Bill.com (BILL) is an interesting value investment because it sells a product that most organizations need: Accounts Payable (AP), Accounts Receivable (AR), and Credit & Expense Management Software.
To elaborate, Bill.com (NYSE: BILL) claims to simplify AP, AR, and Credit Expense Management with end-to-end automation. Bill promises to “clean up your payables mess.” As somebody who has worked in AP, I can testify that mess is an accurate description for many organizations’ accounts payable situations.
Bill.com’s primary product is AP automation software that can reduce accounts payable to four easy steps. The steps are enter, approve, pay, and sync. This software gives everybody in the company one place to enter, review, approve, pay, and monitor invoices and AP payments.
Bill.com Accounts Receivable Solutions
They claim Bill.com creates one tech stack that syncs with accounting software and can reduce the time spent on AP by 50%. In particular, Bill helps vendors get paid two-times faster. Hence, Bill.com could reduce all the time wasted talking to vendors seeking payment and employees wondering why bills are unpaid.
Another Bill.com solution can supposedly simplify AR into five steps. The steps are enter, send, track, get paid, and sync. They claim Bill.com’s AR Automation Software can set up and send invoices in minutes. The software can create and customize professional invoices. Additionally, users can track invoices with automatic unique numbering.
The Bill.com AR solution can send invoices by email. Additionally, Bill.com can send invoices by US mail. It can also simplify the tracking and followup of invoices. Moreover, the AR Solution can sync with Intuit Quickbooks, Oracle NetSuite, Sage Intacct, Microsoft products, and Xero. The syncing can be manual or automatic.
Plus, Bill.com can combine AR & AP in one platform to reduce costs and increase efficiency. Bill.com can make AR & AP payments through ACH, international payments, pay by card, and network payments.
Divvy and Bill.com
Bill.com’s Divvy product offers all-in-one expense management solutions through its Divvy spend management solution. They claim Divvy can keep expenses in budget and give companies the credit they need.
Users can manage business purchases on a Divvy card and get access to business credit lines through the card. Plus, Divvy manages spending with real-time tracking of expenses. They claim Divvy can save the average company 12 hours of time and $10,360 a month.
Divvy syncs with noom, cuts, qualitrics, and Route. Some Divvy solutions include virtual cards, reimbursements, rewards, and credit builder. There is also a mobile app and accounting integrations. Finally, Divvy can manage expenses through a smartphone app.
How Much Money does Bill.com make?
Bill.com Holdings Inc. (NYSE: BILL) loses money but grows fast. For example, Bill.com reported no quarterly operating income and a quarterly revenue growth rate of 155.8% on 30 June 2022.
The revenue growth rate fell from 179.41% on 31 March 2022 and rose from 85.88% on 30 June 2021. Consequently, Bill.com’s quarterly revenues grew from $78.27 million on 30 June 2021 to $166.91 million on 31 March 2022 to $200.72 million on 30 June 2022.
In contrast, the quarterly operating loss was -$83.18 million on 31 March 2022 and -$70.72 million on 30 June 2021. However, Bill.com can make some money. For instance, Bill.com reported a quarterly gross profit of $144.72 million on 30 June 2022. The quarterly gross profit grew from $119.08 million on 31 March 2022 and $53.99 million on 30 June 2021.
How Much cash can Bill.com generate?
Bill.com (BILL) is burning cash. For example, Bill.com reported a quarterly operating cash flow of -$10.47 million on 30 June 2022. The quarterly operating cash flow fell from -$26.45 million on 31 March 2022 and $17.79 million on 30 June 2021.
In contrast, Bill.com reported a quarterly ending cash flow of $76.68 million on 30 June 2022. The quarterly ending cash flow rose from $403.50 million on 31 March 2022 and fell from $430.91 million on 31 December 2021. Bill.com can generate some cash. It reported a $3.438 billion ending cash flow on 30 September 2021. The quarterly ending cash flow rose from -$562.37 million on 30 June 2021.
Bill.com finances its operations by borrowing money. For example, Bill reported a quarterly financing cash flow of $138.71 million on 30 June 2022. Bill.com has borrowed far more.
It reported quarterly financing cash flows of $959.18 million on 31 December 2021 and $2.104 billion on 30 September 2021. Consequently, Bill.com’s Total debts rose from $1.076 billion on 30 June 2021 to $1.856 billion on 30 June 2022.
Bill.com can accumulate some cash. It reported $2.705 billion in cash and short-term investments on 30 June 2022. The cash and short-term investments grew from $1.165 billion on 30 June 2021 and fell from $2.782 billion on 31 March 2022.
What Value Does Bill.com (BILL) Offer?
I think Mr. Market grossly overvalued Bill.com (BILL) at $167.66 on 26 August 2022. I do not think the total assets of $9.256 billion on 30 June 2022 do not justify the share price.
The total assets grew from $5.969 billion on 30 June 2021. Hence, Bill.com’s value is growing.
However, I think Bill.com is a lousy stock because it makes no money and Mr. Market overvalues it. I think there are better software stocks out there, including Microsoft (MSFT) and Oracle (ORCL).