Hello, and welcome to Bill.com's Third Quarter Fiscal Year 2022 Earnings Conference Call. My name is Alex, and I will be coordinating the call today. I will now hand over to your host, Karen Sansot, Vice President of Investor Relations. Over to you, Karen.

Thank you operator. Welcome to Bill.com's Fiscal Third Quarter 2022 Earnings Conference Call. We issued our earnings press release a short time ago and furnished the related Form 8-K to the SEC. The press release can be found on the Investor Relations section of our website at investor.bill.com. With me on the call today is Rene Lacerte, Chairman CEO and Founder of Bill.com; and John Rettig, Executive Vice President and CFO. Before we begin, please remember that during the course of this call, we may make forward-looking statements about the operations and future results of Bill.com that involve many assumptions, risks and uncertainties. If any of these risks or uncertainties develop or if any of the assumptions prove incorrect, actual results could differ materially from those expressed or implied by our forward-looking statements. For a discussion of the risk factors associated with our forward-looking statements, please refer to the text in the company's press release issued today and to our periodic reports filed with the SEC, including our most recent annual report on Form 10-K and quarterly report on Form 10-Q filed with the SEC and available on the Investor Relations section of our website. We disclaim any obligation to update any forward-looking statements. On today's call, we will refer to both GAAP and non-GAAP financial measures. The non-revenue financial figures discussed today are non-GAAP, unless stated that the measure is a GAAP number. Please refer to today's press release for the reconciliation of GAAP to non-GAAP financial performance and additional disclosures regarding these measures. At times during this call, we will discuss organic or standalone results, which exclude Divvy and Invoice2go, which we acquired on June 1, 2021 and September 1, 2021, respectively, to help listeners understand our organic performance. Now, I'll turn the call over to Rene.

Thank you, Karen. Good afternoon, everyone. Thank you for joining us today. Bill.com produced great results in the third quarter. Total revenue increased 179% year-over-year. Bill.com's organic core revenue grew 74% year-over-year, and revenue from our Divvy spend management solution increased 155% year-over-year. Additionally, our non-GAAP gross margin was 85%, and our non-GAAP net loss was much lower than we expected. We are delivering meaningful growth at scale, while continuing our track record of efficient operational execution. We are the leader in helping small and midsized businesses transform and automate their financial operations so they can easily gain control of their spend and cash management. Our growth this quarter demonstrates that demand for our solution continues to be robust. As of the end of fiscal Q3, more than 380,000 businesses trusted Bill.com to manage their financial operations, and we processed over $55 billion of total payment volume on our platform. We know that in inflationary times, businesses increasingly seek cost-effective solutions that provide cash management control and increased visibility. The powerful combination of our platform and go-to-market ecosystem delivered more than 11,000 net new Bill.com organic customers in the third quarter. We experienced strong demand across all channels, particularly among financial institutions where our white-label platform for Bank of America's small business customers continue to roll out to new regions in the US. During the quarter, we reorganized fully integrating the Divvy and Invoice2go employees into the Bill.com organization. We are now one team focused on building an integrated easy-to-use solution for customers. We are combining Bill.com's AP platform, powerful distribution capabilities and significant scale with Divvy's spend management expertise, customer success initiatives and modern design, and with Invoice2go's account receivables capabilities, mobile experiences and global reach. Having a combined team will enable us to move faster. With the remote work capabilities now being essential for businesses of all sizes, SMBs increasingly need to reduce the complexity of their businesses. They want fewer solutions and tools to run their back office. A great example of how we help companies streamline their operations is InfluenceLogic, an online marketing platform that helps SMBs grow. Samantha Parzych, Director of Finance said and I quote, 'Prior to adopting Bill.com our international payment process was manual and time-consuming. We had to go to a bank for international payments and track AP with an Excel spreadsheet. Bill.com really simplified our process and improved the timeliness of our payments. We also adopted Divvy, which has become our go-to program for all payments outside of the accounts payable process. Having AP and spend management in one place makes managing and tracking payments and spend way more efficient. It reduces the amount of time spent toggling between different solutions and gives me more confidence in our financial operations.' Every employee at Bill.com is energized by the value we create for our customers and the very large market opportunity ahead of us with 30 million micro small and midsized businesses in the US and more than 70 million globally. A key component of our go-to-market is the relationships we have built with the strategic partners. These partners enable us to efficiently reach the long tail of SMBs who do not have the time or the resources to keep up on the latest trends in back-office automation. Accountants and banks are the most trusted advisers to SMBs. As trusted advisers, SMBs look to them first to recommend new tools and technologies that can help improve their businesses. We have been investing in our relationships with accounting professionals since Bill.com's inception. Our platform enables accounting firms to automate routine manual tasks creating staff to offer value-added client advisory services called CAS to their clients. Accounting firms that have embraced CAS have strengthened their relationships with clients expanding far beyond bookkeeping and tax preparation to become strategic advisers. This quarter we expanded our long-standing exclusive partnership with CPA.com the business and technology arm of the American Institute of CPAs known as the AICPA, the world's largest member association representing the CPA profession. CPA.com serves more than 400,000 members of the AICPA by identifying emerging trends and technologies and providing education, training and other resources. In recognition of Divvy's leadership position in the spend management arena, CPA.com has selected Divvy as its exclusive partner for expense management, corporate cards and spend management. Erik Asgeirsson, President and CEO of CPA.com said and I quote, 'We are thrilled to build upon our long history of success with Bill.com who has been instrumental in the evolution and broad adoption of CAS by accounting firms. And now with the powerful combination of Bill.com and Divvy, we will continue to help firms expand their role as the most trusted advisers as we define the next generation of CAS.' Moving on to financial institutions. During the quarter we continued our planned rollout with Bank of America. The service is now available in all 50 states for new small business customers within the online banking experience. We are excited that this new white label platform extends our reach beyond Bank of America's commercial customers. We will continue to support BofA's rollout throughout calendar 2022 to drive awareness and adoption of the new platform. In addition to strengthening our strategic partnerships, we have continued our rapid pace of innovation as we broaden the portfolio of payment and funding options our customers have to choose from. During the quarter, we introduced an early version of enhanced ACH which provides large vendors with faster payment speed and rich remittance data. This offering complements our menu of ad valorem payment offerings including virtual card, cross-border, instant transfer and pay by card. These offerings enable us to provide more value to customers and as a result increase our share of wallet for their payment flows. We are scaling our organization to address the large global opportunity ahead of us and to build a solid foundation for becoming a multibillion-dollar company. As we do so, our people continue to be the key to our success. I'm happy to announce two new additions to the Bill.com team. First, we have a new Chief People Officer, Michael DeAngelo. I'm excited to work with Michael to tap his global experience dealing with teams and organizations from start-ups to large public companies including Pinterest, Google and Microsoft. His experience aligns with our global ambitions. Michael takes over from Jackie Hendy, who has led our people team for the last eight years. I would like to thank Jackie for all of her contributions to our success and for being a wonderful partner to me and the team. Second, we have added Aida Álvarez to our Board of Directors. Aida brings a wealth of experience from large public Boards like Walmart and HP. And having served in the first cabinet-level position for the Small Business Administration under President Bill Clinton, she brings deep knowledge of SMBs. In addition, Mark Lenhard, the CEO of Invoice2go and Bill.com's COO, will be leaving the company in September. Mark has helped us quickly complete organizational integration across the three companies and the one-year anniversary of the Invoice2go acquisition marks the right timing for Mark to pursue his entrepreneurial interest. In closing, we delivered another strong quarter of results, driven by focused execution against our objectives. Each of our 2,000 employees is inspired by the opportunity to help hundreds of thousands of businesses, transform their financial operations, so they can focus on their passions, the reasons they started their businesses. I'll now turn the call over to John to talk in more detail about our quarter.

