Cloud Stocks: Bill.com Focusing On Mobile And AI

I’m publishing this series to discuss a topic that I follow closely — cloud stocks, trends, strategy, acquisitions, and more. I like fundamentals-focused business building, and outline the principles of fundamentals-focused business building in my free Bootstrapping course.

The continuing pandemic conditions are driving up demand for services such as those offered by Bill.com (NYSE:BILL). Bill.com listed last December and despite uncertain times, it continues to see its stock soar.

Bill.com’s Financials

Bill.com recently announced its first quarter financials. Revenue for the quarter grew 31% to $46.2 million, significantly ahead of estimates of $36.83 million. Net loss was $13 million, compared to net loss of $5.7 million a year ago. On an adjusted basis, net loss was $2.8 million, or $0.04 per share, compared with a net loss of $2.8 million or $0.05 per share last year. The market was looking for a loss of $0.10 per share for the quarter.

By segment, subscription and transaction revenues grew 53% to $43.8 million.

Among key metrics, it reported a customer growth of 27% to over 103,600. It processed $28.8 billion in total payment volume, growing 31% from 6.5 million transactions a year ago.

Bill.com’s Product Upgrades

During the quarter, Bill.com continued to expand its AI capabilities. It recently brought its supplier enablement completely in-house, by employing its own AI matching logic for vendor matching, thus automating the function. By controlling the entire process, Bill.com is now able to improve its ability to identify card-accepting suppliers, allowing them to get paid quicker. The employees are also better equipped than third parties when promoting virtual card payments to suppliers.

It has also announced a partnership with KeyBank and has made Key CashFlow available to all its customers. Key CashFlow was originally made available for banking customers in October. Key CashFlow is a part of Bill.com’s go-to-market initiatives where it is partnering with financial institutions to expand market share.

Earlier last quarter, Bill.com rolled out a new feature called Instant Transfer that allows its network partners to get paid 24/7, and their funds are available for use immediately. It currently charges the recipient an ad valorem fee for the service. The service is currently in pilot mode, and Bill.com is pleased with early engagement data that the services is getting.

The current pandemic has accelerated the adoption of mobile use. The number of Bill.com mobile app downloads almost doubled year-on-year and its number of active mobile users hit an all-time high at the end of the quarter. The company expects a higher level of mobile usage by its network members driven by the continued innovations and release of services like Instant Transfer.

Its stock is currently trading at $134.50 with a market capitalization of $10.92 billion. It had fallen to a 52-week low of $23.61 in March this year. It hit a 52-week high of $154.03 in December 2020. Bill.com had listed on the NYSE in December 2019 when it raised $216 million at an IPO price of $22 apiece and a valuation of $1.6 billion. Prior to listing, it had raised $279.7 million through venture rounds. Its last venture round had valued the organization at $1.1 billion.

Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article.

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