BILL Holdings
Hey guys. I’ve been working recently on BILL Holdings for this stock pitch to get into the greatest and most prestigious group in the world: Duke Investment Club. I’m going to attach my notes, then my script for my slides, and then the presentation itself. Our pitch was a few days ago, but I started looking at this company seriously on October 23rd.
Notes (these were taken for like two weeks, just writing down whatever that could be anything):
BILL
US fin-tech company that basically handles financial software (accounting and shi) for small and mid sized businesses. I remember Tomas said software was really hard to value, but I don’t know if he meant just for the large players or if smaller ones like BILL were included too.
They are NOT the entire accounting software, they more so specifically handle AP, AR, workflow automation, and payments infrastructure-They build on top of actual ERP accounting software like QuickBooks or SAP
P72 and Citadel are 15 and 26 on the list of holders (2.2 m and 900,000 respectively, both increasing their position recently). Plus an Elliot activist campaign and a Starboard one too. I’m more focused on allllll da pod shops that have a big holding in BILL.
14% SI is…large but only 3.2 days to cover
Revenue is consistently compounding, decent double digit growth, need to find why there is such aggressive shorting
“Nevertheless, stable customer growth, TPV/customer growth, and transaction count deserve attention, suggesting sales trends remain robust and macro headwinds are in the rear-view mirror,” they wrote.--Sellside analyst so whatever
So, I like can’t find genuine reasons why this stock has taken such a hit
Exposed to SMBs, maybe exposed to a broader macro slowdown in the US economy
Deutsche has headwinds listed as slower SMB spend, “heightened supplier cost sensitivity,” and “lingering competitive threats.”
I need to analyze those three I think
Ad valorem payment type increases could yield higher earnings,
23.7-They are cheap as shi compared to the industry
TPV is up 23% in the same period as the stock is down 50%
Dayum! These figs are pretty solid-TPV up 13% y/y in 2025, TPV up 17% Y/Y
Decrease in revenue from interest on funds held for customers bc of decrease in interest rates
Why are service costs going up at a faster rate than revenue?
Dayum that gross margin is goated
Their small business TAM is huge-6 million small businesses, and they’ve got 500,000 on the books
They’re weak in the AP portion of the accounting business compared to the AR, according to an expert
Management might be shit
Expert says that they have no competitors: “You take Tipalti, you take Brex, you take Melio, they all have bits and pieces, but they don’t have the depth and the breadth of what Bill.com has to offer. That’s undoubtedly their strength.”
^This could be a potential point to elaborate on mis-pricings in the market, but those names are so stupid dude.
Biggest competitors: Ramp, Intuit (report in 2025 said that 70% of accountants at SMB said they would never want to switch to Intuit systems from BILL, recent Intuit foray could be considered a failure)
Market is possibly pricing in a weaker macro SMB market than is actually prudent, assuming no growth in TPV y/y
Only 3x forward sales
Possible thesis: The company’s growth-at-all costs strategy that saw their stock increase 800% from 2020 to the end of 2021, then lose 85% of its value in the following three years, has been replaced by an operating margin expansion strategy that is yielding higher cash flow numbers. This maturation is not being priced in by the general market, which still sees BILL as being an immature, typical Silicon-spender.
High-Yield BILL Cash Acct-Take a look. Is comp doing this?
AI-automation but must be delicate about how this is phrased: A W-9 collection agent now automatically requests and validates vendor tax forms, eliminating 80%+ of manual tax prep steps and saving an estimated 650k hours for BILL customers, a Receipt Reconciliation agent auto-matches receipts to expenses (early tests showed a 533% increase in transactions processed entirely by AI at 92% accuracy), procurement automation, and other stuff that increases onboarding speeds and shi
^^^Need to phrase this as being tangibly beneficial to the business compared to pretty useless AI use-cases by other large businesses ($1 trillion in payment data to be trained on). Are comps doing this?
Fed rate cut increasing spending and borrowing in SMBs, meaning higher spending=higher payment volumes through BILL (rlly shit but something)
2.7B warchest of cash/liquidity
Crash in February was because of revising revenue down and take rates. Take rate movement needs to be checked.
NTTR is at 0.31% for FY2025 as opposed to 0.34% expected. I think it’s just going to stay here for a while
However, despite revising NTTR down, BILL has repeatedly beaten on expectations, like in their most recent quarter.
Partnership with Acumatica signals a move towards medium sized businesses which should provide BILL with a higher NTTR, better ARPU
Net Debt Negative
Key points/theses to be covered:
Operating margin expansion & profitability transition
AI-driven workflow automation (more effective implementation than peers must be harped on)
Competitive moat and customer stickiness will provide BILL significant upside if the SMB customer base is just a bit warmer than is being expected (maybe bring in Fed stuff here)
Can get the P72+Elliot+Starboard stuff in the company overview, for Citadel, must mention just that they expanded their position
Market is over-penalizing BILL for slowing float interest payments which are deflating top-line, just cyclical
How BILL will mitigate a noticeable reduction in discretionary spending needs to be addressed somewhere
Must address why BILL is undervalued right now, not just why they are an intrinsically high-quality business. I think this gets covered with the first, a little bit of the second, a bit of the fourth, and maybe the fifth (but it’s mostly BS).