Thanks, Rene. Today I'll provide an overview of our fiscal third quarter 2022 financial results and discuss our outlook for the fiscal fourth quarter and full fiscal year 2022. As a reminder, today's discussion includes non-GAAP financial measures. Please refer to the tables in our earnings press release for a reconciliation from non-GAAP to the most directly comparable GAAP financial measure. We delivered strong Q3 financial results, with total revenue growth of 179% year-over-year and non-GAAP gross margin of 84.6%. In Q3, organic core revenue grew 74% year-over-year. Divvy's standalone revenue growth was 155% year-over-year. Our revenue performance in Q3 led to a non-GAAP net loss per share that was significantly better than our expectations. We have excellent organic momentum across our solutions and we're excited by our vision for a unified platform experience to enhance our market opportunity. We continue to invest behind opportunities with strong unit economics, which creates operating efficiency as we scale. Before we jump into a discussion of our results, I'd like to comment on two top-of-mind macro factors and how they impact our business: inflation and interest rates. Regarding inflation, we have heard from customers that price increases for goods, services and employee salaries are collectively creating pressure in their businesses. The magnitude of the impact obviously varies by company. Because Bill.com provides visibility into spend and cash flow, our platform gives businesses looking for cost efficiencies, the tools to redirect resources where they are needed most in the current environment. It is likely that inflation to date has had a positive impact on our total payment volume growth, but we believe the impact is immaterial overall. And like most businesses, Bill.com is also experiencing cost increases and we're diligently managing this trend. On the topic of interest rates, we generate float revenue from interest earned on funds held for customers. Assuming recent FBO balances of $3 billion to $3.5 billion, every 100 basis points increase in the Fed funds rate would result in approximately $30 million to $35 million in incremental annual float revenue, though there will be a lag effect until current FBO investments mature and are reinvested in higher-yielding securities. We also earn interest income on our corporate cash balances. While rising interest rates result in increased interest expense related to funding a portion of Divvy's card program, we expect this additional expense to be more than offset by increasing interest income. The net of these moving parts is that rising interest rates is a significant tailwind for Bill.com. Now turning to an update on our key metrics. We delivered a record quarter for customer acquisition in Q3. We ended the fiscal third quarter with 146,600 Bill.com organic customers, with net new adds of 11,600 in the quarter. New customers in the quarter exceeded our expectations, driven by robust demand across channels and significant strength in our financial institution channel. Several of our financial institution partners added new customers at a much faster rate in Q3, driven by both faster rollout of the product across markets and new marketing initiatives that led to a step-up from Q2. Without the step-up from financial institution partners, net new customer adds in Q3 exceeded the upper end of our expectations. We ended Q3 with 18,100 spending businesses using our Divvy spend management solution, representing growth of 2,600 net new adds in the quarter. This is more than double the total number of spending businesses from a year ago when we announced the Divvy acquisition. In addition, we ended fiscal Q3 with 221,400 subscribers using our Invoice2go AR solution. The slight decline in Invoice2go subscribers was due to the continued implementation of Bill.com's more rigorous onboarding flows that we discussed on our last call. We believe the application of Bill.com's flows will yield higher-value customers that generate more payment volume and revenue over time. We delivered strong organic total payment volume of $55 billion in Q3, representing 57% year-over-year growth, and reflecting the expected seasonality that we shared with you on our last earnings call. During the quarter we processed 2.1 billion in card transactions from spending businesses using our Divvy spend management solution, which is an increase of 118% year-over-year. Moving on to the number of transactions. We processed 9.5 million payments on the Bill.com platform in Q3, reflecting 32% year-over-year growth. We also processed 5.9 million debit card transactions. Now I'll review our reported consolidated Q3 results. Total revenue was $166.9 million, up 179% year-over-year. Core revenue, which consists of subscription and transaction fees, was $165.5 million, representing growth of 182% year-over-year. Organic Bill.com core revenue was $102.1 million, an increase of 74% year-over-year due to strong demand across channels and increased customer adoption