliers do use the product on a repeat basis.

Speaker 5: And we are leading, we're defining, and folks are looking to us to follow, and we don't look to anybody to follow. We always are going to be leading.

Speaker 9: Thank you. And then just on the invoice financing, the strategy around that, and I don't know if that's part of the incremental investment that you're making this year that you had mentioned up front, Renee, but what is the timing of rolling out that? Will you be doing it for both core bill and for divvy?

Not every time that there is a transaction that comes their way, but they do use it and so that's something that we think is a good indicator that there is value in the solution and now we're building out all of the capabilities. So that you can do it at scale and it's one of the things that we've learned that when you meet with that type of money, we move across our platform that you got to be thoughtful you've got a bill thanks careful.

And you got to do it in a way that's going to enhance the capabilities going forward and so that's where we're at right now and we expect FY 'twenty four we'll make good progress on that.

Speaker 9: and just your confidence now that you have the data that you need to be able to roll that.

Speaker 5: Yeah, yeah, I think it's a great question and something we are excited about because suppliers, businesses, they need cash flow. One of the testimonials that we put into the script was a network member that used instant payments to be able to fund and pay the drivers because they need to pay people today or tomorrow.

Thank you.

Thank you Bob.

Yes.

Our next question comes from batch sales with Bank of America. Please proceed.

Oh, great. Thanks for taking the question I wanted to ask about TPP per customer.

John you're guiding to are expecting low single digit decline here I mean before the macro that metric was kind of in the mid teens high teens. So my question is is there a path back to that type of growth. If we were in a better macro could you just help us unpack, what's driving that delta, it's a big deceleration, obviously theres a lot.

Speaker 5: And we know that there's going to be demand for businesses to manage their cash flow across longer time frames. And so invoice financing gives our suppliers in our network the choice and the opportunity to actually accelerate their cash flow and help them manage their business and make it work a lot better. And so what we've seen to date, and it's early days, but what we've seen to date is that suppliers do use the product.

On a macro here, but any thoughts on where that could trend.

Speaker 5: on a repeat basis, not every time that there's a transaction that comes their way, but they do use it. And so that's something that we think is a good indicator that there's value in the solution. And now we're building out all the capabilities so that you can do that scale. It's one of the things that we've learned that when you move the type of money we move across our platform, that you got to be thoughtful, you got to build things carefully, and you got to do it in a way that...

Acro improves.

Yes, thanks for the question, Brad and I think.

Macro does influence our view of TBB per customer here and I'd say one of the things that.

We worked really hard at is increasing the surface area of our platform and the share of wallet that we have like how much of the <unk> spend of our customers are we helping them with and we know that there's a ways to go there thats one of the drivers of increasing TPB per customers. So I think we do have some levers even before.

Speaker 3: Our next question comes from Brad Fills with Bank of America. Please proceed.

A complete turnaround in AR.

Growth economy environment, but you put those two things together.

Speaker 11: Oh, great. Thanks for taking the question. I wanted to ask about TPV per customer. John , you're guiding to or expecting low single-digit decline here. Before the macro, that metric was in the mid-teens, high teens. My question is, is there a path back to that type of growth if we were in a better macro?

Down the road, including more payment types, which we know increases TBB per customer and other features and functionality that will build on the platform and we do see a path to.

More much more meaningful growth on a per customer basis, but I'd say the short term is certainly influenced by the external environment and how small businesses are reacting to that and adjusting their spend levels.

That's great color. Thank you for that John and then Renee you you've mentioned some pretty exciting initiatives this year adopt.

Speaker 6: Yeah, thanks for the question, Brad. And I think macro does influence our view of TVB for customer here. And I'd say one of the things that we work really hard at is increasing the surface area of our platform and the share of wallet that we have. And I think that's one of the things that we work really hard at is increasing the surface area of our platform and the share of wallet that we have.

Adoption of integrated AP and spend.

<unk> ecosystem AD valorem solutions continued progress there.

You look across those initiatives, which one are you most excited about which one perhaps is there some low hanging fruit, where maybe we could see some upside if it's execution on those.

Pulled forward.

Yeah.