NTTR higher than expected, earlier drop this year (like 20%) was due to FX messing with NTTR, which seems insane, but this is a really raw nerve
Replacing paper check processing should also be mentioned for white space expansion
Partner channel with banks/financial institutions makes the company stickier
Moving mid-market
EV/GP multiple needs to be mentioned, seems to be popular with sellside
Greater focus on medium businesses compared to smaller businesses in the future will provide a greater TPV than being currently projected
BILL trades right now at a 3.48 EV/Revenue, way too low, average across sell-side is 7.7x
Script (I had theses and covering the DCF):
Theses-
BILL experienced a massive run-up during the post-COVID software bubble, reaching a market-cap of 35 billion at its all-time high. During this time, investors rewarded BILL for growing top-line results and pursuing expansion at all-costs. However, OPEX and COGS both grew faster than profitability metrics like EBIT could keep up. Investor sentiment forced BILL to re-focus on profit starting in 2023. BILL has successfully compounded on profit, and while this change has been appreciated, two consecutively weak quarters have spooked investors again. In Q2 and Q3 2025, BILL reported weaker take rate figures than had been expected, guiding down and lowering revenue estimates. In response, the stock fell 60% throughout in the following month and has not recovered. It is our belief that NTTR was actually lower primarily because of an uniquely high focus on the use of automated clearinghouse (ACH) payments, which return lower take rates to BILL, and FX headwinds that lowered international take rate substantially. These results lowered top-line growth but TPV numbers were still strong throughout FY25, indicating that as take rate returns, which we believe will happen as BILL emphasizes virtual cards, BILL will be able to return stronger margins than is currently being expected, removing investor fear that BILL’s growth is genuinely slowing.
Second, BILL’s AI rollout isn’t just theoretical, it’s driving real operational savings. Because BILL’s models are trained on trillions of transaction data points, they’re automating some of the most time-consuming back-office tasks. That means accountants are reclaiming hundreds of thousands of hours, and small businesses are really seeing a tangible ROI from automation. It’s a clear differentiator from legacy platforms and we believe this automation will allow BILL to garner more interest from small businesses eager to cut costs in a period of potential economic slowdown, while still pursuing larger businesses eager for total workflow automation. BILL’s AI offerings will continue to improve as the technology improves and more data is fed into the company, and we believe that BILL is one of the few use-cases for AI where the value-add is obvious enough to warrant interest in the stock. However, these efficiency gains are not being priced in. While the AI agents were mentioned several times in the most recent call with investors, sellside, a good proxy for investor interest, mentioned benefits of AI once out of the 22 analysts covering this company as a reason to be bullish on the company. We believe that the benefits of AI will be realized in the coming years in the form of expansion in the small-business area of BILL’s customer base.
And finally, Bill’s moat. Bill has always been ahead of the curve in automating the financial back office. They were the first to truly digitize both accounts payable and receivable, and they’ve built on that advantage through smart acquisitions like Divvy and partnerships with major financial players such as Acumatica and JPMorgan. They are the default when it comes to financial automation, handling of AP/AR for businesses, and they are expanding the higher take rate, spend and expense wing. That combination gives Bill a deep moat — strong integration, trusted partners, and technology leadership. But because much of their base is made up of small and midsize businesses, results have been cyclical, and often weighed down by persistent macro fears, fears that SMB feel much more strongly than other parts of the market. As Bill expands into more profitable enterprise and embedded-finance areas, looking to target more mid-sized business, volatility will smooth out, and the market will re-rate BILL as a durable, compounding leader rather than a high-beta growth name.
We believe these three theses, BILL’s successful move to profit that has been missed by the market, a mis-valued successful AI-buildout with massive potential, and a more sustainable customer base will lead BILL to being completed re-rated in the coming years as a monopolistic, fast-growing, compounding company, leading to significant multiple expansion, specifically when it comes to EV/Revenue where we believe that a 5x EV/Revenue target is a conservative but highly reachable target, especially when compared to the sellside average of 7.7x.
DCF+Comps
Focus on current EV/Revenue valuation
Mention how the comps aren’t really too valuable because BILL doesn’t really have direct competition from public companies, only really small, private companies
In the DCF, mention how the typical sellside projection is an EV/Revenue target of 7.7x, but we think BILL can be conservatively modeled out to a 5x multiple without stressing the model much at all. We think a growth in TPV and a strong transaction base will lead BILL to a a 80% upside over the current price.
Also mention non-GAAP EBIT, primarily over SBC add-back, typical in the software space.
Okay, then here is the link to our slides:
Well actually Duke is being annoying, so I can’t share it with people outside of the university (F this dumb school!!), but email me independently, and I’ll add you to the list independently, which should work.
Also, BILL was up 11% the day after we pitched it, just to get that on the record.