of our ad valorem payment products. In addition to our organic core revenue strength, revenue from our spend management solution grew 155% year-over-year. These results were driven by stronger-than-expected spend given typical Q3 seasonality and interchange income at approximately 260 basis points in the quarter. Subscription revenue increased to $52.2 million, up 78% year-over-year driven by our growing customer base across all segments and the inclusion of Invoice2go subscribers. Bill.com organic subscription revenue growth was 48% year-over-year. Transaction revenue increased to $113.3 million, up 286% year-over-year due to TPV strength, increased adoption of our ad valorem products and increasing spend on Divvy, which totaled $53.6 million in transaction revenue for Q3. Bill.com organic transaction revenue growth was 101% year-over-year. Turning to gross margin and our operating results for Q3. Non-GAAP gross margin was 84.6%, well above our expectations driven by a higher mix of interchange and variable transaction revenue. As a reminder we manage a portfolio of payment offerings that have a range of margins entering various stages of adoption and we currently have a very favorable payment mix. In the short-term we expect non-GAAP gross margin to be slightly above the 79% to 81% range we discussed previously. Non-GAAP operating expenses were $146.8 million, an increase of $17 million from Q2. We increased R&D investments related to integrating the products and technology from our recent acquisitions in addition to enhancing our platform capabilities including development of new payment offerings. Our sales and marketing expenses increased primarily due to expanding our go-to-market initiatives and increased rewards expense associated with our spend management solution. Non-GAAP operating loss was $5.7 million. And our non-GAAP net loss was $8.7 million or a net loss per share of $0.08 based on 103.8 million basic weighted shares outstanding. Our non-GAAP net loss was significantly better than our expectations given our strong revenue performance. Moving on to the balance sheet. Cash, cash equivalents and short-term investments at the end of Q3 were $2.8 billion, flat quarter-over-quarter. We continue to be well-capitalized enabling us to invest in our platform, expand our go-to-market capabilities and extend our market leadership. As of March 31, 2022, we had $3 billion in customer funds on our balance sheet, which was down $337 million from the end of Q2 due to the previously mentioned PPP seasonality in Q3. Shifting to our financial outlook for the fiscal fourth quarter and full fiscal year 2022. As discussed earlier, we are closely monitoring the macro environment and our fiscal 2022 outlook assumes that macro factors do not have a material negative impact on our business. For fiscal Q4 we expect total revenue to be in the range of $182.3 million to $183.3 million. For Q4, Bill.com organic core annual revenue growth is expected to be approximately 60% on a standalone basis, while Divvy spend management revenue is expected to grow approximately 120% year-over-year from approximately $29 million in fiscal Q4 of 2021. We are beginning to see yields increase in our FBO funds, which should lead to float revenue of approximately $2.5 million in Q4. In terms of operating expenses, we expect to continue our rapid pace of innovation by investing in our platform, scaling with accounting and financial institution partners and enhancing our go-to-market capabilities. On the bottom line for Q4, we expect to report a non-GAAP net loss in the range of $14.9 million to $13.9 million and a non-GAAP loss per share of $0.14 to $0.13 based on a share count of 104 million basic weighted shares outstanding. For fiscal 2022 we expect total revenue to be in the range of $624 million to $625 million. This assumes organic or standalone Bill.com core revenue growth of approximately 73% in fiscal 2022. We expect to report a non-GAAP net loss for fiscal 2022 in the range of $35.9 million to $34.9 million and a non-GAAP loss per share of $0.35 to $0.34 based on a share count of 101.7 million basic weighted shares outstanding. We are diligently executing against our fiscal 2022 strategic priorities including integrating Divvy and Invoice2go, expanding our payment offerings and our platform, driving monetization of our products and extending our reach. We've made substantial progress investing in these priorities. This combined with our efficient go-to-market motion and strong unit economics means we're also on track to deliver a net loss less than half of our initial outlook for fiscal 2022. We believe there is a significant greenfield opportunity ahead of us to help millions of businesses manage their cash flows and transform their financial operations. Our broad platform capabilities, diverse distribution ecosystem and increasing scale uniquely position us to be the de facto financial operations platform for companies ranging from sole proprietors and freelancers to mid-market companies.