Speaker 6: how much of the B2B spend of our customers are we helping them with? And we know that there's a ways to go there. That's one of the drivers of increasing TPB per customer. I think we do have some levers even before a complete turnaround in a growth economy.

Yes, it's a great question Brad.

Obviously.

Some ways, you're kind of asking me to pick my favorite child, which there are no such thing right. So.

And the reason I say that is because if you are in any of the operating meetings I think everybody on the team I think that I've wanted that wanted to be more important than the next one and the reality is that they're all super important and one of the things in our responsibilities is to make sure that we somehow do all of them and focus on all of them and so.

Speaker 6: environment, but you put those two things together, you know, down the road, including more payment types, which we know increases TBB per customer and other features and functionality that will build out in the platform. And we do see a path to much more meaningful growth per customer basis, but I'd say it's short term.

Thank the opportunity to expand the market with with.

Our ecosystem is super important.

Speaker 6: is certainly influenced by the external environment and how small businesses are reacting to that and adjusting their spend levels.

We have obviously enhanced our financial institution capabilities with the extending contract with JP Morgan Chase going after the Smbs that bofa as we're expanding those capabilities you see all the strength we have in the account channel.

Speaker 5: That's great, caller. Thank you for that, John . And then, Renee, you mentioned some pretty exciting initiatives this year, you know, adoption of integrated AP and spend, the partner ecosystem, Ad Valorem solutions, continued progress there. When you look across those initiatives, which one are you most excited about? Which one, perhaps, is there some low-hanging fruit where maybe we could see some upside if execution on those is kind of seconds given, you know, what could be in a dust can or whatever? Why didn't you

But then I look at the ability for us to drive the integration of our.

Seamless financial back office, when it comes to AP and spend and expense in over the.

Over time, obviously, the financial analytics and tools that we're going to be bringing in from the <unk> acquisition that is super exciting and we hear that from customers. All the time. They just want one place to do this and so there's lots of opportunities then obviously on the AD valorem capabilities, which you've talked about and I think maybe if I just step back the thing that to.

Me is.

The I get excited about every day is that.

Speaker 5: were in any of the operating meetings, I think everybody on the team would think that I wanted that one to be done more important than the next one. And the reality is that they're all super important. And one of the things in our responsibilities is to make sure that we somehow do all of them and focus on all of them. And so I think the opportunity to expand the market with our ecosystem is super important.

We started this this financial operations.

Category solutions set whatever you want to call. It we started at 17 years ago, We just crossed $1 billion in revenue, which obviously is a milestone so but we see no obstacles to this being tens of billions of dollars in annual revenue from a category perspective, and we're working hard to be the leader in that category and so we.

Speaker 11: We have obviously enhanced our financial institution capabilities with the extending contract with JPMorgan Chase, going after the SMBs that B of A has, we're expanding those capabilities. You see all the strength we have in the account channel. But then I look at the ability for us to drive the integration.

We see this as kind of similar to how payroll has become its own its own thing and there are multiple players in that and we see this as an opportunity to continue to lead and define what does it mean to think about financial operations for Smbs.

That's exciting thank so much renee.

Speaker 5: of a seamless financial back office when it comes to AP and spending expense. And over time, obviously, the financial analytics and tools that we're going to be bringing in from the Pinmark acquisition. That is super exciting and we hear that from customers all the time. They just want one place to do this.

Thank you Brad.

Our next question comes from Darrin Peller with Wolfe Research. Please proceed.

Hey, Thanks, guys.

John maybe just quickly start with you if we could bridge.

From.

Speaker 11: And so, there's lots of opportunities then obviously on the ad valorem capabilities, which we've talked about. And I think, maybe if I just step back, the thing that to me is, that I get excited about every day is that we started this financial operations.

This year in 2023, some of the major Kpis, just remind us of the compare between this year's factors that drove your results versus again, just like for like the assumptions in guidance just trying to figure out.

How much of it was again float income changes how much of it again was macro conservatism that you are building and just your assumption for TPB. If you could just help us parse that out.

