10-K: BILL Holdings Achieves Profitability in FY25 Amid Strong Growth

BILL Holdings, Inc. reported a net income of $23.8 million for fiscal 2025, reversing prior year losses, driven by increased transaction volume and customer adoption of its financial operations platform.

Summary

• Achieved a net income of $23.8 million in fiscal 2025, a significant improvement from a net loss of $28.9 million in fiscal 2024 and $223.7 million in fiscal 2023.
• Total revenue increased by 13% year-over-year to $1.46 billion in fiscal 2025, primarily driven by subscription and transaction fees.
• Total Payment Volume (TPV) grew 13% to $329.8 billion in fiscal 2025, with transactions processed increasing by 17% to 121.3 million.
• The number of businesses using solutions grew 4% to 493,800 as of June 30, 2025.
• Free cash flow rose to $312.5 million in fiscal 2025 from $257.9 million in fiscal 2024, indicating improved liquidity.
• The net dollar-based retention rate improved to 94% in fiscal 2025 from 92% in fiscal 2024.
• Issued $1.4 billion in 0% convertible senior notes due April 1, 2030, and used a portion of the proceeds to repurchase outstanding 2025 and 2027 convertible notes and $200.0 million of common stock.
• A new $300 million share repurchase program was authorized in August 2025, following the completion of a previous $300 million program in July 2025.

Sentiment

Score: 7

Explanation: The company demonstrated a significant turnaround to profitability in fiscal 2025, coupled with robust revenue and TPV growth, and strong free cash flow generation. These are positive indicators of operational efficiency and market adoption. However, the net dollar-based retention rate, while improved, remains below 100%, suggesting ongoing customer churn or reduced spending per customer. Macroeconomic headwinds impacting SMBs, intense competition, and the inherent risks associated with credit products and a rapidly evolving regulatory environment warrant a cautious approach. The new share repurchase program is a positive signal for shareholder value, but the stock's volatility and the need for continued significant investment in R&D and AI, along with the integration challenges of acquisitions, suggest a 'hold' position. Investors should monitor the company's ability to sustain profitability, improve retention rates, and effectively navigate competitive and macroeconomic pressures.

Positives

• Achieved net income of $23.8 million in fiscal 2025, a significant turnaround from net losses in previous years.
• Total revenue increased by 13% to $1.46 billion in fiscal 2025, demonstrating continued top-line growth.
• Subscription and transaction fees, the core revenue driver, increased by 16% to $1.30 billion.
• Total Payment Volume (TPV) grew by 13% to $329.8 billion, indicating strong platform usage.
• Transactions processed increased by 17% to 121.3 million, reflecting higher engagement.
• Free cash flow increased significantly to $312.5 million in fiscal 2025, up from $257.9 million in fiscal 2024, showing improved operational efficiency and liquidity.
• Net dollar-based retention rate improved to 94% in fiscal 2025 from 92% in fiscal 2024, suggesting better customer satisfaction and expansion.
• Operating loss significantly reduced to $(80.6) million in fiscal 2025 from $(174.2) million in fiscal 2024.
• Successful issuance of $1.4 billion in 2030 convertible senior notes, demonstrating access to capital markets.
• Proactive management of debt through repurchases of 2025 and 2027 convertible notes.
• Authorization of a new $300 million share repurchase program in August 2025, signaling confidence in future cash flow and commitment to shareholder returns.
• Strong focus on AI development, including AI agents for SMB payables, receivables, procurement, and cash management.
• Robust cybersecurity governance with a dedicated board committee and CISO.