Thank you. Our first question for today comes from Darrin Peller of Wolfe Research. Darrin, your line is now open.

Hi, thank you. I wanted to discuss the customer additions. Considering the large numbers from previous quarters where you had between 5,000 and 6,000, and the last quarter where you had 8,000 but initially projected around 6,000, you ended up with over 10,000, specifically between 10,000 and 11,000 net additions, which is very impressive. I'm interested in understanding more about what is driving this growth, beyond just the financial aspects. Additionally, could you provide more details on the revenue impact from these additional customers?

Thank you, Darrin. It was definitely a great quarter. We've been building this multichannel distribution strategy for a long time. We're unique in the way that we go to market with our direct accountant and financial institution partners. And all channels delivered great results this quarter. But specifically, we had a really strong quarter in the financial institution. And that's in part because the Bank of America offering where we are the default solution for their new small business customers when it comes to bill pay. That is now in pilot in all 50 states. So there's more to roll out there through the year but that started coming on in this quarter and that was great. And then we also had another regional bank that did some marketing efforts to consolidate multiple bill pay solutions onto our platform. So a couple of call-outs for the FIs but in general it goes back to that great distribution strategy that we've built over the coming years.

It seems broad, but the financial institutions are clearly playing a significant role. Could you explain the revenue model related to these financial institutions again, considering their current contributions? Additionally, are we seeing any benefits from cross-selling in terms of customer numbers, either on the Divvy side or to some extent on the Bill side?

Yes, Darrin, let me take the first part of that question on the FIs and the model and how the revenue flow-through works. As Rene mentioned we had great performance from the FI channel in the quarter. And the 11,000-plus net adds was in large part from the success there. There's a pretty significant lag effect before those adds actually contribute to revenue growth. Our arrangements with most of our financial institution partners are under sort of minimum guarantees, with commitments to certain customer and adoption levels. And it takes many quarters in some cases a year or two to grow into those minimums. So it's a great indicator of how the platform is working and being successful in the market. And then over time, we expect that to produce revenue results. The second part of the question, maybe I'll start and see if Rene has anything to add. On the Divvy cross-sell as noted on the prepared remarks, we had great organic growth from Divvy. And the vast majority of that is actually still their organic momentum selling into the market. It's really early in the adoption cycle of spend management, expense management, and the smart corporate card. And they're having great success in the market driving growth. We are starting to make progress with cross-sell and introducing the product to the Bill.com customer base, but I wouldn't say that's a significant contributor to the growth at this point. And Rene I don't know if you have anything to add.

I think that's great.

Great. Thanks a lot guys.

Thank you, Darrin.

Thank you. Our next question comes from Bryan Keane of Deutsche Bank. Bryan, your line is now open.

Hi guys. Just wanted to ask about Instant Transfer and that rollout versus enhanced ACH and the target markets for that. And then how that all is going to roll up for maybe higher yields for you guys going forward? Thanks.

Hey Bryan, part of the unique sauce of Bill.com is the robust payment platform that we have the ability to serve customers that are paying their bills and suppliers that are receiving those payments. And what you've seen over the last couple of years is us investing in payment options for the suppliers. And Instant Transfer is one of those examples where the supplier is able to say, 'Hey, I'd like to have my money now versus the coming days via a check or maybe even a week if it's a check.' And so that option is something that we obviously think is important. The enhanced ACH is also for suppliers where there are some suppliers that would prefer to have more data on the transaction than what it's able to go through our normal transactions on the ACH rails. And so having the ability to kind of both provide the data and potentially accelerate the ACH payment for those suppliers is important. So, I think what you're seeing is just kind of the broad capabilities of our platform to continue to serve customers that are interested in us from a payables perspective and customers suppliers, if you will, that need assistance in accepting payments and accelerating their payment timing. So, all-in-all, it's something that we feel is going to be important for the business model and something that we work hard to provide the optionality that businesses need when they need it.

Got it. And then John any thoughts just on yields then and how that all rolls up?

Sure. Both Instant Transfer or real-time payments and the enhanced ACH product monetize at a similar level it should be additive to our overall monetization. And I think there's, as Rene mentioned, a big opportunity to get the right payment method in front of the right supplier or a buyer. And so I think over time, both of them will contribute to a continued expansion of our monetization versus our overall monetization where we are today, which is still quite low.

Great. Thanks for taking the questions.

Thank you.

Thank you. Our next question comes from Josh Beck of KeyBanc. Josh, your line is now open.

Thank you so much for taking the question. I wanted to ask a little bit of a macro angle. Certainly inflation is really rearing its head. And so I'm just curious with respect to some of your customers, do you see them maybe delaying purchases in some cases? Or maybe just trying to be more prudent with some of their expenses? Just curious if there's any factors like that that came into play this quarter or that we should be mindful of as we think about the future?

Thank you, Josh. To date, we've seen very minimal immaterial impact from inflation environment. What I would note is that in an inflationary environment businesses and small businesses we know are resilient. They will look for ways to be more efficient in their business. Our business and the platform enables businesses to save 50% of the time it takes to manage those financial operations that we talk about. And that means you can save resources and allocate them to other parts of the business, saving time for yourself and your team so they can do more with the time that they have. We believe that this is a counter effect basically counteracts the inflationary pressures that our product enables a much better experience for our customers. So, we've not seen any pullback and I believe that this is something that will continue to be part of the transformation digital transformation.

Okay, very helpful. And then maybe to follow-up I think on Darrin's question about the synergies. There's lots of different avenues, if you will, when you think about obviously the Bill.com core customers, the suppliers, Divvy customers, Invoice2go. So, there's just many different paths between them where you could obviously do a cross-sell. I'm just wondering as we start to think about next fiscal year, are there certain ones out of the gate where maybe there's a clearer or stronger path to realizing those synergies? Or will they all kind of start to materialize at a similar cadence? Just curious, if there's any other color you can share on that topic.

