Press release

Bill.com Reports First Quarter Fiscal 2021 Financial Results

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Bill.com (NYSE: BILL), a leading provider of cloud-based software that simplifies, digitizes, and automates complex back-office financial operations for small and midsize businesses (SMBs), today announced financial results for the first fiscal quarter ended September 30, 2020.

“We kicked off the new fiscal year with strong Q1 financial results that exceeded our expectations, as we saw SMB customers getting back to business compared to the prior quarter,” said René Lacerte, Bill.com CEO. “We experienced strong demand for our platform as customers embraced our broader offering of payment methods. We are excited about the increasing adoption of our platform throughout our diversified go-to-market ecosystem,” concluded Mr. Lacerte.

Financial Highlights for the First Quarter of Fiscal 2021

  • Total revenue was $46.2 million, an increase of 31% from the first quarter of fiscal 2020. Subscription and transaction revenue was $43.8 million, an increase of 53% from the first quarter of fiscal 2020.
  • GAAP gross profit was $34.1 million, representing a 73.8% gross margin, compared to $26.0 million, or a 74.0% gross margin, in the first quarter of fiscal 2020. Non-GAAP gross profit was $35.6 million, representing a 77.0% non-GAAP gross margin, compared to $27.2 million, or a 77.2% non-GAAP gross margin in the first quarter of fiscal 2020.
  • Loss from operations was $13.8 million, compared to a loss from operations of $6.3 million in the first quarter of fiscal 2020. Non-GAAP loss from operations was $3.7 million, compared to a non-GAAP loss from operations of $3.5 million in the first quarter of fiscal 2020.
  • Net loss was $13.0 million, or ($0.16) per share, basic and diluted, compared to net loss of $5.7 million, or ($0.69) per share, basic and diluted, in the first quarter of fiscal 2020. Non-GAAP net loss was $2.8 million, or ($0.04) per share, basic and diluted, compared to non-GAAP net loss of $2.8 million, or ($0.05) per share, basic and diluted, in the first quarter of fiscal 2020.
  • Cash, cash equivalents and short-term investments were $700.3 million at September 30, 2020.

Business Highlights and Recent Developments

  • Served 103,600 customers as of the end of the first quarter of fiscal 2021, representing year-over-year customer growth of 27%.
  • Processed $28.8 billion in total payment volume on our platform in the first quarter, an increase of 31% year-over-year.
  • Processed 6.5 million transactions in the first quarter of fiscal 2021.
  • Rolled out Instant Transfer in pilot mode which enables businesses to provide real-time payments to their vendors.
  • Expanded our executive team with the addition of Tom Clayton as our Chief Revenue Officer.
  • Added seasoned payments executive Colleen Taylor and business, marketing and communications leader Allie Kline to our board of directors.

Conference Call

In conjunction with this announcement, Bill.com will host a conference call at 1:30 p.m. PT (4:30 p.m. ET) today to discuss the first quarter results, as well as our outlook for the second quarter of fiscal 2021. The conference call will be available via live webcast and replay at the Investor Relations section of Bill.com’s website: https://investor.bill.com/events-and-presentations/default.aspx .

About Bill.com

Bill.com is a leading provider of cloud-based software that simplifies, digitizes, and automates complex, back-office financial operations for small and midsize businesses. Customers use the Bill.com platform to manage end-to-end financial workflows and to process payments. The Bill.com AI-enabled, financial software platform creates connections between businesses and their suppliers and clients. It helps manage cash inflows and outflow. The company partners with several of the largest U.S. financial institutions, the majority of the top 100 U.S. accounting firms, and popular accounting software providers. Bill.com has offices in Palo Alto, California and Houston, Texas. For more information, visit www.bill.com .