Speaker 5: category, solution, set, whatever you want to call it. We started it 17 years ago. We just crossed a billion dollars in revenue, which obviously is a milestone in and of itself, but we see no obstacles to this being tens of billions of dollars in annual revenue from a category perspective. And we're working hard to be the leader in that category. And so we see this as kind of similar to how...

Part of that would also be to understand the step down from Q1 growth targets of I think 29% at the midpoint and just the bridge down to the 22 to 23 for the full year.

Yeah. Thanks for the question Darren So I'd say the <unk>.

The key trend.

Occurred throughout all of FY2023 was the deceleration in spend.

On a per customer basis for TPB, and we think thats a direct reflection of.

Speaker 5: That's exciting. Thanks so much, Renee.

Speaker 5: That's exciting. Thanks so much, Renee. Thank you, Brad.

Adjustments, our small business customers are making to the macro environment. It is our view at least our assumptions that that adjustment process is going to continue throughout all of FY 'twenty for like until we see clear signs that businesses have turned the corner and entering expansion mode.

Speaker 3: Our next question comes from Darren Peller with Wolf Research. Please proceed.

Speaker 12: Hey, thanks, guys. John , maybe just quickly start with you. If we could break.

Speaker 12: From.

Until then we're going to assume a more muted spend or moderated spend environment and thats whats reflected in.

Speaker 12: This year in 2023, some of the major KPIs just remind us of the compare between this year's factors that drove your results versus again, just like for like the assumptions and guidance just just trying to figure out. You know how much of it was again, float income changes, how much of it again was macro conservatism that you're building in just your assumptions for TPV if you could just help us parse that out and then

In our numbers, so thats, probably the most important variable I think we'll continue to make progress as we've discussed earlier on our monetization and things of that nature, regardless of the spend environment as it relates to the Q1 Q4 to Q1 transition.

The primary change there is around.

Speaker 12: Part of that would also be to understand the step down from Q1 growth targets of I think 29% of the midpoint and just the bridge down to the 22 to 23 for the full year.

Our subscription revenue so embedded in our core revenue estimates.

A step down in Q1 associated with the.

The change in our contract with Bank of America. So if we look at that for the whole year, we'd be looking at high single digits increase in subscription revenue versus our estimates early.

Speaker 6: Thanks for the question, Darren. I'd say the key trend that occurred throughout all of FY23 was the deceleration in spend on a per-customer basis for TPB. We think that's a direct reflection.

Earlier on the call. So thats, probably the biggest change on a sequential quarterly basis.

So I guess I was trying to figure out from Q1 guide versus the full year diesel.

Speaker 6: adjustments our small business customers are making to the macro environment. It's our view, at least our assumptions, that that adjustment process is going to continue throughout all of FY24. Like until we see clear signs that businesses have turned the corner and entering expansion mode.

I mean, I assume a lot of it is the macro factors being embedded as the year progresses more substantially at comps right like clothing comps and whatnot.

Yes, well, so float income sorry, specifically to address that comment we're assuming.

Speaker 6: Until then, we're going to assume a more muted spend or moderated spend environment, and that's what's reflected in our numbers. That's probably the most important variable. I think we'll continue to make progress, as we've discussed earlier, on our monetization and things of that nature, regardless of the spend environment. As it relates to the Q1...

Our yield for the full year, that's lower than our Q1.

Yield 460 basis points.

We're actually anticipating in the first half of calendar 'twenty four so the second half of our fiscal year that the fed funds rate is going to decline.

Speaker 6: Q4 to Q1 transition. The primary change there is around our subscription revenue. So embedded in our core revenue estimates are a step down in Q1 associated with the change in our contract with Bank of America. So if we look at that for the whole year, we'd be looking at high single digits.

Obviously, not forecasters on these topics, but our assumption is a four 4% fed funds rate versus I think current consensus is 5%. So that's rolling through our numbers for sure in terms of flows that obviously has an impact on on cash flows as well.

Really just on Debbie and the cross sell it sounds like you guys are very excited about that we are too I just want to understand that.

Speaker 6: increase in subscription revenue versus our estimates earlier on the call. So that's probably the biggest change on a sequential quarterly basis.

Conviction you have now.