I think in general one of the things that you see from us is that we're a business that is at scale. We move over $200 billion, $220 billion on a run rate basis from a TPV perspective 146,000 businesses now using the core Bill platform 380,000 across all three offerings that we have. And what I see is that there are synergies as we continue to scale and grow. There are opportunities to lean into the network. The last number we discussed was over $3 million in the network. The opportunity to lean in and offer services for them such as the payment products we talked about that's one thing. But there's opportunities on the core services that we have that we expect we'll be able to make progress on as we continue to scale and grow the business. So, there definitely are synergies. It's something that we're starting to see and something that we're working on to enhance the experience for our customers.

Thanks, Rene.

Thank you, Josh.

Our next question comes from Brent Bracelin of Piper Sandler. Brent, your line is now open.

Thank you. Good afternoon. Maybe I'll start with John a quick follow-up for Rene. John, on the guidance for June, it does look like you're guiding to a very strong quarter here. It looks like June could actually be stronger than the March quarter. Can you just talk a little bit about the monthly TPV trends you're seeing? Or as you see travel come back is that helping either the Bill.com kind of business so far this quarter? Just any sort of color around TPV trends and what's giving you optimism for that June quarter? Thanks.

Sure, thanks Brent. Yes, we are I think excited about the growth prospects ahead and feel good about the fourth quarter in our fiscal year. And as expected, the Q3 seasonality in TPV did materialize. With our Divvy solution we are able to get insights into travel and entertainment spend relative to other categories. Now it's not a huge category for Divvy, but we have seen some increases there throughout this calendar year. So it looks like there is the beginning of additional T&E spend flowing through to both Divvy and small businesses at large. Generally speaking that doesn't move the needle for Bill.com's numbers overall, but I would expect to see progress with continuing to drive growth with TPV in our next quarter as suggested by our guidance.

Super helpful. Rene, I’d like to follow up on the macro aspect. As you’ve seen from this call, investors are really focused on understanding the macro environment and how you are managing it. My question is whether you believe that your multichannel strategy can provide some insulation for the business in light of the headwinds we may face going forward. The increase in new customer additions this quarter is significant. I’m trying to consider the potential for this trend to continue as a way to offset some of these macro challenges. Do you think we might see more small businesses adopting software during tough times? I’m trying to grasp the implications of this substantial increase and your plans for navigating these macro difficulties.

Yes, thank you, Brent. In short, I believe it's both. We have put in significant effort to establish our unique multichannel strategy that enables us to serve a diverse range of customers, from the smallest businesses to large mid-market companies across various verticals. This is a complex undertaking, but it highlights the numerous opportunities for resilience in any market. For instance, during COVID, we observed that small and medium-sized businesses were resilient and able to achieve growth. The current macro environment presents opportunities, and the performance indicators this quarter demonstrate the effectiveness of our multi-distribution channel strategy. Additionally, I anticipate that there will be further tailwinds, such as the ongoing digital transformation post-COVID. There will likely be increasing interest and perhaps pressure from inflation, prompting businesses to consider efficiency and how to manage costs in a hybrid model. Our platform enables customers to significantly grow their business without needing to increase their staff. Therefore, if overall business growth slows down, companies will seek ways to cut costs, and we can assist them in that endeavor.

Helpful color. Thank you.

Thank you.

Thank you. Our next question comes from William Nance of Goldman Sachs. William, your line is now open.

Hi guys. Thanks for taking the question. I wanted to ask a question actually on the competitive environment. We've gotten a number of questions from a few different angles on what competition in the space looks like over time as you get more new entrants in the space, particularly around some of the partners that you guys actually work with QuickBooks and Intuit. So I'm wondering if you could just maybe talk about the barriers to entry and maybe the head start that you guys have and how you think about the space getting kind of more competitive over time.

Thank you, William. The most important thing about the market is it's just a massive market, right? And people today are using paper as the primary form of managing their financial operations. And so competitively that's what we're dislodging. And having a platform that is robust and has the ability to do what we do across multiple, like I said earlier, any sized business essentially up to the large mid-market companies that we serve all the way down to the smallest businesses that are SOHOs, having that ability does provide we think a unique advantage in this go-to-market solution. I think the competitive environment broadly is going to be focused on people switching from paper to digital. And I think our channel approach will allow us to get the awareness out to businesses of all sizes in all industries. And I think, our head start on scale allows us to be able to really deliver value for customers at a very reasonable price.

Got it. Appreciate the color.

Thank you, William.

Thank you. Our next question comes from Brad Sills of BofA Securities. Brad, your line is now open.

Great. Thanks guys for taking my question. Yes, nice result in the quarter. I wanted to ask about just the magnitude of upside. In the past, we've seen a bigger upside to your guidance. Just is there any change in guidance philosophy John that we should be thinking about going forward?

Thanks, Brad. There is no change in our guidance. We strive to keep everyone informed about what we are observing in the business and then aim to improve our outcomes. As we continue to grow, it's reasonable to anticipate that our performance will align more closely with our expectations. The business remains strong, and the fundamentals are solid. We are pleased with the growth we achieved this quarter, especially in terms of organic strength. Looking ahead, our guidance suggests that we expect further growth.

Great to hear. Thanks, John. And then one more if I may please. Just any color on virtual card cross-border. It looks like a nice result again this quarter in your step up and your continued monetization and the take rate there for transaction against TPV. Just any color on those two in particular. It looks like the Divvy number was very strong as well.