Note on Forward-Looking Statements

This press release and the accompanying conference call include forward-looking statements, which are statements other than statements of historical facts, and statements in the future tense. Forward-looking statements are based on our expectations as of the date of this press release and are subject to a number of risks, uncertainties and assumptions, many of which involve factors or circumstances that are beyond our control. These statements include, but are not limited to, statements regarding our expectations for future performance, the growth of demand on our platform and the expansion of our customers’ utilization of our services. These risks and uncertainties include, but are not limited to, the novel coronavirus pandemic (COVID-19) and its impact on our employees, customers, strategic partners, vendors, results of operations, liquidity and financial condition, our history of operating losses, our recent rapid growth, the large sums of customer funds that we transfer daily, the risk of loss, errors and fraudulent activity, the market, interest rate, foreign exchange and other conditions that the customer funds we hold in trust are subject to, our ability to attract new customers and convert trial customers into paying customers, our ability to develop new products and services, increased competition or new entrants in the marketplace, potential impact of acquisitions and investments, changes in staffing levels, and other risks detailed in registration statements and periodic reports we file with the SEC, including our annual report on Form 10-K filed with the SEC on August 31, 2020, which may be obtained on the Investor Relations section of Bill.com’s website (https://investor.bill.com/financials/sec-filings/default.aspx) and on the SEC website at www.sec.gov. Additional information will also be set forth in our quarterly report on Form 10-Q for the three months ended September 30, 2020 when filed. Actual results may differ materially from those presently reported. All forward-looking statements in this press release are based on information available to us as of the date hereof. We assume no obligation to update the information contained in this press release or the accompanying conference call.

Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), this press release and the accompanying tables contain, and the conference call will contain, non-GAAP financial measures, including non-GAAP loss from operations, non-GAAP net loss and non-GAAP net loss per share, basic and diluted. The non-GAAP financial information is presented for supplemental informational purposes only and is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP.

We believe that these non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects and allow for greater transparency with respect to important metrics used by our management for financial and operational decision-making. We believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry. However, it is important to note that the particular items we exclude from, or include in, our non-GAAP financial measures may differ from the items excluded from, or included in, similar non-GAAP financial measures used by other companies in the same industry.

We adjust the following items from one or more of our non-GAAP financial measures:

Stock-based compensation expense. We exclude stock-based compensation expense, which is a non-cash expense, from certain of our non-GAAP financial measures because we believe that excluding this item provides meaningful supplemental information regarding operational performance. In particular, companies calculate stock- based compensation expenses using a variety of valuation methodologies and subjective assumptions.

Employer payroll taxes related to employee stock-based compensation: We exclude payroll tax expense related to employee stock-based transactions because we believe that excluding this item provides meaningful supplemental information regarding operational performance. In particular, this expense is dependent on the price of our common stock and other factors that are beyond our control and do not correlate to the operation of our business. Employer payroll tax expense related to employee stock-based compensation was not material for all periods prior to June 30, 2020; therefore, it was excluded from those prior periods.

Depreciation and amortization expense. We exclude depreciation and amortization expenses from certain of our non-GAAP financial measures because we believe that excluding this item provides meaningful supplemental information regarding operational performance.

Capitalized internal-use software and amortization. We include capitalization and exclude the subsequent amortization of internal-use software costs in certain of our non-GAAP financial measures. We capitalize direct costs incurred related to obtaining or developing internal-use software during the application development stage and we amortize those costs over the estimated useful lives of the software. The capitalization and subsequent amortization of those costs can vary every period depending on our business needs and the timing on the software’s availability for its intended use. We believe that including or excluding the effect of the capitalized internal-use software in certain of our non-GAAP financial measures provides us useful information in evaluating and comparing the consistency of our operating performance on a period-to-period basis.

Deferred costs and amortization. Deferred costs consist of capitalized sales commissions and capitalized service costs. We include capitalization of sales commission and service costs, and exclude their subsequent amortization in certain of our non-GAAP financial measures. We capitalize sales commissions that are incremental costs in obtaining new customer contracts. We capitalize service costs, which pertain primarily to direct payroll and third-party costs incurred when we provide implementation services to our financial institution customers and certain SMB customers prior to the launching of our product for general use. We amortize the capitalized sales commissions and capitalized service costs over the estimated benefit period. We believe that including or excluding the effect of the capitalization of sales commissions and service costs in certain of our non-GAAP financial measures in a given period provides us useful information in evaluating and comparing the consistency of our performance in acquiring new customer contracts on a period-to-period basis.

Loss on revaluation of warrant liabilities. We exclude loss on revaluation of warrant liabilities, which is a non-cash expense, from certain of our non-GAAP financial measures because we believe that excluding this item provides meaningful supplemental information regarding operational performance.

There are material limitations associated with the use of non-GAAP financial measures since they exclude significant expenses and income that are required by GAAP to be recorded in our financial statements. Please see the reconciliation tables at the end of this release for the reconciliation of GAAP and non-GAAP results.

