Bill.com Holdings Inc: Fintech Stock Up 290% YoY & Has Additional 55% Upside

BILL stockBill.com Stock Continues to Have Great Momentum

Shares of Bill.com Holdings Inc (NYSE:BILL) have been on a tear over the last year, rising 290%.

BILL stock is up approximately 18% since the start of 2021. Since going public in December 2019, the stock has more than quadrupled, up 347% from $36.00 per share.

Despite these solid gains, Wall Street bulls see Bill.com stock as having room to run over the next 12 months, with a median forecast of $170.00 per share, which implies additional upside of 5.3%. The high target of $250.00 per share suggests a 55% gain from the current level.

Why the optimism?

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Bill.com Holdings Inc is more than just a new financial technology (fintech) stock. The company has disruptive technologies that could make it a leader in a global multi-billion-dollar industry.

Chart courtesy of StockCharts.com

BILL Stock Overview

Bill.com Holdings Inc provides cloud-based software that digitizes and automates back-office financial operations for small and midsized businesses around the world.

The company’s roughly 110,000 worldwide customers use the Bill.com platform to manage end-to-end financial workflows and process payments. (Source: “Investor Presentation: February 2021,” Bill.com Holdings Inc, last accessed April 19, 2021.)

Through its platform dashboard, users can view their cash inflows and outflows, as well as their bills coming due. The company offers various services, including automated clearing house payments, accounts payable, accounts receivable, card payments, checks, and cross-border payments.

In a nutshell, the Palo Alto, CA-based company brings businesses into the digital age, which helps streamline payment operations and eliminate paperwork.

Bill.com Holdings Inc might target small and mid-size businesses, but its clients come in every size. Over 80% of the top 100 U.S. accounting firms use Bill.com. The company has also partnered with some of the largest U.S. financial institutions, including Wells Fargo & Co (NYSE:WFC), JPMorgan Chase & Co. (NYSE:JPM), and Bank of America Corp (NYSE:BAC).

The company’s customer base has been growing fast, up 27% year-over-year.

Bill.com’s potential market is massive. There are 20 million small and mid-sized businesses in the U.S., and a whopping 90% of them still use paper checks and rely on other manual processes. This leaves Bill.com with an addressable market of $30.0 billion. In 2020, the company reported full-year revenue of $157.6 million.

Great Q2 2021 Results

For the second quarter of fiscal 2021, ended December 31, 2020, Bill.com announced that its revenue increased 38% year-over-year and 17% sequentially to $54.0 million. The company was targeting second-quarter revenue growth of 32%. (Source: “Bill.com Reports Second Quarter Fiscal 2021 Financial Results,” Bill.com Holdings Inc, February 4, 2021.)

Bill.com’s core revenue was up 59% year-over-year, at $52.3 million. Its subscription fees increased 33% to $26.6 million and its transaction fees increased 98% to $25.7 million.

The company’s gross profit was $40.1 million (74.1% gross margin), compared to $29.3 million (75.0% gross margin) in the second quarter of fiscal 2020. Its adjusted gross profit was $41.8 million (77.3% adjusted gross margin), compared to $30.5 million (78.0% adjusted gross margin) in the second quarter of fiscal 2020.

Bill.com Holdings Inc reported a second-quarter net loss of $17.2 million ($0.21 loss per share), compared to a second-quarter 2020 net loss of $7.6 million ($0.34 loss per share). Its adjusted net loss was $2.1 million ($0.03 loss per share), versus an adjusted net loss of $3.6 million ($0.06 loss per share) in the same prior-year period.

The company finished the second quarter with cash, cash equivalents, and short-term investments of $1.7 billion. At the end of the first fiscal quarter, ended September 30, 2020, that number stood at $700.3 million.

Second-Quarter Highlights

  • Number of customers increased 27% year-over-year to 109,200
  • Total payment volume processed increased 40% year-over-year and 21% sequentially to $34.8 billion
  • Number of transactions processed increased 16% year-over-year and 10% sequentially to 7.2 million
  • Introduced “Bill Manager,” a new joint offering with Wells Fargo
  • Launched a tailored offering for wealth management firms to help deliver bill payment services for high-net-worth clients
  • Completed a $1.2-billion offering of zero-percent convertible senior notes due in 2025

Analyst Take

Bill.com Holdings Inc has tremendous long-term growth potential. As mentioned above, the company reported strong second-quarter financial results and record payment volume growth. The company also strengthened its balance sheet.

Bill.com stock might be a new fintech stock, but the company has a massive addressable market, and its continued quarterly growth shows that it’s making serious inroads.