Yes. With regards to the virtual card product and cross-border payments, we continue to see incremental adoption from customers and suppliers that is adding to our monetization expansion. And we feel really good about that. We've been growing revenue per transaction north of 50% every quarter since we've been public our annual growth rate. And we still have a long way to go frankly in driving adoption of some of those products relative to our longer-term penetration targets that we've talked about on the last few calls. So they continue to be good drivers. Our TPV growth this quarter was a little bit lower than last quarter and we would expect though that with continued adoption of those products and growing TPV that there's good things ahead.

Got it.

Thank you. Our next question comes from Andrew Bauch of SMBC Nikko Americas. Andrew, your line is now open.

Thank you everyone for taking my question. I would like to explore the relationship between CPA.com and Divvy in more detail. Clearly, CPA.com has been instrumental in assisting Bill.com in launching the core build platform for numerous accounting firms. Could you share a couple of insights or lessons learned from this experience that could be beneficial for Divvy in the future?

Thank you, Andrew. Yes, the CPA.com relationship has definitely been a part of our journey and success in reaching accountants, especially top 100 accounting firms and the top 5000 across the country with over 5,500 firms on the platform. I do feel the experience like you referenced that we've learned in acquiring customers is going to be meaningful as we sell new services into the accounts such as Divvy. The opportunity with CPA.com was to really look at where accountants are today and to really think hard about how can we help accounts continue to evolve and adapt in the market as technology is becoming a more and more important part of how business is done. And so, with CPA.com the partnership is, an exclusive partnership, where we will be the exclusive provider of spend management and expense management solutions on top of already being the exclusive provider for bill payments. And we think that allows focus from an awareness perspective and building the market the way it needs to be built. So the conversations with the top firms, the conversations at any of the conferences having all of that be focused on how to help firms actually add clients and support their clients with more robust tools that enable efficiency and enable the firms to actually drive more revenue for them, that's the alignment that we have with CPA.com and that's what we've shown that we were able to do to date. And this is just going to be another quiver in the boat, whatever the phrase is, I'm messing that up. But you know, what I mean.

Yes, it's a pretty effective mousetrap. My follow-up would be looking at slide number 7, you guys have done a really great job executing in the United States, but I continue to think about that global opportunity and expanding the reach of the platform, particularly now as you have Invoice2go. I mean what are the real obstacles to your business in regards to expanding internationally? And what kind of things are you looking at that may accelerate that push?

Yes. One of the things that we were excited about with Invoice2go is the fact that they do operate customers in over 150 countries. You combine that with the international payments that we do, which is also in the hundreds of countries that we support and move money to, it gives us an opportunity to kind of think more aggressively in the long term about an international presence. And I would say, the obstacles aren't so much obstacles as much as we just acquired two companies in the last year. We're uniting the platform. We have a team now that is unified across the entire company to create the synergies and the product offering and the go-to-market experience for our customers to really drive we think a different experience around financial operations for SMBs. So that's going to be our first focus. And once we have that focus, then obviously money movement is different in all the countries. We can focus on the details and logistics of executing on a broader international strategy. But the fact is we are international today with Invoice2go and feel good about the opportunity to drive the product experience to those customers over time.

Got it. Helpful. Thank you.

Thank you.

Thank you. Our next question comes from Scott Berg of Needham and Company. Scott, your line is now open.

Hi, Rene and John. Congratulations on a fantastic quarter, and thank you for taking my question. I want to follow up. Honestly, I received an email from one of your shareholders asking how to replicate such a great quarter in net additions. I’ll frame it a bit more tactfully since I know you don't have exact predictions. Considering the contributions from financial institutions during the quarter, what would be the best strategy or approach to implement over the next six to 24 months to achieve customer additions in that range and exceed the minimum thresholds?

I think the first thing that I think about is obviously building a great experience. So, if we just take BofA right now, they have redesigned their go-to-market experience for SMBs that joined the bank and we are part of that solution. But there's a lot of work on both teams to actually execute on that and to make sure that it's the right experience for customers. And we feel good about the ability to do what we've done to date and that's why you're seeing some of the numbers that we were able to put up today. And I think over the long-term this is the power of the distribution strategy that we have. We have multiple channels, multiple partners, multiple ways to continue to add and grow our customer base. We're at 2% market penetration out of the six million businesses in the US that have employees. There's so much opportunity in front of us. And having the multi-channel approach, we think is going to continue to drive the type of success we saw this quarter from quarter-to-quarter.

Great. Helpful. And then a question for you John. You talked earlier, I forgot whose question was maybe it was Bryan about, maybe the upside to guidance going forward probably starts to narrow as the company scales in size, which I think we would certainly all understand. But turn that to the profitability range. You guys have been super impressive in your ability to drive leverage and create operational efficiencies given the growth rate. But as you start to get to what might be an $800 million or $900 million revenue range over the next 12 to 18 months, can you still continue to grow at the scale? And will you burn cash or operate at what's pretty much a breakeven level? Or do we see some maybe additional leverage in the model coming here going forward?