BILL.COM HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
 
September 30, June 30,

2020

2020

ASSETS
Current assets:
Cash and cash equivalents

$

564,153

 

$

573,643

 

Short-term investments

 

136,171

 

 

123,974

 

Accounts receivable, net

 

5,042

 

 

4,252

 

Unbilled revenue

 

6,925

 

 

6,549

 

Prepaid expenses and other current assets

 

15,421

 

 

26,781

 

Funds held for customers

 

1,668,903

 

 

1,644,250

 

Total current assets

 

2,396,615

 

 

2,379,449

 

Non-current assets:
Operating lease right-of-use assets

 

43,400

 

 

 

Property and equipment, net

 

21,709

 

 

13,866

 

Other assets

 

17,484

 

 

10,700

 

Total assets

$

2,479,208

 

$

2,404,015

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable

$

6,566

 

$

3,478

 

Accrued compensation and benefits

 

7,605

 

 

12,387

 

Other accrued and current liabilities

 

8,335

 

 

8,541

 

Deferred revenue

 

6,166

 

 

5,891

 

Line of credit borrowings

 

2,300

 

 

2,300

 

Operating lease liabilities

 

2,485

 

 

 

Customer fund deposits

 

1,668,903

 

 

1,644,250

 

Total current liabilities

 

1,702,360

 

 

1,676,847

 

Non-current liabilities:
Deferred revenue

 

2,785

 

 

2,622

 

Operating lease liabilities

 

52,934

 

 

 

Other long-term liabilities

 

2,361

 

 

13,827

 

Total liabilities

 

1,760,440

 

 

1,693,296

 

Commitments and contingencies
Stockholders’ equity:
Common stock

 

2

 

 

2

 

Additional paid-in capital

 

879,346

 

 

857,044

 

Accumulated other comprehensive income

 

1,118

 

 

2,420

 

Accumulated deficit

 

(161,698

)

 

(148,747

)

Total stockholders’ equity

 

718,768

 

 

710,719

 

Total liabilities and stockholders’ equity

$

2,479,208

 

$

2,404,015

 

 
BILL.COM HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands except per share amounts)
 
Three months ended
September 30,

2020

2019

Revenue
Subscription and transaction fees

$

43,788

 

$

28,548

 

Interest on funds held for customers

 

2,421

 

 

6,632

 

Total revenue

 

46,209

 

 

35,180

 

Cost of revenue (1)

 

12,106

 

 

9,147

 

Gross profit

 

34,103

 

 

26,033

 

Operating expenses
Research and development (1)

 

17,786

 

 

11,515

 

Sales and marketing (1)

 

12,908

 

 

10,267

 

General and administrative (1)

 

17,190

 

 

10,535

 

Total operating expenses

 

47,884

 

 

32,317

 

Loss from operations

 

(13,781

)

 

(6,284

)

Other income, net

 

830

 

 

639

 

Loss before provision for income taxes

 

(12,951

)

 

(5,645

)

Provision for income taxes

 

 

 

51

 

Net loss

$

(12,951

)

$

(5,696

)

 
Net loss per share attributable to common stockholders, basic and diluted

$

(0.16

)

$

(0.69

)

Weighted-average number of common shares used to compute net loss per share attributable to common stockholders, basic and diluted

 

80,216

 

 

8,231

 

 
(1) Includes stock-based compensation expense as follows:
Cost of revenue

$

601

 

$

148

 

Research and development

 

3,069

 

 

671

 

Sales and marketing

 

1,504

 

 

382

 

General and administrative

 

4,720

 

 

1,075

 

$

9,894

 

$

2,276

 

BILL.COM HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 
Three months ended
September 30,

2020

2019 (1)

Cash flows from operating activities:
Net loss

$

(12,951

)

$

(5,696

)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization

 

924

 

 

985

 

Stock-based compensation

 

9,894

 

 

2,276

 

Amortization of premium (accretion of discount) on investment in marketable debt securities

 

46

 

 

(730

)

Non-cash operating lease expense

 

765

 

 

 

Revaluation of warrant liabilities

 

 

 

165

 

Changes in assets and liabilities:
Accounts receivable

 

(790

)

 

707

 

Unbilled revenue

 

(376

)

 

(621

)

Prepaid expenses and other current assets

 

2,314

 

 

(1,142

)

Other assets

 

(6,784

)

 

(50

)

Accounts payable

 

1,566

 

 

508

 

Accrued and other current liabilities

 

(4,504

)

 

1,132

 

Operating lease liabilities

 

5,764

 

 

 

Other long-term liabilities

 

1,338

 

 

93

 

Deferred revenue

 

438

 

 

(7

)

Net cash used in operating activities

 

(2,356

)

 

(2,380

)