And bind with I think you said you had 7200 customers Cross sold now up from probably 2000 last time, you talked about it. So is the conviction there because of the progress on the engineering side of it having been really up and running and ready to go in the fall the way you hoped.

Speaker 6: I guess I was trying to figure out from Q1 guide versus the full year de-sell. I mean, I assume a lot of that is the macro factors being embedded as the year progresses more substantially in comps, right, like float income comps and whatnot. Yeah, well, so float income, sorry, specifically to address that comment, we're assuming that we say that it's a growth in revenue from a consumer experience or that a business can guarantee producingnow and inevitably the general activity that millennium has set in. So I own myself enough as an engineer to

Yeah, I think great question Darrin there are the conviction is and it goes back to the hypothesis thesis about why we wanted the.

<unk> solution as part of the Bill solution and have to spend management and expense capabilities inside of Bill. So just to clarify we had started the acquisition we had 1000 joint customers and what we disclosed today is that we have 7200 joint customers so roughly up 6000.

Speaker 6: a yield for the full year that's lower than our Q1 yield, about 460 basis points. So we're actually anticipating in the first half of calendar 24, so the second half of our fiscal year, that the Fed funds rate is gonna decline. We're obviously not.

Of that around 5000 or bill customers adopting Debbie.

Others are debit customers adopting bill so I think what gets me excited is that when you get a chance to talk and see the activity that these joint customers are doing they are using it as one platform. They are seeing the opportunity to be able to manage their financial operations differently and that's something that we're very passionate about and I think.

Speaker 6: you know, forecasters on these topics, but our assumption is a 4% fed funds rate versus, I think, current consensus is 5%. So that's rolling through our numbers for sure in terms of flow that has an impact on cash flows as well.

Speaker 12: Just on Divvy and the cross-sell sounds like you guys are very excited about that. We are too. I just want to understand the conviction you have now combined with I think you said you had 7,200 customers cross-sold now from probably 2,000 last time you talked about it. So is the conviction there because of the progress on the engineering side of it having been really up and running and ready to go in the fall the way you hoped?

I think it's super important that when you are going to go create a new space or new solution for businesses that you have to have passed and you have to have.

<unk> expertise and vision and you have to have the ability to be persistent and continue.

Continuous basis over time, and that's what we've been doing and so this is for FY 'twenty four is an important year on this this journey of getting more cross sold but it's going to take all the things I just said to continue this.

Speaker 5: Yeah, I think the great question, Darren, the conviction is, and it goes back to the hypothesis thesis about why we wanted the DIVI solution as part of the bill solution and have to spend management expense capabilities inside a bill. So just to clarify, we started the acquisition, we had a thousand joint customers.

Journey for Smbs to have make that difference so that they actually do have one place and that's something that we're going to be focused on for years to come.

Unfortunately that is all the time that we do have for the Q&A session. So I will pass the conference back to Rene <unk> for any final remarks.

Speaker 5: And what we disclosed today is that we have 7,200 joint customers, so roughly up 6,000. Of that, around 5,000 are bill customers adopting DIVI. The others are DIVI customers adopting bill. So I think what gets me excited is that when you get a chance to talk and see the activity that these joint customers are doing.

Thank you and thanks, everyone for joining us today Bill delivered another great quarter and fiscal year. We are excited about the future and we look forward to serving more and more smbs. Thanks for joining.

That will conclude today's conference call. Thank you all for your participation you may now disconnect your lines.

Speaker 11: that when you're going to go create a new space or a new solution for businesses, that you have to have passion, you have to have a set of expertise and vision, and you have to have the ability to be persistent and do it on a continuous basis over time. And that's what we've been doing. And so this is, you know, FY24 is an important year on this.

Speaker 5: We do have one place and that's something that we're going to be focused on for years to come.

Speaker 3: Unfortunately, that is all the time that we do have for the Q&A session, so I will pass the conference back to Renee for any final remarks.

Speaker 11: Thank you and thanks everyone for joining us today. Bill delivered another great quarter in fiscal year. We are excited about the future and we look forward to serving more and more SMBs. Thanks for joining. That will conclude today's conference call. Thank you all for your participation. You may now disconnect your line.

Speaker 10: That will conclude today's conference call. Thank you all for your participation.