BILL Holdings, Inc. (BILL): A Bull Case Theory

We came across a bullish thesis on BILL Holdings, Inc. (BILL) on Compounding Your Wealth’s Substack. In this article, we will summarize the bulls’ thesis on BILL. BILL Holdings, Inc. (BILL)’s share was trading at $43.40 as of 29^th May. BILL’s forward P/E was 19.76 according to Yahoo Finance.

Bill.com reported strong financial results for Q1 FY25 with total revenue of $358.2 million, marking a 10.9% increase year-over-year and beating estimates by 0.8%. This growth was primarily driven by subscription and transaction fees, which rose 13.9% to $320 million and accounted for nearly 90% of total revenue.

Despite this revenue strength, gross margin declined slightly by 2.3 percentage points to 84.9%, while operating margin also contracted to 14.9%, down 3.2 percentage points year-over-year, reflecting margin pressures from investments and possibly a shift in product mix.

The company’s free cash flow margin, however, improved significantly by 6.8 percentage points to 27.5%, highlighting efficient cash generation. Net margin remained negative at -3.2%, worsening by 13.1 percentage points, which could be attributed to non-cash expenses or continued investment in growth initiatives. Non-GAAP EPS came in at $0.50, exceeding expectations by 35%. On the customer front, Bill.com served 488,600 businesses, a 5.1% increase, with the AP/AR platform growing to 164,800 customers, up 12.3% year-over-year.

Total payment volume and transaction counts both rose by over 11% and 15% respectively, signaling strong user engagement despite some moderation in spending per customer. The company introduced new features like multi-entity management, procurement automation, and mass payments aimed at mid-market firms, while also accelerating investment in AI-powered finance agents to automate key processes.

Management cautioned about near-term uncertainty impacting SMB discretionary spending but remains confident in the company’s long-term growth prospects, supported by ongoing product innovation, strategic pricing changes, and a robust accounting channel partnership. Guidance for FY25 was slightly lowered but remains optimistic for accelerated growth and margin expansion in the following year.

For a comprehensive analysis of another standout stock covered by the same author, we recommend reading our summary of this bullish thesis on Shopify Inc. (SHOP).

BILL Holdings, Inc. (BILL) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 53 hedge fund portfolios held BILL at the end of the first quarter which was 64 in the previous quarter. While we acknowledge the potential of LYFT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.