Cash flows from investing activities:
Purchases of corporate and customer fund short-term investments

 

(343,345

)

 

(189,204

)

Proceeds from maturities of corporate and customer fund short-term investments

 

244,332

 

 

255,171

 

Proceeds from sale of corporate and customer fund short-term investments

 

33,286

 

 

10,761

 

(Increase) decrease in other receivables included in funds held for customers

 

(1,522

)

 

2,049

 

Purchases of property and equipment

 

(5,894

)

 

(1,946

)

Capitalization of internal-use software costs

 

(314

)

 

(215

)

Net cash (used in) provided by investing activities

 

(73,457

)

 

76,616

 

Cash flows from financing activities:
Increase in customer fund deposits liability

 

24,653

 

 

137,186

 

Proceeds from exercise of stock options

 

8,962

 

 

294

 

Proceeds from issuance of common stock under the employee stock purchase plan

 

4,327

 

 

 

Payments of offering costs related to the follow-on public offering

 

(664

)

 

 

Payments of deferred offering costs

 

 

 

(874

)

Payments of deferred debt issuance costs

 

 

 

(151

)

Net cash provided by financing activities

 

37,278

 

 

136,455

 

Net (decrease) increase in cash, cash equivalents, restricted cash, and restricted cash equivalents

 

(38,535

)

 

210,691

 

Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period

 

1,592,377

 

 

983,168

 

Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period

$

1,553,842

 

$

1,193,859

 

 
Reconciliation of cash, cash equivalents, restricted cash, and restricted
cash equivalents within the consolidated balance sheets to the
amounts shown in the consolidated statements of cash flows above:
Cash and cash equivalents

$

564,153

 

$

86,249

 

Restricted cash included in other current assets

 

119

 

 

256

 

Restricted cash and restricted cash equivalents included in funds held for customers

 

989,570

 

 

1,107,354

 

Total cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period

$

1,553,842

 

$

1,193,859

 

 
______________________
(1) Amounts have been adjusted to reflect the adoption of Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. Shown below is a summary of the adjustments during the three months ended September 30, 2019 (in thousands).
 
As
previously reported
ASU No.
2016-18 adjustments
As
adjusted
Net cash used in operating activities

$

(2,380

)

$

 

$

(2,380

)

Net cash (used in) provided by investing activities

 

(138,132

)

 

214,748

 

 

76,616

 

Net cash provided by financing activities

 

136,455

 

 

 

 

136,455

 

Net (decrease) increase in cash, cash equivalents, restricted cash, and restricted cash equivalents

 

(4,057

)

 

214,748

 

 

210,691

 

Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period

 

90,306

 

 

892,862

 

 

983,168

 

Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period

$

86,249

 

$

1,107,610

 

$

1,193,859

 

 
 
BILL.COM HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP DATA
THREE MONTHS ENDED SEPTEMBER 30, 2020
(Unaudited, in thousands except percentages and per share amounts)
 
GAAP Stock-based
compensation
expense
Employer
payroll taxes
related to stock-
based
compensation
expense
Deferred
costs
(amortization
of deferred
costs)
Depreciation
and
amortization
expense
Non-GAAP
Total revenue

$

46,209

 

$

 

$

 

$

 

$

 

$

46,209

 

Cost of revenue

 

12,106

 

 

(601

)

 

(46

)

 

(129

)

 

(725

)

 

10,605

 

Gross profit

 

34,103

 

 

601

 

 

46

 

 

129

 

 

725

 

 

35,604

 

Gross margin

 

73.8

%

 

1.3

%

 

0.1

%

 

0.3

%

 

1.6

%

 

77.0

%

Operating expenses
Research and development

 

17,786

 

 

(3,069

)

 

(271

)

 

1,097

 

 

(59

)

 

15,484

 

Sales and marketing

 

12,908

 

 

(1,504

)

 

(132

)

 

703

 

 

(35

)

 

11,940

 

General and administrative

 

17,190

 

 

(4,720

)

 

(507

)

 

 

 

(106

)

 

11,857

 

Loss from operations

 

(13,781

)

 

9,894

 

 

956

 

 

(1,671

)

 

925

 

 

(3,677

)

Other income, net

 

830

 

 

 

 

 

 

 

 

 

 

830

 

Loss before benefit from income taxes

 

(12,951

)

 

9,894

 

 

956

 

 

(1,671

)

 

925

 

 

(2,847

)

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(12,951

)

$

9,894

 

$

956

 

$

(1,671

)

$

925

 

$

(2,847

)