Negatives

• Interest on funds held for customers decreased by 3% to $161.8 million in fiscal 2025, primarily due to lower yield from decreasing interest rates.
• Gross margin slightly decreased to 81.4% in fiscal 2025 from 81.8% in fiscal 2024, attributed to a change in the mix of payment processing costs.
• The net dollar-based retention rate of 94% indicates some customer churn or contraction, as it is below 100%.
• Macroeconomic conditions, including interest rate volatility and inflation, have led SMBs to tighten budgets and select lower-cost payment methods, impacting TPV per customer.
• Increased rewards expense for BILL Divvy Cards, rising from 48% to 49% as a percentage of revenue from spend and expense interchange fees, due to lower interchange fees relative to total card payment volume.
• Accumulated deficit increased to $1.51 billion as of June 30, 2025, despite achieving net income for the fiscal year.
• The company still reported an operating loss of $(80.6) million, indicating that core operations before other income/expenses are not yet profitable.

Risks

• A history of operating losses and uncertainty about sustaining or expanding profitability in the future.
• A significant portion of revenue comes from small and medium-sized businesses (SMBs), which are susceptible to economic downturns, inflation, and interest rate increases, potentially affecting demand for products and services.
• Inability to attract new customers, convert trial customers into paying customers, or successfully promote charge card usage could adversely affect revenue growth.
• Failure to retain current customers, increase customer adoption of products, sell additional services, or develop and launch new payment products could harm business and growth.
• The BILL Divvy Card offering and invoice financing expose the company to credit risk related to spending businesses' ability to pay balances.
• Risk management efforts may not be effective in preventing fraudulent activities by customers, subscribers, spending businesses, or third parties, which could expose the company to material financial losses and liabilities.
• The markets in which the company participates are competitive, and failure to compete effectively could harm operating results.
• Transferring large sums of customer funds daily subjects the company to numerous associated risks, including financial losses, damage to reputation, or loss of trust.
• Dependence on relationships with accounting firms and financial institutions, which could adversely affect growth prospects if these relationships weaken or terminate.
• Recent growth may not be indicative of future growth, and there is no assurance of ability to scale the platform and infrastructure or manage growth effectively.
• Subject to numerous risks related to partner banks and financing arrangements with respect to the spend and expense management solution.
• Challenges with successfully developing and deploying new AI tools or properly managing the use of AI could result in reputational harm, competitive harm, and legal liability.
• Future acquisitions, strategic investments, partnerships, collaborations, or alliances could be difficult to identify and integrate, divert management attention, disrupt business, dilute stockholder value, and adversely affect operating results.
• Payments and other financial services-related regulations and oversight are material to the business, and failure to comply could materially harm the business.
• Debt service obligations, including convertible senior notes and revolving credit facilities, may adversely affect financial condition and results of operations.
• May not have the ability to raise the funds necessary for cash settlement upon conversion of notes or to repurchase notes for cash upon a fundamental change.
• The conditional conversion feature of the notes, when triggered, may adversely affect financial condition and operating results.
• Capped Calls may affect the value of notes and common stock, and the company is subject to counterparty risk with respect to the Capped Calls.
• The market for common stock has been, and will likely continue to be, volatile, potentially leading to loss of investment.
• Anti-takeover provisions in charter documents and under Delaware law could make an acquisition of the company more difficult.
• Management team has limited experience managing a public company, potentially diverting attention from day-to-day business.
• No intention to pay dividends for the foreseeable future, requiring investors to rely on stock price appreciation.
• If securities or industry analysts do not publish research or publish unfavorable or inaccurate research, stock price and trading volume could decline.
• Sales of substantial amounts of common stock in the public markets, particularly by directors, executive officers, and significant stockholders, could cause the market price to decline.
• The timing and amount of any repurchases of common stock are subject to uncertainties, and excise tax on repurchases may increase costs.
• Ability to use net operating losses (NOLs) to offset future taxable income may be subject to certain limitations.
• Could be required to collect additional sales taxes or be subject to other tax liabilities that may increase costs for customers.
• Natural catastrophic events, pandemics, and man-made problems such as power disruptions, computer viruses, data security breaches, war, and terrorism may disrupt the business.
• Failure to maintain an effective system of disclosure controls and internal control over financial reporting could impair the ability to produce timely and accurate financial statements.
• Reported financial results may be adversely affected by changes in accounting principles generally accepted in the U.S. (GAAP) or if estimates or judgments relating to critical accounting policies prove incorrect.
• Estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and business could fail to grow at similar rates.
• Reliance on assumptions and estimates to calculate certain performance metrics, and real or perceived inaccuracies may harm reputation.
• Future litigation could be costly and time-consuming to defend.
• Failure to maintain company culture as the company grows could harm success and business.
• Exposure to foreign currency exchange risk relating to Canadian operations and cross-border payments.
• Actions by or proposals from activist stockholders could impact the trading value of securities and harm the business.
• Extensive government regulation and oversight, particularly related to privacy, data protection, and information security, with actual or perceived failure to comply potentially harming the business.