Yes. Thanks for the question Scott. We're feeling really good about our ability to balance growth driving revenue adoption, penetrating the market with creating efficiency as we grow. In particular we've done a good job since we've been public at expanding gross margins. And as you pointed out we've operated with minimal losses. That's a recipe that we think works really well for us. We have had minimal losses. We reduced actually our non-GAAP net loss expectations this year as reflected in our guidance for Q4 and fiscal 2022. We'll have more to say about, obviously, fiscal 2023 and beyond in August when we delivered guidance for that year. But our continued commitment is to balance the size of the market opportunity with our growth and investments and the efficiency with which we're delivering these results.

Great. Thanks for taking the questions.

Thanks Scott.

Thank you. Our next question comes from Samad Samana from Jefferies. Samad, your line is now open.

Hi, good afternoon. I think it’s impressive to see 74% organic growth. I don't think anyone expected this level of growth around the time of the IPO, so congratulations on that. Rene, when considering the core business, how do you view the lead flow to the top of the funnel? Has that changed or increased? What’s the trend like? Also, what about conversion rates so far in May? As the company has grown, you've invested more in sales and marketing, and the brand is gaining recognition. What are you observing regarding inbound leads to your funnel?

Great question Samad. That is part of the reason why I mentioned our success across all channels. The direct team has been effective in driving more leads at the top of the funnel, and the sales team is closing more deals, all due to strong execution by the team. Additionally, awareness plays a key role, as some of our partners help enhance visibility. Being a public entity also contributes to this awareness, along with the network, which now has over three million members. This presents an opportunity for us to grow and bring more entities into the fold. Therefore, the success we are experiencing will stem from this multi-channel approach driving results from quarter to quarter, and our awareness capabilities will continue to scale as we gain more customers.

Great. And then John maybe a question for you and maybe this also includes your perspective as a CFO of a company yourself. But when you think about times where businesses are getting, kind of, let's call it more constrained or feeling pressure like they're doing from inflation, do you think that products like virtual card and cross-border and local currency that have variable fees, are they more valuable because they accelerate the cash conversion cycle? Or do you think that businesses are more sensitive to that? Just what are you seeing or hearing from your customers in that regard?

Great question, Samad. I think it really depends on the business and what their model is but I think for almost all businesses, managing working capital and having quick access to cash in a way that can also create efficiency in the back office, so easy reconciliation, which means good data. Those things are always in demand probably more so in an environment where companies might be trying to create more efficiency or need cost savings or things like that. So I don't think it's the absolute say cost of a transaction or something like that that's the big driver of decisions as much as the overall profile of the business and the way that they run their operations and create efficiency.

Great. Appreciate taking my questions.

Thank you.

Thank you. Our next question comes from Jeff Cantwell of Wells Fargo. Jeff, your line is now open.

Hey, thank you. Thanks for taking my question. Let's just maybe take a step back and think about where we are in this macro environment right now think about your capabilities the company that you've built. Can you tell us how you feel right now about your ability going forward to penetrate that SMB TAM you guys have? We could see the 147,000 Bill.com customers and the customer growth has really been there over the past several quarters now and payment volumes were $55 billion this quarter. Cross-sell is getting more in trend. So maybe can you help us think out a little bit here. Any color in terms of what we should expect to see in terms of Bill.com customer adds as we think further out. Maybe talk about your confidence thinking through the next year perhaps. Any color there would be great. Thank you.

Thank you, Jeff. To start, I want to emphasize that we are at the onset of a digital transformation in how businesses operate. Traditionally, businesses have relied on paper, which is predominantly used by small and medium-sized enterprises across the country for management purposes. This approach is not sustainable or efficient, and in a hybrid work environment, it's increasingly impractical to manage paper documents in one location while working elsewhere. We believe that the momentum, initially sparked by COVID, was already developing prior and continues to accelerate as more businesses transition to our platform. Recent examples indicate that the volume of transactions on our network has reached unprecedented levels, with more interactions occurring between online entities. This trend is expected to persist. Currently, only about 2% of the employer market is utilizing our platform, which presents a significant opportunity for us moving forward. We will remain focused on providing solutions for these businesses. John, I believe you may want to add something as well.

I would just add that we are confident in our ability to scale customer acquisition over the long term due to our investments in go-to-market distribution. In the near term, we are comfortable with net additions being around 6,000, primarily because of our current investment programs and the successes we've achieved with our financial institution partners and accounting firms, although we do not control the timing of those. There could be some additional upside related to this, but based on our current trajectory, we believe that approximately 6,000 is the recurring rate for net new additions we have at this time, with potential for upside.

Okay. Great. Appreciate that. And then secondly, can you talk a little more about expectations for future profitability? What are your thoughts on time frame, et cetera, because we can see Divvy layering in now, and you've obviously had a couple of strong quarters in the row on the bottom line. So anything that you can talk about there to help us think through for next year and so forth would be great. Thank you.

Sure. Yes, we're very pleased with where we're at from a margin profile perspective. We focus in managing and balancing the investments and growth of the business. We focus predominantly on unit economics and making sure that we have a short payback period so we can deploy capital and get a return on that quickly. We've been operating for a number of years now with very small non-GAAP net losses. And I can't speak specifically to our fiscal 2023 at this point about the profitability profile, but we look forward to coming back to you with specifics in August on that.

Okay. Understood. Thanks very much and congrats on the results.

Thank you.

Thank you. Our next question comes from Brian Schwartz of Oppenheimer. Brian, your line is now open.

Thank you very much. Hi, Rene and John. Thanks for taking my question. Rene, I thought I'd just ask you for an update on the enablement and maybe in rolling out or cross-selling initiative with Invoice2go. I'm just wondering if that is still ahead or if you've begun maybe targeting that new base that I think you talked about that you claimed up in terms of the quality of opportunities with them.

