BILL Holdings, Inc. — Form 10-Q Summary
Reporting period: Quarter ended March 31, 2022, the third quarter of fiscal 2022, with nine-month results through March 31, 2022. The request metadata says “2021 Q3,” but the filing itself covers fiscal 2022 Q3.
Business context and financial performance
BILL provides cloud-based payments and spend-management software for small and midsize businesses. Results include Divvy, acquired in June 2021, and Invoice2go, acquired on September 1, 2021. Accordingly, comparisons with the prior year are affected by acquisitions; the filing does not present a fully comparable organic-growth rate.
| Metric | Three months ended March 31 | Nine months ended March 31 |
|---|---|---|
| Revenue | $166.9 million, up 179% from $59.7 million | $441.7 million, up 176% from $160.0 million |
| Gross profit / margin | $129.6 million / 77.6%, versus $44.3 million / 74.2% | $340.2 million / 77.0%, versus $118.5 million / 74.1% |
| Operating loss | $83.2 million, versus $15.3 million | $233.5 million, versus $43.2 million |
| Net loss | $86.7 million, or $0.84 per share, versus $26.7 million, or $0.32 per share | $241.4 million, or $2.39 per share, versus $56.9 million, or $0.70 per share |
| Operating cash flow | Not separately presented in the supplied filing text for the quarter | $(7.6) million, versus $(13.2) million |
| Free cash flow | Not separately presented for the quarter | $(18.8) million, versus $(31.3) million |
Q3 revenue growth reflected higher subscription revenue and increased transaction fees, including greater adoption of newer products and a shift toward variable-priced transaction revenue. Gross margin improved, while operating losses widened as expenses—particularly sales and marketing—rose sharply. Nine-month stock-based compensation expense was $140.4 million.
Liquidity, debt, and other key metrics
- At March 31, 2022, cash and cash equivalents were $1.64 billion and short-term investments were $1.14 billion. Management said available liquidity was expected to cover working-capital needs for at least 12 months.
- Funds held for customers were $3.04 billion, matched by $3.04 billion of customer fund deposits. These funds are not equivalent to unrestricted corporate liquidity.
- Total debt principal was $1.80 billion: $1.725 billion of 0% convertible notes and $77.5 million drawn on credit facilities. Net carrying value of debt and borrowings was $1.775 billion.
- The $1.15 billion 2025 Notes became convertible at holders’ option during the quarter following March 31 after the stock-price conversion condition was met. The company classified their $1.135 billion net carrying amount as a current liability and said it intended to settle conversions with principal in cash and any excess value in shares.
- Credit facilities had $155 million of total commitments, with $77.5 million drawn; remaining availability depends on eligible card receivables collateral and facility terms.
- Key operating measures, excluding Divvy and Invoice2go, included 146,600 customers, up 27%; payment volume of $55.1 billion, up 57%; and 9.46 million transactions processed, up 32% in Q3.
Material changes, outlook, and risks
- Invoice2go was acquired for $674.3 million in total consideration. It contributed approximately $10 million of revenue and $13 million of net loss in Q3. The acquisition added $585.4 million of preliminary goodwill; total goodwill was $2.36 billion at quarter-end.
- Management expects cost of revenue, research and development, and general and administrative expenses to increase in absolute dollars as the business grows. It also plans continued investment in product development, sales, marketing, and expansion; the filing provides no specific revenue or earnings guidance.
- Risks highlighted include continuing operating losses, acquisition integration and realization of expected benefits, card-receivable credit and fraud losses, customer-fund liquidity and investment risks, competition, regulatory compliance, and uncertainty from COVID-19 and economic conditions.
- The company reported an unremediated material weakness in internal control over financial reporting related to review and documentation of Divvy acquisition accounting. Management concluded the financial statements were fairly presented after additional procedures, but disclosure controls were not effective at quarter-end.
- Authorized card transactions not yet cleared totaled $41.0 million and were not recorded on the balance sheet; expected credit losses were not material. Litigation reserves were also described as immaterial.
- Available-for-sale investments had unrealized losses as interest rates rose. Management said it did not intend, and was not likely required, to sell the affected securities before recovery at maturity.
Important facts for investors to verify
- How much of reported revenue and payment-volume growth reflects underlying business performance versus acquisitions and product mix.
- The timing and potential cash requirements if holders convert the 2025 Notes, and the company’s ability to fund cash settlement.
- Progress toward remediating the material weakness and the outcome of year-end internal-control assessments.
- Integration progress and performance of Divvy and Invoice2go, including card-credit losses, rewards costs, and acquired goodwill and intangible-asset amortization.
- Whether corporate liquidity remains adequate while customer funds are kept separate and facility borrowing depends on eligible receivables and covenant compliance.