Future Outlook

The company expects to continue investing significant funds in platform development, including introducing new products and AI-enabled tools, driving new customer adoption, and expanding partner integrations. Research and development expenses are anticipated to increase in absolute dollars. The company plans to expand its cross-border payments offering and international operations. Management will monitor macroeconomic conditions closely and adjust sales and marketing spend accordingly. The ability to utilize net operating losses may be impacted by future ownership changes or tax law changes, such as the One Big Beautiful Bill Act.

Management Comments

• Our mission is to make it simple to connect and do business.
• As a champion of SMBs, we are automating the future of finance so businesses can thrive.
• Our purpose-built, artificial intelligence (AI)-enabled financial software platform creates seamless connections between our customers, their suppliers, and their clients.
• We believe our customer retention is strong.
• We intend to continue to monitor macroeconomic conditions closely and to take appropriate financial or operational actions in response to such conditions.
• We believe that maintaining and enhancing our brands is important to support the marketing and sale of our existing and future products to new customers and partners and to expand sales of our platforms to new and existing customers and partners.
• We are committed to helping build a more sustainable future for businesses using our solutions, as well as for their communities, and stakeholders.
• Our culture enables us to attract and retain exceptional talent.
• We are not aware of any risks from cybersecurity threats that have materially affected or are reasonably likely to affect us, including our business strategy, result of operations or financial condition.

Industry Context

The company operates in a rapidly evolving and competitive market for SMB financial software solutions, characterized by increasing digitization of back-office operations. While legacy manual processes remain a primary competitor, the company also faces competition from large enterprise resource planning (ERP) providers, niche solution providers, and adjacent product companies like Intuit (QuickBooks), Brex, and Ramp, which are expanding into bill payment. The industry is also subject to increasing regulatory scrutiny, particularly concerning payments, data protection, and the emerging use of AI. Macroeconomic factors, such as interest rate fluctuations and inflation, are influencing SMB spending patterns, leading some to seek lower-cost payment methods.

Comparison to Industry Standards

• The platform provides SMBs with core functionality and value-added services typically reserved for larger companies, enabling them to connect and do business from nearly anywhere, any time, through cloud-based desktop and mobile applications.
• The extensive investment in building a fully-integrated two-way sync with popular software providers like QuickBooks Online, QuickBooks Desktop, Oracle NetSuite, Sage Intacct, Xero, and Microsoft Dynamics 365 Business Central is well-regarded in the industry, differentiating the company from competitors.
• Proprietary risk management expertise, leveraging data from millions of B2B transactions, has resulted in nominal fraud and credit loss rates of approximately 0.01% of TPV for BILL AP/AR payment services and 0.23% for BILL Divvy Cards in fiscal 2025, demonstrating effective risk mitigation.
• Competitors such as Intuit (with its QuickBooks bill payment solution), Brex, and Ramp (offering spend and expense management products and bill payment) are noted, with the company believing its platform offers 'much greater functionality' than these competing offerings.
• The security program is aligned with NIST-800-53 standards and certified to SOC1 Type II and SOC2 Type II, indicating adherence to recognized industry security and control benchmarks.