 
Net loss per share attributable to common stockholders, basic and diluted (1)

$

(0.16

)

$

(0.04

)

 
Weighted-average number of common shares used to compute net loss per share attributable to common stockholders, basic and diluted

 

80,216

 

 

80,216

 

 
 
(1) GAAP net loss per share attributable to common stockholders, basic and diluted

$

(0.16

)

Stock-based compensation expense

 

0.12

 

Employer payroll taxes related to stock-based compensation expense

 

0.01

 

Deferred costs (amortization of deferred costs)

 

(0.02

)

Depreciation and amortization expense

 

0.01

 

Non-GAAP net loss per share attributable to common stockholders, basic and diluted

$

(0.04

)

 
 
BILL.COM HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP DATA
THREE MONTHS ENDED SEPTEMBER 30, 2019
(Unaudited, in thousands except percentages and per share amounts)
 
GAAP Stock-based
compensation
expense
Deferred costs
(amortization
of deferred
costs)
Depreciation
and
amortization
expense
Loss on
revaluation of
warrant
liability
Non-GAAP
Total revenue

$

35,180

 

$

 

$

 

$

 

$

 

$

35,180

 

Cost of revenue

 

9,147

 

 

(148

)

 

(216

)

 

(773

)

 

 

 

8,010

 

Gross profit

 

26,033

 

 

148

 

 

216

 

 

773

 

 

 

 

27,170

 

Gross margin

 

74.0

%

 

0.4

%

 

0.6

%

 

2.2

%

 

0.0

%

 

77.2

%

Operating expenses
Research and development

 

11,515

 

 

(671

)

 

186

 

 

(87

)

 

 

 

10,943

 

Sales and marketing

 

10,267

 

 

(382

)

 

519

 

 

(59

)

 

 

 

10,345

 

General and administrative

 

10,535

 

 

(1,075

)

 

 

 

(65

)

 

 

 

9,395

 

Loss from operations

 

(6,284

)

 

2,276

 

 

(489

)

 

984

 

 

 

 

(3,513

)

Other income, net

 

639

 

 

 

 

 

 

 

 

165

 

 

804

 

Loss before provision for income taxes

 

(5,645

)

 

2,276

 

 

(489

)

 

984

 

 

165

 

 

(2,709

)

Benefit from income taxes

 

51

 

 

 

 

 

 

 

 

 

 

51

 

Net loss

$

(5,696

)

$

2,276

 

$

(489

)

$

984

 

$

165

 

$

(2,760

)

 
Net loss per share attributable to common stockholders, basic and diluted (1)

$

(0.69

)

$

(0.05

)

 
Weighted-average number of common shares used to compute net loss per share attributable to common stockholders, basic and diluted (2)

 

8,231

 

 

60,665

 

 
 
(1) GAAP net loss per share attributable to common stockholders, basic and diluted

$

(0.69

)

Stock-based compensation expense

 

0.28

 

Deferred costs (amortization of deferred costs)

 

(0.06

)

Depreciation and amortization expense

 

0.11

 

Loss on revaluation of warrant liability

 

0.02

 

Impact of the assumed conversion of redeemable convertible preferred stock

 

0.29

 

Non-GAAP net loss per share attributable to common stockholders, basic and diluted

$

(0.05

)

 
 
(2) Shares used to compute GAAP net loss per share attributable to common stockholders, basic and diluted

 

8,231

 

Weighted average effect of the assumed conversion of redeemable convertible preferred stock from the date of issuance

 

52,434

 

Shares used to compute non-GAAP net loss per share attributable to common stockholders, basic and diluted

 

60,665

 

 
BILL.COM HOLDINGS, INC.
FREE CASH FLOW
(Unaudited, in thousands)
 
Three months ended
September 30,

2020

2019

Net cash used in operating activities

$

(2,356

)

$

(2,380

)

Purchases of property and equipment

 

(5,894

)

 

(1,946

)

Capitalization of internal-use software costs

 

(314

)

 

(215

)

Free cash flow

$

(8,564

)

$

(4,541

)

 
 
BILL.COM HOLDINGS, INC.
REMAINING PERFORMANCE OBLIGATIONS WITH FINANCIAL INSTITUTIONS
(Unaudited, in thousands)
 
September 30, June 30,

2020

2020

Remaining performance obligations with financial institutions to be recognized as revenue:
Within 1 year

$

17,888

$

13,001

Thereafter

 

133,321

 

139,334

Total

$

151,209

$

152,335