On Wednesday, KeyBanc maintained a Sector Weight rating on Bill.com Holdings Inc. (NYSE: NYSE:BILL), following the company's announcement of enhancements to its payment product suite. The upgrades include an expansion of the Invoice Financing offering, the introduction of Local Transfer for same-day international payments, and improvements to the Instant Payment service.
Bill.com's enhanced Invoice Financing now allows businesses to receive advances of up to $100,000 on eligible outstanding invoices within minutes. The service includes a 3% origination fee per invoice with no interest charged if repaid within two months. After this period, a monthly interest rate of 15% (18.2% APR) will be applied until the invoice is paid. Payments from accounts payable customers on financed invoices will be used to settle outstanding supplier balances. WebBank is the credit issuer for this service.
The company also launched Local Transfer, a new feature for international payments that enables businesses to make same-day payments to vendors in local currencies. This service aims to bypass intermediary bank and wire fees by not using the SWIFT network. While Bill.com indicates that Local Transfers are free to send, they may include a foreign exchange conversion fee.
Additionally, Bill.com has improved its Instant Payment offering by incorporating the FedNow service, which allows for instant sending and receiving of payments. The existing Instant Payment modality carries a fee of 1%, with a minimum of $9.99 and a maximum of $100.
These product enhancements were previously hinted at during the F4Q24 earnings call, so the announcement was expected. With the details on Invoice Financing pricing and assumptions around Local Transfer and Instant Transfer, KeyBanc anticipates that the adoption of these payment modalities will positively contribute to the company's take rate. Moreover, the timing of these introductions is believed to align with and support management's forecasted take rate trough in the first half of fiscal year 2025.
In other recent news, Bill.com introduced a series of enhancements to its payment engine, including Local Transfer for international payments, and upgrades to its Instant Payment and Invoice Financing options.
The company also welcomed Mary Kay Bowman as Executive Vice President, General Manager of Payments and Financial Services. Deutsche Bank maintained its Buy rating on the company, following its fourth-quarter results, which demonstrated approximately 16% year-over-year revenue growth, a 9% increase in total payment volume, and adjusted earnings per share of $0.57.
However, Mizuho reduced its price target on Bill.com's stock due to a decline in the net revenue retention rate and lower-than-expected revenue growth guidance for fiscal year 2025. Seaport Global Securities also lowered its price target but kept a Buy rating, following the announcement of an 11% increase in revenue and a decrease in adjusted operating income for fiscal year 2025.
In addition, Bill.com announced a new $300 million share buyback program and plans to invest $45 million in fiscal year 2025 to reaccelerate growth. The company's recent activities also include an expansion agreement with Bank of America and a strategic partnership with Xero to enhance its platform.
InvestingPro Insights
Following the recent product suite enhancements by Bill.com, investors may find additional context from InvestingPro data and tips valuable. Notably, Bill.com holds more cash than debt on its balance sheet, which suggests a strong liquidity position to support initiatives like the expanded Invoice Financing and the introduction of Local Transfer. This financial stability is further underscored by the company's impressive gross profit margins, which stood at 85.3% over the last twelve months as of Q4 2024.
While Bill.com does not pay a dividend to shareholders, the company's shareholder yield is deemed high, indicating potential returns through other means such as share buybacks or capital gains. In terms of growth, analysts predict that the company will be profitable this year, which may appeal to investors looking for growth in net income. However, it is worth noting that the stock price has experienced significant volatility, with a 46.92% decline over the past year, reflecting some level of market uncertainty.
For readers seeking a deeper dive into Bill.com's financial health and future prospects, InvestingPro offers a wealth of additional tips—currently listing 9 more insights for the company. These could provide further guidance on investment decisions, especially in light of the company's recent strategic moves. For more details, investors are encouraged to explore the full set of InvestingPro Tips at https://www.investing.com/pro/BILL.
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