Management Changes

Corporate Governance

Legal Proceedings

• Not currently a party to any legal proceedings believed to be material to the business or financial condition.
• From time to time, involved in lawsuits, claims, investigations, and proceedings that arise in the ordinary course of business (e.g., patent, commercial, product liability, employment, class action, whistleblower, regulatory investigations).
• Previously subject to fines and other penalties by regulatory authorities for violations of state money transmission laws.
• Regulators and third-party auditors have identified gaps in anti-money laundering and sanctions programs, which have been addressed through remediation processes.
• Submitted a voluntary self-disclosure to OFAC in March 2024 related to U.S. domestic payments made by customers traveling in sanctioned countries and subscription payments from subscribers in sanctioned countries by an acquired subsidiary (Zipbooks). OFAC issued a cautionary letter in November 2024.

Related Party Transactions

• In connection with a commercial relationship with CPA.com, Inc., warrants were issued on April 7, 2025, to purchase up to 312,682 shares of common stock. These warrants were net exercised on April 13, 2025, for 312,607 shares of common stock.

Stakeholder Impact

• Shareholders: Positive impact from achieving net income, strong revenue growth, increased free cash flow, and new share repurchase program. Potential dilution from future equity issuances. Risk of stock price volatility.
• Employees: Restructuring plan in December 2023 involved a reduction in global workforce. Company culture is a key focus for attracting and retaining talent. Comprehensive compensation and benefits program.
• Customers (SMBs): Benefit from automated financial operations, new AI-enabled products, and enhanced platform functionality. Impacted by macroeconomic conditions leading to tightened budgets and preference for lower-cost payment methods.
• Suppliers/Vendors: Benefit from faster payments through the platform.
• Financial Institution Partners: Continued partnerships are crucial for distribution and product offerings. Subject to audits and compliance requirements.
• Accounting Firms: Key distribution channel, using the platform for client advisory services.
• Regulatory Authorities: Company is subject to extensive and evolving regulations, with ongoing compliance efforts and past penalties/scrutiny.

Next Steps

• Continue to expend significant funds to further develop the platform, including introducing new products and functionality.
• Drive new customer adoption and expand partner integrations.
• Launch AI agents for SMB payables, receivables, procurement, and cash management.
• Expand cross-border payments offering and international operations.
• Monitor macroeconomic conditions closely and take appropriate financial or operational actions.
• Recruit, hire, develop, and retain highly qualified personnel, especially software developers, legal, compliance, and risk operations professionals.
• Potentially initiate additional share repurchase programs or repurchase additional Notes.
• Evaluate the impacts of the One Big Beautiful Bill Act (OBBBA) on consolidated financial statements.
• Implement additional disclosures for income tax rate reconciliation and cash taxes paid (effective fiscal 2026).
• Implement additional disclosures for disaggregation of income statement expenses by nature (effective annual periods beginning after December 15, 2026).

Key Dates

Recommendation

The company demonstrated a significant turnaround to profitability in fiscal 2025, coupled with robust revenue and TPV growth, and strong free cash flow generation. These are positive indicators of operational efficiency and market adoption. However, the net dollar-based retention rate, while improved, remains below 100%, suggesting ongoing customer churn or reduced spending per customer. Macroeconomic headwinds impacting SMBs, intense competition, and the inherent risks associated with credit products and a rapidly evolving regulatory environment warrant a cautious approach. The new share repurchase program is a positive signal for shareholder value, but the stock's volatility and the need for continued significant investment in R&D and AI, along with the integration challenges of acquisitions, suggest a 'hold' position. Investors should monitor the company's ability to sustain profitability, improve retention rates, and effectively navigate competitive and macroeconomic pressures.

Keywords

Financial Operations Platform, SMB Finance, Accounts Payable Automation, Accounts Receivable Automation, Spend Management, Expense Management, BILL Divvy Card, Payment Processing, Artificial Intelligence (AI), Cloud-based Software, Fintech, SEC Filing, 10-K Report, Corporate Governance, Risk Management, Share Repurchase, Convertible Notes, Financial Performance, Revenue Growth, Profitability, Cash Flow, Cybersecurity, Regulatory Compliance, Market Trends, Investment Analysis