Thank you, Brian, for your question. I want to highlight that this quarter we announced the full integration of our teams, which happened more quickly than we anticipated. We observed synergies and the teams collaborating effectively, allowing us to align all teams into a single organizational structure. This alignment will enable us to create a unified platform experience for businesses across all their interactions. As we move forward, we are in the early stages of exploring cross-selling opportunities with Invoice2go, a process we have already initiated with Divvy. The unique advantage we have is offering a single platform that addresses the financial operations for all small and medium-sized businesses. Having this in place will be crucial as we look to go to market in the future.

Thank you. Rene, could you provide an update on the company's progress with machine learning and whether there are any monetization opportunities? Your company has been a technology leader in machine learning, and given the volume of data related to invoicing and transaction processing, we have heard complaints from finance departments about issues with obtaining predictive data quickly, which is affecting their efficiency. I am interested in your insights on the company's current machine learning capabilities and if there are competitive advantages or monetization prospects. I also have a quick follow-up question for John. Thank you.

Sure. Thank you, Brian. Yes, we have been developing our machine learning AI capabilities and incorporating them into the platform for several years now. Each release has seen improvements in these capabilities. One example is our enhanced ability to automatically connect with network members. Additionally, we've significantly improved our capacity to process information from invoices without requiring data entry. Our next goal is to analyze detailed line items on invoices and leverage that data, as you mentioned, to support our customers in better understanding their businesses and potentially generating revenue. Initially, we will prioritize building the necessary capabilities and creating experiences that eliminate the need for paper. This is our top focus as a company; we are committed to simplifying connections and business transactions. This focus allows us to concentrate on improving the experience by reducing the existing burdens. However, you are correct that there is a future opportunity for data monetization.

Thank you. And then the one follow-up I had for John. I just wanted to double check on the better-than-expected performance and the net loss that you delivered in Q3. I just want to make sure was that all from the revenue upside? Or did any of the spend that maybe you had planned either on hiring or other investments did that all get done in Q3? Thanks.

Thanks, Brian. Yes, it was primarily the revenue performance and our strong non-GAAP gross margins that flowed through to the bottom line performance that we delivered.

That's all I have. Good job on the quarter. Thanks for taking my questions.

Thanks, Brian.

Thank you. We have time for one more question today and that comes from Ken Suchoski from Autonomous Research. Ken, your line is now open.

Hey, Rene and John, good afternoon. Thanks for squeezing me in and taking the questions. Nice to see rolling out new products like enhanced ACH. I guess just a multipart question on that product. Can you talk about where you price that? And maybe talk about it relative to Instant Transfer. And then maybe you could talk about some of the steps you're taking to drive adoption on that payment type whether on the customer side or the supplier side. And then just any thoughts on long-term penetration. Thank you.

Thank you, Ken. Yes, to just step back when you think about the millions of transactions that we do every quarter, the billions of dollars that we do every quarter, there's lots of different sizes of suppliers in the network that are getting paid through the Bill.com solution. And when you think about the experiences that they need, they're all going to be different. So there are probably SOHOs if you will, smaller businesses that might take the Instant Transfer as the best way to get paid to manage their cash flow, like John talked about the working capital needs that they might have for a business. But there might be larger businesses that prefer to have more information, more streamlined. And that's what the enhanced ACH opportunity is for. And yes, there might be other businesses that prefer the virtual card offering because of the alignment they already have with their card processing capabilities. So, our goal here is to create solutions that allow businesses whether they're paying or getting paid the way that they want to be able to do that, and on the time they want to be able to do that. So, we feel good about the product offering. We think that the diverse capability we have enhances the overall network and platform that we've built and we think it's an opportunity for us to continue to drive value for suppliers and for customers.

Just to add in terms of the monetization model for those products Ken, its order of magnitude between 75 and 100 basis points across Instant Transfer, real-time payments and enhanced ACH. They're a similar model delivered differently potentially to different suppliers as Rene mentioned but in that ballpark.

Okay. Alright. That's really helpful. And then, just as my follow-up. And I'll let you guys go. I just wanted to ask about the new customers that are coming on given that more of them are from the FI channel. Can you just talk about the ARPU and the TPV per customer that you expect from these newer customers relative to the rest of your customer base? That would be really helpful.

Sure. Thanks, Ken. Yes, the up-tick in new customers we've seen over the last couple of quarters much of that has come from success with the financial institution partners. Just like with a direct Bill.com customer or through an accounting firm it takes a number of months we say about six to nine months usually for these customers to fully get up and running on the platform. So there's a little bit of a lag in them getting to steady state. I'd say on average with some of the newer bank relationships we have now where we're starting to see customers adopt, they're about the average Bill.com small business. So it's similar in size to a small business customer for Bill.com. And we'll, as we get a little bit further into driving adoption within the financial institutional channel I think have more details to share about the demographics and profile, as it relates to TPV and ARPU of those customers. But at this point I can say they kind of look like the average small business customer for Bill.

Okay. Alright. Thank you very much.

Thank you.

Thank you.

Thank you. That concludes the Q&A for today. I will now hand back to Rene Lacerte for any closing remarks.

Thanks everyone for joining us today. We delivered another quarter of very strong growth as we helped SMBs transform their financial operations. We look forward to communicating our progress as we pursue the tremendous opportunity ahead. Thank you.

Thank you for joining today's call. You may now disconnect.