Shares of Bill Holdings (BILL -2.20%) have climbed spectacularly following a better-than-expected quarterly update. At the time of writing, the stock is at $90.00 per share, up 61% in the past month to a new 52-week high.
Long-time shareholders are breathing a sigh of relief amid the fintech disruptor's renewed growth and earnings momentum. That being said, the stock remains 70% below its peak of $342.26 set in November 2021.
Does the latest rally mark the start of a bigger comeback story, and should you buy shares of Bill Holdings while it's still below $100? Here's what you need to know.
AI-powered growth
Bill Holdings is recognized as a leader in cloud-based accounting solutions for small and medium-sized businesses (SMBs). The platform specializes in automating financial operations to streamline critical tasks like invoicing, expense management, and bill payments.
A key component of the technology is artificial intelligence (AI) and machine learning capabilities that eliminate data entry from workflows. Ultimately, businesses being able to save time and reduce costs is a strong selling point that has allowed Bill to serve more than 476,000 current customers.
On the other hand, slowing growth in recent years while high spending pressured earnings helps explain the large sell-off in the stock from its pandemic-era all-time high.
The good news is that the latest trends have been much more encouraging. For first-quarter fiscal 2025 (for the period ended Sept. 30), Bill reported total revenue growth of 18% year over year with adjusted earnings per share (EPS) of $0.63, ramping up from $0.44 in the prior-year quarter. Notably, the results were well ahead of the average Wall Street estimates.
Image source: Getty Images.
Operationally, the number of transactions processed this quarter increased by 16% from last year, including a record $80 billion in total payment volume. Management is citing the strong customer response to its new AI-powered features, including "Sync Assist," which allows for a seamless integration with third-party accounting systems as a growth driver.
Maybe the biggest development from the earnings report was the updated guidance. For 2025, Bill expects total annual revenue growth between 12% and 13%, up from the prior 11% midpoint forecast. The company also hiked its full-year adjusted EPS estimate to between $1.65 and $1.83, compared to the previous $1.36 to $1.61 range.
While this year's EPS target represents a decline compared to $2.12 in fiscal 2024 as the company moves to increase capital expenditures, management is projecting confidence that they have positioned Bill to be a "durable high growth, and highly profitable business over the long-term."
| Metric | 2024 | Prior 2025 (Estimate) | New 2025 (Estimate) |
|---|---|---|---|
| Total Revenue | $1,290 million | $1,415 to $1,450 million | $1,439 to $1,464 million |
| YOY (Change) | 22% | 10% to 12% | 12% to 13% |
| Non-GAAP EPS | $2.12 | $1.36 to $1.61 | $1.65 to $1.83 |
Data source: Bill Holdings. YOY = year over year. GAAP = generally accepted accounting principles.
Tailwinds for Bill into 2025
What I like about Bill Holdings as an investment is the company's unique exposure to the operating landscape for SMBs. Heading into the new year, there is some optimism for macroeconomic conditions to stay resilient and possibly strengthen as interest rates decline.
The setup is great news for Bill, as its target customer base looks to expand and invest in business productivity tools. The bullish case for the stock is that the results will outperform expectations through these tailwinds for growth and earnings. Company fundamentals are further supported by underlying free cash flow and a solid balance sheet.
Bill stock is trading at 33 times its $291 million in free cash flow from the past year as a price-to-free cash flow ratio. This valuation metric is at a discount compared to larger financial management software players like Intuit, SAP, and Oracle with higher free cash flow multiples. By this measure, there is a case to be made that Bill remains undervalued, with room for cash flow and earnings to accelerate over the next several years.
BILL Price to Free Cash Flow data by YCharts.
Decision time on Bill stock
Bill appears to have finally turned the corner toward more consistent financials in what may still be the early stages of a sustained turnaround with an improving outlook. I believe there's a good chance the stock will be trading at a much higher price by this time next year. Investors have a great opportunity today to pick up shares in Bill under $100 to complement a diversified portfolio.
