BILL Holdings: The Turnaround Is Here

BILL Holdings, Inc. (Bill.com) reported robust fiscal Q4 results, with revenue up 12% year-over-year to $383.3 million, surpassing analyst expectations, and core revenue growing 15% to $345.9 million, mitigating a decline in float revenue. The company also issued strong FY26 guidance, projecting 9-11% revenue growth, and announced a new $300 million share repurchase program, signaling management's confidence in the stock's undervaluation. Despite a year-to-date decline of approximately 40%, Bill.com's solid performance, attractive valuation multiples (e.g., <3x EV/FY26 revenue), and integration of AI features position it as an overlooked growth opportunity amidst a market favoring large-cap stocks.

Analysis

BILL Holdings, Inc. (BILL) has demonstrated operational resilience and a strengthening fundamental outlook following its fiscal Q4 earnings report, contrasting sharply with its approximately 40% year-to-date stock price decline. The company exceeded Wall Street expectations with a 12% year-over-year revenue increase to $383.3 million, marking an acceleration from the 11% growth seen in Q3. Critically, this was driven by a 15% YoY expansion in core revenue, which now comprises roughly 90% of total revenue, effectively mitigating the 12% decline in interest-rate-sensitive float revenue. This shift de-risks the business model from interest rate fluctuations. Furthermore, a 13% YoY growth in Total Payment Volume (TPV) to $86.1 billion indicates sustained business momentum despite a challenging macroeconomic environment for its small and medium-sized business (SMB) clientele. The company's forward guidance for FY26 projects continued double-digit core revenue growth (12-15%), supporting an overall revenue growth forecast of 9-11%. Despite a slight projected dip in pro forma operating margin to 15.8% due to the changing revenue mix, the company's valuation appears compelling at 2.7x EV/FY26 revenue and 12.9x EV/FY26 FCF. Management's confidence is underscored by a newly authorized $300 million share repurchase program, equivalent to about 6% of the current market capitalization, signaling a belief that the stock is undervalued.

Key Decisions for Investors

• Investors could consider the stock as an undervalued growth opportunity, given its valuation multiples are low for a software company with high gross margins and double-digit core revenue growth.
• Monitor the trajectory of core revenue and Total Payment Volume (TPV) in subsequent reports, as these are the key metrics demonstrating the company's ability to offset interest rate headwinds and macroeconomic pressures.
• The new $300 million share repurchase program acts as a significant positive catalyst and signal of management confidence, though this must be weighed against the primary risk of the company's concentrated exposure to the SMB sector, which remains vulnerable to economic downturns.
• Pay close attention to the adoption and impact of the company's AI-driven features, as management is positioning these as a crucial element for future growth, customer retention, and operational efficiency.