Business Context and Reporting Period
Company: BILL Holdings, Inc. (BILL)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended June 30, 2026
Business Overview: BILL operates an intelligent finance platform for small and midsize businesses (SMBs), providing accounts payable, accounts receivable, spend and expense management, and payment processing. The platform leverages artificial intelligence (AI) to automate workflows. As of June 30, 2026, the platform served approximately 479,300 businesses with a Total Payment Volume (TPV) of $371.3 billion.
Key Financial Metrics
| Metric (in millions, except per share) | Fiscal 2026 | Fiscal 2025 | Change |
|---|---|---|---|
| Total Revenue | $1,653.2 | $1,462.6 | +13% |
| Net Income (Loss) | $(11.2) | $23.8 | Turned to Loss |
| Gross Profit | $1,337.9 | $1,190.5 | +12% |
| Gross Margin | 80.9% | 81.4% | -0.5 pts |
| Operating Loss | $(73.4) | $(80.6) | Improved |
| Free Cash Flow | $354.7 | $312.5 | +13.5% |
| Cash & Equivalents | $1,031.1 | $1,038.3 | -0.7% |
| Short-term Investments | $906.5 | $1,180.1 | -23.2% |
| Debt (Convertible Notes) | $1,506.1 | $1,534.5 | -1.9% |
| Debt (Credit Facilities) | $330.0 | $180.0 | +83.3% |
Material Changes vs. Prior Period
- Profitability Reversal: The company reported a net loss of $11.2 million in fiscal 2026, compared to net income of $23.8 million in fiscal 2025. This shift was primarily driven by $90.9 million in restructuring charges and a decrease in interest income on funds held for customers.
- Revenue Growth: Total revenue increased 13% to $1.65 billion. Transaction fees grew 18% due to higher TPV, while interest income on customer funds declined 8% due to lower market interest rates.
- Restructuring Costs: The company incurred $90.9 million in restructuring expenses in fiscal 2026 (none in fiscal 2025) related to multiple reductions in force (RIFs) impacting approximately 36% of the workforce cumulatively during the year.
- Debt Structure: The company issued $1.4 billion in 2030 Convertible Senior Notes in late fiscal 2025 and used proceeds to repurchase portions of 2025 and 2027 notes. Borrowings under Revolving Credit Facilities increased to $330 million.
Guidance, Outlook, and Risks
- Strategic Shifts: Management announced a transition to a "remote-first" operating model, expecting to reduce real property footprint. The company launched "BILL AI" agents to automate SMB workflows and expanded "Embed 2.0" partnerships with Paychex, Oracle NetSuite, and Acumatica.
- Share Repurchases: In May 2026, the board authorized a $1.0 billion share repurchase program. Approximately $702 million remained available as of June 30, 2026.
- Key Risks:
- Macroeconomic Sensitivity: SMB customers are highly susceptible to economic downturns, inflation, and interest rate fluctuations.
- Interest Rate Exposure: Revenue from interest on customer funds is volatile and tied to the federal funds rate; declining rates reduce this revenue stream.
- Credit Risk: The BILL Divvy Card product exposes the company to credit risk from spending businesses, with fraud and credit loss rates at 0.23% of card volume.
- Regulatory & AI: Emerging regulations regarding AI, data privacy, and money transmission could increase compliance costs or limit product offerings.
Investor Verification Checklist
- Restructuring Impact: Verify the timeline for completing the May 2026 RIF and the expected run-rate savings to confirm if profitability can be sustained without the one-time charges.
- Interest Income Trajectory: Assess the sensitivity of the "Interest on funds held for customers" revenue line to further Federal Reserve rate cuts.
- Card Receivables Quality: Review delinquency trends and charge-off rates for the BILL Divvy Card portfolio to ensure credit risk models remain accurate in a potentially slowing economy.
- AI Monetization: Evaluate early adoption metrics for the new "BILL AI" agents to determine if they will drive sufficient upsell revenue to offset R&D investments.
- Debt Conversion Risk: Monitor the stock price relative to the conversion prices of the 2027 ($414.80) and 2030 ($119.45) notes to assess potential dilution or cash settlement obligations.