Insights

Why Bill.com Stock Was Plunging Today

What happened
Shares of Bill.com Holdings (NYSE: BILL) were taking a dive today as a high valuation and broader fears in the market overshadowed a solid earnings report in its fiscal third quarter.
As of 10:26 a.m. ET, the stock was down 18.1%.
Image source: Getty Images.

So what
Bill.com, which provides cloud software to help small and medium-sized businesses (SMBs) manage back-office accounting and payments, beat estimates on the top and bottom lines.
Revenue jumped 179%, with the help of its acquisitions of Divvy and Invoice2Go, to $166.9 million, topping expectations at $157.9 million. Organic core revenue grew 74%, showing that the legacy business continues to grow briskly, especially as SMBs bounce back from the pandemic. 
Transaction fees jumped 286% to $113.3 million, and organic transaction fees doubled to $58.4 million, showing payment volume ramping up on the platform. Total payment volume on Bill.com increased 57% to $55.1 billion. 
On the bottom line, its adjusted loss per share expanded from $0.02 to $0.08, but that was better than estimates at a per-share loss of $0.16. 
CEO René Lacerte said: “We delivered a great quarter driven by robust demand for our solutions. We are executing against our strategy to drive organic momentum across our solutions while building a unified platform experience incorporating the strengths of Divvy and Invoice2go.”
Now what
Guidance also topped expectations as the company forecast $182.3 million to $183.3 million in revenue in the fourth quarter, which was better than the consensus at $168.8 million. On the bottom line, it sees a per-share loss of $0.13 to $0.14, slightly ahead of estimates at $0.15.
While the report itself left little to complain about, the headwinds against the software-as-a-service (SaaS) sector and high-growth, unprofitable stocks pushed the stock lower. The market seems to be saying that Bill.com stock was overvalued, and it still trades at a price-to-sales ratio around 20 even after today’s sell-off.
Still, the business itself looks strong and the stock was actually up 20% from its low point in the day by late morning, indicating some investors saw the sell-off as a buying opportunity.
While it’s impossible to know when the stock will bottom out, Bill.com’s fundamentals are strong and it still looks like a long-term winner.
Jeremy Bowman has positions in Bill.com Holdings, Inc. The Motley Fool has positions in and recommends Bill.com Holdings, Inc. The Motley Fool has a disclosure policy. –

What happened

Shares of Bill.com Holdings (NYSE: BILL) were taking a dive today as a high valuation and broader fears in the market overshadowed a solid earnings report in its fiscal third quarter.

As of 10:26 a.m. ET, the stock was down 18.1%.

Image source: Getty Images.

So what

Bill.com, which provides cloud software to help small and medium-sized businesses (SMBs) manage back-office accounting and payments, beat estimates on the top and bottom lines.

Revenue jumped 179%, with the help of its acquisitions of Divvy and Invoice2Go, to $166.9 million, topping expectations at $157.9 million. Organic core revenue grew 74%, showing that the legacy business continues to grow briskly, especially as SMBs bounce back from the pandemic. 

Transaction fees jumped 286% to $113.3 million, and organic transaction fees doubled to $58.4 million, showing payment volume ramping up on the platform. Total payment volume on Bill.com increased 57% to $55.1 billion. 

On the bottom line, its adjusted loss per share expanded from $0.02 to $0.08, but that was better than estimates at a per-share loss of $0.16. 

CEO René Lacerte said: “We delivered a great quarter driven by robust demand for our solutions. We are executing against our strategy to drive organic momentum across our solutions while building a unified platform experience incorporating the strengths of Divvy and Invoice2go.”

Now what

Guidance also topped expectations as the company forecast $182.3 million to $183.3 million in revenue in the fourth quarter, which was better than the consensus at $168.8 million. On the bottom line, it sees a per-share loss of $0.13 to $0.14, slightly ahead of estimates at $0.15.

While the report itself left little to complain about, the headwinds against the software-as-a-service (SaaS) sector and high-growth, unprofitable stocks pushed the stock lower. The market seems to be saying that Bill.com stock was overvalued, and it still trades at a price-to-sales ratio around 20 even after today’s sell-off.

Still, the business itself looks strong and the stock was actually up 20% from its low point in the day by late morning, indicating some investors saw the sell-off as a buying opportunity.

While it’s impossible to know when the stock will bottom out, Bill.com’s fundamentals are strong and it still looks like a long-term winner.

Jeremy Bowman has positions in Bill.com Holdings, Inc. The Motley Fool has positions in and recommends Bill.com Holdings, Inc. The Motley Fool has a disclosure policy.

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